WACOAL HOLDINGS Integrated Report 2012

29, Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan

REACHING OUTWACOAL HOLDINGS Integrated Report 2012

120905-TCY-AT3

Printed in Japan

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20

OVERVIEWA SUSTAINABLE WACOAL

0434

ACTIONCORPORATE GOVERNANCE

06

37

DIRECTION

BOARD OF DIRECTORS

Contents

38
CORPORATE AUDITORS

08

39

PERFORMANCEFINANCIAL SECTION

1080STRATEGY FROM TOP
MANAGEMENTCORPORATE DATA

14

81

PERFORMANCE OVERVIEW AND
STRATEGIES BY SEGMENTINVESTOR INFORMATION

Editorial Policy for This Report

Aiming to further understanding of its
financial and non-financial information,
the Wacoal Group began issuing integrated
reports from the previous fiscal year. This
new format combines an annual report,
detailing business results and businessstrategies for shareholders and otherinvestors, with a communication report,
focusing on the Group’s corporate social
responsibility (CSR) initiatives. Reflecting
this editorial policy, for our report on thefiscal year under review we have further
enhanced the content and changed the title
from Annual Report to Integrated Report.
We intend to continue pursuing an editorial
policy that responds to reader expectations.

Announced publicly in 1964, Wacoal’s vision includes the phrase “mutual
trust.” The motivation for putting these words into our vision came fromour founder Koichi Tsukamoto’s decision—based on his humanistic
philosophy—to position mutual trust at the center of business management
and thereby build relationships of trust with employees.
Since then, aiming to realize the goal of “Helping women to express theirbeauty” set out at the time of its 1946 establishment, Wacoal has built
relationships of mutual trust not only with employees but also with society.
Above all else, building mutual trust with the world’s women has been at
the core of our business activities.
Based on a holding company system that encompasses 47 consolidated
subsidiaries and nine affiliates as of March 2012, the Wacoal Group isbuilding an even more robust operational platform in Japan while growing
sales aggressively in North America, Europe, and Asia. In this manner,
Wacoal has continued to advance by developing its innerwear business.
As we moved forward as a company, however, it became clear that showing
strong empathy with women through our business activities would earnsociety’s recognition for the worthwhile functions we perform. With this inmind, Wacoal declared itself “a company empathetic to women” in 2001.
This phrase expresses Wacoal’s ambition to be a company that empathizes
with women in all aspects of its business operations.
With its sights set on establishing a stronger global presence, the Wacoal
Group is stepping up the pace of business development worldwide. As we
pursue these business ventures, we will never forget the philosophy of our
founder—we will continue growing with local communities in each region
and building mutual trust.
In addition to explaining our business strategies that will drive growth going
forward, we hope this integrated report furthers understanding of ourunique CSR activities aimed at building mutual trust with society.

REACHING OUT

02

THE WACOAL GROUPMANAGEMENT PHILOSOPHY
Wacoal has since our founding pursued the essence of“beauty” which transcends the ages, while always keeping
a close eye on the values and aesthetic sense of women.
Furthermore, 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 “arelationship of mutual trust” with each individual. Wacoal
is founded on this philosophy of mutual trust, and has
remained our Management Philosophy since our founding.

OVERVIEWOUR MISSIONOUR VALUES

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

1
2
3
4
5

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

WACOAL HOLDINGSCreate products loved by customers
Develop new products that meet the needs of the times
Conduct business in a fair manner with a forward focus
Build a better Wacoal through better human resources
Fear not failure and boast not of success03

Share of Net Sales

72.3%
Foundation garments
and lingerie
5.5%Nightwear
0.9%
Children’s underwear
9.5%
Outerwear and sportswear
0.9%
Hosiery
4.8%
Textile products

OUR PRODUCTS
We are engaged in the manufacturing, wholesaling, and—forcertain products—retailing of women’s foundation garments
and lingerie, nightwear, children’s underwear, outerwear
and sportswear, hosiery, and other textile products. Other
operations include restaurant businesses, cultural andservice-related operations, and the construction of interiors
for commercial premises.

6.1%
Other

Integrated Report 2012

04

1946

1950

Koichi Tsukamoto establishes Wako Begins production of inaugural
Shoji (precursor to Wako Corp.)
brassiere: No. 101

1964

1965

Changes name to Wacoal Corp.

Publishes Golden Proportions
and offers proportion “making”

1964
Lists on second sections ofseveral stock exchanges

A brassiere from around 1951

1962
1949
Establishes Wako Corp.

1964
Establishes Product Research
Department (precursor to
Human Science Research Center)

1970

Sets out mutual trust as
overriding goal of business
management

ACTION

Embarks on first overseas foray
Exhibited at the Osaka Expo

1964
Begins sales of first internationallypatented product: Tummy Girdle

THE FOOTPRINTS OF
THE WACOAL GROUP
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 tandem with thewomen’s innerwear market in Japan while continuallycontributing to society.

1970
Posts sales above ¥10 billion

1964
Announces basic management
policy and vision publically

1965
Sets out Mission

Principal Business Lines

WACOAL HOLDINGS

Principal CSR Initiatives

1973
Establishes Social Welfare
Department (changes name to
Remamma Department in 1979)

05

1974

1983

1991

2002

Begins supplying Remamma
brassieres

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

Supports establishment of the
Karada Bunka Kenkyukai (physique culture research group) by
academics (changes name to
Nyubou Bunka Kenkyukai (breast
culture research group) in 1996)

Establishes Chinese Human
Science Research Center

1983
Establishes Wacoal America, Inc.

2002
Launches Pink Ribbon
activities in Japan

1992
1984
1977

Announces new Wacoal
Declaration: Physique Industry

Changes Central ResearchCenter’s name to Human
Science Research Center

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

2005
Establishes Wacoal Holdings as
holding company

2008
Begins brassiere recycling
initiative in earnest

1977
Enters U.S. market

2009
1995

1978
Establishes Kyoto CostumeInstitute (KCI)

1979

Publishes Golden Canon1985

Launches Breast Cancer Screening
Support Project

2010

Opened the multipurpose
cultural facility Spiral

Publishes Aging of the Physiqueand the Principles of Beauty

Posts sales above ¥80 billion

1986
1979

Establishes Beijing Wacoal Co., Ltd.

Renewed the CI initiative logo

2000

1979

Publishes Spiral Aging

Publishes Beautiful Proportions

2001
1990
Establishes Wacoal France S.A.

Announces new Wacoal Declaration: Wacoal as a Company
Empathetic to Women2010
Begins joint research with Okayama
University on safety and usability of
innerwear for women who have hadbreast reconstruction

2012
2001
1981

Establishes Tsubomi School

Eveden Group Limited becomes awholly owned subsidiary of Wacoal
Holdings

Posts sales above ¥100 billion

Integrated Report 2012

06

WACOAL BY FIGURES
Year ended March 31, 2012

Sales by Business Segment1

Sales by Sales Channel(Wacoal Corp.)2

Sales by Geographic Segment1

31.9%
Department stores
67.4%
Wacoal business (Domestic)

38.7%
General merchandising stores

12.5%
Wacoal business (Overseas)
8.0%
Peach John

6.1%
Asia

19.2%
Internet sales and mail-ordercatalog sales operations/
SPA shops

12.1%
Other

1

87.0%
Japan

10.2%
Specialty/Retail stores

6.9%
Americas and Europe

Percentage figures are calculated based on external customers sales	Figures are Wacoal Corp. business results

2

DIRECTIONWACOAL GROUP ORGANIZATION
Wacoal Corp.

Domestic Principal Subsidiaries, Joint Ventures

Shinyoung Wacoal Inc. (South Korea)

Overseas Principal Subsidiaries, Joint Ventures

Lecien Corporation
Peach John Co., Ltd.
Wacoal Holdings Corp.

Nanasai Co., Ltd.
House of Rose Co., Ltd.
Wacoal Career Service Corp.
Wacoal Service Co., Ltd.
Wacoal Distribution Corp.

WACOAL HOLDINGS

07

OUR BUSINESS FIELDS
At Wacoal, we see the “body” as having both a physical anda mental/spiritual side, and our intimate apparel and wellness
businesses, based on our core competences, offer threecorresponding forms of value: beauty, comfort, and health.
One of these core competences is the Human Science
Research Center we have built up over many years. Looking atthings from the Human Science perspective enables us to discover the new values our customers desire and transform theminto products. Having a clear sense of different people’s needs,
turning those insights into products and services that offer newvalue, and delivering them to customers in the appropriate
space—this is the process through which we have managed tocreate everything from new brands to new lifestyles.

The Different Business Fields of “Body Design”

Body Fit

COMFORTHUMAN
SCIENCERESEARCH

In

Out

(Core
Competence)
HEALTHBEAUTY

Mind Fit

WACOAL’S OVERSEAS OPERATIONS
Wacoal Holdings
Equity Owned

Net Sales(¥ Million)

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

100%¥10,475

Wacoal China Co., Ltd.

100

6,020

Wacoal Hong Kong Co., Ltd.

80

1,922

Wacoal France S.A.

100

1,194

Wacoal Singapore Pte. Ltd.

100

695

Philippine Wacoal Corp.

67

425

Shinyoung Wacoal Inc. (South Korea)

25

13,776

Thai Wacoal Public Co., Ltd.

34

10,198

Taiwan Wacoal Co., Ltd.

50

10,373

FY2012

Shanghai,
China

CanadaDalian, China
England

Beijing, China

FranceGuangzhou,
China

Netherlands

Hong Kong
Thailand

Manufacturing/Sales
Sales
Manufacturing

Malaysia
Singapore

South Korea

U.S.A.

TaiwanPhilippines
Vietnam

Dominican
Republic

Indonesia
As of March 2012

Integrated Report 2012

08

KEY FIGURES
Thousands of
U.S. Dollars*Millions of Yen
Years ended March 31, 2012, 2011 and 2010

% Change

2012 2012 vs 2011

2012

2011

2010

¥171,897¥165,548¥163,548$2,085,875

3.8%

Operating income

10,377

4,401

3,829

125,919135.8%

Selling, general and administrative expenses

79,62977,71678,524966,254

2.5%

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

10,207

3,927

3,155

123,856

159.9%Net income attributable to Wacoal Holdings Corp.

6,913

2,785

2,475

83,885148.2%

Return on assets (ROA)

3.1%

1.3%

1.1%

Net sales

Return on equity (ROE)

4.1%

1.6%

1.5%

¥ 10,060¥ 10,441¥   9,463$   122,072-3.6%

Net cash used in investing activities(3,467)(703)(3,573)(42,070)

393.2%Net cash used in financing activities(2,824)(4,965)(5,363)(34,268)-43.1%Net cash provided by operating activities

Cash and cash equivalents

29,98526,31622,328363,851

13.9%

Total assets

221,098

215,276

222,889

2,682,903

2.7%

Total shareholders’ equity

171,496

167,480

171,860

2,081,010

2.4%* The U.S. dollar amounts represent translations of Japanese yen solely for convenience at the rate of ¥82.41=$1.

PERFORMANCENet Sales¥ Billion

165.2

171.0

163.5 165.5

171.9

Operating Income/Operating Income Margin

SG&A Expenses/% of Net Sales¥ Billion/%¥ Billion/%

13.3

77.2

78.5

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

77.7

79.6

¥ Billion/Yen
6.9

68.9
10.4

9.8

4.8

8.1
5.8

6.0%
3.8

08

09

WACOAL HOLDINGS

10

11

12

08

09

4.4

2.3

2.7

10

11

12

41.7

08

45.2

48.0

46.9

5.1
49.1 yen

46.3%

35.6
34.3

09

10

11

12

08

09

2.5

2.8

17.5

19.7

10

11

12

09

Yen
Years ended March 31, 2012, 2011 and 2010

2011

2012

U.S. Dollars*% Change

2012 2012 vs 20112010

Per share of common stock
Net income attributable to Wacoal Holdings Corp. (Basic)¥   49.08 ¥   19.73 ¥   17.51

Cash dividends$ 0.60148.8%

28.00

20.00

20.00

0.34

40.0%

1,217.57

1,189.08

1,217.15

14.77

2.4%

Number of brassiere sales (Millions)

41.8

39.0

—

Research and development expenses (Millions of Yen, Thousands of U.S. Dollars)

¥801

¥815

¥778

CO2 emissions (Tons)

6,297t

7,635t

7,859t-21.2%

Waste emissions (Tons)

1,169t1,170t1,230t-0.1%

Shareholders’ equity

7.2%$9,720-1.7%

PeopleNumber of employee (Consolidated)
Wacoal Business (Domestic)

7,229

7,241

7,453

-0.2%

Wacoal Business (Overseas)

7,520

7,004

6,349

7.4%

364

422

467

-13.7%

Other

1,411

1,346

1,417

4.8%

Total

16,52416,013

15,686

3.2%

Number of consolidated female employees

11,208

10,660—5.1%

Outside director ratio

37.5%

37.5%

42.9%

Peach John

ROA/ROE

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

Net Cash Provided byOperating Activities/
Cash and Cash Equivalents

Total Assets¥ Billion¥ Billion
30.0
ROE
4.1

2.0

2.2

1.5
1.1

08

09

166.8

171.5

171.9

167.5

77.1

77.8

77.6%

10

11

12

ROA
3.1

2.9

2.6

27.1

184.1

10

1.6

26.3
22.0

240.1
213.8

22.3

222.9 215.3

221.1

14.2
76.7

78.0

8.2

9.5

10.4

10.1

11

12

1.3

11

12

08

09

08

09

10

08

09

10

11

12

Net Cash Provided by Operating Activities
Cash and Cash Equivalents

Integrated Report 2012

10

STRATEGYFROM TOP MANAGEMENT
The Wacoal Group—
Empathy with Women and Mutual Trust

Yoshikata Tsukamoto
President and Representative Director, Wacoal Holdings Corp.

Through a firm commitment tomutual trust and empathy withwomen as our corporate raisond’être, we will sustain growth.

WACOAL HOLDINGSThe corporate mission of the Wacoal Group has been to“contribute to society by helping women to express theirbeauty” since its establishment in 1946. As we have pursued
this mission through our corporate activities, mutual trust has
consistently been the bedrock of our business management.
Reflecting the view that cultivating mutual trust contributes
to everyone’s happiness, the Wacoal Group’s vision is to create a company founded on respect for human dignity andrelationships of strong mutual trust—not only between the
Wacoal Group and its customers but also between the Groupand its employees, society, and other stakeholders.
During the more than half a century since our establishment, we have grown enterprise value by constantly creatingproducts customers love and developing products meetingthe needs of the times. In tandem with these efforts, we havedeveloped corporate social responsibility (CSR) initiatives
actively, thereby building mutual trust with the women thatuse our products.
Over a decade ago, in 2001, the Wacoal Group declareditself “a company empathetic to women.” Empathy withwomen is the Wacoal Group’s designated role. Manufacturing
products that resonate with women is something that also
resonates with society. For example, the Wacoal Group’s
Human Science Research Center has conducted basic
research on women’s physiques for nearly 50 years. In a
broad variety of ways, we use the results of this research todevelop products that help women to express their beauty.
In April 2010, significant interest focused on the Wacoal
Group’s announcement of research results on Aging of the
Physique and the Principles of Beauty (For details, please see
page 23.), underscoring the Group’s credentials as a truly
unique company.
Through a firm commitment to mutual trust andempathy with women as our corporate raison d’être, wewill sustain growth.
Fiscal 2012 Business Results Report

For fiscal 2012, ended March 31, 2012, the Wacoal Group
achieved year-on-year increases of 3.8% in net sales, to¥171,897 million; 135.8 % in operating income, to ¥10,377
million; and 148.2% in net income, to ¥6,913 million.

11

Regarding sales, in the Wacoal Group’s domestic business,mainstay brassieres and undergarments sold briskly thanks to
product rollouts and promotions that appealed to consumers
based on the Human Science Research Center’s findings about
the how the physique ages. Furthermore, despite currency
fluctuation, the Wacoal Group’s overseas businesses posted
year-on-year sales increases as businesses in the UnitedStates and China grew sales, and Peach John Co., Ltd.,
achieved a recovery in business results.
Meanwhile, earnings were up significantly year on year.
This was attributable to Peach John achieving profitability
based on a rebuilt earnings structure and the favorable performance of the Wacoal Group’s domestic business, which
offset the deficit of the Group’s business in China and theLecien Corporation’s loss due to withdrawal from an employees’ pension fund.
Progress in the Second Year of
the Medium-Term Management Plan

We have completed the second year of our medium-term
management plan, launched in April 2010. In earnings, wemade steady progress, achieving our targets one year aheadof schedule. Although tasks remain, I am sure the strategic
direction of our efforts to achieve our targets is correct.
Accordingly, we will continue advancing vigorously.
Domestically, we continued restructuring innerwear
wholesale operations. As a result, our earnings structure
improved significantly, and operating income recovered
significantly. Particularly successful was an initiative thatrightsized the deployment of department store sales area
personnel and reduced inventory. Further, sales promotions
exploiting research on aging reaffirmed the value of Wacoal
products and heightened customer endorsement. In addition,
the retail business, which operates directly managed stores,
and mail-order operations, responsible for such operations as
Internet sales, continued growing steadily.
Overseas, businesses performed well, posting an 11% yearon-year increase in sales in the Americas on a local currency
basis. In Europe, Wacoal France S.A. moved into the black
for the first time in the fiscal year under review. As for ourbusiness in China, although sales grew 21% from the previous
fiscal year as new stores opened, this was below our target.
And, the business recognized a loss due to higher selling,

AN OVERVIEW OF THE MEDIUM-TERM
MANAGEMENT PLAN PERIODTARGET

April 2010—March 2013
CORPORATE PROFILEA stronger global presence for the Wacoal Group
Numerical targets (Fiscal 2013)

Net sales of at least¥190 billion
Operating income of at least¥8 billion
GROUP STRATEGIES OVER THE THREE YEARS• Heighten the overall capabilities of the Wacoal
Group through promoting collaboration among
Group companies to realize each company’s
strengths• Secure and increase earnings
– Restructure operations focusing on innerwear
wholesale operations– Accelerate expansion in growing business areas athome and abroad• Strengthen system for Groupwide management
TARGET CORPORATE PROFILE FOR FISCAL 2013

• New revenue and earnings pillars establishedalongside existing innerwear wholesale operations• Overseas operations such as those in the U.S. andChina support growth• Restructured innerwear wholesale operations see
profitability improve• System for Groupwide management further
developed and strengthened• Meeting CSR and compliance requirements

Integrated Report 2012

12

STRATEGYFROM TOP MANAGEMENT

general and administrative expenses reflecting stepped-up
store openings. Nevertheless, China remains the most important region for the Wacoal Group’s growth going forward.
Keeping our sights set on realizing earnings, we will therefore
concentrate efforts on increasing brand visibility in China.
After recording losses for two consecutive years, PeachJohn achieved a 20% rise in net sales year on year and adramatic return to operating income. However, these business results remain below expectations given the level of thecompany’s business results for the fiscal year ended March
2009, when it posted net sales of ¥15.0 billion and operating
income of ¥1.3 billion. With this in mind, we will strengthen
profitability even further.
In other businesses, Lecien, which became a wholly
owned subsidiary in 2010, actually improved earnings significantly if we exclude the loss arising from withdrawal from theemployees’ pension fund.
Thus, we are progressing well in reforming the earnings
structures of operating companies. However, as net sales
show, our growth stills needs to regain momentum. To thisend, in the current fiscal year I will focus more on net sales
growth as a growth driver while targeting earnings above
those of the fiscal year under review.
Measures and Strategies for the Final Year of
the Medium-Term Management Plan

The current fiscal year is the final year of the medium-term
management plan, themed on change and taking on challenges. We embarked upon this plan determined to realize
stable earnings while building new growth engines. I think
an objective analysis of our achievements over the past two
years vindicates the direction of our strategies and measures.
In the final year, we will work toward realization of the plan’stargets unstintingly. Guiding these efforts, our overriding
strategies will be returning to basics and reinforcing strengths
and strengthening our ability to take measures from a global
viewpoint. Moreover, in the current fiscal year we intend toestablish a solid platform from which to launch our next
medium-term management plan, beginning from April 2013.
Given that the Wacoal Group’s domestic businesses
account for the majority of net sales, maintaining andexpanding the sales of this business is crucial. In Japan,

WACOAL HOLDINGS

we will clearly identify priority areas, such as directly
managed stores and Internet sales, and accelerate their
growth. At the same time, we will begin restructuring the
manufacturing area in earnest. Also, emulating the successof its aging research, the Wacoal Group will take advantage
of its strengths to ramp up development of products andservices offering real value that generates new demand. Ifthese efforts convince customers of the superior value of
Wacoal products, I think we can realize our goal of returning
to basics and reinforcing strengths.
As I mentioned, overseas businesses are our growth
drivers. I believe accelerating expansion of these businesses isimportant to reach the medium-term management plan’s net
sales target and realize our target corporate profile—a stronger global presence for the Wacoal Group. Including affiliates,
the Wacoal Group has 30 overseas operating companies,
which generate local sales of ¥59.6 billion. This breaks down
into ¥10.6 billion from the Americas, ¥1.2 billion from Europe,¥9.3 billion from China including Hong Kong, and ¥38.5 billion
from Asia excluding China. However, this operational scale isonly half way toward establishing a stronger global presence
for the Wacoal Group.
Aiming to expand and improve our overseas businesses,
we will classify them under four regions—the Americas,
Europe, China, and Asia excluding China—and pursue strategies suited to each region’s characteristics. Further, to build astronger position for Wacoal as a global brand, we will establish a structure that enables us to advance businesses moreforcefully and optimize overall collaboration among regions.
Among overseas strategies, accelerating our business in
China is the top priority. If we consider the size of China’s
market, the scope for us to grow is significant. Therefore,
while reforming the profit structure of the business, we intend
to continue actively allocating management resources toChina to heighten the visibility of the Wacoal corporate brandand increase market share.
Meanwhile, in Europe we made Eveden Group Limited,
headquartered in Northamptonshire, the United Kingdom,a subsidiary by acquiring all of its shares in April 2012. Eveden
manufactures and sells women’s innerwear and swimwear.
The group boasts a sales network comprising over 5,000
retailers, principally in the United Kingdom but also in13Australia and more than 50 other countries in Europe, North
America, Asia, and other regions. Eveden’s product lineup
covers areas beyond the scope of our lineup. Including highquality fashionable innerwear and swimwear for a wide rangeof physiques and sizes, the product lineup testifies to outstanding production technology. As a result, mutually
exploiting each other’s management resources promises
synergies. Also, this new subsidiary will accelerate the
Wacoal Group’s globalization and contribute to achieving
medium-term management goals significantly.
The Group’s Overall Capabilities Heighten Steadily

The Wacoal Group has made good progress toward heightening its overall capabilities—one of the medium-term
management plan’s Group strategies. The improved profitability of operating companies and intensified collaboration
within the Group were major contributors to reaching theoperating income target early. For example, the operatingcompany Wacoal Corp. supported the research and development of various companies; Lecien and affiliates provided
production support; and Nanasai Co., Ltd., supported sales
area development and supplied fixtures. Intensifying suchcollaboration among operating companies, not only domestically but overseas, will quicken the pace of overseas businessexpansion, thereby adding momentum to the establishmentof a stronger global presence for the Wacoal Group.
As the Group’s holding company, Wacoal Holdings Corp.
has an extremely important part to play in this intensified
collaboration within the Group. Coordinating the Group laterally, the Company will set out overall goals and explore andadvance growth strategies. Other functions will include monitoring the roles and tasks of operating companies, deciding
the allocation of resources within the Group, and supporting
collaborative efforts. Consequently, the holding company’s
decisions will be pivotal in determining the Wacoal Group’s
destiny. We will keep this foremost in our minds as we tackle
various initiatives going forward.
Peach John, Lecien, and the latest addition Eveden havegiven the Group a fairly extensive portfolio of business lines.
Fulfilling my role as the leader of the holding company, I
intend to overview operations, shedding light on structuralproblems companies have and taking steps to resolve them.

Sure-Footed Steps toward
a Stronger Global Presence

The medium-term management plan sets out creating astronger global presence for the Wacoal Group as a target
corporate profile. This is based on a goal of our vision, which
also calls on us to “maintain a refined corporate culture basedon mutual trust.” I believe one key component of our target
corporate profile entails continuing to value mutual trust as
the starting point of our business while earning endorsementfor our products from women everywhere. In other words,
our products should be available in markets worldwide, andWacoal should be a brand everyone knows. We should put
down roots in local communities to become a company
everyone loves. To realize this vision, I think we need to reexamine high-quality products with advanced functionality that
we have taken for granted as our strength. I want to rebuild
the Wacoal Group’s unique strength—the real value it gives
customers—so that this value gains recognition the world over.
I remain convinced that advancing CSR initiatives directly
related to our mainstay innerwear business realizes our corporate mission, which calls on us to “contribute to society byhelping women to express their beauty.”
As we move forward, I would like to ask our shareholders,investors, and other stakeholders for their continued understanding and support.
August 2012

Yoshikata Tsukamoto
President and Representative Director

Integrated Report 2012

14

PERFORMANCE OVERVIEW AND STRATEGIESBY SEGMENT

WACOAL BUSINESS (DOMESTIC)
Fiscal 2012 Performance Summary

In innerwear wholesale operations, sales were up year on year as mainstay brassieres andundergarments sold steadily due to sales promotions and product rollouts that appealed
to customers effectively based on the findings of the Human Science Research Center’s
research into the physique changes that accompany aging.
Regarding retail operations, mainstay directly managed store AMPHI grew sales due tothe positive effect of new store openings as well as a strong performance by existing stores
attributable to heightened brand visibility. Further, Wacoal Factory Store, located in outlet
malls, performed well overall thanks to an enhanced product lineup, counteracting damage
the March 2011 earthquake caused to certain stores. As a result, retail operations’ sales roseyear on year.
Meanwhile, in the Wellness Business overall sales were unchanged year on year. This
also reflected the effects of the earthquake and lower sales from television infomercials,
which offset steady sales of sports tights under the CW-X sports conditioning wear brandand functional business footwear.
The mail-order sales business saw a year-on-year rise in sales on solid mail-order catalog sales and higher Internet sales.
Consequently, the domestic Wacoal business achieved sales above those of the previous fiscal year due to a favorable performance by mainstay innerwear wholesale operations
and expanded retail operations. Operating income was also up due to higher sales, lower
cost of sales, and improvement in selling, general and administrative expenses as a percentage of net sales.
Strategies for the Final Year of the Medium-Term Management Plan

The domestic Wacoal business will boost sales and profitability by advancing the following
three priority strategies.

NET SALES

115,870¥

millionUP 4.5% YOY
OPERATING PROFIT

8,172

¥

millionUP 45.4% YOY
Sales by Business Segment

67.4%* Percentage figures are calculated basedon external customers sales

Net Sales to External
Customers/Operating Profit¥ Million
113,929

110,856

1 Increase share of Japan’s innerwear market

Maintaining and increasing sales in Japan is indispensable if the Group is to realize sustained
growth. Accordingly, the Group aims to grow its share of Japan’s innerwear market andperipheral markets by identifying the growth areas clearly and then implementing strategies and measures while fostering collaboration among operating companies centered on
Wacoal Corp.
As the mainstay of earnings, innerwear wholesale operations will strengthen productdevelopment based on the concept of physique changes that accompany aging, which has
been well received by customers. For the Wacoal brand, we will increase sales by bringing
new offerings to market and further highlighting the benefits of product lineups. We will
also grow sales by reorganizing the Wing brand based on the aging concept. In addition,
to carve out a larger share of the market for brassieres priced in the ¥2,000 range, which
we view as a high-volume market, we will expand and enhance our product lineup centeredon chain stores and directly managed stores. Going forward, the Wacoal Group will concentrate on expanding its share of Japan’s innerwear market based on a two-pronged
approach of extending and upgrading aging-related product lineups while strengthening
its presence in the high-volume market.

WACOAL HOLDINGS

115,870
8,172

5,620
4,542

10

11

12

15

CW-X

2 Continue structural reform and introduce to manufacturing area

The structural reform we have been implementing as a key task under the current
medium-term management plan is steadily producing benefits, and profitability has
improved as a consequence. In the current fiscal year, we intend to continue structuralreform with a view to realizing even greater profitability and widening our operating
income margin.
The focus of our structural reform will shift from distribution, sales, and planning anddesigning to manufacturing and product procurement. These efforts will not simply seek
lower cost in manufacturing divisions. Our goal is to analyze manufacturing systems andproduction items from a Groupwide perspective and then build a manufacturing structure
optimized for the Group as a whole. During the current fiscal year, we will analyze thepresent situation and then set out specific measures and numerical targets, which we will
begin pursuing in earnest under the medium-term management plan beginning in the
coming fiscal year.
3	Establish businesses as new sales mainstays

Retail operations and the Wellness Business, the mail-order sales business, and themenswear business are growing as future earnings mainstays.
In the fiscal year under review, retail operations revised the positioning of directly
managed store brands to strengthen offerings in the high-volume market and realize area
control. In the current fiscal year, by stepping up new product development, we will attract
a wider customer base, thereby improving our profit margin.
The Wellness Business will accelerate growth of CW-X by increasing points of contact
with customers and expanding the brand’s product lineup. To expand the customer baseof CW-X, we will strengthen the appeal of the brand’s image while coordinating operations
with Internet sales. Moreover, in the current fiscal year, plans call for forays into new areas
through such initiatives as collaborating with a major pharmaceuticals manufacturer tomarket supporters through drug stores.
In the mail-order sales business, our Internet sales web site, Wacoal Web Store, willcater to diverse customer needs by carrying more products and offering a more extensive
range of sizes to establish a comprehensive selection of products that stores are unable
to realize. Also, aiming to acquire more customers and cultivate brand loyalty throughincreased customer convenience, we will further upgrade our web site and rollout smartphone compatible applications.
In men’s innerwear operations, we aim to increase sales by bolstering the appeal of
products for seniors through tie-ups with major business customers.

AMPHI

Integrated Report 2012

16

PERFORMANCE OVERVIEW AND STRATEGIESBY SEGMENT

WACOAL BUSINESS (OVERSEAS)
Fiscal 2012 Performance Summary (Main Overseas Operations)

U.S. business: In the United States, we increased our share of sales at department stores,
our mainstay sales channel; grew sales in surrounding countries; and increased Internet
sales. In fiscal 2012, undergarments with corrective functionality and reasonably priced
brassieres sold well, while Internet sales surpassed targets. As a result, the U.S. businessposted a year-on-year rise in sales, despite the effect of foreign exchange rates. Operating
income was up due to higher sales and an improved profit margin reflecting cost
reductions.
China business: In China, we worked to strengthen product appeal while increasing store
openings, primarily in interior regions. Although sales were up, sales growth softened. This
slowdown was attributable to a dramatic slump in customer visits in the mainstay department store sales channel, stemming from the government’s administrative guidance on theregulation of false labeling, and insufficient sales promotion and differentiation from competitors’ products. Further, the business recorded an operating loss partly because of higher
selling, general and administrative expenses accompanying stepped-up store openings.
Strategies for the Final Year of the Medium-Term Management Plan

Overseas businesses are the growth engines of the Wacoal Group, and as such it must
accelerate their sales growth. To this end, the Wacoal Group’s operating companies will
steadily expand their businesses in respective markets. At the same time, the Group will
optimize its overall operations on a global scale so that it can respond to market changes.
In the medium-to-long term, these efforts will build an optimized global network for us asa group. Based on this network, we will create a system that allows each operating company to realize its unique strengths in the countries in which it operates.
Going forward, we will categorize our overseas businesses into four regions—the
Americas, Europe, China, and Asia excluding China. After clearly setting out each region’s
responsibilities and roles, we intend to rapidly advance regional strategies aimed at growing
sales. Further, we will tackle regional issues and manage collaboration among regions basedon consideration of each region’s growth and overall optimization.
Having become a wholly owned subsidiary in April 2012, the Eveden Group Limited
promises to enable strategic synergies with the whole Wacoal Group because the subsidiary operates in the United States and other countries worldwide. Moreover, manufacturingbases in Tunisia and Sri Lanka give it the capacity to shoulder an important role in the Wacoal
Group’s production strategy and strategy for Asia. Going forward, we intend to create awide variety of Group synergies, including establishing complementary relationships for
products and increasing supply chain efficiency.

WACOAL HOLDINGSNET SALES

21,396¥

millionUP 6.9% YOY
OPERATING PROFIT

1,440

¥

millionUP 8.9% YOY
Sales by Business Segment

12.5%* Percentage figures are calculated basedon external customers sales

Net Sales to External
Customers/Operating Profit¥ Million

19,295
1,616

20,010

1,322

10

11

21,396

1,440

12

17

b.tempt’d by Wacoal

Business Strategies by Region
Americas BusinessIn the Americas, we are moving forward with a multi-brand strategy in the mid-to-high-end
market—our area of strength—based on the mainstay Wacoal brand and in-house brandb.tempt’d by Wacoal. We aim to grow sales of Wacoal brand products by further heightening the appeal of undergarments with advanced functionality, such as Shapewear andDaywear. For b.tempt’d by Wacoal, we aim to increase sales by claiming a larger share of the
U.S. market and enhancing brand value. Also, for both brands, plans call for increasing market share in such surrounding countries as Canada, Brazil, and Mexico. By rolling out bothbrands in the Americas and then across into Europe, we will grow them into global brands.
Further, in Internet sales we will strengthen Wacoal Direct, which has been expanding
steadily since its 2010 start-up. And, we intend to promote multichannel sales that combine Internet sales and store sales. As for production, with the manufacturing of products
for Europe also in mind, we intend to enhance the quality and productivity of our plant in
the Dominican Republic.
Europe Business

In Europe, the Wacoal brand’s reputation is building as Shapewear and the lineup of otherfunctional products it represents earn market recognition. In France, we aim to increase
earnings by claiming a greater share of the specialty store market and improving the efficiency of our operations serving department stores.
Further, Eveden has established a standing as a major innerwear manufacturer in theEuropean market. By using this subsidiary’s distribution and sales infrastructure, we intend
to establish points of contact with more new customers and enhance the appeal of our
products.
China Business

In China, sales are growing. However, because our business in China is still at the advanceinvestment stage, it is recording operating losses. Therefore, our tasks are to grow sales andsecure earnings. To increase sales, we intend to raise brand visibility by continuing advertising and promotional activities. In conjunction with these activities, we will use the specialty
store agencies channel to grow market share. Further, to promote the development of
products painstakingly designed to suit Chinese women, we will strengthen collaboration
with the Chinese Human Science Research Center. Also, we will broaden our customer
base by rolling out new brands targeting high-volume markets for mid-priced products.
In efforts to improve profitability, the business will lower the cost of sales as a percentageof net sales by creating more campaign products independently while exploiting the capabilities of its operating companies and revising material selection.

Net Sales(Asia excluding China)¥ Million
10,527
9,167
7,943

10

11

12

Net Sales(Americas and Europe)¥ Million
11,703

11,382

10

11

11,78312

Wacoal brand for China

Asia Excluding China BusinessIn Asia, we want to strengthen earning power through supply chain initiatives that takeadvantage of operating bases in Thailand, Taiwan, and Indonesia and include the establishment of joint venture companies. At the same time, we will consider further expanding andenhancing production infrastructure.
In another initiative, continuing our forays into Asia’s emerging countries, we will consider
how and when to enter India’s market.

Integrated Report 2012

18

PERFORMANCE OVERVIEW AND STRATEGIESBY SEGMENT

PEACH JOHN BUSINESSFiscal 2012 Performance Summary

In the Peach John business, mainstay mail-order catalog sales performed well thanks tothe success of rescheduling sales in response to changes in catalog publication periods.
In Japan, although there were fewer directly managed stores than in the previous fiscal
year, sales campaigns and improved product lineups enabled existing stores to grow sales
year on year. Overseas, the company’s seven directly managed stores in China struggled
slightly, but the two stores in Hong Kong performed well. As a result, Peach John’s sales
surpassed those of the previous fiscal year.
For fiscal 2012, the company moved into the black. This turnaround reflected a pickup insales; lower personnel expenses and fixed costs, due to the previous fiscal year’s consolidation of operating bases; and improved profitability of the domestic business resulting fromlower cost of sales as a percentage of net sales. These positive factors counteracted higher
expenses accompanying the development of operations in China and amortization costs
the company records each fiscal year.
Strategies for the Final Year of the Medium-Term Management Plan

In the current fiscal year, having reached profitability after two consecutive fiscal years ofoperating losses, Peach John will pursue a strategy of realizing sustained high earnings
by continuing to restructure domestic operations. In Japan, the company will evolve sales
initiatives while growing sales. Specifically, we will restore the Peach John brand bystrengthening product planning focused on meeting customer needs—an approach thathas already borne fruit—and advertising strategically. Further, we will increase our expertise in the mail-order sales business with a view to boosting sales. In particular, having
comprehensively renewed Internet sales, the company will continue upgrading this sales
channel to heighten the visitor purchase rate.
Having scrapped unprofitable stores, our operations in China account for four stores inShanghai and two stores in Beijing. We aim to realize profitability rapidly by growing thesales at these directly managed stores while increasing Internet sales.
For our operations in Hong Kong, we will realize efficient product delivery with shorter
lead times, grow sales, and reduce cost by strengthening Hong Kong’s capabilities as a
product procurement and inventory base while intensifying coordination with Peach John’sbases in Japan and Shanghai.

Peach John mail-order catalog

WACOAL HOLDINGSNET SALES

13,836¥

millionUP 19.5% YOY
OPERATING PROFIT

529¥

millionOperating loss of ¥2,879
million for FY2011
Sales by Business Segment

8.0%* Percentage figures are calculated basedon external customers sales

Net Sales to External
Customers/Operating Profit(Loss)¥ Million
13,836

13,079
11,575–1,592–2,879

529

10

11

12

19

Lecian products

OTHER BUSINESSES
Fiscal 2012 Performance Summary (Main Subsidiaries)
LecienThe company posted favorable sales thanks to rollouts of mainstay innerwear jointly
developed with major customers. However, outerwear sales were lower due to theremoval of low-margin products from the lineup. Consequently, Lecien’s fiscal 2012 sales
were unchanged year on year. The company recognized an operating loss because steady
improvement in the profitability of its operations did not offset the loss incurred due towithdrawal from an employees’ pension fund.
Nanasai

Manufacturing, selling, and renting mannequins and undertaking commercial facility
interior design and remodeling, this subsidiary saw buoyant product sales. However,short-term mannequin rental was sluggish because department stores completed a roundof sales area remodeling, while the Great East Japan Earthquake caused customers to curb
investment and cancel promotional events. As a result, the company recorded a year-onyear decline in sales. Operating income was below the previous fiscal year’s because
reduced expenses were unable to fully compensate for lower sales.

NET SALES

20,795¥

million

DOWN 10.0% YOY
OPERATING PROFIT

236¥

million

DOWN 30.2% YOY
Sales by Business Segment

12.1%

Strategies for the Final Year of the Medium-Term Management Plan
LecienHeightening profit margins in all operations and building an operational structure thatrealizes profits stably are this company’s pressing tasks. Targeting chain stores, its main
sales channel, the company will step up rollouts of high-value-added products, such as
innerwear jointly developed with major customers and private brands. For outerwear,
we will continue removing low-margin products from the lineup while developing highvalue-added products that exploit the research findings of the Wacoal Group’s Human
Science Research Center.
As for production, we intend to strengthen our manufacturing system in Asia. In
addition to ramping up production capacity, we aim to expand and improve quality control
systems to increase the stability of production infrastructure overseas. Then, with a viewto maximizing Group synergies, the Wacoal Group will incorporate Lecien’s production
infrastructure into its supply chain. At the same time, Lecien will increase its capacity tosupply lace materials to the Group’s operating companies.

* Percentage figures are calculated basedon external customers sales

Net Sales to External
Customers/Operating Profit(Loss)¥ Million
23,107
20,795
17,245

Nanasai

–737

338

236

This company faces the task of heightening profitability. Its strengths lie in the development of high-value-added products and services centered on the manufacture ofmannequins and sales area construction. However, to entrench a profitable operational
structure, the company will enhance the profitability of its core mannequin business andsales area construction business.

10

11

12

Integrated Report 2012

20

A SUSTAINABLE WACOAL
Operations with Sustainability Built-in
The Wacoal Group’s goal is to “contribute to society by helping women to express their beauty.”
To this end, we aim to be a company empathetic to women in every aspect of our operations,
including research and development, production technology, and consultative sales. As well as
being our raison d’être, realizing empathy with women is a passionate commitment that drives
our business development.

THE BUSINESS PROCESS OF WACOAL AS A COMPANY EMPATHETIC TO WOMENRESEARCH AND DEVELOPMENTPRODUCTION TECHNOLOGYThe Starting Point of Manufacturing

The Creation of Customer Satisfaction

MEASUREMENTS TAKENOF EACH WOMANNUMBER OF MANUFACTURING
BASES WORLDWIDEWOMEN REPRESENTED IN PHYSIQUE
MEASUREMENT DATA (IN JAPAN)

THE SAME QUALITY THE WORLD OVER

158

21

Made by

40,000+ WACOAL

Wacoal’s Human Science Research Center has accumulated data on more than 40,000 women since its launch
in 1964. Using a standard international measurement
method, the Martin measurement method, the center
takes 158 measurements of each woman.

The Wacoal Group has 21 manufacturing bases worldwide. With “made by Wacoal” as our slogan, around theworld we rigorously apply our unique manufacturing philosophy to deliver safe, reliable products customers love.

FOR DETAILS, PLEASE SEE PAGE 22.

FOR DETAILS, PLEASE SEE PAGE 24.

WACOAL HOLDINGS

21

CONSULTATIVE SALESSUPPORTING WOMENThe Dedication of Beauty Advisors to Each Customer

The Development of Mutual Trust with Society

NUMBER OF SALESAREAS WORLDWIDEREMAMMA
BRASSIERES USEDBEAUTY ADVISORSAT STORES WORLDWIDESIZE PATTERNSFOR PROBLEM-SOLVING-TYPE PRODUCTS

At Wacoal, we refer to in-store sales personnel as beauty
advisors. At 15,000 sales areas the world over, approximately 8,200 beauty advisors provide information and sell
products based on consultations.

The Remamma project began in 1974 as a business directly
under the president’s control. More than 180,000 women
have used Remamma products. Further, the semi-ordermade brand Wacoal Dublevé creates innerwear that fits eachwoman’s physique. Offering 3,030 sizes, this brand is gaining
prominence as a lineup of problem-solving-type products.

FOR DETAILS, PLEASE SEE PAGE 26.

FOR DETAILS, PLEASE SEE PAGE 28–31.

15,0008,200

180,000
3,030

Integrated Report 2012

22

A SUSTAINABLE WACOALRESEARCH AND DEVELOPMENTThe Starting Point of Manufacturing

Wacoal’s goal is to fulfill women’s wish to be beautiful.
The starting point of all of Wacoal’s initiatives is the hugeamount of data that the Human Science Research Centerhas gathered.

In Pursuit of Evolving Feminine Beauty
Since its establishment in 1964, Wacoal’s Human Science
Research Center has consistently shed further scientific lighton feminine beauty. The center currently has a team of 37 personnel, of whom 27 are women, and encompasses a diverse
range of research areas, including physique shape, internal
tissue, sensation, physiology, psychology, and lifestyle. Every
year, the center measures the physiques of approximately
1,000 women between the ages of 4 and 69. To date, it has
accumulated data on more than 40,000 women.
Based on this database, we proposed the “golden proportions” as the new standard of beauty for Japanese womenin 1965. Since then, the center has deepened its research,announcing the “beautiful proportions” for each age groupin 1979 and the “golden canon” for each individual’s achievement of a beautiful balance in 1995.
Further, the center has continued research on changes in
the physique shapes of modern women, since announcing areport titled “New-Breed Generation of Recent Years” in 1992.
Released in 2004, a subsequent report comparing the proportions of women in their 20s with those of women 10 years
earlier, “The Reality of the Physiques of Modern Women,”
met with a great deal of interest from various quarters.

Research on the Five Senses Using
the Latest Technology
Wacoal’s Human Science Research Center achieves highly
precise measurements by combining the Martin measuringmethod with a contactless three-dimensional measuringmethod that uses laser equipment. Moreover, the center’s
research on the movement of the body during exercise
underpins the development of sportswear with highly
advanced functionality and foundation garments.
During the development process, the center repeatedly
conducts wearing tests using prototypes and rigorously monitors shape, movement, and wearing comfort. Research on
the five senses using the latest technology has led to thecreation of many hit products.

The R&D of Wacoal China
Since its 2002 establishment, the Chinese Human Science
Research Center in Shanghai has gathered physique measurements of Chinese women in various regions stretchingfrom northeast to southern China. Based on this data, we aredeveloping products matching Chinese physiques and preferences. At Wacoal China Co., Ltd., Wacoal’s approach to
manufacturing is steadily building mutual trust.

Research and Development¥ Million

Physique measurement at Wacoal’s Human Science
Research Center

WACOAL HOLDINGSThe personnel of Wacoal’s Chinese Human Science
Research Center

766

768

778

08

09

10

815

801

11

12

23

LOVE, AGING
Aging of the Physique and the Principles
of Beauty

In addition to its scale, the data Wacoal’s
Human Science Research Center collects is unique in the world because it
includes measurements of the same
individuals made over a series of years.
Based on this data, the center is progressing with research on changes inphysique shape with age. One importantresult of this effort was the “SPIRAL
Ageing” concept of 2000, which identifies three turning points in the development of the bodyline as the physiqueages. This research highlighted thataging is a lifelong concern.
Subsequently, in 2010 and 2011
the center published a report detailing
specific stages of change in the bustand bottom: “Aging of the Physique and
the Principles of Beauty.” The announcement of this report gave an overall view ofbody aging, a phenomenon that until thenhad only been understood intuitively.
The Importance of Selecting theCorrect Innerwear
For all women, as they age their bustundergoes the same stages of change.
The age at which the bust begins tochange is different for each person.

However, for some women change
begins in their 20s. Not only shape but
also flexibility changes. Therefore, whenselecting brassieres, the customer
should not only consider size but also
shape and flexibility. Consequently, even
if their sizes are the same, a brassierethat fits a woman in her 20s will notnecessarily fit a woman in her 40s. As
with the bust, the bottom undergoes thesame stages of change for all women.
Physique changes accompanying
aging differ for each individual. Our study
showed that 25% of women maintained
youthful proportions as they aged. Allsuch individuals had active lifestyles, ate
properly, and took care to wear innerwear
that fit their physique.
Aging is something that is with us allof our lives. It is not a phenomenon thatsuddenly occurs from a certain watershed age. For all age groups the aging
concept is essential in the correct selection of innerwear.
As lineups of products designed toaccommodate changes in the physiquewith aging, we offer such brands as
PARFAGE, Lasée, Gra-P, Cutie, Kirei, andGraces. Further, from the 2010 autumn/
winter season we unveiled the Love,
Aging campaign, which features the circulation to stores nationwide of amultifunctional “Love Aging Mirror,”*that reflects customers’ future physique
shapes. In addition, we have rolled out
this educational initiative across othermedia formats. For example, we havedeveloped an iPhone application for
diagnosis.
Social Asset
By enabling Wacoal to “contribute tosociety by helping women to express
their beauty,” the research of the Human
Science Research Center ensures thismission remains at the core of theCompany’s activities.
In the field of research into women’s
physiques, the Human Science ResearchCenter has produced world-leading
research findings. The research anddevelopment process of applying totechnology new scientific knowledge
that is valid and universal lies at theheart of Wacoal’s technology management. Also, the huge amount of datathat the center has is a social asset
enabling Wacoal’s multifaceted contributions to society.
* In stores, we install life-size panels with screens in theircenter. By using a simple touch-panel, customers are able
to produce a simulated image of their bust shape in 10 to 30
years’ time. Customers can print out the results and use
them when selecting innerwear.

Press briefing for the announcement of Aging of the
Physique and the Principles of Beauty

Integrated Report 2012

24

A SUSTAINABLE WACOALPRODUCTION TECHNOLOGYThe Creation of Customer Satisfaction

The uniform quality of Wacoal products worldwide that
our quality control enables and the day-to-day activitiesof our production system sustain a broadening global
circle of mutual trust.

Wacoal Plants Worldwide
The establishment of joint venture companies in Korea,
Thailand, and Taiwan in 1970 heralded Wacoal’s entry into
overseas markets. Four decades on, the Company operates
businesses in approximately 40 countries and regions andhas 33 overseas bases as of March 31, 2012. In production
for example, we have 21 plants around the world (including
eight in Japan), and approximately 80% of our brassieres are
manufactured overseas.
Whether in Japan, China, or Vietnam, we rigorously focus
on bringing products to market that are loved for their safety
and reliability by adhering to unique manufacturing ideals in
production. Therefore, rather than emphasizing that products
are made in Japan or made in China, our slogan emphasizes
that they are made by Wacoal. Thus, in manufacturing, ourtarget corporate profile is steadily becoming a reality as weestablish a stronger global presence for the Wacoal Group.

with the very latest production technology to realize strict
quality control. Finally, only finished products that havepassed comprehensive quality inspections reach stores as
Wacoal products.
Having such a system that permits no compromise—evenin the minutest details—enables us to realize uniform madeby Wacoal quality even though our production system straddles several countries.
Overseas Bases As of March 31, 2012

Americas United States

Wacoal International Corp.
Wacoal America, Inc.
Wacoal Sports Science Corp.
Wacoal Direct Corp.
LECIEN U.S.A.

EuropeCanadaWACOAL CANADA INC.

Dominica

Wacoal Dominicana Corp.*

FranceWacoal France S.A.

United Kingdom Wacoal (UK) Limited
Asia

Netherlands

RHINETEX B.V.

Singapore

Wacoal Singapore Pte. Ltd.

Hong Kong

Wacoal Hong Kong Co., Ltd.
Wacoal International Hong Kong Co., Ltd.

Everything Comes from an Insistence on Quality
Uncompromising quality control has supported our dynamic
operational development. In March 1997, Wacoal became thefirst company in Japan’s apparel industry to acquire ISO 9001
accreditation. Further, we have established the Quality
Assurance Inquiry Committee as the Group’s highest
authority for quality assurance. Also, we have set out quality
assurance specifications, which stipulate basic policy andrequirements with a view to maintaining and enhancing
quality. To comply with these specifications, each of theGroup’s operating companies has established detailed quality
assurance regulations and a quality control committee. Thissystem enables the Group to coordinate initiatives.
At the stage of planning and developing new products,
we first clarify quality requirements with respect to such
facets as safety, appearance, and wearability. Based on theserequirements, we prepare prototypes and check a range of
specifications through wearing tests and scientific evaluations of functionality.
At production sites, we have built up extensive knowhow
in such areas as sewing techniques and sewing machine
needles and attachments. Each plant combines these skills

WACOAL HOLDINGSPJ hong kong limited
China

Wacoal China Co., Ltd.*Guangdong Wacoal Inc.*
Shanghai Yadie Fashion Co., Ltd.*
Wacoal (Shanghai) Human Science R&D
Co., Ltd.
Dalian Wacoal Co., Ltd.*PEACH JOHN SHANGHAI Co., LTD.
DALIAN LECIEN FASHION CO., LTD.*ZHE JIANG JIAXING LECIEN TEXTILE
CO., LTD.*
Shanghai Lecien Co., Ltd.
NANASAI SHANGHAI CO., LTD.

VietnamVietnam Wacoal Corp.*
LECIEN (VIETNAM) CO., LTD.*

South Korea

Shinyoung Wacoal Inc.*

ThailandThai Wacoal Public Company Limited*

TaiwanTaiwan Waoal Co., Ltd.*
Wacoal Investment Co., Ltd.

Philippines

Philippine Wacoal Corp.

Indonesia

PT. Indonesia Wacoal*

Malaysia

Wacoal Malaysia Sdn. Bhd.

* Overseas production bases (some including sales), other production bases in Japan ateight locations

25

MADE BY WACOAL
Wacoal quality the world over

Located in the city of Unzen in Mizuho, aserene rural area of Nagasaki Prefecturewith Mount Unzen Fugen-dake on one
side and the Sea of Ariake on the other,
the Nagasaki Factory of Kyushu Wacoal
Manufacturing Corp. is one of Wacoal’s
state-of-the-art production facilities. It
employs 500 personnel, 95% of whom
are women, and has a combined daily
output of roughly 6,000 brassieres, girdles, and bodices.
The plant has a “quality check time”
three times a day. On the signal of music
played throughout the facility, all personnel recheck the work they have donethat day.
Further, if a needle breaks during
sewing, surrounding personnel immediately halt all work and use magnets tocollect the needle fragments. They takesuch thoroughgoing precautions because
incorporating a needle fragment into a
product would severely damage thetrust consumers place in Wacoal.
Moreover, before shipping products
we inspect them using a needle detector,
thus giving the facility several layers ofchecks.

Bonds of Trust Transcend Cultures
and Borders
In addition, the Nagasaki Factory
plays a valuable role as a mother plant
supporting Wacoal’s operational development overseas. Every year, the plant
receives trainees from overseas subsidiaries, who learn sewing skills and theprinciples of quality control. Anotherimportant contribution of the Nagasaki
Factory is the training of future managers of overseas plants.
In China, our two major production
bases in Guangdong and Dalian not only
manufacture for the domestic market
but also for overseas markets including
Japan.
The 1995 establishment of Guangdong
Wacoal Inc. marked the first time we
had taken on an entire project independently. We funded all of the capital
investment, and undertook everythingfrom site selection and construction
through to hiring and training personnel
and operating the plant. Subsequently,
aiming to add value to the plant as amanufacturing facility, we sent technology and design instructors from Japan.
The plant’s personnel assimilated suchtechnical skills as calculating the lengthsof cloth required and man-hour calculations in 2004. And 2008 saw it acquire
pattern design capabilities and otherdesign capabilities. Furthermore,

The Nagasaki Factory of Kyushu Wacoal
Manufacturing Corp.

approximately onethird of the founding
personnel still work at the plant—a majorachievement given China’s generallyhigh employee turnover rate.
Our other mainstay in China, Dalian
Wacoal Co., Ltd., was established in2003 and began sending long-term
trainees to the Nagasaki Factory inautumn 2009. So far, 16 such trainees
have come to Japan: four in the firstintake, three in the second, and ninein the third. The training term is three
years, and the first intake’s trainees willcomplete the program this year. The
trainees’ manager at Dalian Wacoal
explains happily, “Considering that at
the outset they were bewildered andsome even cried, we are proud of the
progress these women have made.”
When the first Dalian department
store to carry the products of Wacoal
China Co., Ltd., opened, many employees went on a study tour of the sales
area because they wanted to see theirproducts being purchased.
These personnel and their pride inbeing members of Wacoal dedicated toa unique approach to manufacturing thattranscends borders embody Wacoal’s
CSR philosophy of creating mutual trustwith society.

Trainees visiting the Nagasaki Factory

Integrated Report 2012

26

A SUSTAINABLE WACOALCONSULTATIVE SALESThe Dedication of Beauty Advisors to Each Customer

Beauty advisors are the most significant point of contact
linking Wacoal to its customers. Why do we call thembeauty advisors rather than simply sales personnel?
The answer to this question reveals Wacoal’s stance as
a company empathetic to women.

Why Beauty Advisors
In 1999, Wacoal changed the title of its sales personnel from“sales ladies” to beauty advisors. This new title reflected thefact that commitment to continually providing customers withbeauty is our ultimate goal and central to our corporate stance.
Also, the title expresses our belief that receiving specialist
advice through face-to-face consultative sales builds trust.
Wacoal has approximately 8,200 beauty advisors worldwide, including 3,400 in Japan. Beauty advisors at the sales
areas of department stores nationwide—our mainstay sales
channel—or our directly managed stores, provide information
through consultative services and sell products. Our beauty
advisors in Japan undergo rigorous training, which requires
them to acquire measuring and fitting expertize and know
the characteristics of product fabrics. All of them havepassed our in-house Wacoal Bodyfit Examination and the
Nihon Body Fashion (NBF) Association standardized exam.
Particularly noteworthy are their listening skills, which beauty
advisors are constantly honing as they work. As selecting
innerwear is a delicate matter, the majority of customers are
reluctant to fully explain their needs in detail.

WACOAL HOLDINGSFor example, as Wacoal’s beauty advisor training manager
explains, “When a customer looking at products says, ‘thiswill do,’ it means something slightly different than if they say‘this is nice.’” A beauty advisor can only suggest productsthat will satisfy customers if they are able to perceive thecustomer’s underlying feelings based on subtle differencesin wording or gestures.

Beauty Advisor Feedback Is Customer Feedback
Given that creating products customers love is one of ouroverriding management goals, the feedback beauty advisors
receive from customers is a treasure trove for us. Accordingly,
we are advancing initiatives that will enable us to collect customer feedback from beauty advisor more dynamically andthen use it in operational decision making and productdevelopment.
Specifically, a dozen or so years ago we established BA
Study Groups and the SQUASH system.* Moreover, whendeveloping new products, we normally use this system topresent multiple prototype samples to beauty advisors to
get their opinions.
* This is an original system for responding to customer feedback by relaying and sharing
information. We gather customer feedback and beauty advisors’ responses to it weekly
and send them to headquarters. Product development departments devise remedial
measures promptly and report back to beauty advisors.

27

A BRIDGE TO CUSTOMERSIN JAPAN AND CHINA
Dedication to each customer realizes empathy

Communicators of Beauty and Health
Our Human Science Research Center’s
research on aging revealed that whether
or not women are able to find innerwear
that fits their physique properly affects
emotional and physical well-being
significantly. Meanwhile, a study weconducted in fiscal 2012 (a white paperon physiques and innerwear based ondata collected from 10,000 women),
indicated that only 13.8% of customers
tried products on or had their bust measured before purchasing brassieres.
Clearly then, a gap between the ideal
situation and reality still exists in theselection of innerwear. As communicators of beauty and health, the dual
responsibility beauty advisors shoulder
is greater than ever.
Taking into account not only bust size
but also the effect of aging when selecting innerwear is critical to realize beautiful proportions and maintain emotional
and physical health. Beauty advisors
working diligently day-to-day based on
an appreciation of these factors, as theexperts in this area most familiar to customers, contribute to women’s beautyand health.

The Love, Aging sales campaign wehave been conducting since fiscal 2011
has brought about a positive change inthe mindset of beauty advisors and intheir relationship with customers. Beauty
advisors report a rise in customers whorequest to be measured and take thelead in broaching difficult-to-talk-about
concerns relating to their body shape.
Furthermore, beauty advisors now findit easier to suggest aging care solutions.
Also, some stores are seeing a higher
number of more-mature customers andvisits from a wider range of age groups.
China: Beauty Advisors Rather Than
Products Affect Customers
In China’s rapidly expanding market,
fierce competition is continuing amonga large number of manufacturers. At thisstage, the visibility of Wacoal remains
low in the country’s interior regions, andthe effectiveness of advertising throughmass media has limits. Therefore, therole of beauty advisors as links between
consumers and Wacoal is important,but in a different way than in Japan.
Generally, sales personnel at retail
outlets affect the purchasing behaviorof Chinese women considerably, to thepoint where customers can be said to“follow” sales personnel. In this context,
Wacoal’s beauty advisors, who provide

Beauty advisors in Japan

information from an objective viewpoint,
have earned the respect of competitors.
Rather than the elliptic cylinder ofJapanese women’s physiques, the physiques of Chinese women are closer toa regular circular cylinder. Further, thephysiques of women in the north andsouth of China differ significantly. Thus,
providing innerwear that fits is also
important with regard to such regional
differences, which is why data fromthe Chinese Human Science ResearchCenter gives Wacoal China Co., Ltd.,an absolute advantage. As points of contact with customers, beauty advisors in
China emphasize the merits of Wacoal’s
offerings, forging links between Chinese
women and Wacoal.
Whether in Japan or in China, ourbeauty advisors will provide consultation
services to customers based on rigorous
adherence to Wacoal’s founding spirit
and in light of the very latest scientificresearch results. Going beyond simply
being customer oriented, beauty
advisors’ dedication to each customer
supports Wacoal’s efforts to be a company empathetic to women.

A beauty advisor in China

Integrated Report 2012

28

A SUSTAINABLE WACOALSUPPORTING WOMENThe Development of Mutual Trust with Society

Far ahead of its time, the Remamma project began in 1974
as a business directly under the president’s control.
Because Wacoal aims to be a company empathetic towomen, building mutual trust with the women of the world
through this long-standing project is an obvious mission
for it to pursue.

Wacoal’s Breastcare Activities
Around the world, the number of breast cancer cases isincreasing rapidly. Having long accounted for the highest
number of cases, the West is taking a series of countermeasures that are gradually producing benefits. However, inemerging countries that have seen dramatic diet changes andin Japan the number of patients is rising steadily every year.
At Wacoal, for many years we have been developing
the Remamma project, which caters to women that haveundergone breast cancer surgery. Also, as a preventative
approach encouraging early discovery and treatment, wehave been organizing and promoting Pink Ribbon Activities
in earnest since September 2002. For example, October
2009 saw us launch the Breast Cancer Examination Support
Project. Wacoal intends to accelerate its breastcare activities
for free to as many women as possible.
Remamma Project

Coined by Wacoal, the name Remamma reflects our desire
to help restore the attractive bodylines of women who haveundergone breast removal surgery. “Re,” means again, and“mamma” is derived from the word mammary.
Since its establishment directly under the control of thepresident in 1974, the Social Welfare Section has developed
an array of items based on expert medical opinions.
Wacoal produces pads, innerwear, and bathing suits thatease the burden on the body, have a natural feeling fit, andencase the bust gently. We have established an extensive
variety of products catering to women that have had total orpartial mastectomies. More than 180,000 have used
Remamma products during the 38 years since this project
began.
As well as selling the Remamma lineup at six Remamma
Rooms around the country, we send catalogs to roughly
1,800 hospitals, which enables us to cater to women inremote areas through mail-order catalog sales. Also, at morethan 10 locations we organize annual free consultation events
that enable customers to be measured and try products on.
Since we began holding them in 1993, more than 18,000
people have visited these events.
Pink Ribbon Activities

In 2007, Wacoal launched the Pink Ribbon Fitting Campaign as
a new initiative based at sales areas. The following summarizes
the campaign.
1	We host fitting campaigns at approximately 2,020 storesnationwide every October. For every brassiere customers
try on at stores, we donate ¥10 to the Japan Cancer
Society’s Wipe Out Breast Cancer Smile Fund.
2	We donate free booklets about breast cancer.
3	We conduct Pink Ribbon online examinations based ona quiz format. For every respondent answering all threequestions, we donate ¥3 to the aforementioned fund.

Wacoal’s Breastcare Activities
Overseas
China

Japan

Korea
TaiwanUnited States
Fit forthe Cure®

Hong Kong
ThailandPhilippines
Vietnam

Malaysia
Singapore
Indonesia
Screening bus

WACOAL HOLDINGS

Remamma innerwear

One of Wacoal’s original Pink Ribbon
badges29

In the 2011 campaign, 173,621 people tried on 441,277
brassieres, resulting in a donation of ¥4,412,770.
Further, shareholders can also participate in our Pink
Ribbon activities by donating part of the Wacoal essence
check gift certificates provided as a shareholder benefit.
Under this system, Wacoal matches the amount of thesecontributions with its own contributions to the fund.
The Wacoal Group undertakes multifaceted breast cancer
related activities in 12 countries and regions around theworld. In particular, Wacoal America, Inc., has been running
its all-year-round Fit for the Cure‰ campaign throughout theUnited States since as far back as 1999. For every brassierethat store visitors try on, we donate US$2 to the Susan G.
Komen* for the Cure foundation. And if they purchase an
item, we donate a further US$2 to the foundation. To date,
we have given more than US$3.0 million to this foundation
through this system.
The Breast Cancer Examination Support Project

Even today, only slightly more than 20% of Japanese women
undergo screening for breast cancer. Aiming to help address
this problem in whatever small way we can, we purchased the
Aio mobile breast cancer screening unit, which we lend to medical institutions as a way of supporting breast cancer screening.
Featuring the Aio logo, the outward appearance of thevehicle evokes ease and reassurance. Inside, it has a changing
room with a relaxing aroma and it uses state-of-the-art digital mammography screening equipment. We operate thevehicle by lending it to medical institutions. If screening discovers any abnormalities, the individual is introduced to anaffiliated hospital. While further strengthening tie-ups withmedical institutions in each region, we intend to deliver Aio(love) to even more women.

Wacoal’s Environmental Activities
Brassiere Recycling

Wacoal holds a Brassiere Recycling Campaign every year
during the period between Brassiere Day, on February 12, andEarth Day, on April 22. Customers put brassieres that they nolonger need in specially designed collection bags and bringthem to stores. The collected brassieres and the bags containing them are processed into RPF (Refuse Paper & Plastic
Fuel). Using RPF as a power source, paper plants manufacture recycled paper, which is made into collection bags. Fromfiscal 2012, we broadened the scope of this initiative by
beginning to collect competitors’ products for recycling.
This brassiere recycling initiative began after an attitude
survey Wacoal conducted in 2007 revealed that 61% of
women feel reluctant to discard brassieres. With a view tocatering to customers’ needs while contributing to the environment, we began this campaign in fiscal 2008. Everyone
involved has responded positively to the campaign, which is
growing every year. Approximately 800 stores in Japan and500 stores in Taiwan now take part in the campaign.
In Japan, we have collected a cumulative total of 338,500
brassieres, which have been processed into 33.85 tons of
RPF. In fiscal 2012, we improved our performance dramatically: collecting 159,300 brassieres, which produced 15.93
tons of RPF.
* The Susan G. Komen breast cancer foundation is the world’s largest grassroots networkof breast cancer survivors and activists and works to save lives, empower people, ensure
quality care for all, and energize science to find cures.

Brassieres Collected for
Recycling in Japan
Bags/Brassieres
159,300

38,41751,80013,632

Wacoal’s very own mobile breast cancer screening unit, Aio

Bra recycle bag

10

61,50016,14511

12Integrated Report 2012

30

A SUSTAINABLE WACOALSUPPORTING WOMENThe Development of Mutual Trust with Society

Bust shapes vary from woman-to-woman. Our semiorder-made innerwear brand Wacoal Dublevé realizes
the long-held dream of many women of handmadebrassieres that fit each individual perfectly.

A Revolution in the Concept of Bust Size
Normally, bust size is established by combining measurementsof the upper bust and underside of the bust. At stores, thebrassieres we sell are available in approximately 50 sizes.
Sometimes, however, even this is not enough. Habituallysqueezing into innerwear that does not fit properly can leadto ill health or ruin a women’s bodyline.
Launched in 1999, Wacoal Dublevé offers 3,030 sizes
based on combinations of sizes for the left and right circumference of the underside of the bust, or the verge’s line; cup
volume; and the underside of the bust.
Aiming to enable as many women as possible to enjoy
perfectly fitting brassieres, we set the pricing of these products close to that of ready-made products.
In 2004, we began rolling these products out at commercial facilities and launched them at department stores from2009. At present, we market the brand through 31 stores,
comprising 18 directly managed stores and 13 department
stores. For fiscal 2012, the brand posted sales of ¥1.3 billion.

A Dublevé sales area

WACOAL HOLDINGS

Each Brassiere Made by Hand and with Devotion
After receiving an order from a customer, we begin preparing
an assembly production order on the following morning at
our plant. Resembling a patient’s medical chart, the order ispacked with data about the customer. After the order and thefabric required for the brassiere are placed in a special tray,
the production process begins.
A feature of Wacoal Dublevé products is the large numberof paper patterns involved. Lace alone accounts for 48 typesof paper patterns. These lace parts are prepared by hand,
while other parts are individually cut using specialized
equipment.
We perform the sewing processes entirely by hand. Withdifferent equipment used to stitch each part, the work calls
for considerable expertise and experience. Therefore, only
personnel who have mastered all patterns and fabrics are
entrusted to do this work at the plant. Also, the humidity of
the workplace is strictly controlled using a hygrometer,
because slight differences in humidity can affect the work.
Once a brassiere is completed, inspection personnel
meticulously check the measurements and design. Given
that, for Wacoal Dublevé products, this is the final check,these inspections are particularly thorough. Although adhering to the manufacturing of hand-made products is no easytask in an age of mass production, feedback from customers
asking us to make more Wacoal Dublevé products for themkeeps our motivation high.

31

COLLABORATION WITH
A MEDICAL INSTITUTION
A new paradigm in tie-ups between
companies and medical institutions

Previously, developing breast cancer
often meant undergoing a total mastectomy. In recent years, however, partial
mastectomies that minimize the area
removed are becoming common rapidly.
Furthermore, combining total mastectomy and breast reconstruction surgery
is attracting attention as a new medical
option. With a view to realizing a further role for Wacoal Dublevé, we areadvancing a joint project with Okayama
University Hospital, which is at the forefront of this field.
Importance of a Perfect Fit
Following breast reconstruction surgery,many patients find it difficult to decide
which type of brassiere to select. As wellas the sizes of off-the-peg products not
fitting, gaps readily form at the top ofcups, wasting the effort made to reconstruct an attractive bust.
Aiming to address this problem andimprove patients’ quality of life, Okayama
University Hospital began joint researchwith Wacoal in January 2009. Since
then, we have been steadily accumulating clinical research data on the safety
and usability of innerwear for women
who have had breast reconstruction.

Researcher Permanently Posted
at the Hospital Facilitates In-Depth
Communication with Patients
As part of our joint research with
Okayama University Hospital, we havepermanently dispatched a researcher
of Wacoal’s Human Science ResearchCenter to the counseling room of thehospital’s Breast Cancer Treatment andReconstruction Center. Deploying a
researcher to the hospital permanently
has helped cement this patient-centeredcollaboration between Wacoal andthe hospital.
Before breast reconstruction
surgery and one month, three months,
six months, and one year after surgery,
we measure the shape and size of thebusts of patients, who have consented toparticipate in the joint research project.
In addition, we conduct a questionnaire
about the bust and innerwear.
Advice Based on Empathy
with Patients
Our joint research has revealed thatfor many women who have undergone
surgery information about innerwear
is insufficient. Often patients have not
had time to consider innerwear before
breast reconstruction surgery because
they were preoccupied with the prospectof surgery. Further, after surgery many
women find explaining their condition tosales personnel stressful. In this context,

joint research has shown the advantagesof giving patients advice about innerwear in a hospital environment. “I wasable to discuss things with the counselor
with peace of mind because the hospital
introduced her to me.” “Dealing withpersonnel who understand the diseaseminimizes the psychological strain ofchoosing innerwear.” Moreover, ourresearch highlighted the popularity of
Wacoal Dublevé among patients. “Unlike
specialized innerwear for breast cancer
patients, the products are attractive andcolorful.” “The rich variety of sizes anddesigns means I can find something to
my liking.”
Helping Women to Feel Fashionable
Many women who have undergone
breast reconstruction surgery are anxious about a recurrence of the disease.
Therefore, they need attentive emotional
as well as physical care. On the other
hand, they want to wear fashionable
innerwear. In response, Wacoal can
provide products that gently enclose
the bust and fit perfectly. Also, we canoffer a rich selection of designs tochoose from. Going forward, in collaboration with medical institutions, Wacoal
will draw on such capabilities to theutmost to help enhance the quality oflife of women who have undergone
breast reconstruction surgery.

Integrated Report 2012

32

A SUSTAINABLE WACOALENVIRONMENTALCONSERVATION ACTIVITIESConsidering that preservation of the global environmentis a corporate responsibility in global business activities,
Wacoal will promote the conservation of the environment,in line with a spirit of “mutual trust” for harmony withthe society and our motto : “Promise of Environmental
Preservation for Next Generations, Their Smiles, andBeautiful Earth.”

Environmental Policies
1	We will reduce environmental loads generated frombusiness activity processes through business improvement initiatives and make efforts to prevent
environmental pollution.
2	Establishing environmental targets focusing on thefollowing 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 kindto people and the environment(4)	Purchase of product materials, materials, and officesupplies that are kind to people and the environment3	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
to cooperate and contribute to environmental preservation activities as a member of local communities.
5	We will disclose our environmental policies and approaches
to environmental preservation, aiming to preserve theenvironment through wide-ranging social partnerships.

Environmental Targets
In accordance with our environmental policies, we prepare a
medium-term environmental action plan every three years andconduct environmental management initiatives in a planned,
systematic way to achieve the targets set out in the plan.
Medium-Term Environmental Action Plan
(April 2010—March 2013)1	Improve the coordination of environmental management
systems throughout the Wacoal Group.
2	Promote environmental protection activities based on
the idea that “business improvement equals environmental improvement.”

WACOAL HOLDINGS

3 Reduce CO2 emissions.
4 Promote green purchasing.
5 Reinforce waste management.
6 Reinforce environmental risk management.
7 Disclose environmental information.
8	Raise employees’ environmental awareness throughenvironmental education.
9	Contribute to the preservation of the local environment,
as a member of the local community.
Note: For further details, please go to our web site.
http://www.wacoalholdings.jp/csr/7m_environment_1_e.html

Case Study
Beginning Operation of a Solar
Power Generation System

In February 2012, Wacoal
Distribution Corp., in Shiga
Prefecture, installed a solar
power generation system.
Mindful of the growing
social impetus toward reducing CO2 emissions and introducing renewable energy, we installed the system to advancecorporate environmental initiatives and reduce power usage
volumes. A further aim in introducing the system was to contribute to the local community by providing the system’s site
as an evacuation site during disasters. It is a polycrystalline
solar power generation system with a generation capacity of
499.95kw—sufficient to meet onethird of the company’s
power needs. In terms of power generation volume, the system is the largest of its kind in Shiga Prefecture (As of
February 2012).
Eco Mannequins—Environment-friendly Mannequins

In December 2010, Nanasai Co., Ltd.,
introduced mannequins made of a
new material that uses environmentally friendly biomass plastic*. The
new material is a mixture of 15% byweight of biomass plastic and theconventional mannequin material.
Our environment-conscious attitude
and efforts have received warm understanding and support
from our business partners.
* A plastic made from renewable bio-based resources such as corn starch, sugar cane, andfood waste. Biomass plastic can be produced sustainably without using petroleum, whichis considered to contribute to global warming and anticipated to deplete in near future.

33

CSR MANAGEMENT
The Wacoal Group’s CSR

The Wacoal Group’s CSR Management

Having placed mutual trust at the heart of its businessphilosophy since its foundation, the Wacoal Group views
the goal of CSR (corporate social responsibility) initiatives
as building mutual trust with society.

The Wacoal Group will manage its CSR initiatives basedon two overall categories: fundamental CSR activities andproactive CSR initiatives.

In the Wacoal Group, we believe realizing the mission to“contribute to society by helping women to express theirbeauty” will build mutual trust with society and enable us
meet our corporate social responsibilities. Based on aninternational consensus, the ISO 26000 standard defines
sustainable development as unceasing efforts by society
at large, aimed at realizing a high quality of life, health,and prosperity. Further the standard states that it is eachorganization’s corporate social responsibility to identify its
effect on society, maximize the positive effects, minimize
the negative effects, and pursue truly sustainable growth.
The Wacoal Group operates businesses in approximately
40 countries and manufactures at 21 plants. Approximately
8,200 beauty advisors sell the resulting finished innerwear atroughly 15,000 sales areas worldwide. In Japan and overseas,
we sell about 41.8 million brassieres per year. Given thatnumerous women support our manufacturing and purchaseour products, we feel a natural obligation to strive to be firstand foremost, a company empathetic to women.
That said, the scope of the Wacoal Group’s responsibility
is not limited to women. Our stakeholders include shareholders, investors, business partners, employees and theirfamilies, local communities, NPOs (nonprofit organizations)and NGOs (nongovernmental organizations), and government bodies. Therefore, we want to establish bonds of mutual
trust with all of these stakeholders and earn a higher level ofsocial trust.

As well as setting out numerical targets for earnings, theWacoal Group’s current medium-term management plan,
ending in March 2013, calls on the Group to strengthen its
ability to operate globally by expanding in Europe, North
America, China, and Asia. Such efforts are likely to expand
our international influence.
With this in mind, at this juncture we must reassess andrigorously realize CSR fundamentals to ensure that we do notaffect society negatively. Further, we need to view our current
situation more proactively as a good opportunity to affectsociety positively and advance our unique CSR initiatives. In
light of these imperatives, we have grouped our contributions
into fundamental CSR activities and proactive CSR initiatives.
For fundamental CSR activities, we will identify and clearlyprioritize tasks based on the seven core subjects set out inthe social responsibility standard ISO 26000. Then, thewhole Group will mobilize in a coordinated effort to advance
CSR activities.
Proactive CSR initiatives will focus on areas in which we
can exploit unique characteristics and competence. These
initiatives will come under three main headings—(1) Society:Tackling social problems, (2) Business: Continuously implementing social business programs through our mainstay
business, and (3) Wacoal’s uniqueness: Developing systems
for services that respond to emerging social problems while
passing on the management philosophy we have inherited.
Also, in 2004 the Wacoal Group established the CSR
Promotion Office, which is dedicated to establishing CSR
policy, coordinating with related divisions, gathering information, and conducting in-house educational initiatives. Aiming
to further this office’s ability to disseminate information andcommunicate with society, we transferred it to the Investor
Relations & Public Relations Office in 2011.

Integrated Report 2012

34

CORPORATE GOVERNANCE
The overriding goal of the Wacoal Group’s corporate governance is tocontinuously 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 andCorporate 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 interestin 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 individualin the Group, from the management team through to employees, is aware of the social significance of the Wacoal Groupand adheres to good ethical conduct. We believe that properly functioning corporate governance based on mutual trust
is indispensable in order to achieve sustained growth andfurther increase enterprise value.
Regarding our progress in developing corporate governancesystems, in 2002 the Company introduced a corporate officer
system to clarify responsibility for operational implementation,
speed up decision making, and strengthen the monitoring
functions of the Board of Directors. In 2003, Wacoal established the Disclosure Committee in order to ensure theaccuracy of the financial and other information made available
to the public. Further, in 2005 we elected outside directors toensure management decisions are balanced and not madesolely by directors. Meanwhile, in October 2005 we trans-ferred to a holding company system in order to realizea more effective management system that enables strategic
decision making and optimal resource deployment for Group
companies overall while clarifying responsibility and authority
and allowing flexible operations at operating subsidiaries.
Corporate Governance System

The Group employs an auditor system of governance, with
operational implementation and oversight undertaken by
the Board of Directors and the Board of Corporate Auditors.
Comprising 8 directors, 3 of whom are outside directors, and5 corporate auditors, 3 of whom are outside corporate auditors, the Board of Directors decides such issues as importantmanagement policies and strategies and items stipulated
by statutory laws and regulations or the Group’s articles ofincorporation. Furthermore, the Group files notifications with
the Tokyo Stock Exchange for all of the aforementioned outside directors and outside corporate auditors as “independent
directors or auditors.”Five corporate auditors, 3 of whom are outside corporate
auditors, sit on the Board of Corporate Auditors, which
supervises and audits business management. Also, the Grouphas established the Office of Corporate Auditors, which audits
and monitors the appropriateness and efficiency of the operational processes of Group companies.

GENERAL SHAREHOLDERS’ MEETINGGroup Management Meeting
5 Directors / 2 Corporate Auditors

Group Strategy
Meeting
5 Directors
2 Corporate Auditors
Representative of Main
Company and Department

Quarterly Business Results
Review Committee
8 Directors
5 Corporate Auditors
Representative of EachCompany and Department

Board of Directors
5 Directors
3 Outside Directors
5 Corporate Auditors

Board of Corporate Auditors
2 Corporate Auditors
3 Outside Corporate Auditors
Board of Corporate Auditors’ Secretariat

Representative Director

Executive Compensation Advisory Committee
Office of Corporate Auditors

Disclosure Committee

Operating Subsidiary

Compliance Committee

Risk Management Committee

Operating Subsidiary

Corporate Ethics Hotline

Corporate Ethics Committee

Operating Subsidiary
Operating Subsidiary

Corporate Governance Structure
As of June 28, 2012

WACOAL HOLDINGS

Independent
Accountants35

Also, the Group has established the Group Management
Meeting, which comprises directors and corporate auditors.
The meeting considers Group management strategy andother important management issues and conducts prior deliberation of matters for consideration by the Board of Directors.
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.
Disclosure Policy

The Group has established the Disclosure Committee in orderto ensure the accuracy of financial and other information
issued by the Group. This committee checks the propriety of
the Group’s internal controls and disclosure based on Section
302 of the U.S. Sarbanes-Oxley Act with respect to 20-F
annual reports filed with the U.S. Securities and Exchange
Commission and other financial reports submitted by the
representative director and directors responsible for financial
matters. In addition, the committee checks the accuracy of
disclosed information. The representative director and the
directors responsible for financial matters prepare written
oaths based on the reports that the committee has verified.
Limited Liability Agreements Concluded with
Outside Directors and Outside Corporate Auditors

In order to enable the Group to include competent outside
directors and outside corporate auditors, the Group’s articles
of incorporation permit the Group to conclude agreementswith outside directors and outside corporate auditors limiting
their liability for damages in relation to the Group. Accordingly,
the Group concludes limited liability agreements with outside
directors and outside corporate auditors.
Requirements for Resolutions Electing Directors

The Group’s articles of incorporation stipulate that a resolution for the election of a director requires the attendance ofshareholders that can exercise voting rights and that own atleast one-third of voting rights as well as authorization basedon a majority of voting rights. Furthermore, cumulative votes
are not permitted.
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.

Compensation of Executives

For the fiscal year under review, total compensation for
directors was ¥236 million, total compensation for corporate
auditors was ¥32 million, and total compensation for outside
directors and outside corporate auditors was ¥48 million.
In addition, the total compensation for directors includes
acquisition rights for the subscription of new shares of ¥41
million recognized in expenses. Further, one auditor, who
retired upon conclusion of the ordinary general shareholders’meeting convened on June 29, 2011, is included. Yoshikata
Tsukamoto, the one executive that receives compensationof over ¥100 million on a consolidated basis, serves concurrently as a director of Wacoal Holdings Corp. and Wacoal
Corp. and receives total compensation of ¥162 million.
Attendance of Outside Directors at Meetings ofthe Board of Directors
April 2011—March 2012

Mamoru Ozaki
Morio Ikeda
Atsushi Horiba

Attended 12 from a total of 14
Attended 13 from a total of 14
Attended 9 from a total of 14

Attendance of Outside Corporate Auditors at Meetings ofthe Board of Directors and the Board of Corporate Auditors
April 2011—March 2012

Akira Katayanagi
Tomoharu Kuda
Yoko Takemura

Board of Directors

Board of Corporate Auditors

Attended 12
from a total of 14
Attended 14
from a total of 14
Attended 11
from a total of 14

Attended 14
from a total of 15
Attended 15
from a total of 15
Attended 12
from a total of 15

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 Group has
established its own conduct and ethics code.
• Directors lead efforts to instill and ensure adherence togood corporate ethics throughout the Wacoal Group.
• Headed by the representative director and with theLegal and Compliance Department as its secretariat, theCorporate 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 toviolations of the Group’s conduct and ethics code canreport these immediately to the Legal and ComplianceDepartment. This system includes a corporate ethics
hotline for whistleblowers. Upon receiving such reports, theLegal and Compliance Department investigates the detailsof cases, consults with the division in charge, and decides
on the measures to prevent recurrence. The Legal andCompliance Department submits serious problems to the
Corporate Ethics Committee, which reports the results ofIntegrated Report 201236

investigations to the Board of Directors and the Board of
Corporate Auditors.
• 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
and has established an internal system in this regard.

• 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 andrisk 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.

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 theentire Wacoal Group.
Performance of Duties by Directors• In order to heighten the appropriateness of directors’decision making, the Group’s directors include independent
outside directors.
• Directors establish medium-term management plans,
which directors and employees share and that apply laterally to the entire Group. Further, in accordance with theseplans, directors issue instructions to each division regarding
the establishment of medium-term and short-term policies
and business results targets.
• The business results of each Group company are analyzed
on a monthly basis and reported to the Board of Directors.
Also, directors check the business results and the progressof measures at meetings of the Quarterly Business Results
Review Committee held four times a year. If targets havenot been met, directors examine improvement measuresand revise targets if needed.
Group Management Systems of the Wacoal Group• The Group has established regulations and a basic policy
for the management of Group companies. The Group also
stipulates items that the Board of Directors must decideand items that must be reported to Wacoal Holdings Corp.

WACOAL HOLDINGSDefensive Measures against Takeovers
through the 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 contributeto the enhancement of the enterprise value and shareholders’common interests. The Group’s defensive measures against
takeovers, or peacetime takeover defensive measures, include
providing advance warning that there are procedures prospective purchasers of the Group’s shares must follow andthat a gratis allocation of acquisition rights for the subscriptionof new shares with discriminatory treatment for the exerciseof such rights may be implemented. In addition, the Grouphas established the Independent Committee to ensure that
initiations of defensive measures against takeovers are basedon 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/ir_e/news.html

37

BOARD OF DIRECTORS
Wacoal Holdings Corp. and Subsidiaries
As of June 28, 2012

President and Representative Director

Director

YOSHIKATA TSUKAMOTOYUZO IDE

Representative Director and Chairman,
Wacoal Corp.

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

Director and Executive Vice President

Outside Director

HIDEO KAWANAKAMAMORU OZAKI

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

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

Senior Managing Director

Outside Director

IKUO OTANIMorio Ikeda
Adviser, Shiseido Company, Limited/Chairman of theBoard of Trustees and Chancellor of Toyo Eiwa Jogakuin/
Chairman of Public Interest Corporation Commission/
Outside Director of Asahi Kasei Corporation/Outside
Director of Isetan Mitsukoshi Holdings/Outside Directorof Tokyo Metropolitan Television Broadcasting Corp./
Chairman of the Board of Trustees of Shiseido Beauty
AcademyDirector

Outside Director

HIRONOBU YASUHARA

ATSUSHI HORIBA

Representative Director, President andCorporate Officer, Wacoal Corp.

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

A Message
from an Outside Director
Mamoru Ozaki

Almost 70 years have elapsed since end of the Second World
War. During this period the laws that form the basis of corporate
governance have changed considerably. The knowledge that I andmy peers garnered from studying company law, then part of commercial law, at university in the mid-1950s is no longer of muchuse. This type of change is indicative of society’s transformation.
As a joint-stock company, Wacoal Holdings basically complies
with the Companies Act and the stipulations of related laws.
Within the limits of the law, however, there is some scope fordiscretion as well as freedom to implement initiatives. This gives
rise to different management systems.
Because companies are fundamentally organizations forpursuing profit, the primary objective of management systems
used to be ensuring that profit was appropriately distributed
among shareholders, business managers, and employees. Thisremains an important role today. However, the scope of modern
corporate governance has broadened. Management systems haveto cover a wide range of areas, such as social contribution, environmental problems, and consideration for consumers. I think
today’s emphasis on outside directors is actually one of theexpressions of this change.
Recently, the media has reported that the government, despite
opposition from the business community, has decided to makethe appointment of outside directors obligatory. The Wacoal
Group has already appointed outside directors. My understandingis that through such initiatives the Wacoal Group aims to contribute to the development of its business by ensuring it maintains thebreadth of vision society expects. No doubt there are those withdifferent opinions. However, I think that having the flexibility toadapt to changes in society is key to protecting enterprise value.
Companies are often referred to as “going concerns.” We caninterpret this as meaning companies must continue changing
in step with social evolution. I think this attribute is common topeople’s understanding of the intrinsic nature of companies.

Integrated Report 2012

38

CORPORATE AUDITORS
Wacoal Holdings Corp. and Subsidiaries
As of June 28, 2012

Standing Corporate Auditor

Outside Corporate Auditor

MITSUO YAMAMOTOTOMOHARU KUDA
Certified Public Accountant

Standing Corporate Auditor

Outside Corporate Auditor

TOMOKI NAKAMURAYOKO TAKEMURA
Partner at Miyake Imai Ikeda law firm,
Lawyer/Outside Statutory Auditor,
ADEKA Corporation

Outside Corporate Auditor

AKIRA KATAYANAGISpecial Advisor, Mitsubishi UFJ NICOS
Co., Ltd.

A Message
from an Outside CORPORATE AUDITORAKIRA KATAYANAGII think my role as an outside corporate auditor is to assess
whether the Wacoal Group is growing sustainably based on soundcorporate activities and whether it is deserving of society’s trust.
Moreover, my role is to offer advice with respect to whether theGroup has established adequate systems to support these two
requirements. Also, I provide opinions from an external standpoint, drawing on my experience in dealing with a variety ofcustomers at financial institutions and my experience in corporate
business management.
Regarding corporate governance, the Group has acquired new
subsidiaries, such as Peach John and Lecien, and through a process of trial and error sought to maximize synergies with them.
These two subsidiaries have undergone fundamental reform andare now steadily getting back on track, which I think testifies tothe corporate governance the holding company is exercising.
Given that Eveden, which recently became a subsidiary, is a

WACOAL HOLDINGS

European company and entails elements of indirect control, I
expect the Wacoal Group to use its experience thus far to step up
corporate governance as it moves into a new phase.
Tasks remain with respect to internal control and compliance.
The Group needs to adopt a more systematic approach in theseareas. However, the Group as a whole has a favorable corporate
culture that is amenable to lively discussions among personnel ofdifferent ranks. No matter how much one strengthens rules, ultimately it is personnel and directors that actually enforce them.
Therefore, communication is a basic requirement of corporate
governance. In addition, I think the Wacoal Group’s strong focus
on social contribution activities gives personnel shared experiences, deepens communication, and helps to enhance complianceawareness.
I want the Wacoal Group to exhibit pride and demonstrate
responsibility befitting an industry-leading company that is rooted
in the tradition of Kyoto’s textile industry. At the same time, I
would like the Group to value its unfettered, enterprising corporate culture as its forges ahead.

40

51

ELEVEN-YEAR
FINANCIAL SUMMARYCONSOLIDATED STATEMENTS
OF COMPREHENSIVEINCOME (LOSS)

42

51

MANAGEMENT’SDISCUSSION AND ANALYSISCONSOLIDATED STATEMENTS
OF EQUITY

52
FINANCIALSECTIONCONSOLIDATED STATEMENTS
OF CASH FLOWS

53
NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

48

77

CONSOLIDATEDBALANCE SHEETSMANAGEMENT’S REPORT ON
INTERNAL CONTROL OVERFINANCIAL REPORTING

50

78

CONSOLIDATEDSTATEMENTS OF INCOMEREPORT OF INDEPENDENTREGISTERED PUBLICACCOUNTING FIRM

40

ELEVEN-YEAR FINANCIAL SUMMARY
Wacoal Holdings Corp. and Subsidiaries

Millions of yen, except per share amounts
Years ended March 31

2012

2011

2010

¥171,897
81,891
47.6%
79,62946.3%¥165,548
81,65949.3%
77,71646.9%¥163,548
80,101
49.0%
78,52448.0%

10,377
(189)
19

4,401
(523)
49

3,829
(717)
43

10,207
4,199
6,913

3,927
2,010
2,785

3,155
1,655
2,475

3.1%
4.1%

1.3%
1.6%

1.1%
1.5%

Net cash provided by operating activities
Net cash (used in) provided by investing activities
Net cash (used in) provided by financing activities

10,060(3,467)(2,824)

10,441(703)(4,965)

9,463(3,573)(5,363)

Depreciation and amortization
Capital expenditures

4,660
2,708

4,685
2,652

4,765
3,981

Per share of common stock (in yen)
Net income attributable to Wacoal Holdings Corp. (Basic)
Cash dividends
Shareholders’ equity¥49.0828.00
1,218¥19.7320.00
1,189¥17.5120.00
1,217¥ 97,295
35,60729,98549,078221,098
6,482
171,496¥ 90,410
33,88026,31649,734215,276
6,436
167,480¥ 89,455
34,94522,32851,804
222,889
8,162
171,860

For the year
Net sales
Cost of sales% of net sales
Selling, general and administrative expenses% of net sales
Government subsidy
Special retirement related expenses
Operating income
Other income and expenses, net
Net interest income
Income before income taxes, equity in net income of affiliated companies,
and net (income) loss attributable to noncontrolling interests
Income taxes
Net income attributable to Wacoal Holdings Corp.
Return on assets
Return on equity

At year-end
Total current assets
Total current liabilities
Cash and cash equivalents
Net property, plant and equipment
Total assets
Short-term bank loans and long-term debt, including current portion
Total shareholders’ equity

F 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 havechanged 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 thefiscal year ended March 31, 2011, have been retroactively revised accordingly.

WACOAL HOLDINGS

41

Millions of yen, except per share amounts

2009

2008

2007

2006

2005

2004

2003

2002

¥170,960
83,87949.1%
77,24845.2%¥165,201
82,94350.2%
68,921
41.7%¥166,410
84,65850.9%
68,85641.4%¥164,122
84,322
51.4%
70,94643.2%¥160,968
84,041
52.2%
72,261
44.9%(7,100)¥163,155
84,63851.9%
75,501
46.3%¥163,709
85,30652.1%
71,13943.5%¥162,829
86,56753.2%
69,07642.4%

9,833(2,699)195

13,337592
224

12,896
861
163

7,521
1,333
1,976
157

11,766
206
107

3,016
1,404
112

7,264
(2,800)
140

7,186
310
117

7,329
3,083
5,062

14,153
5,774
4,845

13,920
6,502
9,029

3,466
1,459
2,821

12,079
5,800
6,790

4,532
2,520
2,902

4,604
2,487
2,898

7,613
3,785
4,983

2.2%
2.9%

2.0%
2.6%

3.7%
4.8%

1.2%
1.6%

3.0%
3.9%

1.3%
1.8%

1.3%
1.8%

2.2%
2.9%

8,202
(4,759)(7,448)14,2493,709(9,400)9,339(1,185)(8,404)719(2,069)(3,428)2,045(5,528)
296

5,201
1,328
(6,138)

7,858(9,839)(6,006)

8,653(9,412)(5,472)

4,544
2,370

3,892
1,110

3,735
2,536

3,433
6,456

3,312
5,418

3,081
2,338

2,971
2,104

3,533
2,484

¥35.5725.00
1,187¥34.2925.00
1,285¥63.1822.00
1,375¥19.6020.00
1,296¥47.1720.00
1,221¥19.8515.00
1,186¥19.4813.50
1,097¥33.2213.50
1,128¥ 90,778
31,762
21,954
49,165
213,827
5,302
166,767¥ 97,671
35,802
27,06951,185240,053
5,701
184,128¥ 92,915
34,86819,81652,782
250,266
5,984
193,278¥110,773
35,52519,89353,501
242,296
6,458
186,475¥120,300
34,97024,19551,826226,196
6,911
175,746¥123,045
33,89927,44349,932
224,803
4,450
170,758¥124,486
33,57627,24654,171
218,105
6,301
160,839¥127,390
37,09535,38157,291
223,985
8,079
168,205

Integrated Report 2012

42

MANAGEMENT’S DISCUSSION AND ANALYSIS
Wacoal Holdings Corp. and Subsidiaries
Years ended March 31, 2012, 2011 and 2010

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),
47 consolidated subsidiaries and 9 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.
Overview
We are the leading designer, manufacturer and marketer ofwomen’s intimate apparel in Japan, with the largest share of theJapanese market for foundation garments and lingerie. We also
sell our foundation garments and lingerie products in several overseas markets. Sales of foundation garments (primarily brassieres
and girdles) and lingerie (primarily slips, bra-slips and women’s
briefs) accounted for approximately 72.3% of our consolidated net
sales for fiscal 2012. We also design, manufacture and sell nightwear, children’s underwear, hosiery and other apparel and textile
products and engage in several business lines that are ancillary to
our core apparel business.
Revenues
We principally generate revenues from sales of innerwear(consisting of foundation garments and lingerie, nightwear andchildren’s underwear), outerwear and sportswear, hosiery, textile
products and other products.
The following table sets forth information with respect to our net
sales by category of products for fiscal 2012, 2011 and 2010:
For fiscal 2012, approximately 83% of the net sales of Wacoal
Corp. (the net sales of which account for approximately 64% of
our consolidated net sales) were apparel sales made on a wholesale basis to department stores, general merchandisers and othergeneral retailers, and approximately 15% were apparel sales madethrough our own specialty retail stores, catalog sales and theShare of Net Sales
2012

Hoisiery
1.0%

Textile products
4.8%
Other
6.0%

Outwear andsportswear
9.5%Foundation
garments
and lingerie
72.3%

Children’s
underwear
0.9%
Nightwear
5.5%

Internet. Sales from our other businesses (which include restaurant businesses, cultural products and other services) comprised
the remaining 2% of Wacoal Corp.’s net sales for fiscal 2012.
Over the past five fiscal years, fluctuations in our sales havetypically reflected changes in unit volume, as average unit prices
have generally remained stable during this period. Because of thedemographic trends and downward price pressure in Japan, mostof the gains we have made in net sales in recent years have comefrom our overseas markets. We therefore expect to continue toexpand our overseas businesses in the near-to-medium term.
Cost of Sales
Our cost of sales arises principally from material and manufacturing costs related to the production of our apparel products. In thelast couple of fiscal years, we successfully kept our cost of sales
below the fiscal 2009 level through our cost reduction efforts
involving raw material, manufacturing and inventory management.
Our success in lowering our cost of sales for fiscal 2012 in comparison to that for fiscal 2011 is attributable to multiple factors, including an increase in the proportion of products sold in Japan being
manufactured overseas, a streamlining of product selection, more
stringent inventory control leading to less inventory write-downs,
and more effective product research and development.

Net Sales (and Percentage) by Product Category
Millions of Yen

2011

2012

2010

Innerwear
Foundation Garments and LingerieNightwear
Children’s Underwear¥124,303
9,390
1,530

72.3%
5.5
0.9

¥116,127
8,713
1,476

70.1%
5.3
0.9

¥116,478
9,437
1,608

71.2%
5.8
1.0

Total Innerwear
Outerwear and Sportswear
Hosiery
Textile Products
Other¥135,223
16,371
1,646
8,226
10,431

78.7%
9.5
1.0
4.8
6.0

¥126,316
17,3971,666
7,493
12,676

76.3%
10.5
1.0
4.5
7.7

¥127,523
17,125
1,702
7,420
9,778

78.0%
10.5
1.0
4.5
6.0

Total

¥171,897

100.0%¥165,548

100.0%¥163,548

100.0%WACOAL HOLDINGS

43

Selling, General and Administrative Expenses
Our selling, general and administrative expenses principallyconsist of employee compensation and benefit expenses and promotional expenses, such as advertising costs. Other selling, general and administrative expenses include shipment costs, payment
fees (including outsourcing payments) and rental payments forour specialty retail stores. Our selling, general and administrative
expenses do not include any impairment charges on long-lived
assets or any gains or losses on the sale or disposal of property,
plant and equipment. In recent years, our selling, general andadministrative expenses have been affected by two countervailingfactors: reduction in labor costs and increases in marketing efforts,
particularly in our overseas markets. In addition, for fiscal 2012, we
took significant temporary cost-cutting measures, including thecancellation of television commercials, in response to the aftermath of the earthquake and tsunami of March 2011. Thus, for thenear-to-medium term, we expect the two countervailing factors tocontinue to offset each other in varying degrees and the effect of
temporary cost-cutting measures to diminish.
Income Tax Expenses
Our income tax expenses depend on our taxable income, applicable statutory tax rates and the proportion of current and deferredincome taxes. Our effective tax rate depends on a range of factors,
including applicable statutory tax rates, permanently non-deductible expenses, unrecognized tax benefits, any valuation allowancewith respect to tax loss carryforwards and tax exemptions. Our
effective tax rate was 41.1% for fiscal 2012, 51.2% for fiscal 2011,
and 52.5% for fiscal 2010.
Key Industry Trends
We believe that the following have been key trends in our industry
during the last three fiscal years:• The number of department stores, one of our key distribution
channels, and retail sales through department stores declined
due to the deterioration in consumption caused by the worsening
economy. General merchandising stores faced not only
decreases in the numbers of new branch openings due to stagnant consumption levels, but also reductions in store sizes andincreases in store closings, as well as reductions in retail sales. At
the same time, however, sales at direct sales outlets and on theInternet have steadily risen.
• Due to adverse changes in consumer behavior and retail industry
coupled with factors such as a decline in the female population,
the market for women’s innerwear garments in Japan shrank, andthe prices of innerwear declined in terms of both overall prices
and average price per item. The numbers of innerwear items purchased and owned per person also decreased.
• Specialty apparel, outerwear fashion and other manufacturers
entered the innerwear market. These manufacturers offer theirproducts by focusing on new elements, such as fashionability,
lifestyle and price, rather than function and quality. Because theeconomic downturn has led consumers to become more priceconscious, these new manufacturers and others have achieved agreater market share.
• These manufacturers and other competitors strengthened theircost reduction efforts by, for example, sourcing fabric and producing garments in China and other lower-cost countries. Sales
in Japan of lower-priced women’s innerwear garments manufactured in these countries increased, leading to an intensification ofprice competition in our industry. The recent development andtendency of general merchandisers producing their own lowpriced “private brand” merchandise accelerated these trends.
• Although catalog marketing has made little progress, new sales
strategies such as e-commerce and television marketing have
led to more diversified sales channels and exposure to new
customer groups.
We have taken steps to address these key industry trends, inseeking to build on the core strengths of our market position andbrand awareness with Japanese consumers. We continue to seek
to sell higher-end products to reach consumers seeking high-quality innerwear garments and to mitigate the adverse impact onsales and margins from lower-priced garments. We have taken
steps to reduce our cost structure, such as producing more products in lower-cost countries such as China and Vietnam, consolidating and modernizing our product distribution centers andexpanding our early retirement program. 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 welaunched our sorci age brand—and increase sales through our own
specialty retail stores, our catalog operations and the Internet. We
also are researching expansion into emerging economies such as
India and other new markets such as Russia, Canada, Mexico andBrazil. Additionally, we intend to extend our innerwear productofferings into the mid-price range and include more fashionable
offerings in our product mix to help us reach a broader customer
base. We believe that Peach John and Lecien will help us toadvance these goals. We will continue to implement these steps
and evaluate other strategies to address challenges and opportunities in the industry going forward.

Results of Operations—Fiscal 2012 Compared to Fiscal 2011
Net Sales
Consolidated net sales increased 3.8% from ¥165,548 million forfiscal 2011 to ¥171,897 million for fiscal 2012, mainly due to the
expansion of sales attributable to our Wacoal brand business,
Peach John and our business in China.
By product category, net sales for the innerwear productcategory increased ¥8,907 million or 7.1% from ¥126,316 million
for fiscal 2011 to ¥135,223 million for fiscal 2012 primarily due tothe increase in net sales of foundation garments and lingerie. Net
sales of the textile products product category also increased¥733 million or 9.8% from ¥7,493 for fiscal 2011 to ¥8,226 forfiscal 2012. The increases in net sales for the innerwear and textile
products product categories more than offset the decreases in
net sales for the outerwear and sportswear, hosiery and otherproduct categories.
By business segment, net sales of Wacoal Business (Domestic)
increased by 4.5% from ¥110,856 million for fiscal 2011 to¥115,870 million for fiscal 2012 primarily due to strong performance of the Wacoal Brand Business Department. Net sales of
Wacoal Business (Overseas) increased by 6.9% from ¥20,010
million for fiscal 2011 to ¥21,396 million for fiscal 2012 primarily
due to strong performance of our reasonably priced brassieres,bottom products and our Internet sales. Net sales of Peach John
increased by 19.5% from ¥11,575 million for fiscal 2011 to ¥13,836
million for fiscal 2012 primarily due to sales from our core mailorder catalogs showing strong performance and effective advertising campaigns. Net sales of the Other business segment, which

Integrated Report 2012

44

include Lecien and Nanasai businesses, decreased by 10% from
¥23,107 million for fiscal 2011 to ¥20,795 million primarily due todecrease in sales for Nanasai based on the declining effect of shop
renovations that increased sales for fiscal 2011.
Cost of Sales
Our cost of sales increased 0.3% from ¥81,659 million for fiscal
2011 to ¥81,891 million for fiscal 2012. Cost of sales as a percentage of net sales decreased 1.7%, from 49.3% for fiscal 2011 to
47.6% for fiscal 2012. The decrease in the cost of sales as a percentage of net sales is primarily due to an increase in the proportion of products sold in Japan being manufactured overseas, astreamlining of product selection, more stringent inventory control
leading to less inventory write-downs, and more effective productresearch and development.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses increased 2.5%
from ¥77,716 million for fiscal 2011 to ¥79,629 million for fiscal
2012. The selling, general and administrative expenses as a percentage of net sales decreased 0.6% from 46.9% for fiscal 2011 to
46.3% for fiscal 2012. This decrease was primarily due to our success in keeping our selling, general and administrative expenses
for fiscal 2012 at a level very close to that for fiscal 2011 relative tothe increase in net sales. However, this is partly due to the aftermath of the earthquake and tsunami of March 2011 that forced us
to take significant temporary cost-cutting measures, particularly inthe first half of fiscal 2012. Although we do not expect to continue
to be able to benefit from the factors that temporarily led to adecrease in our selling, general and administrative expenses forfiscal 2012, we believe that our cost-cutting efforts will help tocounteract the loss of such benefit.
Impairment of Goodwill andOther Intangible Assets
At the end of fiscal 2012, we evaluated the recoverability of goodwill and other intangible assets and concluded that there was no
impairment in the carrying value of any such assets for any of ourreporting units. Our impairment loss therefore decreased by¥1,772 million from an impairment loss of ¥1,772 million that we
recognized in fiscal 2011 with respect to Peach John’s trademark,catalog customer relationships and goodwill, which we recognized
as intangible fixed assets when Peach John became our wholly
owned subsidiary in fiscal 2008.
Operating Margin
Our operating margin (i.e., operating income as a percentage ofnet sales) increased to 6% for fiscal 2012, as compared to 2.7% forfiscal 2011. This increase was largely due to our success in keeping
our cost of sales and selling, general and administrative expenses
for fiscal 2012 at a level very close to that for fiscal 2011 relative tothe increase in net sales and the fact that there were no impairment losses on goodwill and other intangible assets for fiscal 2012.
However, this is partly due to the aftermath of the earthquake andtsunami of March 2011 that forced us to take significant temporary
cost-cutting measures, particularly in the first half of fiscal 2012.
Although we do not expect to be able to continue to benefit fromthe factors that temporarily led to an increase in our operating
margin for fiscal 2012, we believe that our efforts to expand our
net sales will help to counteract the loss of such benefit.

WACOAL HOLDINGS

Total Other Expenses, Net
Total other expenses, net, decreased ¥304 million from ¥474
million for fiscal 2011 to ¥170 million for fiscal 2012. This decrease
was primarily due to a significant improvement in the valuation of
the marketable securities and investments we hold and the factthat there were no impairment losses for fiscal 2012.
Net Income Attributable to
Wacoal Holdings Corp.
Net income attributable to Wacoal Holdings Corp. for fiscal 2012was ¥6,913 million, an increase of ¥4,128 million compared to¥2,785 million for fiscal 2011. This increase was primarily due tothe success in promotion efforts for the Wacoal domestic businessand the improved recognition of our specialty retail businessbrands such as AMPHI, Wacoal Factory and Une Nana Cool, particularly among outlet mall customers. In addition, we were successful in keeping our cost of sales and selling, general andadministrative expenses relatively low, partly due to the aftermathof the earthquake and tsunami of March 2011 that forced us to takesignificant temporary cost-cutting measures, particularly in thefirst half of fiscal 2012. Furthermore, we had no impairment losses
on goodwill and other intangible assets for fiscal 2012. Our current
income taxes increased for fiscal 2012 and were only partially offset by our deferred income taxes. The effective tax rate decreased
from 51.2% in fiscal 2011 to 41.1% in fiscal 2012 primarily due tochanges in Japanese income tax rates.
Operating Results by Business Segment
We divide our businesses into four segments: Wacoal Business(Domestic), Wacoal Business (Overseas), Peach John and Other.
Wacoal Business (Domestic)
Net sales of Wacoal Business (Domestic) for fiscal 2012 were¥115,870 million, as compared to ¥110,856 million for fiscal 2011,and exceeded the results for fiscal 2011 by 4.5%.This was primarily
due to the strong performance of our core operating business,
Wacoal brand business and the expansion of our specialty retailbusiness. Net sales for Wacoal Business (Domestic) as a percentage of our total net sales increased to 67.4%, as compared to 67%
for fiscal 2011.
Net sales of the five key business units of Wacoal Business(Domestic) combined were ¥111,587 million, an increase of¥4,492 million compared to ¥107,095 million for fiscal 2011.
• Wacoal Brand Business Department: In our Wacoal Brand
Business Department, core brasseries and bottom products
showed strong performance due to our success in appealing toconsumers through our product lineup and promotional activities
based on our announcement entitled “Body Aging (physiologicalchanges associated with aging),” which was based on the resultsof the Wacoal Corp. Human Science Research Center’s research.
However, this was partially offset by sales of our undergarments,
which fell below the results of the previous fiscal year due tocompetition and unsteady weather conditions despite the strong
performance of certain products using natural materials. Thus,
overall sales of our core Wacoal brand business exceeded theresults for fiscal 2011 by 3.7% as a result of the performance ofour brassieres and bottom products.
• Wing Brand Business Department: In our Wing Brand Business
Department, although sales of our brassieres and bottom products showed steady performance, which was similar to that of45

our Wacoal brand business, sales of men’s innerwear fell below
the results for the previous fiscal year due to the poor performance and clearance of Style Science series products. Thus,
although in-store performance was steady, overall sales of our
Wing brand business remained nearly unchanged from theresults for fiscal 2011 due to clients’ inventory adjustments, which
resulted in fewer deliveries of our products.
• Retail Business Department: Regarding our Retail Business
Department, sales at our direct retail store AMPHI expanded asa result of strong performance of our existing shops due toimprovement of brand recognition and the opening of newstores. Sales from our Wacoal Factory Stores were steady in general due to our improvement in product lineup, despite the partial
damage to certain stores as a result of the effects of the earthquake that struck northeastern Japan on March 11, 2011 and thesubsequent tsunami. As a result, overall sales of our specialty
retail business exceeded the results of fiscal 2011 by 26.3%.
• Wellness Business Department: In our Wellness Business
Department, despite the steady performance of sports tightsfrom our sports conditioning wear “CW-X” brand and functionality-focused business pumps, overall sales from our wellness
business remained unchanged from the results for the previous
fiscal year due to a decrease in sales from TV infomercials subsequent to a decrease in the number of TV infomercials run after
the March 11 earthquake and tsunami. As a result of the foregoing, net sales of our wellness products fell below net sales for fiscal 2011 by 0.4%.
• Catalog Sales Business Department: In our Catalog Sales Business
Department, overall sales exceeded the results for fiscal 2011 by
6% due to steady performance of catalog sales, which was partly
attributable to the shifting of inventory from department stores tocatalog resulting in an increase of catalog product selection, andthe expansion of Internet sales through both our directly managed
Internet shopping site (http://store.wacoal.jp/) and third-party
shopping portal sites, including, among others, Rakuten (http://
www.rakuten.co.jp).
Wacoal Business (Overseas)
Net sales for our Wacoal Business (Overseas) segment as a percentage of our total net sales increased to 12.5%, as compared to12.1% for fiscal 2011.
• United States. Net sales in the United States represented 48.7%of net sales for this segment for fiscal 2012, compared to 50.9%
for fiscal 2011. We made aggressive efforts in expanding our U.S.
market share and enhancing our product lineup at department
stores, which are our major clients, as well as in expanding sales
in countries neighboring the United States and Internet retailing.
Despite the impact of exchange rate fluctuations, sales exceeded
the results for fiscal 2011 as a result of the strong performance ofour reasonably priced brassieres and functional bottom products
and our Internet sales, which exceeded our original expectations.
As a result, net sales in the United States increased 2.2% from
¥10,189 million for fiscal 2011 to ¥10,418 million for fiscal 2012,
which was attributable entirely to Wacoal International Corp.,
which undertakes certain sales activities for our U.S. operations.
• Asia (Excluding Japan).Net sales in Asia outside of Japan(including China, Hong Kong and Singapore) represented 45.7%
of net sales for this segment in fiscal 2012, compared to 43.6% in
fiscal 2011. During fiscal 2012, we aimed to expand sales in countries neighboring Japan. In our business in China, we madeefforts to strengthen our product lineup and promote the opening of new stores mainly in inner mainland China. Although net
sales exceeded the results for fiscal 2011 by ¥1,067 million, thegrowth in net sales slowed due to a significant decline in thenumber of visitors to department stores, which are our major clients, which in turn was attributable to certain government
administrative guidance on the regulations on misleading advertisements and a lack of differentiation of our products from competing products and sales promotions. As a result, net sales fromour business in China increased 12.9% from ¥7,609 million forfiscal 2011 to ¥8,587 million for fiscal 2012, of which ¥6,007 million was attributable to the Wacoal China Co., Ltd., our subsidiarythat undertakes certain manufacturing and sales operations
related to our business in China. Net sales for Wacoal China Co.,
Ltd. exceeded results for fiscal 2011 by ¥828 million or 16%.
• Europe. Net sales in Europe represented 5.6% of net sales for thissegment in fiscal 2012, compared to 5.5% in fiscal 2011.
• Foreign Currency. The average noon buying rate for yen in New
York City as certified for customs purposes by the Federal Reserve
Bank of New York was ¥78.86 for fiscal 2012, as compared to¥85.00 for fiscal 2011.The increase in net sales to external customers for this segment was reduced by approximately 45% dueto the significant strengthening of yen against the U.S. dollar andother currencies of the markets in which we sell our products.
As a result of the foregoing, net sales to external customers forthis segment increased 6.9% from ¥20,010 million for fiscal 2011
to ¥21,396 million for fiscal 2012.
Peach John
Net sales for our Peach John segment as a percentage of our total
net sales increased to 8%, as compared to 7% for fiscal 2011. Sales
from our core mail-order catalogs showed strong performance asa result of successful rescheduling of our catalog publication timing, which was in line with the change of our sales schedule. In
addition, net sales from our domestic direct retail stores wereabove net sales for fiscal 2011 due to effective advertising campaigns and improved product lineups, despite a decrease in thenumber of shops as compared to the previous fiscal year. As forour directly managed overseas stores, although the seven storesoperated in China showed weak performance, our two directly
managed stores in Hong Kong showed strong performance. As aresult of the foregoing, net sales to external customers for this segment increased 19.5% from ¥11,575 million for fiscal 2011 to¥13,836 million for fiscal 2012.

Integrated Report 2012

46

Other
Net sales for our Other business segment as a percentage of our
total net sales decreased to 12.1%, as compared to 13.9% for fiscal
2011. With respect to Lecien Corporation (“Lecien”), one of ourmajor subsidiaries comprising this segment, sales from our core
innerwear showed strong performance as a result of the expansion
of offered products jointly developed with our major clients.
However, net sales from the apparel business of Lecien, which
offers outerwear products, fell below the results for fiscal 2011 due
to a reduction in the number of unprofitable products. As a result,net sales from Lecien for fiscal 2012 remained generally at the samelevel as in fiscal 2011. As for Nanasai, another major subsidiarycomprising this segment, net sales for fiscal 2012 fell significantly
as compared to fiscal 2011 despite strong sales performance of our
products. This was due to the completion of the shop renovationsof department stores commenced during fiscal 2011, as well as thepoor performance of the short term rental business of mannequins
stemming from the restrained investments and cancellation of various events by our business partners caused by the impact of the
March 2011 earthquake. As a result of the foregoing, net sales toexternal customers for this segment decreased 10% from ¥23,107
million for fiscal 2011 to ¥20,795 million for fiscal 2012.
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.
Our borrowing requirements are not affected by seasonality. We
believe that our working capital is adequate for our present
requirements and for our business operations in the short-tomedium term. Thus, we do not believe that our business is substantially dependent on these facilities.
As of March 31, 2012 we had credit facilities at financial institutions totaling ¥46,157 million, a large majority of which was for
short-term, yen-denominated borrowings with variable interest
rates. Unused lines of credit for short-term financing as of March
31, 2012 amounted to ¥40,184 million. In general, all of our credit
facilities have automatically renewed terms, and we are not awareof any issues with respect to any of our lenders that could cause
these facilities to become unavailable.
Of this total credit, ¥28,910 million is available to Wacoal
Holdings and our main subsidiary Wacoal Corp., but we have not

SG&A Expenses¥ Billion

Net Cash Provided byOperating Activities

drawn down from this credit line in recent years and have no current plans to use it in the near future. The remainder of the credit,
totaling ¥17,247 million, is available for Lecien, Nanasai and ourother subsidiaries, which had drawn down for working capital purposes a total of ¥5,973 million as of March 31, 2012, including borrowings by Wacoal Servicing Co. Ltd. of ¥3,238 million andborrowings by Nanasai of ¥1,800 million. Because our policy is tofund cash needs from our cash flows from operations, we do not
expect this balance to increase significantly over the short-tomedium term. Even if any of our subsidiaries loses access to funds
from our credit facilities, we believe that it is possible for othercompanies in our group to provide any necessary funds. We are
not aware of any restrictions on the transfers of funds from a subsidiary to a parent company in the form of a cash dividend, loan or
cash advance.
Our short-term loans as of March 31, 2012 were ¥5,780 million, a decrease of ¥372 million from ¥6,152 million as of March 31,
2011. Our long-term debt, primarily consisting of collateralized andunsecured bank loans, including the current portion, was ¥702
million as of March 31, 2012, an increase of ¥418 million from¥284 million as of March 31, 2011.
In connection with our acquisition of all outstanding commonshares of Eveden in April 2012 for ¥19,961 million, we borrowed¥12,000 million from a financial institution.
Additionally, we maintain the majority of our cash and cash
equivalent assets in Japanese yen and generally refrain from using
financial products for hedging purposes.
Cash FlowsNet Cash Provided by Operating Activities
Net cash provided by operating activities decreased by ¥381 million from ¥10,441 million for fiscal 2011 to ¥10,060 million for fiscal 2012, which reflects the result after adjusting the net income of¥7,016 million for deferred taxes and equity in net income of affiliated companies, as well as depreciation expenses and an increasein payables.
Net Cash Used in Investing Activities
Net cash used in investing activities increased by ¥2,764 million
from ¥703 million for fiscal 2011 to ¥3,467 million for fiscal 2012,
due to the acquisition of marketable securities and tangible fixed
assets, despite proceeds from the sale and redemption of marketable securities.

Capital Expenditures¥ Billion¥ Billion
79.6 79.6
78.5 78.5
77.7 77.7
77.2 77.2
68.9 68.9

48.0 48.0
46.9 46.946.3%
46.3%
45.2 45.2
41.7 41.7

4.0
14.2 14.2
10.4 10.4
10.1 10.1
9.4 9.4
8.2 8.2

2.4

2.7

2.7

11

12

1.1

08 0809 09 10 10 11 11 12 1208 0809 09 10
Ratio of SG&A expenses to total net sales (%)

WACOAL HOLDINGS

10 11

11 12

12

08

09

10

47

Net Cash Used in Financing Activities
Net cash used in financing activities decreased by ¥2,141 million
from ¥4,965 million for fiscal 2011 to ¥2,824 million for fiscal
2012, due to the repayment of short-term bank loans and cash
dividend payments.
Capital Expenditures
Capital expenditures were ¥2,708 million for fiscal 2012 (including¥355 million for rebuilding and relocation of some of our properties), ¥2,652 million for fiscal 2011 and ¥3,981 million for fiscal
2010. These expenditures were primarily for the repair of officefacilities of our domestic subsidiaries and the expansion of our
specialty retail store network. Payments to acquire intangible
assets were ¥846 million for fiscal 2012, ¥687 million for 2011 and¥1,772 million for fiscal 2010. These payments are primarily composed of payments for information technology-related
investments.
For fiscal 2012 we spent ¥355 million for office maintenanceand repair, and we expect to spend ¥553 million in fiscal 2013.
Although we currently do not have any concrete plans, we expect
to continue to make expenditures for the expansion of our specialty retail store network (including costs for the development of
new stores and the closure of underperforming stores) and formaintenance, to meet applicable legal requirements and to facilitate the manufacture of new products with new designs and specifications. Furthermore, we intend to evaluate and pursue
opportunities for acquisitions, investments and other strategictransactions that we believe will help us achieve our businessobjectives, including extending our product offerings in Japan andin overseas markets and strengthening our capabilities in theInternet, catalog and other marketing channels. We expect to fundthese capital expenditures and other expenditures through our
cash from operations, existing cash reserves and other available
sources of liquidity.
In fiscal 2009, we sold plants and other property in connection
with the liquidation of our subsidiary Tokai Wacoal Sewing Corp.
with a book value of ¥59 million. In fiscal 2011, we sold our
Karasuyama Corporate Housing with a book value of ¥75 million and
our Ikuta Corporate Housing with a book value of ¥152 million. In fiscal 2012, we sold our Nagaoka dormitory with a book value of ¥60
million and our Sapporo building with a book value of ¥79 million.
Cash Dividends
On May 15, 2012, our board of directors approved a fiscal year-end
dividend of ¥100 per five shares of common stock to our shareholders on record as of March 31, 2012, and dividends in a total
amount of ¥3,944 million were paid on June 5, 2012. Our basic
policy regarding the distribution of profits to our shareholders is topay steady dividends and increase our earnings per share, while
giving due consideration to the improvement of corporate value
through active investment that will result in increased profitability.
Based on our steady performance of the business results for the
fiscal year ended March 31, 2012, we will amend the dividend payable for fiscal 2012 to 28.00 yen per share, an increase of 5.00 yen
per share from 23.00 yen per share, as initially announced. For fiscal year ending March 31, 2013, we hope to be able to distribute
28.00 yen per share.

Share Repurchases
We repurchased 15,231 shares of common stock during fiscal 2012
from shareholders who held shares constituting less than one unit
and requested that such shares be repurchased.
Research and Development, Patents andLicenses, etc.
For more than 40 years, since the establishment of our Human
Science Research Center, we have aimed to achieve harmony
between the human body and clothing. In particular, we have conducted research into women’s body in order to accurately understand the Japanese woman’s physique. In order to accurately
understand the Japanese woman’s physique, we have developed
such things as a silhouette analysis system and a three-dimensional measuring system. However, we are also working on aneven more advanced measurement of sensory comfort. Our
research and development activities focus on addressing the proportional, physiological and mental aspects of garment design.
One of our most important research results was the Golden
Canon, which we announced in 1995, and which provides a set ofindicators that characterize the beautiful Japanese woman’s body.
We also began applying new sales methods at that time. From1995 to 1998, we participated in a project led by the Ministry ofInternational Trade and Industry (presently the Ministry of
Economy, Trade and Industry) enriching the basic study of sensory
comfort and conducting research based on reactions to three factors: pressure, heat and touch. Based on this research, we arefocused on developing new products that are not only comfortable
for the wearer but also have a positive physiological effect. In
2000, we conducted an analysis on the physiological changes
associated with aging throughout a 25-year period from the teenage years to the 40s. We named the principles of these changes
SPIRAL Aging.
Our research and development activities for fiscal 2012 havebeen fruitful as we presented in July 2011 the second installment of
our long-term aging research results on “Body Aging (physiological changes associated with aging),” as well as presented in
February 2012 findings related to breast development among
juniors and the necessity of training brassieres during such periodsof physiological change. In terms of product development, ourresearch and development activities supported the commodification of new products in the Style Science series that incorporate a“donut” mechanism that is unique to Wacoal, which provides support to the hip joints, thereby enabling the wearer of such undergarments to experience greater freedom in the forward andbackward movement of the legs.
The cost of research and development for fiscal 2012 wasapproximately ¥801 million, compared to ¥815 million for fiscal 2011and ¥778 million for fiscal 2010. We expect to maintain a similarlevel of research and development expenditures for fiscal 2013.

Integrated Report 2012

48

Consolidated Balance Sheets
Wacoal Holdings Corp. and Subsidiaries

Thousands ofMillions of Yen U.S. Dollars (Note 2)
March 31, 2012 and 2011

2012

2011

2012

ASSETS
Current Assets:
Cash and cash equivalents
Time deposits
Marketable securities (Notes 3, 19 and 20)
Notes and accounts receivable (Note 17)
Allowance for returns and doubtful receivables (Note 4)Inventories (Note 5)
Deferred income taxes (Note 16)
Other current assets (Notes 17, 19 and 20)
		 Total current assets¥ 29,985
733
5,179
22,725(1,460)32,847
4,234
3,052
97,295¥ 26,316
706
4,840
21,171(1,617)
31,116
5,212
2,666
90,410$  363,851
8,895
62,844
275,756(17,716)
398,580
51,37737,034
1,180,621

Property, Plant And Equipment:
Land (Note 9)
Buildings and building improvements (Notes 9, 11 and 20)
Machinery and equipment
Construction in progress		 Total
Accumulated depreciation
		 Net property, plant and equipment

21,78360,077
14,03922
95,921(46,843)
49,07821,78760,31814,06893
96,266(46,532)
49,734

264,325
729,001
170,356
267
1,163,949(568,414)
595,535

14,59934,064
10,367
9,541

177,151
413,348
125,798
115,775

597
5,557
74,725

14,702
32,685
10,367
10,325
158
876
6,019
75,132¥221,098¥215,276$2,682,903

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

Total
See notes to consolidated financial statements.

WACOAL HOLDINGS

7,244
67,431
906,747

49

Thousands ofMillions of Yen U.S. Dollars (Note 2)
March 31, 2012 and 2011

2012

2011

2012

¥   5,780¥   6,152$   70,137

1,429
10,737
6,948
6,411
1,747
64
2,491
35,607

1,617
10,474
5,112
6,133
1,932
70
2,390
33,88017,340130,288
84,31077,794
21,199777
30,227432,072

638
2,817
7,085
1,523
12,063

214
2,183
7,441
2,178
12,016

7,741
34,18385,97318,481
146,378

13,26029,447
141,370

13,26029,401
137,274

160,903357,323
1,715,447(10,916)
4,197(2,976)(9,695)(10,159)
2,596(2,002)(9,565)(132,459)
50,928(36,112)(117,643)(2,886)
171,496(2,890)167,480(35,020)
2,081,010

Noncontrolling Interests
			 Total equity

1,932
173,4281,900
169,380

23,443
2,104,453

Total¥221,098¥215,276$2,682,903

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 12, 16, 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 2012 and 2011; issued 143,378,085 shares in 2012
and 2011
Additional paid-in capital (Note 14)
Retained earnings
Accumulated other comprehensive loss (Note 15):
		 Foreign currency translation adjustments
		 Unrealized gain on securities
		 Pension liability adjustments (Note 12)
			 Total accumulated other comprehensive loss
Less treasury stock at cost—2,527,015 shares and 2,529,607 sharesin 2012 and 2011, respectively
			 Total Wacoal Holdings Corp. shareholders’ equity

Integrated Report 2012

50

Consolidated Statements of Income
Wacoal Holdings Corp. and Subsidiaries
Thousands ofMillions of Yen U.S. Dollars (Note 2)
Years Ended March 31, 2012, 2011 and 2010

Net Sales (Note 17)
Operating Costs and Expenses:
Cost of sales (Notes 12 and 17)
Selling, general and administrative (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):
Interest income
Interest expense
Dividend income
Gain on sale or exchange of marketable securities andinvestments —net (Note 3)Impairment charges on marketable securities andinvestments (Notes 3 and 20)
Other—net (Notes 1, 3 and 20)
		 Total other expenses - net
Income Before Income Taxes, Equity in Net Income of Affiliated Companies,
and Net (Income) Loss Attributable to Noncontrolling Interests (Note 16)
Income Taxes (Note 16):
Current
Deferred		 Total income taxes
Income Before Equity in Net Income of Affiliated Companies, andNet (Income) Loss Attributable to Noncontrolling Interests
Equity in Net Income of Affiliated Companies (Note 6)
Net Income
Net (Income) Loss Attributable to Noncontrolling Interests
Net Income Attributable to Wacoal Holdings Corp.

Years Ended March 31, 2012, 2011 and 2010

Net Income Attributable to Wacoal Holdings Corp. Per Share (Note 18):
Basic
DilutedNet Income Attributable to Wacoal Holdings Corp. Per American
Depositary Receipt (5 shares of common stock) (Note 18):
Basic
DilutedSee notes to consolidated financial statements.

WACOAL HOLDINGS

2012

2011

2010

2012

¥171,897¥165,548¥163,548$2,085,875

81,891
79,62980,101
78,52471
1,023
159,719
3,829

993,702966,254

161,520
10,37781,65977,716836
936
161,147
4,401

1,959,956
125,919

112
(93)
724

137
(88)
643

133
(90)
619

1,359
(1,129)
8,785

25

372

7

303

(831)
(107)
(170)

(1,585)47(474)(1,460)117(674)(10,084)(1,297)(2,063)

10,207

3,927

3,155

123,856

3,523
676
4,199

3,480
(1,470)
2,010

3,243
(1,588)
1,655

42,7508,203
50,953

6,008
1,008
7,016
(103)
¥   6,913

1,917
990
2,907
(122)
¥   2,785

1,500
907
2,407
68
¥   2,475

72,903
12,232
85,135(1,250)$   83,885

Yen

U.S. Dollars(Note 2)

2012

2011

2010

2012

¥49.08¥49.02¥19.73¥19.72¥17.51¥17.50

$0.60
$0.59

¥245.41¥245.12¥98.66¥98.58¥87.55¥87.50

$2.98
$2.97

51

Consolidated Statements of Comprehensive Income (Loss)
Wacoal Holdings Corp. and Subsidiaries
Thousands ofMillions of Yen U.S. Dollars (Note 2)
Years Ended March 31, 2012, 2011 and 2010

Net Income
Other Comprehensive (Loss) Income, Net of Tax (Note 15):
Foreign Currency Translation Adjustments
Unrealized Gains (Losses) on Securities
Pension Liability Adjustments
Other Comprehensive (Loss) Income
Comprehensive Income (Loss)
Comprehensive (Income) Loss Attributable to Noncontrolling Interests
Comprehensive Income (Loss) Attributable to Wacoal Holdings Corp.

2012

2011

2010

2012

¥7,016¥ 2,907¥2,407$ 85,135

(782)
1,602
(974)
(154)
6,862
(79)
¥6,783(2,802)(1,072)(219)(4,093)(1,186)(47)¥(1,233)

180
3,351
1,600
5,131
7,538
49
¥7,587(9,489)19,439(11,819)(1,869)83,266(959)$ 82,307

See notes to consolidated financial statements.

Consolidated Statements of Equity
Wacoal Holdings Corp. and Subsidiaries
Millions of Yen

Years Ended March 31, 2012, 2011 and 2010

BALANCE, APRIL 1, 2009 (Note 1)
Net income
Other comprehensive incomeCash dividends paid to Wacoal Holdings Corp.
shareholders, ¥125 per 5 shares of common stock
Cash dividends paid to noncontrolling interests
Repurchase of treasury stock
Sale of treasury stock
Share-based compensation granted and exercised (Note 14)
Purchase and sales of common shares of the Company’s
subsidiaries
Distribution of treasury stock to acquire a subsidiary (Note 7)
BALANCE, MARCH 31, 2010
Net income
Other comprehensive lossC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 stock
Share-based compensation granted (Note 14)
BALANCE, MARCH 31, 2011
Net income
Other comprehensive lossC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 stock
Share-based compensation granted and exercised (Note 14)
BALANCE, MARCH 31, 2012

Shares of
Outstanding
CommonStock(Thousands)

CommonStock

Additional
Paid-in
Capital140,451¥13,260¥29,316

Accumulated
Other
Retained Comprehensive
Earnings
Loss¥138,442
2,475

Total Wacoal
Holdings
Corp.
Treasury Shareholders’ Noncontrolling
Stock
EquityInterests¥(10,659) ¥(3,592)
5,112(3,511)¥166,767
2,475
5,112

¥2,094(68)
19(3,511)(76)(1,372)11
450(1,540)13
5(1,540)
13
55

2,582
(2,532)

2,489
171,860
2,785(4,018)(46)
2,104
141,198

13,26029,366(93)
137,313
2,785(5,547)(4,018)(2,824)

1,923
122
(75)

(2,824)
(70)

(586)
236
140,848

13,260(15)
50
29,401(655)
297
137,274
6,913(9,565)(2,890)(130)(2,817)

(655)
282
50
167,480
6,913
(130)

1,900
103
(24)

(2,817)
(47)

(15)
6
12
140,851 ¥13,260

46¥29,447¥141,370(15)514¥ (9,695) ¥(2,886)

(15)
5
60
¥171,496¥1,932

Total Equity¥168,861
2,407
5,131
(3,511)(76)(1,540)
13
55
(46)
2,489
173,783
2,907(4,093)(2,824)
(70)
(655)
282
50
169,380
7,016(154)(2,817)
(47)
(15)
5
60
¥173,428

Thousands of U.S. Dollars (Note 2)

Years Ended March 31, 2012

BALANCE, MARCH 31, 2011
Net income
Other comprehensive lossC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 stock
Share-based compensation granted and exercised (Note 14)
BALANCE, MARCH 31, 2012

CommonStock

Additional
Paid-in
CapitalAccumulated
Other
Retained Comprehensive
Earnings
Loss

Total Wacoal
Holdings
Corp.
Treasury Shareholders’ Noncontrolling
Stock
EquityInterests

Total Equity$160,903 $356,765 $1,665,745
83,885$(116,066) $(35,069) $2,032,278
83,885(1,577)(1,577)$23,055 $2,055,333
1,250
85,135(292)(1,869)(34,183)(34,183)(34,183)
(570)
(182)
61
728
$23,443 $2,104,453
(570)

558
$160,903 $357,323 $1,715,447

(182)
(182)
61
61
170
728
$(117,643) $(35,020) $2,081,010

See notes to consolidated financial statements.

Integrated Report 2012

52

Consolidated Statements of Cash Flows
Wacoal Holdings Corp. and Subsidiaries
Thousands ofMillions of Yen U.S. Dollars (Note 2)
Years Ended March 31, 2012, 2011 and 2010

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
		 (Loss) gain 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)
		 Impairment charges on marketable securities and investments (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) decrease in inventories
			 (Increase) decrease in other current assets
			 Increase (decrease) in notes and accounts payable			 (Decrease) increase in liability for termination and retirement benefits			 (Decrease) increase in accrued expenses, income taxes payable and othercurrent liabilities
		 Other			 Net cash provided by operating activities
Investing Activities:
Increase in time deposits and certificates of deposits
Decrease in time deposits and certificates of 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 investments
Cash balances of subsidiary acquired through share exchanges (Note 7)
Other
			 Net cash used in investing activities
Financing Activities:
Decrease in short-term bank loans with three months or less maturity—net
Proceeds from issuance of short-term bank loans
Repayments of short-term bank loans
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 on common stock to noncontrolling interest
			 Net cash used in financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
Additional Cash Flow Information:
Cash paid for:		 Interest
		 Income taxes
Noncash investing activities:
		 Fair value of certain marketable securities received in exchange for othermarketable securities with carrying values of ¥86 million ($1,044 thousand)and ¥5 million in 2012 and 2010, respectively (Note 3)
		 Acquisition of marketable securities by assuming payment obligation
		 Acquisition of fixed assets by assuming payment obligation
		 Acquisition of subsidiary through share exchange (Note 7)
See notes to consolidated financial statements.

WACOAL HOLDINGS

2012

2011

2010

2012

¥ 7,016¥ 2,907¥ 2,407$  85,135

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

4,765
55
(266)
(1,588)
25
23
71
1,023
(7)
1,460
(492)

56,547728(1,881)
8,203
(425)
449

(25)
831
(451)

4,685
50
(364)
(1,470)
122
107
836
936
(372)
1,585
(566)

(303)
10,084(5,473)(1,589)(1,801)
(377)
1,973
(685)

493
400
194
1,251
(331)

1,108
669
147
(1,830)449(19,282)(21,854)(4,575)23,941(8,312)(513)
438
10,060(267)
245
10,441

1,057
387
9,463

(6,225)
5,315
122,072

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

(1,809)1,991
3,817(1,036)(920)

24(3,467)

(10)
(703)

467
(3,981)(1,772)2,021(2,019)362(39)(3,573)(6,249)5,922
102,864(105,655)
959
(959)
5,473
(32,860)(10,266)
1,092(2,682)

(690)
393
(71)
500
(82)
(15)
5
(2,817)(47)(2,824)(100)
3,669
26,316¥29,985(1,794)

(291)

200
(104)
(655)
282
(2,824)(70)(4,965)(785)
3,988
22,328¥26,316(350)(1,148)13(3,511)(76)(5,363)(153)
374
21,954¥22,328(8,373)
4,769
(862)
6,067
(995)
(182)
61
(34,183)(570)(34,268)(1,213)44,521
319,330$ 363,851¥   903,702¥   91
3,645¥   902,097$ 1,092
44,922¥   11$ 1,529(347)
538(2,652)
(687)
413
(921)

¥  126

10,099(7,791)

291(42,070)¥  200¥  352$ 4,271¥2,489

53

Notes to Consolidated Financial Statements
Wacoal Holdings Corp. and Subsidiaries

1	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of Financial Statements—Wacoal Holdings Corp. (the“Company”) and subsidiaries are predominantly engaged in one
industry, the manufacture and sale of apparel, including foundation
garments, lingerie, nightwear and outerwear in Japan, the 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.
Consolidation—The consolidated financial statements include theaccounts 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 areincluded in the Company’s consolidated financial statements
based on the subsidiaries’ fiscal year. There were no material intervening events that occurred with respect to these subsidiaries.
On August 17, 2009, the Company acquired the outstanding
common shares of Lecien Corp. (“Lecien”) with a fiscal year ended
March 31, 2010. Lecien’s results of operations were included in the
Company’s consolidated statements of income for the year ended
March 31, 2010 from August 1, 2009.
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 accounting principles generally acceptedin the United States of America (U.S. GAAP) requires management
to make estimates and assumptions that affect the reported
amounts of assets 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 thereporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents—Cash and cash equivalents include alltime deposits and certificates of deposit (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 translatedusing average exchange rates for the period. Translation adjustments resulting from the process of translating consolidated financial statements, net of tax, are included in accumulated othercomprehensive loss, a separate component of equity. Exchange
gains and losses resulting from foreign currency transactions andthe conversion of monetary assets and liabilities denominated inforeign currencies are included in other income (expenses) in the
consolidated statements of income.
Foreign currency translation losses for the year ended March
31, 2012 and 2011 were ¥94 million ($1,141 thousand) and ¥137
million, respectively. Foreign currency translation gains for the year
ended March 31, 2010 were ¥59 million. 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 selling themin the near term. Trading securities are recorded at fair value andunrealized 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 tomaturity 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 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 are computed based on cost determined using the average cost method.
If a decline in the fair value of marketable securities and investments is determined to be other than temporary, an impairment
charge is recorded in the consolidated statements of income. The
Companies periodically determine whether a decline in the fairvalue of marketable securities and investments is deemed to beother than temporary based on criteria that include the duration of
the market decline, the extent to which cost exceeds market value,
the financial position and business outlook of the issuer and theintent and ability of the Companies to retain the impaired marketable securities and investments for a sufficient period of time for
anticipated recovery in market value.
Allowance for Sales Returns—Allowance for sales returns is estimated 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 on the first-in, first-out method for raw
materials and the average cost method for work in process and finished products. Cost includes net prices paid for materials purchased, production labor cost, factory overhead and charges forcustoms duties.
Property, Plant and Equipment—Property, plant and equipment isstated at cost less accumulated depreciation and impairment
losses. Depreciation of property, plant and equipment is computedby the declining-balance method, except for buildings acquired on
or after 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, 2012,2011 and 2010 are ¥2,913 million ($35,348 thousand), ¥2,827
million and ¥2,985 million, respectively.

Integrated Report 2012

54

Impairment of Long-Lived Assets—The carrying values of longlived 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 thesum of the undiscounted cash flows expected to result from theuse and eventual disposition of the asset. That assessment shall bebased on the carrying amount of the asset at the date it is tested
for recoverability, whether in use or under development. The
impairment loss is measured as the amount by which the carrying
amount of a long-lived asset exceeds its fair value. The Companies
recorded ¥37 million ($449 thousand), ¥107 million and ¥23 million in impairment charges on long-lived assets for the years
ended March 31, 2012, 2011, and 2010, respectively, and havebeen included in selling, general and administrative expenses.
Goodwill and Other Intangible Assets—Goodwill represents theexcess of the purchase price of an acquired entity over the net
amounts assigned to 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
amount of a reporting unit exceeds its fair value, the second stepof the goodwill impairment test is performed by comparing thecarrying amount of reporting unit goodwill with its implied fairvalue. If the carrying amount of reporting unit goodwill exceeds its
implied fair value, an impairment loss is recognized in an amountequal to that excess.
To test for impairment of other intangible assets with indefinite
useful lives, the carrying value of an intangible asset is comparedwith its fair value. If the carrying amount of an intangible asset
with indefinite useful life exceeds its fair value, an impairment loss
is recognized in an amount equal to that excess.
Other intangible assets with estimable useful lives consist primarily of customer relationship and software and are amortizedover their estimated useful lives using the straight-line method.
The estimated useful lives are as follows:
Customer relationship: 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 obligation is measured with an expected
present value technique based on historical experience andrecorded in other long-term liabilities in the consolidated balance
sheets and is 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 therelated lease, which is determined using best estimate because theCompanies’ lease contracts generally have automatic renewal articles. The associated estimated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset anddepreciated over its useful life.
Termination and Retirement Plans—Termination and retirement
benefits are accounted for in accordance with the guidance for

WACOAL HOLDINGS

retirement benefits. The Companies amortize net actuarial gains
and losses and prior service cost over the average employees’
remaining service period by a declining-balance method and by astraight-line method, respectively. Provisions for termination andretirement benefits include those for directors and corporate auditors 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 capitalleases and the leased assets are included as part of property, plantand equipment. Other leases are classified as operating leases andare not capitalized. The payments on such leases are recorded as
expense. The rental expense under operating leases is recognizedon a straight-line basis.
Treasury Stock—The Companies account for treasury stock under thecost 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 thatcan be identified and named. The purchase price in excess of thefair value of the net assets is recorded as goodwill.
Revenue Recognition—The Companies recognize revenue on sales
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 theCompanies’ directly managed retail stores at the point of sale tothe customer.
Shipping and Handling Costs—Shipping and handling fees billed tocustomers are classified in net sales. Shipping and handling costs
are expensed as incurred. Shipping and handling costs for the years
ended March 31, 2012, 2011 and 2010 were ¥5,773 million ($70,052
thousand), ¥5,691 million and ¥5,320 million, respectively, and havebeen included in selling, general and administrative expenses.
Advertising Expenses—Advertising costs are expensed as
incurred. Advertising expenses for the years ended March 31,
2012, 2011 and 2010 were ¥12,665 million ($153,683 thousand),¥11,946 million and ¥11,711 million, respectively, and have been
included in selling, general and administrative expenses.
Research and Development Costs—Research and development
costs are expensed as incurred. Research and development costs forthe years ended March 31, 2012, 2011 and 2010 were ¥801 million($9,720 thousand), ¥815 million and ¥778 million, respectively, andhave been included in selling, general and administrative expenses.
Income Taxes—The provision for income taxes is determined under
the asset and liability method in accordance with the guidance forincome 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.

55

The Companies assess their income tax positions and record
tax benefits for all years subject to examination based upon theirevaluation of the facts, circumstances and information available asof the end of 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 compensation. The Company measures share-based compensation cost at
the grant date, based on the fair value of the award and recognizes
the cost over the requisite service period, which is the vesting
period. The fair value of the award is estimated using the BlackScholes option-pricing model.

Derivatives—Derivative instruments, including certain derivative
instruments embedded in other contracts, are accounted for inaccordance with the guidance for derivatives and hedging.
Because such derivative instruments are not designated as ahedge, changes in the fair value are recorded in earnings.
Change of Subsidiaries’ Fiscal Year Ends—For the year ended
March 31, 2012, certain subsidiaries changed their fiscal year ends
from December 31 and February 28 to March 31 to more closely
conform with the Parent’s year-end. Accordingly, the Companies
have retrospectively adjusted the prior periods’ consolidated financial statements to reflect the change. As a result, retained earnings
as of April 1, 2009 increased from ¥138,235 million as originallyreported to ¥138,442 million. The effect of the retrospective application for the years ended March 31, 2011 and 2010 was as follows.

Millions of Yen

2011

Consolidated Balance Sheets
Total assets
Total liabilities
Total equity
Consolidated Statements of Income
Net income from continuing operations
Net income attributable to Wacoal Holdings Corp.
Consolidated Statements of Cash Flows
Operating activities
Investing activities
Financing activities
Cash and cash equivalents, end of the year

As Originally
Reported

2010

As Adjusted

As Originally
Reported

As Adjusted¥215,345
46,478168,867¥215,276
45,896
169,380¥223,387
49,834
173,553¥222,889
49,106
173,783

2,737
2,615

2,907
2,785

2,456
2,524

2,407
2,475

10,054(1,546)(4,899)26,981

10,441(703)(4,965)26,316

9,449(2,698)(5,438)24,317

9,463(3,573)(5,363)22,328Yen

Earnings per share
Net income attributable to Wacoal Holdings Corp.
		 Basic
		 Diluted

Reclassifications—Certain reclassifications have been made to theprior years’ consolidated financial statements to conform to thecurrent year’s presentation.
Recent Accounting Pronouncements:
Fair Value Measurements—In January 2010, the Financial
Accounting Standards Board (FASB) issued additional disclosure
requirements for fair value measurements. According to the guidance, the fair value hierarchy disclosures are to be further disaggregated by class of assets and liabilities. A class is often a subset ofassets or liabilities within a line item in the consolidated balance
sheets. The guidance also requires additional disclosure about significant transfers between Levels 1 and 2 of the fair value hierarchy, andseparate disclosures about purchase, sales, issuance and settlements
relating to Level 3 measurement. This guidance was effective forinterim and annual reporting periods beginning after December 15,
2009 except for the requirement regarding the Level 3 activity which
was effective for fiscal years beginning after December 15, 2010, andfor interim periods within those fiscal years. The Companies adopted
the guidance regarding Level 3 activity from the first quarter beginning April 1, 2011. Since the guidance related only to additional disclosures, it did not have an impact on the Companies’ consolidated
financial position, result of operations, or cash flows.

¥18.5318.51¥19.7319.72¥17.8617.85¥17.5117.50

In May 2011, the FASB issued the new guidance for fair value
measurements. The guidance changes the wording used to describe
requirements for measuring fair value and for disclosing information
about fair value measurements in order to improve consistency
between U.S. GAAP and International Financial ReportingStandards. Also, some amendments change a particular principle or
requirement for measuring fair value or for disclosing information
about fair value measurements, which leads to an expansion of thedisclosure requirements. This guidance is effective during interim
and annual periods beginning after December 15, 2011. The
Companies adopted this guidance from the interim period ended
after December 15, 2011. Since this guidance related only to additional disclosures, it did not have an impact on the Companies’ consolidated financial position, result of operations, or cash flows.
Presentation of Comprehensive Income—In June 2011, the FASB
issued revised guidance for the presentation of comprehensive
income. This guidance requires displaying adjustments for items
that are reclassified from other comprehensive income to net
income in the statement in which the components of net income
and the components of other comprehensive income are presented.
This guidance does not change the items that must be reported inother comprehensive income, nor does it affect the calculation or
Integrated Report 201256

reporting of earnings per share. In December 2011, the FASB
amended its recently issued accounting guidance by deferring theeffective date pertaining to the presentation of reclassifications of
items out of accumulated comprehensive income. All other requirements in the guidance issued in June 2011 are not affected by thisdeferral. The guidance is effective for interim and annual periods
beginning after December 15, 2011. The adoption of this guidance is
not expected to have an effect on the Companies’ consolidated
financial position, result of operations, or cash flows, but will only
impact how certain information related to Other Comprehensive
Income is presented in the consolidated financial statements.
Testing Goodwill for Impairment—In September 2011, the FASB
issued new guidance that amends goodwill impairment testing.
Under the revised guidance, entities testing goodwill for impairment
have the option of performing a qualitative assessment before calculating the fair value of the reporting unit. The guidance does notchange how goodwill is calculated or assigned to reporting units, nordoes it revise the requirement to test goodwill annually for impairment. This guidance is effective for annual and interim goodwill

impairment test performed for fiscal years beginning after December
15, 2011, during interim and annual periods beginning after December
15, 2011. Since this guidance does not change how goodwill is calculated, it is not expected to have an impact on the Company’s consolidated financial position, result of operations, or cash flows.
Multiemployer Plans—In September 2011, the FASB issued additional disclosure requirements for multiemployer plans. The objective of the guidance is to enhance the transparency of disclosuresabout (1) the significant multiemployer plans in which an employer
participates, (2) the level of the employer’s participation in thoseplans, (3) the financial health of the plans, and (4) the nature of theemployer’s commitments to the plans. The disclosure requirements do not apply to an employer’s participation in multipleemployer plans. The guidance is effective for fiscal years ended
after December 15, 2011. The Companies adopted this guidancefrom the fiscal year ended after December 15, 2011. Since thisguidance related only to additional disclosures, it did not have an
impact on the Companies’ 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, the currency 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 of Japanand have been made at the rate of ¥82.41 to $1, the noon buying rate for yen in New York City as of March 31, 2012. Such translations should
not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at the above or any other rate.

3	MARKETABLE SECURITIES AND INVESTMENTS
Held-to-Maturity and Available-for-Sale Securities—The fair value of debt and marketable equity securities classified as held to maturity
and available for sale is based on quoted market prices as of March 31, 2012 and 2011. The cost, gross unrealized gain and loss and the fairvalue of held-to-maturity and available-for-sale securities by major security type were as follows:
Millions of Yen

2012

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

Cost

Gross Unrealized Gain

Gross Unrealized Loss

Fair Value¥    101,500
2,581¥ 4,091¥    01
156¥  157¥61
4¥65¥    101,440
2,733¥ 4,183¥21,803¥9,341¥14¥31,130¥   332¥    1¥ 3¥   330

Cost

Gross Unrealized Gain

Gross Unrealized Loss

Fair Value¥   5101,300
2,657¥ 4,467¥    3
4
117¥  124

¥ 27
2
¥ 29

¥   5131,277
2,772¥ 4,562¥22,165¥7,488¥516¥29,137¥   347¥    1¥   2¥   346

Millions of Yen

2011

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

WACOAL HOLDINGS

57

Thousands of U.S. Dollars

2012

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

Cost

Gross Unrealized Gain

Gross Unrealized Loss

Fair Value$    121
18,20231,319$ 49,642$      0121,893$   1,905

$740
49
$789

$    121
17,47433,163$ 50,758$264,567$113,348$170$377,745$   4,029$     12$ 37$   4,004

There were no available-for-sale and held-to-maturity securities, which have been in a continuous unrealized loss position for more than
12 months as of March 31, 2012 and 2011. Gross unrealized holding losses and fair values of available-for-sale and held-to-maturity securities, all of which have been in a continuous unrealized loss position for less than 12 months as of March 31, 2012 and 2011, were as follows:
Millions of Yen

2012

Thousands of U.S. Dollars

Fair Value

Gross Unrealized Loss

Fair Value

Gross Unrealized Loss

¥1,139315¥1,454¥61
4¥65$13,821
3,822$17,643

$740
49
$789

Available-for-sale securities:
Current:
		 Corporate debt securities
		 Mutual fund			 Total
Noncurrent:		 Equity securities
Held-to-maturity debt securities:
Current:
		 Corporate debt securities¥  120¥14$ 1,456$170¥  247¥ 3$ 2,997

$ 36

2011

Fair Value

Gross Unrealized Loss¥  6739¥  682

¥ 27
2
¥ 29

¥6,009¥516¥  259¥   2

Millions of Yen

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

The unrealized losses on available-for-sale and held-to-maturity
securities were caused primarily by a general decline in stock prices
in Japan as of the end of the fiscal year. As of March 31, 2012, theavailable-for-sale and held-to-maturity securities in a continuous
unrealized loss position are composed of 6 corporate debt securities
and 8 other securities. The severity of decline was less than 22.2%.
The Companies periodically determine whether a decline in the fairvalue of available-for-sale and held-to-maturity securities is deemed
to be other than temporary based on criteria that includes the duration of market decline, the extent to which cost exceeds market

value, the financial position and business outlook of the issuer andthe intent and ability of the Companies to retain the impaired available-for-sale and held-to-maturity securities for sufficient period oftime for anticipated recovery in market value as described in Note 1.
No available-for-sale and held-to-maturity securities were identified
that meet the Companies’ criterion for recognition of an impairment
loss on available-for-sale and held-to-maturity securities in unrealized loss position presented above. Therefore, the Companies do notbelieve the unrealized losses represent an other-than-temporary
impairment as of March 31, 2012 and 2011.

Integrated Report 2012

58

Future maturities of debt securities and mutual funds classified as available for sale excluding mutual funds without fixed maturities as ofMarch 31, 2012 were as follows:
Millions of Yen

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

Thousands of U.S. Dollars

Cost

Fair Value

Cost

Fair Value¥  4011,825
700¥2,926¥  3991,841
676¥2,916$ 4,866
22,145
8,494$35,505$ 4,841
22,3408,203$35,384

Future maturities of debt securities classified as held to maturity as of March 31, 2012 were as follows:
Millions of Yen

Due within one year

Thousands of U.S. Dollars

Cost

Fair Value

Cost

Fair Value

¥332

¥330

$4,029$4,004

Proceeds from available-for-sale securities and the gross realized gains or losses on the sales of available-for-sale securities as of March
31, 2012, 2011, and 2010, were as follows:
Millions of Yen

Proceeds from sales of available-for-sale securities
The gross realized gains on the sales of available-for-sale securities
The gross realized losses on the sales of available-for-sale securities

During the years ended March 31, 2012 and 2010, theCompanies 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 ($485
thousand) and ¥6 million in the years ended March 31, 2012 and2010, respectively. There was no such exchange of marketablesecurities for the year ended March 31, 2011.
The amount of impairment charges the Companies recognizedon available-for-sale securities in which declines in fair value areother than temporary are ¥823 million ($9,987 thousand), ¥1,366
million and ¥1,445 million in the years ended March 31, 2012, 2011
and 2010, respectively.
Trading Securities—A subsidiary in the United States of America
has trading securities consisting of mutual funds, which arerecorded as marketable securities at the fair value of ¥421 million($5,109 thousand) and ¥278 million as of March 31, 2012 and 2011,
respectively. The Companies recorded a gain of ¥15 million ($182
thousand) and ¥55 million, which are included in other-net of otherincome (expense) for the years ended March 31, 2012 and 2011,
respectively, that relates to trading securities still held as of March
31, 2012 and 2011, respectively. There was no trading security held
as of March 31, 2010, except for the ones described below.

2012

2011

2010

2012

¥180
2

¥1,602
354
37

¥795
4
3

$2,18424

The subsidiary in the United States of America adopted a nonqualified deferred compensation plan and trust agreement.
Investments consist of several mutual funds, which are recorded
as investments at the fair market value of ¥97 million ($1,177 thousand) and ¥99 million as of March 31, 2012 and 2011, respectively.
The Companies recorded gains of ¥4 million ($49 thousand) and¥13 million and ¥33 million which are included in other-net ofother income for the years ended March 31, 2012, 2011 and 2010,
respectively that relates to trading securities still held as of March
31, 2012, 2011 and 2010, 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 ¥3,080
million ($37,374 thousand) and ¥3,102 million as of March 31,
2012 and 2011, respectively. Investments in nonmarketable equity
securities are reviewed annually or upon the occurrence of anevent for other-than-temporary impairment. The Companies recognized impairment charges on investments in nonmarketable
equity securities of ¥8 million ($97 thousand), ¥219 million and¥15 million in the years ended March 31, 2012, 2011 and 2010,
respectively.

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

Balance at the beginning of the year
Increase due to change in scope of consolidation (Note 7)
Charged to costs and expenses
Balances written-off/reversed
Balance at the end of the year

WACOAL HOLDINGS

Thousands of
U.S. Dollars

Thousands of
U.S. Dollars

2012

2011

2010

2012

¥100

¥114

$1,213

9
(39)
¥ 70

13
(27)
¥100

¥  82
28
36
(32)
¥114

109
(473)
$  849

59

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

Balance at the beginning of the year
Increase due to change in scope of consolidation (Note 7)
Charged to costs and expenses
Balances utilized
Balance at the end of the year

2012

2011

2010

2012

¥ 1,517¥ 1,915$ 18,408

1,390(1,517)¥ 1,390

1,517(1,915)¥ 1,517¥ 2,198
15
1,915(2,213)¥ 1,915

5	INVENTORIESThe components of inventories as of March 31, 2012 and 2011 were as follows:
Millions of Yen

Finished products
Work in process
Raw materials
Total

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 influenceis generally deemed to exist if the Companies have an ownershipinterest in the voting stock of the investee between 20% and 50%,although other factors are considered in determining whether theThousands of
U.S. Dollars

16,867(18,408)$ 16,867

Thousands of
U.S. Dollars

2012

2011

2012

¥28,555
3,209
1,083¥32,847¥26,778
3,270
1,068¥31,116$346,499
38,93913,142$398,580

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

The Companies’ investments in affiliated companies and percentage of ownership as of March 31, 2012 and 2011 include, among others,
the following companies:
Percentage of Ownership (%)
Name of Investee

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

2012

2011

34
25
42
50
20

34
25
42
50
20

Aggregate values of carrying amounts and fair values of investments in affiliated companies which have a quoted market price as ofMarch 31, 2012 and 2011 were as follows:
Millions of Yen

Carrying amount
Aggregate value of quoted market priceThousands of
U.S. Dollars

2012

2011

2012

¥8,552
8,497¥8,766
7,735$103,774
103,106

The following tables represent the affiliated companies’ summarized information from the balance sheets as of March 31, 2012 and 2011,
and statements of operations for the years ended March 31, 2012, 2011 and 2010.
Millions of Yen

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

Thousands of
U.S. Dollars

2012

2011

2012

¥32,041
26,372¥58,413¥ 7,609
6,116
44,688¥58,413¥31,148
28,646¥59,794¥ 7,569
6,373
45,852¥59,794$388,800
320,010$708,810$ 92,331
74,214542,265$708,810

Integrated Report 2012

60

Millions of Yen

Net sales
Gross profit
Income before income taxes
Net income

Thousands of
U.S. Dollars

2012

2011

2010

2012

¥51,690
27,765
4,753
3,302¥50,833
27,196
3,947
3,039¥49,130
25,9483,730
2,777$627,230
336,91357,67540,068Dividends received from the affiliated companies were ¥557 million ($6,759 thousand), ¥424 million and ¥415 million during the years
ended March 31, 2012, 2011 and 2010, respectively.
Retained earnings include net undistributed earnings of affiliated companies in the amount of ¥14,735 million ($178,801 thousand) and¥14,910 million as of March 31, 2012 and 2011, respectively.

7	ACQUISITIONS
Eveden—On April 10, 2012, the Company acquired all the outstanding common shares of Eveden Group Limited (“Eveden”),
which manufactures and sells innerwear and swimsuits for womenin Europe and the United States of America in the amount of¥19,961 million ($242,216 thousand). The amount includes preexisting loans to Eveden in the amount of ¥6,178 million ($74,967
thousand). The acquisition aims to expand our overseas operations. This will enable the Companies to accelerate our globalization strategy and to expand the target customer segment byeffectively utilizing sales channels, technology, management know
how and brand strength of both companies.
Acquisition-related costs were ¥411 million ($4,987 thousand),
which were included in selling, general and administrative
expenses for the year ended March 31, 2012.
The Company is currently determining the acquisition date fairvalue of assets acquired and liabilities assumed. As a result, further information related to the accounting for this business combination, such as the fair values for assets acquired and liabilities
assumed, including goodwill, has not been disclosed.
Lecien—On August 17, 2009, the Company acquired all the outstanding common shares of Lecien which primarily manufacturesand sells innerwear, lace, handicrafts and tapestries, through shareexchange. This aimed to expand its business field. This enables theCompanies to maintain the growth of its innerwear business in thedomestic market by making its presence known in the new market
and developing new and different products, sales methods andchannels, as well as pricing strategies.
This transaction was accounted for as an acquisition. Lecien’s
results of operations were included in the consolidated statements
of income for the year ended March 31, 2010 from August 1, 2009.
Lecien’s results of operations and change in financial position
between August 1, 2009 and August 17, 2009 were not significant.

WACOAL HOLDINGSThe purchase cost of the acquisition was ¥2,489 million, which
was the fair value of the shares distributed to the shareholders ofLecien. As consideration for the acquisition, the Company distributed 2,104,063 shares of treasury stock to the shareholders ofLecien. Those shares were valued at ¥1,183 per share which was
the stock price on the acquisition date of August 17, 2009.
The purchase price of Lecien’s shares was allocated based upon
the estimated fair value of the identifiable assets acquired and liabilities assumed. As a result of the allocation of basis of investment
in Lecien, the Companies recognized goodwill of ¥71 million.
Lecien’s net sales and net loss included in the consolidated
statement of income for the year ended March 31, 2010 were
¥8,751 million and ¥245 million, respectively.
Acquisition-related costs were ¥121 million, which were
included in selling, general and administrative expense for the year
ended March 31, 2010.
Unaudited Pro Forma Results
Unaudited pro forma financial information was presented below as
if the acquisition of Lecien occurred at the beginning of the 2010 fiscal year.
Millions of Yen

2010

Pro forma sales
Pro forma operating incomePro forma net income attributable to
Wacoal Holdings Corp.

¥167,872
3,291
1,815
Yen

2010

Pro forma net income attributable to
Wacoal Holdings Corp. per share:
Basic
Diluted¥12.84
12.83

61

8	GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill—There was no change in the carrying amount of goodwill and accumulated impairment losses for the year ended March 31, 2012.
The changes in the carrying amount of goodwill for the year ended March 31, 2011 were as follows.
Millions of Yen
Peach John Segment

2012

Balance at the beginning of the year:
Goodwill
Accumulated impairment losses
		 Total
Impairment losses
Balance at the end of the year:
Goodwill
Accumulated impairment losses
		 Total¥11,203¥11,203¥   (836)¥11,203(836)¥10,367

During the year ended March 31, 2011, the Companies recorded an impairment charge on goodwill of ¥836 million in Peach John
Segment. See Note 20 for further information.
During the year ended March 31, 2010, the Companies identified a decline in fair value of Lecien primarily because of events that
occurred after the acquisition date and recognized an impairment loss of ¥71 million. See Note 7 for further information.
Other Intangible Assets—The components of acquired intangible assets excluding goodwill as of March 31, 2012 and 2011 were as follows:
Millions of Yen

2012
Year Ended March 31

Amortized intangible assets:
Customer relationship
Software
Other
		 Total
Unamortized intangible assets:
Trademark
Other
		 Total

Gross Carrying
AmountGross Carrying
AmountAccumulated
Amortization andImpairment Loss

¥ 3,361
8,228
1,202¥12,791¥2,818
4,866
426¥8,110$ 40,784
99,842
14,586$155,212$34,195
59,046
5,169$98,410¥ 5,316103¥ 5,419¥  559$ 64,506
1,250$ 65,756$ 6,783

Amortized intangible assets:
Customer relationship
Software
Other
		 Total
Unamortized intangible assets:
Trademark
Other
		 Total¥  559$ 6,783

Millions of Yen

2011
Year Ended March 31

Thousands of U.S. Dollars

Accumulated
Amortization andImpairment Loss

Gross Carrying
AmountAccumulated
Amortization andImpairment Loss

¥ 3,361
7,543
1,289¥12,193¥2,636
3,677
412¥6,725¥ 5,316100¥ 5,416¥  559¥  559Other intangible assets acquired during the year ended March 31, 2012 totaled ¥846 million ($10,266 thousand) which primarily consistof software of ¥829 million ($10,059 thousand) with estimated useful life of 5 years.

Integrated Report 2012

62

During the year ended March 31, 2012, the Companies
recorded no impairment charge on other intangible assets.
During the year ended March 31, 2011, the Companies recorded
an impairment charge on other intangible assets of ¥377 millionand ¥559 million, for the customer relationship and trademark,respectively, in Peach John Segment. See Note 20 for further
information.
During the year ended March 31, 2010, the Companies
recorded an impairment charge on other intangible assets of¥1,023 million for customer relationship in Peach John Segment.
See Note 20 for further information.

9	SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans as of March 31, 2012 and 2011 consisted of
the following:
Millions of Thousands of
Yen
U.S. Dollars

Collateralized bank loans
Unsecured bank loans
Total

2012

2011

2012

¥5,780¥5,780¥  500
5,652¥6,152$70,137$70,137

The weighted-average annual interest rates on short-term bankloans as of March 31, 2012 and 2011 were 1.3% and 0.9%,
respectively.
Unused lines of credit for short-term financing as of March 31,
2012 and 2011, aggregated ¥40,184 million ($487,611 thousand)and ¥24,651 million, respectively. The Companies compensate
banks for these facilities in the form of commitment fees, whichwere not material during the years ended March 31, 2012 and 2011.
Long-term debt as of March 31, 2012 and 2011 are summarized
below. The interest rates and maturities are for loans as of March
31, 2012.
Millions of Thousands of
Yen
U.S. Dollars

Collateralized bank loans, withfloating interest at 1.0%~3.7%,
maturing through 2016Collateralized bank loans, with
fixed interest at 1.5%, maturing
through 2021
Unsecured bank loans, with
fixed interest at 1.5%–1.8%,
maturing through 2021
Capital lease obligation
Total
Less current portionLong-term debt, less current
portionWACOAL HOLDINGS

2012

2011

2012

¥307

¥ 76

$3,725

98

1,189

297
0
702
(64)

200
8
284
(70)

3,604
0
8,518
(777)

¥638

¥214

$7,741Aggregate amortization expenses for the years ended March
31, 2012, 2011 and 2010 related to other intangible assets were
¥1,747 million ($21,199 thousands), ¥1,858 million and ¥1,780
million, respectively. Future estimated amortization expenses as ofMarch 31, 2012 were as follows:Year Ending March 31

Millions ofYen

Thousands of
U.S. Dollars

Estimated amortization expense
		 2013
		 2014
		 2015
		 2016
		 2017
Total¥1,384
1,165
758
312
236
¥3,855$16,794
14,136
9,198
3,786
2,864
$46,778

The annual maturities of long-term debt as of March 31, 2012were as follows:

Millions of Thousands of
Yen
U.S. Dollars

Year Ending March 31

2013
2014
2015
2016
2017
Thereafter
Total

¥ 64
250
50
50
50
238
¥702

$  777
3,034
607
607
607
2,886
$8,518A subsidiary has pledged assets as security for loans. As of
March 31, 2012 and 2011, assets pledged as collateral for bankloans were as follows:

Millions of Thousands of
Yen
U.S. Dollars

Land
Buildings
Total

2012

2011

2012

¥  952758¥1,710¥  803460¥1,263$11,552
9,198$20,750

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

63

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

Millions ofYen

Thousands of
U.S. Dollars

2013
2014
2015
2016
2017
Thereafter
Total¥  321
297
245
218
209
404
¥1,694$ 3,895
3,604
2,973
2,645
2,536
4,903
$20,556

Rental expenses were ¥5,317 million ($64,519 thousand), ¥5,130 million and ¥5,265 million for the years ended March 31, 2012, 2011
and 2010, respectively, and have been included in selling, general and administrative expenses.

11	ASSET RETIREMENT OBLIGATIONSThe Companies recorded the fair value of asset retirement obligations in order to recognize legal obligations associated with the removal 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
Changes due to translation of foreign currencies
Balance at the end of the year

12	TERMINATION AND RETIREMENT PLANS
Employee Retirement Plans—The Companies sponsor termination
and retirement benefit plans that cover substantially all employees. Benefits are based on the employee’s years of service, position and performance. If the termination is involuntary or caused
by death, the employee is usually entitled to greater payments
than in the case of voluntary termination.
The Companies have a contributory defined retirement benefit
plan and several unfunded termination plans administered by theThousands of
U.S. Dollars

2012

2011

2012

¥663
6
78
(86)

¥ 594
20
231
(177)
(5)
¥ 663

$8,04573946(1,043)¥661$8,021Companies. Benefits under the contributory defined retirement
benefit plan are usually paid in a lump sum at the earlier of termination or retirement, although periodic payments are available
under certain conditions. Benefits under the other termination andretirement benefit plan are paid either as lump-sum payments orperiodic payments under certain conditions. The benefits are usually paid as a lump-sum payment, if the employee resigns before
the mandatory retirement age.

Integrated Report 2012

64

Contributory Defined Retirement Benefit Plan—The following provides a reconciliation of benefit obligations, plan assets and funded statusof the plans:

Change in benefit obligations:Benefit obligations at the beginning of the year
Service cost
Interest cost
Participants' contributions
Actuarial loss (gain)
Benefits paid from plan assets
Settlement paid from plan assets
Settlement paid by the Companies
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

Millions of Yen

Thousands of
U.S. Dollars

2012

2011

2012

¥32,708
833
725
71
1,793
(752)
(1,090)(153)¥34,135¥33,454
835
712
71
(593)
(708)
(926)
(137)
¥32,708$396,894
10,1088,797
862
21,757(9,125)(13,226)(1,857)$414,210¥30,978
550
1,850
71
(752)
(1,090)¥31,607¥ (2,528)¥31,743
(768)
1,566
71
(708)
(926)
¥30,978¥ (1,730)$375,901
6,674
22,449862(9,125)(13,227)$383,534$ (30,676)

Millions of Yen

Thousands of
U.S. Dollars

2012

2011

2012

¥   (93)(2,435)¥(2,528)¥   158¥   (90)(1,798)¥(1,730)$ (1,129)(29,547)$(30,676)

Amounts recognized in the consolidated balance sheets as of March 31, 2012 and 2011 consist of:Prepaid pension expense
Accrued expenses
Liability for termination and retirement benefits

Amounts recognized in accumulated other comprehensive loss, pre-tax, as of March 31, 2012 and 2011 were as follows:
Millions of Yen

Actuarial loss
Prior service benefit

2012

2011

2012

¥(7,665)
2,805¥(4,860)¥(6,874)
3,497¥(3,377)$(93,010)
34,037$(58,973)

Millions of Yen

Thousands of
U.S. Dollars

The accumulated benefit obligation for all defined benefit plans as of March 31, 2012 and 2011 were as follows:

Accumulated benefit obligation

Thousands of
U.S. Dollars

2012

2011

2012

¥33,723¥32,255$409,210

The projected benefit obligations and the fair value of the plan assets for the Companies’ 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 Companies’ pension plans withaccumulated benefit obligations in excess of plan assets were as follows:

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

WACOAL HOLDINGS

Millions of Yen

Thousands of
U.S. Dollars

2012

2011

2012

¥34,135
31,607¥2,488600$414,209
383,534

33,72331,6072,488
600

409,210
383,534

65

Net periodic benefit costs for the Companies’ plans consisted of the following for the years ended March 31, 2012, 2011 and 2010:
Thousands of
U.S. Dollars

Millions of Yen

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

2012

2011

2010

2012

¥  833
725
(756)
1,208
(692)
¥1,318¥  835
712
(758)
1,255
(691)
¥1,353¥  915
764
(705)
1,814
(691)
¥2,097$10,108
8,797(9,174)
14,658(8,397)$15,992

The unrecognized net actuarial loss and prior service benefit are being amortized over 12 years (the average remaining service life ofactive participants) using the declining-balance method and the straight-line method, respectively.
Other changes in plan assets and benefit obligations recognized in other comprehensive (loss) income for the years ended March 31,
2012, 2011 and 2010 were as follows:

Thousands of
U.S. Dollars

Millions of Yen

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

The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit cost overthe next year are summarized as follows:.
Millions of Thousands of
Yen
U.S. Dollars

Actuarial loss
Prior service benefit¥1,341(641)$16,272(7,778)The Companies use a measurement date of March 31 for theirplans. The weighted-average assumptions used as of March 31 incomputing the benefit obligations shown above were as follows:
Discount rate
Rate of increase in future compensation

2012

2011

1.9%
0.0%

2.4%
0.0%

The weighted-average assumptions used as of March 31 in computing the net periodic benefit cost shown above were as follows:
Discount rateRate of increase in futurecompensationExpected long-term rate of
return on plan assets

2012

2011

2010

2.4%

2.3%

2.5%

0.0%

0.0%

0.0%

2.5%

2.5%

2.5%

The Company’s wholly owned subsidiary, Wacoal Corp.’sapproach to establishing the discount rate is based upon long-term
Japanese government bond rates and corporate bond indices. The
discount rate assumption is based upon the effective yields as ofMarch 31, 2012 on the Japanese government bonds whose maturity dates would be the same as timing of the expected future benefit payments, adjusted for an incremental yield of approximately 25
basis points that is achieved by selecting corporate bonds whose
credit characteristics satisfy the quality requirements but whose
yields are slightly higher than the yields on Japanese government
bonds. For other plans, similar indices and methods are used.
The expected long-term rate of return on plan assets is derived
proportionally from return assumptions determined for each of the

2012

2011

2010

2012

¥(1,999)
1,208
(692)
¥(1,483)¥ (933)1,255(691)¥ (369)¥1,575
1,814(691)¥2,698$(24,257)
14,658(8,397)$(17,996)

major asset classes. The return expectations for each of the asset
classes are based largely on assumptions about economic growthand inflation, which are supported by long-term historical data. The
estimated long-term rate of return is based on an asset allocation ofequity securities of 33%, debt securities of 48%, life insurancecompany general accounts of 17% and short-term financing of 2%.
The Companies’ investment strategy is to maintain actual asset
weightings within a preset range of target allocations. The Companies’
investments are broadly diversified, typically consisting primarily ofequity and debt securities. The Companies believe these ranges represent an appropriate risk profile for the planned benefit payments ofthe plans based on the timing of the estimated benefit payment.
The asset allocation as of March 31, 2012 and 2011 was as follows:
Equity securities
Debt securities
Life insurance company general accounts
Short-term financing

2012

2011

40.4%
40.8%
16.1%
2.7%

37.1%
40.9%
16.1%
5.9%

The target allocation percentages are reviewed and approvedby the Pension Committee. The actual allocations for 2012 and2011 are different from the target allocation percentages primarily
because Wacoal Corp. maintained additional equity securities as
the separate plan asset which was contributed to the plan based on
an agreement between Wacoal Corp. and its employees and are
not governed by the Pension Committee. As such, the actual allocation percentage of equity securities to the total plan assets ishigher than the target allocation, and similarly, the actual allocation
for the other types of assets are lower than the target allocation.
The following table presents the Companies’ plan assets using thefair value hierarchy as of March 31, 2012. The fair value hierarchy has
three levels based on the reliability of the inputs used to determine fairvalue. Level 1 refers to fair values determined based on quoted prices
in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes
fair values estimated using significant unobservable inputs.

Integrated Report 2012

66

Millions of Yen

2012

Equity securities:
Japanese companies
Foreign companies
Pooled funds (a)Debt securities:
Japanese government bonds
Japanese municipal bonds
Japanese corporate bonds
Foreign government bonds
Pooled funds (b)Life insurance company general accounts
Other types of investments:
Equity long/short hedge funds (c)Short-term financing
		 Total

Level 1

Level 2

Level 3

¥6,105866

Total¥ 6,105866
4,357¥ 4,357
1,927

9,654
5,093

1,927
5
70
668
9,654
5,093

¥9,5662,017
845¥22,041

2,017
845¥31,607

Level 1

Level 2

5
70
668

Millions of Yen

2011

Equity securities:
Japanese companies
Foreign companies
Pooled funds (a)Debt securities:
Japanese government bonds
Japanese municipal bonds
Japanese corporate bonds
Foreign government bonds
Pooled funds (b)Life insurance company general accounts
Other types of investments:
Equity long/short hedge funds (c)Short-term financing
		 Total

Level 3

¥5,693865

Total¥ 5,693
865
3,405¥ 3,405
1,921

9,924
4,974

1,921
5
118
708
9,924
4,974

¥9,187

1,529
1,836¥21,791

1,529
1,836
¥30,978

Level 1

Level 2

5
118
708

Thousands of U.S. Dollars

2012

Equity securities:
Japanese companies
Foreign companies
Pooled funds (a)Debt securities:
Japanese government bonds
Japanese municipal bonds
Japanese corporate bonds
Foreign government bonds
Pooled funds (b)Life insurance company general accounts
Other types of investments:
Equity long/short hedge funds (c)Short-term financing
		 Total$ 74,081
10,508$ 52,870
23,383Total$ 74,081
10,50852,870117,146
61,801

23,383
61849
8,106
117,146
61,801

24,475
10,254$267,456

24,475
10,254$383,534

61
849
8,106

$116,078

Level 3(a)	T his class includes common stock of approximately 63% Japanese companies and 37% foreign companies as of March 31, 2012, and those percentages were 73% and 27%, respectively,
as of March 31, 2011.
(b)	T his class includes approximately 49% of Japanese government bonds, 3% of Japanese municipal bonds, 42% of foreign government bonds, and 6% of corporate bonds as of March 31,
2012, and those percentages were 46%, 2%, 38%, and 14%, respectively, as of March 31, 2011.
(c)	T his class includes hedge funds that invest both long and short in approximately 36% of Japanese common stocks, 35% of foreign common stocks and 29% of debt securities as of March
31, 2012, and those percentages were 51%, 49% and 0%, respectively, as of March 31, 2011.

WACOAL HOLDINGS

67

Equity securities and debt securities presented in Level 1 areprimarily valued using a market approach on the quoted market
prices of identical instruments. Municipal bonds and corporate
bonds presented in Level 2 are primarily valued using quoted
prices for identical instruments in markets that are not active.
Pooled funds in equity securities or debt securities and equity
long/short hedge funds which are categorized in Level 2 are valuedby the sponsor of the fund primarily based on quoted prices inboth active and inactive market for identical instruments which
comprise funds. Life insurance company general accounts is thecontracts with the insurance companies with guaranteed rate of
return and capital, and those value are based on addition of original value and return.
The Companies’ funding policy for the funded plans is to contribute amounts computed in accordance with actuarial methods
accepted by Japanese tax law. The Companies expect to contribute ¥1,813 million ($22,000 thousand) to their plans in the year
ending March 31, 2013.
The following benefit payments, which reflect expected futureservices, as appropriate, are expected to be paid:

Year Ending March 31

Millions of Thousands of
Yen
U.S. Dollars

2013
2014
2015
2016
2017
Thereafter¥2,043 $ 24,791
2,115
25,6642,020
24,512
2,003
24,305
1,989
24,135
9,975 121,041

Multiemployer Plan—A subsidiary participated in a multiemployer
plan, Kyoto Orimono Oroshisho Employee Pension Plan, and withdrew from the plan during the year ended March 31, 2012. As acondition of the withdrawal, the subsidiary contributed special
premiums in the amount of ¥1,580 million ($19,172 thousand). The
subsidiary recorded the estimated withdrawal liability of ¥774 million as of March 31, 2011 as it was probable that the subsidiarywould withdraw from the fund. Accordingly, the subsidiaryrecorded an additional expense in the amount of ¥806 million($9,780 thousand) for the year ended March 31, 2012, and it has
been included in selling, general and administrative expenses.

Kyoto Orimono Oroshisho Employee Pension Plan’s plan assets and benefit obligations as of March 31, 2011 were ¥34,442 million and¥42,894 million, respectively. The subsidiary’s contribution to the plan for the years ended March 31, 2011 and 2010 exceeded 5% of total
contribution.
Premium Contributions to Program
Funded Status

Millions of Yen

Program Name

Program Number

March 31, 2011

April 1, 2011–
March 31, 2012

Kyoto Orimono Oroshisho Employee Pension Plan

Kyoki No. 317 more than 80%¥56

April 1, 2010–
March 31, 2011

¥42

Defined Contribution Plan—A subsidiary has a defined contribution plan. The amounts of cost recognized for its contribution to
the plan were ¥27 million ($328 thousand), ¥28 million and ¥20
million for the years ended March 31, 2012, 2011 and 2010,
respectively.
Employee Early Retirement Program—The Companies provide
additional benefits to employees that elect to participate in the
Companies’ early retirement program. Retirement benefits of¥260 million ($3,155 thousand), ¥348 million and ¥361 million
were paid in addition to normal benefits and charged to selling,
general and administrative expenses for the years ended March 31,
2012, 2011 and 2010, respectively.
Termination Plan for Directors and Corporate Auditors—The
Company and certain subsidiaries have termination plans for
directors and corporate auditors. Payment of termination benefits
to directors and corporate auditors 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 and corporate auditors upon the approval of its
shareholders. The amount of benefit for each individual was fixed
as of June 29, 2005 and will remain frozen until the retirement ofeach respective director and corporate auditor. The outstanding
liabilities were ¥317 million ($3,847 thousand) as of March 31,
2012 and 2011 and were recorded in other long-term liabilities.
Subsidiaries still maintain plans for their directors and corporate
auditors. In accordance with the guidance for determination ofvested benefit obligation for a defined benefit pension plan, thesubsidiaries recorded a liability for termination benefits for directors and corporate auditors at the amount that would be needed if
all directors and corporate auditors were to resign at each balance
sheet date. The liabilities for termination benefits for directors andcorporate auditors as of March 31, 2012 and 2011 were ¥382 million ($4,636 thousand) and ¥385 million, respectively, 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 thatmeet 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 Board of Directorsof companies with board committees (an appointment committee,
compensation committee and audit committee) can also do so
because such companies with board committees already, by
nature, meet the criteria under the Companies Act, even thoughsuch companies have an audit committee instead of the Board of
Corporate Auditors.
The Companies Act permits companies to distribute dividends
in kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.

Integrated Report 2012

68

Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation of
the companies so stipulate. The Companies Act provides certain
limitations on the amounts available for dividends or the purchaseof treasury 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, reserveand surplus
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
the payment of such dividends until the total of aggregate amountof legal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Companies Act, the total amount ofadditional 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 theBoard of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by specific formula.

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,
2012, 2011 and 2010. The Company believes that such awards better align the interests of its directors with those of its shareholders,by sharing both risk and return from fluctuations in stock prices
and giving motivation to enhance its corporate value. The compensation cost is measured at fair value on the grant date. Options
vest over one year in proportion to the services rendered by the
directors, and are exercisable from the day after the date of retirement up to (i) 20 years from the grant date or (ii) 5 years from the
day after the 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.

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
the historical volatility of the Company’s share price over the mostrecent period commensurate with the expected term of theCompany’s stock options. Risk-free interest rate is based on theJapanese government bonds yield curve in effect at the time of
grant for a period commensurate with the expected term of theCompany’s share options. Expected term of options granted isbased 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 their retirement.
Expected dividends
Expected volatility
Risk-free interest rate
Expected term

2012

2011

2010

2.1%
31.6%
0.3%
3.8 years

1.7%
31.5%
0.2%
3.6 years

2.1%
30.6%
0.5%
4.0 years

A summary of stock option activities under the Plan for the year ended March 31, 2012, was as follows:
Yen

SharesOutstanding as of April 1, 2011
GrantedExercised
Forfeited or expired
Outstanding as of March 31, 2012
Exercisable as of March 31, 2012

U.S. Dollars

Years

Weighted-Average
Exercise Price

Weighted-Average
Remaining
Contractual Term

148,000
69,00012,000

¥1
1
1

$0.01
0.01
0.01

205,000
3,000

1
1

0.01
0.01

17.9 years
2.0

Millions of Yen

Thousands of
U.S. Dollars

Aggregate Intrinsic Value¥201
3$2,43936

The total intrinsic value of options exercised was ¥12 million ($146 thousand) and ¥5 million for the years ended March 31, 2012 and2010, respectively. There were no options exercised for the year ended March 31, 2011.
Total compensation costs recognized for the years ended March 31, 2012, 2011 and 2010 were ¥60 million ($728 thousand), ¥50 millionand ¥55 million, respectively. The total recognized tax benefits related thereto for the years ended March 31, 2012, 2011 and 2010 were ¥21
million ($255 thousand), ¥20 million and ¥22 million, respectively.
The weighted-average grant date fair values of options granted for the years ended March 31, 2012, 2011 and 2010 were ¥878 ($11),¥1,081 and ¥1,084, respectively.
As of March 31, 2012, there were ¥11 million ($133 thousand) of total unrecognized compensation cost related to nonvested share-based
compensation arrangements granted under the Plan. That cost is expected to be recognized over three months.

WACOAL HOLDINGS

69

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

Millions of Yen

2011

2012

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

Pre-tax
AmountTax(Expense)
CreditNet
Amount¥  (836)¥   54

1,608
783
2,391
(1,999)516(1,483)¥    722010

Pre-tax
AmountTax(Expense)
CreditNet
AmountPre-tax
AmountTax
ExpenseNet
Amount¥   (782)¥(2,890)¥   88¥(2,802)¥  255¥   (75)¥  180

(470)
(319)
(789)

1,138
464
1,602

(2,843)
1,014(1,829)

1,170
(413)
757

(1,673)601(1,072)

4,319
1,293
5,612

(1,735)(526)(2,261)

2,584
767
3,351

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

(933)
564
(369)
¥(5,088)

380
(230)
150
¥ 995

(553)
334
(219)
¥(4,093)

1,575
1,123
2,698
¥8,565(641)(457)(1,098)¥(3,434)

934
666
1,600
¥5,131Thousands of U.S. Dollars

2012
Pre-tax
AmountForeign currency translation adjustments $(10,144)
Unrealized gain on securities:
Amount arising during the year
19,512
Reclassification adjustments
9,501
		 Net unrealized gain
29,013Pension liability adjustment:
Amount arising during the year
(24,257)
Reclassification adjustment
6,261
		 Net unrealized loss
(17,996)
Other comprehensive loss$    873

Tax(Expense)
CreditNet
Amount$   655$ (9,489)(5,703)(3,871)(9,574)

13,8095,630
19,4398,640(15,617)(2,463)
3,798
6,177(11,819)$(2,742) $ (1,869)

16	INCOME TAXES
Domestic and foreign components of income before income taxes,
equity in net income of affiliated companies, and net (income) loss
attributable to noncontrolling interests were summarized as follows:
Millions of Thousands of
Yen
U.S. Dollars

Japan
Foreign
Total

2012

2011

¥18,045(7,838)¥10,207¥ 9,212(5,285)¥ 3,927

2010

2012

¥ 9,147 $218,966(5,992) (95,110)¥ 3,155 $123,856

Domestic and foreign components of income taxes expenseconsist of:Millions of Thousands of
Yen
U.S. Dollars

Current:
Japan
Foreign
Deferred:Japan
Foreign
Total income taxes

2012

2011

2010

2012

¥2,942581¥3,523¥ 2,882598¥ 3,480¥ 2,851392¥ 3,243$35,700
7,050$42,750¥  6751¥  676¥4,199¥(1,398)(72)¥(1,470)¥ 2,010¥(1,726)138¥(1,588)¥ 1,655$ 8,19112$ 8,203$50,953

Income taxes in Japan applicable to the Companies, imposedby the national, prefectural and municipal governments, in theaggregate resulted in normal effective statutory tax rates ofapproximately 40.7% for the years ended March 31, 2012, 2011
and 2010. Foreign subsidiaries are subject to income taxes of thecountries in which they operate.
The Companies are subject to a number of different taxes
based on income. The effective income tax rates differed from thenormal statutory rates for the following reasons for the years
ended March 31, 2012, 2011 and 2010:
2012

2011

2010

Normal Japanese statutory rates
40.7% 40.7% 40.7%
Increase (decrease) in taxes resulting from:Permanently nondeductible expenses
4.6
9.9
12.9
Change in valuation allowance
3.2
17.6
(8.5)
Undistributed earnings of associatedcompanies
(0.1)
2.9
2.6
Differences in foreignsubsidiaries' tax rate
(1.5)
(4.4)
(5.8)
Changes in Japanese income tax rates(6.0)
Tax exemption
(0.3)
(0.7)
(1.0)
Unrecognized tax benefits
0.2
2.9
6.4
Impairment losses on goodwill(12.3)
Other—net
0.3
(5.4)
5.2
Effective tax rates
41.1% 51.2% 52.5%

Integrated Report 2012

70

Amendments to the Japanese tax regulations were enacted
into law on November 30, 2011. As a result of these amendments,
the statutory income tax rate will be reduced from 40.7% to 38%
effective from the year beginning April 1, 2012, and to 35.6%
effective from the year beginning April 1, 2015, 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% 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 ($7,475
thousand) and have been reflected in income taxes in the consolidated statements of income for the year ended March 31, 2012.

The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax balances as of March 31, 2012
and 2011 were as follows:
Millions of Yen

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
Pension expense
Tangible fixed assets
Tax loss carryforwards
Intangible assets
Investment in subsidiaries
Other temporary differences
Total
Valuation allowance
Total

Thousands of U.S. Dollars

2012

2011

2012

DeferredDeferredTax Assets Tax Liabilities

DeferredDeferredTax Assets Tax Liabilities

DeferredDeferredTax Assets Tax Liabilities¥   489
55
210
990
1,302
1,431

¥   576
51
333
1,844
1,342
1,541
¥ 1,679
1,846
2,904
1,920

¥ 1,452
1,819
3,292
1,696

$ 17,619
22,07339,947
20,580

232
190
763
268
1,484
1,629
4,081

303
165
731
236
1,356
1,303
3,626

906
13,103(4,088)¥ 9,015$   5,934
667
2,548
12,013
15,79917,364

1,905
912
193
11,269¥11,269540
495
15,369(4,938)¥10,431

3,677
2,002
8,870
2,864
16,454
15,81144,000
2,233
1,042
160
11,784

23,116
11,067
2,342
136,744

10,994
158,997(49,605)¥11,784 $109,392 $136,744

The valuation allowance decreased by ¥850 million ($10,314 thousand) for the year ended March 31, 2012. The valuation allowance
increased by ¥1,506 million for the year ended March 31, 2011.
As a result of changing the Companies’ legal structure, the Companies reversed certain of valuation allowance for the year ended March
31, 2010. Accordingly, the Companies utilized ¥721 million of tax loss carryforwards and recognized the tax benefits of ¥293 million for theyear ended March 31, 2010.
As of March 31, 2012, certain subsidiaries had tax loss carryforwards, which are available to offset future taxable income ofsuch subsidiaries, expiring as follows:Year Ending March 31

Millions of Thousands of
Yen
U.S. Dollars

2013
2014
2015
2016
2017
2018
2019
2020
2021
ThereafterTotal¥   725 $   8,797
749
9,089
179
2,172
373
4,526
398
4,830
207
2,512
2,348
28,492
2,367
28,722
1,961
23,795966
11,722¥10,273 $124,657

There was no portion of undistributed earnings of foreign subsidiaries and foreign corporate joint ventures which were deemed
to be permanently invested as of March 31, 2012 and 2011.
WACOAL HOLDINGS

A reconciliation of beginning and ending amount of unrecognized tax benefits was as follows:

Millions of Thousands of
Yen
U.S. Dollars

2012

2011

2010

2012

Balance at the beginning of the year ¥188
Additions based on tax positions
related to the current year
79
Additions for tax positions ofprior years
Reductions for tax positions ofprior years
Settlements with tax authorities
Balance at the end of the year
¥267

¥321

¥106

$2,281

58

232

959

50
(191)
¥188

(41)
(26)
¥321

$3,240Total amount of unrecognized tax benefits that, if recognized,
would affect the effective tax rate is ¥267 million ($3,240 thousand) and ¥188 million as of March 31, 2012 and 2011, respectively.

71

Based on each of the items of which the Companies are aware
as of March 31, 2012, no significant changes to the unrecognizedtax benefits are expected within the next twelve months.
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 theyears ended March 31, 2012, 2011 and 2010 were not material.

The Companies file income tax returns in Japan and various
foreign tax jurisdictions. In Japan, the Companies are no longer subject to regular income tax examinations by the tax authorities foryears before 2009 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 examination ofcertain domestic subsidiaries’ 2002 to 2007 fiscal years and certain
U.S. subsidiaries’ 2004 and 2003 fiscal years was 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 affiliated companies in the amount of ¥2,093 million ($25,397 thousand), ¥1,131 million and ¥1,209 million in the fiscal years ended
March 31, 2012, 2011 and 2010, respectively. The accounts payable to affiliated companies were ¥26 million ($315 thousand) and¥0 million as of March 31, 2012 and 2011, respectively.
The Companies also sell supplies, materials and products tocertain affiliated companies. Aggregate sales to affiliated companies were ¥477 million ($5,788 thousand), ¥537 million and ¥354

million in fiscal years ended March 31, 2012, 2011 and 2010. The
accounts receivable from affiliated companies were ¥81 million($983 thousand) and ¥91 million as of March 31, 2012 and 2011,
respectively.
The Companies earn royalties from the use of the Wacoal
Brand by certain affiliated companies. The amount of royalty revenue earned was ¥216 million ($2,621 thousand), ¥201 million and¥199 million in the fiscal years ended March 31, 2012, 2011 and2010, respectively. Other accounts receivables from affiliatedcompanies, which are inclued in other current assets in the consolidated balance sheets, were ¥171 million ($2,075 thousand) and¥158 million as of March 31, 2012 and 2011, respectively.

18	EARNINGS PER SHARE AND AMERICANDEPOSITARY RECEIPT
Basic net income attributable to Wacoal Holdings Corp. per sharehas 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 options to issue common stock were exercised.
The computation of earnings per American Depositary Receipt(ADR), each ADR representing 5 shares of common stock, isbased on the weighted-average number of common stock outstanding. The weighted-average number of common stock outstanding used in the computations of basic net income attributable
to Wacoal Holdings Corp. per share was 140,848,576 shares for
2012, 141,145,190 shares for 2011 and 141,353,141 shares for 2010.
The weighted-average number of diluted common stock outstanding used in the computations of diluted net income attributable to
Wacoal Holdings Corp. per share was 141,013,083 shares,
141,260,186 shares and 141,423,315 shares for 2012, 2011 and2010, 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, 2012 and 2011 were as follows:
Millions of Yen

2012

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

Thousands of U.S. Dollars

Carrying Amount

Fair Value

Carrying Amount

Fair Value¥ 4,936
31,22774¥36,237¥ 4,934
31,22774¥36,235$ 59,896
378,922898$439,716$ 59,871
378,922898$439,691¥    (12)(702)¥   (714)¥    (12)(702)¥   (714)$    (146)(8,518)$  (8,664)$    (146)(8,518)$  (8,664)

Millions of Yen

2011

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

Carrying Amount

Fair Value¥ 4,840
29,583
24¥34,447¥ 4,840
29,582
24¥34,446¥    (49)(276)¥   (325)¥    (49)(276)¥   (325)
Integrated Report 2012

72

There are investments in nonmarketable equity securities forwhich there are no readily determinable fair values. See Note 3 forfurther information. The carrying amounts of all other financial
instruments approximate their estimated fair values.
Foreign Exchange Contracts—The Companies are exposed to foreign currency exchange risks on the transactions denominated inforeign currencies relating to its ongoing business operations. Suchrisks 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-debt securities
are classified as marketable securities and investments as ofMarch 31, 2012, and 2011, respectively. The fair value of these
held-to-debt securities are classified as Level 1. For all other investments included in marketable securities and investments, seeNotes 3 and 20.
Long-Term Debt—The fair values for long-term debt are estimatedby discounted cash flow analysis, using rates currently available forsimilar 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 natureand involve uncertainties and matters of significant judgment andtherefore cannot be determined with precision. Changes inassumptions could significantly affect the estimates.
Concentration of Credit Risk—The Companies’ business consists
primarily of sales of women’s intimate apparel to a large number ofdiverse 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 thegeneral retail customers that are consolidated companies in the
Aeon Group collectively accounted for approximately 9.8%, 10.0%
and 10.4% of the total sales in fiscal years ended March 31, 2012,2011 and 2010, respectively.

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 a three-level fair value hierarchy that prioritizes the
inputs used to measure fair value as follows:

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

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, 2012 and 2011 were as follows:
Millions of Yen

2012

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

WACOAL HOLDINGS

Level 1

Level 2¥   421421¥   10
1,440
2,733
4,183

31,13097
31,227¥31,648

Level 3Total¥    10
1,440
3,154
4,604
31,13097
31,22774¥4,25774¥35,905¥   (12)¥    (12)73

Millions of Yen

2011

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

Level 1

Level 2

Level 3¥   503

278
781¥   503
10
1,277
3,050
4,840

¥   10
1,277
2,772
4,059

29,137
99
29,236¥30,017

Total

29,137
99
29,23624¥4,083

24¥34,100¥   (49)¥    (49)Thousands of U.S. Dollars

2012

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

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
not active and mutual funds presented in Level 2 are valued by thefinancial institution based on quoted prices in both active andinactive 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 infair value of marketable securities and investments is determined
to be other than temporary.
Derivative instruments are composed of foreign currency
exchange contracts. Financial instruments presented in Level 2 arevalued using quotes obtained from third parties.

Level 1

Level 2$   5,1095,109$   121
17,47433,16350,758377,745
1,177
378,922$384,031

Level 3Total$    121
17,474
38,27255,867377,745
1,177
378,922898$51,656898$435,687$   (146)$    (146)

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 ¥89 million ($1,080 thousand), a loss of ¥8
million and a gain of ¥103 million in other—net of other income(expenses) in the years ended March 31, 2012, 2011 and 2010,
respectively.
The Companies recorded the derivative instruments as othercurrent assets and other current liabilities in the consolidated balance sheets at fair value of ¥74 million ($898 thousand) and ¥12
million ($146 thousand), respectively as of March 31, 2012. The
derivative instruments are presented as other current assets andother current liabilities in the consolidated balance sheets at fairvalue of ¥24 million and ¥49 million as of March 31, 2011.

Integrated Report 201274

Assets Measured at Fair Value on a Nonrecurring Basis
There were no significant assets or liabilities that were measured at fair value on a nonrecurring basis as of March 31, 2012.
Assets measured at fair value on a nonrecurring basis as of March 31, 2011 were as follows:
Millions of Yen

2011

Buildings and building improvements
Investments:
Unlisted shares
Goodwill (Note 8)
Trademark (Note 8)
Customer relationship (Note 8)

Buildings and building improvements held and used, with a carrying amount of ¥107 million were written down to their fair valueof ¥0, because the Companies decided to abandon an office building. An impairment charge of ¥107 million was included in earrings
for the year ended March 31, 2011, in Wacoal Business (Domestic)
Segment.
Certain unlisted securities with a carrying amount of ¥236 million were written down to their fair value of ¥17 million in connection with the decline in fair value, which was mainly caused by adownturn of investees’ business operations. Impairment chargesof ¥219 million were included in earrings for the year ended March
31, 2011. These unlisted securities presented in Level 3 are valued
based on the net assets value of the investees adjusted using cash
flows and other factors that would impact the fair value.
As of the end of March 31, 2011, goodwill with a carrying
amount of ¥11,203 million is written down to its implied fair valueof ¥10,367 million, resulting in an impairment charge of ¥836 million, which is included in earnings for the year ended March 31,
2011. To measure the fair values of the reporting units, theCompanies used the expected present value of future cash flows
and incorporated relevant unobservable inputs, such as management’s internal assumptions about future cash flows and appropriately risk-adjusted discount rates, which reflected the
management’s estimate of assumptions that market participants
would use in pricing the asset in an arm’s length transaction as ofthe measurement date.
Trademark with a carrying amount of ¥5,316 million as ofMarch 31, 2011, was written down to its fair value of ¥4,757 million,
resulting in recognition of an impairment charge of ¥559 million forthe year ended March 31, 2011. The impairment arose due to thedecline in its fair value, which was mainly caused by a downturn inconsumption due to the general market conditions. To measure thefair value of the trademark, the Companies used the relief-fromroyalty method and incorporated relevant unobservable inputs,
such as management’s internal assumptions about future cash
flows, the rate of royalty, and appropriately risk adjusted discountrate, which reflected the management’s estimate of assumptions

WACOAL HOLDINGS

Level 1

Level 2

Level 3

Total

Total Losses¥  (107)¥    17
10,3674,757
725¥    17
10,367
4,757
725

(219)
(836)
(559)
(377)
¥(2,098)

that market participants would use in pricing the asset in an arm’s
length transaction as of the measurement date. Future cash flows
were based on the management’s cash flow projections for the
future five years, and after these five years, future cash flows were
estimated using the perpetuity growth rate of 0%. The management’s cash flow projections 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 thevaluation 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.
There was no impairment loss recognized related to the customer relationship for the year ended March 31, 2012.
Customer relationship with a carrying amount of ¥1,102 millionand ¥2,401 million as of March 31, 2011 and 2010, respectively,
were written down to its fair value of ¥725 million, resulting in recognition of impairment charges of ¥377 million for the year ended
March 31, 2011 and ¥1,378 million, resulting in recognition of
impairment charges of ¥1,023 million for the year ended March 31,
2010. The impairments recorded for these years arose due to thedecline in its fair value, which was mainly caused by a downturn inconsumption because of the general market condition. To measure
the fair value of the customer relationship, the Companies usedthe excess earnings method and incorporated relevant unobservable inputs, such as management’s internal assumptions about
future cash flows, the percentage of orders that the Companies
expect to receive from the customers existed at the point of acquisition and appropriately risk-adjusted discount rate, whichreflected the management’s estimate of assumptions that market
participants would use in pricing the asset in a current transaction
as of the measurement date. The future cash flows were projectedin the same way as described in the trademark. The percentage oforders that the Companies expect to receive from the customers
existed at the point of acquisition was estimated based on the historical trend of the percentage of sales to the preacquisition customers. Risk-adjusted discount rate representing a WACC wasdetermined using the capital asset pricing model.

75

21	SEGMENT INFORMATION
Operating Segment Information
The Companies have three reportable segments: “Wacoal business (domestic),” “Wacoal business (overseas),” and “PeachJohn,” 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 makerin deciding how to allocate the Companies’ resources and inassessing their performance. The accounting policies used forthese reportable segments are the same as those described in thesummary of significant accounting policies in Note 1.

“Wacoal business (domestic)” segment primarily produces andsells innerwear (consisting of foundation, lingerie, nightwear andchildren’s innerwear), outerwear, sportswear and hosiery. “Wacoal
business (overseas)” segment produces and sells innerwear (consisting of foundation, 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 are sold under the “Peach John” brand.

Information about operating results and assets for each segment as of and for the years ended March 31, 2012, 2011 and 2010 was as follows:
Millions of Yen

2012

Net sales:
External customers
Intersegment
		 Total
Operating costs and expenses:
Operating costs and expenses
Amortization on other intangible assets (Note 8)
		 Total
Operating profit
Total assets

WacoalBusiness(Domestic)

WacoalBusiness(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)

110,417

26,49726,303(15,197)

110,417
8,172
208,373

26,4971,440
29,367

13,318182
13,500529
21,23726,303236
20,566(15,197)

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination¥110,856
2,134
112,990¥20,010
6,118
26,128¥11,575
73
11,648¥23,107
4,588
27,695¥(12,913)(12,913)

107,370

24,80627,357(12,913)

107,370
5,620
202,054

24,806
1,322
27,10912,479276
836
936
14,527(2,879)21,01327,357338
20,910(12,913)

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination¥113,929
1,793
115,722¥19,295
6,216
25,511¥13,079
9
13,088¥17,245
3,204
20,449¥(11,222)(11,222)

111,180

23,895

21,186(11,222)

111,180
4,542
205,136

23,895
1,616
27,02013,177480
1,023
14,680(1,592)
23,867

21,186(737)
20,535(11,222)

Consolidated¥171,897(58,445)

171,897
161,338
182
161,520
10,377221,098
Millions of Yen

2011

Net sales:
External customers
Intersegment
		 Total
Operating costs and expenses:
Operating costs and expenses
Amortization on other intangible assets (Note 8)
Impairment charges on goodwill (Note 20)
Impairment charges on other intangible assets (Note 20)
		 Total
Operating profit (loss)
Total assets

Consolidated¥165,548(55,810)

165,548
159,099276
836
936
161,147
4,401
215,276
Millions of Yen

2010

Net sales:
External customers
Intersegment
			 Total
Operating costs and expenses:
Operating costs and expenses
Amortization on other intangible assets (Note 8)
Impairment charges on other intangible assets (Note 20)
			 Total
Operating profit (loss)
Total assets

Consolidated¥163,548(53,669)

163,548
158,216480
1,023
159,719
3,829
222,889

Integrated Report 2012

76

Thousands of U.S. Dollars

2012

Net sales:
External customers
Intersegment
		 Total
Operating costs and expenses:
Operating costs and expenses
Amortization on other intangible assets (Note 8)
		 Total
Operating profit
Total assets

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination$1,406,018
32,994
1,439,012$259,629
79,371
339,000$167,892
2,342
170,234$252,336
69,700322,036$(184,407)(184,407)

1,339,850

321,526

319,172(184,407)

1,339,850
99,162
2,528,492

321,526
17,474356,352

161,607
2,208
163,8156,419
257,699

319,1722,864
249,557(184,407)

Consolidated$2,085,875(709,197)

2,085,875
1,957,748
2,208
1,959,956
125,919
2,682,903

The Companies account for intersegment sales and transfers at cost plus a markup. Operating profit (loss) represents net sales less operating costs and expenses. Amortization and impairment charges on other intangible assets only represent amortization and impairment charges
on customer relationships or trademark related to the acquisition of Peach John, and do not include any other intangibles such as software.
Products and Service Information
Net sales information by products and services for the years ended March 31, 2012, 2011 and 2010 was as follows:

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

Millions of Yen

Thousands of
U.S. Dollars

2012

2011

2010

2012

¥124,303
9,390
1,530
135,223¥ 16,371
1,646
8,226
10,431¥171,897¥116,127
8,713
1,476
126,316¥ 17,397
1,666
7,493
12,676¥165,548¥116,478
9,437
1,608
127,523¥ 17,125
1,702
7,420
9,778
¥163,548$1,508,349
113,942
18,566
1,640,857$  198,653
19,973
99,818
126,574$2,085,875

Geographic Information
Information by major geographic area as of and for the years ended March 31, 2012, 2011 and 2010 was as follows:

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

Millions of Yen

Thousands of
U.S. Dollars

2012

2011

2010

2012

¥149,587
10,527
11,783¥171,897¥144,999
9,167
11,382¥165,548¥143,902
7,943
11,703¥163,548$1,815,156
127,739
142,980$2,085,875¥ 45,240
2,334
1,504
¥ 49,078¥ 45,792
2,349
1,593
¥ 49,734¥ 47,378
2,512
1,914
¥ 51,804$  548,963
28,322
18,250$  595,535

Net sales are attributed to countries or areas based on the location of sellers.
Countries or areas are classified according to geographical proximity. Long-lived assets represent property, plant and equipment.

22 SUBSEQUENT EVENTSOn May 15, 2012, the Board of Directors resolved to pay a cash dividend of ¥140 ($2) per 5 shares of common stock to holders of record asof March 31, 2012 (aggregate amount of ¥3,944 million ($47,858 thousand)).
On April 10, 2012, the Company paid ¥19,961 million ($242,216 thousand) to acquire all the outstanding common shares of EvedenGroup Limited, including a loan to Eveden Group Limited. In relation to this acquisition, the Company borrowed ¥12,000 million ($145,613
thousand) from a financial institution. For further information, see Note 7.
WACOAL HOLDINGS

77

management’s report on internal control over financial reporting

The management of Wacoal Holdings Corp. is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The company’s internal control over financial reportingis a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of
directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes thosepolicies and procedures that:• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of theassets of the company;• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Wacoal Holdings Corp’s management assessed the effectiveness of internal control over financial reporting as of March 31, 2012. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (the COSO criteria).
Based on its assessment, management concluded that, as of March 31, 2012, Wacoal Holdings Corp’s internal control over financial
reporting was effective based on the COSO criteria.
Wacoal Holdings Corp’s independent registered public accounting firm, Deloitte Touche Tohmatsu LLC, has issued an attestation
report on the effectiveness of our internal control over financial reporting as of March 31, 2012.

Yoshikata Tsukamoto
President and Representative Director

Ikuo Otani
Senior Managing Director and General Manager of Corporate Planning

June 28, 2012

Integrated Report 2012

78

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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 balance sheets of Wacoal Holdings Corp. and subsidiaries (the “Companies”) as of March 31, 2012
and 2011, and the related consolidated statements of income, comprehensive income (loss), equity, and cash flows for each of the three years in the
period ended March 31, 2012, which are all expressed in Japanese yen. These financial statements are the responsibility of the Companies’ management.
Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Wacoal Holdings Corp. andsubsidiaries as of March 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended March
31, 2012, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 22 to the consolidated financial statements, on April 10, 2012, the Companies acquired all the outstanding common shares of
Eveden Group Limited.
Our audits also comprehended the translation of the Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis stated in Note 2. The translation of the financial statement amounts into U.S. dollars has been made solely forconvenience of readers outside of Japan.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companies’ internal
control over financial reporting as of March 31, 2012, based on the criteria established in Internal Control - Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated June 28, 2012 expressed an unqualified opinion on the
Companies’ internal control over financial reporting.

June 28, 2012

WACOAL HOLDINGS79

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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 internal control over financial reporting of Wacoal Holdings Corp. and subsidiaries (the “Companies”) as of March 31, 2012,
based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Companies’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the Companies’ internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting wasmaintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that amaterial weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive andprincipal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and proceduresthat (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management overrideof controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of theeffectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Companies maintained, in all material respects, effective internal control over financial reporting as of March 31, 2012, based on thecriteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended March 31, 2012 of the Companies and our report dated June 28, 2012, expressed an unqualified opinion on thosefinancial statements and included an explanatory paragraph regarding a subsequent event relating to the acquisition of Eveden Group Limited.

June 28, 2012

Integrated Report 2012

80

CORPORATE DATA
As of March 31, 2012

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/index_e.html
Date of foundation

June 15, 1946
Date of establishment
November 1, 1949

International network

Shareholders’ equity

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

Wacoal International Corp.

¥171,496 million
Number of employees (consolidated)

Wacoal America, Inc.

16,524
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.
Fukuoka Wacoal Sewing Corp.
Hokuriku Wacoal Sewing Corp.
Torica Inc.
Nanasai Co., Ltd.
Wacoal Distribution Corp.

%

100
100
100
100
100
100
100
100
57
82
100

Domestic principal joint ventures
Wacoal Holdings Equity Owned%

House of Rose Co., Ltd.

20

Overseas principal subsidiaries
Wacoal Holdings Equity Owned

Wacoal International Corp. (U.S.A.)
Wacoal America, Inc.
Wacoal France S.A.
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 (Shanghai) Human Science
R&D Co., Ltd.

WACOAL HOLDINGS

Dalian Wacoal Co., Ltd.

136 Madison Avenue,
New York, NY 10016, U.S.A.
Tel 1-212-532-6100
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, QC, Canada H3B 4W5
Tel 1-514-448-2173
Wacoal Dominicana Corp.

Las Americas Industrial Free Zone,
KM22, Autopista Las Americas,
Santo Domingo, Dominican Republic
Tel 1-809-549-1090
Wacoal France S.A.

%

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

7/11 Rue des Gazometres,
93218 Saint-Denis La Plaine Cedex,
FranceTel 33-1-5593-0310
Wacoal China Co., Ltd.

Jia 16 Tongji North Road,
Beijing Economic & Technological
Development Area,
Beijing 100176, P. R. C.
Tel 86-10-6787-2185
Wacoal (Shanghai) Human Science
R&D Co., Ltd.

5th Floor, Jiangnan Zaochuan Bldg.,
No.600 Lu Ban Road, Lu Wan District,
Shanghai 200023, P. R. C.
Tel 86-21-6390-7448
Guangdong Wacoal Inc.

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

No.6 Fu An Street, Economic &Technical Development Zone, Dalian,
Liaoning 116600, P. R. C.
Tel 86-411-8733-7722
Wacoal Hong Kong Co., Ltd.

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.

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

81

INVESTOR INFORMATIONAs of March 31, 2012

Stock listings

Ownership and distribution of shares

Tokyo, Osaka, NASDAQ
Fiscal year-end

Securities firms

March 31

1.82%

Securities code

3591

Individuals
and others

Common stock

Financial institutions
41.54%

20.36%

Issued: 143,378,085 shares
Outstanding: 140,851,070 shares

Other Japanesecompanies

Trading unit

Foreign institutions
and individuals

18.34%

1,000 shares

17.94%

Shareholder register agent
for common stock

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

Major shareholders

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

The Bank of New York Mellon as depositary bank for depositary receipt holders*

7.96

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

4.87

Meiji Yasuda Life Insurance Company

4.73

DepositaryJapan Trustee Services Bank, Ltd. (Trust Account)

3.99

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 8
 88-269-2377(888-BNY-ADRS)
www.adrbny.com

Nippon Life Insurance Company, Limited.

3.65

Number of shareholders%

Mika Okada

3.42

The Bank of Kyoto, Ltd.

3.28

The Shiga Bank, Ltd.

2.54

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

2.53

Mitsubishi UFJ Trust and Banking Corporation

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

10,811

Stock price/Trading volume
¥

2,000

1,500

1,000

500
Thousandshares

20,00015,00010,000
5,000
0

03/4

04/1

05/1

06/1

07/1

08/1

09/1

10/1

11/1

12/1

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 todiffer materially from those anticipated in these statements.

Integrated Report 2012

WACOAL HOLDINGS Integrated Report 2012

29, Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan

REACHING OUTWACOAL HOLDINGS Integrated Report 2012

120905-TCY-AT3

Printed in Japan