Taking Forward Strides
WACOAL HOLDINGS CORP. annual report 2009

Since its establishment in 1949, Wacoal has remained at theforefront of the Japanese market for women’s innerwear byenabling women the world over to express their beauty.
At present, we are building an unshakable operational
platform in Japan while increasing sales steadily inNorth America, Europe, and Asia. Furthermore, we havedeveloped innerwear and other garments that realize
outstanding comfort and figure enhancement thanks tobasic research on the shape and movement of the humanbody as well as research on the physiology of sensation.
That research draws on a wealth of analytical data that
we have accumulated by measuring the bodies of approximately 35,000 Japanese women. Going forward, as well as
providing beauty and comfort, through new functionality
we will create further added value to products that evenmore customers love while providing products that
invigorate markets.

our mission

We will contribute to society by helping women to express
their beauty.
our visionWe, the employees and management of Wacoal, will maintain arefined corporate culture based on mutual trust and will continually
strive to make the Company a global leader in the industry.
our values

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

contents
1 Financial Highlights
2	Wacoal Group Challenges—The Wacoal Group’s Strategy for Growth
8 To Our Shareholders and Other Investors
12 Messages from the Vice Presidents
14 Taking Forward Strides
		 Style Science—Innovating New Value
20	Corporate Governance of
Wacoal Holdings Corp.
22	Social Contribution Activities andEnvironmental Management
23	Board of Directors and Corporate Auditors
24 Eleven-Year Financial Summary
26 Management’s Discussion and Analysis
31 Risk Factors
32 Consolidated Balance Sheets
34 Consolidated Statements of Income
35	Consolidated Statements ofComprehensive (Loss) Income
35	Consolidated Statements ofShareholders’ Equity
36 Consolidated Statements of Cash Flows37	Notes to Consolidated Financial
Statements
51	Management’s Report on Internal
Control over Financial Reporting52	Report of Independent Registered
Public Accounting Firm
54 Corporate Data
55 Investor Information

financial highlights
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2009, 2008 and 2007

Millions of Yen (except per 5 share amounts)
2009
2008
2007

Shareholders’ equity
Total assets% Change
2009 vs 2008

¥165,761
13,540¥166,410
12,896$1,737,529
102,158+3.9%– 25.2

14,353
4,966
2.6

13,9209,029
4.8

76,92452,748– 46.9
+5.3

¥ 184
125
5,905

¥ 176
125
6,457

¥ 316
110
6,874

$ 1.85
1.26
59.56

+4.6
+0.0
– 8.5

¥165,873
213,486¥185,113
241,619¥193,278
250,266$1,672,950
2,153,162

–10.4
–11.6

Net sales¥172,276
Operating income
10,129
Income before income taxes, equity in net income (loss)
7,627
		 of affiliated companies and minority interests
Net income
5,230
3.0
ROE (%)Per 5 shares of common stock (in yen/dollars):
		 Net income
		 Cash dividends
		 Shareholders’ equity

Thousands of
U.S. Dollars*
2009* The U.S. dollar amounts represent translations of Japanese yen solely for convenience at the rate of ¥99.15=$1.

Net Sales

Operating Income

Net Income

Shareholders’ Equity¥ Billion¥ Billion¥ Billion¥ Billion

166 166
161 164

12.9

172

13.5

186

9.0

193
185

176

166

11.8
10.1

77.7

77.7 77.0 77.2 76.6

316

6.8

176 184

236
98

5.0

5.2

FY

FY

2.8

1.3
FY

05

FY

06

FY

07

FY

08

FY

09

FY

05

FY

06

FY

07

FY

08

FY

09

FY

05

FY

06

FY

07

08

09

Earnings per 5 Shares (¥)

FY

05

FY

06

FY

07

FY

08

FY

09

Equity Ratio (%)

The Wacoal Group’s Strategy for Growth

Wacoal Group Challenges
For more than half a century, the Wacoal Group has led the women’s innerwear
market in Japan. To heighten its market presence even further amid worsening
economic conditions worldwide, the Wacoal Group will continue providing
customers with real value. This section looks at the management strategies the
Wacoal Group will deploy to triumph against fierce competition and achievesustainable growth.

Strategy for Growth and Analysis of Conditions

An Increasingly Mature Domestic Market for Women’s Innerwear
At the core of the Wacoal Group’s operations, the Japanese market for women’s
innerwear has been contracting since peaking in 2000. Currently, it is estimated togenerate revenues of about ¥711 billion. As Japan’s population ages, that market ismaturing and is unlikely to grow significantly.
Meanwhile, in Japan’s retail industry, department stores, which form a market
worth approximately ¥7.7 trillion, have seen revenues gradually contracting in recent
years. Similarly, comprising a market of about ¥14 trillion, general merchandisingstores have struggled to overcome stagnation in the past several years.
The Wacoal Group’s mainstay sales channels—department stores and generalmerchandising stores—are facing severe business conditions characterized by changes
in consumer lifestyles and the emergence of new retail formats such as drug stores andInternet sales. Competition is also intensifying in the women’s innerwear industry
with the entry of apparel manufacturers.
In response to those trends, the following key strategies will enable the Wacoal
Group to realize sustainable growth.

I	Building new sales channels by developing direct retail operations
II	Increasing points of contact with customers with a focus on
younger customers
III Strengthening and expanding overseas operations even further
IV	Strengthening product development that emphasizes signature
Wacoal features
V	Maintaining a strong financial base and investing decisively ingrowth areas

The Japanese Market for Women’s
Innerwear (Retail base)¥ Billion

867
791 793 791

00

01

02

03

767 7580405

1

740 725

711

06

08

07

Source: Yano Research Institute Ltd.

F

Wacoal Group Challenges: Part 1

Building new sales channels by developing direct retail operations
At Wacoal, as a way of counteracting the shrinking of suchmainstay wholesale channels as department stores and generalmerchandising stores, we are developing and strengthening newsales channels and actively creating new business areas toincrease points of contact with customers and create further
growth opportunities. As part of those initiatives, we are stepping
up direct retail operations to build new sales channels. At present,
the direct retail operations on which we are concentrating
efforts and the pillars of these operations are SPA operations andmail-order sales through catalogs and the Internet.
Since beginning in 2001, SPA operations have developed storesto suit target customers and location characteristics and expanded
steadily each year. For fiscal 2009, ended March 31, 2009, SPA
operations posted a ¥1.2 billion increase in sales, to ¥10.4 billion.
SPA Operations StoreSPA operations accounted for 102 stores at fiscal year-end,
up 7 stores from the previous fiscal year-end, testifying to thesteady increase in points of contact with customers. Goingforward, we will increase profitability by increasing efficiency
through efforts to consolidate business format brands andestablish common lineups in product mixes.
Mail-order operations saw a ¥0.2 billion increase in sales,to ¥6.0 billion. Internet sales are growing favorably, partly
because customers are now able to purchase men’s innerwear
at our Internet store and are doing so in increasing numbers.
We aim to further increase Internet sales by advertising effectively
and increasing limited edition products and products exclusive
to the Internet sales channel.

Net Sales of Wacoal’s SPA
Operations¥ Million

7,038
6,565

5,116
Amphi—Kashiwa

Amphi—Kawasaki BE

4,028

2,223

FY

05

Wacoal Factory Store

FY

06

FY

07

FY

08

FY

09

Topic Une nana cool—Evolving Steadily
Having increased its business size each year, SPA subsidiary Une nana cool Corp. moved into theblack in the fiscal year. The subsidiary achieved sales of approximately ¥3.2 billion for the fiscal year
and had 42 stores at fiscal year-end. Hoping to reach sales of ¥5 billion and a 60-store network inthree years, Une nana cool is stepping up the pace of business expansion. From spring 2009, it began
renewing its brand and introduced a new design image for its offerings. At the same time,
the subsidiary is marketing high-value-added products with even more advanced functionality andcarrying more product lineups to keep in step with the ever-changing needs of younger customers.

Wacoal Group Challenges: Part II

Increasing points of contact with customers with a focus on younger customers
Wacoal’s mainstay high-value-added innerwear with advanced
functionality enjoys a dominant presence in the department storesand general merchandising stores that make up the mid-to-highend market. With the aging of the Wacoal fans that are theCompany’s main customers in that market, Wacoal’s customer
base has become increasingly biased toward and centered on career
women and upward. In particular, for comparatively young
customers that tend to favor low prices and fashion, purchasing
opportunities in department stores have been decreasing, andWacoal’s points of contact with such customers have been declining.
To rectify that situation and expand our customer base, weneed to make sweeping changes across the board, from productdevelopment through to sales channels and pricing. Good
examples of such fresh approaches are the development of SPA
operations and our inclusion of Peach John as a subsidiary.
Through those strategies, we will increase points of contact witha younger customer base to grow sales. In conjunction with thoseinitiatives, we will energetically roll out Gra-P and Lasée as brands
for middle-aged and senior customers that offer products
tailored to suit changes in physique and physiology.
Through such initiatives, the Wacoal Group will strengthen its
market presence by anticipating changes in business conditions inorder to market products and build sales channels that cater to all
generations, from young customers through to senior customers.

The Positioning of the Wacoal Group’s Main Brands

Prestige

TréflePARFAGE
SaluteMid-to-high-end

Lasée Gra-P

WACOALMid-endPeach John
Une nana cool
SUBITOWing

Sur La Plage

High-volume

Amphi

SPA (specialty store retailer of private label apparel) operations

15

20

25

30

Teenage

Young

Young career

Career35
Mature career

40

45
Mature50
Middle-aged

55

60

65

SeniorTopic Peach John—Winning Support from the Younger Generation
Principally targeting young women and young career women, in Japan,
Peach John Co., Ltd. sells innerwear through a quarterly mail-order catalog anddirectly managed stores, numbering 28 as of the end of August 2009. The company
specializes in innerwear with a youthful, fashionable look that has become
very popular among young women. Consequently, Peach John’s customers havea different appreciation of fashion to those of Wacoal, and the Wacoal Group
is capitalizing on the new subsidiary to expand the Group’s business area.

Wacoal Group Challenges: Part III

Strengthening and expanding overseas operations even further
While the women’s innerwear market in Japan is contracting,looking overseas, there are still numerous markets with large
reserves of untapped demand. In fact, advancing overseas operations has been one of Wacoal’s growth strategies for many years.
Our history overseas began in 1970 with forays into Thailand,
Taiwan, and South Korea. Since then, we have expanded overseas
operations to include the United States, Europe, and China. By
redoubling efforts to strengthen and expand overseas operations,
the Wacoal Group will advance the creation of platforms for growth.
Retooling Mainstay U.S. Operations
In the U.S. market, Wacoal has built an unshakable standing
among department stores in the mid-to-high-end market. For
the fiscal year, Wacoal America, Inc., recorded sales of roughly$130 million, making U.S. operations the mainstay of overseas
operations in terms of revenues. The fiscal year saw sales drop
temporarily due to lower sales stemming from slumping
consumption and a reduction in transactions of licensed products
for DKI and DKNY designer brands because we stopped manufacturing and selling them in 2008. However, at the beginning of
the fiscal year we marketed a new brand for high-end department
stores, Wacoal Luxe, which is doing well. Another original brandthat Wacoal brought to the market was the sexy, fashionable

Net Sales of
Wacoal America

Operating Income & Net
Income of Wacoal America

US$ Thousands

US$ Thousandsb.tempt’d by Wacoal brand, which debuted in January 2009. Although
U.S. operations are in a transitional phase at the moment, we areconvinced that changing over to in-house brands that havehigher margins than licensed products will create even more
Wacoal fans and an even more robust earnings base.
Continuing to Expand Operations in China
The ongoing growth of China’s economy will likely fuelfurther growth in the women’s innerwear market. Our goal is
to build Chinese operations into a second pillar of overseas
operations alongside those in the United States by developing
operations even more vigorously than before. To that end, in thefiscal year we established a three-brand system that can cater tothe diverse demand of our customer base by adding two brands
with different target customers and price ranges to the mainstay
Wacoal brand. In order to increase the sales and name recognitionof the Wacoal brand, we launched a combined advertising
campaign in China, South Korea, Taiwan, Hong Kong, Vietnam,
and other Asian countries from July 2008. Also, to supplement
sales at department stores, we will look toward opening directly
managed stores in shopping malls and other locations as
we adopt an even more aggressive posture in China’s market
and target the early achievement of ¥100 billion in sales.

145,562 145,570
125,738
109,511

129,424
24,487
112,000
20,452b.tempt’d by Wacoal

Wacoal Luxe

The sales area of a department store
in China

A spring / summer 2009
campaign productfor China

16,775
14,771
12,6479,125

12,54010,033
7,009
9,100

7,184
5,400

FY FY FY FY FY FY

05 06 07 08 09 10(Projection)FY FY FY FY FY FY

05 06 07 08 09 10
Operating Income
Net Income(Projection)Wacoal Group Challenges: Part IV

Strengthening product development that emphasizes signature Wacoal features
Wacoal regards itself as a Body Designing Business, which is a key
business strategy of using our core competency in innerwear to
expand peripheral businesses. As a Body Designing Business, oneof our core competencies is human science research. From thestandpoint of human science, we discover and create the value
customers seek and, by reflecting this in products, realize new possibilities for innerwear. By applying research achievements and basic
technologies garnered over many years to product development,
Wacoal will continue to provide customers with genuine value.
Capitalizing on Human Science Researchin Product Development
For more than four decades, Wacoal has accumulated a varietyof basic research on women’s bodies. Through the use of such

Shakitto Bra

research achievements in product development, Wacoal has
consistently given the world attractive, innovative products.
For example, human science research achievements have enabled
the creation of many of Wacoal’s flagship products, including
Style Science lineups*, which have become a hot topic, the sports
conditioning wear product CW-X, and Shakitto Bra, which stretches
the back muscles naturally. Similarly, Gra-P, Lasée, and other brands
for middle-aged and senior customers are the fruit of researchon changes in body shape as well as sensory and physiologicalphenomena that draws on a huge amount of accumulated data.
Product development underpinned by such original researchrealizes the advanced functionality and high added value thatclearly differentiate Wacoal products in the market.
* For further details, please see the feature section on page 14.

Lasée

Gra-P

Topic Sugoi—Realizing further Innerwear Innovations
Launched in September 2007, the women’s innerwear product Sugoi features outstanding thinness,lightness, and warmth. Reflecting those advanced characteristics, Sugoi became a hit product,shipping more than 930,000 units in the six months after being launched. The use of ultra-fine-fiber
micro-acrylic thread creates a structure that traps air to achieve heat insulation. At the same time,
the structure prevents moisture build-up and thereby maintains a comfortable warmth. Witha thickness equivalent to roughly three sheets of tissue paper, 0.4mm, and a weight of 66g, theproduct feels light when worn. Currently, we are growing sales by bringing out similar products
for men, boys, girls, and pregnant women.

Wacoal Group Challenges: Part V

Maintaining a strong financial base and investing decisively in growth areas
At Wacoal, we believe that maintaining a strong financial baseis indispensable to the creation of platforms for growth. At
present, we do not need large loans because we keep the capitalrequired for working capital, capital investment, and dividend
payments within the scope of net cash provided by operating
activities. Some of our overseas subsidiaries have establishedcredit facilities with financial institutions in order to secure
working capital. However, our level of interest-bearing debt isextremely low. At the fiscal year-end, total interest-bearing debt
stood at ¥5,263 million and the ratio of interest-bearing debt toequity was 0.03 times. Further, the equity ratio was 77.7% ,reflecting strong financial stability, and we maintained a highcurrent ratio of 2.84 times. Also, for the fiscal year we secured
free cash flows of ¥5,806 million. As those figures illustrate,
Wacoal has an extremely solid and stable financial base,affording significant advantages to various management initiatives such as flexible and timely strategic investment andbusiness development.

Taking advantage of its robust financial base, the Wacoal Group
actively undertakes strategic investment for growth. Aiming tostrengthen our earning power and enhance enterprise value,
we will implement additional investment in Peach John, whichbecame a consolidated subsidiary. Also, Wacoal will invest to
expand SPA operations, the Wellness Business, and men’s
innerwear operations as well as undertaking timely investment
to strengthen overseas operations. Moreover, in accordancewith our CAP21 growth strategy, we will aggressively pursue
M&A transactions for companies or operations —irrespectiveof whether they are in Japan or overseas—that promise to createsynergistic benefits with our existing businesses. In line withthat strategy, we made Lecien Corporation, which mainly
manufactures and sells mid-priced women’s innerwear for
general merchandising stores, a wholly owned subsidiarythrough a share exchange in August 2009. That acquisition willallow Wacoal to strengthen its mid-priced product lineups andcarve out a larger share of the domestic market.

Shareholders’ Equity

Debt to Equity Ratio

Current Ratio

Free Cash Flows*¥ Billion

Times

Times

¥ Billion

186

193

185

176
166

0.04

13.0

77.7

77.7 77.0 77.2 76.6

3.44
0.03
0.03

3.12

0.03
0.03
5.0

37

2.66

2.8

2.74
5.0

2.84

6.8

5.8

2.8
–3.4
–5.7

FY

05

FY

06

FY

07

FY

08

Equity Ratio (%)

FY

09

FY

05

FY

06

FY

07

FY

08

FY

09

FY

05

FY

06

FY

07

FY

08

FY

09

FY

05

FY

06

FY

07

FY

08

FY

09

* Free Cash Flows = Net cash provided
by operating activities – Capital
expendituresto our shareholders andother investors
Wacoal is moving forward withinitiatives on various fronts toensure sustainable growth.

Yoshikata Tsukamoto
Representative Director

Evaluation of the Fiscal
Year’s Business Resultsand Market ConditionsIn the fiscal year under review, ended March 31, 2009, net sales and earnings unfortunately were below
our initial targets. Although our performance was comparatively solid in the first half of the fiscal year,
from the second half the worldwide economic crisis that began in the United States, coupled with aworsening of the real economy, significantly affected business results. Reflecting a rapid loss of
consumer confidence as personal income stagnated and the job market worsened, the domestic retailindustry, Wacoal’s mainstay sales channel, saw sales of fall and winter lineups slump, centered on
department stores and general merchandising stores. Similarly, the women’s fashion apparel industry
faced very tough conditions, with the exception of certain low-price products.
We were unable to meet our targets mainly because of lackluster performances by core operations—
women’s innerwear operations in Japan and operations in the United States. In Japan, thehigh-value-added brand Gra-P for mature to senior consumers and the specialty-store luxury brandSalute posted year-on-year increases in sales. Overall, however, sales were sluggish for such brassieres as the
Wacoal-brand LALAN brassiere, which was the centerpiece of a marketing campaign. In the UnitedStates, a deteriorating business climate and falling consumer spending depressed sales at department
stores carrying our lineups, which affected operations. Other negative factors in the fiscal year
included volatile foreign exchange rates and diminishing shipments of licensed products accompanying the cancellation of a manufacturing and sales contract for DKI and DKNY designer brands.
Meanwhile, new Style Science lineups featuring exercise functionality, which has been a focus of
our sales promotion efforts in recent years, sold favorably. In the fiscal year, we introduced women’s
Cross Walker, using the same name as that used for the men’s lineup, and sales of both lineups increased.
Further, SPA (specialty store retailer of private label apparel) operations performed well thanks to alowering of median prices and mainstay customers who are young and more willing to spend, even in
the current recession, than those in established wholesale channels. Similarly, mail-order operations
performed steadily thanks to solid mail-order catalog sales and Internet sales. Also, the Wellness Business grew sales of CW-X conditioning sportswear, mainly to sports chain stores and specialty stores.

Progress under
the Medium-Term
Management Plan
and CAP21

Started April 2007, our three-year Medium-Term Management Plan sets net sales of ¥194.0 billion andoperating income of ¥16.4 billion as numerical targets for its final year, which is the year ending March
2010. However, given the volatility of recent business conditions, I think that achieving those targets
will be difficult. Nonetheless, we will likely achieve the key task of moving SPA operations into theblack earlier than expected. Moreover, initiatives to expand operations by venturing into new businessareas are producing benefits. For example, we are harnessing the development of Cross Walker to expand
men’s innerwear operations dramatically. Further, we have almost completed integrating the
manufacturing operations of the Wacoal brand and Wing brand, which is creating a structure for evenhigher earnings. That initiative is enabling us to consolidate varieties and colors for Wacoal-brand products,
which lowers inventory loss and thereby reduces the cost of sales as a percentage of net sales.
Also, because business conditions in Japan and overseas have transformed since we began the CAP21(Corporate Activation Project 21) growth strategy three years ago, meeting its numerical targets—net
sales of ¥200 billion and operating income of ¥18 billion in the fiscal year ending March 2011—will bechallenging. Nevertheless, over those three years we engaged in M&A transactions, which is a key
element of CAP21. The inclusion of Peach John Co., Ltd., as a wholly owned subsidiary is steadily producing benefits by allowing us to develop a new customer base and market. Guided by CAP21, Wacoal
will continue initiatives for new growth. At the same time, we will set new medium- to long-termtargets in light of progress under CAP21 and trends in business conditions. At this juncture, I believe
our task is to lay foundations in readiness for the growth that will come with economic recovery. We
must see the current tough business conditions as an opportunity to clarify pressing tasks and makedecisive forays into growth areas.
One such initiative was making Lecien Corporation a wholly owned subsidiary through a shareexchange in August 2009. Lecien manufactures and sells women’s innerwear under its own brand andon an OEM basis mainly for general merchandising stores. Also, the company designs and manufactureshigh-quality lace. Before that merger, the Wacoal Group’s business relationship with Lecien involved only
the outsourcing of some production for SPA brands and Peach John. Lecien will provide a stable supplyof lace and other raw materials and will help reduce the Wacoal Group’s purchasing costs. Further, theaddition of Lecien will give the Wacoal Group access to an even wider variety of sales methods andchannels. Primarily rolling out products for high-volume markets, Lecien will complement thestrengths of Wacoal Corp. in high-value-added lineups with advanced functionality for career womenand upward and the strength of Peach John in fashionable, reasonably priced products for young
women through to young career women.
MEDIUM-TERM MANAGEMENT PLAN OVERVIEW

PeriodTheme
Priority measures
Numerical targets
for FY 2010 (¥ Million)

April 2007 – March 2010
Getting Closer to Customers, Three Years of Shifting to Growth andHeightening Earning Power
1. Reform and strengthen existing businesses to reflect changing markets
2. Increase points of contact with customers for new growth
3. Enforce rigorous quality control that justifies customers’ trust
Net sales
180,000
Operating income
15,300

CAP21 OVERVIEW

Aims	Reorganize and strengthen existing businesses and develop business in areas thatpromise growth through M&As, operational tie-ups, capital tie-ups, andindependent initiatives
Numerical targets
Net sales
200,000
for FY 2011 (¥ Million)
Operating income
18,000Operating income margin
9%* Corporate Activation Project 2110

The Strengtheningof Our Platform for
Future Growth

In order to build a growth platform for the future, Wacoal will take on the challenges of new businessareas by undertaking product development based on its unique research and development andadvancing M&A activities and SPA operations.
Mindful that its products are the source of its competitiveness, Wacoal has created appealing
products with unique value by always trying to identify what customers see as providing real value andconscientiously manufacturing products accordingly. In recent years, such efforts have produced aseries of high-value-added hit products that have contributed significantly to Wacoal’s business results.
Examples include the Style Science Cross Walker lineup, which is highly attuned to current market
trends, Shakitto Bra, and Sugoi. Even in a mature market such as women’s innerwear, products that offer
customers value can invigorate the market and grow sales.
Therefore, our subsidiary Peach John still has considerable scope for growth. To tap this potential,
we are developing a system for the development of products that are even more competitive. Also, tocomplement mail-order catalog sales and Internet sales, which have been Peach John’s mainstay sales
channels, we will step up the company’s sales through directly managed stores. December 2008 saw the
opening of Peach John’s first overseas store in Hong Kong. Since then, the store’s sales have been brisk,
surpassing its initial targets. Using that store as a bridgehead, we will open another store in Hong Kongand develop a store network in China. And, with a view to creating synergies with Wacoal Corp., wewill move forward with measures that effectively combine the differing expertise that both companies
have evolved for their respective customer bases. For example, the companies will collaborate in productdevelopment and mail-order catalog sales to cater to the wide range of customer preferences andheighten both companies’ brand value.
In the SPA operations of Wacoal Corp., for the time being we will focus on achieving profitability
rather than expansion. Specifically, we will partly reorganize and streamline SPA operations. At thesame time, SPA operations will expand lineups and raise efficiency by carrying more products in the
low-to-medium price range. Further, we will use OEM as well as in-house production to reduce costs.
After shortening lead times from planning to marketing in order to move SPA shops quickly into theblack, we will once again increase shop openings.

The Strengthening ofOverseas Operations

Strengthening and expanding overseas operations is an important pillar of the Wacoal Group’s growthstrategy. In mainstay U.S. operations, we have been rolling out original Wacoal Luxe brand products as
a luxury lineup for high-end department stores since the cancellation of a manufacturing and sales
contract for licensed products for DKI and DKNY designer brands. The Wacoal Luxe brand has earned
high acclaim from our business customers, and sales have outperformed initial targets. We alsobrought to market our sexy and fashionable b.tempt’d by Wacoal brand from January 2009. Based on those
two brands, we will take more aggressive measures, such as increasing sales channels to encompass
specialty retail stores as well as department stores and entering countries nearby the United States.
Although the sales of U.S. operations have decreased due to slumping consumption and the ending ofa contract for licensed products, I am confident that these operations will become more profitable in
the near future with the changeover from licensed products to our high-margin brand products.
In China, the most promising market, we will expand operations even further. In order to cater toa wider customer base, we are already selling through a three-brand system comprising the mainstay
Wacoal brand, amphi for younger customers, and the high-value-added brand Salute. Also, in the fiscal
year we advertised on a larger scale than before to increase name recognition of the Wacoal brand in
China. Looking ahead, our goal is to grow in step with the pace of market expansion by increasing thenumber of stores carrying our products.

In other areas of Asia, from October 2008 we launched sales in Vietnam, the site of some of our
production bases, and sales have been encouraging. Vietnam’s market has the potential to growsignificantly as the lifting of regulatory restrictions on foreign capital in the retail industry allows
inflows of foreign capital. Closely monitoring that trend, we will expand operations in Vietnam as
appropriate in order to supply products from nearby Asian countries.
Worldwide, the Wacoal Group’s companies will achieve growth and profitability by analyzing
business conditions in their respective countries to gain a firm grasp of issues while using the resourcesof other Group companies effectively—including those of joint venture companies—to build networks
that offset the weaknesses of individual countries.

OutlookGiven the lack of clarity in global economic trends, there is concern that the economic recession may
deepen. In Japan, personal spending is likely to continue declining. While in both Japan and overseas,
market conditions are expected to be difficult. However, we aim to maintain sales at approximately
their current level by continuing to market appealing products and brands. As a result, for the current
fiscal year we expect year-on-year declines of 0.7% in net sales, to ¥171.0 billion; 28.9 % in operating
income, to ¥7.2 billion, due to slumping U.S. operations and an increase in retirement benefit payments
resulting from impairment of pension assets; and 27.0 % in net income, to ¥3.8 billion. That forecast
assumes a foreign exchange rate of US$1=¥97, but foreign exchange fluctuations could significantly
affect consolidated business results because U.S. operations account for a large share of Wacoal’s
consolidated revenues and earnings.
Despite the tough business conditions, Wacoal will redouble efforts to discover what customers see
as real value so that it can develop products that are even more appealing and advance business results.
As we move forward with those initiatives, I ask our shareholders and other investors for their continued
understanding and support.
August 2009

Yoshikata Tsukamoto
Representative Director

11messages from the vice presidents

While maintaining a sound, stable financial base, theWacoal Group will invest to increase earnings in domestic
growth areas and overseas markets.
Shoichi Suezawa

Director and Vice President

Analysis of Consolidated Business Results for the Fiscal YearIn fiscal 2009, net sales were up 3.9%, to ¥172,276 million; operating
income declined 25.2%, to ¥10,129 million; income before income
taxes, equity in net income (loss) of affiliated companies, andminority interests decreased 46.9%, to ¥7,627 million; and net
income rose 5.3%, to ¥5,230 million. Net sales increased because
the inclusion of Peach John in consolidated business results fromthe fiscal year counteracted a lackluster performance by existing
operations. Operating income decreased due to a ¥0.9 billion
increase in pension expenses at Wacoal Corp., a ¥0.6 billion loss
arising from the dissolution of Tokai Wacoal Sewing Corp. on June30, 2008, and a ¥0.5 billion decrease in gains on sales of fixed assets.
Although the SG&A ratio increased 3.3 percentage points, to45.0%, due to the inclusion of Peach John in consolidated businessresults, the cost of sales ratio improved 0.9%, to 49.2%. That
improvement stemmed from a lowering of inventories, including
store inventories, which reduced write-downs on returned goods,
the effect of Peach John’s cost of sales as a percentage of net sales, andan increase in the percentage of products manufactured overseas.
While we have set 9% or higher as a medium-term target for theoperating income margin, for the fiscal year the operating income
margin was 5.9%, down 2.3 percentage points year on year.
The marked decrease in equity in net income (loss) of affiliatedcompanies and minority interests was due to a ¥2.6 billion increasein loss on securities held by the Company because of a fall in stock
prices and the absence of an approximately ¥0.6 billion gain on saleand exchange of marketable securities and investment recognizedin the previous fiscal year. Meanwhile, the increase in net income
resulted from the absence of a ¥4.7 billion write-down of our interest
in Peach John, recognized as net loss of affiliate companies in theprevious fiscal year.
Looking at the sales of our main consolidated subsidiaries, mainstay
Wacoal Corp. recorded a year-on-year decrease in net sales, to¥114,738 million, which represented 66.6% of net sales, down 5.0
percentage points year on year. Included in consolidation from thefiscal year, Peach John posted net sales of ¥14,893 million, accounting
for 8.6% of net sales. Although still small, Une nana cool Corp. and
12

Wacoal China Co., Ltd., saw favorable sales growth. However,
Wacoal International Corp. (U.S.A.), our holding company in the
United States, and Nanasai Co., Ltd., saw significant drops in sales.
Capital Measures and Returns to Shareholders
Wacoal’s basic financial policy is to ensure the Company has strong
financial foundations and ample cash flows to enable flexible capital
measures. Reflecting that basic policy, Wacoal is investing in growthareas to strengthen earning power and increase enterprise value.
In China, Vietnam, and other countries that promise growth, we
are investing in advertising and sales promotions to further brandpenetration. In Japan, we believe that, rather than increasing sales
through wholesale channels, our mission is to increase profit
margins by improving operational efficiency and reducing costs
and expenses. Meanwhile, in Japan we will deploy capital in areas
promising growth.
Regarding our M&A strategy, we will not miss opportunities toinvest in growth areas in Japan and expand markets overseas, and weare making strategic preparatory moves for long-term growth accordingly. While maintaining a sound, stable financial base, the Wacoal
Group will invest to advance domestic growth areas and increase
revenues and earnings from overseas markets.
Regarding returns to shareholders, we view meeting the expectations of our shareholders by steadily increasing earnings to heighten
enterprise value as an important management task, in accordancewith our basic policy of paying stable dividends in light of consolidated business results. For the fiscal year, we maintained cash
dividends per ADR at the previous fiscal year’s level of ¥125. Further,since 2001 we have purchased treasury stock as part of increasing
returns to shareholders. In the fiscal year, we improved capitalefficiency by purchasing 770,000 shares of treasury stock, bringing
treasury stock purchased to a total of 18.16 million shares. Given
performance trends and the challenging conditions, for fiscal 2010,
ending March 2010, we plan to pay cash dividends per ADR of ¥100.
Also, regarding retained earnings, while considering investment in
new businesses and M&As, we will purchase treasury stock flexibly
to improve capital efficiency and realize returns to our shareholders.

The Wacoal Group will accelerate management
reforms to realize even greater growth potential
and profitability.
Hideo Kawanaka Director and Vice President

Initiatives to Restructure Organizations andReengineer Operations
The aims of our Medium-Term Management Plan are Shifting toGrowth and Heightening Earning Power as well as achieving
Operational Restructuring and establishing Advancement Systems.
Accordingly, we implemented organizational restructuring that
established the Corporate Strategy Division at Wacoal and theGeneral Strategy Section at Wacoal Corp. in April 2008. With those
new departments laterally coordinating and controlling our vertically structured organization, we will increase the overall strengthof the Wacoal Group and the competitiveness of operatingcompanies. Already, those organizational changes are steadily
producing benefits.
Specifically, the holding company’s Corporate Strategy Division
will allocate personnel, resources, and capital among operatingcompanies more efficiently. And, the General Strategy Section,
which laterally links divisions within Wacoal Corp., has strengthened
our control of strategies that transcend specific sales channels andbrands. For example, we increased sales of Style Science lineups bydeveloping them laterally, above divisional boundaries. Also, we
have brought SPA operations, for which achieving profitability has
become a pressing task, to the verge of profitability ahead of schedule. Another success has been accelerating the earnings growth of
the Wellness Business, which we are developing into core operations
second only to innerwear operations.
The Status and Business Strategies of Peach John
Becoming a wholly owned subsidiary in January 2008, Peach John,
together with Wacoal International Corp. (U.S.A.), forms a strong
secondary tier within the Wacoal Group. In the fiscal year, only
Wacoal Corp.’s sales surpassed Peach John’s net sales of ¥14.9
billion. Peach John has grown rapidly thanks to overwhelming
endorsement and popularity among young women and young
career women and unique sales channels that comprise mail-ordercatalog sales, Internet sales, and store sales. Following a temporary
dip in revenues in the previous fiscal year, Peach John posted
higher revenues and earnings in the fiscal year due to solid

mail-order catalog sales and the opening of new stores.
Targeting net sales of ¥20 billion and operating income of ¥2billion in the immediate future, Peach John is pursuing a businessstrategy focused on opening additional directly managed stores
mainly in the Tokyo metropolitan area and expanding overseas
operations. Under that strategy, the company will raise store sales
to a level comparable with mail-order catalog sales by doublingits store network, which stood at 28 stores on August 30, 2009.
Meanwhile, Peach John will consider opening stores in China andSoutheast Asia. Opened in Hong Kong during the fiscal year, PeachJohn’s first overseas store made an impressive debut by outperforming initial targets. We are aiming to open more stores andlaunch a foray into China.
Preconditions for Growth
To achieve sustainable growth, Wacoal has to take on two
challenges. First, we need to adapt to structural change in Japan’s
retail industry. Second, we must expand operations in overseas
markets with strong growth potential. In Japan’s retail industry,wholesale channels that have been our mainstays, such as
department stores and general merchandising stores, are shrinking,while convenience stores and drug stores are increasing theirpresence. We have to respond to that structural change by developing new products, establishing new sales channels, andpursuing pricing strategies. Further, we will deploy capital inareas that promise growth, such as the Wellness Business, SPA
operations, and Internet sales.
Further, to offset Japan’s maturing innerwear market, we will
embark upon full-fledged development of China’s promising market. At the same time, as we have already done in Vietnam, we will
begin sales in new countries and regions. In China, stepped-up
advertising and sales promotions bore fruit. However, we intend toraise revenues in China from their current level of roughly ¥3.3
billion to ¥10.0 billion as soon as possible. Furthermore, we want toincrease overseas sales, including those of affiliates, from the fiscal
year’s level of approximately ¥60.0 billion* to ¥100.0 billion.** Total local sales of overseas subsidiaries and affiliates.

13

Taking
Forward
Strides
Style Science—Innovating New Value

14

Style Science products provide customers with new value by drawing ontechnology that Wacoal has evolved for women’s innerwear over many years.
Developed by Wacoal’s Human Science Research Center, Style Science technology
changes walking into exercise, enabling wearers to tone their muscles as they go
about their everyday routines. That unique feature has built a new market andgenerated more than 11 million product sales, as of March 2009, since the launch of
the first Style Science product, Hip Walker, in fall 2005. Through Style Science, thissection provides a window on one area of Wacoal’s product development.

15

Cross Walker—Revolutionizing the Men’s Innerwear Market
As part of its efforts with the Style Science series, in March 2008 Wacoal unveiled Cross
Walker, heralding the Company’s full-fledged entry into the men’s innerwear market.
Cross Walker is a pioneering product that incorporates exercise functionality. Wacoal’s
unique cross structure lengthens the wearer’s stride by providing just the right amountof stimulation to the thigh muscles. Consequently, walking while wearing Cross Walker
in accordance with our wearing guidelines can reduce body fat and firm up thewearer’s physique.* Becoming an instant hit and selling 860,000 products in its firstyear, Cross Walker is breathing new life into the market for men’s innerwear in Japan.
Aiming to increase points of contact with customers, Wacoal entered the men’s
innerwear market in Japan, which is estimated to account for sales of about ¥250
billion. Although that market is small compared with the market for women ’s innerwear products, which are viewed as fashion items, recent years have seen growing
demand from male consumers for fashionable and functional products. Therefore,
because it has fashion appeal and revolutionary functionality, Cross Walker has attracted
a great deal of attention and helped invigorate the men’s innerwear market. Developedby exploiting technology that Wacoal evolved for women’s innerwear, Cross Walker
enables wearers to reduce their body fat and firm up muscle tone as they walk. Anothertailwind for Cross Walker is the recent increase of concern in Japan with staying healthy
to prevent metabolic syndrome, also known as visceral obesity syndrome, and otherlifestyle-related diseases.
Interest in Cross Walker is strong not only among consumers but also among suchbusiness customers as department stores, which see the product as helping to invigorate sales areas. For example, to heighten the appeal of sales areas and create synergistic
sales benefits, stores stock Cross Walker in sales areas for sports products and footwear, as
well as in those for men’s underwear. As a result, sales of Cross Walker are steadily growing through a variety of retail formats and sales channels.
* Wearing Guidelines: If the wearer walks 6,000 steps or more at least five days per week for one month or longer

Style Science—Changing How People See Innerwear
By enabling a new way to get exercise, Wacoal’s aim was not to have Style Science
wearers exercise energetically but to allow them to acquire attractive well-toned
physiques at their own pace while carrying out everyday activities. Accordingly,
we created Style Science lineups based on the completely new concept of changing
everyday walking into exercise. The scientific approach that we applied to walking
when developing the Style Science series resulted in products that further reduce
body fat and firm up muscles the more they are worn.*

16

Until recently, functional innerwear has been for body-shape “correction.” Whatdifferentiates Style Science lineups is that they reflect an approach not of “correcting”
the shape of the body but of toning it. By changing how people think of innerwear, that
innovativeness won the support of consumers and ensured the success of these lineups
as hit products. Style Science lineups are a good example of how Wacoal brings to bear
its outstanding capabilities in technology and product development.

The Japanese Market for Men’s
Innerwear (Retail base)¥ Billion

292

289
266

278

268 274 269* Wearing Guidelines: If the wearer walks 6,000 steps or more at least five days per week for one month or longer

258

1
250

The Benefits of Cross Walker
The cross structure stimulates the quadriceps topromote long strides. Taking long strides uses a lotof muscles and exercises the whole body, thereby
providing aerobic exercise that burns body fat. As an
approximate guide, walking 6,000 steps or more atleast five days per week for one month or longer
while wearing Cross Walker can reduce body fat andtighten up the body’s muscles.

The cross structure(patent no. 3924586)
stimulates the thighmuscles.

The wearer’s stride
naturally becomeswider.

The muscles of thethighs and buttocks
are exercised.

00

01

02

03

04

05

06

07

08

FY

Source: Yano Research Institute Ltd.

Walking in accordancewith Wearing
Guidelines can reduce
body fat and firm up
the wearer’s physique.

Note: Indications of benefits differ depending on the individual.
Please carefully read the “safety warning” included with the product before using them.

17Style Science—Opening Up New Horizons

Exwalker is sold through such channels as
corporate health insurance associations

The inaugural product in the Style Science series was Hip Walker, a women’s undergarment for the lower body launched in fall 2005. As a product incorporating a uniquestructure that shapes up the buttocks as the wearer walks, Hip Walker became a huge
hit, shipping more than 2 million units its first year. Capitalizing on that success, webrought a series of new products to market: for women, Onaka Walker, which tones thestomach muscles, and for men, the abovementioned Cross Walker. As a whole, Style
Science had accounted for 11 million unit sales in the Wacoal Group as of the end of
March 2009. Also, Cross Walker for women, with the same name as the men’s product,has sold briskly since we brought it to market. Through such efforts the market
presence of Style Science lineups is building steadily.
Further, for Style Science products, we are opening up new sales channels, including
gyms and health insurance associations. In Japan, as part of the reform of the medicalcare system, in April 2008 medical check-ups and health guidance targeting metabolic
syndrome became mandatory from the age of 40 for those with health insurance thathas medical care coverage. Because they can help prevent lifestyle-related diseases,
Style Science products are attracting interest from various quarters. For such new sales
channels, Wacoal has already marketed a Style Science product, Exwalker, and is expanding operational foundations in these areas.

Style Science—Emerging from Human Science Research

Onaka Walker

18

Style Science products are a representative example of the lineups Wacoal has createdusing the research achievements of its Human Science Research Center. For more than
40 years, since its establishment in 1964, the Human Science Research Center has been
conducting basic research on women’s bodies to identify, from a human science
standpoint, the products and customer value customers want. Today, it is one of thecore competencies supporting Wacoal’s product development. Every year, the Center
measures the physiques of between 500 and 1,000 Japanese women, ranging from thosein their late teens through to those in their 60s. To date, we have gathered data on
approximately 35,000 individuals. Further, by measuring the same individuals overlong periods of time, we are advancing research that sheds light on the changes inwomen’s physiques that accompany aging. In 2002, in China we established theChinese Human Science Research Center, which has begun collecting data in orderto develop products suited to Chinese women.
In addition to that basic research on the changes in women’s body shapes, the Human
Science Research Center investigates sensory and physiological reactions and physicalfunctions. In particular, the Center’s research on muscle and joint mechanisms

and other body movements forms the basis of Style Science product development.
We have also applied the achievements of that research to the sports conditioning
wear product CW-X and girdles that support the joints and help senior women to walk.
CW-X supports fluid movement and can lessen muscle fatigue by incorporating ataping principle to stabilize joints during exercise. That functionality has earned highpraise from professional athletes in a wide range of sports, and sales of that productgrow yearly.
In this way, Wacoal draws on research on human science garnered over more thanfour decades to create revolutionary functionality, which plays a key role in differentiating and increasing the appeal of Wacoal products.
Far left:
CW-X Expert Model
Left:
The Human Science ResearchCenterStyle Science—Developing through Diverse Sales Channels
Offering a wide spectrum of possibilities and features as well as the prospect of businessexpansion, Style Science products are dramatically reforming the organization of
Wacoal’s activities. As mentioned earlier, to complement the men’s Cross Walker product,
we launched a version of Cross Walker for women in August 2008. Through a large
variety of sales channels that cover a wide customer base, we have begun sales promotions of Cross Walker as innerwear with innovative functionality under the new concept
of “wearing for exercise.”
Specifically, in addition to such mainstay sales channels as department stores andgeneral merchandising stores, we are marketing Style Science lineups through major
drug stores and sundry goods stores. Further, Wacoal Corp. is advancing lateral promotional activities that transcend its in-house operating departments and divisions.
Those activities are enabling combined marketing initiatives that encompass both
women’s and men’s products. And, we are varying pricing in accordance withcharacteristics of sales channels. Thus, through Style Science the Company has realized
a new initiative that truly draws on Wacoal’s wide-ranging strengths.
As the above example shows, in addition to creating new possibilities for the
innerwear business, Style Science lineups are helping to vitalize the Wacoal
Group’s organization.

19

corporate governance of wacoal holdings corp.
Wacoal Holdings Corp. (“Wacoal”), a worldwide
manufacturer of high-end women’s intimate apparel, isa forward-thinking company with a strategy to enhanceshareholder value over the medium to long term. As theholding company of 10 subsidiaries, Wacoal is continually
innovating not only its product lines but also its governancemechanisms to stay at the forefront of its industry. Wacoal
believes that commitment to both its products and corporate
governance is essential for Wacoal to optimize shareholder
value and foster continual growth of the Company.
Corporate Governance Structure
Corporate Governance Innovations
Wacoal has always been a leader in the corporate governance field
and has instituted several measures beyond those required by law
to ensure that its corporate governance system works to thegreatest advantage of its shareholders. We describe below a few
of these innovations.
• Disclosure Committee   In 2003, Wacoal established theDis­closure Committee to strengthen its corporate governanceinfrastructure. The Disclosure Committee ensures the accuracyof the financial and other information made available to the public
and filed with our regulators, including the U.S. Securities andExchange Commission and the Japanese Financial Services Agency.
This committee also reviews and confirms the appropriateness of
our internal controls.
• Corporate Ethics Committee   In 2004, Wacoal created the
Corpo­rate Ethics Committee, which is headed by a member ofCorporate Governance Structure

Wacoal’s board. This committee produced a code of conduct for
executives, corporate officers, and other em­ployees, and it works toinstill a strong culture of ethics and legal compliance at all levels of
the Company. Wacoal’s corporate ethics framework conveys
strongly to employees the Com­pany’s unyielding commitment togood corporate ethics.
• Hotline System   Wacoal has established a hotline system thatallows employees to ask questions about corporate ethics and toreport any violations or potential violations of its ethics code. The
hotline promotes good ethics within the Company and provides away for the Company to learn promptly about ethics violations.
• Accidents and Disasters Countermeasures Committee
In 2006, Wacoal established the Accidents and Disasters Counter­measures Committee as a subcommittee of the Risk Mana­gement
Committee to manage overall risks to Wacoal. The Risk Management
Committee establishes measures to manage and control risks to theCompany and monitors Wacoal’s implementation of those measures.
The Risk Management Committee keeps the Board of Directors
fully informed about the operation of the risk management system.
• Independent Committee   In the event of a potential takeoverof the Company through the acquisition of substantial shares,
Wacoal has granted independent outsiders extraordinary authority
to exchange information and conduct discussions about theCompany without management. An “Independent Committee” –composed of one outside director, one outside auditor, and one
academic – has the authority to call a meeting without thepresence of the Company’s executives and may retain external
professionals to advise them on takeover and related issues. With

As of June, 26 2009

GENERAL SHAREHOLDERS’ MEETINGGroup Management Meeting
4 Directors
2 Corporate Auditors
Quarterly Business Results
Review Committee
7 Directors
5 Corporate Auditors
Representative of Each Company and Department
Disclosure Committee
Risk Management Committee
Information Security Promotion Division

Board of Directors
4 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
Operating Subsidiary
Operating Subsidiary

Compliance Committee
Corporate Ethics Committee
Corporate Ethics Hotline

20

Operating Subsidiary
Operating Subsidiary

Independent
Accountants

these powers and resources, the Independent Committee canevaluate takeover bids and pursue related strategies withoutma­nagement interference. This committee serves as a powerfultool to safeguard shareholder interests at crucial junctures.
Statutory Auditor System
The aforementioned innovations complement Wacoal’s corporate
governance infrastructure under the statutory auditor system.
Operating under that system, Wacoal’s directors oversee operations
and provide broad oversight of the Company and its subsidiaries.
Wacoal’s statutory auditors, in turn, supervise the activities of theboard and provide a check on the directors’ oversight of the Company.
In the following section, we discuss some of the specific features of
Wacoal’s statutory auditor system and certain enhancements
designed to produce better governance.
1. Board of Directors
Following the ordinary general shareholders’ meeting in June 2009,
Wacoal’s board was reduced from eight members to seven members.
In 2002, we reduced the number of directors to allow directors to
respond more flexibly and make decisions more efficiently in an everchanging business environment. This process was intended to permit
directors to focus on the supervisory and strategic responsibilities
and to unburden them from operational and management duties.
Although Japanese law does not require any independent,
outside directors on the board under the statutory auditor system,
Wacoal believes that including the voices and perspectives of
independent directors improves the governance of the Company.
As a result, Wacoal has three independent, outside directors who
contribute to the work of the board.
The directors work diligently for the benefit of the Company. To
assist the members of the Board of Directors, Wacoal has drafted
guidelines for board meetings that are provided in the Company’s
articles of incorporation as well as directors’ meeting rules.
Wacoal also believes that there should be a retirement age for themembers of the board so that fresh perspectives can periodically be
brought to the board. To enhance the transparency of Wacoal’scor­porate governance, the Company has established theretirement age in its corporate rules. Also, beginning with thecurrent fiscal year, Wacoal will include in the proxy materials theattendance records of directors at board meetings.
While the board members have a depth of experience andknow­ledge, Wacoal believes that continuous education and trainingof directors are essential to good corporate governance of theCompany. To this end, new directors of Wacoal attend an educational seminar for directors conducted by outside professionals.
2. Statutory Auditors
The statutory auditors continually monitor the supervisory activitiesof the board and the overall work of the Company. The statutory

auditors attend board meetings and separately meet with individual
directors once a month and Wacoal’s President twice a year.
Wacoal believes that enhanced independence of the statutory
auditors would allow the auditors to be more effective “watchdogs”
for the Company. We, therefore, have gone beyond what is required
under Japanese law for statutory auditors. Although Japanese law
only requires that 50 % of the statutory auditors be independent,
60% of Wacoal’s statutory auditors are independent of the Company.
3. Appointment and Compensation Committee
Wacoal has created the Executive Compensation Advisory Committee.
This committee, with the assistance of the Mana­­gement andAdministration Department of the Com­pany, develops proposals
for personnel appointments and for compensation. The committee,
which comprises independent outside directors, a personnel officer,
staff supervisors, and members of the Management and Administration Department, submits its proposals to the President andRepresentative Director. The President then reviews the proposals
and submits the appointments for a board resolution. A shareholder
resolution would then be made at the general meeting of shareholders.
Wacoal believes that this structure for determining nominees
and compensation is appropriate for the Company. For this reason,
the Company does not maintain separate board committees forthese purposes.
Defensive Measures Against Takeovers through theAcquisition of a Substantial Shareholding of the Company
After the Company’s June 2006 ordinary general share­holders’meeting passed a resolution authorizing the adoption of a basic
policy on measures against the acquisition of a substantial shareholding of the Company, the Board of Directors decided upon specificcounter­measures reflecting that basic policy. Further, the June 2009
ordinary general shareholders’ meeting of renewed this policy.
In principle, the Company does not oppose the acquisition oflarge shareholdings that contribute to the enhancement of theenterprise value and shareholders’ common interests.
The Company’s defensive measures against takeovers, or peacetime
takeover defensive measures, include providing advance warningthat there are procedures prospective purchasers of the Company’s
shares must follow and that a gratis allocation of acquisition rights
for the subscription of new shares with discriminatory treatment
for the exercise of such rights may be implemented. In addition,
the Company has established the Independent Committee to ensurethat 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 referto the Company’s web site.
www.wacoalholdings.jp/ir_e/news.html

21social contribution activities andenvironmental management
Benefiting society at large by enabling women the world
over to express their beauty is both the goal of the Wacoal
Group and the philosophy at the heart of its success.
Drawing on a variety of expertise garnered from ourbusinesses, we will realize unique social contributions.
Remamma
In 1974, we began the Remamma
project to provide our originallydevel­op­ed innerwear and swimwear
for women who have undergone
ope­rations for breast cancer. Morethan 180,000 women in Japanand overseas have used theseproducts to date.
Pink Ribbon
Since September 2002, we havesupport­ed Pink Ribbon activities,
which raise awareness of the importance of early diagnosis andtreatment of breast cancer. As partof those efforts, we do­nate to the“breast cancer eradication smile
fund.” Our shareholders also parti­ci­pate in efforts to eradicate
breast cancer. In 2005, we introduced a system where­by share­
holders are able to make contributions to the fund equivalent toa part of the Wacoal essence check gift certificates provided as ashareholder benefit. Wacoal matches the amount of those contributions with its own contributions to the fund. Moreover, we holdPink Ribbon Fitting Campaign events in which we donate to the“breast cancer eradication smile fund” the equivalent of the total
number of brassieres customers try on multiplied by ¥10. Also,
we incorporate education for consumers about breast cancer
prevention in other events.
Tsubomi School
As a contribution to local educational initiatives, we have held
Tsubomi School programs since 2001 for adolescent girls and theirparents. We began those programs to help girls become healthy,
beautiful women. The programs seek to alleviate the uncertainty
and insecurity that is common among adolescent girls bypromoting understanding of the body’s development andaddressing anxieties. Together, parents and children learn how
to choose innerwear to suit specific needs or stages of maturity,
22

thereby providing a chance for parents and children to discussthese issues at home. Held with the cooperation of the National
Federation of Kodomo-kai, our approximately 1,000 Tsubomi
School programs have instructed more than 15,000 participants
since 2001.
“Tsubomi” means bud in Japanese. The name Tsubomi School
is based on an analogy between women’s lives and flowers, withadolescent girls whose busts are beginning to develop called “buds.”
Sports SponsorshipAs a company empathetic to women, Wacoal formed the Spark
Angels women’s track team and supports the activities of theathletes that belong to the team. The Spark Angels celebrated
their 20th anniversary in 2007. By sponsoring women that run likethe wind, lithely and freely, and personify our image as a company
with operations focused on beauty, health, and comfort, we want
to show society at large the joy of sports and the radiant beauty ofactive women through sports.
Environmental Corporate Management
The Wacoal Group actively promotes environmental activities.
One example from among our many initiatives is the “bra recycle”
campaign. We launched our first such campaign in February 2008.
And, we organized another in 2009, from February 12, (“BrassiereDay”) until April 22 (“Earth Day.”) During that period, acrossJapan a total of 650 stores, mainly Wacoal’s directly managed storesand innerwear specialty stores carrying Wacoal products, took
part in the campaign. As a manufacturer, we believe the treatmentof Wacoal products that our customers have previously owned
and loved is an important responsibility. Accordingly, during the
campaign we encouraged customers to put brassieres no longer
used into special collection bags, and the stores collected 9,500 ofthese “bra recycle bags.” Those products were then processed into
3,590 kg of recycled plastic fuel. The resulting fuel is slated for use
by paper manufacturing companies. True to its environmental
policy, Wacoal will continue taking the initiative in environmental activities.

Bra recycle bag

Recycled plastic fuelboard of directors and corporate auditors
Wacoal Holdings Corp. and Subsidiaries
As of June 26, 2009

Representative
Director

Yoshikata Tsukamoto

Director andVice Presidents

Shoichi Suezawa

Directors

Tadashi Yamamoto

Kazuo Inamori

Director andSenior Corporate Officer,
Wacoal Corp.,
General Manager ofInternational Operations(Outside Director)

Mamoru Ozaki

Atsushi Horiba(Outside Director)(Outside Director)

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

Representative Director
and Chairman
and President, HORIBA, Ltd.

Kimiaki Shiraishi

Yoshio Kawashima(Standing Corporate Auditor)(Standing Corporate Auditor)

Yutaka Hasegawa

Tomoharu Kuda

(Corporate Auditor)(Corporate Auditor)

Corporate Auditor,
The Hyakugo Bank, Ltd.

Certified Public Accountant

Corporate
Auditors

Representative Director, President andChief Executive Officer, Wacoal Corp.

Hideo Kawanaka
Director, Vice President andCorporate Officer, Wacoal Corp.,
In charge of Business Restructuring,
General Manager ofSales Control Department andGeneral Manager of Technology /Production Division

Chairman Emeritus,
Kyocera Corporation,
Honorary Adviser,
KDDI Corporation

Yoko Takemura(Corporate Auditor)
Partner at Miyake Imai Ikeda law firm,
Lawyer23

eleven-year financial summary
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31

2009

2008

2007

For the year:

Net sales
Cost of sales% of net sales
Selling, general and administrative expenses
Loss (gain) on sale or disposal of property, plant and equipment
Impairment charges on long-lived assets
Government subsidy
Special retirement related expenses
Total selling, general and administrative expenses% of net sales
Operating income
Other income and expenses, net
Net interest income (expense)
Income before income taxes, equity in net income (loss)of affiliated companies and minority interests
Income taxes
Net income

24¥172,276¥165,761¥166,410
84,686
83,12784,658
49.2%
50.1%
50.9%
77,39969,24568,831
33
(184)
25
29
33		
				
				
77,461
69,09468,856
45.0%
41.7%
41.4%
10,12913,54012,896(2,701)
588
861
199
225
163
7,627
3,213
5,230

14,353
5,853
4,966

13,9206,502
9,029

Return on assets
Return on equity

2.3%
3.0%

2.1%
2.6%

3.7%
4.8%

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

8,168(4,714)(7,448)14,2253,590(9,400)9,339(1,185)(8,404)

Depreciation and amortization
Capital expenditures

4,546
2,362

3,908
1,211

3,735
2,536

Per 5 shares of common stock (in yen):
Net income
Cash dividends
Shareholders’ equity¥   184
125
5,905¥   176125
6,457¥   316110
6,874

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¥ 90,619
31,94322,93949,039213,486
5,263
165,873¥ 98,845
36,01028,04351,548
241,619
5,701
185,113¥ 92,915
34,86819,81652,782
250,266
5,984
193,278Millions of Yen (except per 5 share amounts)

2006

2005

2004

¥164,122¥160,968
84,322
84,041
51.4%
52.2%
69,72072,128
612
133
614		
				
(7,100)7,521
78,467
65,161
47.8%
40.5%
1,333
11,766
1,976
206
157
107

¥163,155
84,63851.9%
72,472
455
2,574

2003

2002

2001

2000

1999

¥163,709¥162,829¥162,023¥165,937
85,306
86,56787,49389,290
52.1%
53.2%
54.0%
53.8%
70,44068,336
64,831
66,004
143
740
75
(474)
556				

¥169,996
91,95154.1%
67,319(706)

75,501
46.3%
3,016
1,404
112

71,13943.5%
7,264(2,800)140

69,076
42.4%
7,186
310
117

64,90640.1%
9,624
10,44362

65,53039.5%
11,117338(54)66,613
39.2%
11,432
595
195

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

20,129
9,058
10,88911,401
4,961
7,254

12,222
4,749
8,489

1.2%
1.6%

3.0%
3.9%

1.3%
1.8%

1.3%
1.8%

2.2%
2.9%

4.6%
6.3%

3.1%
4.2%

3.6%
5.0%

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)

11,480(13,686)(6,478)8,451(9,624)(2,611)

8,813(10,624)
(105)

3,433
6,456

3,312
5,418

3,081
2,338

2,971
2,104

3,533
2,484

3,265
1,182

3,157
7,757

2,447
8,604

¥   98
100
6,480

¥ 236
100
6,105

¥ 99
75
5,931

¥ 97
68
5,487

¥ 166
68
5,640

¥ 356
83
5,709

¥ 235
68
5,632

¥ 275
68
5,485

¥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¥129,508
41,44941,196
58,644232,262
8,865
172,558¥127,734
38,49049,88959,990237,721
9,658
173,612¥129,206
39,54153,93356,339233,817
10,649169,06525

management’s discussion and analysis
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2009, 2008 and 2007

Financial information contained in this section is based on the
consolidated financial statements included in this annual 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),
37 consolidated subsidiaries and 8 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 and sportswear, hosiery and other textile products.
Other operations include restaurant businesses, cultural andservice-related operations, and the construction of interiors forcommercial premises.

Share of Net Sales

OVERVIEW
We are the leading designer, manufacturer and marketer of women’s
intimate apparel in Japan, with the largest share of the Japanese market
for foundation garments and lingerie. We also sell our foundation
garments and lingerie products in several overseas markets. Sales offoundation garments (primarily brassieres and girdles) and lingerie(primarily slips, bra-slips and women’s briefs) accounted for approximately 71.3% of our consolidated net sales for fiscal 2009. We also
design, manufacture and sell nightwear, children’s underwear,
outerwear, sportswear, hosiery and other apparel and textile products,
and engage in several business lines that are ancillary to our coreapparel business.
Revenues
We principally generate revenues from sales of innerwear (consistingof foundation garments and lingerie, nightwear and children’s
underwear); outerwear and sportswear; hosiery; textile products; andother products.
The following table sets forth information with respect to our net
sales by category of products for fiscal 2009, 2008 and 2007:
For fiscal 2009, approximately 87% of the sales of Wacoal Corp.
(the net sales of which account for approximately 67% of our consolidated sales) were apparel sales made on a wholesale basis to department

stores, general merchandise stores and other general retailers, andapproximately 11% were apparel sales made through our own specialty
retail stores, catalog sales and the Internet. Sales from our other businesses (which include store and home design services, restaurant
businesses, cultural products and other services) comprised theremaining 2% of Wacoal Corp.’s sales for fiscal 2009.
Over the past five fiscal years, fluctuations in our sales have typicallyreflected changes in unit volume, as average unit prices have generally
remained stable during this period.
Cost of Sales
Our cost of sales arises principally from material and manufacturingcosts related to the production of our apparel products.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses principally consist of
employee compensation and benefit expenses and promotional expenses,
such as advertising costs. Other selling, general and administrative
expenses include shipment costs, payment fees (including outsourcing
payments) and rental payments for our 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 ofproperty, plant and equipment. However, these expenses are included
in operating costs and expenses and thus impact our operating income.

2009
Textile products
4.0%
Other
7.3%

Hosiery
1.0%
Outerwear andsportswear
8.9%Foundation garments
and lingerie
71.3%

Children’s underwear
1.1%
Nightwear
6.4%

Net Sales (and Percentage) by Product Category			
2009

Innerwear
Foundation Garments and LingerieNightwear
Children’s Underwear
Total Innerwear
Outerwear and Sportswear
Hosiery
Textile Products
Other
Total

26

¥122,823
11,0091,950
135,782
15,424
1,657
6,899
12,514¥172,276

Millions of Yen

2008

71.3%
6.4
1.1
78.8
8.9
1.0
4.0
7.3
100.0%¥123,460
10,611
1,953
136,024
8,920
1,803
3,963
15,051¥165,761

2007

74.4%
6.4
1.2
82.0
5.4
1.1
2.4
9.1
100.0%¥123,295
10,081
2,069
135,445
8,751
2,102
4,051
16,061¥166,410

74.1%
6.0
1.2
81.3
5.3
1.3
2.4
9.7
100.0%

Key Industry Trends
We believe that the following have been key trends in our industry
during the last three fiscal years:•	Consumer spending in Japan stagnated in the second half of fiscal
2008 following increased fuel prices and volatility in the stock andcurrency exchange markets due to the U.S. sub-prime mortgage
crisis. Additionally, since September of fiscal 2009, with the collapseof Lehman Brothers and the global financial crisis, the economy has
rapidly worsened and consumer spending has remained sluggish.
•	The number of department stores, one of our key distribution
channels, and retail sales through department stores declined due tothe deterioration in consumption caused by the worsening economy.
Mass merchandising stores faced not only decreases in the numbersof new branch openings due to stagnant consumption levels, but also
reductions in store sizes and increases in store closings, as well as
reductions in retail sales. At the same time however, sales at direct
sales outlets and on the Internet have steadily risen.
•	Due to the adverse changes in the retail industry coupled with factors
such as a decline in the female population, the market for women’s
innerwear garments in Japan shrank, and the 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.
•	Outerwear and other manufacturers entered the innerwear market.
These manufacturers offer their products by focusing on newelements, such as fashionability, lifestyle and price, rather thanfunction and quality. Because the economic downturn has led
consumers to become more price conscious, these new manufacturers
and others achieved a greater market share.
•	These manufacturers and other competitors strengthened their cost
reduction efforts by, for example, sourcing fabric and producing
garments in China and other lower-cost countries. Sales in Japan oflower priced women’s innerwear garments manufactured in thesecounties increased, leading to an intensification of price competitionin our industry. The recent development and tendency of massmerchandise stores producing their own low priced “private brand”
merchandise accelerated these trends.
•	Although catalog marketing and direct marketing have made little
progress, new sales strategies such as e-commerce and televisionmarketing have led to more diversified sales channels and exposure
to new customer groups.
We have taken steps to address these key industry trends, in seeking
to build on the core strengths of our market position and brandawareness with Japanese consumers. We continue to seek to sellhigher-end products to reach consumers seeking high quality
innerwear garments and to mitigate the adverse impact on sales andmargins from lower priced garments. We have taken steps to reduce
our cost structure, such as producing more products in lower-cost
countries such as China and Vietnam, consolidating and modernizing
our product distribution centers and expanding our early retirement

program. We are also seeking to expand sales in overseas markets—in particular China, the United States and Europe, as well as in the
ASEAN region, where we launched our Sorci age brand—and increase
sales through our own specialty retail stores, our catalog operations
and the Internet. Pursuant to our CAP 21 strategic plan, we intend toextend our innerwear product offerings into the mid-price range andinclude more fashionable offerings in our product mix to help us reacha broader customer base. We believe that Peach John and our expectedacquisition of Lecien will help us to advance these goals. We willcontinue to implement these steps and evaluate other strategies toaddress challenges and opportunities in the industry going forward.
Results of Operations—Fiscal 2009 Compared to Fiscal 2008
Net Sales
Consolidated net sales increased 3.9% from ¥165,761 million for fiscal
2008 to ¥172,276 million for fiscal 2009 due to inclusion of sales
through Peach John in our consolidated net sales. However, the net
sales of our existing businesses decreased due to a deterioration in
general economic conditions and consumer confidence in both Japanand the United States caused by the sub-prime crisis, the global
financial crisis and the bankruptcy of Lehman Brothers, followed by
the collapse of other major financial institutions.
Innerwear
In our innerwear business, sales for fiscal 2009 decreased 0.2%
to ¥135,782 million as compared to sales for fiscal 2008 due to a
deterioration in general economic conditions and consumer confidence.
Sales from our innerwear products (consisting of foundation wear,nightwear and children’s underwear) comprised 78.8% of total
consolidated sales for fiscal 2009.
Wacoal Brand. In the Wacoal brand business department of Wacoal
Corporation, which is our core operating company, overall sales
performance of our main product of brassieres, including LALAN
which is our new campaign brassiere, remained sluggish. In the fall
and winter season, we actively developed Sugoi, a line of lingerie withsales that largely exceeded our expectations last season. However, due
to an unusually warm winter and increased competition from othercompanies’ products, our overall sales of lingerie were lower thanfiscal 2008 even though the sales performance of Sugoi exceeded thefiscal 2008 figures. In contrast to this, the sales of our high value-added
brands, Salute for specialist boutiques and Gra-P targeted at middle-age
to senior consumers, exceeded fiscal 2008 sales. For girdle pants, werenamed our Style Science series products with new features for the
lower body Cross Walker, which is the same name as our men’s Style Science
products, and sales of these and other products for the lower bodyremained strong. Additionally, sales of sleepwear and casual clothes
under the license of the designer brand Tsumori Chisato, and those of
pajamas for women and children under Atsuko Matano, another designer
brand, were both firm.

27Wing Brand. In our Wing brand business department, the overall salesof the core brassiere products were sluggish. Further, although sales of
our new product Slim Up Pants, which launched in the fall as one of ourStyle Science series products performed strongly at first, sales of girdle
pants were significantly lower compared to sales for fiscal 2008.
Specialty Retail Business. Sales at our specialty retail business, mainly
targeting the younger generation who have more consumer confidence compared to customers of our existing retail channels, exceeded
sales for fiscal 2008. This business performed well due to a number ofreasons including, the closure of non-performing stores, and slightly
lower pricing leading to increased sales. Similarly, our specialty retailstore business, Une Nana Cool Corp., which is also targeted at the
younger generation, has been expanding well.
Outerwear and Sportswear
In our outerwear and sportswear business, sales for fiscal 2009
increased 72.9% to ¥15,424 million as compared to sales for fiscal 2008
due principally to the inclusion of the results of Peach John as a newly
consolidated subsidiary. Additionally, the sales of men’s innerwear,
which belongs to this segment, performed strongly for fiscal 2009.
While sales of our main sports conditioning wear product CW-X
increased significantly, primarily in sporting goods chains and specialty
stores, sales in the shrinking swimming goods stores market weresignificantly lower than for fiscal 2008. Cross Walker products that wedeveloped in spring 2008 as Style Science products for men were promoted
under the men’s inner wear DAMS brand in department stores, andunder the BROS brand, which is mainly promoted in chain store channels.
Sales of these products have largely exceeded our sales plan because ofwide media coverage that attracted much interest from consumers.
Hosiery
In our hosiery business, sales for fiscal 2009 decreased 8.1% to ¥1,657
million as compared to sales for fiscal 2008, due to sluggish hosiery
sales in department stores, drugstores and convenience stores. Therewas, however, an increase in sales from TV shopping and catalog
shopping, focusing mainly on our Style Cover products.
Textile Products
In our textile products business, sales for fiscal 2009 increased 74.1% to¥6,899 million as compared to sales for fiscal 2008 due to a solid increasein sales of our Success Walk brand of shoes, which we account for in our textile
products business, and which emphasize foot comfort and functionality.
Other
In our other businesses (mannequin and fixture rental, store designand construction, residential interiors, restaurants, culture, services),
sales for fiscal 2009 decreased 16.9% to ¥12,514 million compared tosales for fiscal 2008, due mainly to the completion of large-scale
remodeling projects in department stores in the Tokyo area, combinedwith the postponement, cancellation and wind-down of new remodeling plans due to worsening economic conditions.
Overseas Sales
United States. Our sales in the United States. represented 7.9% of our
total consolidated sales for fiscal 2009, compared to 10.5% for fiscal 2008.
In the United States, sales for fiscal 2009 were significantly lower thanfor fiscal 2008 due to department stores suffering from a slump in sales
caused by a deterioration in general economic conditions and confidence.
Additionally, we had less business involving Donna Karan licensed
products (DKI, DKNY), because the relevant licensing agreement was

28

terminated as of December 31, 2008. On the other hand, Wacoal LUXE,
a new brand that we developed from the beginning of fiscal 2009 forhigh-grade department stores, was well received by customers and its
sales exceeded our expectations, though they were not sufficient tocover the decline in sales in our U.S. business. We expect the effect of
the license terminations on our operating margins to be small relative
to their impact on our net sales, because the operating margins for theterminated licensed brands were generally lower than our consolidated
operating margin.
Asia (Excluding Japan). Our sales in Asia outside of Japan (including
China, Hong Kong and Singapore) represented 4.4% of our total
consolidated sales for fiscal 2009, compared to 4.6% for fiscal 2008.
Against this trend in Asia, our sales in China increased by 14.1% to¥3,318 million for fiscal 2009 compared to ¥2,908 million for fiscal
2008. In China, we commenced a three-brand system with our youth
orientated brand Amphi, our high value-added brand Salute, and ourcore brand Wacoal, and have been enhancing selling space and productappeal that will meet diversified consumer needs. Additionally, since
July 2008, as part of a joint promotion with some Asian countries, wehave been working on improving the visibility and enhancement of
the Wacoal brand image in China by running a campaign featuring a
popular Japanese artist.
Cost of Sales
Our cost of sales increased 1.9% from ¥83,127 million for fiscal 2008 to¥84,686 million for fiscal 2009. Cost of sales as a percentage of net sales
decreased by 1.0%, from 50.1% for fiscal 2008 to 49.1% for fiscal 2009.
This was due to a number of factors including, product consolidationand improvements in inventory management by Wacoal Corp. resulting
in fewer returned goods and fewer losses from inventory write-downs,
improved efficiencies in overseas production, and the consolidation ofPeach John which has a comparatively lower cost percentage.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses increased 11.8%
from ¥69,245 million for fiscal 2008 to ¥77,399 million for fiscal 2009.
Selling, general and administrative expenses as a percentage of net
sales increased by 3.1% from 41.8% for fiscal 2008 to 44.9% for fiscal
2009 due mainly to the increase in our net periodic benefit costs andthe consolidation of Peach John, which has considerably larger selling,
general and administrative expenses as a percentage of net sales than
Wacoal. The increase in our net periodic benefits costs was principally
attributable to the significant increase in the actuarial loss with respect
to our pension plans. Peach John’s greater selling, general and administrative expenses as a percentage of net sales than such expenses for
Wacoal on a consolidated basis is attributable mainly to Peach John’s
greater publicity and shipping costs, which are characteristic of acatalog business.
Operating Margin
Our operating margin (i.e., operating income as a percentage of net
sales) decreased to 5.9% for fiscal 2009, as compared to 8.1% for fiscal
2008. Although our consolidated net sales increased as a result of PeachJohn consolidation, net sales from non-Peach John operations declined.
In addition, with respect to non-Peach John operations, net sales
declined at a greater rate than the decline in cost of sales, while selling,
general and administrative expenses increased. As a result, the operating
margin of non-Peach John operations decreased. The decrease in ourconsolidated operating margin was primarily due to the decrease in
the operating margin of non-Peach John operations, which more thanoffset any positive impact of Peach John consolidation on our consolidated operating margin.
Total Other Expenses, Net
We had a net ¥2,502 million of other expenses for fiscal 2009, as compared
to a net ¥813 million of other income for fiscal 2008. This change wasprimarily due to a loss on valuation of investment securities of approximately ¥2,600 million for fiscal 2009 and an approximately ¥600
million profit on sale of investment securities for fiscal 2008.
Net Income
Net income was ¥5,230 million for fiscal 2009, an increase of ¥264
million compared to fiscal 2008. Net income increased despite a large
decrease in sales proceeds and pre-tax net income because fiscal 2008
included a large one-off approximately ¥4,700 million write-down inthe value of our investment in Peach John which was at that time not a
consolidated subsidiary and therefore recorded as an investment loss
under equity in net loss of affiliated companies.
Liquidity and Capital Resources
Our main source of liquidity is cash from operations, which allows
us to secure working capital, make capital investments and pay dividends without relying on substantial borrowings or other financing
from outside of the group. Some of our subsidiaries, however, havecredit facilities at financial institutions to secure working capital. The
aggregate amount of these credit facilities is ¥14,474 million, and theoutstanding balance drawn from these facilities was ¥5,221 million asof March 31, 2009, including borrowings by Wacoal Service of ¥2,878
million and borrowings by Nanasai of ¥2,000 million. In general, all of
our credit facilities have unlimited or automatically renewed terms,
and we are not aware of issues with respect to any of our lenders that
could cause these facilities to become unavailable. Even if any of ouroverseas subsidiaries loses access to funds from such credit facilities,
we believe we have or are capable of raising sufficient funds to meet theirfunding requirements. Our borrowing requirements are not affectedby seasonality.
We are not aware of any restrictions on the transfers of funds from a
subsidiary to a parent company in the form of a cash dividend, loan or
cash advance. We believe that our working capital is adequate for ourpresent requirements and for our business operations both in the longand short-term.
Cash Flows
Cash Provided by Operating Activities. Net cash from operating activities was¥8,168 million for fiscal 2009, as compared to ¥14,225 million for fiscal
2008. This significant decrease in net cash from operating activities,
despite the increase in net income by ¥264 million, was, in part, because
net income for fiscal 2008 reflected our equity in net loss of affiliatedcompanies, less dividends, in the amount of ¥4,198 million, while net
income for fiscal 2009 reflected our equity in net income of affiliatedcompanies, less dividends, in the amount of ¥296 million. The significant decrease in net cash from operating activities was also attributable
to a net decrease in assets and liabilities of ¥4,741 million that included
an increase in inventories of ¥3,712 million, an increase in notes andaccounts payable of ¥3,455 million, a decrease in liability for termination
and retirement benefits of ¥1,404 million and a decrease in accrued

expenses, income taxes payable and other current liabilities ¥6,231
million. The foregoing items were only partially offset by an increasein impairment charges on marketable securities and investmentsof ¥2,613 million.
Net Cash Used in Investing Activities. Net cash used in investing activitieswas ¥4,714 million for fiscal 2009, as compared to net cash provided byinvesting activities of ¥3,590 million for fiscal 2008. This was primarily
due to the impact of Peach John’s cash and cash equivalents of ¥4,115
million, which were consolidated into our accounts for fiscal 2008 andwere no longer treated as cash provided by investing activities for fiscal
2009, as well as due to the following factors: a decrease in proceedsfrom the sale and redemption of marketable securities of ¥3,382
million, an increase in acquisition of investments of ¥1,253 million,
and a decrease in proceeds from sale of investments and fixed assets of¥2,282 million. The foregoing cash provided by investing activities waspartially offset by a decrease in payments to acquire marketable securities of ¥4,453 million.
Net Cash Used in Financing Activities. Net cash used in financing activitieswas ¥7,448 million for fiscal 2009, as compared to ¥9,400 million forfiscal 2008. This was primarily due to a decrease in treasury stock
purchases of ¥2,478 million in fiscal 2009 compared to fiscal 2008,
which more than offset an increase in dividend payments of ¥491
million in fiscal 2009 compared to fiscal 2008.
Capital Expenditures
Capital expenditures were ¥2,362 million for fiscal 2009, ¥1,211 million
for fiscal 2008 and ¥2,536 million for fiscal 2007. These expenditures
were primarily for the repair of office facilities of our domestic
subsidiaries and the expansion of our specialty retail store network.
Payments to acquire intangible assets were ¥1,846 million for fiscal
2009, ¥1,678 million for fiscal 2008 and ¥984 million for fiscal 2007.
These payments primarily comprised of payments for information
technology-related investments.

Net Cash Provided byOperating Activities

SG&A Expenses¥ Billion¥ Billion

77.4
72.1

14.2

69.7 68.8 69.2

9.3
8.2
47.8
41.4 41.7

40.5

45.0

2.0
0.7
FY

05

FY

06

FY

07

FY

08

FY

09

FY

05

FY

06

FY

07

FY

08

FY

09

Ratio of SG&A expenses
to net sales (%)

29

We expect to spend approximately ¥1,600 million in fiscal 2010 (andpossibly fiscal 2011) to rebuild and relocate some of our manufacturing
operations. We also expect to continue to make expenditures for the
expansion of our specialty retail store network, (including costs for thedevelopment of new stores and the closure of underperforming stores),and for maintenance, to meet applicable legal requirements and to
facilitate the manufacture of new products with new designs andspecifications. Furthermore, we intend to evaluate and pursue opportunities for acquisitions, investments and other strategic transactions
that we believe will help us achieve our business objectives, including
extending our product offerings in Japan and in overseas markets andstrengthening our capabilities in the Internet, catalog and othermarketing channels. We expect to fund these capital expenditures andother expenditures through our cash from operations, existing cash
reserves and other available sources of liquidity.
In fiscal 2007, we sold domestic corporate housing units witha book value of ¥129 million. In fiscal 2008, we sold overseas corporate
housing units and other property with a book value of ¥211 million,
and in fiscal 2009, we sold plants and other property in connection
with the liquidation of our subsidiary Tokai Wacoal Sewing Corp. witha book value of ¥59 million.
Research and Development, Patents and Licenses
For more than 40 years since the establishment of our Human Science
Research Center in 1964, we have conducted many forms of basic
research including research on the Japanese woman’s body. In order toCapital Expenditures¥ Billion

6.5
5.4

2.5

2.4

1.2

FY

05

30

FY

06

FY

07

FY

08

FY

09

accurately understand the Japanese woman’s physique, we havedeveloped such things as a silhouette analysis system and a threedimensional measuring system. However, we are currently developing
equipment that we believe will provide an even more advanced
measurement of sensory comfort. Our research and development
activities focus on addressing the proportional, physiological andmental 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 of indicatorsthat characterize the beautiful Japanese woman’s body. We also beganutilizing new sales methods at that time. We also began applying newsales methods at that time. From 1995 and for 10 years, we participatedin a project led by the Ministry of International Trade and Industry(presently the Ministry of Economy, Trade and Industry) enriching thebasic study of sensory comfort and conducting research based onreactions to three factors: pressure, heat and touch. Based on thisresearch, we are focused on developing new products that are not only
comfortable for the wearer but have a positive physiological effect. In
2000, we conducted an analysis on the physiological changes associatedwith aging throughout a 25 year period from the teenage years to the
40s. We named the principles of these changes SPIRAL Aging. In
addition, every year we take the measurements of 500 – 1,000 people
focusing on women any age from teenagers to those in their 60s.
Presently we have collect data from over 35,000 persons.
In addition, we have been conducting further studies focusing on
body movement. Based on these studies, we have been able to incorporate the principles behind “taping” for stabilizing joint function
during exercise into sportswear products designed to create smooth
movements and alleviate muscle fatigue such as CW-X. Also based on
our studies, we have developed products such as those that support
both posture and movement in order to ease and alleviate the aging
and body changes that burden senior citizens.
From fiscal 2007, we began research and development into men’s
innerwear, and have progressed in implementing the measurement of
the male body and improved the organization of our monitoring
system. In fiscal 2008, we carried out various trials in relation to Style
Science products for men and were able to verify their effectiveness.
As a result, we developed our Cross Walker product and began sales indepartment stores and chain stores across Japan. This product has shownfavorable sales. In addition, in fiscal 2009 we released an easy-to-understand summary of our collection and accumulation of information
regarding the fat-burning ability of our Style Science products and thiscontributed to our marketing activities of the Style Science line.
Overseas, we established the Chinese Human Science ResearchCenter to undertake research and development into the Chinese
woman’s body, similar to that conducted in Japan.
The cost of research and development for fiscal 2009 was approximately ¥768 million, compared to ¥766 million for fiscal 2008 and¥714 million for fiscal 2007.

risk factors
Our business, performance and financial condition are subject
to risks and uncertainties, including those described in the risk
factors below.  These risks and uncertainties could result in amaterial adverse effect on our results of operations and financial
condition, and a material decline in the trading price of ourcommon stock and American Depositary Shares (“ADSs”).

10. Our business may be adversely affected by seasonality.
11.	We may face increasing risks relating to conducting businessinternationally.
12.	We may not be successful with acquisitions and other strategictransactions with third parties.

1.	The recent global economic downturn and financial crisis, which
has weakened the Japanese economy, could negatively affect ourbusiness, results of operations and financial condition.

13.	We may face infringement of our intellectual property rights or
claims that we infringe the intellectual property rights of others.

2.	Continued difficulties faced or changes in business policies made by
department stores, general merchandise stores and other generalretailers in Japan would hurt our business.

14.	I f we fail to protect our customers’ privacy and data and maintainthe confidentiality of our trade secrets we may face proceedings
against us and lose customer confidence.

3.	Our sales may decline if we are unable to effectively anticipate
and respond to consumer tastes and preferences and deliver
high-quality products.

15.	I f we fail to maintain adequate internal controls over financial
reporting we may not be able to produce reliable financial reports
in a timely manner or prevent financial fraud.

4.	The apparel market is highly competitive, and our share ofsales or profitability may decline if we are unable to maintainour competitivenesss.

16.	Our holdings of equity securities expose us to market risks.

5.	Our specialty retail store network expansion may not lead to
improved sales and profits.
6.	We may experience difficulties in successfully increasing ourcatalog and Internet sales.

17.	Natural disasters and epidemics could affect our manufacturing
abilities or sales results.
18.	We may become classified as a passive foreign investment company,
which could result in adverse U.S. tax consequences to U.S. holdersof our stock or ADSs.

7.	We are subject to inventory risks that could negatively impact ouroperating results.

19.	Yen–dollar fluctuations could cause the market price of the ADSs
to decline and reduce dividend amounts payable to ADS holders as
expressed in U.S. dollars.

8.	Improvement in our profitability will largely depend on our ability
to reduce costs.

20.	Holders of ADSs will have fewer rights than a shareholder has, andyou must act through the depositary to exercise those rights.

9.	It may be difficult for us to attract and retain highly qualified
personnel.

21.	Japan’s unit share system imposes restrictions on holdings of ourcommon stock that do not constitute whole units.

31

consolidated balance sheets
Wacoal Holdings Corp. and Subsidiaries
March 31, 2009 and 2008

		Millions of Yen

AssetsCurrent assets:
Cash and cash equivalents:
Cash		

2009

2008

2009

$ 134,927
96,430231,357
105,729¥ 13,378¥ 15,857

Time deposits and certificates of deposit 		Total 		Marketable securities (Notes 3 and 19) 		
Notes and accounts receivable:
Trade notes 		
Trade accounts (Note 16) 		
Allowance for returns and doubtful receivables (Note 4) 		
Inventories (Note 5) 		
Deferred income taxes (Note 15) 		

9,561
22,93910,483

12,18628,043
12,614541
19,422(2,279)31,153
5,395

353
22,337(3,145)30,020
5,411

Other current assets 		
Total current assets 		

2,965
90,6193,212
98,845

Property, plant and equipment:
Land 				Buildings and building improvements 		
Machinery and equipment 		

20,502
58,216
13,66020,71158,575
14,448Construction in progress 		
Total 		Accumulated depreciation 		
Net property, plant and equipment 		

68
92,446(43,407)
49,03999
93,833(42,285)
51,548Other assets:
Investments in affiliates (Note 6) 		
13,283
Investments (Notes 3 and 19) 		
29,182
Goodwill (Notes 9 and 10) 		
11,203
Other intangible assets (Notes 9 and 10) 		
13,242
Prepaid pension expense (Note 11)		Deferred income taxes (Note 15) 		
1,088
Other 		Total other assets 		

5,830
73,82818,942
38,056
11,203
13,216
3,444
1,462
4,903
91,226

Total				¥213,486¥241,619

See notes to consolidated financial statements.

32

Thousands of
U.S. Dollars (Note 2)

5,456
195,885(22,985)
314,201
54,412
29,904
913,959

206,777
587,151
137,771686
932,385(437,791)
494,594

133,969
294,322112,990
133,555$2,153,162

10,97358,800744,609		Millions of Yen

Liabilities and Shareholders’ Equity

Thousands of
U.S. Dollars (Note 2)

2009

2008

2009

¥ 5,221¥ 5,572$ 52,658

2,498
9,172
5,817
6,336
747
39
2,113
31,943

1,935
9,394
6,327
6,645
3,872
48
2,217
36,01025,19492,506
58,66963,9037,534
393
21,311
322,168

Long-term liabilities:
Long-term debt (Notes 7 and 18)		
Liability for termination and retirement benefits (Note 11)		
Deferred income taxes (Note 15)		
Other long-term liabilities (Notes 11 and 15)		
Total long-term liabilities		

42
4,090
8,346
1,098
13,57681
2,181
14,527
1,356
18,145424
41,251
84,175
11,074
136,924

Minority interests		

2,094

2,351

21,12013,26029,316138,235

13,26029,262
136,589

133,737
295,673
1,394,201

Current liabilities:
Short-term bank loans (Note 7)		Notes and accounts payable:
Trade notes		Trade accounts (Note 16)		
Other payables		Accrued payroll and bonuses		
Income taxes payable		Current portion of long-term debt (Notes 7 and 18)		
Other current liabilities (Note 11)		
Total current liabilities		

Commitments and contingencies (Note 8)
Shareholders’ equity (Note 12):
Common stock, no par value—authorized, 500,000,000 shares in 2009 and 2008;
issued 143,378,085 shares in 2009 and 2008		
Additional paid-in capital (Note 13)		
Retained earnings		
Accumulated other comprehensive (loss) income (Note 14):
Foreign currency translation adjustments		
Unrealized gain on securities		
Pension liability adjustments (Note 11)		
Total accumulated other comprehensive (loss) income 		
Less treasury stock at cost—
2,927,238 shares and 35,998 shares in 2009 and 2008		
Total shareholders’ equity		

(8,288)325(3,383)(11,346)

248
5,295
514
6,057

(83,591)
3,278(34,120)(114,433)(3,592)
165,873(55)
185,113(36,228)
1,672,950

Total 		

¥213,486¥241,619$2,153,162

33

consolidated statements of income
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2009, 2008 and 2007

		Millions of Yen

Net sales (Note 16)
Operating costs and expenses (income):
Cost of sales (Notes 11 and 16)
Selling, general and administrative (Notes 11 and 13)
Impairment charges on long-lived assets
Loss (gain) on sale or disposal of property, plant and equipment
Total operating costs and expenses
Operating income
Other income (expenses):
Interest income
Interest expense
Dividend income
Gain on sale or exchange of marketable securities and investments (Note 3)
Impairment charges on marketable securities and investments (Notes 1 and 3)
Other – net
Total other (loss) income – net
Income before income taxes, equity in net income (loss)of affiliated companies, and minority interests (Note 15)
Income taxes (Note 15):
Current
Deferred
Total income taxes
Income before equity in net income (loss) of affiliatedcompanies, and minority interests
Equity in net income (loss) of affiliated companies (Note 6)
Minority interests
Net income

Earnings per share (Note 17):
Basic
DilutedEarnings per american depositary receipt(5 shares of common stock) (Note 17):
Basic
DilutedSee notes to consolidated financial statements.

34

Thousands of
U.S. Dollars (Note 2)

2009

2008

2007

2009

¥172,276¥165,761¥166,410$1,737,529

84,686
77,39929
33
162,147
10,12983,12784,65869,24568,831
33		
(184)
25
152,221
153,514
13,54012,896854,120
780,625293
333
1,635,371
102,158

274
(75)
677
19
(3,550)153(2,502)

303
(78)
641
715
(937)
169
813

236
(73)
603
406
(423)
275
1,024

2,763
(756)
6,828
192
(35,804)
1,543(25,234)

7,627

14,353

13,92076,924

2,717
496
3,213

5,577
276
5,853

2,874
3,628
6,502

27,403
5,003
32,406

4,414
893
(77)
¥ 5,230

8,500(3,392)(142)¥ 4,966

7,418
1,771
(160)
¥ 9,02944,518
9,007(777)$ 52,748

Yen

U.S. Dollars (Note 2)

2009

2008

2007

2009

¥36.75¥36.74¥35.14¥35.14¥63.18¥63.18

$0.37
$0.37

¥183.74¥183.72¥175.72¥175.72¥315.90¥315.90

$1.85
$1.85

consolidated statements ofcomprehensive (loss) income
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2009, 2008 and 2007
		Millions of Yen

Net income
Other comprehensive (loss) income, net of tax (Note 14):
Foreign currency translation adjustments
Unrealized (losses) gains on securities
Pension liability adjustments
Other comprehensive (loss) income
Comprehensive (loss) income

Thousands of
U.S. Dollars (Note 2)

2009

2008

2007

2009

¥ 5,230¥ 4,966¥ 9,029$ 52,748(8,536)(4,970)(3,897)(17,403)¥(12,173)

(468)
1,452
(9,133)117(3,616)		
(13,217)1,569¥ (8,251)¥10,598(86,092)(50,126)(39,304)(175,522)$(122,774)

See notes to consolidated financial statements.

consolidated statements of shareholders’ equity
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2009, 2008 and 2007

		
Shares of 				Additional		
Outstanding		
Common Stock
CommonPaid-in
Retained(Thousands)
Stock
CapitalEarnings

Millions of Yen

Accumulated
Other
Comprehensive
IncomeBALANCE, APRIL 1, 2006
143,916¥13,260¥25,242¥134,515¥ 13,575
Net income				9,029
Other comprehensive income					1,569Cash dividends paid, ¥100 per 5 shares of common stock				(2,878)
Repurchase of treasury stock(3,339)					Adjustment to initially apply SFAS No. 158, net of tax (Note 11)					4,130BALANCE, MARCH 31, 2007
140,577
13,26025,242
140,666
19,274
Net income				4,966
Other comprehensive loss					(13,217)
Cash dividends paid, ¥110 per 5 shares of common stock				(3,093)
Repurchase of treasury stock(3,936)					Cancellation of treasury stock				(5,950)		
Issuance of new shares to acquire a subsidiary (Note 9)
3,261		4,474Distribution of treasury stock to acquire a subsidiary (Note 9)3,440		
(454)			BALANCE, MARCH 31, 2008
143,342
13,26029,262
136,589
6,057
Net income				5,230
Other comprehensive loss					(17,403)
Cash dividends paid, ¥125 per 5 shares of common stock				(3,584)
Repurchase of treasury stock(2,891)				
Share-based compensation granted (Note 13)			
54
Balance, March 31, 2009
140,451¥13,260¥29,316¥138,235¥(11,346)

TreasuryStock¥ (117)(5,047)(5,164)(6,015)
5,950
5,174
(55)

(3,537)¥(3,592)

Thousands of U.S. Dollars (Note 2)
					
			
Additional				CommonPaid-in
Retained		
Stock
CapitalEarnings

Accumulated
Other
Comprehensive
IncomeBALANCE, MARCH 31, 2008		
$133,737$295,129$1,377,600$ 61,089
Net income				52,748Other comprehensive loss					(175,522)
Cash dividends paid, $1.26 per 5 shares of common stock			
(36,147)		
Repurchase of treasury stock 					Share-based compensation granted (Note 13)			
544
Balance, March 31, 2009		
$133,737$295,673$1,394,201$(114,433)

TreasuryStock$ (555)(35,673)$(36,228)

See notes to consolidated financial statements.

35

consolidated statements of cash flows
Wacoal Holdings Corp. and Subsidiaries
Years Ended March 31, 2009, 2008 and 2007

		Millions of Yen

2009

2008

2007

Operating activities:		
Net income¥ 9,029¥ 5,230¥ 4,966
Adjustments to reconcile net income to net cash provided by operating activities:		
Depreciation and amortization
3,735
4,546
3,908
Provision for returns and doubtful receivables
(725)
190
173
Deferred income taxes
496
276
3,628
Loss (gain) on sale or disposal of property, plant and equipment
33
(184)
25
Impairment charges on long-lived assets
29
33		
Gain on sale or exchange of marketable securities and investments
(19)
(715)
(406)
Impairment charges on marketable securities and investments (Note 1)
3,550
937
423
Equity in net (income) loss of affiliated companies, less dividends
(296)
4,198
(1,164)
Changes in assets and liabilities:				 Decrease in notes and accounts receivable
401
2,109
1,822
		 (Increase) decrease in inventories(2,494)
1,218(2,897)
		 Decrease (increase) in other current assets
105
49
(371)
		 Increase (decrease) in notes and accounts payable841(2,614)219
		 Decrease in liability for termination and retirement benefits(1,209)(2,613)(2,472)
		 (Decrease) increase in accrued expenses, income taxes payable and		 other current liabilities(696)(3,550)
2,681
Other
(478)
73
(288)
Net cash provided by operating activities
8,168
14,2259,339
Investing activities:
Proceeds from sales and redemption of marketable securities
7,124
10,50628,509Payments to acquire marketable securities(5,439)(9,892)(9,929)Proceeds from sales of property, plant and equipment
159
1,057
524
Capital expenditures(2,362)(1,211)(2,536)
Payments to acquire intangible assets(1,846)(1,678)(984)
Proceeds from sales of investments
30
1,414
8
Payments to acquire investments in affiliated companies			(15,326)
Payments to acquire investments(1,887)(1,871)(618)
Cash balances of subsidiary acquired in excess of cash paid			80
Cash balances of subsidiary acquired through share exchanges (Note 9)		4,115
Other		
(509)
(103)
356
Net cash (used in) provided by investing activities(4,714)
3,590(1,185)
Financing activities:
Decrease in short-term bank loans—net
(279)
(259)
(575)
Proceeds from issuance of long-term debt		
18
130
Repayments of long-term debt
(34)
(48)
(51)
Repurchase of treasury stock(3,537)(6,015)(5,047)
Dividends paid on common stock(3,584)(3,093)(2,878)Net cash used in financing activities(7,448)(9,400)(8,404)
Effect of exchange rate changes on cash and cash equivalents
173(1,110)(188)
Net (decrease) increase in cash and cash equivalents(77)(5,104)
8,227
Cash and cash equivalents, beginning of year
19,89328,043
19,816
Cash and cash equivalents, end of year
¥19,816¥22,939¥28,043
Additional cash flow information:
Cash paid for:
Interest¥ 75
Income taxes
7,268
Noncash investing activities:
Fair value of certain marketable securities received in exchange forother marketable securities with a carrying values of ¥7 million ($71 thousand)and ¥48 million in 2009 and 2008, respectively¥9
Acquisition of subsidiary through share exchanges (Note 9)		See notes to consolidated financial statements.

36

Thousands of
U.S. Dollars (Note 2)2009$ 52,748
45,850(7,312)
5,003
333
293
(192)
35,804(2,986)
21,271(25,154)
1,059
8,482
(12,194)(35,804)(4,821)
82,38071,851(54,856)
1,604(23,823)(18,618)303(18,871)(5,134)(47,544)(2,814)(484)(35,673)(36,147)(75,118)(11,195)(51,477)
282,834$231,357

¥ 70
4,667

$ 756
73,303¥ 143		
9,194

$ 91

¥ 78
2,542

notes to consolidated financial statements
Wacoal Holdings Corp. and Subsidiaries

1. summary of significant accounting policies
Basis of Financial Statements—Wacoal Holdings Corp. (the “Company")and subsidiaries are predominantly engaged in one industry, the manufacture and sale of apparel, including foundation garments, lingerie,nightwear and outerwear in Japan, the United States 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 except for the omissionof segment information as required by Statement of Financial AccountingStandards (“SFAS”) No. 131, “Disclosures about Segments of an Enterpriseand Related Information.”
Consolidation—The consolidated financial statements include the accountsof the Company and its majority-owned subsidiaries (collectively, the“Companies"). All intercompany transactions and balances are eliminated.
Foreign subsidiaries of the Company have a fiscal year ending
December 31. The accounts of those subsidiaries are included in the
Company’s consolidated financial statements based on the subsidiaries’
fiscal year. As further described in Note 9 to the financial statements, onJanuary 10, 2008, the Company acquired the remaining 51% interest ina domestic subsidiary with a fiscal year ended February 29, 2008. Prior to
January 10, 2008, the Company accounted for its original investment of
49% in this subsidiary using the equity method. As of March 31, 2008 andthereafter, the subsidiary is included in the Company’s consolidatedbalance sheet based on the subsidiary’s fiscal year end. However, because
the subsidiary’s results of operations and changes in financial position
between January 10, 2008 and March 31, 2008 were not significant, theCompany continued to account for its investment using the equity
method and the income from the subsidiary’s operations for the fiscal year
ended February 29, 2008 was included in equity in net income (loss) ofaffiliated companies in the consolidated statements of income. The
subsidiary is included in the Company’s consolidated statements ofincome for the year ended March 31, 2009 based on the subsidiary’s fiscal
year end for the year ended February 28, 2009.
Investments in affiliates where the Company’s 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 of between
20% to 50%, although other factors are considered in determining
whether the equity method of accounting is appropriate.
Use of Estimates—The preparation of financial statements inconformity with accounting principles generally accepted in the UnitedStates of America requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents—Cash and cash equivalents include alltime deposits and certificates of deposit (all of which are interest-bearing)with original maturities of three months or less, which can be withdrawn
at face value at any time without diminution of principal.
Foreign Currency Translation—Assets and liabilities of foreignsubsidiaries have been translated to Japanese yen at period-end exchange
rates and income and expenses have been translated using weighted-averageexchange rates for the period. Translation adjustments are included inother comprehensive (loss) income, a separate component of shareholders’equity. Exchange gains and losses resulting from foreign currency transactions and the conversion of monetary assets and liabilities denominatedin foreign currencies are included in other income (expenses) in the
consolidated statements of income.
Marketable Securities and Investments—The Companies classify theirdebt and marketable equity securities as available-for-sale and carry them atfair value with a corresponding recognition of unrealized holding gains orlosses (net of tax) in other comprehensive (loss) income, a separate
component of shareholders’ equity, until realized. Equity securities that do
not have readily determinable fair values are recorded at cost. Gains andlosses on sales of investments are computed based on cost determined using
the average cost method.
If a decline in the fair value of marketable securities and investments isdetermined to be other-than-temporary, an impairment charge is recordedin the consolidated statements of income. The Companies periodicallydetermine whether a decline in the fair value of marketable securities andinvestments is deemed to be other-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 andthe intent and ability of the Companies to retain the impaired marketablesecurities and investments for a sufficient period of time for anticipated
recovery in market value.
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 theaverage cost method for work in process and finished products.
Property, Plant and Equipment—Property, plant and equipment is statedat cost less accumulated depreciation. Depreciation of property, plant andequipment is computed by the declining-balance method, except forbuildings acquired on or after April 1, 1998, which are depreciated using thestraight-line method, based upon the estimated useful lives of the assets.
The estimated useful lives are as follows:
Buildings and building improvements:
5—50 years (Mainly 38 years)
Machinery and equipment:
2—20 years (Mainly 5 years)
Goodwill and Other Intangible Assets—Goodwill represents the excessof the purchase price over the related underlying tangible and intangible net
asset values of business acquired. Annually, or more frequently if conditions
indicate an earlier review is necessary, the carrying value of the goodwill ofreporting unit is compared to an estimate of its fair value. The annual ormore frequent evaluation for impairment of goodwill is based on valuation
models that incorporate assumptions and internal projections of expected
future cash flows and operating plans.
Other intangible assets with estimable useful lives consist primarily ofcustomer list and software and are amortized over their estimated useful
lives using the straight-line method. The estimated useful lives are as follows:
Customer list:
7 years
Software:5 years
Other intangible assets with indefinite useful lives are evaluated forpotential impairment in a manner consistent with goodwill.
Impairment of Long-lived Assets—The carrying values of long-lived
assets, held and used by the Companies, are evaluated for impairment
whenever there is an event or change in circumstances that indicates thatsuch assets have been impaired or that the carrying amounts of such assets
might not be recoverable.
The Companies recorded ¥29 million ($293 thousand) and ¥33 million in
impairment charges on long-lived assets for the years ended March 31, 2009
and 2008, respectively, which resulted from the impairment of primarily
buildings of certain factory in the year ended 2009, and land and buildings of
a company residence in the year ended 2008. The Company decided to close
its wholly owned manufacturing subsidiary, Tokai Wacoal Sewing Corp., andto sell its property, plant and equipment to an unrelated party in the year
ended March 31, 2009. Therefore, the Companies recognized an impair­­mentof the asset to be disposed of by sale at the amount of the difference between
the sales price and the Company’s book value. In the year ended March 31,
2008, the Company decided to sell the company residence to an unrelated
party. The Company entered into a sales contract in March 2008 and the sales
transaction completed in April 2008. Therefore, the Companies recognized
an impairment of the asset to be disposed of by sale at the amount of thedifference between the sales price and the Company’s book value.
No impairment charges were recorded in the year ended March 31, 2007.

37

38

Derivatives—Derivative instruments, including certain derivative
instruments embedded in other contracts, are accounted for in accordancewith SFAS No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” SFAS No. 138, “Accounting for Certain Derivative Instruments
and Certain Hedging Activities an Amendment of the Financial AccountingStandards Board (“FASB”) Statement No. 133,” and SFAS No. 149,
“Amendment of Statement 133 on Derivative Instruments and Hedging
Activities.” Changes in the fair value of a derivative are recorded in earnings,
since derivative instruments are not designated as a hedge.
Asset Retirement Obligations—The Companies have obligations arisingfrom contractual commitments to remove leasehold improvements fromleased facilities and return the property to a specified condition when thelease terminates. Lease contracts have automatic renewal articles andtherefore, the Companies use their best estimate to determine the leasetermination dates for the purpose of calculating asset retirement obligations.
Termination and Retirement Plans—Termination and retirement
benefits are accounted for in accordance with SFAS No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans.”
Provisions for termination and retirement benefits include those fordirectors and corporate auditors of the Companies.
As allowed under SFAS No. 88, “Employers’ Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination
Benefits,” the Companies do not recognize a gain or loss on settlement of
the pension obligation when the cost of all settlements in a year is less thanor equal to the sum of the service cost and interest cost components of net
periodic pension cost for the plan for the year.
Leases—Certain noncancelable leases are classified as capital leases and theleased assets are included as part of property, plant and equipment. Suchleasing arrangements involve the computer aided design system and thecomputer hardware. Other leases are classified as operating leases and are
not capitalized. The payments on such leases are recorded as expense. The
rental expense under operating leases is recognized on a straight-line basis.
Treasury Stock—The Companies account for treasury stock under the cost
method and include treasury stock as a component of Shareholders’ Equity.
Acquisition—The Company accounts for acquisitions using the purchasemethod in accordance with SFAS No. 141, “Business Combinations.” The
Company allocates the purchase price to the assets acquired and liabilities
assumed based on the estimated fair values at the date of acquisition, including
intangible assets that can be identified and named. The purchase price inexcess of the fair value of the net assets and liability is recorded as goodwill.
Share-Based Compensation—Share-based compensation is accounted forin accordance with SFAS No. 123(R) (revised 2004), “Share Based Payment.”
The Company measures share-based compensation cost at the grant date,based on the fair value of the award and is recognized over the requisite
service period, which is the vesting period. The fair value of the award isestimated using the Black-Scholes option-pricing model.
Revenue Recognition—The Companies recognize revenue on sales toretailers, mail order catalog sales and internet sales when (1) persuasive
evidence of an arrangement exists, (2) delivery has occurred resulting in transferof title and risk of loss, (3) the sales price is fixed or determinable, and(4) collectibility is reasonably assured. The Companies establish allowancesfor estimated returns based on historical experience. 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 to the customer.
Advertising Expenses—Advertising costs are expensed as incurred. Advertisingexpenses for the years ended March 31, 2009, 2008 and 2007 were ¥13,624 million($137,408 thousand), ¥11,768 million and ¥12,084 million, respectively andhave been included in selling, general and administrative expenses.
Shipping and Handling Costs—Shipping and handling costs for the years
ended March 31, 2009, 2008 and 2007 were ¥4,895 million ($49,370 thousand),¥4,062 million and ¥4,186 million, respectively, and have been included inselling, general and administrative expenses.
Research and Development Costs—Research and development costs are
expensed as incurred. Research and development costs for the years ended
March 31, 2009, 2008 and 2007 were ¥768 million ($7,746 thousand), ¥766
million and ¥714 million, respectively, and have been included in selling,
general and administrative expenses.
Income Taxes—The provision for income taxes is determined under theasset and liability method pursuant to SFAS No. 109, “Accounting forIncome Taxes.” Under this method, deferred tax assets and liabilities are

determined for temporary differences between the financial statement andtax bases of assets and liabilities at presently enacted tax rates. A valuation
allowance is recorded when it is more likely than not that some portion or
all of the deferred tax assets will not be realized in the future.
Provisions are made for taxes on undistributed earnings and cumulativetranslation adjustments of foreign subsidiaries whose earnings are notdeemed to be permanently invested.
On April 1, 2007, the Company adopted FASB Interpretation No. 48,“Accounting for Uncertainty in Income Taxes—an interpretation of FASBStatement No. 109” (“FIN 48”). The Company recognizes the tax benefit
from an uncertain tax position only if it is more likely than not the tax
position will be sustained on examination by the taxing authorities, based on
the technical merits of the position.
Reclassifications—Certain reclassifications have been made to the prioryears’ financial statements to conform with the current year’s presentation.
To conform to the 2009 presentation, the Companies have reclassified
impairment charges on marketable securities to “Impairment charges onmarketable securities and investments,” which had previously been presented
as “Other” in other expenses in the consolidated statements of income and“Other” in operating activities in the consolidated statements of cash flows.
Recent Accounting Pronouncements:
Fair Value Measurements—In September 2006, the FASB issued SFAS No.
157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes aframework for measuring fair value and expands disclosure of fair value
measurements. SFAS No. 157 applies under other accounting pronouncementsthat require or permit fair value measurements and, accordingly, does not
require any new fair value measurements. SFAS No. 157 is effective for fiscal
years beginning after November 15, 2007. In February 2008, the FASB issued
Staff Position (“FSP”) No. FAS157-2, “Effective Date of FASB Statement No.
157,” which delayed the effective date of SFAS No. 157 for one year forcertain nonfinancial assets and liabilities. The Companies adopted SFAS No.
157 in the first quarter beginning April 1, 2008 for all financial assets andliabilities that are recognized or disclosed at fair value. This adoption did nothave a material impact on the Companies’ consolidated results of operations
and financial position. The Companies are currently in the process ofassessing the impact of the adoption of SFAS No. 157 for all nonfinancial
assets and liabilities, since the adoption of SFAS No. 157 for all nonfinancial
assets and liabilities is effective for the fiscal years beginning after November
15, 2008. See Note 19 for disclosures required by SFAS No. 157.
In October 2008, the FASB issued FSP No. FAS 157-3, “Determining theFair Value of a Financial Asset When the Market for That Asset is Not Active,”
which clarifies the application of SFAS No. 157 in a market that is not active
and provides an example to illustrate key considerations in determining thefair value of a financial asset when the market for that financial asset is not
active. FSP No. FAS 157-3 is effective upon issuance. This adoption did nothave a material impact on the Companies’ consolidated financial position,
result of operations or cash flows.
In April 2009, the FASB issued FSP No. FAS 157-4 “Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly,”which provides additional guidance on measuring the fair value of financial
instruments when markets become inactive and quoted prices may reflect
distressed transactions. FSP No. FAS 157-4 is effective for interim or fiscal
years ending after June 15, 2009. The Companies are currently in the processof assessing the impact of adoption of FSP No. FAS 157-4 on its financial
position, results of operation or cash flows.
The Fair Value Option for Financial Assets and Financial Liabilities—
Including an Amendment of FASB Statement No. 115—In February
2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets
and Financial Liabilities—Including an amendment of FASB Statement No.
115.” SFAS No. 159 provides entities with an option to report selected financial
assets and liabilities at fair value, with changes in fair value recorded in earnings.
It also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007. The adoption of SFAS No. 159 did nothave a impact on the consolidated financial statements, since the Companies
did not elect to report financial assets and liabilities at fair value.
Business Combinations—In December 2007, the FASB issued SFAS No.
141(R), “Business Combinations”. SFAS No. 141(R) replaces SFAS No. 141,
“Business Combinations.” This statement establishes principles and require-ments for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill acquired. This
statement also establishes disclosure requirements to enable the evaluationof the nature and financial effects of the business combination. In April 2009,
FASB issued FSP No. FAS 141(R)-1, “Accounting for Assets Acquired andLiabilities Assumed in a Business Combination That Arise from Contingencies.”
FSP No. FAS 141(R)-1 amends and clarifies SFAS No. 141(R) to addressapplication issues raised by preparers, auditors, and members of the legal
profession on initial recognition and measurement, subsequent measurement
and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. SFAS No. 141(R) and FSP No. FAS 141(R)-1
are effective for business combinations for which the acquisition date is on
or after the beginning of the fiscal year beginning on or after December 15,
2008. The Companies are currently in the process of assessing the impact the
adoption of SFAS No.141(R)and FSP No. FAS 141(R)-1 will have on theirconsolidated financial position, cash flows or results of operations.
Noncontrolling Interest in Consolidated Financial Statements—
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in Consolidated Financial Statements, an Amendment of Accounting Research
Bulletin No. 51.” This statement establishes accounting and reporting
standards for ownership interests in subsidiaries held by parties other thanthe parent, the amount of consolidated net income attributable to theparent and to the noncontrolling interest, changes in a parent’s ownershipinterest, and the valuation of retained noncontrolling equity investments
when a subsidiary is deconsolidated. SFAS No. 160 also establishes disclosure
requirements that clearly identify and distinguish between the interests ofthe parent and the interests of the noncontrolling owners. SFAS No. 160 iseffective for fiscal years beginning after December 15, 2008. The Companies
are currently evaluating the potential impact, if any, of the adoption of SFAS
No. 160 on its financial position, results of operations or cash flows.
Disclosure about Derivative Instruments and Hedging Activities—
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities.” The new standard is intended to improvefinancial reporting about derivative instruments and hedging activities byrequiring enhanced disclosures to enable investors to better understandtheir effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008. According to FSP No. FAS 133
and FIN 45-4, the Companies adopted SFAS No. 161 in the fourth quarter
ended March 31, 2009. SFAS No. 161 impacts disclosures only. See Note 19 fordisclosures required by SFAS No. 161.
Employer’s Disclosures about Postretirement Benefit Plan Assets—
In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’
Disclosures about Postretirement Benefit Plan Assets.” FSP No. FAS 132(R)-1
requires providing detailed disclosures about fair value measurements ofplan assets such as information about how investment allocation decisions
are made, the fair value of each major category of plan assets, information
about the inputs and valuation techniques used to develop fair value measurements, and significant concentrations of risk. FSP No. FAS 132(R) impacts
disclosures only. FSP No. FAS 132(R)-1 is effective for fiscal years ending
after December 15, 2009.
Recognition and Presentation of Other-than-temporary
Impairments—In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,“Recognition and Presentation of Other-Than-Temporary Impairments.”
FSP No. FAS 115-2 and FAS 124-2 amends the other-than-temporary
impairment guidance for debt securities to make the guidance more
operational and to improve the presentation and disclosure of other-thantemporary impairments on debt and equity securities in the financial
statements. This FSP does not amend existing recognition and measurement
guidance related to other-than-temporary impairments of equity securities.
FSP No. FAS 115-2 and FAS 124-2 are effective for interim or fiscal years ending
after June 15, 2009. The Companies are currently in the process of assessing
the impact the adoption of FSP No. FAS 115-2 and FAS 124-2 will have on
their consolidated financial position, cash flows or results of operations.
Subsequent Events—In May 2009, the FASB issued SFAS No. 165,
“Subsequent Events.” SFAS No. 165 provides guidance to establish generalstandards of accounting for and disclosure of events that occur after
balance sheet date but before financial statements are issued or areavailable to be issued. SFAS No. 165 is effective for interim or fiscal years
ending after June 15, 2009. The Companies are currently evaluating thepotential impact, if any, of the adoption of SFAS No. 165.

2. TRANSLATION INTO U.S. DOLLAR STATEMENTS
The financial statements are stated in Japanese yen, the currency of thecountry in which the Company is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely
for convenience of readers outside of Japan and have been made at the rateof ¥99.15 to $1, the noon buying rate for yen in New York City at March 31,
2009. Such translations should not be construed as representations that theJapanese yen amounts could be converted into U.S. dollars at the above or
any other rate.

3. MARKETABLE SECURITIES AND INVESTMENTS
The fair value of debt and marketable equity securities is based on quoted market prices at March 31, 2009 and 2008. The fair values of the debt and marketable
equity securities were as follows:
Millions of Yen

2009

Current:
Corporate debt securities
Bank debt securities
Mutual fundNational debt securities
			 Total
Noncurrent:
Equity securities

Cost

Gross Unrealized Gain

Gross Unrealized Loss

Fair Value¥  5,011
100
3,987
1,659
¥10,757¥  56¥   143

261
13
¥330

461
¥  604¥  4,924
100
3,787
1,672
¥10,483¥22,505¥5,961¥2,173¥26,293

Cost

Gross Unrealized Gain

Gross Unrealized Loss

Fair Value¥ 4,302
¥
4
¥ 127
100		
1
5,475
118
144
2,309
12		
¥12,186
¥ 134
¥ 272

¥ 4,179
99
5,449
2,321
¥12,048¥25,762¥36,981Millions of Yen

2008

Current:
Corporate debt securities
Bank debt securities
Mutual fundNational debt securities
			 Total
Noncurrent:
Equity securities¥13,333¥2,11439

Thousands of U.S. Dollars

2009

Current:
Corporate debt securities
Bank debt securities
Mutual fundNational debt securities
		 Total
Noncurrent:
Equity securities

Cost

Gross Unrealized Gain

Gross Unrealized Loss

Fair Value$  50,540
1,008
40,212
16,732$108,492$     565

$  1,442

2,633
131$  3,329

4,650$  6,092$  49,663
1,008
38,195
16,863$105,729$226,979$60,121$21,916$265,184

There were no securities which had been in a continuous unrealized loss position for more than 12 months at March 31, 2009 and 2008. Gross unrealized
holding losses and fair values of debt and marketable equity securities, all of which have been in a continuous unrealized loss position for less than 12 months
at March 31, 2009 and 2008, were as follows:
Millions of Yen

2009

Fair Value

Gross Unrealized Loss

Current:
Corporate debt securities¥3,638¥   143
Bank debt securities
1000
Mutual fund
2,247
461
			 Total¥5,985¥   604
Noncurrent:
Equity securities¥5,862¥2,173		

Thousands of U.S. Dollars
Fair Value

Gross Unrealized Loss

$36,692
1,008
22,663$60,363$  1,442
04,650$  6,092$59,123$21,916

Millions of Yen

2008

Current:
Corporate debt securities
Mutual fundBank debt securities
National debt securities
			 Total
Noncurrent:
Equity securities

Fair Value

Gross Unrealized Loss

¥3,6752,943
99810¥7,527

¥ 127
144
1
¥ 272

¥5,351¥2,114The unrealized losses on investments were caused primarily by a general decline in stock prices in Japan as of the end of the fiscal year. The Companies
periodically determine whether a decline in the fair value of marketable securities and investments is deemed to be other-than temporary based on criteriathat include the duration of 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 sufficient period of time for anticipated recovery inmarket value as described in Note 1. No investments were identified that meet the Companies’ criterion for recognition of an impairment loss on investments
in unrealized loss position presented above. Therefore, the Companies do not believe the unrealized losses represent an other-than-temporary impairment asof March 31, 2009 and 2008.
Future maturities of debt securities and mutual fund classified as available-for-sale at March 31, 2009 were as follows:		Millions of Yen

Due within one year
Due after one year through five years
Due after five years through ten years
After ten years
Total
Proceeds from sales of available-for-sale securities were ¥304 million($3,066 thousand), ¥2,136 million and ¥2,573 million for the years ended
March 31, 2009, 2008 and 2007, respectively. The gross realized gains on thesales of available-for-sale securities for the years ended March 31, 2008 and2007 were ¥557 million and ¥408 million, respectively. No realized gains
were recorded in 2009. The gross realized losses on the sales of available-forsale securities for the year ended March 31, 2007 were ¥2 million. No realized
losses were recorded in 2009 and 2008.
During the years ended March 31, 2009 and 2008, the Companies
exchanged certain equity securities for other marketable securities. The
Companies recorded the newly received securities at fair value and recognized a gain of ¥2 million ($20 thousand) and ¥95 million in the years ended
March 31, 2009 and 2008. No such exchanges were made in 2007.

40

Thousands of
U.S. Dollars

Cost

Fair Value

Cost

Fair Value¥  2,330
5,402
1,501
1,524
¥10,757¥  2,367
5,572
1,351
1,193
¥10,483$  23,500
54,483
15,13815,371$108,492$  23,873
56,198
13,626
12,032$105,729

The Companies recognized impairment charges on marketable securities
and investments of ¥3,550 million ($35,804 thousand), ¥937 million and¥423 million in the years ended March 31, 2009, 2008 and 2007, respectively.
Investments in non-marketable equity securities for which there is no
readily determinable fair value were accounted for using the cost method
and aggregated ¥2,865 million ($28,896 thousand) and ¥1,019 million atMarch 31, 2009 and 2008, respectively. Investments in non-marketable equity
securities are reviewed annually or upon the occurrence of an event forother-than temporary impairment.
The Company’s subsidiary in the United States of America adopted a
non-qualified deferred compensation plan and trust agreement. Investments
consist of several mutual funds, which are recorded at the fair market valueof ¥24 million ($242 thousand) and ¥56 million as of March 31, 2009 and2008, respectively.

4. valuation and qualifying accounts
Information related to the Companies’ allowance for doubtful receivables was as follows:		Millions of Yen

Thousands of
U.S. Dollars

2009

2008

2007

2009

¥77
13
(8)
¥82

¥ 82
10
(15)
¥ 77

¥ 92
10
(20)
¥ 82

$777
131
(81)
$827

		
Millions of Yen

Thousands of
U.S. Dollars

Balance at beginning of year
Charged to costs and expenses
Balances written-off/reversed
Balance at end of year
Information related to the Companies’ allowance for returns was as follows:

2009

2008

2007

2009

¥ 3,068
2,197(3,068)¥ 2,197¥ 2,897
3,068(2,897)¥ 3,068¥ 2,686
2,897(2,686)¥ 2,897$ 30,943
22,158(30,943)$ 22,158

		Millions of Yen

Thousands of
U.S. Dollars

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

5. inventories
Inventories at March 31, 2009 and 2008 were as follows:

		

2009

2008

2009

Finished products		
Work in process		
Raw materials		
Total		

¥26,7023,269
1,182¥31,153¥25,653
3,097
1,270¥30,020$269,309
32,97011,922$314,201

6. investments in affiliates
Investments are accounted for using the equity method of accounting if the investment provides the Companies the ability to exercise significant influence,but not control, over an investee. Significant influence is generally deemed to exist if the Companies have an ownership interest in the voting stock of
the investee of between 20% to 50%, although other factors are considered in determining whether the equity method of accounting is appropriate.
The Companies record investments in equity method investees meeting these characteristics as “Investments in affiliates.” Under the equity method,
the Companies record their proportionate share of an affiliate’s income or loss based on the most recently available financial statements.
The Companies’ investments in affiliated companies and percentage of ownership at March 31, 2009 and 2008 include, among others, the following companies:
2009
					
		
Yen
Millions of Yen
U.S. Dollar
			Percentage of		
Ownership (%)
Quoted Market Price

Aggregate Value 		of Quoted		Market Price
Quoted Market Price

Aggregate Valueof Quoted
Market Price34¥     97
¥3,896$     978
25
6,046
1,360
60,9784250				
20
1,334
1,267
13,454$39,294
13,717

Name of Investee

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

Thousands of
U.S. Dollars

12,779

2008
		

Yen

Millions of Yen			Percentage of		
Name of Investee
Ownership (%)
Quoted Market Price

Aggregate Valueof Quoted
Market Price

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

34
25
42
50
20

¥ 111
15,064¥4,488
3,389

1,370

1,302

41

The following tables represent the summarized information from the balance sheets and statements of operations for the affiliated companies which areaccounted for under the equity method as of and for the years ended March 31, 2009 and 2008.
		
Millions of Yen

Thousands of
U.S. Dollars

		

2009

2008

2009

Current assets		
Noncurrent assets		
Total 		Current liabilities		
Noncurrent liabilities		
Minority interests		
Net assets		
Total		

¥30,974
24,926¥55,900¥  8,247
5,771
141,881¥55,900¥40,330
37,690¥78,020¥13,2235,885
158,911¥78,020$312,395
251,397$563,792$  83,177
58,205
10422,400$563,792

		Millions of Yen

Thousands of
U.S. Dollars

Net sales
Gross profit
Income before income taxes
Net income

2009

2008

2007

2009

¥57,488
30,3883,630
2,832¥81,466
44,063
7,480
5,087¥75,414
38,2607,011
5,052$579,808
306,485
36,611
28,563

Dividends received from the affiliated companies were ¥597 million ($6,021 thousand), ¥806 million and ¥607 million during the years ended March 31,
2009, 2008 and 2007, respectively.

7. SHORT-TERM BANK LOANS AND CAPITAL LEASE OBLIGATIONS
Short-term bank loans at March 31, 2009 and 2008 consisted of the following:		Millions of Yen

Unsecured bank loans

Thousands of
U.S. Dollars

2009

2008

2009

¥5,221¥5,572$52,658

The weighted-average annual interest rates on short-term bank loans asof March 31, 2009 and 2008 were 1.5% and 1.3%, respectively.

The future minimum payments required at March 31, 2009 were as
follows:			Year Ending March 31
Millions of Yen

2010
2011
Total

¥39
42
¥81

Thousands of
U.S. Dollars

$393
424
$817

In 2009 and 2008, no assets were pledged as collateral.
Capital lease obligations at March 31, 2009 and 2008 consisted of thefollowing:		Millions of Yen

Capital lease obligations
Less current portion
Capital lease obligations,less current portion

Thousands of
U.S. Dollars

2009

2008

2009

¥ 81
(39)

¥129
(48)

$ 817
(393)

¥ 42

¥81

$ 424

8. 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 non-cancelable operating leases are presented below:
		Year Ending March 31
Millions of Yen

2010
2011
2012
2013
2014
Thereafter
Total

¥ 820
713
535
505
164
946
¥3,683Thousands of
U.S. Dollars$ 8,271
7,191
5,396
5,093
1,654
9,541
$37,146

Rental expenses were ¥4,800 million ($48,411 thousand), ¥3,979 million and ¥3,795 million for the years ended March 31, 2009, 2008 and 2007, respectively.

42

9. ACQUISITIONOn January 10, 2008, the Company acquired the remaining 51% of theoutstanding common shares of Peach John Co., Ltd. (“PJ”), primarily a mailorder innerwear retailer, through share exchange. Until then, the Company
had held a 49% of the issued common shares since the initial acquisition on
June 2, 2006. This acquisition aimed to expand its innerwear operations’market area by including customer age groups and product styles that it had
not been able to develop fully.
This transaction was accounted for as a purchase. PJ is included in the
Company’s consolidated balance sheet as of March 31, 2008 based on PJ’s
fiscal year end, which is February 29, 2008. However, because PJ’s results ofoperations and change in financial position between January 10, 2008 andMarch 31, 2008 were not significant, the Company continued to account for
its investment using the equity method and the income from PJ’s operations
for the fiscal year ended February 29, 2008 was included in equity in net
income (loss) of affiliated companies in the consolidated statements of income.
The purchase cost of the additional shares was ¥9,266 million, which
consisted of the fair value of the shares distributed to the shareholder of PJ
and the direct costs of the business combination. As consideration for theacquisition, the Company distributed 3,261,400 new shares and 3,440,000
shares of treasury stock to the shareholder of PJ. Those shares were valuedat ¥1,372 per share which was the five-day average stock price before theacquisition announcement on November 9, 2007.
The purchase price of additional PJ shares was allocated based upon theestimated fair value of the identifiable assets acquired and liabilities assumed.
The Company’s new basis of investments in PJ was ¥21,814 million,
including the initial investment of ¥10,670 million for the 49% shares andthe corresponding amount of deferred tax liability of ¥1,878 million for theoutside basis temporary differences, which the Company recognized oninvestment in PJ upon the acquisition.
As a result of the allocation of new basis of investment in PJ, theCompany recognized goodwill of ¥11,203 million and intangible assets of¥8,677 million, in aggregate, which were classified as goodwill and otherintangible assets in the consolidated balance sheets. Intangible assets
consisted of trademark of ¥5,316 million and customer list of ¥3,361 million.
The trademark is not subject to amortization and the customer list is
subject to amortization over estimated useful life of 7 years. Goodwill is notdeductible for tax purpose.
The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition.
2008
		

Millions of Yen

Current assets		
Property, plant, and equipment		
Intangible assets		
Goodwill		
Other assets				 Total assets acquired		Current liabilities		
Long-term debt		
		 Total liabilities assumed		Net assets acquired		¥ 6,808
698
8,677
11,203692
28,078
2,432
3,832
6,264
¥21,814

Unaudited Pro Forma Results
Unaudited pro forma financial information is presented below as if theacquisition of PJ occurred at the beginning of the 2008 and 2007.
		

Millions of Yen

		

2008

2007

Pro forma sales		Pro forma operating income		
Pro forma net income		

¥180,407
14,627
5,492¥181,820
14,219
9,802

		

Yen

		

2008

2007

Pro forma earnings per share		

¥39

¥66

10. GOODWILL AND OTHER INTANGIBLE ASSETS
The components of acquired intangible assets excluding goodwill at March 31, 2009 and 2008 were as follows:
2009
Millions of Yen
Year Ended March 31

Amortized intangible assets:
Customer list
Software
Other
		 Total
Unamortized intangible assets:
Trademark
Other
		 TotalThousands of U.S. Dollars

Gross Carrying Amount

Accumulated Amortization

Gross Carrying Amount

Accumulated Amortization¥  3,361
7,118
945¥11,424¥   480
2,730
386¥3,596$  33,898
71,7909,531$115,219$   4,841
27,534
3,893$36,268¥  5,31698¥  5,414$  53,616
988$  54,604

2008
Millions of Yen
Year Ended March 31

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

Gross Carrying Amount

Accumulated Amortization¥3,361
5,633
1,414¥10,408¥2,356251¥2,607¥5,31699¥5,415Intangible assets acquired during the year ended March 31, 2009 totaled ¥1,846 million ($18,618 thousand) which primarily consist of software of ¥1,832
million ($18,477 thousand). Trademark and customer list are recorded from acquired business. Trademark is not subject to amortization, customer list is
subject to amortization over estimated useful life of 7 years and software is subject to amortization over estimated useful life of 5 years.

43Aggregate amortization expenses related to intangible assets and future
estimated amortization expense were as follows:			
2009
Millions of Yen

Year Ended March 31
Aggregate amortization expense
		 2009
Year Ending March 31
Estimated amortization expense
		 2010
		 2011
		 2012
		 2013
		 2014
Total			Thousands of
U.S. Dollars¥1,496$15,088

1,570
1,541
1,441
1,251
967
¥6,77015,835
15,542
14,534
12,617
9,752$68,280

2008		

Year Ended March 31
Aggregate amortization expense
		 2008		
Year Ending March 31
Estimated amortization expense
		 2009		
		 2010				 2011		
		 2012		
		 2013		
Total				Millions of Yens

¥ 909
1,379
1,260
1,200
1,084
841
¥5,764

There were no changes in the carrying amount of goodwill for the year
ended March 31, 2009.

11. termination and retirement plans
Employee Retirement Plans—The Companies sponsor termination andretirement benefit plans that cover substantially all employees. Benefits are
based on the employee’s years of service, position and performance. If thetermination is involuntary or caused by death, the employee is usuallyentitled to greater payments than in the case of voluntary termination.
The Companies have a contributory defined retirement benefit plan,
several partially funded plans administered by independent trustees andseveral unfunded termination plans administered by the Companies.
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 theother termination and retirement benefit plan are paid either as a lumpsum payments or a periodic payments under certain conditions. The
benefits are usually paid as a lump-sum payment, if the employee resigns
before the mandatory retirement age.
The following provides a reconciliation of benefit obligations, plan assets
and funded status of the plans:					 Millions of Yen

2009

Change in benefit obligation:
Benefit obligation
at beginning of year
¥32,819
Service cost
812
Interest cost751
Participants’ contributions
73
Actuarial loss (gain)61
Benefits paid fromplan assets(492)
Settlement paid fromplan assets(694)
Settlement paid by theCompanies(384)
Increase due to change
in scope of consolidation		
Benefit obligation
32,946at end of year
Change in plan assets:
Fair value of plan assets
at beginning of year
¥34,067
Actual return on plan assets(5,963)
Employer contributions
2,078
Participants’ contributions73
Benefit payments(492)
Settlement payments(694)
Fair value of plan assets
at end of year
29,069Funded status
at end of year44

¥ (3,877)

		Millions of Yen

2009¥33,059858
761
73(1,041)$331,003
8,190
7,574
736
615

(394)

(4,962)(569)(6,999)(3,873)259
32,819332,284¥38,048(5,581)
2,490
73
(394)
(569)

$343,590(60,141)
20,958736(4,962)(6,999)34,067

293,182¥ 1,248$(39,102)

Thousands of
U.S. Dollars

2009

2008

2009

Prepaid pension expense		
Accrued expenses¥     (91)
Liability for termination andretirement benefits(3,786)¥(3,877)¥ 3,444(104)$     (918)(2,092)¥ 1,248(38,184)$(39,102)

Amounts recognized in accumulated other comprehensive income atMarch 31, 2009 and 2008 were as follows:		Millions of Yen

Actuarial loss
Prior service benefit

Thousands of
U.S. Dollars

2008

(187)

Amounts recognized in the consolidated balance sheets at March 31, 2009
and 2008 consist of:Thousands of
U.S. Dollars

2009

2008

2009

¥(10,585)
4,880¥  (5,705)¥(4,705)
5,572
¥867

$(106,757)
49,218$  (57,539)

The accumulated benefit obligation for all defined benefit plans at March
31, 2009 and 2008 were as follows:		Millions of Yen

Accumulated benefit
obligation

Thousands of
U.S. Dollars

2009

2008

2009

¥32,023¥31,842$322,975

Net periodic benefit costs for the Companies’ plans consisted of thefollowing for the year ended March 31:
		Millions of Yen

Service cost
Interest cost on
projected benefit
obligation
Expected return onplan assets
Net amortization

Thousands of
U.S. Dollars

2009

2008

2007

2009

¥   812

¥ 858

¥ 936

$  8,190

751

761

748

7,574

(774)
228
¥1,017

(788)
(770)
¥ 61

(726)
(826)
¥ 132

(7,806)
2,299$10,257

The unrecognized net actuarial loss and prior service benefit are being
amortized over 12 years (the average remaining service life of active
participants) using the declining-balance method and the straight-line
method, respectively.
Other changes in plan assets and benefit obligations recognized in othercomprehensive income for the years ended March 31, 2009 and 2008 were as
follows:		Millions of Yen

Current year actuarial loss
Amortization of actuarial loss
(gain)
Amortization of prior service
benefitThousands of
U.S. Dollars

2009

2008

2009

¥(6,800)¥(5,328)$(68,583)

919

(79)

9,269

(691)
¥(6,572)(691)¥(6,098)(6,969)$(66,283)

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

Actuarial gain
Prior service benefit

Thousands of
U.S. Dollars

2009

2009

¥1,852(691)$18,679(6,969)The Companies use a March 31 measurement date for its plans.
The weighted-average assumptions used as of March 31, in computing thebenefit obligation liabilities shown above were as follows:
Discount rate
Rate of increase in
future compensation

2009

2008

2.5%

2.5%

0.0%

0.0%

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

2009

2008

2007

2.5%

2.5%

2.5%

2.5%

2.5%

2.5%

0.0%

0.5%

0.5%

The Company’s wholly owned subsidiary, Wacoal Corp.’s approach toestablishing the discount rate is based upon long term Japanese government
bond rates and corporate bond indices. The discount rate assumption isbased upon the five-year average of the effective yields on the 20-year
Japanese government bond, 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 areslightly higher than the yields on Japanese government bonds. For otherplans, 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 major asset
classes. The return expectations for each of the asset classes are based largely
on assumptions about economic growth and inflation, which are supported
by long-term historical data. The estimated long-term rate of return is basedon an asset allocation of equity securities of 36.0%, debt securities of 52.0%,
and other investments of 12.0%.
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 of equity

and debt securities. The Companies believe these ranges represent an appropriate risk profile for the planned benefit payments of the plans based on thetiming of the estimated benefit payment.
The asset allocation at March 31, 2009 and 2008 was as follows:		

Equity securities		
Debt securities		
Life insurance company general accounts
Cash and cash equivalents		

2009

2008

39.0%
45.4%
40.8%
44.4%
14.8%	  8.4%
5.4%	  1.8%

The target allocation percentages are reviewed and approved by thePension Committee. The actual allocations for 2009 and 2008 are different
from the target allocation percentages primarily because the Company
maintained additional equity securities as the separate plan asset which wascontributed to the plan based on an agreement between the Company andemployees and are not governed by the Pension Committee. As such, theactual allocation percentage of equity securities to the total plan assets ishigher than the target allocation, and similarly, the actual allocation for the
debt securities and other types of assets are lower than the target allocation.
The general funding policy of the funded plans is to contribute amounts
computed in accordance with actuarial methods accepted by Japanese tax
law. The Companies expect to contribute ¥1,479 million ($14,917 thousand)to their plans in the year ending March 31, 2010.
The following benefit payments, which reflect expected future service, as
appropriate, are expected to be paid as follows:			Year Ending March 31
Millions of Yen

2010
2011
2012
2013
2014
2015–2019¥ 1,358
1,512
1,609
1,781
1,886
10,111Thousands of
U.S. Dollars$ 13,696
15,25016,22817,96319,022
101,977

Employee Early Retirement Program—The Companies provide additional benefits to employees that elect to participate in the Companies’ early
retirement program. Retirement benefits of ¥157 million ($1,583 thousand),¥51 million and ¥14 million were paid in addition to normal benefits andcharged to selling, general and administrative for the years ended March 31,
2009, 2008 and 2007, respectively.
Termination Plan for Directors and Corporate Auditor—The
Company and certain subsidiaries had termination plans for directors andcorporate auditors. Payment of termination benefits to directors andcorporate auditors is made in a lump-sum upon termination and requires
the approval of the shareholders before payment. In June 2005, theCompany rescinded its termination plan for directors and corporate
auditors upon the approval of its shareholders. The amount of benefit foreach individual was fixed as of June 29, 2005 and will remain frozen until theretirement of each respective director and corporate auditor. The
outstanding liabilities at March 31, 2009 and 2008 were ¥339 million ($3,419
thousand) and ¥368 million, respectively, and were recorded in other longterm liabilities. Subsidiaries still maintain plans for their directors andcorporate auditors. In accordance with EITF 88-1, “Determination of Vested
Benefit Obligation for a Defined Benefit Pension Plan,” the subsidiaries
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 and corporate auditors at March 31, 2009 and2008 were ¥304 million ($3,066 thousand) and ¥90 million, respectively, andwere included in liability for termination and retirement benefits.

45

12. SHAREHOLDERS’ EQUITY
Since May 1, 2006, Japanese companies have been subject to the Companies
Act of Japan (the “Companies Act”), which reformed and replaced theCommercial Code of Japan. 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 theshareholders meeting. For companies that meet certain criteria such as; (1)having the Board of Directors, (2) having independent auditors, (3) having
the Board of Corporate Auditors, and (4) the term of service of the directors
is prescribed as one year rather than two years of normal term by its articles
of incorporation, the Board of Directors may declare dividends (except for
dividends in kind) at any time during the fiscal year if the company hasprescribed so in its articles of incorporation. The Company meets all theabove criteria. The Board of Directors of 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 above criteria under the Companies Act, eventhough such companies have an audit committee instead of the Board of
Corporate Auditors.
The Companies Act permits companies to distribute dividends-in-kind(non-cash assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of thecompany so stipulate. The Companies Act provides certain limitations on
the amounts available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to theshareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.
The amount of retained earnings available for dividends under theCompanies Act was ¥95,616 million ($964,357 thousand) as of March 31,
2009, based on the amount recorded in the parent company’s general booksof account.
(b) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends
must be appropriated as a legal reserve (a component of retained earnings)
or as additional paid-in capital (a component of capital surplus) dependingon the equity account charged upon the payment of such dividends until
the total of aggregate amount of legal reserve and additional paid-in capitalequals 25% of the common stock. Under the Companies Act, the total
amount of additional paid-in capital and legal reserve may be reversed
without limitation. The Companies Act also provides that common stock,legal reserve, additional 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 and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stockand dispose of such treasury stock by resolution of the Board of Directors.
The amount of treasury stock purchased cannot exceed the amount available
for distribution to the shareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are now presented as aseparate component of equity. The Companies Act also provides thatcompanies can purchase both treasury stock acquisition rights and treasury
stock. Such treasury stock acquisition rights are presented as a separate
component of equity or deducted directly from stock acquisition rights.

13. SHARE-BASED COMPENSATIONThe Company adopted stock option plan in the year ended March 31, 2009.
Under the 2009 stock option plan, the Company granted its shares ofcommon stock to directors of the Company and the Company’s wholly
owned subsidiary, Wacoal Corp. except outside directors in the year ended
March 31, 2009. The Company believes that such awards better align theinterests of its directors with those of its shareholders, by sharing both risk
and return of fluctuations in stock prices and giving motivation to heighten
its corporate value. The compensation cost is valued at fair value on the
grant date. Options vest over one year in proportion to the service monthsof directors, and are exercisable from the day after the date of retirement up
to (i) twenty years from the grant date or (ii) five years from the day after
the date of retirement, whichever is earlier.
The fair value of the options is estimated by using the Black-Scholes
option-pricing model with following assumptions.

Expected volatility is based on the historical volatility of the Company’s
share over the most recent period commensurate with the expected term of
the Company’s stock options. Expected term of options granted is based on
the average remaining service period of directors, assuming that those whoare granted options will render service until the stated retirement date andthey will exercise option simmediately after their retirement. Expected
dividend yield is based on the actual payout of dividend in the last fiscal year
and the closing price of the Company’s common stock on the grant date.
Risk-free interest rate is based on the Japanese government bonds yield
curve in effect at the time of grant for a period commensurate with the
expected term of the Company’s share options.
			

Expected volatility
Expected dividends
Expected term
Risk-free rate

2009

24.7%
2.0%
4.8 years
1.0%

A summary of option activity under the Plan as of March 31, 2009, and changes for the year ended March 31, 2009, were as follows::						
Thousands of		
Yen
U.S. Dollars
Years
Millions of Yen
U.S. Dollars
			
Weighted-Average		Weighted-Average
Remaining
SharesExercise PriceContractual Term
Aggregate Intrinsic Value

Outstanding at April 1, 2008
GrantedExercised
Forfeited or expired
Outstanding at March 31, 2009
Exercisable at March 31, 2009—
57,000——57,000
—

—
1
—
—
1
—

—
0
—
—
0
—

19.4
—

65
—

656

Total compensation cost recognized and the total recognized tax benefit related thereto during the years 2009 were ¥54 million ($544 thousand) and ¥22
million ($222 thousand), respectively.
The weighted-average grant date fair value of options granted during the year ended March 31, 2009, was ¥1,137 ($11).
As of March 31, 2009, there was ¥11 million ($111 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 0.25 year.

46

14. OTHER COMPREHENSIVE (LOSS) INCOME
The changes in the components of accumulated other comprehensive (loss) income were reported net of income taxes as follows:
Millions of Yen

2009

2008

2007

		
Pre-Tax
AmountTax						(Expense)
Net
Pre-Tax
Tax
Net
Pre-Tax
CreditAmountAmountCreditAmountAmountTax
CreditNet
AmountForeign currency translation adjustments
Unrealized (loss) gain on securities:
Unrealized holding (loss) gain
Reclassification adjustments
		 Net unrealized (loss) gain
Pension liability adjustment:
Unrealized holding (loss) gain
Reclassification adjustment
		 Net unrealized (loss) gain
Other comprehensive (loss) income¥  (9,228)¥   692(10,078)
1,828(8,250)

4,024
(744)
3,280

(6,800)228(6,572)¥(24,050)

2,768
(93)
2,675
¥6,647¥  (8,536) ¥ (506)¥ 38¥ (468)¥1,598¥(146)¥1,452(14,658)(754)(15,412)

5,972
307
6,279

(8,686)(447)(9,133)

56
129
185

(15)
(53)
(68)

41
76
117

(4,032)(5,328)135(770)(3,897)(6,098)¥(17,403) ¥(22,016)

2,168
314
2,482
¥8,799(3,160)(456)(3,616)¥(13,217)¥1,783¥(214)¥1,569(6,054)
1,084(4,970)Thousands of U.S. Dollars

2009		
Pre-Tax
AmountTax(Expense)
CreditNet
AmountForeign currency translation adjustments
Unrealized loss on securities:
Unrealized holding loss
Reclassification adjustments
		 Net unrealized loss
Pension liability adjustment:
Unrealized holding (loss) gain
Reclassification adjustment
		 Net unrealized (loss) gain
Other comprehensive loss

$  (93,071)$  6,979$  (86,092)(101,644)
18,437(83,207)

40,585(7,504)33,081(61,059)
10,933(50,126)(68,583)2,300(66,283)$(242,561)

27,917(938)
26,979$67,039(40,666)
1,362(39,304)$(175,522)

15. Income taxes
Income before income taxes, equity in net income (loss) of affiliatedcompanies, and minority interests is summarized as follows:		Millions of Yen

Thousands of
U.S. Dollars

2009

2008

2007

2009

¥12,553(4,926)¥  7,627¥15,959(1,606)¥14,353¥14,487(567)¥13,920$126,606(49,682)$  76,924

		Millions of Yen

Thousands of
U.S. Dollars

Japan
Foreign
Total

Income taxes expense consists of:Current:
Japan
Foreign		Deferred:Japan
Foreign		Total income taxes

2009

2008

2007

2009

¥2,214503¥2,717¥4,652925¥5,577¥1,446
1,428¥2,874$22,330
5,073$27,403¥   522(26)¥   496¥3,213

¥ 280
(4)
¥ 276
¥5,853¥3,854(226)¥3,628¥6,502$  5,265(262)$  5,003$32,406

The Companies are subject to a number of different taxes based on income.
The effective income tax rates differed from the normal statutory rates for thefollowing reasons for the years ended March 31, 2009, 2008 and 2007:
Normal Japanese statutory rates
Increase in taxes resulting from:
Permanently non-deductible
expenses
Change in valuation allowance
Undistributed earnings
of foreign subsidiaries
Differences in subsidiaries’
tax rate
Tax exemption
Other—net
Effective tax rates

2009

2008

2007

40.7%

40.7%

40.7%

5.8
4.1

2.9
(1.5)

6.5
(2.0)

(2.1)

2.6

0.8

(3.4)
(0.3)
(2.7)
42.1%

(2.5)
(0.2)
(1.2)
40.8%

(0.8)
(1.3)
2.8
46.7%

47

The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax balances at March 31, 2009 and 2008 were as follows:		Millions of Yen

2009
Deferred Tax
AssetsDeferred Tax
Liabilities

Thousands of
U.S. Dollars

2008
Deferred Tax
AssetsDeferred Tax
Liabilities

2009
Deferred Tax
AssetsSales returns¥     838		
¥ 1,082		$    8,452
Allowance for doubtful receivables
257			
¥ 252
2,592
Inventory valuation
1,469		1,201		14,816
Intercompany profits
268		
248		
2,703
Accrued bonuses
1,415		1,420		14,271
Impairment charges on marketable securities and investments985		
1,141		9,934Advanced depreciation on property, plant and equipment		¥  1,696		
1,753		Undistributed earnings of foreign subsidiaries		
1,712		2,695		Net unrealized gain on marketable securities and investments		
1,430		4,511		Net realized gain on exchange of equity securities		
2,448		2,453		Capitalized supplies
227		
291		
2,289
Enterprise taxes
52		
363		
525
Accrued vacation
842		
902		
8,492
Pension expense
2,104		96681521,220
Tangible fixed assets
1,328		1,343		13,394
Tax loss carryforwards
1,733		2,054		17,479Intangible assets		
3,337		3,532		Investment in a subsidiary		
1,878		1,878		Other temporary differences
767
4
679
37
7,736
Total
12,285
12,505
11,69017,926
123,903
Valuation allowance(1,643)		
(1,418)		
(16,571)
Total¥10,642¥12,505¥ 10,272¥17,926$107,332

Deferred Tax
Liabilities$  17,105
17,267
14,423
24,69033,656
18,941
40
126,122$126,122

The valuation allowance increased by ¥225 million ($2,269 thousand) for the year ended March 31, 2009 and decreased by ¥47 million for the year ended
March 31, 2008.
At March 31, 2009, certain subsidiaries had loss carryforwards which areavailable to offset future taxable income of such subsidiaries expiring as follows:		Millions of Yen

2009

2008

2009

			
Year Carryforward Expires
Millions of Yen

Balance at beginning of year¥    420
Additions based on tax positions
related to the current year
20
Additions for tax positionsof prior years		
Reductions for tax positions(334)
of prior years
Balance at end of year¥   106¥ 181$   4,236

332

202

2010
2011
2012
2013
2014
2015
2016
Indefinitely until utilized
Total¥   457
592
482
299
602
472
564
963
¥4,431Thousands of
U.S. Dollars$  4,609
5,971
4,861
3,016
6,072
4,760
5,688
9,713
$44,690

The portion of the undistributed earnings of foreign subsidiaries whichwere deemed to be permanently invested amounted to ¥5,239 million atMarch 31, 2008. Provisions were not made for income taxes on undistributed
earnings of foreign subsidiaries to the extent that they are deemed to bepermanently invested. There was no such portion of undistributed earnings
as of March 31, 2009.
The Companies adopted FIN 48 effective April 1, 2007. As a result of
implementation of FIN 48, the Companies recognized a tax benefit of ¥181
million as of April 1, 2007, and did not require a cumulative-effectadjustment to retained earnings.
A reconciliation of beginning and ending amount of unrecognized tax
benefits was as follows:48

Thousands of
U.S. Dollars

29
(122)
¥ 420

(3,369)$  1,069

Total amount of unrecognized tax benefits that, if recognized, would
affect the effective tax rate is ¥106 million ($1,069 thousand) and ¥420
million at March 31, 2009 and 2008, respectively.
The Companies recognize interest and penalties accrued related tounrecognized tax benefits in income taxes in the consolidated statements ofincome. Total amounts of interest and penalties recognized in the consolidated statements of income for the years ended March 31, 2009 and 2008
were not material.
The Companies file income tax returns in Japan and various foreign tax
jurisdictions. With few exceptions, the Companies are no longer subject toregular income tax examinations by the tax authority for years before 2007.
In the current year, the transfer pricing examination of certain domestic
subsidiary’s 2002 to 2007 fiscal year and certain the U.S. subsidiary’s 2003 and2004 fiscal year was completed.

16. RELATED PARTY TRANSACTIONSThe Companies purchase merchandise from numerous suppliers throughout theworld, including certain affiliates of the Companies. The Companies purchased
merchandise from affiliates in the amount of ¥1,674 million ($16,884 thousand),¥1,031 million and ¥1,588 million in the fiscal years ended March 31, 2009, 2008
and 2007, respectively. The accounts payable to affiliates were ¥34 million ($343
thousand) and ¥48 million at March 31, 2009 and 2008, respectively.

The Companies also sell supplies, materials and products to certain affiliates.
Aggregate sales to affiliates were ¥958 million ($9,662 thousand), ¥803 millionand ¥1,042 million in fiscal years ended March 31, 2009, 2008 and 2007. The
accounts receivable from affiliates were ¥123 million ($1,241 thousand) and ¥60
million at March 31, 2009 and 2008, respectively.

17. EARNINGS PER SHARE AND AMERICAN DEPOSITARY RECEIPTThe Company accounts for its earnings per share in accordance with SFAS No.
128, “Earnings per Share.” Basic net income per share has been computed by
dividing net income available to common shareholders by the weightedaverage number of common stock outstanding during each year. Diluted net
income per share assumes the dilution that could occur if share-based option
to issue common stock were exercised.
The computation of earnings per American Depositary Receipt (“ADR”),
each ADR representing 5 shares of common stock, is based on the weighted-

average number of common shares outstanding. The weighted-average
number of common stock outstanding used in the computations of basic net
income per share was 142,316,921 shares for 2009, 141,304,256 shares for 2008
and 142,910,187 shares for 2007. The weighted-average number of diluted
common stock outstanding used in the computations of diluted net income
per share was 142,336,296 shares , 141,304,256 shares and 142,910,187 shares for
2009, 2008 and 2007.

18. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
Fair Value of Financial Instruments—The carrying amount of cash andcash equivalents and short-term bank loans approximates fair value becauseof the short maturities of these instruments. The fair values of marketablesecurities, as presented in Note 3, are primarily estimated based on quoted
market prices for these securities. However investments in non-marketablesecurities for which there is no readily determinable fair value were
accounted for using the cost method and are reviewed annually or upon theoccurrence of an event for other-than temporary impairment.
The fair value of long-term debt, including current portion, consists oflease obligation, and there is no long-term debt which is required to disclose
its fair value at March 31, 2009 and 2008.
Limitations—Fair value estimates are made at a specific point in time, basedon relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties andmatters of significant judgment and therefore cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.

Forward Currency Exchange Contracts—The Companies occasionallyuses forward currency exchange contracts to manage their exposure toforeign currency fluctuation on the transactions denominated in foreign
currencies. The Companies measures forward currency exchange contracts
at the fair value since they were not designated as a hedge.
Concentration of Credit Risk—The Companies’ business consists
primarily of sales of women’s intimate apparel to a large number of diverse
customers in the Japanese retail industry, which include well establisheddepartment stores, general merchandise stores and other general retailers
and to specialty stores. No single customer constitutes 10.0% or more of thetotal sales, although the general retail customers that are consolidated
companies in the Aeon Group collectively accounted for approximately
9.8%, 11.2% and 10.1% of the total sales in fiscal years ended March 31, 2009,2008 and 2007, respectively.

19. FAIR VALUE MEASUREMENTS
The Companies adopted SFAS No. 157 on April 1, 2008. SFAS No. 157 defines
fair value as the price that would be received to sell an asset or paid to transfer
a liability (an exit price) in the principal or most advantageous market for
the asset or liability in an orderly transaction between market participants at
the measurement date. SFAS No. 157 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value as follows:

Level 1 —	Inputs are quoted prices in active markets for identical assets or
liabilities.
Level 2 —	Inputs are quoted prices for similar assets or liabilities in active
markets, quoted prices for identical or similar assets or liabilities inmarkets that are not active, inputs other than quoted prices thatare observable, and inputs that are derived principally from or
corroborated by observable market data by correlation or othermeans.
Level 3 — Inputs are unobservable.

Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities at fair value on a recurring basis as of March 31, 2009 were as follows:		
Level 1

Assets:Marketable securities¥  1,662
Investments
26,317
		 Total assets¥27,979
Liabilities:
Financial instruments		

Level 2Millions of Yen
Level 3

¥8,821¥8,821¥ 10,483
26,317¥36,800¥    (84)¥       (84)		Level 1

Assets:Marketable securities$   16,763
Investments
265,426
		 Total assets$282,189
Liabilities:
Financial instruments		

Total

Level 2

$88,966

Thousands of U.S. Dollars
Level 3

Total

$88,966$105,729
265,426$371,155$     (847)$      (847)49Marketable securities presented in Level 1 include government bonds.
Marketable securities presented in Level 2 include principally corporate debt
securities. Investments presented in Level 1 include principally equity
securities.
Marketable securities and investments presented in Level 1 are valued
using an unadjusted quoted market price in active markets with sufficientvolume and frequency of transactions. Marketable securities presented in
Level 2 are valued using quoted market price obtained from third parties.
As presented in Note 3, the Companies recorded impairment charges onmarketable securities and investments if a decline in fair value of marketablesecurities and investments is determined to be other than temporary.

Financial instruments are comprised of foreign currency exchange
contracts. Financial instruments are valued using quotes obtained fromthird parties.
The changes in the fair value of the foreign currency exchange contracts
are recorded in earnings, since the foreign currency exchange contracts are
not designate as a hedge. The Companies recognized ¥62 million ($625
thousand) and ¥35 million in other income (expenses) in the years ended
March 31, 2009 and 2008. No foreign currency exchange contract wasoutstanding as of March 31, 2007.
The Companies recorded the financial instruments as other current
liabilities in the consolidated balance sheet at fair value of ¥84 million ($847
thousand) at March 31, 2009.

20. SUBSEQUENT EVENTSOn May 8, 2009, the Board of Directors resolved to pay a cash dividend of¥125 ($1.26) per 5 shares of common stock to holders of record as of March
31, 2009 (aggregate amount of ¥3,511 million ($35,411 thousand)).
On May 8, 2009, the Board of Directors of the Company resolved to makeLecien Corporation (“Lecien”) its wholly owned subsidiary through a shareexchange. Upon the resolution of the board of directors, the Company
entered into a share exchange agreement with Lecien.
Lecien is a manufacturing and wholesale company which manufacturesand sells women’s mid-priced innerwear and clothing, lace and otherhandicrafts accessories. This business integration with Lecien aims to enable
the Company to enhance its adaptability to the new innerwear business inthe domestic market.
According to the share exchange agreement, 0.065 shares of theCompany’s common stock will be allocated and distributed in exchange foreach share of Lecien’s stock on August 17, 2009. There will be no issuance of
new shares of common stock upon the share exchange. The Company will
distribute 2,104,441 shares (tentative) of its treasury stock for the shareexchange.

Unaudited financial results of Lecien which is prepared on the basis of accounting principles generally accepted in Japan for the recent fiscal years wereas follows:		Millions of Yen

50

Thousands of
U.S. Dollars

		

2009

2008

2009

Sales 		Net loss		Total assets		

¥17,013260
10,647¥19,326899
11,872$171,589
2,622
107,383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 inRule 13a-15(f) under the Securities Exchange Act of 1934. The company’s internal control over financial reporting is a process designed by, or under thesupervision of, the company’s 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 accordancewith generally accepted accounting principles and includes those policies and procedures that:	  • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany;	  • 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 in accordance with authorizations ofmanagement 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, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance 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, 2009. 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, 2009, 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, has issued an attestation report on the effectiveness of
our internal control over financial reporting as of March 31, 2009.

Yoshikata Tsukamoto
Representative Director

Shoichi Suezawa
Chief Financial Officer
June 26, 200951

report of independent registeredpublic accounting firm
Deloitte Touche Tohmatsu
Yodoyabashi Mitsui Building
4-1-1, Imabashi Chuo-ku,
Osaka 541-0042
Japan
Tel: +81 6 4560 6017
Fax: +81 6 4560 6019
www.deloitte.com/jp

To the Board of Directors and Shareholders 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, 2009 and 2008,
and the related consolidated statements of income, comprehensive (loss) income, shareholders’ equity, and cash flows for each of the three years in the
period ended March 31, 2009, 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 requirethat 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 theaccounting 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.
Certain information required by Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and RelatedInformation” has not been presented in the accompanying financial statements. In our opinion, presentation of segment information concerning theCompanies’ operations is required for a complete presentation of the Companies’ consolidated financial statements.
In our opinion, except for the omission of segment information, such consolidated financial statements present fairly, in all material respects, the financial
position of Wacoal Holdings Corp. and subsidiaries as of March 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three
years in the period ended March 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 20 to the consolidated financial statements, on May 8, 2009, the board of directors of Wacoal Holdings Corp. resolved to make Lecien
Corporation its wholly owned subsidiary through a share exchange.
Our audits also comprehended the translation of the Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been madein conformity with the basis stated in Note 2. The translation of the financial statement amounts into U.S. dollars has been made solely for convenience ofreaders 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, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committeeof Sponsoring Organizations of the Treadway Commission and our report dated June 26, 2009 expressed an unqualified opinion on the Companies’ internal
control over financial reporting.

June 26, 200952

report of independent registeredpublic accounting firm
Deloitte Touche Tohmatsu
Yodoyabashi Mitsui Building
4-1-1, Imabashi Chuo-ku,
Osaka 541-0042
Japan
Tel: +81 6 4560 6017
Fax: +81 6 4560 6019
www.deloitte.com/jp

To the Board of Directors and Shareholders 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, 2009, 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 the effectiveness ofinternal 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 requirethat we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in allmaterial respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material 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 and principal
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 in accordance withgenerally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or dispositionof 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, 2009, 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, 2009 of the Companies and our report dated June 26, 2009 expressed an unqualified opinion on thosefinancial statements, except for the omission of segment information required by Statement of Financial Accounting Standards No. 131, “Disclosures about
Segments of an Enterprise and Related Information.”

June 26, 200953

corporate data
As of March 31, 2009

wacoal holdings corp.
Head Office
29, Nakajima-cho, Kisshoin,
Minami-ku, Kyoto 601-8530, Japan
Tel: (075) 682-5111
Fax: (075) 661-5603
URL: www.wacoalholdings.jp/index_e.html

Date of Foundation
June 15, 1946

Shareholders’ Equity¥165,873 million

Date of Establishment
November 1, 1949

Number of Employees (Consolidated)
14,476

Domestic Principal Subsidiaries  

International Network
Wacoal America, Inc.
136 Madison Avenue,
New York, NY 10016, U.S.A.
Tel: 1-212-532-6100
Wacoal France S.A.
7/11 Rue des Gazometres,
93218 Saint-Denis La Plaine Cedex, France
Tel: 33-1-5593-0310
Wacoal (UK) Limited
4th Floor, Hardy House,
16-18 Beak Street,
London W1R 3HA,
United Kingdom
Tel: 44-207-439-6190
Wacoal Singapore Pte. Ltd.
215 Henderson Road,#01-08 Henderson Industrial Park,
Singapore 159554
Tel: 65-6270-2887
Wacoal Hong Kong Co., Ltd.
16th Floor East, Warwick House,
Taikoo Place, 979 King’s Road,
Quarry Bay, Hong Kong
Tel: 852-2811-3202
Wacoal International Hong Kong Co., Ltd.
16th Floor East, Warwick House,
Taikoo Place, 979 King’s Road,
Quarry Bay, Hong Kong
Tel: 852-2561-9191
Wacoal China Co., Ltd.
Jia 16 Tongji North Road,
Beijing Economic & Technological
Development Area,
Beijing 100176, P. R. C.
Tel: 86-10-6787-2185
Guangdong Wacoal Inc.
Huahai Industrial District,
Xinhua Town, Huadu Qu,
Guangzhou City,
Guangdong, P. R. C.
Tel: 86-20-8686-1170˜3
Dalian Wacoal Co., Ltd.
#42 Economic & TechnicalDevelopment Zone, Dalian,
Liaoning, P. R. C.
Tel: 86-411-8733-7722

Wacoal Holdings Equity Owned(%)

Wacoal Corp.
Peach John Co., Ltd.
Studio Five Corp.
Wacoal Dublevé Corp.
Une nana cool Corp.
Kyushu Wacoal
Manufacturing Corp.
Niigata Wacoal Sewing Corp.
Fukuoka Wacoal Sewing Corp.
Miyazaki Wacoal Sewing Corp.
Hokuriku Wacoal Sewing Corp.
Torica Inc.
Nanasai Co., Ltd.
Wacoal Distribution Corp.

100
100
100
100
100
100
100
100
100
90
57
81
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 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.

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

Overseas Joint Ventures

54

Wacoal Holdings Equity Owned(%)

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

25
34
50
42
50
20

Vietnam Wacoal Corp.
110 Amata Road,
Amata Mordern Industrial Park,
Long Binh Ward, Bien Hoa City,
Dong Nai Province,
Socialist Republic of Vietnam
Tel: 84-61-892060˜2
Wacoal Dominicana Corp.
Zona Franca Industrial,
Las Americas KM22,
Autopista Las Americas,
Santo Domingo, Dominican Republic
Tel: 1-809-549-1090
Philippine Wacoal Corp.
3rd Floor, 6788 Ayala Avenue,
Makati Metro Manila, Philippines
Tel: 63-2-893-7432
Shinyoung Wacoal Inc.
345-54, Ka San Dong, Cum Chone Gu, Seoul,
Republic of Korea
Tel: 82-2-818-5120
Thai Wacoal Public Co., Ltd.
930/1 Soi Pradoo 1,
Sathupradith Bangkholaem,
Bangkok, Thailand
Tel: 66-2-289-3100˜9
Taiwan Wacoal Co., Ltd.
15, Jingkwo Road, Taoyuan,
Taiwan, R.O.C.
Tel: 886-3-326-9369˜80
Indonesia Wacoal Co., Ltd.
Jl. Tarikolot No. 59,
Citeureup-Bogor, Indonesia
Tel: 62-21-875-3611
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
Wacoal Sports Science Corp.
136 Madison Avenue,
New York, NY 10016, U.S.A.
Tel: 1-212-743-9849
Wacoal (Shanghai) Human Science
R&D Co., Ltd.
7th Floor, Jiangnan Zaochuan Bldg.,
600 Luban Road, Luwan District,
Shanghai, P. R. C.
Tel: 86-21-6390-7448

investor information
As of March 31, 2009

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

Stock Listings
Tokyo, Osaka, NASDAQ
Fiscal Year-End
March 31
Securities Code3591

Depositary
The Bank of New York Mellon
101 Barclay Street,
New York, NY 10286, U.S.A.
Tel: 1-212-815-8161
U.S. toll free: 8 88-269-2377(888-BNY-ADRS)URL: http://www.adrbny.com

Common Stock
Issued: 143,378,085 shares
Outstanding: 143,342,087 shares
Trading Unit
1,000 shares%

Major Shareholders
The Bank of New York Mellon as depositary bank fordepositary receipt holders*
Meiji Yasuda Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mika Noguchi
Japan Trustee Services Bank, Ltd. (Trust Account 4G)
Nippon Life Insurance Company
The Bank of Kyoto, Ltd.
The Dai-ichi Mutual Life Insurance Company
The Shiga Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corporation

12.38
4.98
4.97
4.77
3.92
3.88
3.03
2.78
2.40
2.17

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

Number of Shareholders
11,038

Shareholder Register Agentfor Common Stock
Mitsubishi UFJ Trust andBanking Corporation
1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Ownership and Distribution of Shares

Stock Price/Trading Volume¥
2,000

Securities
Firms
0.86%
Individuals
and Others
21.69%

143,378
thousandsharesOther JapaneseCompanies
19.09%

1,500

Financial
Institutions
40.53%

1,000

500

0

20,000Foreign Institutions
and Individuals
17.83%

15,00010,000
5,000
0

’02/4
Stock Price

’03/1

’04/1

’05/1

’06/1

’07/1

’08/1

’09/1

Trading Volume

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

55

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

Printed in Japan

090731-FA-WT3