REACHING OUTWACOAL HOLDINGS
Integrated Report 2013

REACHING OUT
Aiming to “contribute to society by helping women tostronger global presence for the Wacoal Group, we areexpress their beauty,” the Wacoal Group has built rela−accelerating business development worldwide. As wetionships of mutual trust not only with employees but

draw on strengths to pursue these business ventures,

also with society. Above all else, building mutual trust

we will never forget the philosophy of our founder—wewith the world’s women has always been at the core of ourwill continue growing with local communities in eachbusiness activities. To make products customers love, we

region and building mutual trust.

have accumulated knowledge and experience and unﬂag−

This report incorporates an integrated narrative

gingly developed all business processes, from researchlinking the features of the Wacoal Group’s unique value

and development through to manufacturing, sales, andcreation, a review of the medium−term management plancustomer support. Consequently, the Wacoal Group has

ended in March 2013, and overview and analysis of theestablished unique strengths in each business process.

new medium−term management plan that began from

Moreover, the resulting unique competitive advan−

April 2013. We hope this integrated report furthers

tages are building our presence in markets. Thus, byunderstanding of the Wacoal Group’s efforts to leverage

combining such strengths, the Wacoal Group creates

unique intellectual assets and advance business strate−

value day after day. With our sights set on establishing agies to sustain growth.

CONTENTS
02

OUR PRODUCTS

28

LOOKING AHEAD
Overview of the Fiscal 2014–2016
Medium−Term Management Plan

32

ONE−ON−ONE DISCUSSION
The Wacoal Group’s Value Creation

04

OUR BUSINESSES

06

OUR OVERSEAS OPERATIONS08

OUR STRENGTHS16

KEY FIGURES

18

LOOKING BACK
Review of the Fiscal 2011–2013
Medium−Term Management Plan

36

CORPORATE GOVERNANCE

40

BOARD OF DIRECTORS/ AUDIT &SUPERVISORY BOARD MEMBERS

FOCUS STORY
Creating Intellectual Assets—Wacoal’s Human Science Research Center

41

CSR MANAGEMENT

45

FINANCIAL SECTION86

CORPORATE DATAMESSAGE FROM TOP MANAGEMENT87

INVESTOR INFORMATION

21

24

Editorial policy for this report The Wacoal Group issues integrated reports, combining an annual report detailing business results and business strategies forshareholders and other investors, with a communication report that focuses on the Group’s corporate social responsibility (CSR) initiatives. For this integrated
report, we have increased and enhanced the content in light of a new framework the World Intellectual Capital Initiative (WICI)* advocates. Going forward, we
will continue pursuing an editorial policy that responds to reader expectations.
*World Intellectual Capital Initiative—Established in 2007 and comprising organizations representing companies, analysts, investors, accountants, and academics, the WICI seeks to
improve corporate reporting on intellectual assets or capital and key performance indicators (KPIs), which are areas of considerable interest to shareholders and other stakeholders.

THE WACOAL GROUPMANAGEMENT PHILOSOPHY
Wacoal has since our founding pursued the essence of “beauty” whichtranscends the ages, while always keeping a close eye on the values andaesthetic sense of women. Furthermore, in the course of conducting ourbusiness we listen to the opinions of each individual customer andmodestly seek to transform ourselves, so as to build “a relationship ofmutual trust” with each individual. Wacoal is founded on this philosophyof mutual trust, and has remained our Management Philosophy since
our founding.

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

OUR VISION
We, the employees and management of Wacoal, will maintain a reﬁned
corporate culture based on mutual trust and will continually strive to makethe 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 successIntegrated Report 2013

01

OUR
PRODUCTS
Share of Net Sales by Product Category

4.3%

Textile products

6.0%
Other

0.9%
Hosiery

9.3%

0.8%

Outerwear and sportswear

Children’s
underwear

5.2%
Nightwear

73.5%

Foundation garments and lingerie

Net Sales (FY2013)

177,154¥

millionNet Sales by Product Category (Millions of Yen)

Foundation garments and lingerieNightwear
Children’s underwear
Outerwear and sportswear
Hosiery
Textile products
Other
Total

02

WACOAL HOLDINGS

2013

2012

2011

¥130,284
9,232
1,467
16,439
1,5597,580
10,593¥177,154¥124,303
9,390
1,530
16,371
1,646
8,226
10,431¥171,897¥116,127
8,713
1,476
17,397
1,666
7,493
12,676¥165,548

Integrated Report 201303

WACOAL BUSINESS(Domestic)

Share of Sales by Business (Wacoal Corp.) (FY2013)8%

5%

Wellness
Business Dept.

Catalog Sales
Business Dept.

11%
RetailBusiness Dept.

Net Sales to External Customers/Operating Proﬁt

51%¥ million

115,657
8,423

2013

115,870
8,172

2012

110,856
5,620

2011

Net Sales
YOY

DOWN

0.2%

25%

Wacoal Brand
Business Dept.

Wing Brand Business Dept.

Share of Sales by Sales Channel (Wacoal Corp.) (FY2013)

22.1%
Internet sales andmail−order catalog
sales operations/
SPA shops

31.2%
Department stores

37.2%

9.5%

General merchandisingstoresSpecialty/Retailstores13.0%
Share of Sales by Business Segment*

65.3%
Wacoal business(Domestic)

Wacoal business(Overseas)

14.9%
Other businesses

6.8%

Peach John business

Wacoal Business (Domestic) Mainly wholesale operations of Wacoal Corp. for department stores, general merchandising stores, and specialty stores
Wacoal Business (Overseas) Mainly operations of Wacoal International (U.S.) and Wacoal China
Peach John Business Operations of Peach John became wholly owned subsidiary in 2008
Other Businesses Mainly operations of Nanasai Co., Ltd. (became subsidiary in 1987, Lecien Corporation (became subsidiary in 2009), Wacoal Eveden
Limited (U.K., became subsidiary in 2012)* Percentage ﬁgures are calculated based on external customers sales

OUR BUSINESSES
04

WACOAL HOLDINGSPEACH JOHN
BUSINESSOTHER
BUSINESSESNet Sales to External Customers/Operating Proﬁt

Net Sales to External Customers / Operating Proﬁt¥ million¥ million

11,972−2,701

2013

26,444947

2012

13,836529

2012

20,795236

2011

11,575−2,8792011

23,107338

2013

Net Sales
YOY

DOWN

13.5%

Net Sales
YOY

Sales by Business Format (Peach John Co., Ltd.)

UP

27.2%

Sales of Lecien Corporation¥ million

1%

2013

11,758

2012

13,8542011

13,355

Other66%

Mail−order catalog
sales

33%
Store

Sales of Nanasai Co., Ltd.
¥ million

2013

9,684

2012

9,637

2011

11,469Mail-Order Catalog Sales (Peach John Co., Ltd.)¥ million

2013

7,439

2012

8,815

2011

7,525

Sales of Wacoal Eveden Limited¥ million

2013
Store Sales (Peach John Co., Ltd.)

7,203¥ million

2013

3,632

2012

4,159

2011

3,812

Integrated Report 2013

05

OUR
OVERSEAS
OPERATIONS
UnitedKingdom

CanadaNetherlands

FranceKorea

United States

China
Japan

IsraelThailandSri Lanka

Dominican
Republic

TaiwanHong Kong
Philippines

20

Vietnam
Malaysia
Singapore

Indonesia

Number of countries where the
Wacoal Group has operating bases

Australia

Sales

The establishment of joint venture companies in South Korea, Thailand,
and Taiwan in 1970 heralded the Wacoal Group’s entry into overseas
markets. At present, the Wacoal Group markets products in 70 countries,
has 50 operating companies overseas including affiliates, and recorded
overseas sales*1 of approximately ¥69.1 billion in ﬁscal 2013. Among ouroverseas businesses, we boast a particularly strong presence in department
stores in the United States. In addition, in South Korea, Thailand, Taiwan,
Indonesia, Vietnam, the Philippines, and other countries, Wacoal has
become established as a leading brand.

Shares of Sales by Geographic Segment* 2

Manufacturing

Sales by Geographic Segment
Japan¥ million

2013

146,224

2012

149,5872011

144,999

Asia and Oceania¥ million

10.3%

82.5%

Manufacturing /Sales

Asia and Oceania

201312,6857.2%

2012

10,527

Americas andEurope

2011

9,167

Japan

Consolidated Overseas
Sales (FY2013)

Overseas Affiliates
Sales (FY2013)

30.9
¥38.2
¥

Americas and Europe¥ million

billionbillion2013

18,245

2012

11,783

2011

11,382*1 This includes sales of affiliates and therefore differs from consolidated overseas net sales *2 Percentage ﬁgures are calculated based on external customers sales

06

WACOAL HOLDINGSWACOAL BUSINESS(Overseas)
Net Sales to External Customers/Operating Proﬁt

Sales/Operating Profit of Wacoal France¥ million¥ million

2013

23,081
1,430

2013

1,090
9

2012

21,396
1,440

2012

1,194
30

2011

20,010
1,322

2011

1,104
−13

Sales / Operating Profit of Wacoal International (U.S.)

Sales/Operating Profit of Wacoal China¥ million¥ million

2013

11,631
1,434

2013

6,625
−346

2012

10,475
1,113

2012

6,020
−212

2011

10,252
1,017

2011

5,182
−213

Internet Sales in United States¥ million

2013

497

2012

382

2011

122

From left
FANTASIE (Wacoal Eveden)b.tempt’d by Wacoal(Wacoal America)
LA ROSABELLE(Wacoal China)

Integrated Report 2013

07

OUR STRENGTHSThe Wacoal Group’s corporate mission is to “contribute to society by helping women to express their beauty.”
To realize this mission, we are advancing operations by leveraging our insistence on unique strengths in all
business processes, from research and development through to manufacturing capabilities, sales channels, andconsultative sales. Always the basis of its activities, empathy with women enables the Wacoal Group to create
original value. By bringing to bear such strengths not only in domestic operations but also in operations
overseas, we want to realize a stronger global presence for the Wacoal Group.
To further stakeholders’ understanding of the Wacoal Group’s unique value creation, this section explains
initiatives based on key performance indicators (KPIs) reflecting the characteristics of each business process.

Providinglong-term
feedback

Providing
feedback

R&D (Human
Science Research)

Product Planningand Development

Discover, create,provide value
customers want

Identify needs
precisely, createcustomer value
Providingresearch results

Providinginformation

Providing
feedback

Manufacturing

Sales

Maintain rigorous
quality through same
manufacturing control
worldwide

Provide products via
convenient channels
for customers

Directingmanufacturing

Providing feedback

Basic value creation process of the Wacoal business in Japan

Offering
products

Customer
Service
CenterMakinginquiries andrequests

Customers

Delivering
products

Collecting
information
on needs

Overseasbusinesses

Management philosophy/Management capabilities/Personnel

The Business Process of Wacoal
As it has progressed in step with women for more than half a century, the Wacoal Group has cultivated human science research as acore competence. From a human science perspective, we discover, create, and provide value customers want. Further, we identify
individual customer’s needs precisely, reﬂect these in high−value−added products and services, and provide them through sales
channels that are convenient for customers.
In this integrated value creation process, the Wacoal Group will respect women’s values and individuality fully as it continues totake on the challenge of becoming a company that women love the world over.

08

WACOAL HOLDINGSOUR STRENGTHSRESEARCH & DEVELOPMENT

Number of women and girls between the ages of 4 and69 undergoing physique measurement ever year

Number of people we have measured
continuously for more than 30 years

1,000 200+

approx.

Patents, utility models, and industrial designs
registered, or for which applications ﬁled, in Japan

Number of women and girls we have accumulated
data on during nearly 50 years

550 40,000

approx.

+Human Science Research—the Core of Value Creation for Customers
Since its establishment nearly 50 years ago, Wacoal’s Human Science
Research Center has been conducting a variety of basic research on wom−en’s physiques. The center measures the physiques of approximately 1,000
women and girls, mainly between the ages of 4 and 69, every year and has
accumulated data on more than 40,000 people. Further, by measuring thesame individuals over long periods of time, we are conducting and pub−lishing the results of research that sheds light on the changes in women’s
physiques that accompany aging. Human science research enables us tocreate unique value linking people and science.

Integrated Report 201309

OUR STRENGTHSMANUFACTURING CAPABILITIES

Number of brassieres sales annually worldwide

45.2

approx.

millionParts included in a brassiere

Brassiere stitching reﬂecting the needto balance strength and productivity

6,000

Plants worldwide+

Sizes of semi−order−made brassieres

40 24 3,030+

Manufacturing Capabilities—Creating Value for Customers
One brassiere has more than 40 parts, which comprise approximately 25
different components and materials. Furthermore, we sew all of these parts
together manually, with each process calling for meticulous attention todetail. Over many years, the Wacoal Group has fostered technicians with
consummate skills that enable them to sew together parts into an attrac−
tive shape without diverging even slightly.
In addition, we control cutting and sewing processes strictly based on
original quality standards. Only products passing a comprehensive andscrupulous ﬁnal quality inspection are offered to customers as Wacoal
products. We became the ﬁrst company in Japan’s apparel industry toacquire accreditation under ISO 9001, a group of international standards
for quality management systems, testifying to the Wacoal Group’s com−mitment to uncompromising quality control in manufacturing. Whether
in Japan, China, or Vietnam, we rigorously focus on bringing products tomarket that are loved for their safety and reliability by adhering to uniquemanufacturing ideals in production. Therefore, rather than emphasizingthat products are made in Japan or made in China, our slogan emphasizes
that they are made by Wacoal.

10

WACOAL HOLDINGSOUR STRENGTHSPOINTS OF CONTACT WITH CUSTOMERSPoints of Contact with Customers Worldwide
The Wacoal Group markets through points of contact that cater to eachcustomer’s preferred way of shopping. As well as consultative sales throughdepartment stores and general merchandising stores, we sell our products
through specialty stores and directly managed stores. Recently, variety
stores and drug stores have become promising new sales channel for us.
Also, aiming to provide even easier ways for customers to browse and buy
products, we offer products through mail−order catalog sales and Internet
sales. In this way, we have secured a wide range of sales channel and built
solid foundations as a leading company in Japan’s innerwear market.
As well as in Japan, we market Wacoal products in more than 70 coun−tries around the world. We offer our products at approximately 22,300
sales areas worldwide, including Japan. Thus, by pursuing the same
strategy as we have in Japan to establish points of contact with customers
in regions overseas that reﬂect demand, we deliver Wacoal products tocustomers globally.

Number of stores worldwide

Share of ladies innerwear market
in Japan (FY2013)

22,300 34.0%

approx.

Source: NIKKEI BUSINESS DAILY

Number of countries where the
Wacoal Group markets products

Number of directly managed
stores in Japan70 266+Integrated Report 201311

OUR STRENGTHSCUSTOMER SUPPORTBeauty advisors in Japan

Beauty advisors worldwide (including Japan)

3,400 8,200

approx.

approx.

Approximate number of customer inquiries
Customer Service Center receives annually

After response to complaint, per−centage intending to repurchase48,000 97.0

approx.

Consultative Sales—the Frontline in Providing Value for Customers
The principal point of contact between the Wacoal Group and its customers
are beauty advisors in sales areas. The title “beauty advisor” reﬂects thecommitment to continually providing customers with beauty that is central
to our corporate stance and expresses our belief that receiving specialist
advice through face−to−face consultative sales builds trust.
Given that creating products customers love is one of our overriding
management goals, the feedback beauty advisors receive from customers
is a treasure trove for us. With this in mind, we are advancing initiatives
that will enable us to collect such day−to−day customer feedback frombeauty advisors more dynamically and use it in operational decision mak−ing and product development. Also our Customer Service Center responds
to approximately 48,000 inquiries and requests a year. In addition to pro−viding explanations to customers, the center relays customer feedback to
relevant departments as part of our initiatives to reﬂect customers’ opin−
ions in products and services.

12

WACOAL HOLDINGS%OUR STRENGTHSSUPPORTING WOMEN

Development of Mutual Trust with Society

Wipe Out Breast Cancer Smile Fund. In the 2012 campaign,

Because the Wacoal Group aims to be a company empathetic

188,408 women tried on 496,364 brassieres, resulting in a

to women, building mutual trust with the women of the world isdonation from the Wacoal Group of ¥4,963,640.

the natural mission for it to pursue.

Brassiere Recycling

Wacoal’s Breastcare Activities

As one of its environmental initiatives, Wacoal has been

For many years the Wacoal Group has been developing the

conducting the Brassiere Recycling Campaign since 2008.

Remamma project, which caters to women that have undergone

Customers put brassieres that they no longer need in speciallybreast cancer surgery. Also, to encourage early discovery, diag−

designed collection bags and bring them to stores. The col−nosis, and treatment, we have been organizing and promoting

lected brassieres and the unopened bags containing them are

Pink Ribbon Activities in earnest since September 2002. Asprocessed into RPF (Refuse Paper & Plastic Fuel) that paper

participates of these activities, we launched the Breast Cancer

manufacturers use as a heat source. Also, Taiwan has been

Examination Support Project in October 2009. The Wacoal

taking part in this campaign since 2010.

Group intends to accelerate its breastcare activities to free as

In ﬁscal 2013, we collected 58,798 brassiere collection bags

many women as possible from the suffering breast cancer causes.

(or approximately 224,500 brassieres calculating based on the

Remamma Project—Since its establishment directly under theweight processed and the assumption that one brassiere weighs

control of the president in 1974, the Social Welfare Section has

100g), which were processed into approximately 22.45 tons ofdeveloped an array of items for women who have undergone

RPF, up 41% from the previous ﬁscal year.

breast surgery by combining original human science research,

Tsubomi School

patient feedback, and expert medical opinions. More than

The Tsubomi School refers to innerwear classes the Wacoal

190,000 women have used Remamma products during the past

Group conducts for girls, from the fourth year of elementary

39 years. As well as selling the Remamma lineup and provid−

school through the second year of junior high school, and theiring individual customers with consultations at six Remamma

guardians. Based on the data of Wacoal’s Human Science

Rooms around the country, we cater to women in remote areas

Research Center and incorporating games, the classes enablethrough mail−order catalog sales.

participants to have fun as they learn about the physical andFurthermore, at more than 10 locations we organize annual

emotional changes accompanying adolescence. We provide

free consultation events that enable customers to be measured

instruction at regional children’s associations and girl scouts

and try products on. In ﬁscal 2013, we held 11 consultationgroups, with an increasing number of classes held at elemen−

events, which received approximately 1,200 visitors (Cumula−tary schools and junior high schools in recent years. As oftive total of 21,126 customers since 1993).

March 2013, more than 51,869 people have participated in the

Pink Ribbon Activities—The Wacoal Group engages in multifac−

classes since they began in October 2001.

eted Pink Ribbon Activities in 12 countries and regions

Also, in response to recent years’ growing demand for semi−

worldwide. Since 2007, Wacoal has been holding the Pink Rib−nars for adults, we have been holding Aging Seminars thatbon Fitting Campaign in Japan. For every brassiere customers

explain how the physique ages. In ﬁscal 2013, we hosted 40

try on at stores, we donate ¥10 to the Japan Cancer Society’s

seminars, in which 1,792 people participated.

From left
Remamma innerwear
One of Wacoal’s original Pink Ribbon Badges
Bra Recycle bag
Tsubomi School logo

Integrated Report 2013

13

1949

1952

1964

Establishes Wako
Corp.

Changes trademark
from Clover to
WacoalLists on second
sections of several
stock exchanges

1964

1959

Changes name to
Wacoal Corp.

Establishes ﬁrst
sewing subsidiaries
in Japan1950
Begins production of
inaugural brassiere:
No. 101

Corporate Development

1970

1970

Enters overseas
markets for ﬁrst time
(establishes joint
venture companies inSouth Korea, Thai−land, and Taiwan)

Embarks on ﬁrst
overseas foray
Exhibits at the Osaka
Expo

1977
Enters U.S. market

Overseas Operations

1964

1965

Establishes ProductResearch Depart−
ment (precursor to
Human Science
Research Center)

Publishes Golden
Proportions andoffers proportion“making”

Human Science Research

The Wacoal Group traces its
origins to Wako Shoji, which
Koichi Tsukamoto founded in 1946.
Initially, he began the Company tomarket brassiere pads. Since then,we have grown in tandem with thewomen’s innerwear market in Japan
while continually contributing
to society.

1962

1965

1974

Sets out mutual trustas overriding goalof business
management

Sets out Mission

Begins supplying
RemammaBrassieres

1964
Announces basic
management policy
and vision publically1973
Establishes Social
Welfare Department(changes name to
Remamma Depart−
ment in 1979)

www.wacoalholdings.jp/history
Development of Mutual Trust with Society

THE FOOTPRINTSOF THE WACOAL GROUP
14

WACOAL HOLDINGS

1978
Establishes Kyoto
Costume Institute
(KCI)

1965

1971

1979

1981

2005

Begins sales ofﬁrst internationallypatented product:
Tummy Girdle

Lists some sharesin stock exchanges’
First Section

Posts sales above¥80 billion

Posts sales above¥100 billion

Establishes Wacoal
Holdings as holding
company

1970

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

Posts sales above¥10 billion

1983

1977

Records ﬁrst
decrease in revenue
and earnings, switch−
es to lean business
management

2012
Eveden Group
Limited becomesa wholly owned
subsidiary of Wacoal
Holdings

1978

1986

1990

1995

2003

Establishes sales
base in Singapore(currently Wacoal
Singapore Pte. Ltd.)

Establishes Beijing
Wacoal Co., Ltd.

Establishes Wacoal
France S.A.

Establishes Guang−dong Wacoal Inc.

Establishes Wacoal
Malaysia Sdn. Bhd.

1989

1991

1997

2003

Establishes Philip−
pine Wacoal Corp.

Establishes PT.
Indonesia Wacoal

Establishes Vietnam
Wacoal Corp.

Establishes Dalian
Wacoal Co., Ltd.

2002

2011

Establishes Wacoal(UK) Limited

Establishes
WACOAL CANADA
INC.

1983
Establishes Wacoal
Hong Kong, Co. Ltd.
and Wacoal Ameri−ca, Inc.

1979

1995

2010

Publishes Beautiful
Proportions

Publishes Golden
Canon

1992

2000

Publishes Aging of
the Physique and thePrinciples of Beauty

Changes Central
Research Center’sname to Human
Science ResearchCenterPublishes Spiral
Aging

1984

1991

2001

2002

2009

Announces new
Wacoal Declaration:
Physique Industry

Supports establish−
ment of the Karada
Bunka Kenkyukai(physique culture
research group) by
academics (changes
name to Nyubou
Bunka Kenkyukai(breast culture re−search group) in 1996)

Announces new
Wacoal Declaration:
Wacoal as a Com−pany Empathetic to
Women

Launches
Pink Ribbon
activities in Japan

Launches Breast
Cancer Screening
Support Project

1985
Opens the multipur−
pose cultural facility
Spiral2001
Establishes Tsubomi
School2008
Begins brassiere
recycling initiativein earnest

Integrated Report 201315

KEY FIGURES(Years ended March 31, 2013, 2012 and 2011)2013

Thousands of
U.S. dollars*% change

2011

2013

2013 vs 2012

¥171,897 ¥165,548

2012$1,881,414

3.1%

Operating income

8,099

10,3774,401

86,013−22.0%

Selling, general and administrative expenses

82,86979,62977,716880,087

4.1%

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

10,544

10,207

3,927

111,979

3.3%

7,623

6,913

2,785

80,958

10.3%

Net sales

Net income attributable to Wacoal Holdings Corp.

¥177,154

Millions of yen

Return on assets (ROA)

3.2%

3.1%

1.3%

3.2%

Return on equity (ROE)

4.3%

4.1%

1.6%

4.3%

Net cash provided by operating activities¥12,741¥10,060¥10,441$ 135,312

26.7%

Net cash used in investing activities(23,436)(3,467)(703)(248,895)

576.0%Net cash provided by (used in) ﬁnancing activities

5,303(2,824)(4,965)56,319−287.8%Cash and cash equivalents

24,86029,98526,316

264,019−17.1%

Total assets

253,803

221,098

215,276

2,695,444

14.8%

Total shareholders’ equity

185,840

171,496

167,480

1,973,662

8.4%

Yen

U.S. dollars*

Per share of common stock¥54.12¥49.08¥19.73$0.58

10.3%

28.00

28.00

20.00

0.29

—

1,319.47

1,217.57

1,189.08

14.01

8.4%

Number of brassiere sales (Millions)

45.2

41.8

39.0

Research and development expenses(Millions of yen, thousands of U.S. dollars)

¥788

¥801

¥815

CO2 emissions (Tons)

6,243t6,297t

7,635t−1.0%

Waste emissions (Tons)

1,164t1,169t1,170t−0.4%

Net income attributable to Wacoal Holdings Corp. (Basic)
Cash dividends
Shareholders’ equity

Number of employees (Consolidated)

8.1%$8,368−1.6%

PeopleWacoal Business (Domestic)

7,486

7,229

7,241

3.6%

Wacoal Business (Overseas)

7,746

7,520

7,004

3.0%

338

364

422

−7.1%

Other

3,052

1,411

1,346

116.3%

Total

18,622

16,52416,013

12.7%

Number of consolidated female employees

13,892

11,208

10,66023.9%

Outside director ratio

28.57%

37.50%

37.50%

Peach John

* The U.S. dollar amounts represent translations of Japanese yen solely for convenience at the rate of ¥94.16=$1.

16

WACOAL HOLDINGSNet Sales

ROA/ROE%¥ billion

177.2

2013

3.2 / 4.3

2012

171.9

2012

3.1 / 4.1

2011

165.5

2011

1.3 / 1.6

2010

163.5

2010

1.1 / 1.5

2009

171.0

2009

2.2 / 2.9

2013

Operating Income /Operating Income Margin

Total Shareholders’ Equity/Equity Ratio¥ billion/%¥ billion/%2013

8.1 / 4.6

2013

185.8 / 73.2

2012

10.4 / 6.0

2012

171.5 / 77.6

2011

4.4 / 2.7

2011

167.5 / 77.8

2010

3.8 / 2.3

2010

171.9 / 77.1

2009

9.8 / 5.8

2009

166.8 / 78.0

SG&A Expenses /% of Net Sales

Net Cash Provided by Operating Activities/
Cash and Cash Equivalents¥ billion/%¥ billion

2013

82.9 / 46.8

2013

2012

79.6 / 46.3

2012

10.1 / 30.0

2011

77.7 / 46.9

2011

10.4 / 26.3

2010

78.5 / 48.0

2010

9.5 / 22.3

2009

77.2 / 45.2

2009

8.2 / 22.0

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

12.7 / 24.9

Total Assets¥ billion/¥¥ billion

7.6 / 54.1

2013

253.8

2012

6.9 / 49.1

2012

221.1

2011

2.8 / 19.7

2011

215.3

2010

2.5 / 17.5

2010

222.9

2009

5.1 / 35.6

2009

213.8

2013

Integrated Report 201317

LOOKING
BACK
Review of the Fiscal 2011–2013 Medium−Term Management Plan
The Wacoal Group’s previous medium−term management plan began in April 2010 and ended
on March 31, 2013. During these three years, the plan’s main goals were restoring our ability
to adapt to volatile market conditions and stepping up initiatives in growth areas. The plan’smeasures to restore adaptability focused on realizing comprehensive capabilities as a Groupand restructuring wholesale operations for women’s innerwear.
Meanwhile, efforts to step up initiatives in growth areas concentrated on overseas businesses.
Priority businesses were the U.S. business, tasked with leveraging the economic recovery atthat time to achieve new growth, and the China business, which sought to grow market sharein China’s rapidly expanding market.

Summary of the Previous Medium-Term Management Plan
Corporate ProﬁleTarget Corporate Proﬁle for Fiscal 2013

A stronger global presence for the Wacoal GroupNew revenue and earnings pillars established alongside
existing innerwear wholesale operations

Group Strategies Over the Three Years

Overseas operations such as those in the U.S. and China

Heighten the overall capabilities of the Wacoal Groupsupport growththrough promoting collaboration among Group companies

Restructured innerwear wholesale operations see proﬁt−

to realize each company’s strengths

ability improve

Secure and increase earnings

System for Groupwide management further developed and– Restructure operations focusing on innerwear wholesale

strengthened

operations

Meeting CSR and compliance requirements– Accelerate expansion in growing business areas at home
and abroad
Strengthen system for Groupwide management

Numerical Targets (Fiscal 2013)
Net Sales

190,000¥
18

WACOAL HOLDINGS

Operating Income

million¥8,000

millionBackdrop to the Launch of the Fiscal 2011–2013

continue to grow and promise to contribute further earnings.

Medium−Term Management Plan

Became more efficient thanks to further integration of the

When the Wacoal Group introduced the previous medium−termlogistics operations of Wacoal Corp. and Lecien Corporation

management plan, the situation it faced had three principal

in Japan and reorganization of logistics bases

features. First, its core business, wholesale operations for wom−

Enabled Group to realize comprehensive capabilities by

en’s innerwear in Japan, had slumped signiﬁcantly due toentrenching the Group Strategy Meeting, where mainly

radical changes in business conditions. Second, the Group’s

domestic Group companies share issues, develop mutual

operational structure was unable to adapt completely to these

support systems, and advance coordination

business condition changes. Third, overseas businesses, whichshould have been driving growth, lacked momentum.
The ﬁrst issue stemmed from lackluster sales of high−end

Wacoal business (domestic)
Net sales to external customers:

products as the markets for men’s and women’s innerwear con−¥115,657 million, up 1.5% versus ﬁscal 2010

tinued to contract in Japan. Moreover, Japan’s high−volume

Operating income: ¥8,423 million, up 85.4% versus ﬁscal 2010

market was shifting toward low−priced products. In particular,

Improved the proﬁtability of women’s innerwear wholesale

the shrinking of the women’s innerwear market contributed

operations in Japan through structural reform

signiﬁcantly to wholesale operations’ stagnation.

We reduced product development man−hours by reducing the

The second issue was attributable to a major change in thevarieties for each newly planned product and reusing existing

structure of sales channels resulting from consumers’ use of anpatterns. Further, aiming to enhance sales efficiency in theincreasingly diverse range of retail channels. Declining sales indepartment stores sales channel, we reduced returns of unsold

such mainstay retail channels as department stores, specialty

goods by rigorously ensuring timing, quantities, and products

stores, and general merchandising stores had a substantial

were appropriate when introducing products, and we deployedeffect on the Group. Furthermore, our inability to respond rap−

beauty advisors more efficiently. These initiatives improved

idly to this change dealt a severe blow to business results.

earnings approximately ¥1.5 billion.

As for the third issue, the Group needed to expand overseas

Reinforced solid position in domestic market for women’sbusinesses to achieve growth but was unable to develop busi−

innerwear

nesses rapidly enough.

Product rollouts and promotions based on the Human Science
Research Center’s ﬁndings about how the physique ages ap−

Priority Measures Implemented over the Three Years andpealed to customers effectively and invigorated the market.

Their Results

Identifying brassieres priced between ¥2,000 and ¥3,000 as its

Wacoal Group as a wholehigh−volume market, the Wacoal Group expanded and im−

High−value−added innerwear businesses in Japan under theproved product lineups mainly for chain stores and directly

Wacoal and Wing brands remain the Group’s core business−managed stores, which helped increase net sales.

es. However, the retail operations of the Wacoal businessNumerical Targets Achievement Percentage
Net Sales (Fiscal 2013)
vs fiscal 2010

¥

UP

8.3%

Operating Income (Fiscal 2013)
Achievement
percentage

177,154

93.2%

millionEven taking into account an approximately ¥3 billion negative
effect on net sales due to currency exchange, net sales wereroughly ¥10 billion below target.

vs fiscal 2010¥

UP

111.5%

8,099

Achievement
percentage

101.2%

millionThe domestic business centered on the Wacoal brand improved
signiﬁcantly thanks to structural reform. The Group met thistarget one year early. In the plan’s ﬁnal year, the Group kept
operating income at the targeted level despite recognizing a¥2.9 billion impairment loss.

Integrated Report 201319

Advanced businesses that will become new sales mainstays

to a deterioration in proﬁtability. From ﬁscal 2013, we sought toRetail operations: These operations increased net sales steadi−

move into the black as soon as possible by heightening thely by opening AMPHI, Une Nana Cool, and other stores inemphasis on securing earnings through efforts to strengthen

railway station buildings, fashion−themed commercial facili−

the foundations of sales operations and improve cost. At theties, and shopping centers. Respective business formats

same time, we launched a new brand, LA ROSABELLE, target−

contributed signiﬁcantly as our mainstays in growth areas.

ing middle−class customers.

Wellness Business: Responsible for developing the CW−X

Asia businesssports conditioning wear, this business grew net sales steadily

Net sales grew in step with the economic growth of the region’s

by expanding product lineups and opening directly managed

countries, but growth rates in countries where we have astores. However, growth softened due to stagnation of its main−presence have softened. Therefore, we need to revise pricing

stay sportswear market.

strategies and cost with a view to further growth. In India,

Men’s innerwear: Net sales declined because rolling out prod−which has many entry barriers, we are continuing to explore

ucts in a greater number of stores, actively promoting Internet

market entry methods, including the selection of sales partners

sales, and marketing new brands for seniors did not completely

and product supply systems.

counteract the ending of a boom resulting from customers’
concern over metabolic syndrome.

Peach John business

Internet sales: Introducing an Internet mall grew net sales but

Net sales to external customers:

not to the extent anticipated.

¥11,972 million, down 8.5% versus ﬁscal 2010
Operating loss:

Wacoal business (overseas)¥2,701 million, down ¥1,109 million versus ﬁscal 2010

Net sales to external customers:

The business did not reach its ¥15.6 billion net sales target due¥23,081 million, up 19.6% versus ﬁscal 2010

to a generational change among mainstay customers, lackluster

Operating income: ¥1,430 million, down 11.5% versus ﬁscal 2010

sales of outerwear and sundries, and inventory shortages during

Americas businessproduct launches. To address the earnings issue, we increased

We stably realized year−on−year operating income growth ofefficiency by reducing cost and expense. These efforts included

at least 10% throughout the three−year period. Business results

reducing ﬁxed costs through integration of operating bases andwere steady, reaching the initial net sales target of US$140

other restructuring measures. However, as a result of lower net

million. We increased market share in mid−to−high−end de−sales and the recognition of an impairment loss on intangible

partment stores by strengthening b.tempt’d by Wacoal andﬁxed assets, the business recorded an operating loss, comparedproducts with advanced functionality. Also, we developed newwith the previous ﬁscal year’s operating income of ¥529 million.

sales channels and markets, such as in−house Internet sales,
Canada, and Brazil.

Other businesses

Europe businessNet sales to external customers:

Although still a small business, Wacoal France S.A. success−¥26,444 million, up 53.3% versus ﬁscal 2010

fully rolled out Shapewear, heightened its standing in the

Operating income: ¥947 million, operating loss of ¥737 million formarket, and remained proﬁtable. In April 2012, we acquiredﬁscal 2010

the U.K.’s Eveden Group Limited*, which sells women’s inner−

While streamlining its unproﬁtable businesses, Lecien helped

wear in Europe, North America, Australia, and Asia. The

the Group’s foray into the high−volume market and low−costcompany has become the mainstay of the Europe business.

manufacturing. The business achieved operating income but

Also, it has bases in regions where the Wacoal Group did not

did not realize the ¥15 billion net sales target. Nanasai Co.,

have a presence.

Ltd., heightened its revenue−generating capabilities while* Eveden Group Limited changed its name to Wacoal Eveden Limited in January 2013.
The company’s business result ﬁgures are included in other businesses.

maintaining proﬁtability by leveraging high−value−added prod−

China businessand sales area construction. Further, reﬂecting the inclusion of

Although we rapidly grew net sales by opening stores in inland

Wacoal Eveden, this business segment’s revenues and earnings

regions, we did not reach our 7.5 billion yuan net sales target.

surpassed the medium−term management plan’s initial targets

Meanwhile, rapid expansion increased SG&A expenses, leading

signiﬁcantly.

20

WACOAL HOLDINGS

uct development and services based on mannequin production

FOCUS STORY
R&D—The heart of Wacoal’s technology management

Creating Intellectual Assets
Wacoal’s Human Science Research Center

The huge amount of measurement data that Wacoal’s Human Science Research Centerhas collected is the departure point of all of the Wacoal Group’s activities and thewellspring of the Group’s competitive advantages. Human science research achievements
enable us to fulﬁll women’s wish to be beautiful, which is our ultimate goal.

LOVE, AGING—Invigorating the Women’s Innerwear Market
Wacoal’s Human Science Research Center published research results on the “Aging of
the Physique and the Principles of Beauty” in April 2010. These research results gave
an overall view of body aging—a phenomena that until then had only been understood
intuitively—by detailing speciﬁc stages of change in the bust and bottom. The result of
nearly ﬁfty years of steady effort, this initiative epitomizes the Wacoal Group’s uniqueintellectual assets. Meeting with a great response that included mass media coverage,
the announcement of the research results successfully underscored the Group’s status

A LOVE, AGING campaign logo

as a truly unique entity.
Recognizing the research results as opportunity to further heighten Wacoal’s brandvalue, we exploited them to develop products. Working in concert, the product devel−
opment team and Wacoal’s Human Science Research Center launched large−scale
promotional LOVE, AGING campaigns. Beginning in the 2010 autumn−winter season,
we developed products designed to accommodate changes in the physique with aging

Integrated Report 201321

and marketed them under the Laseé, Gra−P, Cutie, Kirei, and Graces brands. Empha−
sizing to customers that for all age groups the aging concept is essential in the correct
selection of innerwear, these campaigns not only contributed to the Wacoal Group’sbusiness results but also invigorated the market for women’s innerwear in Japan.
Wacoal’s Human Science Research Center—Pursuing the Evolution of Women’s
Beauty Tirelessly
Since its establishment in 1964, Wacoal’s Human Science Research Center has consis−
tently shed further scientiﬁc light on feminine beauty. The center currently has a teamPress brieﬁng for the announcement of “Aging of
the Physique and the Principles of Beauty”

of 52 personnel, of whom 41 are women, and encompasses a diverse range of researchareas, including physique shape, internal tissue, sensation, physiology, psychology,
and lifestyle. Every year, the center measures the physiques of approximately 1,000
women between the ages of 4 and 69. To date, it has accumulated data on more than
40,000 women.
Based on this database, we proposed the “golden proportions” as the new standard ofbeauty for Japanese women in 1965. Since then, the center has deepened its research,announcing the “beautiful proportions” for each age group in 1979 and the “golden
canon” for each individual’s achievement of a beautiful balance in 1995.
Further, the center has continued research on changes in the physique shapes ofmodern women, since announcing a report titled “New−Breed Generation of Recent
Years” in 1992. Released in 2004, a subsequent report comparing the proportions of
women in their 20s with those of women 10 years earlier, “The Reality of the Physiquesof Modern Women,” met with a great deal of interest from various quarters. In this way,
the data Wacoal’s Human Science Research Center collects is unique in the world be−cause it includes measurements of the same individuals made over a series of years.
Based on this data, the center is progressing with research on changes in physiqueResearch on the Five Senses Using the Latest Technology
Highly precise measurements determine “shape”

The center’s research on the movement of theThis research focuses on three facets or stimuli

by combining the Martin measuring method withbody during exercise underpins the development

relating to comfort: temperature, contact, anda contactless three−dimensional measuringof sportswear with highly advanced functionality

touch. As a result, our product development

method that uses laser equipment.

and foundation garments.

realizes wearing comfort based on temperature,fabric texture, and ﬁt.

22

WACOAL HOLDINGS

shape with age. One important result of this effort was the “SPIRAL Ageing” conceptof 2000, which identiﬁes three turning points in the development of the bodyline as

Research and Development Expenses

the physique ages. This research highlighted that aging is a lifelong concern. These¥ million

research results led to the publication of the above−mentioned “Aging of the Physique

2013

788

and the Principles of Beauty” in 2010.

2012

801

2011

815

Since its 2002 establishment, the Chinese Human Science Research Center in Shanghai

2010

778

has gathered physique measurements of Chinese women in various regions stretching

2009

768

The R&D of Wacoal China

from northeast to southern China. Based on this data, we are developing products
matching Chinese physiques and preferences. At Wacoal China Co., Ltd., Wacoal’s
approach to manufacturing is steadily building mutual trust.
Wacoal’s Human Science Research Center—An Intellectual and Social Asset
By enabling Wacoal to “contribute to society by helping women to express their beau−ty,” the research of the Human Science Research Center ensures this mission remains
at the core of the Company’s activities. Empathy with women is the Wacoal Group’s
designated role. Moreover, manufacturing products that resonate with women is some−thing that also resonates with society. Central to these efforts is the Human Science
Research Center, which has conducted research on women’s physiques for nearly 50
years. During this time, it has produced world−leading research ﬁndings. The researchand development process of applying to technology new scientiﬁc knowledge that is
valid and universal lies at the heart of Wacoal’s technology management. The center’shuge amount of data is an intellectual asset that contributes to the value of the Wacoal
brand as well as a social asset enabling Wacoal’s multifaceted contributions to society.

Value Creation Process Led by Wacoal’s Human Science Research Center

Providing information
for consultative sales

Economic value

Receiving feedback
from sales areas

Sales areas

Wacoal’s
Human Science
Research Center

Flagship Products that Leverage
Research Results

Development
and manufacturing

Shakitto Bra

Invigorating
markets

Social value

Integrated collaboration

Unseen value

Products

Beneﬁting
women

Wacoal’scustomer value

Wacoal’svalue creation

Cross Walker

Integrated Report 2013

23

MESSAGE
FROM TOPMANAGEMENT
Based on our corporate mission to “contribute tosociety by helping women to express their beauty,”
we will establish a stronger global presence for the
Wacoal Group by creating unique enterprise value.

Toward Our Target Corporate ProﬁleUnder the three−year medium−term management plan that
ended in March 2013, we took an array of measures to create astronger global presence for the Wacoal Group. In addition, theplan called on us to realize this target corporate proﬁle 10 years
after its launch. Based on our new medium−term management
plan launched in April 2013, we will continue advancing toward
this target corporate proﬁle. A stronger global presence for the
Wacoal Group means achieving the following corporate proﬁle.
ƌɌɄ*'Ɍ-*0+Ɩ.Ɍ+-*0/.Ɍ)Ɍ. -1$ .Ɍ -)$)"Ɍ./-*)"Ɍ/-0./Ɍ
from customers in markets worldwideƌɌɄ*0)/-$ .Ɍ)Ɍ- "$*).Ɍ$)Ɍ2#$#Ɍ-*0+Ɍ#.Ɍ0.$) .. .Ɍ*)−tinue to increaseƌɌɄ**-$)/$)"Ɍ0.$) ..Ɍ 1 '*+( )/Ɍ*)Ɍ"'*'Ɍ.' Ɍ. Ɍon Group’s networkƌɌɄ*''$)"Ɍ*0/Ɍ$))*1/$1 Ɍ+-*0/.Ɍ$)Ɍ(-& /.Ɍ2*-'2$ Ɍ)Ɍ
developing innerwear culture constantlyƌɌɄ-*0+Ɩ.Ɍ"*'.Ɍ)Ɍ()" ( )/Ɍ+#$'*.*+#4Ɍ$)./$'' Ɍ$)Ɍpersonnel worldwide
During the period of the previous medium−term management
plan, the Wacoal Group expanded its overseas operations bymaking Eveden Group Limited, currently Wacoal Eveden Lim−
ited, a subsidiary. It has a sales network comprising over 5,000
retailers, principally in the United Kingdom but also in Australia
and more than 50 other countries in Europe, North America,
Asia, and other regions. As a result, the Wacoal Group’s products
have become available in more than 70 countries. Moreover, we
now have more than 50 operating bases in 20 countries. This
operational scale makes us one of the world’s largest innerwear

Yoshikata Tsukamoto
President and Representative Director, Wacoal Holdings Corp.

companies. However, our current status only realizes one partof our target corporate proﬁle. Going forward, we have manytasks to tackle. Therefore, we will have to redouble efforts.

24

WACOAL HOLDINGS

With this in mind, the Group is determined to accelerate

Business Conditions and the Wacoal Group’s Tasks

initiatives aimed at realizing a stronger global presence for the

The Wacoal Group is likely to see its market in Japan contract

Wacoal Group by ensuring a common understanding amongas consumers’ spending power declines due to a higher con−Group personnel worldwide of its corporate mission to “contrib−

sumption tax and social insurance premiums. Furthermore, theute to society by helping women to express their beauty” andaging of Japan’s population is expected to change the structure

the Wacoal Group’s corporate raison d’être in society.

of consumption and diversify the market. On the other hand,
the Japanese government’s economic policies promise to boost

Evaluation of the Medium−Term Management Plan Ended

the domestic economy. However, we intend to analyze market

March 2013changes objectively while continuing to concentrate efforts on

In ﬁscal 2013, ended March 31, 2013, and the ﬁnal year of thedeveloping and selling products customers love. As we pursue a

previous medium−term management plan, the Wacoal Groupstronger global presence for the Wacoal Group, Japan remains

posted a 3.1% year−on−year increase in net sales, to ¥177.154

our mother market and our largest earnings source. Bearing

billion, below the ¥190 billion target. Despite decreasing 22.0 %this in mind, further cementing our domestic foundations by

year on year, to ¥8.099 billion, operating income surpassed the

conducting even more in−depth marketing and heightening

target of ¥8 billion or more.

our ability to cater to regions and markets we have yet to ex−

Aiming to grow net sales, in Japan we increased our share of
the mainstay innerwear market and restructured operations. At

ploit fully is a major task going forward. (For details, please see
page 28.)

the same time, we strengthened growth by actively developing

Overseas, Western markets harbor potential causes of eco−businesses overseas. However, net sales were signiﬁcantly be−

nomic instability, while China and other emerging economies

low target due to a decline in department store sales and thein Asia face concerns about rising manufacturing cost as wages

effect of exchange rates on overseas businesses.

increase. In these conditions, the Wacoal Group will analyze

Meanwhile, the steep decrease in operating income reﬂectedmarket trends in each country and region and increase or re−an impairment loss of ¥2.852 billion arising from revaluation ofduce the pace of business expansion as appropriate. In the

Peach John’s fair value. Nevertheless, we reached our operat−

mainstay U.S. market, we will continue measures aimed at

ing income target one year ahead of schedule, testifying to thesteady growth. As for Europe, the Group will rebuild producthigher earnings level that ongoing restructuring of domestic

strategies and sales channels centered on Wacoal Eveden. Over

wholesale operations is realizing.

the past several years, in China we have been undertaking

While not reaching the net sales target is extremely regret−advance investment to expand operations. However, given thetable, during the past three years I think we have had

economic slowdown and the deterioration of sentiment toward

considerable success in laying the groundwork for the coming

Japan in the country, we intend to curb new investment fromthree years. For example, including the Eveden Group Limited

Japan for the time being. Instead, we will restrict capital expen−(currently Wacoal Eveden Limited) in the Group will lend fur−

ditures to local investment through Wacoal China Co., Ltd.,

ther impetus to its global strategy going forward. Moreover, inwhile focusing on improving core proﬁtability. In this way,

our mainstay domestic business a revamped earnings struc−plans call for continuing to expand businesses steadily in coun−ture—featuring reduced product development man−hours andtries and regions where we already have a presence. In thoseincreased sales efficiency in the department store channel—will

regions where we do not have a presence, our task is to estab−

enable us to develop businesses even more aggressively.

lish bridgeheads as rapidly as possible.

Integrated Report 2013

25

MESSAGE
FROM TOPMANAGEMENTNew Medium−Term Management Plan

inventory, sales, and manufacturing rigorously on a Groupwide

The new medium−term management plan launched in April

basis and pursue an improved operating margin as the bench−2013 calls on the Group to make maximum use of management

mark of proﬁt−structure strengthening.

resources to extend the scope of the business areas and regions

Finally, the fourth management strategy will continue toin which it enjoys competitive advantages and expand opera−build mutual trust with society by advancing corporate social

tions. Further, we have established increasing the operating

responsibility (CSR) initiatives. For the Wacoal Group, CSR

income margin to at least 7% as a numerical target to reach ininitiatives mean conducting all business activities fairly andthree years. To this end, we have set our sights on net sales ofproviding customers with products they want. Through such¥200 billion and operating income of ¥14 billion in the plan’sefforts each officer and employee aims to build relationships ofﬁnal year. Aiming to enhance the operating margin, I want totrust with customers and society at large. Speciﬁcally, we will

expand businesses in Japan and overseas while rationalizing

continue social contribution initiatives under seven headings:

and heightening the efficiency of business management to in−enhancing governance and compliance, respecting humancrease adaptability and proﬁtability.

rights, utilizing and training personnel and respecting diver−With these targets in mind, the new plan sets out medium−sity, preserving the environment, realizing fair businessterm management strategies and tasks. Later sections explain

practices, ensuring safe, reliable products and services, andtasks and priority measures, so here I would like to focus on

conducting breastcare activities.

management strategies.
Cultivation of Further Group Coordination and Unity
Management Strategies over the Coming Three Years

During the previous medium−term management plan, I think

The ﬁrst management strategy calls on us to evolve into a global

we strengthened coordination within the Group considerably.

company by establishing a stronger global presence for the

However, as the above−mentioned management strategies

Wacoal Group based on ﬁve countries and regions. Accordingly,

suggest, to achieve the growth we seek Group companies must

we aim to expand businesses in Japan, the Americas, Europe,

realize synergies to an even greater extent. Accordingly, theChina, and Asia by heightening our competitiveness in markets.

holding company Wacoal Holdings Corp. will serve as a “con−Under the second management strategy, we will strengthentrol tower” for the whole Group by showing the direction it

the Group’s comprehensive capabilities by increasing coordina−should proceed in and analyzing and advancing growth strate−tion among companies in Japan and overseas. This will entail

gies. In addition, Wacoal Holdings will support coordination

coordinating within the Wacoal Group as a whole to bring toby monitoring the roles and tasks of each operating company,

bear its comprehensive capabilities to resolve problems difficult

reengineering operations to enhance efficiency, and determining

for local Group companies in countries or regions to resolve

resource allocation within the Group. Also, we are addressing

alone. By effectively combining the assets, brands, expertise,issues relating to personnel training and the human resources

and capabilities of each company, we will raise efficiency andsystem. For example, we have launched a “women’s empower−

boost competitiveness.

ment project,” aimed at increasing diversity by establishing

The third management strategy will strengthen the proﬁt

conditions that encourage female employees—who account forstructure of the Group so that it can adapt to changing condi−

the majority of our workforce—to play a variety of more promi−

tions. Establishing a proﬁt structure able to respond tonent roles.

changing conditions in markets in Japan and overseas while

To heighten the sense of unity among Group companies,

securing earnings is critical. Therefore, we intend to control

mutual communication is important. Understanding each

26

WACOAL HOLDINGSTo establish a stronger global presence for the
Wacoal Group, I want to continue highlighting
the Wacoal Group’s unique advantages.

other’s business lines and sharing information is sure to lead tosociety by helping women to express their beauty.” A passion

a higher level of coordination. Therefore, we will disseminate

to realize this corporate mission underpins all of our businessmore information within the Group to heighten employees’

activities. I am convinced this dedication has enabled us toawareness of other areas of the Group and begin creating sys−build relationships of trust with society, women, and customers

tems that stimulate communication within the Group to promoteand become a successful business. Given the Group’s accelerat−a greater sense of unity.

ing globalization, I feel reemphasizing the corporate mission as
our origin is important. No matter how conditions ﬂuctuate, theStable Returns to Shareholders

Wacoal Group’s goals, vision, and basic management policies

Our basic policy is to return proﬁt to shareholders stably, inwill not change. In my view, the fastest way to growth is for eachlight of consolidated business results, while investing activelyof us to take these unchanging values to heart and put themto grow proﬁtability and enterprise value and increasing net

into practice in day−to−day duties. Therefore, to further instill

income per share. For ﬁscal 2013, we paid cash dividends ofthe corporate mission throughout the Wacoal Group, I want to¥28.00 per share, unchanged from the previous ﬁscal year.

create opportunities to reconﬁrm and put it into practice.

Further, we will increase enterprise value by using internal

Of course, to respond to the era’s changes, we will not hesi−

reserves to heighten product appeal, develop manufacturing

tate to change things that need changing. Therefore, in thisand sales systems, and invest in growth areas. At the same

regard I think we should undertake a reassessment. Meanwhile,time, we intend to use internal reserves to improve capital ef−

we must convey to personnel the importance of the corporate

ﬁciency and realize returns to shareholders by acquiring andmission and other attributes we should maintain as part of theretiring treasury stock ﬂexibly.

Wacoal Group identity. Also, I want each employee to feel they
are playing a central role in creating a stronger global presence

Communication of the Management Philosophy

for the Wacoal Group. Through such efforts, personnel the world

throughout the Group, Toward a Stronger Global Presence

over will inherit and share the mindset we have had since ourfor the Wacoal Groupestablishment. This will make the whole Group more coherent

Over many years, the Wacoal Group’s Human Science Research

and maximize its strengths.

Center has accumulated data, which represents the Group’s

Going forward, I want to sustain the growth of the Wacoal

core competence. We exploit this advantage in all businessGroup by maintaining and developing unique strengths as aprocesses, from product development through to marketing,company empathetic to women so that it continues creating

manufacturing, and sales. Under the previous medium−term

unmatched value. As our development enters a new phase, I

management plan, we capitalized on the Human Science Re−

would like to ask our shareholders, investors, and other stake−search Center’s research on aging to roll out products andholders for their continued understanding and support.

services successfully. By continuing to develop high−value−
added products competitors cannot match, the Wacoal Group

August 2013

will stimulate further new demand. This approach is the basic
mechanism through which we create value and has driven our
growth. To establish a stronger global presence for the Wacoal
Group, I want to continue highlighting the Wacoal Group’s
unique advantages.
The Wacoal Group’s corporate mission is to “contribute to

Yoshikata Tsukamoto
President and Representative Director

Integrated Report 201327

LOOKING
AHEAD
Overview of the Fiscal 2014–2016 Medium−Term Management Plan
The Wacoal Group’s new three−year medium−term management plan began in April
2013. Under this new plan, we will continue advancing a range of measures to establish
a stronger global presence for the Wacoal Group. Over the coming three years, the plancalls on the Wacoal Group to strengthen its comprehensive capabilities while ensuring
its management philosophy and conduct and ethics code are shared throughout theGroup as a permanent foundation.
Furthermore, to enable responses to unexpected volatility, we will bolster proﬁtability
and build even stronger relationships of trust with society. Adhering to these strategies,
we intend to grow in Japan, the Americas, Europe, China, and Asia as we evolve into
a global corporate group.

Summary of the New Medium-Term Management Plan
Medium−Term Strategy
Reconﬁrm and implement management philosophy
Develop into a global company
Strengthen Group’s comprehensive capabilities throughcollaboration among companies in Japan and overseas
Strengthen business management system to enable re−sponse to changing conditions
Build mutual trust with society

Eveden, build robust earnings foundations– Recover market share in Americas’ high−end segment,
maintain high earnings by development of new sales
channels– Shift emphasis in China from increasing sales to earn−ings, penetrate middle−class customer group
Rebuild Group’s manufacturing system– Redeploy Group’s manufacturing resources in Japanand overseas

Tasks– Shift manufacturing capabilities from China to ASEAN

Cater to Japan’s diversifying women’s innerwear market,– Develop raw material supply sources and localize pur−achieve sales and earnings targets– Secure and develop points of contact with customers– Hone products’ strengths

Develop presence in growth areas outside Japan’s women’s– Have Wacoal, Peach John, and Lecien grow sales in theirtarget markets
Increase sales and earnings overseas– Strengthen organization in Europe centered on Wacoal

28

WACOAL HOLDINGS

chasing centered on ASEAN
innerwear business– Develop positions for Wellness Business and men’s
innerwear business with view to medium−to−long−termgrowthBackdrop to Launching the Fiscal 2014–2016

has broadened coverage of Japan’s market by expanding retail

Medium−Term Management Plan

operations and participating in Lecien and Peach John, areas

We launched the new medium−term management plan in lightoffering scope for expansion remain because the Group has notof the following outlook for market conditions. In Japan, as thecompletely realized its potential presence in them. These areas

population declines we expect the consumer market to contract

are regions, age groups, and price range.

and the structure of consumption to diversify. Overseas, mean−

Regions exist in which our share of store sales is small de−

while, Asia’s market is likely to expand for some time to come.

spite these regions having similarly sized stores carrying theIn addition, Western economies seem to be on track for recov−

same brand mixes and using the same sales systems as regions

ery. Overall, although challenging conditions will probably

where we boast a signiﬁcant market share. Furthermore, there

continue in our domestic market, we anticipate sufficientare many regions that do not have Wacoal sales areas.
Age groups refers partly to teenage customers, a group

growth opportunities in Japan and overseas.
As for the supply side, the Wacoal Group’s business develop−

where our share of the market is limited. Another facet of thisment incurs risks. Such factors as rising wages in Asia and yen

area is that major apparel chain stores are increasingly attract−

depreciation affect manufacturing cost signiﬁcantly. Complex

ing customers in their 50s and 60s, who have strong loyalty tointerrelated market conditions in Japan and overseas give rise

the Wacoal brand.

to problems that the businesses of individual countries, regions,Price range indicates our small share of the high−volume

or operating companies ﬁnd extremely difficult to resolve inde−

market, in other words brassieres priced between ¥2,000 andpendently. Therefore, the Wacoal Group will have to draw on¥3,000.
Moreover, abundant scope for expansion remains in Ameri−comprehensive capabilities to tackle such problems.

cas and Europe, China, and Asia.
Key Areas Requiring Strategic Measures
In some areas of its domestic business, the Wacoal Group has
not fully pursued potential opportunities. Although the Group

Future Market Conditions
Quantitative Targets

Japan

FY2016 Net Sales: At least

Consumer market contraction and diversifying consumption

200,000¥

structure

millionConsumption shrinks due to declining population anddeindustrialization
Disposable income decreases due to rising consumption tax andincreased social welfare burden

FY2016 Operating Income: At least

14,000¥Senior market expands due to society’s accelerated aging
Brisk high−end product sales due to wealth effectmillionAiming for Operating Margin of at least

7%

Diversiﬁcation of purchasing behavior due to distribution changes

Overseas
Asia’s market grows, Western markets have scope for development
China’s and ASEAN’s middle class and wealthy class increases
U.S. stays on economic recovery track
Europe challenging overall, but large markets centered on U.K. andGermany promise pick−up

Integrated Report 201329

Priority Measures of Major Operating Companies

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

Wacoal Corp.

Fiscal 2016 numerical targets (assumed exchange rate: US$1=¥95)

Fiscal 2016 numerical targets

Net sales: ¥16.0 billion, up 37.6% versus ﬁscal 2013

Net sales: ¥116.0 billion, up 3.4% versus ﬁscal 2013

Operating income: ¥1.7 billion, up 18.5% versus ﬁscal 2013

Operating income: ¥7.4 billion, up 14.1% versus ﬁscal 2013

Aim for continued growth and step up expansion

Core operating company, Wacoal Corp., will exercise leadership

We will regain our share of the high−end market in U.S. depart−by controlling and instilling the Wacoal management philoso−

ment stores by enhancing planning capabilities for high−end

phy throughout the whole Group.

products and strengthening cost−competitiveness. Also, plans

Further, Wacoal’s will take the following strategic measures.

call for fostering sales channels in the markets of surrounding

Increase points of contact with customers

countries in which we already have a presence, such as CanadaƌɄ Ʉ 1 '*+Ɍ#$"#ȳ1'0 ȳ Ɍ+-*0/.Ɍ4Ɍ./- )"/# )$)"Ɍ

and Brazil, and expanding Internet sales, which are brisk.

human science research, build systems straddling sales

In addition, Wacoal International Corp. and Wacoal Eveden

channels and brands, develop new business models, andwill use each other’s management resources to enable bothestablish robust retail operations

companies to increase points of contact with customers eco−

Exploit Japan’s high−volume market

nomically. Meanwhile, Wacoal International will coordinateƌɄ Ʉ $(Ɍ/*Ɍ'$(Ɍ'-" -Ɍ.#- Ɍ*!Ɍ#$"#ȳ1*'0( Ɍ(-& /Ɍ )/ - Ɍwith Wacoal Corp. in Japan and local subsidiaries in Asia to

on low−priced products, expand product lineup for this mar−improve quality and efficiency in relation to materials purchas−ket by developing formats for suburbs and adults,

ing, plants, and other supply chain assets.

developing market for seniors, and strengthening existing
brands

Wacoal China Co., Ltd.

Respond to changing conditions

Fiscal 2016 numerical targets (assumed exchange rate: CNY1=¥15)ƌɄ Ʉ*)/-*'Ɍ$)1 )/*-4Ɍ-$"*-*0.'4Ɍ)Ɍ- 0 Ɍ$)1 )/*-4Ɍ.Ɍ+ -−Net sales: ¥10.0 billion, up 50.9% versus ﬁscal 2013

centage of net sales by 10 percentage points. Further, toOperating income: ¥0.3 billion, versus ﬁscal 2013’s operating loss

mitigate risk of manufacturing cost hikes, restructure manu−

Increase efficiency and give priority to stabilizing businessfacturing area, introduce common items, increase percentage

managementof materials purchased overseas, shift manufacturing capa−

Applying a revised expansion method, we will curb new store

bilities to ASEAN countries

openings and use sales agencies to expand. Also, to achieve

Take on new growth areas

proﬁtability we will reduce cost by strengthening inventoryƌɄ Ʉ $(Ɍ/*Ɍ*)/$)0 Ɍ!*./ -$)"Ɍ0.$) .. .Ɍ 4*)Ɍ/# Ɍ2*( )Ɩ.Ɍcontrol and heightening technological capabilities.

innerwear business, in new growth areas strengthen initia−

Based on the resulting leaner organization, we will steadily

tives, including efforts to attract new customers by expanding

establish a position in the market by strengthening productproduct lineups in Wellness Business and men’s innerwear

lineups through the introduction of functional products tobusinessachieve differentiation from competitors and developing
LA ROSABELLE to expand and improve our lineup of products
targeting middle−class customers.

Net Sales / Operating Income (Wacoal Corp.)

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

116,000
7,400

2016

vs ﬁscal 2013
Net sales

UP

3.4%

UP

14.1%
112,224
6,487

2013

30

OperatingincomeWACOAL HOLDINGS¥ million

16,0001,700

2016

vs ﬁscal 2013
Net sales UP

2013

37.6%

OperatingincomeUP

18.5%
11,631
1,434

Wacoal Eveden Limited

Lecien Corporation

Fiscal 2016 numerical targets (assumed exchange rate: £1=¥140)

Maintain proﬁtability and deepen coordination

Net sales: ¥14.0 billion, up 94.4% versus ﬁscal 2013

within the Group as provider of infrastructure supporting

Operating income: ¥1.7 billion, up 701.9% versus ﬁscal 2013

Group strategies

Position as core of Europe business and exploit management

Because the majority of Lecien Corporation’s materials purchas−

resources globally

ing is overseas, and most of its sales are in Japan, hikes in

By coordinating closely with Wacoal America, Inc., and Wacoal

personnel expenses in Asia and exchange rates can affect itin Japan, Wacoal Eveden will realize a wide range of synergies.

signiﬁcantly. Nevertheless, infrastructure that enables low−cost

These will include mutual sharing of sales channels in thepurchasing is critical to the efforts of the Wacoal Group as aAmericas, strengthening the sales system and expanding thewhole to increase its presence in high−volume markets. Accord−

Wacoal brand’s presence in Europe, rolling out Wacoal Eveden

ingly, Lecien will help strengthen the Group’s competitivenessproducts through local subsidiaries in Asia and sales opera−

by maintaining proﬁtability through a higher internal produc−tions in Japan, and leveraging sales channels in the Middle

tion rate, realizing stable operations at its plant in Cambodia,

East and Oceania to market Wacoal brand products.

and establishing a materials purchasing model in the ASEAN

Further, based on the characteristics of countries and sales
channels, we will deploy brands optimally within the Group andregion.
As for its business providing products outside the Group, theundertake effective brand investment. As for the supply side,company will strengthen its solutions capabilities in original

Wacoal Eveden will reduce cost by restructuring its brand−

equipment manufacturing and increase product rollouts.

based manufacturing system while taking full advantage of theGroup’s resources.
Peach John Co., Ltd.
Fiscal 2016 numerical targets
Net sales: ¥14.5 billion, up 18.8% versus ﬁscal 2013
Operating income: ¥1.1 billion, up 215.3% versus ﬁscal 2013

Rebuild customer base and grow sales
Peach John will attract new customers and increase customer
numbers by completing the reorganization of brands and mail−order catalog sales it began in ﬁscal 2013 and using advertisingand the Internet ﬂexibly. Other initiatives will include opening
new directly managed stores.
Meanwhile, aiming to ensure an optimal balance between
supply and demand, we will undertake painstaking inventory
and sales control based on appropriate order plans.

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

10,000300

2016

vs ﬁscal 2013
Net sales

2013

UP

50.9%

Operatingincome ¥0.3billion
6,625
−346

Integrated Report 201331

ONE−ON−ONE DISCUSSION
Discussing unseen assets that create competitive advantages

The Wacoal Group’s
Value Creation

Yoshikata Tsukamoto, President and Representative Director, Wacoal Holdings Corp.

Takayuki Sumita, Chairman, WICI (As of May 17, 2013)

Takayuki Sumita, the Chairman of World Intellectual Capital Initiative (WICI),
and Yoshikata Tsukamoto, the President and Representative Director of Wacoal
Holdings Corp., discuss the Wacoal Group’s value creation from the perspectiveof intellectual assets based management.

Hanado Let me begin by giving an overview of the Worldon this insight in the interim report of the Subcommittee onIntellectual Capital Initiative (WICI). A three−pronged interna−Management and Intellectual Assets, under the Industrial

tional effort encompassing Japan, Europe, and the United

Structure Council, and disclosure guidelines on intellectual

States, WICI has been working to realize intellectual assets

assets based management issued in 2005. Subsequently, whilebased management since 2007. Intellectual assets based man−

performing his principal duties at the Ministry of Economy,

agement primarily indicates business management in which

Trade and Industry, Mr. Sumita accepted the position as chair−companies focus on creating value in the most efficient manner

man of WICI and has worked to build a global framework forby exploiting unique intellectual assets that are a source ofintellectual assets based management ever since. In addition,

strength—personnel assets, organizational assets, related as−as the chairman of WICI, he has contributed signiﬁcantly tosets, and other intangible assets available to companies—andcombining them with tangible resources appropriately.
Regarding Mr. Sumita, as Japan’s economy was beginning tochange course toward ﬁnancial capitalism, and the Ministry of
Economy, Trade and Industry pursued initiatives based on theview that manufacturing was the foundation supporting soci−ety, he provided insight about the key role of intellectual assets
as unseen business management resources. He elaborated

32

WACOAL HOLDINGS

Coordinator: Yasuhito Hanado,
WICI Governance Group,
Senior Adviser, Waseda Intellectual
Capital Research Society

the activities of the International Integrated Reporting Council

the trust of customers and motivate them to continue using our(IIRC), which aims to establish a global framework for inte−

products, thereby increasing customer loyalty. As a result ofgrated reporting. Through the cooperative efforts of the WICI

maintaining this commitment to quality, even today customers

and the IIRC, he has worked on integrated reporting frame−

remark that although Wacoal products are expensive, because

works, which express the essence of companies’ value creation

they last for a long time they are actually economic. Customers,

activities as a single story. These frameworks help companies

including young customers, generally recognize that we pro−create value by including key performance indicators (KPIs),

vide good quality. Although it has taken a long time, we have

which benchmark factors in value creation, communicating

successfully established a strong association between Wacoal

with stakeholders in a readily understandable manner, andand high quality in customers’ minds.

providing appropriate feedback.
I would like to ask you to have an uninhibited discussion

Wacoal’s Human Science Research Center is a unique

about the Wacoal Group’s actual business activities from theintellectual asset and the source of competitive strength.

perspective of intellectual assets based management. Topics I

Sumita Regarding the quality that the Wacoal Group has de−suggest we explore include how the Wacoal Group has formed

veloped, simultaneous research on materials and the humanthe key values underpinning it as a company empathetic tophysique has been extremely important.

women; how its business management maintains and controls

With respect to differentiation from competitors in the same

quality, which is the foundation of customers’ trust; how it ex−

industry, Wacoal’s Human Science Research Center is extreme−

ploits the results of unique research to roll out products; andly signiﬁcant. How do you view the center?

the extent to which it is incorporating the strengths of the do−

Tsukamoto Looking back, I think it has given us a major com−

mestic business as its develops businesses globally.

petitive advantage. We have been collecting data for a longtime, nearly 50 years. Compared with women’s physiques at theUnderstanding of the Wacoal Group’s commitment to quality

time of our establishment, all aspects of modern women’s phy−has heightened customers’ trust in Wacoal products.

siques have changed, including height, leg length, and theSumita With respect to business management, Japanese com−balance of bust and hips. Modern Japanese women are begin−panies emphasize medium−to−long−term value and uniquening to resemble Western women. Naturally, in accordance

unseen assets in Japan that support them. Since joining thewith such changes in Japanese women’s physiques, the Wacoal

Ministry of Economy, Trade and Industry, I have sought to tellGroup’s products have evolved to cater to changing needs. The

the world about this unique approach to business management

data that we have continuously collected enables us to adapt

among Japanese companies. With this in mind, my ﬁrst prior−product lineups in this way. We believe we should be the leader

ity is to create a framework that transmits information to thein products for Japanese women as well as Southeast Asianworld effectively and that the world ﬁnds acceptable.

women, who are similar to Japanese women.

This emphasis on medium−to−long−term value is very

Sumita What goals are you pursuing under the new medium−ﬁrmly established in the Wacoal Group. My impression isterm management plan launched in April 2013? How do youof a company with clear key strengths, such as researchintend to leverage quality and other strengths of the Wacoal

and development capabilities and quality.

Group?

Tsukamoto In the initial period after the establishment of the

Tsukamoto Basically, we intend to continue what we are doing

Wacoal Group, female sales assistants, designers, and sewers

at present. However, companies that only maintain the statusanalyzed overseas products to discover their construction.

quo decline. Therefore, we have to change to meet the demands

Based on this analysis, they made products using overseasof the times. For example, in Japan’s market we have to create

products as models and began discussing how to improve

products with new value in areas beyond those of our current

them. This was the beginning of our focus on quality. Then,product lineup.

when we were able to manufacture a certain quantity of prod−ucts, we began quality initiatives in earnest.

Our trump card in such efforts is Wacoal’s Human Science
Research Center. This center has conducted a variety of re−Japan has a culture that values perfecting things. Therefore,

search aimed at helping women to express their beauty, fromfrom then on, rather than design, we decided to focus on qual−

research on brassiere patterns that give the bust a natural

ity in relation to products’ strength by conducting washing tests

shape through to designs, including research on where correc−

and stretching tests. Through higher quality we sought to earntions are required and what shapes are required.

Integrated Report 201333

As I mentioned earlier, Wacoal’s Human Science Research

the difference in values. Although companies in Japan and Asia

Center used to be an organization that mainly tested materials

focus strongly on customers as their ﬁrst priority, in Europe’s

to check such attributes as to whether innerwear caused any

economy companies are entirely focused on suppliers. While I

material−pressure problems for the physique. With this aim in

think there is a need to change sales methods in Europe’s mar−mind, the center has continued to collect measurement dataket, regarding the global development of businesses, what

every year for nearly 50 years. Moreover, there are 400 women

aspects of the Wacoal Group’s values will you concentrate on?

we have measured every year from the age of 20 through to 60.

Tsukamoto One thing the Wacoal Group insists on is consul−

This data has deepened our understanding of changes in wom−tative sales. In sales areas in the United States, we have beauty

en’s physiques.

advisors just as we have in Japan. Our deployment of beauty

Until now, our sales method has been to launch campaign

advisors came about as the result of a method learned from theproducts every year. If customers like them, sales are brisk. If

West. When our founder ﬁrst visited the West on an inspection

they do not, sales are lackluster. Recently, we have been capi−

tour, sales personnel in department stores in Europe and thetalizing on the research of Wacoal’s Human Science Research

United States would only sell products after taking a customer’s

Center to offer products emphasizing that the physique’s shapemeasurements. Seeing value in this Western method, we incor−changes and the consequent importance of wearing brassieres

porated it and preserved it. However, by the time the Wacoal

that ﬁt properly. Today, Wacoal’s Human Science ResearchGroup began establishing a presence in the United States, local

Center has evolved into a dynamic organization that publishes

companies no longer used this method. As a result, we reintro−

its own research results and contributes signiﬁcantly to the

duced a method we had learned from the West to overseas

Wacoal Group. As a result, the sales methods of beauty advi−sales areas. Ironically, it struck customers overseas as novel.

sors have changed to reﬂect this. Beauty advisors have to

I think it is important to preserve such strengths as consulta−

choose from the large number of brassieres we produce to offer

tive sales and quality rigorously while adapting to local

appropriate products that ﬁt each customer’s physique from theconditions as necessary. Until quality reaches a certain level, weviewpoint of human science. This requires today’s beauty advi−

will send personnel from Japan to provide technical support.

sors to study research results so that they can draw on them

However, once local businesses have improved quality and arewhen offering products.

advancing sales activities effectively, our basic approach is toentrust decisions to them. Inculcating the Wacoal Group’s

While adapting to local values, the Wacoal Group will

identity while understanding local conditions and empha−

instill its management philosophy globally.

sizing that local employees should lead business activities

Sumita Given the likely further maturing and contraction ofis important.

Japan’s market, is developing businesses overseas indispens−

Sumita Even if you expand businesses mainly through local

able for companies seeking growth?

personnel, it will take time in Europe and require a great deal

Tsukamoto Yes, I think that is correct. The Wacoal Groupof perseverance. Furthermore, Europe is not homogeneous.

began developing businesses overseas ahead of competitors in

Preferences and ways of thinking in the United Kingdom and in

the domestic industry. In 1950, our founder Koichi Tsukamotocontinental countries are completely different. In my view, while

included establishing a stronger global presence for the Wacoal

British people are comparatively receptive to new things, conti−

Group in the Group’s vision, at a time when it only had about

nental Europeans tend to be conservative. Amid such differences,

10 employees. When the Group was still small, it set out a de−working with Wacoal Eveden Limited, which has an in−depth

cade−by−decade 50−year plan, which provides a long−termunderstanding of local conditions, is probably an effective way tovision. For each successive decade during its 50−year term, theadvance businesses. I think using Wacoal Eveden’s methods inplan sets the Group a task: pioneer Japan’s market, establish

continental countries is a very promising strategy. Because theJapan’s market, pioneer overseas markets, establish overseas

Wacoal Group has these useful capabilities, I would like to see itmarkets, and become a global group. In fact, we launched ourset targets and use such effective strategies as it moves forward.

ﬁrst overseas foray in South Korea in 1970, more than 20 years
after our establishment. In the same year, we created joint ven−

The Wacoal Group beneﬁts women worldwide throughtures in Thailand and Taiwan. So, we have had a presence inunique initiatives appropriate to the scope and nature ofSouth Korea, Thailand, and Taiwan for 43 years.

its business.

Sumita My experience of living in Europe brought home to me

Sumita In the West, interest in corporate social responsibility

34

WACOAL HOLDINGS

(CSR) is very strong, and many Japanese companies have

Research Center, product development reﬂecting customer

begun preparing CSR reports. Inevitably, however, many com−needs, and manufacturing capabilities that enable highpanies’ reports try to cover too many bases. As for the Wacoal

quality. Personnel, who support the entire Wacoal Group,Group, it contributes to society and meets its responsibilities asreally do their very best for customers. In this sense, I feela good corporate citizen by selling quality products. The samestrongly that personnel are also an asset.

is true for human science research leading to the development

Sumita I hope this report will effectively inform more peopleof products that better ﬁt customers’ physiques. I think theabout the strengths the Wacoal Group has developed. Further−best approach is to emphasize CSR initiatives that express

more, publishing this report globally is sure to enhance

the Wacoal Group’s unique philosophy. Among its wide

understanding of the Group in regions overseas where it isrange of CSR initiatives, there must be areas of competencedeveloping businesses. As far as is possible, I would like theto which the Group gives priority. Therefore, I suggest thereport to communicate the Wacoal Group’s unique value cre−Group modulates the information it transmits by empha−

ation accurately. However, conveying this completely issizing social contributions that make the fullest use of its

extremely challenging. Nevertheless, if there is feedback fromstrengths, such as initiatives related to breast cancer.

readers about areas the report has not covered completely, I

Tsukamoto We strive to undertake initiatives appropriate tothink this will help the Group to identify the aspects of its busi−

the scope and nature of our business. Further, I do not think

ness each type of reader is interested in.

there is any need to refer to our social contribution activities

Until now, the majority of corporate annual reports haveexcessively in advertising, marketing, or public relations activi−

generally focused on financial information or have passively

ties. This is because our continued development of innerwear

included non-financial information based on various guidelines.

is a type of culture in itself. Since our establishment, we have

I would be grateful if the Wacoal Group, without being overly

progressed in step with women, which we believe gives us a

conscious of frameworks, takes the initiative to disseminate

natural responsibility to help eradicate breast cancer as a dis−readily understandable reports that highlight its corporateease that mainly affects women. However, overstating theidentity, even though it is in a developmental phase. Also, I

scope or nature of our CSR activities through advertising or

would like to thank you for engaging in a wide-ranging

public relations activities would run the risk of disappointing

discussion today.

and inconveniencing many women.

At the head office of Wacoal Holdings Corp., Kyoto

As you know, we have declared ourselves a company
empathetic to women. Interacting with customers on aday−to−day basis, our beauty advisors do their utmost tocater wholeheartedly to the needs of each customer basedon “dedication to each customer.” Supporting this approachto sales, which women have responded to favorably, arethe research achievements of Wacoal’s Human Science

Resume1985 Joined Ministry of International Trade and Industry (currently Ministry of Economy,
Trade and Industry)
1993 Graduated from Graduate School for Foreign Service, Georgetown University
2001 Special assistant to Director−General, Ministry of Economy, Trade and Industry
2004 Director, Intellectual Property Policy Office, Economic and Industrial Policy Bureau
2006 Director, Technology Promotion Division, Industrial Science and Technology Policy
and Environment Bureau
2007 Director, Information and Communication Electronics Division, Commerce andInformation Policy Bureau
2009 Executive Director, Japan Machinery Center Brussels Office(Chairman, WICI since September 2009)
June 2013 Director−General, Natural Resources and Fuel Department, Agency for Natural
Resources and Energy, Ministry of Economy, Trade and Industry

Integrated Report 201335

CORPORATE GOVERNANCE
The overriding goal of the Wacoal Group’s corporate governance is to continuously grow enterprise value
by ensuring that management is highly transparent, equitable, and objective with respect to all stakeholders,
including shareholders, other investors, and customers.
Management Philosophy and Corporate Governancewhom is a woman, the Audit & Supervisory Board supervises

The Wacoal Group’s management philosophy is based on

and audits business management. Also, the Group has estab−mutual trust. This is a value that the Wacoal Group aims tolished the Office of Corporate Auditors, which audits andcarefully preserve in its relationships with shareholders, othermonitors the appropriateness and efficiency of the operational

investors, and all other stakeholders with a vested interest in theprocesses of Group companies.

Group. To that end, the Group will steadily build and strengthen

Also, the Group has established the Group Management

governance systems pursuant to laws and statutory regulations

Meeting, which consists of directors and audit & supervisory

while working to ensure that every individual in the Group,

board members. The meeting considers Group managementfrom the management team through to employees, is aware ofstrategy and other important management issues and conducts

the social signiﬁcance of the Wacoal Group and adheres to goodprior deliberation of matters for consideration by the Board

ethical conduct. We believe that properly functioning corporateof Directors.

governance based on mutual trust is indispensable in order toachieve sustained growth and further increase enterprise value.

Outside Directors and Outside Audit &Supervisory Board Members

Corporate Governance System

The Wacoal Group appoints outside directors with outstanding

The Group employs an audit & supervisory board system ofexperience in corporate management garnered from duties ingovernance, with operational implementation and oversightﬁnancial administration and overseas business development.

undertaken by the Board of Directors and the Audit & Supervi−

By providing objective, neutral advice based on their extensive

sory Board. Under this corporate governance system, meetingsbusiness experience and specialized knowledge in a range ofof the Board of Directors reach decisions reﬂecting the view−ﬁelds, outside directors enhance the appropriateness of direc−

points of directors conversant with respective businesses andtors’ decision making. Further, the Group appoints as outside

objective, neutral advice from outside directors with extensive

audit & supervisory board members individuals who have expe−

business experience and specialized knowledge. In addition, therience of corporate management in the ﬁnancial industry,

Audit & Supervisory Board includes outside audit & supervisorycertiﬁed public accountants who are independent from theboard members. The Wacoal Group believes this system ensures

Group and have a high level of expertise with regard to ﬁnancethe corporate governance of Group companies and effectively

and accounting, and attorneys. While retaining a high degree

improves and maintains the quality of business managementof independence, these outside audit & supervisory board mem−for all stakeholders, including shareholders and customers.

bers draw on their expertise and experience to strengthen theComprising 7 directors, 2 of whom are outside directors

Group’s auditing system.

and none of whom are women, the Board of Directors decides

In addition, to support the outside directors the Corporatesuch issues as important management policies and strategies

Planning Office distributes agendas of meetings of the Boardand items stipulated by statutory laws and regulations or theof Directors and provides explanations to outside directors inGroup’s articles of incorporation. Further, to clarify manage−advance. Similarly, the Group appoints dedicated assistants forment responsibility directors are appointed for one year. Thus,

audit & supervisory board members, including outside audit &we have built a business management system that enables

supervisory board members. In−house audit & supervisory

rapid responses to changes in business conditions.

board members or their assistants explain the agenda of theComprising 5 audit & supervisory board members, 3 ofwhom are outside audit & supervisory board members and 1 of

36

WACOAL HOLDINGS

Board of Directors to outside audit & supervisory board mem−bers in advance.

GENERAL SHAREHOLDERS’ MEETINGGroup Management Meeting
5 Directors/2 Audit & Supervisory Board Members

Group Strategy Meeting
5 Directors
2 Audit & Supervisory
Board Members
Representative of Main
Company and Department

Quarterly Business Results
Review Committee
7 Directors
5 Audit & Supervisory
Board Members
Representative of Each Company
and Department

Board of Directors
5 Directors
2 Outside Directors
5 Audit & Supervisory
Board Members

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

Representative Director

Executive Compensation Advisory Committee
Office of Corporate Auditors

Risk Management Committee

Corporate Ethics Hotline

Corporate Ethics Committee

Independent
Accountants

Operating Subsidiary

Disclosure Committee
Compliance Committee

Audit & Supervisory Board Secretariat

Operating Subsidiary
Operating Subsidiary
Operating Subsidiary

Corporate Governance Structure
As of June 27, 2013

Furthermore, to encourage the appointment of capable out−side directors and outside audit & supervisory board members,

Horiba an appropriate outside director for the Group given its
goal of further increasing business development overseas.

the Group’s articles of incorporation enable the conclusion ofcontracts between the Group and outside directors and outside
audit & supervisory board members that limit liability for dam−ages to the Group within a certain extent. Accordingly, theGroup concludes such limited liability contracts with outside
directors and outside audit & supervisory board members.

Attendance of Outside Directors at Meetings of the Board of Directors
April 2012—March 2013

Mamoru Ozaki

Attended 13 from a total of 14

Morio Ikeda

Attended 11 from a total of 14

Atsushi Horiba

Attended 11 from a total of 14

Also, the Group ﬁles notiﬁcation with the Tokyo Stock
Exchange and the Osaka Securities Exchange for all of theReasons for Appointment of the Said Outside Audit &above−mentioned outside directors and outside audit & supervi−

Supervisory Board Members

sory board members as “independent directors or auditors.”

Akira Katayanagi—Long experience in the ﬁnancial industry
and a wide range of experience and expertise in other indus−

Reasons for Appointment of the Said Outside Directors

tries make Akira Katayanagi an appropriate outside audit &Mamoru Ozaki—This outside director is an expert who has served

supervisory board member for the Group.

in such official capacities as administrative vice minister ofTomoharu Kuda—Business management oversight and counsel−

ﬁnance and president of the National Life Finance Corporation.

ing capabilities based on specialized knowledge of accounting

Appointed by the Group as a counselor in July 2003, Mamoru

and ﬁnance accumulated as a certiﬁed public accountant makeOzaki principally provides advice on ﬁnance and business in

Tomoharu Kuda an appropriate outside audit & supervisory

China. Extensive insight into social issues makes him an appro−board member for the Group.

priate outside director for the Group given its goal of fulﬁlling its

Yoko Takemura—Legal knowledge as an attorney and experi−

corporate social responsibility (CSR) to an even greater extent.

ence accumulated through specialization in commercial

Atsushi Horiba—Extensive experience and expertise in relation

matters make Yoko Takemura an appropriate outside audit &to business development in Japan and overseas make Atsushi

supervisory board member for the Group.

Integrated Report 201337

Attendance of Outside Audit & Supervisory Board at Meetings ofthe Board of Directors and the Audit & Supervisory Board
April 2012—March 2013
Board of Directors

Akira Katayanagi Attended 13
from a total of 14

Audit & Supervisory Board

Attended 13
from a total of 15

Tomoharu Kuda

Attended 14
from a total of 14

Attended 15
from a total of 15

Yoko Takemura

Attended 14
from a total of 14

Attended 14
from a total of 15

established its own conduct and ethics code.
ƌɄ Ʉ$- /*-.Ɍ' Ɍ Ŧ*-/.Ɍ/*Ɍ$)./$''Ɍ)Ɍ ).0- Ɍ# - ) Ɍ/*Ɍ"**Ɍ
corporate ethics throughout the Wacoal Group.
ƌɄ Ʉ  Ɍ4Ɍ/# Ɍ- +- . )//$1 Ɍ$- /*-Ɍ)Ɍ2$/#Ɍ/# Ɍ"'Ɍ)Ɍ

Compliance Department as its secretariat, the Corporate Eth−
ics Committee develops compliance systems and examines
compliance issues that signiﬁcantly affect the Wacoal Group.
ƌɄ Ʉ# Ɍ-*0+Ɍ#.Ɍ ./'$.# ɌɌ.4./ (Ɍ2# - 4Ɍ (+'*4 .Ɍ
discovering potential compliance problems relating to viola−tions of the Group’s conduct and ethics code can report theseCompensation of Executives

immediately to the Legal and Compliance Department. This

Including outside directors, the Executive Compensation

system includes a corporate ethics hotline for whistleblowers.

Advisory Committee develops proposals for the appointment,

Upon receiving such reports, the Legal and Compliancepromotion, and compensation of executives and contributes to

Department investigates the details of cases, consults withthe realization of highly transparent and equitable businessthe division in charge, and decides on the measures to pre−management.

vent recurrence. The Legal and Compliance Department

For the ﬁscal year under review, total compensation for

submits serious problems to the Corporate Ethics Commit−

directors was ¥300 million, total compensation for audit &tee, which reports the results of investigations to the Board

supervisory board members was ¥30 million, and total com−of Directors and the Audit & Supervisory Board.

pensation for outside directors and outside audit & supervisoryƌɄ Ʉ# Ɍ-*0+Ɩ.Ɍ*)0/Ɍ)Ɍ /#$.Ɍ* ȞɌ*-+*-/ Ɍ/#$.Ɵ

board members was ¥48 million. In addition, the total compen−

Wacoal’s Action Agenda, stipulates resolute refusal of de−sation for directors includes acquisition rights for the subscrip−

mands from antisocial forces. Further, conduct standards fortion of new shares of ¥42 million recognized in expenses.

crisis management set out in the Group’s crisis management

Further, one director and one audit & supervisory board mem−

manual stipulate that the Group will not have any relationshipber, who retired upon conclusion of the ordinary general share−

whatsoever with antisocial forces. Also, in order to address

holders’ meeting convened on June 28, 2012, are included.

gratuitous demands from antisocial forces, the Group coordi−

Yoshikata Tsukamoto, the one executive that receives compen−nates with outside specialist organizations and collects andsation of over ¥100 million on a consolidated basis, serves

manages information about antisocial forces and has estab−concurrently as a director of Wacoal Holdings Corp. andlished an internal system in this regard.

Wacoal Corp. and receives total compensation of ¥183 million.
Risk Management System
Determination of Dividends from Retained EarningsƌɄ Ʉ$/#Ɍ/# Ɍ$- /*-Ɍ- .+*).$' Ɍ!*-Ɍ-$.&Ɍ()" ( )/Ɍ.Ɍ$/.Ɍ

In order to return proﬁts to shareholders ﬂexibly, the Group’s

chairperson, the Risk Management Committee manages

articles of incorporation stipulate that resolutions of the Board

overall risks related to the Wacoal Group and develops andof Directors determine cash dividends from retained earnings,

strengthens risk management systems.

unless otherwise stipulated by related laws and statutory
regulations.

ƌɄ Ʉ. Ɍ*)Ɍ/# Ɍ++-*1'Ɍ*!Ɍ/# Ɍ*-Ɍ*!Ɍ$- /*-.ȞɌ/# Ɍ$.&Ɍ
Management Committee establishes risk management regu−
lations that form the basis of the risk management system.

Compliance System

Guided by these regulations, the Risk Management Commit−ƌɄ Ʉ )Ɍ*- -Ɍ/*Ɍ ).0- Ɍ/#/Ɍ$- /*-.Ɍ)Ɍ (+'*4 .Ɍ# - Ɍtee clariﬁes responsibility for respective risk categories andto relevant laws and statutory regulations and implementbuilds systems for comprehensive risk management of theoperations based on sound societal norms, the Group has

entire Wacoal Group.

38

WACOAL HOLDINGSƌɄ Ʉ# Ɍ$.&Ɍ )" ( )/Ɍ*(($// Ɍ+ -$*$''4Ɍ- +*-/.Ɍ/*Ɍ/# Ɍ

Defensive Measures against Takeovers through theBoard of Directors on the operational status of the risk man−Acquisition of a Substantial Share Holding of the Company

agement system of Wacoal Holdings Corp. and the entire

After the Group’s June 2009 ordinary general shareholders’Wacoal Group.

meeting passed a resolution authorizing the adoption of a basic
policy on measures against the acquisition of a substantial

Group Management Systems of the Wacoal Group

shareholding of the Group, the Board of Directors decided uponƌɄ Ʉ# Ɍ-*0+Ɍ#.Ɍ ./'$.# Ɍ- "0'/$*).Ɍ)ɌɌ.$Ɍ+*'$4Ɍ!*-Ɍ

speciﬁc countermeasures reﬂecting that basic policy. Further,

the management of Group companies. The Group also stipu−

the June 2012 ordinary general shareholders’ meeting renewed

lates items that the Board of Directors must decide and items

this policy. In principle, the Group does not oppose the acquisi−that must be reported to Wacoal Holdings Corp.

tion of large shareholdings that contribute to the enhancementƌɄ Ʉ-)./$*).Ɍ /2 )Ɍ-*0+Ɍ*(+)$ .Ɍ(0./Ɍ Ɍ ,0$/' Ɍof the enterprise value and shareholders’ common interests.

and pursuant to laws and regulations, accounting principles,

The Group’s defensive measures against takeovers, or peace−

and tax systems.

time takeover defensive measures, include providing advanceƌɄ Ʉ# ɌŮ Ɍ*!Ɍ*-+*-/ Ɍ0$/*-.Ɍ*)0/.Ɍ$)/ -)'Ɍ0$/.Ɍwarning that there are procedures prospective purchasers ofof Group companies, which include audits of the status of

the Group’s shares must follow and that a gratis allocation of

the construction and operation compliance systems andacquisition rights for the subscription of new shares with dis−risk management systems. Further, the Office of Corporate

criminatory treatment for the exercise of such rights may be

Auditors reports the results of these audits to the Board of

implemented. In addition, the Group has established the Inde−

Directors and the divisions with jurisdiction over respective

pendent Committee to ensure that initiations of defensive

Group companies. At the same time, the Office of Corporate

measures against takeovers are based on substantive, objective

Auditors ensures Group companies conduct operations ap−

decisions and not based on arbitrary decisions by the Board of

propriately by providing them with directions and advice on

Directors. For further details, please refer to the Group’s website:

the construction of systems.

www.wacoalholdings.jp/ir_e/news.html

Integrated Report 201339

BOARD OF DIRECTORS
Wacoal Holdings Corp. and Subsidiaries
As of June 27, 2013

President and Representative Director

Director

Yoshikata Tsukamoto

Yuzo Ide

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

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

Director and Executive Vice President

Outside Director

Hideo Kawanaka

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

Senior Managing Director

Outside Director

Hironobu Yasuhara

Atsushi Horiba

Representative Director, President andCorporate Officer, Wacoal Corp.

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

Senior Managing Director

Ikuo Otani

AUDIT & SUPERVISORY BOARD MEMBERS
Wacoal Holdings Corp. and Subsidiaries
As of June 27, 2013

Standing Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Mitsuo Yamamoto

Tomoharu Kuda
Certiﬁed Public Accountant

Standing Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Tomoki Nakamura

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

Outside Audit & Supervisory Board Member

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

40

WACOAL HOLDINGSCSR MANAGEMENT
However, the scope of the Wacoal Group’s responsibility is

Advancing CSR Management as a Group
Building mutual trust with society is the goal of the Wacoal

not limited to women. Our stakeholders include shareholders,Group’s corporate social responsibility (CSR) initiatives.

investors, business partners, employees and their families,

Under the Wacoal Group’s management philosophy, building

local communities, NPOs (nonproﬁt organizations) and NGOs

mutual trust with society is its corporate goal and raison d’être.

(nongovernmental organizations), and government bodies.

Comprising our mission, vision, and values, this management

Therefore, we want to establish bonds of mutual trust with all

philosophy serves as a compass for our CSR initiatives.

of these stakeholders and earn a higher level of social trust.

Reﬂecting this close link between the management philoso−
phy of the Wacoal Group and its CSR initiatives, the new

The Wacoal Group’s CSR Management

medium−term management plan calls on the Group to advance

The Wacoal Group advances CSR initiatives based on ISO

CSR initiatives as a key management strategy. Incorporating

26000 standards, which the International Organization for

CSR initiatives in its business activities as a key management

Standardization published in November 2010 (Japan Stan−

strategy enables the Wacoal Group to communicate its uniquedards Association, 2010).

business management stance to more stakeholders. The GroupThe medium−term management plan launched in April 2013

will build further relationships of trust with society by advanc−sets out establishing a stronger global presence for the Wacoal

ing CSR initiatives in all business processes, taking CSR into

Group as a target corporate proﬁle. By developing businesses

consideration in business management, and ensuring each

globally, the Group will increase its international inﬂuence.
Based on an international consensus, the ISO 26000 stan−

executive and employee meets society’s demands anddards deﬁne sustainable development as unceasing efforts byexpectations.
The Wacoal Group markets products in more than 70 coun−society at large aimed at realizing a high quality of life, health,tries, includes more than 50 companies with operating bases inand prosperity. To identify and clearly prioritize each Group

20 countries, and has 24 manufacturing bases in 11 countries.

company’s tasks and advance CSR initiatives in areas where

Approximately 8,200 beauty advisors sell the resulting ﬁnishedit can exploit unique strengths, the Group has prepared theinnerwear at roughly 22,300 sales areas worldwide. In Japan

Wacoal Group’s Basic Policies on CSR in accordance with theand overseas, we sell about 45.2 million brassieres annually.

seven core subjects of the ISO 26000 standards. And, we are

Given that numerous women support our manufacturing andrigorously informing employees about these policies.

purchase our products, we feel a natural obligation to be a com−pany empathetic to women.

Wacoal Group’s CSR

Social Business Programs through Wacoal’s Main Business

Management
Philosophy

Business
activities

×

CSR

＋

Uniquepersonalityof Wacoal＝

Wacoal’s
CSR

Code of Ethics
Code of Conduct
Pink Ribbon Activities

Remamma Project

Bra Recycling Campaign

Breast Cancer Examination
Support Project

Tsubomi School

Wacoal Human Science
Research Center

CSR Goals

Basic Policies on CSR

Integrated Report 201341

Wacoal Group’s Basic Policies on CSR
In accordance with the seven core subjects of the ISO 26000 standards, our basic policies for CSR initiatives are as follows.
*“Wacoal” refers to Wacoal Holdings Corp. and its four wholly owned subsidiaries in Japan and Wacoal Corp. and its seven wholly owned subsidiaries in Japan.

1 Organizational governance
Wacoal shall strengthen corporate governance with the aim of earning the trust of all stakeholders by being a valuable
company. Wacoal shall ensure the transparency and equitability of its business management based on respect forinternational standards of conduct and in accordance with sound societal norms. Further, Wacoal shall implement corporate
activities that earn stakeholders’ trust and enhance enterprise value by strengthening compliance and corporate governancesystems and remaining accountable to stakeholders.
2 Human rights
Based on its management philosophy, Wacoal has put mutual trust and respect for people at the center of business
management since its establishment. Believing respect for people to be a corporate responsibility, Wacoal shall further its
basic understanding of human rights with respect to the right to live freely and with dignity and reflect this understanding in
its business activities. Accordingly, Wacoal shall respect individuals’ diverse values, personalities, and privacy. Furthermore,
Wacoal shall prevent acts that disregard human rights, including discriminatory language or behavior with respect to race,
religion, gender, nationality, physical or mental disabilities, or age; violent behavior; sexual harassment or authority-basedharassment; and child labor or forced labor.
3 Labor practices
Based on a management philosophy that emphasizes mutual trust, Wacoal shall deepen mutual trust with employees andcreate workplace conditions that enable all employees to work actively and with a sense of fulfillment. Wacoal shall enhancemeasures aimed at creating a dynamic corporate culture by managing employees’ health and safety in the workplace,training personnel, being receptive to diverse personnel and values, balancing work and private life, and building soundrelationships between labor and management.
In addition, Wacoal shall respect laws and regulations relating to labor, respect societal norms and international standardsof conduct, establish employment regulations and other personnel regulations, and create workplaces that are comfortable towork in.
4 The environment
Wacoal shall promote environment-friendly business activities reflecting the view that protecting the environment is a
corporate responsibility. Wacoal shall provide products that place little burden on the environment and prevent pollution by
pursuing environment-friendly initiatives in a variety of processes related to products, from design and materials
development through to manufacturing, distribution, and sales. Also, Wacoal shall adhere to environmental laws andregulations and its independent management standards, heighten employees’ environmental awareness through education,and cooperate with and contribute to environmental preservation activities. Moreover, Wacoal shall disclose to the generalpublic the progress of initiatives based on its environmental policies and other environmental preservation initiatives andadvance initiatives that are integrated with society.
5 Fair operating practices
The cooperation of business partners and various suppliers, contractors, and plants supports Wacoal’s manufacturing
and sales activities and enables it to provide products customers love.
Wacoal shall respect international standards of conduct and adhere to laws and regulations and sound corporate
ethics to ensure that it engages in fair business transactions and conducts business in a fair and open manner.
Specifically, Wacoal shall comply with the Antimonopoly Act, the Act against Delay in Payment of Subcontract
Proceeds, etc. to Subcontractors, the Act against Unjustifiable Premiums and Misleading Representations, thePharmaceutical Affairs Act, and the Unfair Competition Prevention Act; protect and use its intellectual property rights;
and rigorously respect the intellectual property rights of others. In conjunction with these activities, Wacoal shalleducate employees about these issues.

42

WACOAL HOLDINGS

6 Consumer issues (responding to customers)
Wacoal believes valuing each customer and responding to customer feedback sincerely is a duty and the key to earning trust.
Accordingly, Wacoal shall learn from customer feedback and reflect it in products and services to provide products andservices customers love. Wacoal shall ensure the quality of all operations involved in product lifecycles rigorously, including
research and development, product planning, manufacturing, sales, distribution, and customer support. In these efforts,
Wacoal shall protect customer’s rights, comply with laws and regulations related to consumer protection, and provide safety
and peace of mind. Furthermore, through its website and other media, Wacoal shall disclose a wide range of information tocustomers and promote fair activities.
7 Community involvement and development
Wacoal regards contributing to the development of local communities as an important social responsibility.
With a view to developing local communities, Wacoal shall capitalize on the unique expertise and culture it has cultivatedto benefit society at large, implement social initiatives that it is uniquely capable of realizing, respect relationships withstakeholders, and deepen communication with them.
Also, in each of the regions where it has businesses Wacoal shall respond to society’s requests and expectations andcontribute to society in areas where Wacoal can bring strengths to bear.

Having identiﬁed the strategic signiﬁcance of the uniquefeatures of its business, the Group will tackle social problems
and continue social business programs through its mainstay
business. As a result of these efforts, we will further enhance
our brand power and competitive advantages while passing on
the management philosophy we have inherited.
The Wacoal Group’s System for Advancing CSR Initiatives
In 2004, the Wacoal Group established the CSR Promotion
Office, which is dedicated to establishing CSR policies, coordi−
nating with related divisions, gathering information, andconducting in−house educational initiatives. Aiming to further
this office’s ability to disseminate information internally andexternally and communicate with society, we transferred it to
the Investor Relations & Public Relations Office in 2011.
In adherence with the Group’s advancement of CSR initiatives
as a management strategy, from 2013 we began holding CSR
liaison meetings. At these meetings, we prepare guidelines forpolicies, goals, and targets; discuss problems; monitor the
progress of initiatives; and share information among divisions.
Divisions responsible for managing CSR lead efforts to advance
CSR initiatives that transcend divisional boundaries.

Integrated Report 201343

Environmental Conservation Activities

Medium−Term Environmental Action Plan

A company’s management philosophy is the answer to why it(April 2013—March 2016)

exists and for what purpose. For the Wacoal Group, CSR is

1 Improve coordination of environmental management system

nothing other than putting the Wacoal Management Philoso−phy, which comprises Mission, Vision, and Values, into action.

throughout Wacoal GroupɌƌ Analyze data for whole Group, support environmental
initiatives

Environmental Policies
1 We will reduce environmental loads generated frombusiness activity processes through business
improvement initiatives and make efforts to prevent
environmental pollution.
2 Establishing environmental targets focusing on the

2 Promote environmental protection activities based on ideathat “business improvement equals environmental
improvement”
Ɍƌ View environmental improvement as part of businessactivities, as far as possible quantify operations to checkachievements

following items, we will try to accomplish the targets

3 Manage CO2 emissions rigorously

based on environmental management systems.

Ɍƌ Learn from Challenge 25, by 2020 reduce 25% versus 2002

(1) Energy conservation, resources saving, and reduc−tion of CO2 emissions(ﬁrst year Group conﬁrmed its CO2 emissions) or maintain at
this level(2) Waste reduction and recycling

4 Promote green purchasing(3) Development of products and technologies that areɌƌ Create data showing green purchasing percentage tokind to people and the environment

encourage green purchasing(4) Purchase of product materials, materials, and office

5 Reinforce waste management

supplies that are kind to people and the environmentɌƌ Separate garbage rigorously, continue improvement activities

3 We will comply with environmental laws andordinances, and our voluntary management standards.
4 We will raise our employees’ environmental awarenessthrough ecological education and make efforts to beable to cooperate and contribute to environmental

to eliminate wastefulnessɌƌ Maintain recycle rate at 90% or higher
6 Reinforce environmental risk management
Ɍƌ Manage and dispose of PCB (polychlorinated biphenyl)
waste appropriately

preservation activities as a member of local

7 Disclose environmental information

communities.

Ɍƌ Disclose environmental information through Wacoal

5 We will disclose our environmental policies andapproaches to environmental preservation, aiming topreserve the environment through wide-ranging social
partnerships.

Holdings’ website
8 Raise employees’ environmental awareness throughenvironmental education
Ʉƌ Continue conducting environmental education for employeesɄƌ Make every June Environment Month, increase
environmental awareness

Environmental Targets
In accordance with our environmental policies, we prepare a
medium−term environmental action plan every three years andconduct environmental management initiatives in a planned,
systematic way to achieve the targets set out in the plan.

9 Contribute to preservation of local environment as member of
local communityɄƌ Conduct cleanup and beautification initiatives in vicinity ofGroup’s buildingsɄƌ Promote creation of networks among operating bases andlocal communities

44

WACOAL HOLDINGSFINANCIAL
SECTIONCONTENTS
46

ELEVEN−YEAR FINANCIAL SUMMARY

48

MANAGEMENT’S DISCUSSION AND ANALYSIS

54

CONSOLIDATED BALANCE SHEETS

56

CONSOLIDATED STATEMENTS OF INCOME

56

CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME (LOSS)

57

CONSOLIDATED STATEMENTS OF EQUITY

58

CONSOLIDATED STATEMENTS OF CASH FLOWS

59

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

83

MANAGEMENT’S REPORT ON INTERNALCONTROL OVER FINANCIAL REPORTING84

REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM

ELEVEN-YEAR FINANCIAL SUMMARY
Wacoal Holdings Corp. and Subsidiaries

2013

2012

2011

¥177,154¥171,897¥165,548

Cost of sales

83,334

81,891

81,659"% of net sales

47.0%
82,86946.8%

47.6%
79,62946.3%

49.3%
77,716
46.9%

Operating income

8,099

10,377

4,401

Other income and expenses, net

(150)

(189)

(523)

Net interest income (expense)

(77)

19

49

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

10,544

10,207

3,927

Income taxes

3,649

4,199

2,010

Net income attributable to Wacoal Holdings Corp.

7,623

6,913

2,785

Return on assets

3.2%

3.1%

1.3%

Return on equity

4.3%

4.1%

1.6%

Net cash provided by operating activities

12,741

10,06010,441

Net cash (used in) provided by investing activities(23,436)(3,467)(703)

Net cash (used in) provided by ﬁnancing activities

5,303(2,824)(4,965)

Depreciation and amortization

4,737

4,660

4,685

Capital expenditures

2,391

2,708

2,652

Net income attributable to Wacoal Holdings Corp. (Basic)¥54.12¥49.08¥19.73

Cash dividends

28.00

28.00

20.00

Shareholders’ equity

1,319

1,218

1,189

Total current assets¥103,218¥ 97,295¥ 90,410

Total current liabilities

50,61035,60733,880Cash and cash equivalents

24,86029,98526,316

Years ended March 31

For the year
Net sales

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

Per share of common stock (in yen)

At year−end

Net property, plant and equipment

49,66049,07849,734

Total assets

253,803

221,098

215,276

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

18,675

6,482

6,436

Total shareholders’ equity

185,840

171,496

167,480

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

46

WACOAL HOLDINGSMillions of yen, except per share amounts

2010

2009

2008

2007

2006

2005

2004

2003

¥163,548¥170,960¥165,201¥166,410¥164,122¥160,968¥163,155¥163,709

80,101

83,87982,94384,65884,322

84,041

84,63885,30649.0%
78,52448.0%

49.1%
77,24845.2%

50.2%
68,92141.7%

50.9%
68,85641.4%

51.4%
70,94643.2%

52.2%
72,26144.9%

51.9%
75,501
46.3%

52.1%
71,13943.5%

11,766

3,016

7,264

(7,100)
7,521
3,829

9,833

(717)

(2,699)

43

195

3,155

7,329

1,655
2,475

13,337

12,896

1,333

592

861

1,976

206

1,404

(2,800)

224

163

157

107

112

140

14,153

13,9203,466

12,079

4,532

4,604

3,083

5,774

6,502

1,459

5,800

2,520

2,487

5,062

4,845

9,029

2,821

6,790

2,902

2,898

1.1%

2.2%

2.0%

3.7%

1.2%

3.0%

1.3%

1.3%

1.5%

2.9%

2.6%

4.8%

1.6%

3.9%

1.8%

1.8%

9,463

8,202

14,249

9,339

719

2,045

5,201

7,858

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

1,328(9,839)(5,363)(7,448)(9,400)(8,404)(3,428)296(6,138)(6,006)

4,765

4,544

3,892

3,735

3,433

3,312

3,081

2,971

3,981

2,370

1,110

2,536

6,456

5,418

2,338

2,104

¥17.51¥35.57¥34.29¥63.18¥19.60¥47.17¥19.85¥19.48

20.00

25.00

25.00

22.00

20.00

20.00

15.00

13.50

1,217

1,187

1,285

1,375

1,296

1,221

1,186

1,097

¥ 89,455¥ 90,778¥ 97,671¥ 92,915¥110,773¥120,300¥123,045¥124,486

34,94531,76235,802

34,86835,52534,97033,89933,57622,32821,95427,06919,816

19,89324,19527,44327,24651,804

49,16551,18552,78253,501

51,82649,932

54,171

222,889

213,827240,053

250,266

242,296

226,196

224,803

218,105

8,162

5,302

5,701

5,984

6,458

6,911

4,450

6,301

171,860

166,767

184,128

193,278

186,475

175,746

170,758

160,839

Integrated Report 2013

47

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

Financial information contained in this section is based on the
consolidated ﬁnancial statements included in this integrated
report, which have been prepared in accordance with generally
accepted accounting principles in the United States (U.S. GAAP).
The Wacoal Group consists of 1 holding company (the Company),
59 consolidated subsidiaries, and 9 equity−method affiliates.
The Wacoal Group is engaged in the manufacturing, whole−saling, and—for certain products—retailing of women’s foundation
garments and lingerie, nightwear, children’s underwear, outer−wear and sportswear, hosiery, and other textile products. Other
operations include restaurant businesses, cultural and service−related operations, and the construction of interiors for commer−
cial premises.

Share of Net Sales

OVERVIEW
We are a leading designer, manufacturer, and marketer inJapan of women’s intimate apparel, with the largest share of
the Japanese market for foundation garments and lingerie.
Foundation garments (primarily brassieres and girdles) and linge−rie (primarily slips, bra−slips, and women’s briefs) accounted forapproximately 73.5% of our consolidated net sales for ﬁscal year
2013. We also design, manufacture, and sell nightwear, children’s
underwear, outerwear, sportswear, hosiery and other apparel, andtextile products, and engage in several other services.

include cultural products and other services) constituted theremaining 2% of Wacoal Corp.’s net sales for ﬁscal year 2013.
Over the past ﬁve ﬁscal years, ﬂuctuations in our sales havetypically reﬂected changes in unit volume, as average unit prices
have generally remained stable during these periods.

NET SALES
We principally generate revenues from sales of innerwear (con−sisting of foundation garments and lingerie, nightwear, and chil−dren’s underwear), outerwear and sportswear, hosiery, textile
products, and other products.
For ﬁscal year 2013, approximately 82% of the net sales of
Wacoal Corp. (the net sales of which account for approximately
65% of our consolidated net sales) were apparel sales made on
a wholesale basis to department stores, general merchandisers,
and other general retailers and approximately 16% were apparelsales made through our own specialty retail stores, catalogue
sales, and the Internet. Sales from our other businesses (which

2013

HoisieryOutwear andsportswear

0.9%

9.3%

4.3%

Textile productsChildren’s
underwear

Other
6.0%

0.8%

Foumdation garments
and lingerieNightwear

73.5%

5.2%

COST OF SALES
Our cost of sales arises principally from material and manufac−
turing costs related to the production of our apparel products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Our selling, general and administrative expenses principallyconsist of employee compensation and beneﬁt expenses and pro−motional expenses, such as advertising costs and renovation
costs. Other selling, general and administrative expenses include
shipment costs, payment fees (including outsourcing payments),
and rental payments for our specialty retail stores.
KEY INDUSTRY TRENDS
We believe that the following have been key trends in our indus−
try during the last two ﬁscal years:(i) In Japan, although there was a sense of expectation for recov−
ery in the economy as seen in the reconstruction of the economy

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

2013

2012

2011

Innerwear
Foundation Garments and Lingerie¥130,284

73.5%¥124,303

72.3%¥116,127

70.1%

9,232

5.2

9,390

5.5

8,713

5.3

Children’s Underwear
Total Innerwear
Outerwear and Sportswear
Hosiery
Textile Products

1,467¥140,983
16,439
1,559
7,580

0.8
79.5%
9.3
0.9
4.3

1,530
¥135,223
16,371
1,646
8,226

0.9
78.7%
9.5
1.0
4.8

1,476
¥126,316
17,397
1,666
7,493

0.9
76.3%
10.5
1.0
4.5

Other
Total

10,593¥177,154

6.0
100.0%

10,431¥171,897

6.0
100.0%

12,676¥165,548

7.7
100.0%

Nightwear

48

WACOAL HOLDINGS

in northern Japan from the earthquake and tsunami and break−ing out of deﬂation as a result of implementing large−scale mone−tary easing measures after the change in political administration,
the outlook of the Japanese economy for achieving full−scaleeconomic growth remains uncertain. While Japan experiences
a population decline, low birth rate, and aging population, it isdifficult to improve consumer conﬁdence due to an uncertain
outlook. This is due to factors, such as a tax increase to ﬁnanceearthquake reconstruction, energy supply−related issues, andconcern about market reduction from a macroeconomic perspec−tive. As for overseas, the global economy is in a state of chaoscaused by the protracted uncertain outlook in the leading coun−tries in Europe and the United States, which contributed to a
reduction in the growth rates in China and/or emerging coun−tries in Asia.
(ii) The number of department stores, one of our key distribution
channels, and retail sales through department stores declined
due to the deterioration in consumption caused by the worsening
economy. General merchandising stores faced not only decreases
in the numbers of new branch openings due to stagnant con−sumption levels, but also a decrease in the number of stores, aswell as reductions in retail sales. At the same time, however,sales at direct sales outlets and on our website have steadilyrisen.
(iii) Due to adverse changes in consumer behavior and the retailindustry coupled with factors such as a decline in the female pop−
ulation, the market for women’s innerwear garments in Japan
shrank, and the prices of innerwear declined in terms of bothoverall prices and average price per item. The numbers of inner−
wear items purchased and owned per person also decreased.
(iv) Specialty apparel and other manufacturers entered the inner−
wear market. These manufacturers offer their products by focus−
ing on new elements, such as fashionability, lifestyle, and price,
rather than function and quality. Because the economic downturn
has led consumers to become more price conscious, these new
manufacturers and others have achieved a greater market share.
(v) These manufacturers and other competitors strengthened
their cost reduction efforts by, for example, sourcing fabric andproducing garments in lower−cost countries in Asia. Sales inJapan of lower−priced women’s innerwear garments manufac−
tured in these countries increased, leading to an intensiﬁcation ofprice competition in our industry. The recent development andtendency of general merchandisers producing their own low−
priced “private brand” merchandise accelerated these trends.
(vi) Although catalogue marketing has made little progress, newsales strategies, such as e−commerce and television marketing,have led to more diversiﬁed sales channels and exposure to new
consumer groups.
We have taken steps for two ﬁscal years to address these key
industry trends to build on the core strengths of our market posi−tion and brand awareness among Japanese consumers. We con−tinue to seek to sell higher−end products to consumers seeking
high−quality innerwear garments and to mitigate the adverse
impact on sales and margins from lower−priced garments. We
have taken steps to reduce our cost structure, such as producing
more products in lower−cost countries in Asia, consolidating andstreamlining our product distribution centers and reviewing indi−
rect expenses. 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 have been trying toincrease sales through our directly managed stores and website.
Additionally, we intend to extend our innerwear product offerings
into the midprice range in our product mix to help us reach abroader consumer base. We will continue to implement thesesteps and evaluate other strategies to address challenges andopportunities in the industry going forward.
SUMMARY OF BUSINESS RESULTS
SUMMARY OF OPERATIONS
Our group (primarily Wacoal Corp., our core operating entity)
entered the ﬁnal year of our three−year midterm plan (from ﬁscal
year 2011 to ﬁscal year 2013) and sought to improve proﬁtability
through market share expansion and structural reform of ourdomestic innerwear business and made efforts to strengthen
growth by actively developing our overseas business.
As a result of the above, according to our consolidated busi−
ness results for the ﬁscal year that ended in March 2013, overallsales increased from the previous ﬁscal year mainly due to the
expansion of sales attributable to our businesses in the UnitedStates, and also due to the inclusion of the business results ofEveden, which has been consolidated from April 1, 2012.
Operating income decreased from the previous ﬁscal year due tothe impact of the impairment loss of 2,852 million yen as a resultof the reassessment of the fair value of the assets of Peach John,
despite our efforts to promote efficiency through cost reduction
and cutting expenses. Net income attributable to Wacoal
Holdings Corp. exceeded the results for the previous ﬁscal year
as a result of favorable factors, including the sale of marketablesecurities and a decrease in tax expenses.
Sales:

177,154 million yen (an increase of 3.1% ascompared to the previous ﬁscal year)

Operating income: 8,099 million yen (a decrease of 22.0% ascompared to the previous ﬁscal year)

Pretax net income: 10,544 million yen (an increase of 3.3% ascompared to the previous ﬁscal year)

Net income attributable to Wacoal Holdings Corp.:
7,623 million yen (an increase of 10.3% ascompared to the previous ﬁscal year)

Cost of Sales
Our cost of sales increased 1.8% from 81,891 million yen for ﬁscal
year 2012 to 83,334 million yen for ﬁscal year 2013. Cost of sales
as a percentage of net sales decreased 0.6 of a percentage pointfrom 47.6% for ﬁscal year 2012 to 47.0% for ﬁscal year 2013. Thisdecrease was mainly due to an increase in the overseas produc−tion ratio of the products sold in Japan, streamlining of the pro−duction division, close control of inventory, and effective researchand development.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses increased 4.1%
from 79,629 million yen for ﬁscal year 2012 to 82,869 million
yen for ﬁscal year 2013. The selling, general and administrative
expenses as a percentage of net sales increased 0.5% from 46.3%
for ﬁscal year 2012 to 46.8% for ﬁscal year 2013. This was due toa high increase rate of expenses as compared to the previous ﬁs−cal year during which the aftermath of the earthquake and tsu−
nami forced us to take temporary cost−cutting measures.

Integrated Report 201349

Impairment Loss for Goodwill and Other Intangible Assets
At the end of ﬁscal year 2013, we examined potential impairment
losses on trademarks, customer relationships, and goodwill, all ofwhich are recorded as other intangible ﬁxed assets of Peach John,
pursuant to its business plan, and accordingly, we recorded an
impairment loss of 2,852 million yen in total. There were no
impairment losses for ﬁscal year 2012.
Operating Margin
Our operating margin decreased 1.4% from 6.0% for ﬁscal year
2012 to 4.6% for ﬁscal year 2013. This decrease was mainly due
to the impairment loss recorded in connection with Peach John,
despite our success in maintaining cost and expense reductions.
Other Income /Expenses
We recorded 2,445 million yen as other income, an increase of
2,615 million yen, as compared to 170 million yen of otherexpenses recorded for ﬁscal year 2012. This increase was mainly
due to the sale and exchange of marketable and/or investment
securities increase 2,183 million yen from ﬁscal year 2012.
Net Income Attributable to Wacoal Holdings Corp.
Net income attributable to Wacoal Holdings Corp. for ﬁscal year
2013 was 7,623 million yen, an increase of 710 million yen ascompared to ﬁscal year 2012 as a result of factors including thesale of investment securities and a decrease in tax expenses.
SUMMARY OF OPERATIONS BY OPERATING SEGMENT
Wacoal Business (Domestic)In our Wacoal brand business, sales of core brassieres showedstrong performance, due to the increased sales of certain cam−paign products and high−price products that are sold throughchannels, despite poor performance of bottom products. Sales ofundergarments were below the results for the previous year due
to competition and unsteady weather conditions. On the other
hand, sales of underpants that were featured in TV commercials
showed strong performance as a result of enhanced in−store pro−motions. As a result of the above, overall sales of our Wacoal
brand business remained unchanged from the results for the pre−vious ﬁscal year.
In our Wing brand business, sales of our core brassieres
showed steady performance due to the favorable performance ofour products based on “body aging” and an increase in the num−
ber of shops promoting our collaboration products with our major

SG&A Expenses / % of Net Sales¥ billion/%2013

82.9 / 46.8

2012

79.6 / 46.3

2011

77.7 / 46.9

2010

78.5 / 48.0

2009

77.2 / 45.2

50

WACOAL HOLDINGS

clients. Our bottom products, however, performed poorly due to
weak sales of Style Science series products with functionality.
Sales of men’s innerwear fell below the results for the previous
ﬁscal year due to the poor performance of our seasonal products.
As a result of the above, overall sales of our Wing brand businessremained unchanged from the results for the previous ﬁscal year.
In our retail business, sales at our direct retail store AMPHI
and our Wacoal Factory Stores, which are located in outlet shop−
ping malls, showed growth as a result of an increase in the open−
ing of new stores and due to favorable performance at existing
stores. As a result, overall sales of our retail business exceeded
the results for the previous ﬁscal year.
In our wellness business, sales of our sports conditioning
wear “CW−X” brand were impacted by the products sold by ourcompetitors, but our new products with increased functionality
and products jointly developed with a major pharmaceutical com−pany showed favorable performance. As a result, overall sales of
our wellness business remained unchanged from the results forthe previous ﬁscal year.
In our catalogue sales business, overall sales exceeded theresults for the previous ﬁscal year due to the favorable perfor−
mance of catalogue and Internet sales.
In summary, overall sales attributable to Wacoal business(Domestic) remained unchanged from the results for the previous
ﬁscal year, due to steady performance of our core operating busi−
ness within Wacoal Corp. With respect to proﬁtability, our oper−
ating income exceeded the results for the previous ﬁscal year due
to improved proﬁt margins from Wacoal Corp.
Sales:

115,657 million yen (a decrease of 0.2% ascompared to the previous ﬁscal year)

Operating income: 8,423 million yen (an increase of 3.1% ascompared to the previous ﬁscal year)

Wacoal Business (Overseas)
We made aggressive efforts in expanding our U.S. market shareand enhancing our product lineup, mainly at department stores,
which are our major clients, as well as in expanding our sales
areas and channels. Sales exceeded the results for the previous
ﬁscal year as a result of favorable performance shown by our corebrassiere products and the growth achieved in our Internet sales
and business in Canada. With respect to proﬁtability, operating
income exceeded the results for the previous ﬁscal year following

an increase in sales. The average exchange rate during the cur−rent ﬁscal year was 82 yen per dollar (compared to 78 yen per
dollar for the previous ﬁscal year).
With respect to our business in China, we made efforts instrengthening our product lineup and improving the retention
rates of in−store sales representatives. Although sales showedslower growth due to the economic slowdown and the anti−Japanrallies that took place in China, overall sales from our business in
China exceeded the results for the previous ﬁscal year due to theimproved sales force and opening of additional stores. In addi−tion, sales of our new fashionable and price−competitive brand“La Rosabelle,” targeting the middle−class market, showed strong
performance after the opening of two stores in Beijing. With
respect to proﬁtability, we recorded an operating loss as a resultof an increase in labor costs and the impact of the anti−Japan ral−lies, despite our efforts in reducing costs. The average exchange
rate during the current ﬁscal year was 12 yen per Chinese yuan(compared to 12 yen per Chinese yuan for the previous ﬁscalyear).
Sales:

operating income exceeded the result for the previous ﬁscal year
due to our successful efforts in cost reduction, in addition to theimprovement of proﬁtability from our apparel business and notincurring of expenses incurred in connection with the withdrawal
from our employees’ pension fund during the previous ﬁscal year.
As for Nanasai, which engages in the manufacturing, sales,
and rental business of mannequins, interior design, and con−struction of stores at commercial facilities, net sales exceeded
the results for the previous ﬁscal year due to the favorable perfor−
mance of our interior construction business. On the other hand,
our sales and rental businesses were impacted by restrained
investments by our business partners and the closing of depart−
ment stores. With respect to proﬁtability, operating income
exceeded the results for the previous ﬁscal year as a result of
our successful efforts in cutting expenses.
While operating income from Eveden was less than initially
expected due to the impact of the economic slowdown seen in
European countries and currency ﬂuctuations, sales exceeded
our initial plan on a local currency basis as a result of favorable
expansion generally in the United Kingdom and North America.

23,081 million yen (an increase of 7.9% ascompared to the previous ﬁscal year)

Operating income: 1,430 million yen (a decrease of 0.7% ascompared to the previous ﬁscal year)

Sales:

26,444 million yen (an increase of 27.2% ascompared to the previous ﬁscal year)

Operating income: 947 million yen (an increase of 301.3% ascompared to the previous ﬁscal year)

Peach John Business
Sales from our core mail−order catalogues fell below the results
for the previous ﬁscal year due to the expansion of sales of inner−
wear achieved through TV commercials in the previous year andthe poor performance of outerwear and general merchandise,
despite our efforts in increasing occasions to receive orders byrealigning the business based on consumer age−group and bysending supplementary volumes of catalogues. Net sales attribut−
able to our directly managed stores in Japan showed weak per−formance due to insufficient inventory of our popular items. With
respect to our directly managed overseas stores, sales from Hong
Kong exceeded the results for the previous ﬁscal year due to the
opening of new stores, while our directly managed stores in
China showed weak performance. As a result of the above, over−all sales from our Peach John Business fell below the results forthe previous ﬁscal year. With respect to proﬁtability, despite ourefforts to promote efficiency through cost reduction and cutting
expenses, we recorded an operating loss due to reduced sales
and recognition of impairment loss of 2,852 million yen.
Sales:

11,972 million yen (a decrease of 13.5% ascompared to the previous ﬁscal year)

Operating loss:

2,701 million yen (as compared to 529 million
yen of operating income incurred for the previous
ﬁscal year)

Other
With respect to the business of Lecien, overall sales fell below
the results for the previous ﬁscal year, due to the decreased num−
ber of products offered to our major clients in our innerwear busi−
ness, which mainly offers innerwear products, and as a result of
the termination of the unproﬁtable products at our apparel busi−
ness, which offers outerwear products. In terms of proﬁt,

SUMMARY OF OPERATIONS BY REGION
Japan
With respect to Wacoal Corp., sales of our core Wacoal andWing brand products showed strong performance. Overall salesof Wacoal Corp. remained unchanged from the results for theprevious ﬁscal year. Operating income exceeded the results forthe previous ﬁscal year as a result of improved proﬁtability.
With respect to Peach John, sales from our core mail−ordercatalogues fell below the results for the previous ﬁscal year due
to the expansion of sales of innerwear achieved through TV com−
mercials in the previous year and the poor performance of outer−wear and general merchandise, despite our efforts in increasingoccasions to receive orders by realigning the business by con−sumer age−group and by sending supplementary volumes of cat−alogues. Net sales attributable to our direct retail stores showed
weak performance due to insufficient inventory of our popular
items. As a result of the above, overall sales from our Peach John
Business fell below the results for the previous ﬁscal year. With
respect to proﬁtability, operating income exceeded the results forthe previous ﬁscal year due to our efforts to promote efficiency
through cost reduction and cutting expenses.
With respect to the business of Lecien, overall sales from
Lecien fell below the results for the previous ﬁscal year due to thedecreased number of products offered to our major clients in our
innerwear business, and the termination of the unproﬁtable prod−
ucts at our apparel business, which offers outerwear products. In
terms of proﬁt, operating income exceeded the results for the pre−vious ﬁscal year due to our successful efforts in cost reduction, in
addition to the improvement of proﬁtability in our apparel busi−
ness and not incurring of expenses in connection with the with−drawal from our employees’ pension fund during the previous
ﬁscal year.

Integrated Report 201351

As for Nanasai, which engages in the manufacturing, sales,
and rental business of mannequins and interior design and con−struction of stores at commercial facilities, net sales exceeded theresults for the previous ﬁscal year due to the favorable perfor−
mance of our interior construction business, despite the poor per−formance of our sales and rental businesses, which were
impacted by restrained investments by our business partners andthe closing of department stores. With respect to proﬁtability,
operating income exceeded the results for the previous ﬁscal year
as a result of our successful efforts in cutting expenses.
As a result of the above, sales from our business in Japanamounted to 146,224 million yen, a decrease of 2.2% comparedto the previous ﬁscal year.
Asia/Oceania
With respect to our business of Wacoal Corp. in China, we madeefforts in strengthening our product lineup and improving theretention rates of in−store sales representatives. Although sales
showed slower growth due to the economic slowdown and theanti−Japan rallies that took place in China, overall sales from ourbusiness in China exceeded the results for the previous ﬁscal
year due to the improved sales force and the opening of addi−
tional stores. In addition, sales of our new fashionable and price−competitive brand La Rosabelle, targeting the middle−classmarket, showed strong performance after opening two stores in
Beijing. With respect to proﬁtability, we recorded an operating
loss as a result of an increase in labor costs and the impact of theanti−Japan rallies, despite our efforts in reducing costs.
With respect to our directly managed overseas stores of PeachJohn, sales from Hong Kong exceeded the results for the previ−
ous ﬁscal year due to the opening of new stores, while ourdirectly managed stores in China showed weak performance.
As a result of the above, sales from our business in Asia/
Oceania amounted to 12,685 million yen, an increase of 20.5% ascompared to the previous ﬁscal year.
Europe / North America
With respect to our business in the United States, we madeaggressive efforts in expanding our U.S. market share andenhancing our product lineup mainly at department stores,
which are our major clients, as well as in expanding our sales
areas and channels. Sales exceeded the results for the previous
ﬁscal year as a result of favorable performance shown by our corebrassiere products and the growth achieved in our Internet sales

Net Cash Provided by Operating Activities

LIQUIDITY AND CAPITAL RESOURCES
Our current policy is to fund our cash needs from cash ﬂows
from operations, which allows us to secure working capital, makecapital investments, and pay dividends without relying on sub−stantial borrowings or other ﬁnancing from outside of our groupcompanies. As of March 31, 2013, we had credit facilities at
ﬁnancial institutions totaling 37,746 million yen, and the unusedlines of credit for short−term ﬁnancing amounted to 13,047 mil−lion yen. Of this credit, 7,198 million yen is available to Wacoal
Holdings Corp., 3,329 million yen is available to Wacoal Service
Co., Ltd., and 1,838 million yen is available to Nanasai.
In general, most of our credit facilities have automaticallyrenewed terms, and we are not aware of any issues with respect
to any of our lenders that could cause these facilities to become
unavailable. Even if any of our subsidiaries loses access to funds
from our credit facilities, we believe that it is possible for othercompanies in our group to provide any necessary funds. Our bor−
rowing requirements are not affected by seasonality.
We are not aware of any restrictions on the transfers of funds
from a subsidiary to a parent company in the form of a cash divi−
dend, loan, or cash advance. We believe our working capital isadequate for our present requirements and for our business oper−
ations in the short to long term.
CASH FLOW STATUS
The balance of cash and cash equivalents at the end of ﬁscal year
2013 was 24,860 million yen, a decrease of 5,125 million yen
compared to the end of the previous ﬁscal year.

Capital Investment¥ billion

2013

and business in Canada. With respect to proﬁtability, operating
income exceeded the results for the previous ﬁscal year following
an increase in sales.
With respect to Eveden, while operating income was less thaninitially expected due to the impact of the economic slowdown
seen in European countries and currency ﬂuctuations, sales
exceeded our initial plan on a local currency basis as a result offavorable expansion generally in the United Kingdom and North
America.
As a result of the above, sales from our business in Europe/
North America amounted to 18,245 million yen, an increase of
54.8% as compared to the previous ﬁscal year.

¥ billion

12.7

2013

3.2

2012

10.1

2012

2.7

2011

10.4

2011

2.7

2010

9.5

2010

4.0

2009

8.2

2009

2.4

52

WACOAL HOLDINGSCASH FLOW PROVIDED BY OPERATING ACTIVITIESCash ﬂow provided by operating activities during the ﬁscal year
2013 was 12,741 million yen, an increase of 2,681 million yen
compared to the previous ﬁscal year, which reﬂects the result
after adjusting the net income of 7,834 million yen for deprecia−tion expenses and deferred taxes, as well as changes in assets
and liabilities.
CASH FLOW USED IN INVESTING ACTIVITIESCash ﬂow used in investing activities during the ﬁscal year 2013
was 23,436 million yen, an increase of 19,969 million yen com−pared to the previous ﬁscal year, due to the acquisition of a new
subsidiary (net of cash acquired) and other factors, despite pro−ceeds from the sale and redemption of marketable securities.
CASH FLOW PROVIDED BY FINANCING ACTIVITIESCash ﬂow provided by ﬁnancing activities during the ﬁscal year
2013 was 5,303 million yen, an increase of 8,127 million yen
compared to the previous ﬁscal year, due to an increase in short−term bank loans and other factors, despite the cash dividend
payments.
SUMMARY OF CAPITAL INVESTMENT, ETC.
The amount of capital investment for the ﬁscal year ended
March 31, 2013, was 3,246 million yen. Majority of our capital
investment was used in the information system investment forour domestic subsidiaries and maintenance and repair work
implemented for the real estate properties held by the Company.
The amounts of capital investment made in Wacoal Business(Domestic), Wacoal Business (Overseas), Peach John Business,
and Other were 2,283 million yen, 471 million yen, 202 million
yen, and 290 million yen, respectively.
DIVIDEND POLICY
Our basic policy on proﬁt distribution to shareholders is to makestable distributions based on consideration of our consolidated
performance, while seeking to increase our enterprise value
through active investment aimed at higher proﬁtability and toincrease net income per share. Based on our basic policy, we pro−vide a ﬁscal yearend dividend once a year.
We also prescribe that the Company may distribute earnings
subject to the resolution of the Board of Directors’ meeting pursu−
ant to the provisions of Article 459 of the Corporate Law.
Based on such policy, we paid cash dividends of 28.00 yen
per share as distribution of earnings for the current ﬁscal year.
As for retained earnings, with the aim of improving our cor−porate value, we have actively invested in expanding new pointsof contact with consumers for our domestic business and invest−
ing in our overseas businesses. We also plan to use our retained
earnings in our strategic investments for maintaining competi−
tiveness and reinforcing growth. With these efforts, we seek to
beneﬁt our shareholders by improving future proﬁtability. We
also intend to ﬂexibly acquire treasury stock, and we will try to
improve capital efficiency and return proﬁts to our shareholders.

Since 1964, we have been conducting research into thefemale body in order to accurately understand the Japanese
woman’s physique. In particular, we have developed a silhouette
analysis system and introduced a three−dimensional measuringsystem. We are also working on an even more advanced mea−
surement of sensory comfort. Our research and development
activities focus on addressing the proportional, physiological,
and mental aspects of garment design. One of our most impor−tant research results was the enrichment of our research on sen−sory comfort through our participation in a project led by the
Ministry of Trade and Industry (presently the Ministry of
Economy, Trade and Industry) from 1995 to 1998. Based on thisresearch, we have been focusing on developing new productsthat are not only comfortable for the wearer, but also have a posi−tive physiological effect based on the basic study from three fac−
tors, which are pressure, heat, and touch. In 2005, we developed
and created a new market for our breakthrough Style Science
series products, which support a healthy and beautiful body−making by changing the concept from daily walking to exercise
walking. In 2010, we conducted an analysis and announced prin−ciples on the physiological changes associated with aging period
from 20s to 50s. We also strengthened development of new prod−
ucts coping with aging, and we have been working on developing
new functional products based on the lifestyle habits of people
with small physical changes associated with aging.
The promotion of our research and development is supported by
Development Group I, Development Group II, Research Group, andDevelopment Assistance Group of our Human Science ResearchCenter, with a theme of “research and development with full use
of aging research.”
During the ﬁscal year that ended in March 2013, in February
2012, we made public our ﬁndings related to breast development
among juniors during such periods of physiological change. We
have presented our ﬁndings to the public not only on our website
or through interviews, but also through seminars called “Tsubomi
School” to such juniors and their mothers in a private and secureenvironment. In terms of product development, we proposed our
new aging products, lifestyle modiﬁcation support products, aswell as exercise habit support products. In addition, in order tocompile our physiological database that is required for our future
development of aging products, we took measurements fromabout 1,500 individual subjects, and made efforts in enriching
our software and hardware, such as the creation of a three−dimensional mannequin.
As a result of the above, we recorded 788 million yen forour research and development during the ﬁscal year ended
March 2013.
In order to promote “the realization of supporting industry for
women with unbounded living beauty,” we will make efforts toenrich our research and development activities that can contrib−
ute to the improvements of customer satisfaction and corporate
value based on the key concept of beauty, comfort, and health.
We will also work toward strengthening product appeal anddeveloping new products or services that can gain support fromand satisfy our customers.

RESEARCH AND DEVELOPMENT
Our research and development activities are mainly conductedby our Human Science Research Center to achieve harmony
between the human body and clothing and to support better
product making.

Integrated Report 2013

53

CONSOLIDATED BALANCE SHEETS
Wacoal Holdings Corp. and Subsidiaries

Millions of yen

Thousands of
U.S. dollars(Note 2)

2013

2012

2013

ASSETS
Current Assets:
Cash and cash equivalents
Time deposits
Marketable securities (Notes 3, 19 and 20)
Notes and accounts receivable (Note 17)
Allowance for returns and doubtful receivables (Note 4)Inventories (Note 5)
Deferred income taxes (Note 16)
Other current assets (Notes 17, 19 and 20)
Total current assets¥24,860
1,914
4,601
23,443(1,872)37,8074,821
7,644
103,218¥ 29,985
733
5,179
22,725(1,460)32,847
4,234
3,052
97,295$ 264,019
20,327
48,864
248,969(19,881)401,519
51,20081,181
1,096,198

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

21,94561,455
15,076
136
98,612(48,952)
49,66021,78360,077
14,03922
95,921(46,843)
49,078233,061
652,666
160,1101,444
1,047,281(519,881)
527,400

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

17,59942,36820,14812,817
1,400
1,085
5,508
100,925

14,59934,064
10,367
9,541
597
5,557
74,725

186,905449,959
213,976
136,119
14,868
11,52358,496
1,071,846

Total¥253,803¥221,098$2,695,444

March 31, 2013 and 2012

See notes to consolidated ﬁnancial statements.

54

WACOAL HOLDINGS

March 31, 2013 and 2012

LIABILITIES AND EQUITYCurrent Liabilities:
Short−term bank loans (Note 9)
Notes and accounts payable:
Trade notes
Trade accounts (Note 17)
Other payables
Accrued payroll and bonuses
Income taxes payable (Note 16)
Current portion of long−term debt (Notes 9 and 19)
Other current liabilities (Notes 12, 19 and 20)
Total current liabilities
Long−Term Liabilities:
Long−term debt (Notes 9 and 19)
Liability for termination and retirement beneﬁts (Note 12)
Deferred income taxes (Note 16)
Other long−term liabilities (Notes 11, 12 and 16)
Total long−term liabilities

Millions of yen

Thousands of
U.S. dollars(Note 2)

2013

2012

2013

¥16,259¥5,780$ 172,674

1,442
10,859
6,069
6,897
4,479
898
3,707
50,6101,429
10,737
6,948
6,411
1,747
64
2,491
35,607

15,314
115,325
64,45473,24847,5689,537
39,369537,489

1,518
1,802
10,181
1,688
15,189

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

16,121
19,138108,125
17,927
161,311

13,26013,260140,824

29,514145,049

29,447
141,370

313,445
1,540,452(6,473)9,310(1,928)909(10,916)
4,197(2,976)(9,695)(68,744)
98,874(20,476)
9,654

Commitments and Contingencies (Notes 9 and 10)
Equity:Wacoal Holdings Corp. Shareholders’ Equity (Notes 13 and 22):
Common stock, no par value—
Authorized, 500,000,000 shares in 2013 and 2012; issued 143,378,085 shares in2013 and 2012
Additional paid−in capital (Note 14)
Retained earnings
Accumulated other comprehensive income (loss) (Note 15):
Foreign currency translation adjustments
Unrealized gain on securities
Pension liability adjustments (Note 12)
Total accumulated other comprehensive income (loss)
Less treasury stock at cost—2,533,728 shares and 2,527,015 shares in 2013 and 2012,
respectively(2,892)(2,886)(30,713)

185,840

171,496

1,973,662

Noncontrolling Interests
Total equity

2,164
188,004

1,932
173,428

22,982
1,996,644

Total¥253,803¥221,098$2,695,444

Total Wacoal Holdings Corp. shareholders’ equity

Integrated Report 2013

55

CONSOLIDATED STATEMENTS OF INCOME
Wacoal Holdings Corp. and Subsidiaries

Years Ended March 31, 2013, 2012 and 2011

Net Sales (Note 17)
Operating Costs and Expenses:
Cost of sales (Notes 5, 12 and 17)
Selling, general and administrative (Notes 1, 7, 10, 12 and 14)
Impairment charges on goodwill (Notes 8 and 20)
Impairment charges on other intangible assets (Notes 8 and 20)
Total operating costs and expenses
Operating Income
Other Income (Expenses):
Interest income
Interest expense
Dividend income
Gain on sale or exchange of marketable securities and investments—net (Note 3)
Valuation gain or loss on marketable securities and investments—net (Notes 3
and 20)
Other—net (Notes 1, 3 and 20)
Total other expenses—net
Income Before Income Taxes, Equity in Net Income of Affiliated Companies(Note 16)
Income Taxes (Note 16):
Current
Deferred
Total income taxes
Income Before Equity in Net Income of Affiliated Companies
Equity in Net Income of Affiliated Companies (Note 6)
Net Income
Net (Income) Loss Attributable to Noncontrolling Interests
Net Income Attributable to Wacoal Holdings Corp.

Years Ended March 31, 2013, 2012 and 2011

Net Income Attributable to Wacoal Holdings Corp. Per Share (Note 18):
Basic
DilutedNet Income Attributable to Wacoal Holdings Corp. Per American
Depositary Receipt (5 shares of common stock)(Note 18):
Basic
DilutedMillions of yen

Thousands of
U.S. dollars(Note 2)

2013
¥177,1542012¥171,897

2011¥165,548

2013$1,881,414

83,334
82,8691,197
1,655
169,055
8,099

81,891
79,629161,520
10,37781,65977,716836
936
161,147
4,401

885,026
880,087
12,712
17,576
1,795,401
86,013

82
(159)
789
2,208

112
(93)
724
25

137
(88)
643
372

871
(1,689)8,379
23,450

(325)
(150)
2,445

(831)
(107)
(170)

(1,585)47(474)(3,452)(1,593)25,966

10,544

10,207

3,927

111,979

6,521(2,872)
3,649
6,895
939
7,834
(211)
¥7,623

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

3,480(1,470)
2,010
1,917
990
2,907
(122)
¥2,785

69,254(30,501)
38,75373,226
9,973
83,199(2,241)$ 80,958

Yen

U.S. dollars(Note 2)

2013

2012

2011

2013

¥54.12¥54.04¥49.08¥49.02¥19.73¥19.72

$0.58
$0.57

¥270.61¥270.18¥245.41¥245.12¥98.66¥98.58

$2.87
$2.87

See notes to consolidated ﬁnancial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Wacoal Holdings Corp. and Subsidiaries

Years Ended March 31, 2013, 2012 and 2011

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

56

WACOAL HOLDINGS

Millions of yen

Thousands of
U.S. dollars(Note 2)2013
¥7,834

2012¥7,0162011¥ 2,9072013$83,199

4,523
5,122
1,048
10,693
18,527(300)¥18,227

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

48,03554,397
11,130113,562
196,761(3,186)$193,575

CONSOLIDATED STATEMENTS OF EQUITY
Wacoal Holdings Corp. and Subsidiaries
Millions of yen

Years Ended March 31, 2013, 2012 and 2011

Shares of
Outstand−ing Com−mon Stock(Thou−
sands)

CommonStock

Additional
Paid−in
Capital141,198¥13,260¥29,366

BALANCE, APRIL 1, 2010
Net income
Foreign currency translation adjustments
Unrealized losses on securities
Pension liability adjustment
Cash dividends paid to Wacoal Holdings Corp.
shareholders, ¥100 per 5 shares of common stock
Cash dividends paid to noncontrolling interests
Repurchase of treasury stock
Sale of treasury stock
Share−based compensation granted (Note 14)
BALANCE, MARCH 31, 2011
Net income
Foreign currency translation adjustments

Retained
Earnings¥137,313
2,785

TreasuryStock¥(5,547) ¥(2,532)(2,726)(1,073)(219)(2,824)

Noncontrol−ling Inter−
ests¥171,860
2,785(2,726)(1,073)(219)¥1,923122(76)
1(2,824)
(70)

(586)
236
140,848

13,260(15)
50
29,401(655)
297
137,274
6,913

Unrealized gains on securities
Pension liability adjustment
Cash dividends paid to Wacoal Holdings Corp.
shareholders, ¥100 per 5 shares of common stock
Cash dividends paid to noncontrolling interests
Repurchase of treasury stock

Accumulated
Other
Comprehensive
Income (Loss)

Total Wacoal
Holdings
Corp.
Shareholders’Equity

(757)

(655)
282
50
167,480
6,913
(757)

1,601
(974)

1,601
(974)

(9,565)(2,890)(2,817)

1,900
103
(25)
1

(2,817)(47)(15)

Sale of treasury stock
6
Share−based compensation granted and exercised
12(Note 14)BALANCE, MARCH 31, 2012
140,851
13,260Net income
Foreign currency translation adjustments
Unrealized gains on securities
Pension liability adjustment
Cash dividends paid to Wacoal Holdings Corp.
shareholders, ¥140 per 5 shares of common stock
Cash dividends paid to noncontrolling interests
Repurchase of treasury stock(11)
Sale of treasury stock1
Acquisition of subsidiaries
Equity transactions with noncontrolling interests (Note 13)
Share−based compensation granted and exercised (Note 14)3
140,844 ¥13,260
BALANCE, MARCH 31, 201346
29,447

141,370
7,623(9,695)

1,602
(974)
(2,817)
(47)

(15)

(15)

5
60

5
60

(2,886)

171,496
7,623
4,443
5,113
1,048

1,932
211
80
9

(3,944)(95)¥ 909(2,824)
(70)
(655)
282
50
169,380
7,016
(782)

5
14

(3,944)¥145,049¥173,783
2,907(2,802)(1,072)
(219)

(15)

4,443
5,113
1,048

17
50
¥29,514

Total Equity

(10)
1

(10)
1

3
¥(2,892)

17
53¥185,840

TreasuryStock

Total Wacoal
Holdings
Corp.
Shareholders’Equity208(181)¥2,164

173,428
7,834
4,523
5,122
1,048
(3,944)
(95)
(10)
1
208
(164)
53
¥188,004

Thousands of U.S. dollars (Note 2)

Years Ended March 31, 2013

BALANCE, MARCH 31, 2012
Net income
Foreign currency translation adjustments
Unrealized gains on securities
Pension liability adjustment
Cash dividends paid to Wacoal Holdings Corp.
shareholders, $1 per 5 shares of common stock
Cash dividends paid to noncontrolling interests
Repurchase of treasury stock
Sale of treasury stock
Acquisition of subsidiaries
Equity transactions with noncontrolling interests (Note 13)
Share−based compensation granted and exercised (Note 14)
BALANCE, MARCH 31, 2013

CommonStock

Additional
Paid-in
CapitalRetained
Earnings$140,824 $312,734 $1,501,381
80,958

Accumulated
Other
Comprehensive
Income (Loss)$(102,963) $(30,650)
47,18654,301
11,130(41,887)

Noncontrolling Interests Total Equity$1,821,326
80,95847,18654,301
11,130$20,518
2,241
849
96

$1,841,844
83,19948,03554,397
11,130(41,887)(41,887)(1,009)
(107)
(107)
11
11
2,209
2,209
181
(1,922)(1,741)562
562$1,973,661 $22,982 $1,996,643(1,009)

(107)
11
181
530
$140,824 $313,445 $1,540,452

32$9,654 $(30,714)

See notes to consolidated ﬁnancial statements.

Integrated Report 2013

57

CONSOLIDATED STATEMENTS OF CASH FLOWS
Wacoal Holdings Corp. and Subsidiaries

Years Ended March 31, 2013, 2012 and 2011

Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Share−based compensation (Note 14)
Provision for returns and doubtful receivables—net
Deferred income taxes
Gain (loss) on sale or disposal of property, plant and equipment—net
Impairment charges on property, plant and equipment (Note 20)
Impairment charges on goodwill (Notes 8 and 20)
Impairment charges on other intangible assets (Notes 8 and 20)
Gain on sale or exchange of marketable securities and investments—net (Note 3)
Valuation gain or loss on marketable securities and investments—net (Notes 3 and 20)
Equity in net income of affiliated companies, less dividends
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable(Increase) decrease in inventories(Increase) decrease in other current assets(Decrease) increase in notes and accounts payable
Decrease in liability for termination and retirement beneﬁts
Increase (decrease) in accrued expenses, income taxes payable and other current
liabilities
Other
Net cash provided by operating activities
Investing Activities:
Increase in time deposits
Decrease in time deposits
Proceeds from sales and redemption of available−for−sale securities
Payments to acquire available−for−sale securities
Proceeds from redemption of held−to−maturity debt securities
Payments to acquire held−to−maturity debt securities
Proceeds from sales of property, plant and equipment
Capital expenditures
Payments to acquire intangible assets (Note 8)
Proceeds from sales of other investments
Payments to acquire other investments
Acquisitions of subsidiaries, net of cash acquired and payments to acquire additional
shares of a subsidiary (Note 7)
Payments to acquire additional shares of an affiliated company
Other
Net cash used in investing activities
Financing Activities:
Increase (decrease) in short−term bank loans with three months or less maturity—net
Proceeds from issuance of short−term bank loans with more than three months maturity
Repayments of short−term bank loans with more than three months maturity
Proceeds from issuance of long−term debt
Repayments of long−term debt
Repurchase of treasury stock
Sale of treasury stock
Dividends paid on common stock
Dividends paid on common stock to noncontrolling interest
Net cash provided by (used in) ﬁnancing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net (Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
Additional Cash Flow Information:
Cash Paid for:
Interest
Income taxes
Noncash Investing Activities:
Fair value of certain marketable securities received in exchange for other marketablesecurities (Note 3)
Acquisition of marketable securities by assuming payment obligation
Acquisition of ﬁxed assets by assuming payment obligation
Sales of investments (Note 3)
See notes to consolidated ﬁnancial statements.

58

WACOAL HOLDINGS

Thousands of U.S.
dollars (Note 2)
2013

2013

2012

Millions of yen
2011¥7,834¥7,016¥2,907$83,199

4,737
53
262
(2,872)
103

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

50,308563
2,782(30,501)
1,094
12,712
17,576(23,449)
3,452(3,813)

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

(25)
831
(451)

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

1,818
(673)
(100)
(1,922)(851)(1,589)(1,801)
(377)
1,973
(685)

493
400
194
1,251
(331)

19,308(7,147)(1,062)(20,412)(9,038)3,452
290
12,741(513)
438
10,060(267)
245
10,441

36,661
3,079
135,312(1,846)836
1,578(3,828)
334
(340)
64
(2,391)
(855)
767
(461)

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

(1,809)1,991
3,817(1,036)(347)
538(2,652)
(687)
413
(921)

(19,605)
8,879
16,759(40,654)3,547(3,611)
680(25,393)(9,080)8,146(4,896)(181,287)(2,687)307(248,895)(17,070)(253)
29(23,436)

24(3,467)

(10)
(703)

10,446
353
(578)
2,037
(2,907)(10)
1(3,944)
(95)
5,303
267
(5,125)29,985¥24,860

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

200
(104)
(655)
282
(2,824)(70)(4,965)(785)
3,988
22,328¥26,316

110,939
3,749(6,138)21,633(30,873)(106)
11(41,887)(1,009)56,3192,836(54,428)
318,447$264,019¥ 1564,238¥ 903,702¥ 913,645$1,657
45,008¥1,450¥ 126$15,399¥ 200¥ 429¥3,775¥ 352$4,566$40,091

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Wacoal Holdings Corp. and Subsidiaries

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of Financial Statements—Wacoal Holdings Corp. (the“Company”) and subsidiaries are predominantly engaged in one
industry, the manufacture and sale of apparel, including founda−tion garments, lingerie, nightwear and outerwear in Japan, theUnited States of America, Europe and certain Asian countries.
The accompanying consolidated ﬁnancial statements, statedin Japanese yen, have been prepared on the basis of accounting
principles generally accepted in the United States of America(U.S. GAAP).
Consolidation—The consolidated ﬁnancial statements include theaccounts of the Company and its majority−owned subsidiaries(collectively, the “Companies”). All intercompany transactions
and balances are eliminated.
Some foreign subsidiaries of the Company have a ﬁscal year
ending December 31. The accounts of those subsidiaries areincluded in the Company’s consolidated ﬁnancial statements
based on the subsidiaries’ ﬁscal year. There were no materialintervening events that occurred with respect to thesesubsidiaries.
Investments in affiliated companies where the Companies’
ownership is 20% to 50% are accounted for using the equity
method.
Signiﬁcant inﬂuence is generally deemed to exist if theCompanies have an ownership interest in the voting stock of theinvestee between 20% and 50%, although other factors are consid−
ered in determining whether the equity method of accounting isappropriate.
Use of Estimates—The preparation of consolidated ﬁnancial
statements in conformity with U.S. GAAP requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated ﬁnancial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ fromthose estimates.
Cash and Cash Equivalents—Cash and cash equivalents include
all time deposits (all of which are interest bearing) with original
maturities of three months or less.
Foreign Currency Translation—Assets and liabilities of foreignsubsidiaries have been translated to Japanese yen at period−end
exchange rates and income and expenses have been translatedusing average exchange rates for the period. Translation adjust−ments resulting from the process of translating consolidated
ﬁnancial statements, net of tax, are included in accumulated
other comprehensive income (loss), a separate component ofequity. Exchange gains and losses resulting from foreign cur−rency transactions and the conversion of monetary assets and lia−
bilities denominated in foreign currencies are included in otherincome (expenses) in the consolidated statements of income.
Foreign currency translation losses for the years ended March 31,
2013, 2012 and 2011 were ¥162 million, ¥94 million, and ¥137
million, respectively. They have been included in other—net ofother income (expenses).
Marketable Securities and Investments—The Companies

classify their marketable securities and investments into one ofthree categories: trading, held to maturity or available for sale.
Trading securities are bought and held principally for the pur−pose of selling them in the near term. Trading securities arerecorded at fair value and unrealized holding gains and losses on
trading securities are included in earnings. Held−to−maturity
securities are measured at amortized cost. The Companies clas−
sify debt securities as held to maturity only if the Companies
have the positive intent and ability to hold those securities tomaturity. Available−for−sale securities are carried at fair value
with a corresponding recognition of unrealized holding gains orlosses (net of tax) in accumulated other comprehensive income orloss, a separate component of equity, until realized. Equity secu−
rities that do not have readily determinable fair values arerecorded at cost. Gains and losses on sales of investments arecomputed based on cost determined using the average cost
method.
If a decline in the fair value of marketable securities andinvestments is determined to be other than temporary, an impair−ment charge is recorded in the consolidated statements ofincome. The Companies periodically determine whether adecline in the fair value of marketable securities and investments
is deemed to be other than temporary based on criteria that
include the duration of the market decline, the extent to whichcost exceeds fair value, the ﬁnancial position and business out−
look of the issuer and the intent and ability of the Companies toretain the impaired marketable securities and investments for a
sufficient period of time for anticipated recovery in fair value.
Allowance for Sales Returns—Allowance for sales returns is esti−
mated based on historical products returns experience, sales
movements, and the overall retail industry situation.
Allowance for Doubtful Receivables—Allowance for doubtful
notes and receivables is estimated based on historical collection
experience and additional information including current eco−nomic conditions and creditworthiness of each applicable
customer.
Inventories—Inventories are stated at the lower of cost or market,
cost being determined on the ﬁrst−in, ﬁrst−out method for raw
materials and the average cost method for work in process andﬁnished products. Cost includes net prices paid for materials pur−chased, production labor cost, factory overhead and charges forcustoms duties.
Property, Plant and Equipment—Property, plant and equipment
is stated at cost less accumulated depreciation and impairment
losses. Depreciation of property, plant and equipment is com−puted by the declining−balance method, except for buildings
acquired on or after April 1, 1998, which are depreciated using
the straight−line method, based upon the estimated useful livesof the assets. The estimated useful lives are as follows:
Buildings and building improvements: 2—50 years (mainly 38
years)
Machinery and equipment: 2—20 years (mainly 5 years)
Depreciation expenses for the years ended March 31, 2013, 2012
and 2011 are ¥2,959 million, ¥2,913 million and ¥2,827 million,
respectively.

Integrated Report 201359

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 circum−
stances that indicates that such assets have been impaired or thatthe carrying amounts of such assets might not be recoverable.
The carrying amount of a long−lived asset is not recoverable if it
exceeds the sum of the undiscounted cash ﬂows expected toresult from the use and eventual disposition of the asset. That
assessment shall be based on the carrying amount of the asset atthe date it is tested for recoverability, whether in use or underdevelopment. The impairment loss is measured as the amount bywhich the carrying amount of a long−lived asset exceeds its fairvalue. The Companies recorded no impairment charges on long−
lived assets for the year ended March 31, 2013. The Companies
recorded ¥37 million and ¥107 million in impairment charges onlong−lived assets for the years ended March 31, 2012 and 2011,
respectively, and have been included in selling, general andadministrative expenses.
Goodwill and Other Intangible Assets—Goodwill represents theexcess of the purchase price of an acquired entity over the net
amounts assigned to assets acquired and liabilities assumed.
Goodwill and other intangible assets with indeﬁnite useful
lives are tested for impairment annually, or more frequently if
conditions indicate an earlier review is necessary. The goodwill isallocated to the reporting unit in which the business that createdthe goodwill resides. To test for goodwill impairment, the carry−ing value of each reporting unit is compared with its fair value. If
the carrying amount of a reporting unit exceeds its fair value, thesecond step of the goodwill impairment test is performed bycomparing the carrying amount of reporting unit goodwill with
its implied fair value. If the carrying amount of reporting unit
goodwill exceeds its implied fair value, an impairment loss is rec−ognized in an amount equal to that excess.
To test for impairment of other intangible assets with indeﬁ−nite useful lives, the carrying value of an intangible asset is com−pared with its fair value. If the carrying amount of an intangible
asset with indeﬁnite useful life exceeds its fair value, an impair−ment loss is recognized in an amount equal to that excess.
Other intangible assets with estimable useful lives consist pri−marily of brands, customer relationships and software and areamortized over their estimated useful lives using the straight−
line method. The estimated useful lives are as follows:
Brands: 20—25 years (mainly 25 years)
Customer relationships: 7 years
Software: 5 years
Asset Retirement Obligations—The Companies have obligations
arising from contractual commitments to remove leasehold
improvements from leased facilities and return the property to a
speciﬁed condition when the lease terminates. The Companies
recognize asset retirement obligations at the inception of a lease.
The asset retirement obligations are measured with an expected
present value technique based on historical experience andrecorded in other long−term liabilities in the consolidated bal−ance sheets and are subsequently adjusted for changes in esti−
mated disposal costs. The difference between the gross expected
future cash ﬂow and its present value is accreted over the life of
the related lease, which is determined using best estimate
because the Companies’ lease contracts generally have automatic
renewal articles. The associated estimated asset retirement costs
are capitalized as part of the carrying amount of the long−lived

60

WACOAL HOLDINGS

asset and depreciated over its useful life.
Termination and Retirement Plans—Termination and retirement
beneﬁts are accounted for in accordance with the guidance forretirement beneﬁts. The Companies amortize net actuarial gains
and losses and prior service cost over the average employees’
remaining service period by a declining−balance method and by
a straight−line method, respectively. Provisions for termination
and retirement beneﬁts include those for directors and corporate
auditors of the Companies.
The Companies do not recognize a gain or loss on settlementof the pension obligation when the cost of all settlements in ayear is less than or equal to the sum of the service cost and inter−est cost components of net periodic pension cost for the plan forthe year.
Leases—Certain noncancelable leases are classiﬁed as capitalleases and the leased assets are included as part of property,
plant and equipment. Other leases are classiﬁed as operatingleases and are not capitalized. The payments on such leases arerecorded 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 compo−
nent of equity.
Acquisitions—The Companies account for acquisitions using theacquisition method in accordance with the guidance for businesscombinations. The Companies allocate the purchase price to theassets acquired and liabilities assumed based on the estimatedfair values at the date of acquisition, including intangible assetsthat can be identiﬁed and named. The purchase price in excessof the fair value of the net assets is recorded as goodwill.
Revenue Recognition—The Companies recognize revenue onsales to retailers, mail order catalog sales and internet sales when
(1) persuasive evidence of an arrangement exists, (2) delivery
has occurred resulting in transfer of title and risk of loss, (3) thesales price is ﬁxed or determinable, and (4) collectability is rea−
sonably assured. As for consignment sales, the Companies rec−ognize revenue when the products are sold to the ultimate
customer. The Companies recognize revenue on direct retailingsales at the Companies’ directly managed retail stores at the
point of sale to the customer.
Shipping and Handling Costs—Shipping and handling fees
billed to customers are classiﬁed in net sales. Shipping and han−dling costs are expensed as incurred. Shipping and handlingcosts for the years ended March 31, 2013, 2012 and 2011 were
¥5,425 million, ¥5,773 million and ¥5,691 million, respectively,
and have been included in selling, general and administrative
expenses.
Advertising Expenses—Advertising costs are expensed as
incurred. Advertising expenses for the years ended March 31,
2013, 2012 and 2011 were ¥12,937 million, ¥12,665 million and¥11,946 million, respectively, and have been included in selling,
general and administrative expenses.
Research and Development Costs—Research and development
costs are expensed as incurred. Research and development costs
for the years ended March 31, 2013, 2012 and 2011 were ¥788
million, ¥801 million and ¥815 million, respectively, and havebeen included in selling, general and administrative expenses.
Consumption Taxes—Consumption taxes have been excluded
from sales.
Income Taxes—The provision for income taxes is determinedunder the asset and liability method in accordance with the guid−ance for income taxes. Under this method, deferred tax assets
and liabilities are determined for temporary differences between
the ﬁnancial statement and tax bases of assets and liabilities andtax loss carryforwards at presently enacted tax rates. A valuation
allowance is recorded when it is more likely than not that some
portion or all of the deferred tax assets will not be realized in the
future.
The Companies assess their income tax positions and record
tax beneﬁts for all years subject to examination based upon theirevaluation of the facts, circumstances and information available
as of the end of the ﬁscal year. For those tax positions only where
there is greater than 50% likelihood that the tax position will besustained, the Companies record the largest amount of tax bene−
ﬁt that may potentially be realized upon ultimate settlement witha taxing authority that has full knowledge of all relevant
information.
Share−Based Compensation—Share−based compensation is
accounted for in accordance with the guidance for stock compen−
sation. The Company measures share−based compensation costat the grant date, based on the fair value of the award and recog−
nizes the cost over the requisite service period, which is the vest−
ing period. The fair value of the award is estimated using theBlack−Scholes option−pricing model.
Derivatives—Derivative instruments, including certain deriva−
tive instruments embedded in other contracts, are accounted forin accordance with the guidance for derivatives and hedging.
Because such derivative instruments are not designated as ahedge, changes in the fair value are recorded in earnings.
Reclassiﬁcations—Certain reclassiﬁcations have been made to
the prior years’ consolidated ﬁnancial statements to conform tothe current year’s presentation.
Recent Accounting Pronouncements:
Testing Goodwill for Impairment—In September 2011, theFinancial Accounting Standards Board (FASB) issued new guid−ance that amends goodwill impairment testing. Under therevised guidance, entities testing goodwill for impairment havethe option of performing a qualitative assessment before calculat−
ing the fair value of the reporting unit. The guidance does notchange how goodwill is calculated or assigned to reporting units,
nor does it revise the requirement to test goodwill annually for
impairment. This guidance is effective for annual and interim
goodwill impairment test performed for ﬁscal years beginning
after December 15, 2011. Since this guidance does not change
how goodwill is calculated, it is not expected to have an impact

on the Companies’ consolidated ﬁnancial position, results ofoperations, or cash ﬂows.
Testing Unamortized Intangible Assets for Impairment—In
July 2012, the FASB issued new guidance that amends unamor−
tized intangible assets impairment testing. Under the revised
guidance, entities testing unamortized intangible assets for
impairment have the option of performing a qualitative assess−ment before calculating the fair value of the assets. The guidance
does not revise the requirement to test unamortized intangible
assets for impairment at least annually or more frequently if con−ditions indicate an impairment has occurred. This guidance iseffective for annual and interim unamortized intangible assets
impairment tests performed for ﬁscal years beginning after
September 15, 2012. Since this guidance does not change how
unamortized intangible assets’ impairment is calculated, it is notexpected to have an impact on the Companies’ consolidated
ﬁnancial position, results of operations, or cash ﬂows.
Presentation of Comprehensive Income—In February 2013, the
FASB issued new guidance requiring additional disclosure for theamounts reclassiﬁed out of accumulated other comprehensive
income. The guidance required disclosure of changes in accumu−
lated other comprehensive income by component. It also requires
an entity to present information about signiﬁcant items reclassi−ﬁed out of accumulated other comprehensive income by compo−
nent either on the face of the statement where net income ispresented or as a separate disclosure in the notes to the ﬁnancial
statements. The guidance is effective for ﬁscal years and interim
periods within those years, beginning after December 15, 2012.
The adoption of this guidance is not expected to have an effecton the Companies’ consolidated ﬁnancial position, result of oper−
ations, or cash ﬂows since it relates only to disclosure require−ments of accumulated other comprehensive income.

2 TRANSLATION INTO U.S. DOLLAR STATEMENTS
The consolidated ﬁnancial statements are stated in Japanese yen,
the currency of the country in which the Company is incorpo−
rated and operates. The translations of Japanese yen amounts
into U.S. dollar amounts are included solely for convenience ofreaders outside of Japan and have been made at the rate of¥94.16 to $1, the noon buying rate for yen in New York City as ofMarch 31, 2013. Such translations should not be construed as
representations that the Japanese yen amounts could be con−verted into U.S. dollars at the above or any other rate.

Integrated Report 201361

3 MARKETABLE SECURITIES AND INVESTMENTS
Held−to−Maturity and Available−for−Sale Securities—The fair value of debt and marketable equity securities classiﬁed as held tomaturity and available for sale is based on quoted market prices as of March 31, 2013 and 2012. The cost, gross unrealized gain andloss and the fair value of held−to−maturity and available−for−sale securities by major security type were as follows:
Millions of yen

2013

Available−for−sale securities:
Current:
National debt securities
Corporate debt securities
Mutual fundTotal
Noncurrent:
Equity securities
Held−to−maturity debt securities:
Noncurrent:
Corporate debt securities

Cost

Gross Unrealized Gain

Gross Unrealized Loss

Fair Value¥ 101,200
2,532¥3,742

¥0
0
373
¥373

¥9
2
¥11

¥ 10
1,191
2,903¥4,104¥23,927¥16,603¥4¥40,526

¥291

¥3

Cost

Gross Unrealized Gain

Gross Unrealized Loss

Fair Value¥ 101,500
2,581¥4,091¥ 0
1
156
¥157

¥61
4
¥65

¥ 101,440
2,733¥4,183¥21,803¥9,341¥14¥31,130

¥332

¥1

¥3

¥330

¥294
Millions of yen

2012

Available−for−sale securities:
Current:
National debt securities
Corporate debt securities
Mutual fundTotal
Noncurrent:
Equity securities
Held−to−maturity debt securities:
Current:
Corporate debt securities

There were no available−for−sale and held−to−maturity securities, which have been in a continuous unrealized loss position for morethan 12 months as of March 31, 2013 and 2012. Gross unrealized holding losses and fair values of available−for−sale and held−to−matu−
rity securities, all of which have been in a continuous unrealized loss position for less than 12 months as of March 31, 2013 and 2012,were as follows:
Millions of yen

2013

Available−for−sale securities:
Current:
Corporate debt securities
Mutual fundTotal
Noncurrent:
Equity securities
Held−to−maturity debt securities:
Current:
Corporate debt securities

As of March 31, 2013, the available−for−sale securities in acontinuous unrealized loss position are composed of three equity
securities and three other securities. The severity of decline wasless than 3.9%. The Companies periodically determine whether adecline in the fair value of available−for−sale and held−to−matu−
rity securities is deemed to be other than temporary based on cri−
teria that includes the duration of market decline, the extent towhich cost exceeds fair value, the ﬁnancial position and businessoutlook of the issuer and the intent and ability of the Companies

62

WACOAL HOLDINGS

2012

Fair Value

Gross Unrealized Loss

Fair Value

Gross Unrealized Loss¥ 991296¥1,287¥92¥11¥1,139315¥1,454

¥61
4
¥65

¥157

¥4

¥120

¥14

¥247

¥3

to retain the impaired available−for−sale and held−to−maturity
securities for sufficient period of time for anticipated recovery infair value as described in Note 1. No available−for−sale andheld−to−maturity securities were identiﬁed that meet theCompanies’ criteria for recognition of an impairment loss onavailable−for−sale and held−to−maturity securities in unrealized
loss position presented above. Therefore, the Companies do notbelieve the unrealized losses represent an other−than−temporary
impairment as of March 31, 2013 and 2012.

Future maturities of debt securities and mutual funds classi−ﬁed as available for sale excluding mutual funds without ﬁxed
maturities as of March 31, 2013, were as follows:

Future maturities of debt securities classiﬁed as held to matu−
rity as of March 31, 2013 were as follows:
Millions of yen

Millions of yen

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

Cost

Fair Value¥ 4632,152¥2,615¥ 466
2,216¥2,682

Due after one year through ﬁve years

Cost

Fair Value

¥291

¥294

Proceeds from sales of available−for−sale securities and the gross realized gains or losses on the sales of available−for−sale securities
during the years ended March 31, 2013, 2012 and 2011, were as follows:
Proceeds from sales of available−for−sale securities during the year ended March 31, 2013, include accounts receivable of ¥3,775
million, which is included in other current assets on the consolidated balance sheets.
Millions of yen

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

During the years ended March 31, 2013 and 2012, theCompanies exchanged certain equity securities for other market−
able securities. The Companies recorded the newly received
securities at fair value and recognized a gain of ¥40 million in
the year ended March 31, 2012. There was no gain or loss recog−
nized for the exchange transaction during the year ended March
31, 2013 as there was no difference between the carrying amountof the security transferred and the fair value of the security
received. There was no such exchange of marketable securities
for the year ended March 31, 2011.
The amount of impairment charges the Companies recog−
nized on available−for−sale securities in which declines in fairvalue were other than temporary were ¥55 million, ¥823 millionand ¥1,366 million in the years ended March 31, 2013, 2012 and2011, respectively.
Trading Securities—A subsidiary in the United States of America
has trading securities consisting of mutual funds, which are

2013

2012

2011

¥5,049
2,164
9

¥180
2

¥1,602354
37

recorded as marketable securities and investments at the fairvalue of ¥683 million and ¥518 million as of March 31, 2013 and2012, respectively. The Companies recorded a loss of ¥9 million,a gain of ¥19 million and ¥68 million for the years ended March
31, 2013, 2012 and 2011, respectively, that relate to trading
securities still held as of March 31, 2013, 2012 and 2011,
respectively.
Cost−Method Securities—Investments in nonmarketable equity
securities for which there are no readily determinable fair values
were accounted for using the cost method and aggregated ¥1,365
million and ¥3,080 million as of March 31, 2013 and 2012,
respectively. Investments in nonmarketable equity securities arereviewed annually or upon the occurrence of an event for other−than−temporary impairment. The Companies recognizedimpairment charges on investments in nonmarketable equity
securities of ¥261 million, ¥8 million and ¥219 million in theyears ended March 31, 2013, 2012 and 2011, respectively.

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

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

2013

2012

2011

¥70
84
41
(25)
¥170

¥100

¥114

9
(39)
¥70

13
(27)
¥100

2013

2012

2011

¥1,390
1,702(1,390)¥1,702¥1,517
1,390(1,517)¥1,390¥1,915
1,517(1,915)¥1,517

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

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

Integrated Report 201363

5 INVENTORIESThe components of inventories as of March 31, 2013 and 2012, were as follows:
Millions of yen

Finished products
Work in process
Raw materials
Total

2013

2012

¥32,2853,598
1,924¥37,807¥28,555
3,209
1,083¥32,847

During the year ended March 31, 2013, a subsidiary in the United States of America settled an insurance claim and received cash
proceeds of ¥383 million related primarily to merchandise damaged by the impact of Hurricane Sandy, which made landfall in the
Northeast of the United States of America on October 29, 2012. The subsidiary recorded the proceeds from the insurance settlement incost of sales in the consolidated statements of income for the year ended March 31, 2013.

6 INVESTMENTS IN AFFILIATED COMPANIESInvestments are accounted for using the equity method of
accounting if the investment provides the Companies the ability
to exercise signiﬁcant inﬂuence over an investee. Signiﬁcant
inﬂuence is generally deemed to exist if the Companies have anownership interest in the voting stock of the investee between
20% and 50%, although other factors are considered

in determining whether the equity method of accounting isappropriate. The Companies record investments in equity
method investees meeting these characteristics as “Investments
in affiliated companies.” Under the equity method, theCompanies record their proportionate share of an affiliated com−panies’ income or loss based on the most recently available
ﬁnancial statements.

The Companies’ investments in affiliated companies and percentage of ownership as of March 31, 2013 and 2012 include, among
others, the following companies:
Percentage of ownership (%)
Name of Investee

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

2013

2012

34
25
42
50
24

34
25
42
50
20

Aggregate carrying amounts and fair values of investments in affiliated companies which have a quoted market price as of March 31,
2013 and 2012, were as follows:
Millions of yen

Carrying amount
Aggregate value of quoted market price

2013

2012

¥10,787
8,650¥8,552
8,497

The following tables represent the affiliated companies’ summarized information from the balance sheets as of March 31, 2013 and2012, and statements of operations for the years ended March 31, 2013, 2012 and 2011.
Millions of yen

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

64

WACOAL HOLDINGS

2013

2012

¥37,653
32,341¥69,994¥7,763
7,098
55,133¥69,994¥32,041
26,372¥58,413¥7,609
6,116
44,688¥58,413Millions of yen

Net sales
Gross proﬁt
Income before income taxes
Net income

2013

2012

2011

¥53,229
27,8193,921
2,955¥51,690
27,765
4,753
3,302¥50,833
27,196
3,947
3,039

Dividends received from the affiliated companies were ¥580 million, ¥557 million and ¥424 million during the years ended March
31, 2013, 2012 and 2011, respectively.
Retained earnings include net undistributed earnings of affiliated companies in the amount of ¥15,193 million and ¥14,735 million
as of March 31, 2013 and 2012, respectively.

7 ACQUISITIONS
Eveden—On April 10, 2012, the Company acquired all of theshares of Eveden Group Limited (“Eveden”), which manufacturesand sells innerwear and swimsuits for women in Europe and theUnited States of America in the amount of ¥19,961 million, inclu−
sive of ¥2,581 million of funds to repay Eveden’s preexistingdebts and of ¥3,597 million to acquire the preferred shares andmade it the Company’s wholly owned subsidiary. The acquisition
aims to expand the Company’s overseas operations. This will
enable the group to accelerate the Company’s globalization strat−
egy and to expand the target customer segment by effectively
utilizing sales channels, technology, management know how andbrand strength of both companies.
The Company consolidated Eveden since April 1, 2012,
because the impact of the result of operations and the changes inthe ﬁnancial position of Eveden from April 1, 2012 to April 10,
2012, was insigniﬁcant. Since the ﬁscal year end of Eveden is
December 31, the results of operations of Eveden from April 1,2012 to December 31, 2012 have been included in the

Company’s consolidated statements of income for the year ended
March 31, 2013.
Acquisition−related costs were ¥456 million, of which ¥411
million had already been included in the result of operations forthe year ended March 31, 2012, and ¥45 million were included inselling, general and administrative expenses for the year ended
March 31, 2013.
As a result of the purchase price allocation, the Company has
recognized ¥10,662 million of goodwill and ¥5,499 million ofbrand and these are classiﬁed as goodwill and other intangible
assets, respectively, on the consolidated balance sheet. Goodwill
is not deductible for tax purpose. The amount of brand will beamortized based on the estimated useful lives of 20 to 25 years.
The Company adjusted the fair values of assets acquired andliabilities assumed as of the acquisition date based on the infor−
mation the Company obtained subsequent to the acquisition
date. These adjustments are reﬂected retroactively to the fair val−ues of assets acquired and liabilities assumed as of the acquisi−tion date.

Fair value of assets acquired, liabilities assumed and noncontrolling interests on the acquisition date were as follows:
Millions of yen
April 1, 2012

Before Adjustments

After Adjustments

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

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

1,758
2,581
1,525
5,864
208
¥17,380

1,773
2,581
1,525
5,879
208
¥17,380

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

Integrated Report 201365

Unaudited Pro Forma Results
Unaudited pro forma ﬁnancial information is presented below as if the acquisition of Eveden occurred at the beginning of 2012 ﬁscal
year.
Millions of yen

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

2013

2012

¥180,120
8,446
7,753

¥182,240
11,607
7,376

2013

2012

¥55.0554.96¥52.3752.31

Yen

Pro forma net income attributable to Wacoal Holdings Corp. per share:
Basic
Diluted

8 GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill—The changes in the carrying amount of goodwill for the year ended March 31, 2013 were as follows:
Millions of yen

2013
Peach John Segment

Balance at the beginning of the year:
Goodwill
Accumulated impairment losses
Total
Goodwill acquired during year
Foreign currency translation adjustments
Impairment losses
Balance at the end of the year:
Goodwill
Accumulated impairment losses
Total

Other

¥11,203(836)
10,367¥10,662316(1,197)
11,203(2,033)¥9,17010,978¥10,978

Total¥11,203(836)
10,367
10,662316(1,197)22,181(2,033)¥20,148

There was no change in the carrying amount of goodwill for the year ended March 31, 2012.
The changes in the carrying amount of goodwill for the year ended March 31, 2011, were as follows:
Millions of yen

2011
Peach John Segment

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

During the years ended March 31, 2013 and 2011, the Companies recorded impairment charges on goodwill of ¥1,197 million and¥836 million, respectively, in the Peach John Segment. See Note 20 for further information.

66

WACOAL HOLDINGS

Other Intangible Assets—The components of acquired intangible assets excluding goodwill as of March 31, 2013 and 2012 were as
follows:
Millions of yen

Year Ended March 31

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

During the year ended March 31, 2013, the Companies
recorded an increase of brands of ¥5,499 million with an esti−
mated useful life of 20 to 25 years, as a result of the acquisitionof Eveden. The Companies recorded foreign currency translation
adjustments of ¥163 million for brands.
Other intangible assets acquired during the year ended
March 31, 2013 totaled ¥855 million which primarily consist of
software of ¥824 million with an estimated useful life of ﬁve
years.
During the year ended March 31, 2013, the Companies
recorded an impairment charge on other intangible assets for thecustomer relationships and trademarks of ¥68 million and ¥1,587
million, respectively, in the Peach John Segment.
During the year ended March 31, 2012, the Companies
recorded no impairment charge on other intangible assets.
During the year ended March 31, 2011, the Companies recorded
an impairment charge on other intangible assets of ¥377 million

9 SHORT-TERM BANK LOANS AND LONG TERM DEBT
Short−term bank loans as of March 31, 2013 and 2012, consistedof the following:
Millions of yen

Unsecured bank loans

2013

2012

¥16,259¥5,780The weighted−average annual interest rates on short−termbank loans as of March 31, 2013 and 2012 were 0.7% and 1.3%,
respectively.
Unused lines of credit for short−term ﬁnancing as of March
31, 2013 and 2012, aggregated ¥24,637 million and ¥40,184
million, respectively. The Companies compensate banks forthese facilities in the form of commitment fees, which were notmaterial during the years ended March 31, 2013 and 2012.
Long−term debt as of March 31, 2013 and 2012, are summa−
rized below. The interest rates and maturities are for loans as ofMarch 31, 2013.

2013

2012

Gross Carrying
AmountAccumulated
Amortization andImpairment Loss

Gross Carrying
AmountAccumulated
Amortization andImpairment Loss

¥5,662
3,361
8,270
1,317
¥18,610¥ 190
3,068
5,329
479
¥9,066¥3,361
8,228
1,202¥12,791¥2,818
4,866
426¥8,110¥5,316103¥5,419¥2,146¥5,316103¥5,419¥559¥2,146¥559

and ¥559 million, for the customer relationships and trademarks,
respectively, in the Peach John Segment. See Note 20 for further
information.
Aggregate amortization expenses for the years ended March
31, 2013, 2012 and 2011 related to other intangible assets were
¥1,778 million, ¥1,747 million and ¥1,858 million, respectively.
Future estimated amortization expenses as of March 31, 2013,
were as follows:Year Ending March 31

Millions of yen

Estimated amortization expense
2014
2015
2016
2017
2018
Total

¥1,474
1,120
707
636
536
¥4,473

Millions of yen

2013

Collateralized bank loans, with ﬂoatinginterest at 4.3%, maturing through 2015¥ 28Collateralized bank loans, with ﬁxed inter−
est at 1.0%—1.7%, maturing through 2022
351
Unsecured bank loans, with ﬁxed interest at
0.4%—1.8%, maturing through 2022
2,037
Capital lease obligation
Total
2,416
Less current portion(898)
Long−term debt, less current portion¥1,518

2012

¥307
98
297
0
702
(64)
¥638

Integrated Report 2013

67

The annual maturities of long−term debt as of March 31,
2013, were as follows:Year Ending March 31

2014
2015
2016
2017
2018
Thereafter
Total

A subsidiary has pledged assets as security for loans. As of
March 31, 2013 and 2012, assets pledged as collateral for bankloans were as follows:

Millions of yen¥ 898
696
534
193
20
75
¥2,416

Millions of yen

Land
Buildings
Machinery and equipment
Total

2013

2012

¥ 888638
30¥1,556¥ 952758¥1,710As is customary in Japan, both short−term and long−term loans are made under general agreements which provide that security andguarantees for future and present indebtedness will be given upon request of the bank. The bank has the right to offset cash deposits
against obligations that have become due or, in the event of default, against all obligations due to the bank.

10 LEASES
The Companies lease most of their store premises, some of their distribution centers, and certain equipment. Most leases have automatic
renewal provisions and allow the Companies to extend the lease term beyond the initial base period, subject to the terms agreed at lease
inception. Future minimum rental commitments on operating leases having a remaining noncancelable lease term in excess of one year
as of March 31, 2013 are presented below:

Year Ending March 31

2014
2015
2016
2017
2018
Thereafter
Total

Millions of yen¥ 491
378
262
230
232
237
¥1,830Rental expenses were ¥5,675 million, ¥5,317 million and¥5,130 million for the years ended March 31, 2013, 2012 and2011, respectively, and have been included in selling, generaland administrative expenses.

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

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

12 TERMINATION AND RETIREMENT PLANS
Employee Retirement Plans—The Companies sponsor termina−tion and retirement beneﬁt plans that cover substantially all
employees. Beneﬁts are based on the employee’s years of service,position and performance. If the termination is involuntary orcaused by death, the employee is usually entitled to greater pay−ments than in the case of voluntary termination.
The Companies have a contributory deﬁned retirement beneﬁtplan and several unfunded termination plans administered by

68

WACOAL HOLDINGS

2013

2012

¥ 661
5
92
(113)
3
¥ 648

¥663
6
78
(86)
¥661

the Companies. Beneﬁts under the contributory deﬁned retire−
ment beneﬁt plan are usually paid in a lump sum at the earlier oftermination or retirement, although periodic payments are avail−able under certain conditions. Beneﬁts under the other termina−tion and retirement beneﬁt plan are paid either as lump−sum
payments or periodic payments under certain conditions. The
beneﬁts are usually paid as a lump−sum payment, if theemployee resigns before the mandatory retirement age.

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

Change in beneﬁt obligations:Beneﬁt obligations at the beginning of the year
Service cost
Interest cost
Participants’ contributions
Actuarial loss
Beneﬁts paid from plan assets
Settlement paid from plan assets
Settlement paid by the Companies
Beneﬁt obligations at the end of the year
Change in plan assets:
Fair value of plan assets at the beginning of the year
Actual return on plan assets
Employer contributions
Participants’ contributions
Beneﬁt payments
Settlement payments
Fair value of plan assets at the end of the year
Funded status at the end of the year

2013

2012

¥34,135
849
602
68
1,005
(825)
(1,201)(184)
34,449¥32,708
833
725
71
1,793
(752)
(1,090)(153)¥34,135¥31,607
2,748
1,781
68
(825)
(1,201)
34,178¥ (271)¥30,978
550
1,850
71
(752)
(1,090)31,607¥ (2,528)

Amounts recognized in the consolidated balance sheets as of March 31, 2013 and 2012, consist of:Millions of yen

Prepaid pension expense
Accrued expenses
Liability for termination and retirement beneﬁts

2013

2012

¥ 1,400(87)(1,584)¥ (271)¥ (93)(2,435)¥(2,528)

Amounts recognized in accumulated other comprehensive loss, pre−tax, as of March 31, 2013 and 2012, were as follows:
Millions of yen

Actuarial loss
Prior service beneﬁt

2013

2012

¥(5,396)
2,164¥(3,232)¥(7,665)
2,805¥(4,860)

The accumulated beneﬁt obligation for all deﬁned beneﬁt plans as of March 31, 2013 and 2012, were as follows:
Millions of yen

Accumulated beneﬁt obligation

2013

2012

¥34,449¥33,723

The projected beneﬁt obligations and the fair value of the plan assets for the Companies’ pension plans with projected beneﬁt obliga−
tions in excess of plan assets, and the accumulated beneﬁt obligations and the fair value of the plan assets for the Companies’ pension
plans with accumulated beneﬁt obligations in excess of plan assets were as follows:
Millions of yen

Plans with projected beneﬁt obligations in excess of plan assets:
Projected beneﬁt obligations
Fair value of plan assets
Plans with accumulated beneﬁt obligations in excess of plan assets:
Accumulated beneﬁt obligations
Fair value of plan assets

2013

2012

¥2,333662¥34,135
31,6072,333
662

33,72331,607

Integrated Report 2013

69

Net periodic beneﬁt costs for the Companies’ plans consisted of the following for the years ended March 31, 2013, 2012 and 2011:
Millions of yen

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

2013

2012

2011

¥ 849
602
(772)
1,298
(641)
¥1,336¥ 833
725
(756)
1,208
(692)
¥1,318¥ 835
712
(758)
1,255
(691)
¥1,353The unrecognized net actuarial loss and prior service beneﬁt are being amortized over 12 years (the average remaining service life ofactive participants) using the declining−balance method and the straight−line method, respectively.
Other changes in plan assets and beneﬁt obligations recognized in other comprehensive income (loss) for the years ended March 31,
2013, 2012 and 2011 were as follows:
Millions of yen

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

2013

2012

2011

¥ 971
1,298(641)¥1,628¥(1,999)
1,208
(692)
¥(1,483)¥(933)1,255(691)¥(369)The estimated amounts that will be amortized from accumulated other comprehensive income (loss) into net periodic beneﬁt costover the next year are summarized as follows:
Millions of yen

Actuarial loss
Prior service beneﬁt

¥ 944
(574)

The Companies use a measurement date of March 31 for their plans. The weighted−average assumptions used as of March 31 incomputing the beneﬁt obligations shown above were as follows:
Discount rate
Rate of increase in future compensation

2013

2012

1.2%
0.0%

1.9%
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
R ate of increase in future compensation
Expected long−term rate of return on plan assets

The Company’s approach to establishing the discount rate isbased upon long−term Japanese government bond rates and cor−porate bond indices. The discount rate assumption is based upon
the effective yields as of March 31, 2013 on the Japanese govern−
ment bonds whose maturity dates approximate the timing of the
expected future beneﬁt payments.
The expected long−term rate of return on plan assets isderived proportionally from return assumptions determined foreach of the major asset classes. The return expectations for eachof the asset classes are based largely on assumptions about eco−nomic growth and inﬂation, which are supported by long−termhistorical data. The estimated long−term rate of return is basedon an asset allocation of equity securities of 26.0%, debt securi−ties of 54.0%, life insurance company general accounts of 18.0%
and short−term ﬁnancing of 2.0%.

70

WACOAL HOLDINGS

2013

2012

2011

1.9%
0.0%
2.5%

2.4%
0.0%
2.5%

2.3%
0.0%
2.5%

The Companies’ investment strategy is to maintain actual
asset weightings within a preset range of target allocations. The
Companies’ investments are broadly diversiﬁed, typically con−sisting primarily of equity and debt securities. The Companies
believe these ranges represent an appropriate risk proﬁle for theplanned beneﬁt payments of the plans based on the timing of theestimated beneﬁt payment.
The asset allocation as of March 31, 2013 and 2012, was asfollows:
Equity securities
Debt securities
Life insurance company general accounts
Short−term ﬁnancing

2013

2012

35.8%
37.8%
14.9%
11.5%

40.4%
40.8%
16.1%
2.7%

The target allocation percentages are reviewed and approvedby the Pension Committee. The actual allocations for 2013 and2012 are different from the target allocation percentages primar−
ily because Wacoal Corp. maintained additional equity securities
within a separate plan asset which is assigned to the plan basedon an agreement between Wacoal Corp. and its employees and is
not governed by the Pension Committee. As such, the actual
allocation percentage of equity securities to the total plan assets
is higher than the target allocation, and similarly, the actual allo−
cation for some other types of assets is lower than the target
allocation.

The following tables presents the Companies’ plan assets
using the fair value hierarchy as of March 31, 2013 and 2012,
respectively. The fair value hierarchy has three levels based on
the reliability of the inputs used to determine fair value. Level 1
refers to fair values determined based on quoted prices in active
markets for identical assets. Level 2 refers to fair values esti−
mated using signiﬁcant other observable inputs, and Level 3
includes fair values estimated using signiﬁcant unobservable
inputs.

Millions of yen
2013

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

Level 1

Level 2

Level 3

¥5,159Total¥7,066¥5,159
7,066

8,883
5,094

2,476
8,883
5,094

¥7,635

1,577
3,923¥26,543

1,577
3,923
¥34,178

Level 1

Level 2

2,476

Millions of yen
2012

Equity securities:
Japanese companies
Foreign companies
Pooled funds (a)Debt securities:
Japanese government bonds
Japanese municipal bonds
Japanese corporate bonds
Foreign government bonds
Pooled funds (b)Life insurance company general accounts
Other types of investments:
Hedge funds (c)Short−term ﬁnancing
Total¥6,105866¥4,357
1,927

Total

¥6,105
866
4,357

9,654
5,093

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

2,017
845
¥22,041

2,017
845¥31,607

570
668¥9,566

Level 3(a) This class includes common stock of approximately 27% Japanese companies and 73% foreign companies as of March 31, 2013, and those percentages were 63% and 37%, respectively,
as of March 31, 2012.
(b) This class includes approximately 37% of Japanese government bonds, 4% of Japanese municipal bonds, 33% of foreign government bonds, and 26% of corporate bonds as of March
31, 2013, and those percentages were 49%, 3%, 42%, and 6%, respectively, as of March 31, 2012.
(c) This class includes hedge funds that invest both long and short in approximately 84% of debt securities, 8% of currencies and 8% of other investments as of March 31, 2013. This classincluded hedge funds that invested both long and short in approximately 36% of Japanese common stocks, 35% of foreign common stocks and 29% of debt securities as of March 31,
2012.
Equity securities and debt securities presented in Level 1 are primarily valued using a market approach based on the quoted market prices of identical instruments. Municipal bonds andcorporate bonds presented in Level 2 are primarily valued using quoted prices for identical instruments in markets that are not active. Pooled funds in equity securities or debt securities
and hedge funds which are categorized in Level 2 are valued by the sponsor of the funds primarily based on quoted prices in both active and inactive market for identical instruments
which comprise funds. Life insurance company general accounts include contracts with the insurance companies with guaranteed rate of return and capital, and those values are basedon the sum of original value and return.

Integrated Report 2013

71

The Companies’ funding policy for the funded plans is to con−tribute amounts computed in accordance with actuarial methods
accepted by Japanese tax law. The Companies expect to contrib−ute ¥1,725 million to their plans in the year ending March 31,
2014.
The following beneﬁt payments, which reﬂect expected futureservices, as appropriate, are expected to be paid:
Year Ending March 31

2014
2015
2016
2017
2018
Thereafter

Millions of yen¥2,148
2,266
2,357
2,442
2,395
11,299Multiemployer Plan—A subsidiary participated in a multiem−
ployer plan, Kyoto Orimono Oroshisho Employee Pension Plan,
but withdrew from the plan by paying a special contribution as acondition of withdrawal in the amount of ¥1,580 million during
the year ended March 31, 2012. The subsidiary recorded the esti−
mated withdrawal liability of ¥774 million as of March 31, 2011as it was probable that the subsidiary would withdraw from thefund. Accordingly, the subsidiary recorded an additional expensein the amount of ¥806 million for the year ended March 31,
2012, and it has been included in selling, general and adminis−
trative expenses.
The aggregate amount of contributions to the plan were ¥56
million and ¥42 million for the years ended March 31, 2012 and2011, respectively. The subsidiary’s contribution to the plan forthe year ended March 31, 2011 exceeded 5% of total
contributions.
Deﬁned Contribution Plan—Certain subsidiaries have a deﬁned

13 EQUITY
Japanese companies are subject to the Companies Act of Japan(the “Companies Act”). The signiﬁcant provisions in the
Companies Act that affect ﬁnancial and accounting matters are
summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any
time during the ﬁscal year in addition to the year−end dividend
upon resolution at the shareholders meeting. For companies thatmeet certain criteria, the Board of Directors may declare divi−
dends (except for dividends in kind) at any time during the ﬁscal
year if the companies have prescribed so in its articles of incor−
poration. The Company meets all the above criteria. The Boardof Directors of companies with board committees (an appoint−
ment committee, compensation committee and audit committee)
can also do so because such companies with board committees
already, by nature, meet the criteria under the Companies Act,
even though such companies have an audit committee instead of
the Board of Corporate Auditors.
The Companies Act permits companies to distribute divi−
dends in kind (noncash assets) to shareholders subject to a cer−tain limitation and additional requirements.

72

WACOAL HOLDINGS

contribution plan. The amounts of cost recognized for their con−tributions to the plan were ¥186 million, ¥27 million and ¥28
million for the years ended March 31, 2013, 2012 and 2011,
respectively.
Employee Early Retirement Program—The Companies provide
additional beneﬁts to employees that elect to participate in the
Companies’ early retirement program. Retirement beneﬁts of¥280 million, ¥260 million and ¥348 million were paid in addi−
tion to normal beneﬁts and charged to selling, general andadministrative expenses for the years ended March 31, 2013,2012 and 2011, respectively.
Termination Plan for Directors and Corporate Auditors—The
Company had and certain subsidiaries have termination plans for
directors and corporate auditors. Payment of termination beneﬁts
to directors and corporate auditors is made in a lump sum upon
termination and requires the approval of the shareholders before
payment. In June 2005, the Company rescinded its termination
plan for directors and corporate auditors upon the approval of its
shareholders. The amount of beneﬁt for each individual was ﬁxed
as of June 29, 2005 and will remain frozen until the retirement ofeach respective director and corporate auditor. The outstanding
liabilities were ¥391 million and ¥317 million as of March 31,
2013 and 2012, respectively, and were recorded in other long−term liabilities. Subsidiaries still maintain plans for their direc−
tors and corporate auditors. In accordance with the guidance fordetermination 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 thatwould 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 as of March 31, 2013
and 2012 were ¥218 million and ¥382 million, respectively, andwere included in liability for termination and retirement beneﬁts.

Semiannual interim dividends may also be paid once a year
upon resolution by the Board of Directors if the articles of incor−
poration of the companies so stipulate. The Companies Act pro−vides certain limitations on the amounts available for dividends
or the purchase of treasury stock. The limitation is deﬁned as theamount available for distribution to the shareholders, but theamount of net assets after dividends must be maintained at noless than ¥3 million.
(b) Increases/decreases and transfer of common stock, reserveand surplus
The Companies Act requires that an amount equal to 10% of divi−
dends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid−in capital (a componentof capital surplus) depending on the equity account charged
upon the payment of such dividends until the total of aggregate
amount of legal reserve and additional paid−in capital equals 25%of the common stock. Under the Companies Act, the total
amount of additional paid−in capital and legal reserve may bereversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid−in capital,
other capital surplus and retained earnings can be transferredamong the accounts under certain conditions upon resolution of
the shareholders.

(c) Treasury stock
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of theBoard of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders
which is determined by speciﬁc formula.
During the year ended March 31, 2013, changes in Wacoal Holdings Corp.’s additional paid−in capital due to equity transactions
with noncontrolling interest shareholders were as follows:
2013

Millions of yen

Net income attributable to Wacoal Holdings Corp.
Increase in Wacoal Holdings Corp.’s additional paid−in capital due to transfers of Wacoal Holdings Corp.’sownership interests in its subsidiaries from noncontrolling interests
Change in net income attributable to Wacoal Holdings Corp. and transfers from noncontrolling interests¥7,62317¥7,640

There were no changes in Wacoal Holdings Corp.’s additional paid−in capital due to equity transactions with noncontrolling interest
shareholders for the years ended March 31 2012 and 2011.

14 SHARE-BASED COMPENSATIONThe Company adopted an annual stock option plan in the year
ended March 31, 2009. Under the stock option plan, theCompany granted shares of its common stock to directors of theCompany excluding outside directors and directors of theCompany’s wholly owned subsidiary, Wacoal Corp., in the years
ended March 31, 2013, 2012 and 2011. The Company believes
that such awards better align the interests of its directors withthose of its shareholders, by sharing both risk and return fromﬂuctuations in stock prices and giving motivation to enhance its
corporate value. Each stock option is exercisable to acquire
1,000 shares of the Company’s common stock at ¥1 per share.
The compensation cost is measured at fair value on the grant
date. Options vest over one year in proportion to the services
rendered by the directors, and are exercisable from the day after
the date of retirement up to (i) 20 years from the grant date or (ii)
5 years from the day after the date of retirement, whichever isearlier.
The fair value of the options is estimated by using the Black−
Scholes option−pricing model with the following assumptions.

Expected dividend yield is based on the actual payout of divi−
dends in the last ﬁscal year and the closing price of theCompany’s common stock on the grant date. Expected volatility
is based on the historical volatility of the Company’s share priceover the most recent period commensurate with the expected
term of the Company’s stock options. Risk−free interest rate isbased 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 term of options
granted is based on the average remaining service period of
directors, assuming that those who are granted options will ren−der service until the stated retirement date and they will exercise
options immediately after their retirement.
Expected dividends
Expected volatility
Risk−free interest rate
Expected term

2013

2012

2011

3.2%
22.5%
0.1%
3.1 years

2.1%
31.6%
0.3%
3.8 years

1.7%
31.5%
0.2%
3.6 years

A summary of stock option activities under the Plan for the year ended March 31, 2013, was as follows:
Yen

Outstanding as of April 1, 2012
GrantedExercised
Forfeited or expired
Outstanding as of March 31, 2013
Exercisable as of March 31, 2013

The total intrinsic value of options exercised was ¥3 millionand ¥12 million for the years ended March 31, 2013 and 2012,
respectively. There were no options exercised during the year
ended March 31, 2011.
Total compensation costs recognized for the years ended
March 31, 2013, 2012 and 2011 were ¥53 million, ¥60 millionand ¥50 million, respectively. The total recognized tax beneﬁts
related thereto for the years ended March 31, 2013, 2012 and2011 were ¥19 million, ¥21 million and ¥20 million, respectively.

Shares

Weighted−Average
Exercise Price

205,000
67,000
3,000

¥1
1
1

269,000

1

Years
Weighted−Average
Remaining
Contractual Term

Millions of yen

17.7 years¥272

Aggregate
Intrinsic Value

The weighted−average grant date fair values of options
granted for the years ended March 31, 2013, 2012 and 2011 were¥799, ¥878 and ¥1,081, respectively.
As of March 31, 2013, there were ¥11 million of total unrec−
ognized compensation cost related to nonvested share−based
compensation arrangements granted under the Plan. That cost is
expected to be recognized over three months.

Integrated Report 201373

15 OTHER COMPREHENSIVE INCOME (LOSS)
The changes in the components of accumulated other comprehensive income (loss), including amounts attributable to noncontrollinginterests were as follows:
Millions of yen

2013

2011

Net
AmountPre−tax
AmountTax(Expense)
CreditNet
AmountPre−tax
AmountTax(Expense)
CreditNet
Amount¥4,783¥ (260) ¥4,523¥ (836)¥ 54¥ (782)¥(2,890)¥88¥(2,802)

9,909(2,101)
7,808(3,435)749(2,686)6,474(1,352)
5,122

1,608
783
2,391

(470)
(319)
(789)

1,138
464
1,602

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

1,170
(413)
757

(1,673)601(1,072)

(346)
625
(234)
423
(580)
1,048
¥(3,526) ¥10,693(1,999)516(1,483)¥72

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

(933)
564
(369)
¥(5,088)

380
(230)
150
¥995

(553)
334
(219)
¥(4,093)Pre−tax
AmountForeign currency translation
adjustments
Unrealized gain (loss) on securities:
Amount arising during the year
Reclassiﬁcation adjustments
Net unrealized gain (loss)
Pension liability adjustment:
Amount arising during the year
Reclassiﬁcation adjustment
Net unrealized gain (loss)
Other comprehensive income (loss)

Tax(Expense)
Credit

2012

971
657
1,628
¥14,219

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

JapanForeign
Total

2013

2012

2011

¥18,609(8,065)¥10,544¥18,045(7,838)¥10,207¥ 9,212(5,285)¥ 3,927

2013

2012

2011

¥5,578943¥6,521¥2,942581¥3,523¥2,882598¥3,480¥(2,754)(118)¥(2,872)¥ 3,649¥ 6751¥ 676¥4,199¥(1,398)(72)¥(1,470)¥ 2,010

Domestic and foreign components of income taxes expense consist of:Millions of yen

Current:
Japan
Foreign
Deferred:Japan
Foreign
Total income taxes

Income taxes in Japan applicable to the Companies, imposed by the national, prefectural and municipal governments, in the aggre−
gate resulted in normal effective statutory tax rates of approximately 38.0% for the year ended March 31, 2013 and 40.7% for the years
ended March 31, 2012 and 2011. Foreign subsidiaries are subject to income taxes of the countries in which they operate.
The Companies are subject to a number of different taxes based on income. The effective income tax rates differed from the normal
statutory rates for the following reasons for the years ended March 31, 2013, 2012 and 2011:
Normal Japanese statutory rates
Increase (decrease) in taxes resulting from:
Permanently nondeductible expenses
Change in valuation allowance
Undistributed earnings of associated companies
Differences in foreign subsidiaries' tax rate
Changes in Japanese income tax rates
Tax exemption
Unrecognized tax beneﬁts
Impairment losses on goodwill
Other—net
Effective tax rates

74

WACOAL HOLDINGS

2013

2012

2011

38.0%

40.7%

40.7%

4.3
0.8
0.0
(0.5)

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

9.9
17.6
2.9
(4.4)

(0.3)
0.2
(4.2)
(3.7)
34.6%

0.3
41.1%

(0.7)
2.9
(12.3)(5.4)
51.2%

Amendments to the Japanese tax regulations were issued on
December 2, 2011. As a result of these amendments, the statutory
income tax rate was reduced from 40.7% to 38.0% effective fromthe year beginning April 1, 2012, and will be reduced to 35.6%
effective from the year beginning April 1, 2015, and thereafter.
Consequently, the statutory income tax rate utilized for deferred
tax assets and liabilities expected to be settled or realized in the

period from April 1, 2012 to March 31, 2015 is 38.0% and for
periods subsequent to March 31, 2015 the rate is 35.6%. The
adjustment of deferred tax assets and liabilities for this change
in the tax rate resulted in a decrease of income taxes by ¥616
million and have been reﬂected in income taxes in the consoli−
dated statements of income for the year ended March 31, 2012.

The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax balances as of March 31,
2013 and 2012 were as follows:
Millions of yen

2013
DeferredTax Assets

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

Deferred
Tax Liabilities¥ 608
100
181
1,194
1,274
1,467

2012
DeferredTax Assets¥ 489
55
210
990
1,302
1,431
¥1,403
2,112
6,045
1,059

285
335
834
231
575
1,291
4,037

¥1,452
1,819
3,292
1,696
303
165
731
236
1,356
1,303
3,626

2,631
995
13,407(4,209)¥9,198

Deferred
Tax Liabilities

223
13,473¥13,473906
13,103(4,088)¥9,015

1,905
912
193
11,269¥11,269

The valuation allowance increased by ¥121 million for the year ended March 31, 2013. The valuation allowance increased by ¥850
million for the year ended March 31, 2012.
The Companies reversed certain valuation allowance and utilized ¥705 million of tax loss carryforwards, and recognized tax beneﬁts
of ¥228 million for the year ended March 31, 2013.
As of March 31, 2013, certain subsidiaries had tax loss carryforwards, which are available to offset future taxable income of such sub−sidiaries, expiring as follows:Year Ending March 31

2014
2015
2016
2017
2018
2019
2020
2021
2022
Thereafter
Total

Millions of yen¥ 714
155
408
441
634
2,141
2,349
1,782
913
2,299
¥11,836

There was no portion of undistributed earnings of foreign subsidiaries and foreign corporate joint ventures which was deemed to bepermanently invested as of March 31, 2013 and 2012.

Integrated Report 201375

A reconciliation of beginning and ending amounts of unrecognized tax beneﬁts was as follows:
Millions of yen

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

2013

2012

2011

¥267
46

¥188
79

¥313

¥267

¥321
58
(191)
¥188

Total amount of unrecognized tax beneﬁts that, if recognized,
would affect the effective tax rate is ¥313 million and ¥267 mil−lion as of March 31, 2013 and 2012, respectively.
As a result of revaluations of the Companies’ tax positions andthe expiration of the statute of limitations in several jurisdictions,
it is expected that the amount of unrecognized tax beneﬁts willchange in the next 12 months. Accordingly, the Companies
believe it is reasonably possible that existing unrecognized tax
beneﬁts may be reduced by an amount up to ¥133 million within
the next 12 months.
The Companies recognize interest and penalties accrued
related to unrecognized tax beneﬁts in income taxes in the consol−
idated statements of income. Total amounts of interest andpenalties recognized in the consolidated statements of income forthe years ended March 31, 2013, 2012 and 2011 were not material.
The Companies ﬁle income tax returns in Japan and various
foreign tax jurisdictions. In Japan, the Companies are no longer
subject to regular income tax examinations by the tax authorities
for years before 2009 with few exceptions. For other countries, theCompanies are no longer subject to regular income tax examina−
tions by the tax authorities for years before 2006 with few excep−
tions. In the year ended March 31, 2009, the transfer pricing
examination of certain domestic subsidiaries’ 2002 to 2007 ﬁscal
years and certain U.S. subsidiaries’ 2004 and 2003 ﬁscal years
was completed.

17 RELATED-PARTY TRANSACTIONSThe Companies purchase merchandise from numerous suppliers
throughout the world, including certain affiliated companies of
the Companies. The Companies purchased merchandise fromaffiliated companies in the amount of ¥2,353 million, ¥2,093 mil−lion and ¥1,131 million in the ﬁscal years ended March 31, 2013,2012 and 2011, respectively. The accounts payable to affiliatedcompanies were ¥166 million and ¥26 million as of March 31,
2013 and 2012, respectively.
The Companies also sell supplies, materials and products tocertain affiliated companies. Aggregate sales to affiliated compa−
nies were ¥381 million, ¥477 million and ¥537 million in ﬁscal

years ended March 31, 2013, 2012 and 2011. The accounts
receivable from affiliated companies were ¥81 million as ofMarch 31, 2013 and 2012.
The Companies earn royalties from the use of the Wacoal
brand by certain affiliated companies. The amount of royalty rev−enue earned was ¥247 million, ¥216 million and ¥201 million in
the ﬁscal years ended March 31, 2013, 2012 and 2011, respec−tively. Other accounts receivables from affiliated companies,
which are included in other current assets in the consolidatedbalance sheets, were ¥190 million and ¥171 million as of March
31, 2013 and 2012, respectively.

18 EARNINGS PER SHARE AND AMERICAN DEPOSITARYRECEIPT
Basic net income attributable to Wacoal Holdings Corp. per sharehas been computed by dividing net income attributable to Wacoal
Holdings Corp. by the weighted−average number of common stock
outstanding during each year. Diluted net income attributable to
Wacoal Holdings Corp. per share assumes the dilution that could
occur if share−based options to issue common stock were exercised.
The computation of earnings per American Depositary Receipt(ADR), each ADR representing 5 shares of common stock, is basedon the weighted−average number of common stock outstanding.
The weighted−average number of common stock outstandingused in the computations of basic net income attributable to
Wacoal Holdings Corp. per share was 140,846,298 shares for
2013, 140,848,576 shares for 2012 and 141,145,190 shares for2011. The weighted−average number of diluted common stock out−
standing used in the computations of diluted net income attribut−
able to Wacoal Holdings Corp. per share was 141,070,568 shares,
141,013,083 shares and 141,260,186 shares for 2013, 2012 and2011, respectively.

76

WACOAL HOLDINGS

19 FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
Fair Value of Financial Instruments
The carrying amounts and fair values of ﬁnancial instruments as of March 31, 2013 and 2012 were as follows:
Millions of yen

2013

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

2012

Carrying Amount

Fair Value

Carrying Amount

Fair Value¥4,601
41,00329¥45,633¥4,601
41,00629¥45,636¥4,936
31,22774¥36,237¥4,934
31,22774¥36,235¥ (7)(2,416)¥(2,423)¥ (7)(2,416)¥(2,423)¥(12)(702)¥(714)¥(12)(702)¥(714)

There are investments in nonmarketable equity securities anddebt securities for which there are no readily determinable fairvalues. See Note 3 for further information. The carrying amountsof all other ﬁnancial instruments approximate their estimated fairvalues.
Foreign Exchange Contracts—The Companies are exposed toforeign currency exchange risks on the transactions denominatedin foreign currencies relating to its ongoing business operations.
Such risks are primarily managed by using foreign currency
exchange contracts. The Companies measure forward currency
exchange contracts at the fair value since they are not designatedas a hedge.
Marketable Securities and Investment—Held−to−maturity debt
securities are classiﬁed as investments and marketable securities
as of March 31, 2013 and 2012, respectively. The fair value ofthese held−to−maturity debt securities are classiﬁed as Level 1.
For all other investments included in marketable securities andinvestments, see Notes 3 and 20.
Long−Term Debt—The fair values for long−term debt are esti−
mated by discounted cash ﬂow analysis, using rates currently

available for similar types of borrowings with similar terms andremaining maturities. The estimated fair value is based on Level
2 input.
Limitations—Fair value estimates are made at a speciﬁc point in
time, based on relevant market information and information
about the ﬁnancial instrument. These estimates are subjective innature and involve uncertainties and matters of signiﬁcant judg−
ment and therefore cannot be determined with precision.
Changes in assumptions could signiﬁcantly affect the estimates.
Concentration of Credit Risk—The Companies’ business consists
primarily of sales of women’s intimate apparel to a large numberof diverse customers in the Japanese retail industry, which
include well−established department stores, general merchandise
stores and other general retailers and specialty stores. No single
customer constitutes 10.0% or more of the total sales, although
the general retail customers that are consolidated companies
within the Aeon Group collectively accounted for approximately
9.1%, 9.8% and 10.0% of the total sales in ﬁscal years ended March
31, 2013, 2012 and 2011, respectively.

20 FAIR VALUE MEASUREMENTS
The guidance for fair value measurements deﬁnes fair value as
the price that would be received to sell an asset or paid to trans−
fer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between
market participants at the measurement date. The guidance
establishes a three−level fair value hierarchy that prioritizes the
inputs used to measure fair value as follows:

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

Integrated Report 201377

Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis as of March 31, 2013 and 2012 were as follows:
Millions of yen

2013

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

Level 1

Level 2

¥ 497497¥ 10
1,191
2,903
4,104

Level 3¥ 10
1,191
3,400
4,601

40,526
186
40,712¥41,209

Total

40,526
186
40,71229¥4,13329¥45,342¥ (7)¥ (7)

Millions of yen

2012

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

Marketable securities and investments presented in Level 1
are valued using an unadjusted quoted market price in active
markets with sufficient volume and frequency of transactions.
Bonds presented in Level 2 are valued by the ﬁnancial institution
using quoted market price for identical instruments in markets
that are not active and mutual funds presented in Level 2 are val−ued by the ﬁnancial institution based on quoted prices in bothactive and inactive market for identical instruments which com−prise funds.
As presented in Note 3, the Companies recorded impairment
charges on marketable securities and investments if a decline infair value of marketable securities and investments is determined
to be other than temporary.
Derivative instruments are composed of foreign currency
exchange contracts. Financial instruments presented in Level 2

78

WACOAL HOLDINGS

Level 1

Level 2

¥ 421421¥ 10
1,440
2,733
4,183

31,13097
31,227¥31,648

Level 3Total

¥ 10
1,440
3,154
4,604
31,13097
31,22774¥4,25774¥35,905¥(12)¥ (12)are valued using quotes obtained from third parties.
The changes in the fair value of the foreign currency
exchange contracts are recorded in earnings, since the foreign
currency exchange contracts are not designated as a hedge. The
Companies recognized a gain of ¥40 million, a gain of ¥89 mil−lion and a loss of ¥8 million in other—net of other income(expenses) in the years ended March 31, 2013, 2012 and 2011,
respectively.
The Companies recorded the derivative instruments as othercurrent assets and other current liabilities in the consolidatedbalance sheets at fair value of ¥29 million and ¥7 million, respec−tively as of March 31, 2013. The derivative instruments are pre−sented as other current assets and other current liabilities in the
consolidated balance sheets at fair value of ¥74 million and ¥12
million as of March 31, 2012.

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

2013

Level 1

Goodwill (Note 8)
Trademark (Note 8)
Customer relationship (Note 8)

As of the end of March 31, 2013, goodwill with a carrying
amount of ¥10,367 million was written down to its implied fairvalue of ¥9,170 million, resulting in an impairment charge of¥1,197 million, which is included in earnings for the year ended
March 31, 2013. The impairment arose due to the decline in its
fair value, which was mainly caused by a downturn in consump−tion due to general market conditions. To measure the fair valuesof the reporting units, the Companies used the expected present
value of future cash ﬂows and incorporated relevant unobserv−
able inputs, such as management’s internal assumptions about
future cash ﬂows and appropriately risk−adjusted discount rates,
which reﬂected management’s estimate of assumptions that mar−ket participants would use in pricing the asset in an arm’s lengthtransaction as of the measurement date.
Trademarks with a carrying amount of ¥4,757 million as ofMarch 31, 2013, were written down to their fair values of ¥3,170
million, resulting in recognition of an impairment charge of¥1,587 million for the year ended March 31, 2013. The impair−ment arose due to the decline in their fair value, which was
mainly caused by a downturn in consumption due to generalmarket conditions. To measure the fair value of the trademarks,
the Companies used the relief−from royalty method and incorpo−
rated relevant unobservable inputs, such as management’s inter−
nal assumptions about future cash ﬂows, the rate of royalty, andappropriately risk−adjusted discount rate, which reﬂected the
management’s estimate of assumptions that market participants
would use in pricing the asset in an arm’s length transaction as ofthe measurement date. Future cash ﬂows were based on manage−
ment’s cash ﬂow projections for the future ﬁve years, and after
ﬁve years, future cash ﬂows were estimated using the perpetuity
growth rate of 0%. Management’s cash ﬂow projections weredeveloped using estimates for expected future revenue growth
rates, proﬁt margins and working capital levels of the reporting
units. The rate of royalty used for the valuation was based on theactual royalty ratio used in transactions. The risk−adjusted dis−count rate represents a weighted−average cost of capital (WACC)
adjusted for inherent risk spread.
Customer relationships with a carrying amount of ¥361 mil−lion as of March 31, 2013 were written down to their fair value of¥293 million, resulting in recognition of impairment charges of¥68 million for the year ended March 31, 2013. The impairments
recorded for this year arose due to the decline in their fair value,
which were mainly caused by a downturn in consumption
because of general market conditions. To measure the fair valuesof the customer relationships, the Companies used the excess
earnings method and incorporated relevant unobservable inputs,
such as management’s internal assumptions about future cash
ﬂows, the percentage of orders that the Companies expect toreceive from the customers existed at the point of acquisition andappropriately risk−adjusted discount rate, which reﬂected theLevel 2

Level 3

Total

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

management’s estimate of assumptions that market participants
would use in pricing the asset in a current transaction as of themeasurement date. The future cash ﬂows were projected in thesame way as described in the trademarks. The percentage oforders that the Companies expect to receive from the customers
existed at the point of acquisition was estimated based on thehistorical trend of the percentage of sales to the preacquisition
customers. Risk−adjusted discount rate representing a WACC
was determined using the capital asset pricing model.
There were no signiﬁcant assets or liabilities that were mea−
sured at fair value on a nonrecurring basis as of March 31, 2012.
Buildings and building improvements held and used, with acarrying amount of ¥107 million, were written down to their fairvalue of 0, because the Companies decided to abandon an officebuilding. An impairment charge of ¥107 million was included inearnings for the year ended March 31, 2011, in Wacoal Business(Domestic) Segment.
As of the end of March 31, 2011, goodwill with a carrying
amount of ¥11,203 million is written down to its implied fairvalue of ¥10,367 million, resulting in an impairment charge of¥836 million, which is included in earnings for the year ended
March 31, 2011. To measure the fair values of the reporting
units, the Companies used the expected present value of future
cash ﬂows and incorporated relevant unobservable inputs, suchas management’s internal assumptions about future cash ﬂows
and appropriately risk−adjusted discount rates, which reﬂected
management’s estimate of assumptions that market participants
would use in pricing the asset in an arm’s length transaction asof the measurement date.
Trademarks with a carrying amount of ¥5,316 million as ofMarch 31, 2011, were written down to their fair value of ¥4,757
million, resulting in recognition of an impairment charge of ¥559
million for the year ended March 31, 2011. The impairments
arose due to the decline in their fair value, which were mainly
caused by a downturn in consumption due to general market
conditions. To measure the fair value of the trademarks, theCompanies used the relief−from royalty method and incorporated
relevant unobservable inputs, such as management’s internal
assumptions about future cash ﬂows, the rate of royalty, andappropriately risk−adjusted discount rate, which reﬂected man−agement’s estimate of assumptions that market participants
would use in pricing the asset in an arm’s length transaction asof the measurement date. Future cash ﬂows were based on man−agement’s cash ﬂow projections for the future ﬁve years, and after
ﬁve years, future cash ﬂows were estimated using the perpetuity
growth rate of 0%. Management’s cash ﬂow projections weredeveloped using estimates for expected future revenue growth
rates, proﬁt margins and working capital levels of the reporting
units. The rate of royalty used for the valuation was based on
the actual royalty ratio used in transactions. The risk−adjusted

Integrated Report 2013

79

discount rate represents a WACC adjusted for inherent risk
spread.
Customer relationships with a carrying amount of ¥1,102 mil−lion as of March 31, 2011 were written down to their fair valuesof ¥725 million, resulting in recognition of impairment chargesof ¥377 million for the year ended March 31, 2011. The impair−ments recorded for this year arose due to the decline in their fairvalues, which were mainly caused by a downturn in consumption
because of general market conditions. To measure the fair valueof the customer relationships, the Companies used the excess
earnings method and incorporated relevant unobservable inputs,
such as management’s internal assumptions about future cash
ﬂows, the percentage of orders that the Companies expect toreceive from the customers existed at the point of acquisition andappropriately risk−adjusted discount rate, which reﬂected man−agement’s estimate of assumptions that market participants
would use in pricing the asset in a current transaction as of themeasurement date. The future cash ﬂows were projected in thesame way as described in the trademarks. The percentage oforders that the Companies expect to receive from the customers

existed at the point of acquisition was estimated based on thehistorical trend of the percentage of sales to the preacquisition
customers. Risk−adjusted discount rate representing a WACC
was determined using the capital asset pricing model.
Valuation process
The valuation process involved in Level 3 measurements forapplicable asset and liability is governed by the valuation policies
and procedures, including evaluation method for fair value mea−
surements, pre−approved by the Companies. Based on the poli−cies and procedures, either personnel from the accounting
division or personnel in charge of valuation determine the valua−tion model to be utilized to measure each asset and liability atfair value. We engage independent external experts of valuation
to assist in the valuation process for certain assets over a speciﬁc
amount, and their results of valuations are reviewed by the
responsible personnel. All the valuations including those per−formed by the external experts are reviewed and approved by the
management of the Company before being recorded in the gen−eral ledgers.

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

Fair Value (¥ Million)

Trademarks

Customer relationships¥3,170¥293

Valuation TechniquePrincipal Unobservable Input

Range

Relief−from royalty method

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

7.5%—11.5%
3.0%—4.0%

Excess earning method

21 SEGMENT INFORMATION
Operating Segment Information
The Companies have three reportable segments: “Wacoal busi−
ness (domestic),” “Wacoal business (overseas),” and “Peach John,”
which are based on their locations and brands. These segments
represent components of the Companies for which separate ﬁnan−
cial information is available and for which operating proﬁt (loss)
is reviewed regularly by the chief operating decision maker in
deciding how to allocate the Companies’ resources and in assess−ing their performance. The accounting policies used for thesereportable segments are the same as those described in the sum−mary of signiﬁcant accounting policies in Note 1.
“Wacoal business (domestic)” segment primarily produces and80

WACOAL HOLDINGS

3.3%—5.5%0%
4.5%
2 years

sells innerwear (consisting of foundation, lingerie, nightwear andchildren’s innerwear), outerwear, sportswear and hosiery. “Wacoal
business (overseas)” segment produces and sells innerwear (con−sisting of foundation, lingerie, nightwear and children’s inner−wear), outerwear, sportswear and hosiery. “Peach John” segment
produces and sells innerwear (consisting of foundation, lingerie,nightwear and children’s innerwear), outerwear, and other textile−
related products, which are sold under the “Peach John” brand.
“Other” segment produces and sells innerwear (consisting of foun−dation, lingerie, nightwear and children’s innerwear), outerwear,
sportswear, other textile−related products and mannequins as well
as offers construction of store and interior design services.

Information about operating results and assets for each segment as of and for the years ended March 31, 2013, 2012 and 2011 was asfollows:
Millions of yen

2013

WacoalBusiness(Domestic)

Net sales:
External customers¥115,657Intersegment
2,193
Total
117,850
Operating costs and expenses:
Operating costs and expenses
106,482
Depreciation and amortization
2,945
Impairment charges on goodwill (Note 20)
Impairment charges on other intangible assets (Note 20)
Total
109,427
Operating proﬁt
8,423
Total assets and capital expenditures
Total assets
236,006
Capital expenditures
2,283

WacoalBusiness(Overseas)

Peach John

Other

Elimination¥23,081
7,582
30,663¥11,972
232
12,204¥26,4445,430
31,874¥(15,437)(15,437)

28,635598

30,429498(15,437)

29,233
1,430

11,357
696
1,197
1,655
14,905(2,701)30,927947(15,437)

34,396471

18,135
202

43,836
290(78,570)

Consolidated¥177,154
177,154
161,466
4,737
1,197
1,655
169,055
8,099
253,803
3,246

Millions of yen

2012

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

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

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

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

25,946551
26,497
1,440

12,766734
13,500529

26,013290
26,303236

208,373
1,991

29,367549

21,237348

20,566
666

WacoalBusiness(Domestic)

WacoalBusiness(Overseas)

Peach John

Other

Elimination¥110,856
2,134
112,990¥20,010
6,118
26,128¥11,575
73
11,648¥23,107
4,588
27,695¥(12,913)(12,913)104,384
2,986

24,297509

26,992365(12,913)

107,370
5,620

24,806
1,322

11,930825
836
936
14,527(2,879)27,357338(12,913)202,054
2,488

27,109523

21,013
196

20,910132(55,810)

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

171,897
156,860
4,660
161,520
10,377221,098
3,544

Millions of yen

2011

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

Consolidated¥165,548
165,548
154,690
4,685
836
936
161,147
4,401
215,276
3,339

Integrated Report 2013

81

The Companies account for intersegment sales and transfers at cost plus a markup. Operating proﬁt (loss) represents net sales less oper−
ating costs and expenses. Amortization and impairment charges on other intangible assets represent only amortization and impairment
charges on customer relationships or trademarks related to the acquisition of Peach John, and do not include any other intangibles such assoftware.
Products and Service Information
Net sales information by product and service for the years ended March 31, 2013, 2012 and 2011 was as follows:
Millions of yen

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

2013

2012

2011

¥130,284
9,232
1,467
140,983¥16,439
1,559
7,580
10,593¥177,154¥124,303
9,390
1,530
135,223¥16,371
1,646
8,226
10,431¥171,897¥116,127
8,713
1,476
126,316¥17,397
1,666
7,493
12,676¥165,548

Geographic Information
Information by major geographic area as of and for the years ended March 31, 2013, 2012 and 2011 was as follows:
Millions of yen

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

2013

2012

2011

¥146,224
12,685
18,245¥177,154¥149,587
10,527
11,783¥171,897¥144,999
9,167
11,382¥165,548¥44,670
2,685
2,305¥49,660¥45,240
2,334
1,504¥49,078¥45,792
2,349
1,593¥49,734

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

22 SUBSEQUENT EVENTSOn May 14, 2013, the Board of Directors resolved to pay a cash dividend of ¥140 per 5 shares of common stock to holders of record as ofMarch 31, 2013 (aggregate amount of ¥3,944 million).

82

WACOAL HOLDINGSMANAGEMENT’S REPORT ON INTERNAL CONTROLOVER FINANCIAL REPORTING

The management of Wacoal Holdings Corp. is responsible for establishing and maintaining adequate internal control over ﬁnancial
reporting as deﬁned in Rule 13a−15(f) under the Securities Exchange Act of 1934. The company’s internal control over ﬁnancial
reporting is a process designed by, or under the supervision of, our principal executive and principal ﬁnancial officers and effected byour board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of ﬁnancial report−
ing and the preparation of ﬁnancial statements for external purposes in accordance with generally accepted accounting principles andincludes those policies and procedures that:Ʉ ƌɌɄ+ -/$)Ɍ/*Ɍ/# Ɍ($)/ )) Ɍ*!Ɍ- *-.Ɍ/#/ȞɌ$)Ɍ- .*)' Ɍ /$'ȞɌ0-/ '4Ɍ)Ɍ!$-'4Ɍ- ū /Ɍ/# Ɍ/-)./$*).Ɍ)Ɍ$.+*.$/$*).Ɍ*!Ɍ
the assets of the company;Ʉ ƌɌɄ+-*1$ Ɍ- .*)' Ɍ..0-) Ɍ/#/Ɍ/-)./$*).Ɍ- Ɍ- *- Ɍ.Ɍ)  ..-4Ɍ/*Ɍ+ -($/Ɍ+- +-/$*)Ɍ*!ɌŨ))$'Ɍ.// ( )/.Ɍ$)Ɍ*-−dance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; andɄ ƌɌɄ+-*1$ Ɍ- .*)' Ɍ..0-) Ɍ- "-$)"Ɍ+- 1 )/$*)Ɍ*-Ɍ/$( '4Ɍ / /$*)Ɍ*!Ɍ0)0/#*-$5 Ɍ,0$.$/$*)ȞɌ0. Ɍ*-Ɍ$.+*.$/$*)Ɍ*!Ɍ/# Ɍ
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, projec−
tions of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Wacoal Holdings Corp.’s management assessed the effectiveness of internal control over ﬁnancial reporting as of March 31, 2013.
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).
Wacoal Holdings Corp.’s management excluded the assessment of internal control over ﬁnancial reporting of Eveden Group Lim−
ited and its subsidiaries (collectively, the “Eveden Group”), which became our wholly owned subsidiaries on April 10, 2012 from thescope of assessment for the effectiveness of internal control over ﬁnancial reporting of Wacoal Holdings Corp. as of March 31, 2013.
The percentages of the total assets and net sales of Eveden Group in the consolidated ﬁnancial statements as of and for the year
ended March 31, 2013, were 9.5% and 4.1%, respectively.
Based on its assessment, management concluded that, as of March 31, 2013, Wacoal Holdings Corp’s internal control over ﬁnancial
reporting was effective based on the COSO criteria.
Wacoal Holdings Corp.’s independent registered public accounting ﬁrm, Deloitte Touche Tohmatsu LLC, has issued an attestation
report on the effectiveness of our internal control over ﬁnancial reporting as of March 31, 2013.

Yoshikata Tsukamoto
President and Representative Director

Ikuo Otani
Senior Managing Director

June 27, 2013

Integrated Report 201383

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte Touche Tohmatsu LLC
Shijokarasuma FT Square
20, Naginataboko-cho
Karasuma-higashiiru, Shijo-doriShimogyo-ku, Kyoto 600-8008
Japan
Tel: +81 (75) 222 0181
Fax: +81 (75) 231 2703
www.deloitte.com/jp
To the Board of Directors and Stockholders of Wacoal Holdings Corp.
Kyoto, Japan
We have audited the accompanying consolidated balance sheets of Wacoal Holdings Corp. and subsidiaries (the “Companies”) as of March 31, 2013
and 2012, and the related consolidated statements of income, comprehensive income (loss), equity, and cash ﬂows for each of the three years in the
period ended March 31, 2013, which are all expressed in Japanese yen. These ﬁnancial statements are the responsibility of the Companies’ manage−
ment. Our responsibility is to express an opinion on these ﬁnancial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the ﬁnancial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the ﬁnancial statements. An audit also includes
assessing the accounting principles used and signiﬁcant estimates made by management, as well as evaluating the overall ﬁnancial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated ﬁnancial statements present fairly, in all material respects, the ﬁnancial position of Wacoal Holdings Corp. andsubsidiaries as of March 31, 2013 and 2012, and the results of their operations and their cash ﬂows for each of the three years in the period ended
March 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
Our audits also comprehended the translation of the Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has
been made in conformity with the basis stated in Note 2. The translation of the ﬁnancial statement amounts into U.S. dollars has been made solely forthe convenience of readers outside of Japan.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companies’
internal control over ﬁnancial reporting as of March 31, 2013, based on the criteria established in Internal Control − Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 27, 2013 expressed an unqualiﬁed opinion on
the Companies’ internal control over ﬁnancial reporting.

June 27, 201384

WACOAL HOLDINGSREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte Touche Tohmatsu LLC
Shijokarasuma FT Square
20, Naginataboko-cho
Karasuma-higashiiru, Shijo-doriShimogyo-ku, Kyoto 600-8008
Japan
Tel: +81 (75) 222 0181
Fax: +81 (75) 231 2703
www.deloitte.com/jp
To the Board of Directors and Stockholders of Wacoal Holdings Corp.
Kyoto, Japan
We have audited the internal control over ﬁnancial reporting of Wacoal Holdings Corp. and subsidiaries (the “Companies”) as of March 31, 2013,
based on criteria established in Internal Control − Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment theinternal control over ﬁnancial reporting at Eveden Group Limited and its subsidiaries, which were acquired on April 10, 2012 and whose ﬁnancial
statements constitute 9.5% of total assets and 4.1% of net sales of the consolidated ﬁnancial statement amounts as of and for the year ended March 31,
2013. Accordingly, our audit did not include the internal control over ﬁnancial reporting at Eveden Group Limited and its subsidiaries. The
Companies’ management is responsible for maintaining effective internal control over ﬁnancial reporting and for their assessment of theeffectiveness of internal control over ﬁnancial reporting, included in the accompanying Management’s Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the Companies’ internal control over ﬁnancial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over ﬁnancial reporting wasmaintained in all material respects. Our audit included obtaining an understanding of internal control over ﬁnancial reporting, assessing the risk that amaterial weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over ﬁnancial reporting is a process designed by, or under the supervision of, the company’s principal executive andprincipal ﬁnancial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and otherpersonnel to provide reasonable assurance regarding the reliability of ﬁnancial reporting and the preparation of ﬁnancial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over ﬁnancial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reﬂect the transactions and dispositionsof 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 inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the ﬁnancial statements.
Because of the inherent limitations of internal control over ﬁnancial reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any
evaluation of the effectiveness of the internal control over ﬁnancial reporting to future periods are subject to the risk that the controls may become
inadequate because of changes 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, 2013, basedon the criteria 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, 2013 of the Companies and our report dated June 27, 2013 expressed an unqualiﬁed
opinion on those ﬁnancial statements.

June 27, 2013

Integrated Report 201385

CORPORATE DATA
As of March 31, 2013

Head office

Overseas joint ventures

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

Wacoal Holdings Equity Owned

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

Websitewww.wacoalholdings.jp/index_e.html
Date of foundation

June 15, 1946
Date of establishment
November 1, 1949

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

Shareholders’ equity¥185,840 million

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

Number of employees (consolidated)

Wacoal America, Inc.

18,622
Domestic principal subsidiaries
Wacoal Holdings Equity Owned

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

%

Wacoal Holdings Equity Owned

Wacoal (UK) Limited

100
100
100
57
99
100

WACOAL CANADA INC.

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

%

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

Domestic principal joint ventures
Wacoal Holdings Equity Owned%

House of Rose Co., Ltd.

24

86

WACOAL HOLDINGS

25
34
50
42
50
20

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

100
100
100
100

Overseas principal subsidiaries

Dalian Wacoal Co., Ltd.
%

4th Floor, Hardy House, 16−18 Beak Street,
London WIF 9RD, United Kingdom
Tel 44−207−439−6190
1000 de la Gauchetiere Street West, Suite
2400 Montreal, Q.C., Canada H3B 4W5
Tel 1−514−448−2173
Wacoal Dominicana Corp.

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

Rothwell Road, Desborough,Northamptonshire NN14 2PG,
United Kingdom
Tel 44−1536−760−282
Wacoal France S.A.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

INVESTOR INFORMATIONAs of March 31, 2013

Ownership and distribution of shares

Stock listings

Tokyo, Osaka, NASDAQ
Securities firms
1.59%

Fiscal year-end

March 31
Securities code

3591

Individuals and others
20.90%

Financial institutions
43.48%

Other Japanese companies
21.36%

Foreign institutions
and individuals
12.67%

Common stock

Issued: 143,378,085 shares
Outstanding: 140,844,357 shares
Trading unit

1,000 shares
Shareholder register agent
for common stock

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

Major shareholders

American depositary receipts

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

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

The Bank of Tokyo−Mitsubishi UFJ, Ltd.

4.87

Meiji Yasuda Life Insurance Company

4.73

Nippon Life Insurance Company, Limited.
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)

3.65

The Bank of Kyoto, Ltd.
The Bank of New York Mellon as depositary bank for depositary
receipt holders*Japan Trustee Services Bank, Ltd. (Trust Account 9)

3.28

The Shiga Bank, Ltd.
Mika Okada

2.54

3.62
3.48

3.06
2.76
2.35

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

Number of shareholders

12,078Stock price/Trading volume
¥
2,000

1,500

1,000

500
Thousand
Shares

20,00015,00010,000

5,000

0

04/4

05/1

06/1

07/1

08/1

09/1

10/1

11/1

12/1

13/1

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

Integrated Report 201387

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

130912−DN−AT3

Printed in Japan