June 19, 2006
News conference with Q&A session

Press conference
Forming the UNIQLO-Toray strategic partnership
Date: June 19, 2006
Participants:
Sadayuki Sakakibara, President & CEO, Toray Industries, Inc.
Ginjiro Ishii, Managing Director, Toray Industries, Inc.
Tadashi Yanai, Chairman & CEO, UNIQLO CO., LTD.
Tetsuro Nakajima, Operating Officer, UNIQLO CO., LTD.

Introduction
Ginjiro Ishii, Managing Director, Toray Industries, Inc.
Tadashi Yanai, Chairman & CEO of UNIQLO CO., LTD., and Sadayuki Sakakibara, President &CEO of Toray Industries, Inc. first reached an agreement back in March this year to develop a
strategic partnership between the two companies. Based on that partnership, we are now proud toannounce the signing of an agreement covering mid- and long-term, comprehensive procurement
and supply. The FR group is aiming to expand sales to 1 trillion yen by 2010 with the domestic andglobal UNIQLO business contributing ¥700bln of that total. The Toray group is also aiming for salesof 1.8 trillion yen with its entire fibers & textiles operation contributing ¥600bln. The forming of astrategic partnership will enable our two firms to offer new value products to our customers. In
addition, we will be looking to further strengthen our cooperation to incorporate the possible
development of new business areas and operations.

１．Setting the direction for mid- and long-term cooperation
UNIQLO and Toray have determined the direction of this mid- and long-term cooperative
relationship in order to enable our firms to work closely and enthusiastically on new productdevelopment and planning. In challenging the borders between material manufacturer and SPA
clothes producer and retailer, our two companies will create a seamless product development
system that unifies all the stages from material selection through final product sale. And we will
be able to provide our customers with even better clothes to enrich their lives. Under this midand long-term business relationship, Toray is expected to supply UNIQLO with materials andproducts in excess of ¥200bln over the 5-year period through 2010. There are very few deals on
this scale in the global textile industry.

２．Developing a new breakthrough material
UNIQLO and Toray will combine forces on R&D, production, sales and marketing to bettergrasp market needs. We will look to develop a new, groundbreaking material that the market has
never even seen before. This will lead to the creation of completely new and inspired products,
and will generate fresh customer demand. Following the initial agreement, UNIQLO and Toray
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set up a project team back in March called the Next Generation Material Development Project.
We have already picked out themes covering 73 areas and are now working on material
development. The development is based on the five aspirations, “Healthy beauty”, “Super
natural”, “Ecology”, “Function & comfort”, “Innovation”. And we ensure that staff working inmaterial development can interact actively.

Sadayuki Sakakibara, President & CEO, Toray Industries, Inc.
My name is Sadayuki Sakakibara of Toray. I am very pleased that we have come so far in ourquest that I can sit here today at this news conference with the Chairman of UNIQLO, Mr. Yanai.
You have already heard our managing director Mr. Ishii talk about the content of today’s press
release, but I would also like to add a few words.
As you are well aware, while Japan’s textile industry can boast a number of strengths in terms oftechnical and product development, it also suffers a number of weaknesses. I believe that the mostsignificant weakness today is the inefficiency that arises from the industry’s multi-layer distribution
structure. Under this multiple strata distribution system, it is also difficult to gauge digestibility at theretail level. This leads to a build up in distribution inventory at each and every stage of the systemdepending on individual views on demand. That in turn generates increased losses and as a result
depletes the strength of the overall industry. So what we have here is a clear vicious cycle. And
improving this situation is one of the biggest challenges facing the overall textile industry in Japan.
This problem is clearly addressed in our current “Textile Vision”. UNIQLO, under Mr. Yanai’s
direction, has succeeded in improving the old-style textile distribution, and in creating a new andunique product distribution. I am one among many who value greatly the way that Mr. Yanai
challenged the industry’s old distribution methods. And I am eager to work with him to improve our
distribution structure to the benefit of both the Japanese textile industry as a whole and therestructuring of our own textile operations at Toray.
The new business model that UNIQLO and Toray are aiming to achieve has rarely been seen in
the world to date. We have agreed a strategic partnership that will aim to introduce maximum
improvements in distribution systems. And we are also looking to build the ideal vertical relationshipby creating a unified total industry that covers the entire clothing process from materials to finishedproducts, including planning, development, manufacture and distribution.
Next, I would like to talk about the main contents of our agreement signed today and how wecame to be in this position. UNIQLO and Toray have been doing business together since 1999.
Toray’s materials have been favored in the production of many of UNIQLO’s hit products such as
fleeces, air-tech and heat-tech clothing. In addition, I also had the opportunity to speak about
Toray’s management strategy at a UNIQLO University management seminar held last November.
That was just one more opportunity to talk about and progress the idea of building a strategic
partnership between our two companies. Then, in March this year, we signed the basic agreement
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for this cooperation. After that, Mr. Yanai gave a speech at the Hokuriku Textile Symposium,
sponsored by Toray. It was then that we went together to Fukui to sign the agreement. The actual
plan that we signed today is carved from the basic agreement reached back in March and covers
the commitment from Toray to deliver products to UNIQLO totaling over ¥200bln during the next five
years.
We recognize that this new agreement represents a long-term supply contract on a par in termsof scale with our supply agreement with Boeing for carbon fiber composite materials. In terms ofboth content and magnitude, we feel that this is a landmark deal and contract for the textile industry
rarely send anywhere else in the world.
Our two companies are aiming to create a revolutionary strategic partnership. We will break awayfrom the traditional relationship of simple buyers or sellers of textile materials or apparel
manufacture. Instead our partnership will seek to develop operations with a clear focus and speed
covering the entire process of clothing production from development of materials through planningand manufacture to store sales. And we will do this by melding our long-term operational targets,and both companies working closely and always striving to see things through the eyes of our joint
customers, namely the consumer.
Our two companies have reached a concrete agreement in order to achieve these targets. We
have agreed to set up a structure to facilitate company wide cooperation on product development
and also a revolutionary unified system of store information and production management that will
enable us to radically reduce manufacturing and distribution costs, and inventory risk. The
agreement also covers the regular exchange of staff, some costs and incentive payments, etc.
Toray’s textile operation has production bases worldwide, in the ASEAN region and also in China.
Our comprehensive strength is suited to the development of a global operation spanning thread totextile, to sewn products. In addition, the Toray group can boast 1200 key research andtechnological development personnel involved directly or indirectly with textiles, or required forbasic research through textile development. Given that experience, we believe that, in joining
hands with UNIQLO, we will not just be able to produce new versions of existing products, but will
be able to produce many more entirely new and inspiring landmark products that will generate fresh
demand. In addition, we are looking to make full use of Japanese developed textiles in the quest for
highly functional, highly sensitive products. And we are considering cooperation with the “Toray
GOUSEN(Synthetics) Cluster,” the industrial group formed the year before last in the Hokuriku
region.
Finally, I would like to express my gratitude to UNIQLO’s chairman, Mr. Yanai for his bolddecision and active involvement in bringing about this union. This is the revolutionary businessmodel that I had always strived for. It is a model formed by UNIQLO, the firm that is aiming tobecome the world’s number one casual clothing group, and Toray, the firm that is aiming for the top
global position in state of the advanced materials. Thank you.

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Mr. Tadashi Yanai, Chairman & CEO, UNIQLO CO., LTD.
I believe, that while Japan’s textile industry can boast the world’s most advanced technology, it’spotential has not flourished. That is a highly regrettable situation. Either the industry has not beenable to generate actual products from this top class textile technology or even if products are
realized, they are so small in quantity as to fail to win broad notice. Toray Industries works insidethat industry and boasts a global operation. I think that there are few other industries in which aJapanese company has such an extensive global operation. Toray set out to build products aroundthe world to sell around the world and its global technology has developed accordingly.
We at UNIQLO have had a relationship with Toray ever since we asked it to provide the raw
materials for our fleece products. The reason that we picked Toray back then was because its raw
materials were indeed the best in the world. Following on from fleece, we developed new products
from Toray’s air tech, dry and heat tech materials. I consider it a wonderful thing for UNIQLO going
forward to have formed this strategic partnership with Toray as one of the world’s top fibers &textiles manufacturers. In particular, as we are looking to expand our global operations, I feel that
this partnership will be a valuable weapon in the inevitable battle with other global competitors.
It may appear that the examples of textiles helping to create a new world are few and far between.
But there are actually many instances outside of the clothing industry such as the use of carbon
fiber composite materials in the production of Boeing planes, or sporting goods. And just as film
technology has been used in other industries, so there may be opportunities to use similar
technology in the manufacture of clothes. I had asked Toray for a strategic alliance that spanned
initial R&D through final sale of goods, and a joint development of raw materials as intimate as if wewere one company. Toray consented and that led to this current agreement.
I believe that this single, unified approach covering R&D through product sales is also possible inour own apparel industry. But this has to be conducted on the premise that products are not just to
be sold in Japan but throughout the world. I very much hope that, together, we can develop and sell
products around the world that can truly please and satisfy the consumer.

QUESTION & ANSWER SESSION（Most of the questions have been edited or revised in part for the sake of clarity）

Q: I have 3 questions for Mr. Yanai. ① Is this agreement exclusive in any way? For instance, will
you be obliged to source only from Toray, and will Toray only be able to supply to UNIQLO? ② Is
there any numerical merit in the deal for UNIQLO? For instance, we have heard that Toray will
supply ¥200bln worth of materials over 5 years to UNIQLO, but are there any numerical targets for
UNIQLO such as a specific cost saving target? ③ You say that this will be a strategic alliancecovering all stages from R&D through retail, but, conversely, does this suggest that there are
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limitations to the SPA (manufacture through retail) model that UNIQLO has used to date?
A： Mr. Yanai, UNIQLO
On the question of whether the alliance is “exclusive” or not, while we are planning to work “asone” with Toray in this alliance, I also think that it is possible to have a similar relationship with avariety of business associates or partners. Having said that however, I think that in order to do thissuccessfully, you have to be similar in scale and ability or share a common vision for the future.
Otherwise, it would be difficult to make any great or lasting strides forward together.
On the question of numerical targets for UNIQLO, rather than set any numerical merit at theoutset, we expect that numerical achievements will emerge as a result. I really want to develop a
product or products that are genuinely considered as groundbreaking the world over.
On the question of any limitations to the SPA format, rather than consider it in terms oflimitations, I would rather you consider the potential for enhancing the ability of the SPA model.
Many of the SPA firms and fashion industries around the world place a huge focus on superficial
design and fashion trends. But, I believe it is necessary to consider more basic things such as justwhat it is that truly makes comfortable clothes for everyday wear. And I also think that it is important
for an industry such as ours to be able to continually supply the comfort goods in large quantities.

A： Mr. Sakakibara, Toray
I would like to comment on the question about “limitations” in the partnership. As Mr. Yanai
mentioned, we also feel that the concept of our alliance is not limited. However, since issues ofscale, strengths and consciousness are all important in such partnerships, I don’t think it is possible
to have a similar relationship with many different partners.

Q：This ¥200bln figure for Toray supply for UNIQLO, how much would that the retail price of suchstock be? How much is your current relationship worth? And the fact you want to move forward “asone” with Toray, wouldn’t there be risks for UNIQLO to lose tension and business leverage as acustomer?
A： Mr. Sakakibara, Toray
It depends on the year, but the value of our current business with UNIQLO is around ¥20-30bln
per year. We supply raw materials and textile products to UNIQLO, and over the past few years thebusiness has totaled around ¥100bln.

A： Mr. Yanai, UNIQLO
I’m not exactly sure how much the ¥200bln would be in retail terms so I can’t give you exact
numbers at the moment. The second question on whether UNIQLO would miss tension and lose its
business leverage , I’m sure feeling some healthy tension about this announcing a partnership of
this magnitude. This is obvious, but if you are going to work at a partnership with another firm, then
you can’t do it unless you have that tension. I think you pay even more attention to your dealings
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with each other than you might with a regular purchase deal. And other the other hand, you are
actually sharing all of the things that you ought to be sharing. Since the idea is to sell on thematerials that we buy from Toray as if we were one company, then that means that we will probably
have to recreate the whole cycle from the beginning. I shall be looking to discuss this with ourpartner and decide on how to proceed in a whole variety of areas?

Q：I think that you have had a considerable relationship so far, but just how will the actual
development process change from its current state? And how long do you expect it will be before
the consumer can actually see the fruits of these changes for themselves?
A： Mr. Sakakibara, Toray
We have done business together now for six years, but as Mr. Yanai just mentioned, from now
on we shall be working even more as a single unit, even more as if we were one company. In
addition, we shall be sharing information of every kind from store information to planning anddevelopment. And the most important of all is to provide the consumer with groundbreaking,inspiring materials or products. And in that vein, we, as the manufacturer, are responsible and havea duty to provide the materials required for the job. We at Toray are experiencing a fresh drive andsee this project bringing with it completely different responsibilities and duties than in the past. I feelthat this relationship will encourage us to further boost our strengths so that Toray, along withUNIQLO, can deliver new inspiring products to the consumer.

A： Mr. Yanai, UNIQLO
From our point of view, we are planning to put our all into this project, investing the entire
company in the process. And I would be asking the same of Toray. Up until now the project was ran
by the managers assigned, but going forward I want to create this project as a top priority for thecompany. I believe that you can’t create a good product simply because you have good materials,
and I also feel that you can’t always sell a good product. I think it is vital to have a coordinatedapproach that is channeled into the final product and that incorporates initial research, customer
needs all the way through to the final store layout and location. I want to realize a new approachthat no one else in the industry has yet achieved with success.

Q： You mentioned earlier that the textile industry was poorly structured leading to waste. But just
how much can you reduce or rationalize costs with this project? And, how do you plan to deal withproduct inventory? And finally, when you do develop a wonderful material, will UNIQLO have amonopoly on the material’s use?
A： Mr. Ishii, Toray
On the question regarding how much of an impact on cost can be achieved throughrationalizing inefficiencies in the industry, there are so many different decisions made regarding
product manufacture such as what to make and where. It is therefore difficult to calculate swiftly in
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terms of percentage. But, as Mr. Yanai mentioned earlier, if you consider that we will be working in
future as if we are one company, then we will be changing the conditions and specs of production orconcentrating production of large lot materials for instance. We shall be combining our knowledge
and expertise and I feel we can definitely achieve a rationalization of costs.
In terms of our attitude to inventory, we feel that a quick response is important. We feel that we
can minimize our inventory by using IT tools to combine our retail and production information. In
addition, UNIQLO, as a true SPA firm, has been always implemented at its own risk to consume ourinventory at each and every stage from thread to interim to end products. That we feel that is a vital
part of our corporate trust.
On the question of monopoly over any material developed, I think this is essentially a questionof considering each case on its own. However, if we produce a hit product, in order to produce large
amounts of the same quality material, we would have to work our facilities both in Japan andoverseas at full operation and it is possible that this could end up as a monopoly.

Q： Having attended today’s news conference, I can feel how passionate you both are about thisproject. However, can you tell me the reason why you have not decided to form any capital link orcapital tie-up at this stage?
A： Mr. Sakakibara, Toray
I don’t know how things might develop in the future, but currently this does not feature in our
relationship. I feel that the mutual trust between Mr. Yanai and myself, and the long years spentbuilding up the trust between our two companies probably carries more weight than a capital tie up.

A： Mr. Yanai, UNIQLO
We do not have a capital relationship at present. I can’t say that there is no possibility of thisever happening in the future. However, at this current time, I feel that it is better for us to work
together as strategic partners with the new drive and tension that such a relationship will instill.

Thank you.

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