Edgar Filing: WACOAL HOLDINGS CORP

FORM 20-F/A (AMENDMENT NO. 1)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F/A

(AMENDMENT NO. 1)

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission file number 000-11743

KABUSHIKI KAISHA WACOAL HOLDINGS

(Exact name of Registrant as specified in its charter)

WACOAL HOLDINGS CORP.

(Translation of Registrant’s name into English)

Japan

(Jurisdiction of incorporation or organization)

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

(Address of principal executive offices)

Ikuo Otani

i-otani@wacoal.co.jp, +81-75-682-1028

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

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.


Title of Each Class		Name of Each Exchange on Which Registered
Common Stock		NASDAQ Capital Market
American Depositary Shares (each representing 5 shares of such Common Stock)

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Common Stock Outstanding:

140,851,070 shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

þ Yes ¨ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

¨ Yes þ No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large Accelerated Filer þ		Accelerated Filer ¨		Non-Accelerated Filer ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


U.S. GAAP þ		International Financial Reporting Standards as issued by the International Accounting Standards Board ¨		Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

¨ Item 17 þ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes þ No

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Amendment No. 1 on Form 20-F/A contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our company and our industry. You can identify these statements by the fact that they do not relate strictly to historic or current facts. The forward-looking statements discuss future expectations, identify strategies, contain projections of results of operations or of financial condition, or state other “forward-looking” information. In particular, the forward-looking statements may include statements relating to the impact of the ongoing global economic downturn on our sales and profitability in Japan and our other markets; to the impact of weak consumer spending in Japan and our other markets on our sales and profitability; the impact on our business of anticipated continued weakness of department stores and other general retailers in Japan; our ability to successfully develop, manufacture and market products in Japan and our other markets that meet the changing tastes and needs of consumers and to deliver high quality products; the highly competitive nature of our business and the strength of our competitors; our ability to successfully expand our network of our own specialty retail stores and achieve profitable operations at these stores; our ability to further develop our catalog and Internet sales capabilities; our ability to effectively manage our inventory levels; our ability to reduce costs; our ability to recruit and maintain qualified personnel; effects of irregular weather events on our business and performance; risks related to conducting our business internationally; risks from acquisitions and other strategic transactions with third parties; risks relating to return of investment for development of new market; risks relating to intellectual property; risks relating to protection of personal information and our confidential information; risks relating to internal controls over financial reporting; the impact of weakness in the Japanese equity markets on our holdings of Japanese equity securities; and the impact of any natural disaster or epidemic on our business. Forward-looking statements are contained in the section entitled “Item 5. Operating and Financial Review and Prospects” and elsewhere in this Amendment No.1.

The forward-looking statements are subject to various risks and uncertainties. Information contained in the section listed above and elsewhere in this Amendment No. 1 identifies factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

We undertake no obligation to update any forward-looking statements contained in this Amendment No. 1, whether as a result of new information, future events or otherwise.

TABLE OF CONTENTS


	Page
Explanatory Note		1
PART I
ITEM 3. Key Information		2
ITEM 5. Operating and Financial Review and Prospects		12
ITEM 6. Directors, Senior Management and Employees		40
PART III
ITEM 19. Exhibits		50
SIGNATURES		51
EX-12.1 Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-12.2 Certification of the chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-13.1 Certification of the principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-13.2 Certification of the chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EXPLANATORY NOTE

This Amendment No. 1 to our Annual Report on Form 20-F for the fiscal year ended March 31, 2012, originally filed with the Securities and Exchange Commission on July 13, 2012 (the “2012 Form 20-F Annual Report”), is being filed to (i) correct the Japanese yen and U.S. dollar amounts of cash dividends per share declared for the fiscal year ended March 31, 2012 included in the table under the heading “A. Selected Financial Data” of “Item 3. Key Information”; (ii) correct the reason for the decrease in net sales of our Other business segment under the heading “Fiscal 2012 Compared to Fiscal 2011—Consolidated Operating Results—Net Sales” in “A. Operating Results” of “Item 5. Operating and Financial Review and Prospects”; (iii) correct minor typographical errors included in “E. Share Ownership” of “Item 6. Directors, Senior Management and Employees” and “Item 19. Exhibits”; and (iv) for purposes of furnishing interactive data file disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T. In accordance with the applicable grace period, the interactive data file disclosure in Exhibit 101 is being furnished less than 30 days after the original filing of the 2012 Form 20-F Annual Report.

This Amendment No. 1 consists of the Form 20-F/A cover page; a cautionary statement regarding forward-looking statements; this explanatory note; Items 3, 5, 6 and 19 (each, as amended); the signature page for Form 20-F/A; and the required certifications of our principal executive officer and chief financial officer.

Other than as expressly set forth herein, this Amendment No. 1 does not, and does not purport to, amend or restate any other information contained in the 2012 Form 20-F Annual Report nor does this Amendment No. 1 reflect any events that have occurred after the 2012 Form 20-F Annual Report was filed with the Securities and Exchange Commission.

As used in this Amendment No. 1, unless the context otherwise requires, the “Company” and “Wacoal Holdings” refer to Wacoal Holdings Corp., and “Wacoal”, “we”, “us”, “our” and similar terms refer to Wacoal Holdings Corp. and its consolidated subsidiaries.

The Company’s fiscal year-end is March 31. In this Amendment No. 1, “fiscal 2012” refers to our fiscal year ended March 31, 2012, and other fiscal years are referred to in a corresponding manner.

We publish our financial statements in Japanese yen. In this Amendment No. 1, references to “U.S. dollars” or “$” are to the currency of the United States and references to “yen” or “¥” are to the currency of Japan.

Users of the interactive data files included in Exhibit 101 hereto are advised that pursuant to Rule 406T of Regulation S-T, such files are deemed not filed nor part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections of those Acts.

PART I

Item 3. Key Information.

A. Selected Financial Data.

The following selected historical consolidated financial data of Wacoal Holdings have been derived from the consolidated financial statements of Wacoal Holdings as of and for the fiscal years ended March 31, 2012, 2011, 2010, 2009 and 2008. The selected consolidated income statement data for the fiscal years ended March 31, 2012, 2011 and 2010, and the selected consolidated balance sheet data as of March 31, 2012 and 2011 are derived from the consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), included elsewhere in this annual report. The selected consolidated income statement data for the fiscal years ended March 31, 2009 and 2008, and selected consolidated balance sheet data as of March 31, 2010, 2009 and 2008, are derived from Wacoal Holdings’ consolidated financial statements not included in this annual report.


	Fiscal year ended/as of March 31,
	2012				2011		2010		2009		2008
	(yen in millions and U.S. dollars in thousands unless otherwise indicated)
Income Statement Data
Net sales	¥	171,897	$	2,085,876	¥	165,548	¥	163,548	¥	170,960	¥	165,201
Operating income		10,377		125,919		4,401		3,829		9,833		13,337
Net income attributable to Wacoal Holdings Corp.		6,913		83,885		2,785		2,475		5,062		4,845
Balance Sheet Data
Working capital¹	¥	61,688	$	748,549	¥	56,530	¥	54,510	¥	59,016	¥	61,869
Total assets		221,098		2,682,903		215,276		222,889		213,827		240,053
Short-term bank loans		5,780		70,137		6,152		7,974		5,221		5,572
Long-term debt (including current portion)		702		8,518		284		188		81		129
Common stock		13,260		160,903		13,260		13,260		13,260		13,260
Shareholders’ equity		171,496		2,081,010		167,480		171,860		166,767		184,128
Per Common Share Data
Net income attributable to Wacoal Holdings Corp.
Basic	¥	49.08	$	0.60	¥	19.73	¥	17.51	¥	35.57	¥	34.29
Diluted	¥	49.02	$	0.59	¥	19.72	¥	17.50	¥	35.56	¥	34.29
Cash dividends declared
Japanese yen	¥	28		—	¥	20	¥	20	¥	25	¥	25
U.S. dollars		—	$	0.34	$	0.24	$	0.21	$	0.25	$	0.25
Other Data
Weighted-average number of shares of common stock outstanding (thousands)		140,849		—		141,145		141,353		142,317		141,304

1.	Working capital equals total current assets less total current liabilities.

Prior period information reflects retroactive adjustments made in connection with the change to the fiscal year end of certain consolidated subsidiaries implemented during fiscal 2012. For further discussion, see Note 1, “Summary of Significant Accounting Policies: Change of Subsidiaries’ Fiscal Year End” to our consolidated financial statements and “Item 5.A. Operating Results—Change in the Fiscal Year End of Certain Subsidiaries” below.

We publish our financial statements in yen. The following table sets forth information regarding the noon buying rates for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York, expressed in yen per $1.00 during the periods shown. The noon buying rate was ¥79.81 to $1.00 on June 29, 2012.


	Year ended March 31,
Yen exchange rates per U.S. dollar	2012		2011		2010		2009		2008
Period end	¥	82.41	¥	82.76	¥	93.40	¥	99.15	¥	99.85
Average rate during period		78.86		85.00		92.49		100.85		113.61
Highest rate during period		85.26		94.98		100.71		110.48		124.09
Lowest rate during period		75.72		78.74		86.12		87.80		96.88


Yen exchange rates per U.S. dollar	Highest rate during period		Lowest rate during period
January 2012	¥	78.13	¥	76.28
February 2012		81.10		76.11
March 2012		83.78		80.86
April 2012		82.62		79.81
May 2012		80.36		78.29
June 2012		80.52		78.21

1.	All figures have been derived from figures released through the website of the Federal Reserve Bank of New York.

2.	The noon buying rate on such dates may differ from the rates used in preparation of our financial statements as of such dates.

3.	Average rates are calculated using the average of the exchange rates on the last day of each month during the period.

B. Capitalization and Indebtedness.

Not applicable.

C. Reasons for the Offer and Use of Proceeds.

Not applicable.

D. Risk Factors.

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

We may be adversely affected by the global economy, particularly with respect to Japan, the United States and Europe

While the global economy has recently begun to gradually expand as a result of the growth of emerging economies, effects of economic stimulus measures following the global financial crisis and other factors, the economic uncertainty triggered by the Greek sovereign debt crisis has adversely affected the entire European continent and heightened the risk of turmoil in the global economy.

Against this global backdrop, the Japanese economy has continued to suffer from the appreciation of the yen and deflation. While growth is expected from the adoption of the reconstruction budget in response to the earthquake and tsunami that struck northeastern Japan in March 2011, the outlook of the Japanese economy remains uncertain due to the long-term effects of the natural disaster, such as power and energy supply-related issues.

During fiscal 2012, the Japanese market accounted for approximately 87% of our net sales, and the United States and European markets accounted for approximately 6.9%. In the major markets in which we operate, the continued weakness or deterioration in the economy may have a material adverse effect on our sales, results of operations and financial condition. Our businesses may be particularly sensitive to declines in consumer spending. In addition, another financial crisis may result in lower returns or losses on our financial investments.

Continued difficulties faced or changes in business policies made by department stores, general merchandisers and other general retailers in Japan would hurt our business

In fiscal 2012, a substantial majority of our net sales were made to department stores, general merchandisers and other general retailers in Japan. While we are making efforts to increase sales from our direct sales outlets, catalog and the Internet, we expect that the majority of our net sales will continue to be made through department stores, general merchandisers and other general retailers in Japan for the foreseeable future.

In recent years, many department stores, general merchandisers and other general retailers in Japan have experienced business difficulties for a variety of reasons, including weak consumer spending, competition from convenience stores, catalog and Internet retailers and other sources. Due to such circumstances, the retail market has been undergoing a structural change, which has led to, among other things, the emergence of specialty apparel manufacturers. As a result of this trend, which we expect to continue for the foreseeable future, the share of sales from department stores, general merchandisers and specialty retail stores in the overall retail market is expected to remain weak and may continue to decline.

Continued weakness in the department store, general merchandise and specialty retail sector would make it difficult to increase sales to our customers in this sector, and the failure of one or more of our important general retail customers could materially harm our business. This would mean an immediate loss of sales to such failed retailer and the potential inability to collect some or all of our outstanding accounts receivable from it. Likewise, increased consolidation of Japanese department stores and general merchandisers in preparation for a shrinking market due to the future anticipated decrease in the population of Japan may allow our customers to increase their bargaining power in negotiating pricing and other terms of trade, which could have a material impact on our profitability. Any change in business policy by Japan’s leading retailers would have an adverse impact on our performance, such as net sales or return on sales.

As a result of any of the above factors or otherwise, any change in the business environment surrounding department stores, general merchandisers or other general retailers in Japan would have a material impact on our business, profitability and financial condition.

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

Our success depends in part on our ability to effectively anticipate and respond to changing consumer tastes, preferences and demands, and to translate market trends into products that consumers want to buy at prices that will allow us to be profitable. Customer tastes and fashion trends change rapidly and are difficult to predict. If we are unable to successfully anticipate or respond to changing styles or trends, or if we lose the support of our customers, we would be unable to achieve our sales targets and our financial results would suffer as a result.

In addition, we believe that we have established broad brand recognition in our core Japanese market for our high quality and fashionable women’s innerwear garments, and that this brand recognition is very important for our ability to target the high end of the women’s innerwear market. As a result, our brand image may suffer if we misjudge the market or sell defective merchandise causing consumers to believe that we are not able to offer attractive fashions and top-quality products. If any event were to occur that harms our reputation for producing high-quality products, our sales, operations and financial condition could be materially adversely affected.

The apparel market is highly competitive, and our share of sales or profitability may decline if we are unable to maintain our competitiveness

The sale of intimate and other apparel is highly competitive, and we must compete for sales with a wide range of other apparel companies. In addition to competition from wholesalers and direct retailers in the mid- to

high-end undergarment market in Japan, we must also compete against catalog and Internet sales and new entrants to the intimate apparel market, including mass-market and specialty apparel companies, as well as outerwear fashion manufacturers.

An important factor affecting the competitive environment in our industry in recent years has been the increased penetration of lower-priced garments in the market. Factors driving this trend include increased product sourcing and production in China, Vietnam and other lower-cost countries, the introduction of new manufacturing technologies, consolidation in the retail industry and a prolonged period of sluggish consumer spending, particularly in Japan. Our strategy of focusing on the higher end of the intimate apparel market may help us avoid potential negative effects of such trends on our business and performance, including possible loss of market share and reduced profitability. However, we are affected by these competitive trends and our strategy may not be successful.

Additionally, we continue to be challenged by the emergence of new and competitive retail concepts in the Japanese intimate apparel industry, which target customers through catalog marketing, e-commerce and other means. Increased competition could result in price reductions, increased marketing expenditures and loss of sales volume and market share, all of which could have a material adverse effect on our sales, financial condition and operating results.

Expansion of our specialty retail store network, particularly of stores carrying brands other than Wacoal or Wing brands, may not lead to improved sales and profits

As of March 31, 2012, we had a total of 238 stores in our network in Japan, of which 155, including 18 factory outlet stores, carried brands other than Wacoal or Wing brands, such as those of Peach John Co., Ltd. (“Peach John”). We hope to increase our contact with younger women and other consumers who may have less awareness of our brand and products and who may be less likely to shop for intimate apparel in the general retail stores that carry our products, particularly through our efforts in promoting our network of specialty retail stores carrying brands other than Wacoal or Wing brands.

In pursuing this strategy, we believe increasing sales to younger career-oriented women, as well as younger women in general, is essential for increasing future sales and improving profitability. In June 2006, we entered into a business and capital alliance with Peach John by acquiring 49% of its shares. Subsequently, in January 2008, we made Peach John a wholly owned subsidiary, which, in combination with our specialty retail business, enabled us to strength our business targeting younger consumers.

However, there are a number of risks that we must address in order for our specialty retail stores to succeed, and we may not be successful in resolving these risks, especially in light of our limited experience in operating our own stores. For example:

•

our specialty retail store strategy depends in large part on our ability to find attractive store locations that will provide sufficient customer traffic to drive sales;

•

we must compete for good store locations with other retailers pursuing similar strategies;

•

we may not be able to open new stores with capital investment, leasing and other costs that will allow us to earn a reasonable return; and

•

we must effectively recruit personnel, control inventory, market our stores and new product lines and otherwise operate our stores successfully.

We are developing and marketing distinct lines of intimate apparel for our specialty retail stores under brands that do not feature the Wacoal name in order to reach the targeted customers for our stores and avoid competition with our general retail customers who carry our Wacoal brand apparel. This strategy carries risks, including the risk that our new apparel lines may not meet the fashion, function and other needs of our targeted customers.

Rapid changes in the retail market in Japan in recent years, such as declines in the number and sales of department stores, new controls on mass-merchandising stores, increases in sales at direct sales outlets and on the Internet, and declines in the prices of innerwear and the number of innerwear items sold per person, make it

difficult for us to evaluate the performance of our specialty retail stores to date and to estimate whether we will achieve success in the future. Further investment is necessary in order to expand our specialty retail store business, including costs for the development of new stores and the closure of underperforming stores, and improvement costs for the specialty retail store brand. If new shops fail to secure the expected sales levels, if expenses such as shop rent or personnel costs increase due to changes in the market environment, or if the specialty retail store brand fails to be popular with customers, we may not be able to make sufficient gains to recover the investment.

We may experience difficulties in successfully increasing our catalog and Internet sales

We believe that our catalog and Internet sales will be increasingly important in achieving sales growth, and we are seeking to strengthen our capabilities in these channels. However, we face challenges in our catalog and Internet sales strategies. Our sales through these channels currently represent a small share of our overall sales. We face intense competition in our catalog and Internet business, and many of our competitors have more experience and have devoted more resources to these channels than we have. Although our 2008 acquisition of Peach John—which has a large share of catalog sales to young people in Japan—has contributed to our efforts in this area, we believe that we need to make further system investments in order to expand our catalog and Internet sales for our group as a whole. However, we may not be successful in increasing our catalog and Internet sales sufficiently to compensate for continued flat or declining sales through our core general retailer channel, which could have a material adverse effect on our financial condition and operating results and may lead to impairment charges against goodwill and intangible assets recorded in connection with our acquisition of Peach John.

We are subject to inventory risks that could negatively affect our operating results

Fluctuations in the demand for our products may affect the inventory we own because we usually manufacture our products well in advance of the applicable season and sometimes before fashion trends are identified or evidenced by customer purchases. In addition, the cyclical nature of the retail business requires us to carry additional inventory, especially prior to peak selling seasons when we generally build up inventory levels.

We generally enter into contracts for the purchase and manufacture of merchandise with our suppliers well in advance of the applicable selling season. As a result, we are vulnerable to demand and pricing shifts and to suboptimal selection and timing of merchandise purchases. Therefore, if we are unable to successfully anticipate or respond to changing styles or trends and misjudge the market for our products or any new product lines, our sales will suffer and we may be faced with significant amounts of unsold inventory. In response, we may be forced to reduce our product prices, increase our marketing promotions or take other steps, which could have a material adverse effect on our sales, results of operations and financial condition.

In addition, we review our inventories on a regular basis for their salability and for indications of obsolescence to determine if a write-down due to changes in market demand and other factors is necessary. Any write-downs of inventory resulting from such reviews may have an adverse impact on our earnings and profitability, depending on the extent of the markdowns and the amount of inventory affected.

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

Reducing our cost of conducting business is a key element of our strategy to improve our profitability and business performance, particularly in the coming years during which growth in sales will remain difficult to achieve as consumer spending remains stagnant in Japan.

In recent years, we have taken certain steps intended to reduce our costs. For example, in order to improve the efficiency of our product distribution system, we have reduced the number of our distribution centers over the years from the eighteen centers we maintained in 1998 to our present four distribution centers. We have also taken steps over the years to reduce our labor costs in Japan, such as closing production facilities, implementing an early retirement program and undertaking a reform of our pension plan. We are also seeking to produce or otherwise source more of our apparel in China, Vietnam and other lower-cost countries. Additionally, we are reorganizing production functions and taking other steps to reduce manufacturing costs.

However, with the possibility of an increase in product material prices, a rise in labor costs in China, Vietnam and other countries or costs being incurred in response to changes in the business environment, we may not be successful in materially reducing our costs, and any cost reductions that we achieve may not be large enough to compensate for difficulties that we may face in increasing our sales. A failure to reduce our costs would have a material adverse effect on our profitability and results of operations.

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

The growth of our business depends significantly on our ability to attract, train and retain qualified personnel in areas such as product planning, manufacturing technology and sales and marketing. The competition for qualified personnel in Japan is intensifying due to factors such as a gradual reduction of the working population due to demographic trends in Japan and the increased demand for labor. Our ability to attract qualified personnel depends in large part on our ability to establish and maintain a positive image in the labor market. We may not be successful in attracting and retaining qualified personnel, which may have a material adverse effect on our financial condition and results of operations.

Our business may be adversely affected by irregular weather events

Our business performance and results can be affected by the weather and irregularity of seasons. We typically launch new intimate apparel product campaigns for the spring/summer and fall/winter seasons of each year for our Wacoal and Wing brands and our business success largely depends on the success of these seasonal product campaigns. We also produce and acquire merchandise in advance of the peak selling periods of the seasons during which we intend to sell such merchandise and sometimes before new fashion trends are confirmed by consumer purchases. If a season is unusually warm, cold, short, long or in any other way irregular, consumers may change their buying habits, and we may not be able to sell our inventory in the way we anticipated at the time of purchase. Changes in seasonal weather patterns and extreme weather events have adversely affected our sales in the past and may affect us in the future.

We cannot predict future weather patterns or judge the effect that weather patterns may have on our sales and profitability.

We may face increasing risks relating to conducting business internationally

In fiscal 2012, approximately 87% of our net sales were made in Japan. However, we have gradually increased both the amount of goods we produce and the amount of raw materials we procure in lower-cost countries, such as China—a trend we expect to continue. In addition, we are making efforts to expand our product sales in overseas markets, including in the United States, Europe and China. These initiatives and trends may increasingly subject us to various risks relating to the conduct of our business abroad, including:

•

differing consumer tastes and preferences in overseas markets;

•

political, social and economic instability in countries where we source, manufacture or sell our products;

•

unexpected tax, legal or regulatory changes or actions that may adversely affect our group, including such risks in China;

•

difficulty in staffing and managing widespread operations;

•

changes in exchange rates;

•

differing protection of intellectual property; and

•

public health or similar problems in our important overseas markets or sourcing/production centers.

For instance, in fiscal 2012, the Chinese authorities targeted many department stores for their misleading practice of advertising products purportedly at a discount without proper disclosure of the prediscounted price, thereby adversely affecting sales at these department stores, which serve as important distribution channels. While we believe that this issue has been largely resolved, similar administrative guidance or enforcement action by the Chinese or any other authorities may have a material adverse effect on our results of operations.

We may not be successful with acquisitions and other strategic transactions with third parties

We intend to evaluate and pursue opportunities for acquisitions, investments and other strategic transactions that we believe will help us achieve our business objectives, including extending our product offerings in Japan and in overseas markets and strengthening our capabilities in Internet, catalog and other marketing channels. Three of our key transactions are as follows:

•

Peach John. In June 2006, we entered into a business and capital alliance with Peach John, which markets innerwear, outerwear and other products of its own original design to younger women in Japan through catalog and company-owned retail store sales, by acquiring a 49% interest. In January 2008, we acquired the remaining 51% interest and made Peach John a wholly owned subsidiary.

•

Lecien. In August 2009, Lecien Corporation (“Lecien”), which manufactures and sells women’s innerwear and clothing for the Japanese market, became our wholly owned subsidiary through a share exchange. Lecien’s strength is in the so-called “volume zone,” which is the market for products in the mid-price range generating the largest volume of sales.

•

Eveden. In April 2012, we acquired all of the shares of Eveden Group Limited (“Eveden”), a corporation engaged in the manufacture and sale of women’s undergarments and swimming wear mainly in the United Kingdom and other European countries, North America, Australia, Asia and other areas.

Any acquisitions or other strategic transactions that we have pursued or may pursue in the future may involve significant risks to our company and the value of your shares. For example, your equity in us may be significantly diluted if we issue shares as consideration in any significant strategic transaction. Also, our balance of available cash will be reduced to the extent that we pay cash as consideration in one or more strategic transactions.

Other potential risks that may arise from our strategic transactions include the following:

•

difficulty and expense of assimilating the operations, technology and personnel of an acquired business;

•

our inability to retain the management, key personnel and other employees of an acquired business;

•

our inability to maintain an acquired company’s relationships with customers, suppliers and other key third parties;

•

exposure to legal claims for activities of the acquired business prior to the acquisition;

•

the diversion of our management’s attention from our core business;

•

impairment charges we would have to take if we were to conclude that there had been an other-than-temporary decline in the fair value of our investment in an investee company, below its carrying value if, for example, the investee business was not generating increasing cash flows as quickly as we had expected at the time of our initial investment;

•

possible impairment charges to goodwill or intangible assets; and

•

failure to achieve any intended cost reductions due to unsuccessful integration of or a lack of cooperation between our businesses with those of our counterparties.

If any of these or any other material risks occur, it could have an adverse effect on a business we acquire, as well as the results, financial condition and cash flow of our existing operations. For example, in fiscal 2010, we evaluated the recoverability of Peach John’s customer relationships, which had been recorded as an intangible fixed asset, and recognized an impairment loss of approximately ¥1,023 million as a result. In fiscal 2011, we recognized a further impairment loss of ¥1,772 million composed of an impairment loss of approximately ¥559 million against trademarks, ¥377 million against customer relationships and ¥836 million against goodwill after reassessing the fair value of Peach John.

We may not be able to recover the cost of investments we make in pursuing growth opportunities and developing new markets

Our pursuit of growth opportunities and new markets through international expansion, acquisitions, strategic alliances or otherwise will require significant resources, time and costs. There is no guarantee that we will generate results that are sufficient to cover the cost of making any such investment, even if we conduct an extensive due diligence investigation and other analyses prior to making the investment to maximize the probability of success and minimize the risks. Failure to recover the cost of investments could have a material adverse effect on our financial condition and results of operations. For instance, while our aggressive efforts to expand our business in China have increased our net sales there, we have not recorded any operating profit in China and may never reach a level of profitability in China that justifies our cost of investments to expand our business there.

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

We are subject to certain risks in our business relating to intellectual property rights. In particular, we believe that our brands and related trademarks are important to our ability to create and sustain demand for our products and to the value of our business. We may encounter trademark and related disputes in the future, and our actions to establish and protect our trademarks and other proprietary rights may not be adequate to prevent imitation of our products or the infringement of our trademarks and proprietary rights by others, which could materially harm our operations and financial condition. Additionally, other parties have asserted in the past, and may assert in the future, that we have infringed their intellectual property rights. We cannot predict whether any such assertions or related claims will substantially harm our financial condition or results of operations.

If we fail to protect our customers’ privacy and data and maintain the confidentiality of our trade secrets we may face proceedings against us, lose customer confidence or lose our market position

We must comply with laws and regulations regarding privacy and the protection of customer information in the jurisdictions where we conduct our business and operations. These laws and regulations change from time to time and are not consistent across jurisdictions. Violations of these requirements could arise in a number of ways, including problems with our information systems and inadvertent or intentional disclosures of information by our employees. Any failure by us to comply with these laws and regulations could result in proceedings against us by governmental entities or others, which could potentially have an adverse effect on sales and profitability. Complying with varying privacy requirements could cause us to incur substantial costs and force us to change our business practices.

Any failure by us or third parties to whom we entrust any of our operations to properly protect our customers’ privacy and data could cause customers to lose confidence in our business and products, which could result in a material adverse effect on our sales and profitability.

Additionally, in order for us to secure and maintain an advantageous position in the market, we need to protect our trade secrets, such as manufacturing technology and product information. If these trade secrets are divulged by any party related to us or infringed by another company, our business or financial condition could be materially affected.

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

Beginning with our annual report on Form 20-F for fiscal 2007, we are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing these assessments.

As a result of yearly evaluations conducted by management and independent external auditors we have not discovered any material deficiencies during fiscal 2012. However, we recognize that there are certain improvements that we should make with particular aspects of our internal controls.

In addition, although we have a policy of actively responding to identified deficiencies at the group level, there is a possibility that we may not be able to successfully implement revised controls and procedures, and our revised controls and procedures may not be effective in remedying any deficiencies that are identified.

Furthermore, there is a chance that new deficiencies will arise owing to changes and amendments to the standards for establishing and maintaining effective internal controls or changes that affect the business environment generally, and we may not be able to conclude for the purpose of our annual reports that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.

Moreover, effective internal controls are necessary for us to produce reliable financial reports and important in helping prevent financial fraud. If we cannot provide reliable financial reports on a timely basis or prevent financial fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.

Our holdings of equity securities expose us to market risks

We hold equity and other securities in a number of publicly traded Japanese companies. A significant drop in the value of these securities, or in the Japanese equity markets in general, could have an adverse impact on our financial results in the relevant reporting period. For example, although our balance sheet as of March 31, 2012 showed an unrealized gain on securities of ¥4,197 million, we were required to recognize a valuation loss on our equity securities holdings of ¥831 million for fiscal 2012. This loss recognition was primarily the result of a determination that a decrease in the fair market value of certain equity securities was other than temporary.

In addition, if there is a decrease in our pension assets due to adverse conditions in stock or bond markets or other factors, additional funding and accruals may be required, and such funding and accruals may adversely affect our performance and financial condition. For example, our selling, general and administrative expenses for fiscal 2009 increased as compared to such expenses for fiscal 2008, due in part to a significant increase in the actuarial loss in our pension plans caused by poor returns on the securities included in the plan assets. While our pension assets have not suffered material actual losses since fiscal 2009, there is no assurance that we will not incur future increases in expenses or other costs due to decreases in the valuation of our pension assets.

Natural disasters and epidemics could affect our manufacturing abilities, results of operations or financial condition

Japan is one of the most seismically active countries in the world; it also regularly experiences typhoons and other natural disasters. In the event of a large earthquake, other natural disaster or outbreak of an epidemic that affects our employees or our ability to continue using any of our sales or manufacturing facilities, our sales and marketing efforts would be adversely affected and we would face the possibility of work delays or stoppages, any of which could have a negative effect on our business. Any such natural disaster or epidemic could also cause disruptions in the transportation networks that our business relies upon and could interfere with our normal course of production and distribution. Furthermore, any such natural disaster or epidemic would also have a large impact on consumer activity, which would have a significant impact on the sales of our products. Any such natural disaster or epidemic could also force us to recognize impairment charges on our investments or goodwill or other intangible assets. For instance, we recognized an impairment loss after reassessing the fair value of Peach John in March 2011 partly in light of the effects of the major earthquake and tsunami that struck Northeast Japan in March 2011 as well as due to worsened market conditions and weakened consumer spending. See “—We may not be successful with acquisitions and other strategic transactions with third parties.” Additionally, because one of our main business activities is manufacturing, our operations are particularly vulnerable to damage to infrastructure. Any damage to our means of manufacture or production could result in significant impairment charges to our business.

We may become classified as a passive foreign investment company, which could result in adverse U.S. tax consequences to U.S. holders of our stock or ADSs

We may be classified as a passive foreign investment company (“PFIC”) by the U.S. Internal Revenue Service (“IRS”) for U.S. federal income tax purposes. Such characterization could result in adverse U.S. federal income tax consequences to you if you are a U.S. investor. For example, U.S. investors, who owned our common stock or ADSs during any taxable year in which we were a PFIC, generally are subject to increased U.S. tax liabilities and reporting requirements for that taxable year and all succeeding years, regardless of whether we actually continue to be a PFIC, although a shareholder election to terminate such deemed PFIC status may be available in certain circumstances. We do not intend to provide information to permit you to make a qualified electing fund election to avoid the adverse U.S. tax consequences discussed above. The same adverse U.S. federal income tax consequences will apply to U.S. investors who acquire our common stock or ADSs during the current taxable year or any subsequent taxable year if we are treated as a PFIC for that taxable year.

The determination of whether or not we are a PFIC is made on an annual basis and depends on the composition of our income and assets from time to time. Specifically, we will be classified as a PFIC for U.S. tax purposes for a taxable year if either (i) 75% or more of our gross income for such taxable year is passive income or (ii) 50% or more of the average percentage of our assets during such taxable year either produce passive income or are held for the production of passive income. For such purposes, if we directly or indirectly own 25% or more of the shares of another corporation, we generally will be treated as if we (i) held directly a proportionate share of the other corporation’s assets and (ii) received directly a proportionate share of the other corporation’s income.

We do not believe that we were a PFIC for the preceding taxable year or should be a PFIC for the current taxable year. However, because the PFIC determination is highly fact intensive and made at the end of each taxable year, there can be no assurance that we will not be a PFIC for the current or any future taxable year or that the IRS will not challenge our determination concerning our PFIC status. Given the complexity of the issues regarding our classification as a PFIC, U.S. investors are urged to consult their own tax advisors for guidance as to the U.S. federal, state, local and foreign tax consequences of our status as a PFIC. For further discussion of the adverse U.S. federal income tax consequences of our classification as a PFIC, see “Item 10.E. Taxation—U.S. Federal Income Taxation—Taxation of U.S. Holders—Passive Foreign Investment Company Considerations” below.

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

Fluctuations in the exchange rate between the Japanese yen and the U.S. dollar will affect the U.S. dollar equivalent of the Japanese yen price of the shares on the Tokyo Stock Exchange and, as a result, are likely to affect the market price of the ADSs. If we declare cash dividends, dividends on the shares represented by the ADSs will be paid to the depositary in Japanese yen and then converted by the depositary into U.S. dollars. Therefore, exchange rate fluctuations will also affect the dividend amounts payable to ADS holders following conversion into U.S. dollars of dividends paid in Japanese yen on the shares represented by the ADSs.

As a holder of ADSs, you will have fewer rights than a shareholder has, and you must act through the depositary to exercise those rights

The rights of shareholders under Japanese law to take various actions, including voting their shares, receiving dividends and distributions, bringing derivative actions, examining our accounting books and records and exercising appraisal rights, are available only to shareholders of record. Because the depositary, through its custodian agents, is the registered holder of the shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying a holder’s ADSs as instructed by the holder and will pay to the holder the dividends and distributions collected from us. However, in the holder’s capacity as an ADS holder, that holder will not be able to bring a derivative action, examine our accounting books and records or exercise appraisal rights through the depositary.

Japan’s unit share system imposes restrictions on holdings of our common stock that do not constitute whole units

The Companies Act of Japan allows companies to set one “unit” of shares for the purpose of exercising voting rights at the general meetings of shareholders. Under our articles of incorporation, one unit of our shares is composed of 1,000 shares, equivalent to 200 ADSs. Each unit of our shares has one vote. A holder who owns shares or ADSs, in other than multiples of 1,000 or 200, respectively, will own less than a whole unit. Our articles of incorporation, in accordance with the Japanese Companies Act, impose significant restrictions on the rights of holders of shares constituting less than a whole unit, which include restrictions on the right to vote, to attend a shareholders’ meeting and to bring derivative actions. Under the unit share system, holders of our shares constituting less than one unit have the right to require us to purchase their shares and the right to require us to sell them additional shares to create a whole unit of 1,000 shares. The unit share system does not affect the transferability of ADSs, which may be transferred in lots of any number of whole ADSs. For a further discussion of the Japanese unit share system, see “Item 10.B. Memorandum and Articles of Association—Capital Stock—Unit Share System.”

Item 5. Operating and Financial Review and Prospects.

A. Operating Results.

Overview

We are the leading designer, manufacturer and marketer of women’s intimate apparel in Japan, with the largest share of the Japanese market for foundation garments and lingerie. We also sell our foundation garments and lingerie products in several overseas markets. Sales of foundation garments (primarily brassieres and girdles) and lingerie (primarily slips, bra-slips and women’s briefs) accounted for approximately 72.3% of our consolidated net sales for fiscal 2012. We also design, manufacture and sell nightwear, children’s underwear, hosiery and other apparel and textile products and engage in several business lines that are ancillary to our core apparel business.

Economic Environment

Although the recovery and reconstruction efforts in the aftermath of the earthquake and tsunami that struck Japan in March 2011 led to increased demand in certain areas, the continued appreciation of the yen and deflation has limited the growth of the Japanese economy. Furthermore, consumer spending in Japan was stagnant due to uncertainties pertaining to a possible tax increase to fund the recovery effort, the funding status of the national pension plan and energy challenges, amid population decline and an increasingly aging society. Globally, the sovereign debt crisis in Greece affected the entire European continent and led to uncertainties in the outlook for the Western industrial countries, as well as emerging countries whose economies had been expanding. Because we generate revenues from consumers and therefore rely on their spending, the challenging economic environment will continue to create a downward pressure on our growth plans, which must be countered through our efforts to generate consumer demand for our products by introducing high-quality products with innovative features.

Revenues

We principally generate revenues from sales of innerwear (consisting of foundation garments and lingerie, nightwear and children’s underwear), outerwear and sportswear, hosiery, textile products and other products.

The following table sets forth information with respect to our net sales by category of products for fiscal 2012, 2011 and 2010:

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


	Year ended March 31,
	2012				2011				2010
					(yen in millions)
Innerwear
Foundation and Lingerie	¥	124,303	72.3	%	¥	116,127	70.1	%	¥	116,478	71.2	%
Nightwear		9,390	5.5			8,713	5.3			9,437	5.8
Children’s Underwear		1,530	0.9			1,476	0.9			1,608	1.0

Total Innerwear		135,223	78.7			126,316	76.3			127,523	78.0
Outerwear and Sportswear		16,371	9.5			17,397	10.5			17,125	10.5
Hosiery		1,646	1.0			1,666	1.0			1,702	1.0
Textile Products		8,226	4.8			7,493	4.5			7,420	4.5
Other		10,431	6.0			12,676	7.7			9,778	6.0

Total	¥	171,897	100.0	%	¥	165,548	100.0	%	¥	163,548	100.0	%

Prior-period information reflects retroactive adjustments made in connection with the change to the fiscal year end of certain consolidated subsidiaries implemented during fiscal 2012. For further discussion, see Note 1, “Summary of Significant Accounting Policies: Change of Subsidiaries’ Fiscal Year End” to our consolidated financial statements and “Item 5.A. Operating Results—Change in the Fiscal Year End of Certain Subsidiaries” below.

The following table sets forth information with respect to our net sales by geographic market for fiscal 2012, 2011 and 2010:

Net Sales to External Customers (and Percentage) by Geographic Market


	Year ended March 31,
	2012				2011				2010
					(yen in millions)
Japan	¥	149,587	87.0	%	¥	144,999	87.6	%	¥	143,902	88.0	%
Asia (excluding Japan)		10,527	6.1			9,167	5.5			7,943	4.9
Americas and Europe		11,783	6.9			11,382	6.9			11,703	7.1

Total	¥	171,897	100.0	%	¥	165,548	100.0	%	¥	163,548	100.0	%

1.	Net sales in Europe were ¥1,194 million for fiscal 2012, ¥1,104 million for fiscal 2011 and ¥997 million for fiscal 2010. Net sales in Europe as a percentage of our total net sales were 0.7% for fiscal 2012, 0.7% for fiscal 2011 and 0.6% for fiscal 2010.

For fiscal 2012, approximately 83% of the net sales of Wacoal Corp. (the net sales of which account for approximately 64% of our consolidated net sales) were apparel sales made on a wholesale basis to department stores, general merchandisers and other general retailers, and approximately 15% were apparel sales made through our own specialty retail stores, catalog sales and the Internet. Sales from our other businesses (which include restaurant businesses, cultural products and other services) comprised the remaining 2% of Wacoal Corp.’s net sales for fiscal 2012.

Over the past five fiscal years, fluctuations in our sales have typically reflected changes in unit volume, as average unit prices have generally remained stable during this period. We have made some gains in net sales in recent years from our overseas markets, and expect to continue to expand our overseas businesses in the near-to-medium term. See “Item 4.B. Business Overview—Key Business Strategies—Expand our overseas business in order to decrease our reliance on the Japanese market.”

Cost of Sales

Our cost of sales arises principally from material and manufacturing costs related to the production of our apparel products. In the last couple of fiscal years, we successfully kept our cost of sales below the fiscal 2009 level through our cost reduction efforts involving raw material, manufacturing and inventory management. Our success in lowering our cost of sales for fiscal 2012 in comparison to that for fiscal 2011 is attributable to multiple factors, including an increase in the proportion of products sold in Japan being manufactured overseas, a streamlining of product selection, more stringent inventory control leading to less inventory write-downs, and more effective product research and development.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses principally consist of employee compensation and benefit expenses and promotional expenses, such as advertising costs. Other selling, general and administrative expenses include shipment costs, payment fees (including outsourcing payments) and rental payments for our specialty retail stores. In recent years, our selling, general and administrative expenses have been affected by two countervailing factors: reduction in labor costs and increases in marketing efforts, particularly in our overseas markets. In addition, for fiscal 2012, we took significant temporary cost-cutting measures, including the cancellation of television commercials, in response to the aftermath of the earthquake and tsunami of March 2011. Thus, for the near-to-medium term, we expect the two countervailing factors to continue to offset each other in varying degrees and the effect of temporary cost-cutting measures to diminish.

Income Tax Expenses

Our income tax expenses depend on our taxable income, applicable statutory tax rates and the proportion of current and deferred income taxes. Our effective tax rate depends on a range of factors, including applicable statutory tax rates, permanently non-deductible expenses, unrecognized tax benefits, any valuation allowance with respect to tax loss carryforwards and tax exemptions. Our effective tax rate was 41.1% for fiscal 2012, 51.2% for fiscal 2011, and 52.5% for fiscal 2010. See “Item 5.A. Fiscal 2012 Compared to Fiscal 2011—Net Income Attributable to Wacoal Holdings Corp.”

Key Historical Industry Trends

We believe that the following have been key trends in our industry during the last three fiscal years:

•

The number of department stores, one of our key distribution channels, and retail sales through department stores declined due to the deterioration in consumption caused by the worsening economy. General merchandising stores faced not only decreases in the numbers of new branch openings due to stagnant consumption levels, but also reductions in store sizes and increases in store closings, as well as reductions in retail sales. At the same time, however, sales at direct sales outlets and on the Internet have steadily risen.

•

Due to adverse changes in consumer behavior and retail industry coupled with factors such as a decline in the female population, the market for women’s innerwear garments in Japan shrank, and the prices of innerwear declined in terms of both overall prices and average price per item. The numbers of innerwear items purchased and owned per person also decreased.

•

Specialty apparel, outerwear fashion and other manufacturers entered the innerwear market. These manufacturers offer their products by focusing 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.

•

These manufacturers and other competitors strengthened their cost reduction efforts by, for example, sourcing fabric and producing garments in China and other lower-cost countries. Sales in Japan of lower-priced women’s innerwear garments manufactured in these countries increased, leading to an intensification of price competition in our industry. The recent development and tendency of general merchandisers producing their own low-priced “private brand” merchandise accelerated these trends.

•

Although catalog marketing has made little progress, new sales strategies such as e-commerce and television marketing have led to more diversified sales channels and exposure to new customer groups.

We have taken steps to address these key industry trends, in seeking to build on the core strengths of our market position and brand awareness with Japanese consumers. We continue to seek to sell higher-end products to reach consumers seeking high-quality innerwear garments and to mitigate the adverse impact 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 such as China and Vietnam, consolidating and modernizing our product distribution centers and expanding our early retirement program. We are also seeking to expand sales in overseas markets—in particular China, the United States and Europe, as well as in the ASEAN region, where we launched our sorci age brand—and increase sales through our own specialty retail stores, our catalog operations and the Internet. We also are researching expansion into emerging economies, such as India, and other new markets, such as Russia, Canada, Mexico and Brazil. Additionally, we intend to extend our innerwear product offerings into the mid-price range and include more fashionable offerings in our product mix to help us reach a broader customer base. We believe that Peach John and Lecien will help us to advance these goals. We will continue to implement these steps and evaluate other strategies to address challenges and opportunities in the industry going forward.

For a discussion of other trends that affect our business and operating results, see “Item 3.D. Risk Factors,” “Item 4.B. Business Overview” and “Item 5.D. Trend Information.”

Currency Fluctuations

We prepare our consolidated financial statements in Japanese yen. As a result, fluctuations in the exchange rates between the Japanese yen and other currencies may have a material effect on our results of operations, as well as on our reported value of our assets, liabilities, revenue and expenses as measured in Japanese yen. This, in turn, may materially affect reported earnings and the comparability of period-to-period results of operations. For purposes of our consolidated balance sheets, we translate assets and liabilities denominated in other currencies into Japanese yen at the prevailing market exchange rates as of the relevant balance sheet date. As a result, even if the amounts or values of these items remain unchanged in their respective local currencies, changes in exchange rates have an impact on the amounts or values of these items in our consolidated financial statements. For purposes of our consolidated income statements, revenue and expense items in local currencies are translated into Japanese yen at average exchange rates prevailing during the relevant period. Although the combined sales of our overseas subsidiaries increased by approximately ¥1,800 million for fiscal 2012 compared to such sales for fiscal 2011, if the applicable exchange rates for fiscal 2011 remained the same for fiscal 2012, the increase in such sales would be approximately ¥3,300 million.

Inflation

We do not consider inflation to have had a material impact on our results of operations over the last three fiscal years.

Environmental Matters

We are committed to minimizing the negative impact of our business activities on the environment and believe our operations are in compliance with all applicable laws and regulations. We currently do not expect any existing or proposed domestic legislation or regulations or international accords relating to climate change to have a material impact on our results of operations. Additionally, we currently do not expect climate change to disrupt sourcing or sales efforts or otherwise affect our manufacturing or distribution processes.

Cyber Matters

We believe we have taken appropriate measures to establish backup structures for our informational systems to protect against the possibility of outage or similar disruption, or leakage, falsification or loss of internal databases, as a result of a variety of computer viruses, cyber attacks or terrorist attacks. We therefore currently do not expect such events to have a material impact on our results of operations.

Results of Operations

The following table sets forth certain data from our consolidated statements of income for the last three fiscal years:

Consolidated Operating Results


	Year ended March 31,
	2012					2011					2010
	(yen in millions)
Net sales	¥	171,897		100.0	%	¥	165,548		100.0	%	¥	163,548		100.0	%
Cost of sales		81,891		47.6			81,659		49.3			80,101		49.0
Selling, general and administrative expenses		79,629		46.3			77,716		46.9			78,524		48.0
Operating Income		10,377		6.0			4,401		2.7			3,829		2.3
Total other expenses, net		(170	)	(0.1	)		(474	)	(0.3	)		(674	)	(0.4	)
Net income attributable to Wacoal Holdings Corp.		6,913		4.0			2,785		1.7			2,475		1.5

The following table sets forth information with respect to our operating results by business segment during fiscal 2012, 2011 and 2010:

Operating Results by Business Segment


	Year ended March 31,
	2012					2011					2010
	(yen in millions)
Wacoal Business (Domestic)
Net sales:
External customers	¥	115,870		97.7	%	¥	110,856		98.1	%	¥	113,929		98.5	%
Intersegment		2,719		2.3			2,134		1.9			1,793		1.5

Total		118,589		100.0			112,990		100.0			115,722		100.0
Operating costs and expenses		(110,417	)	(93.1	)		(107,370	)	(95.0	)		(111,180	)	(96.1	)

Operating profit	¥	8,172		6.9	%	¥	5,620		5.0	%	¥	4,542		3.9	%
Wacoal Business (Overseas)
Net sales:
External customers	¥	21,396		76.6	%	¥	20,010		76.6	%	¥	19,295		75.6	%
Intersegment		6,541		23.4			6,118		23.4			6,216		24.4

Total		27,937		100.0			26,128		100.0			25,511		100.0
Operating costs and expenses		(26,497	)	(94.8	)		(24,806	)	(94.9	)		(23,895	)	(93.7	)

Operating profit	¥	1,440		5.2	%	¥	1,322		5.1	%	¥	1,616		6.3	%
Peach John
Net sales:
External customers	¥	13,836		98.6		¥	11,575		99.4		¥	13,079		100.0
Intersegment		193		1.4			73		0.6			9		0.0

Total		14,029		100.0			11,648		100.0			13,088		100.0
Operating costs and expenses		(13,500	)	(96.2	)		(14,527	)	(124.7	)		(14,680	)	(112.2	)

Operating profit (loss)	¥	529		3.8	%	¥	(2,879	)	(24.7	%)	¥	(1,592	)	(12.2	%)
Other
Net sales:
External customers	¥	20,795		78.4	%	¥	23,107		83.4	%	¥	17,245		84.3	%
Intersegment		5,744		21.6			4,588		16.6			3,204		15.7

Total		26,539		100.0			27,695		100.0			20,449		100.0
Operating costs and expenses		(26,303	)	(99.1	)		(27,357	)	(98.8	)		(21,186	)	(103.6	)

Operating profit (loss)	¥	236		0.9	%	¥	338		1.2	%	¥	(737	)	(3.6	%)

Fiscal 2012 Compared to Fiscal 2011

Consolidated Operating Results

Net Sales

Consolidated net sales increased 3.8% from ¥165,548 million for fiscal 2011 to ¥171,897 million for fiscal 2012, mainly due to the expansion of sales attributable to our Wacoal brand business, Peach John and our business in China.

The following table summarizes a breakdown of our consolidated net sales by category of products for fiscal 2012 and 2011:

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


	Year ended March 31,
	2012				2011
	(yen in millions)
Innerwear:
Foundation and Lingerie	¥	124,303	72.3	%	¥	116,127	70.1	%
Nightwear		9,390	5.5			8,713	5.3
Children’s Underwear		1,530	0.9			1,476	0.9

Total Innerwear		135,223	78.7			126,316	76.3
Outerwear and Sportswear		16,371	9.5			17,397	10.5
Hosiery		1,646	1.0			1,666	1.0
Textile Products		8,226	4.8			7,493	4.5
Other		10,431	6.0			12,676	7.7

Total	¥	171,897	100.0	%	¥	165,548	100.0	%

By product category, net sales for the innerwear product category increased ¥8,907 million or 7.1% from ¥126,316 million for fiscal 2011 to ¥135,223 million for fiscal 2012 primarily due to the increase in net sales of foundation garments and lingerie. Net sales of the textile products product category also increased ¥733 million or 9.8% from ¥7,493 for fiscal 2011 to ¥8,226 for fiscal 2012. The increases in net sales for the innerwear and textile products product categories more than offset the decreases in net sales for the outerwear and sportswear, hosiery and other product categories.

The following table summarizes a breakdown of our consolidated net sales by business segments for fiscal 2012 and 2011:

Net Sales to External Customers (and Percentage) by Business Segment


	Year ended March 31,
	2012				2011
	(yen in millions)
Wacoal Business (Domestic)	¥	115,870	67.4	%	¥	110,856	67.0	%
Wacoal Business (Overseas)		21,396	12.5			20,010	12.1
Peach John		13,836	8.0			11,575	7.0
Other		20,795	12.1			23,107	13.9

Total	¥	171,897	100.0	%	¥	165,548	100.0	%

By business segment, net sales of Wacoal Business (Domestic) increased by 4.5% from ¥110,856 million for fiscal 2011 to ¥115,870 million for fiscal 2012 primarily due to strong performance of the Wacoal Brand Business Department. Net sales of Wacoal Business (Overseas) increased by 6.9% from ¥20,010 million for fiscal 2011 to ¥21,396 million for fiscal 2012 primarily due to strong performance of our reasonably priced brassieres, bottom products and our Internet sales. Net sales of Peach John increased by 19.5% from ¥11,575 million for fiscal 2011 to ¥13,836 million for fiscal 2012 primarily due to sales from our core mail-order catalogs showing strong performance and effective advertising campaigns. Net sales of the Other business

segment, which include Lecien and Nanasai businesses, decreased by 10% from ¥23,107 million for fiscal 2011 to ¥20,795 million primarily due to a decrease in sales for Nanasai based on the declining effect of shop renovations that increased sales for fiscal 2011.

Cost of Sales

Our cost of sales increased 0.3% from ¥81,659 million for fiscal 2011 to ¥81,891 million for fiscal 2012. Cost of sales as a percentage of net sales decreased 1.7%, from 49.3% for fiscal 2011 to 47.6% for fiscal 2012. The decrease in the cost of sales as a percentage of net sales is primarily due to an increase in the proportion of products sold in Japan being manufactured overseas, a streamlining of product selection, more stringent inventory control leading to less inventory write-downs, and more effective product research and development.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased 2.5% from ¥77,716 million for fiscal 2011 to ¥79,629 million for fiscal 2012. The selling, general and administrative expenses as a percentage of net sales decreased 0.6% from 46.9% for fiscal 2011 to 46.3% for fiscal 2012. This decrease was primarily due to our success in keeping our selling, general and administrative expenses for fiscal 2012 at a level very close to that for fiscal 2011 relative to the increase in net sales. However, this is partly due to the aftermath of the earthquake and tsunami of March 2011 that forced us to take significant temporary cost-cutting measures, particularly in the first half of fiscal 2012. Although we do not expect to continue to be able to benefit from the factors that temporarily led to a decrease in our selling, general and administrative expenses for fiscal 2012, we believe that our cost-cutting efforts will help to counteract the loss of such benefit.

Impairment of Goodwill and Other Intangible Assets

At the end of fiscal 2012, we evaluated the recoverability of goodwill and other intangible assets and concluded that there was no impairment in the carrying value of any such assets for any of our reporting units. Our impairment loss therefore decreased by ¥1,772 million from an impairment loss of ¥1,772 million that we recognized in fiscal 2011 with respect to Peach John’s trademark, catalog customer relationships and goodwill, which we recognized as intangible fixed assets when Peach John became our wholly owned subsidiary in fiscal 2008. See “Item 5.A. Operating Results—Critical Accounting Policies and Estimates—Valuation of Indefinite-Lived Intangible Assets and Goodwill” and “Item 5.A. Operating Results—Critical Accounting Policies and Estimates—Impairment of Long-Lived Assets and Intangible Assets with Estimable Useful Lives.”

Operating Margin

Our operating margin (i.e., operating income as a percentage of net sales) increased to 6% for fiscal 2012, as compared to 2.7% for fiscal 2011. This increase was largely due to our success in keeping our cost of sales and selling, general and administrative expenses for fiscal 2012 at a level very close to that for fiscal 2011 relative to the increase in net sales and the fact that there were no impairment losses on goodwill and other intangible assets for fiscal 2012. However, this is partly due to the aftermath of the earthquake and tsunami of March 2011 that forced us to take significant temporary cost-cutting measures, particularly in the first half of fiscal 2012. Although we do not expect to be able to continue to benefit from the factors that temporarily led to an increase in our operating margin for fiscal 2012, we believe that our efforts to expand our net sales will help to counteract the loss of such benefit.

Total Other Expenses, Net

Total other expenses, net, decreased ¥304 million from ¥474 million for fiscal 2011 to ¥170 million for fiscal 2012. This decrease was primarily due to a significant improvement in the valuation of the marketable securities and investments we hold and the fact that there were no impairment losses for fiscal 2012.

Net Income Attributable to Wacoal Holdings Corp.

Net income attributable to Wacoal Holdings Corp. for fiscal 2012 was ¥6,913 million, an increase of ¥4,128 million compared to ¥2,785 million for fiscal 2011. This increase was primarily due to the success in promotion efforts for the Wacoal domestic business and the improved recognition of our specialty retail business brands such as AMPHI, Wacoal Factory and Une Nana Cool, particularly among outlet mall customers. In addition, we were successful in keeping our cost of sales and selling, general and administrative expenses relatively low, partly due to the aftermath of the earthquake and tsunami of March 2011 that forced us to take significant temporary cost-cutting measures, particularly in the first half of fiscal 2012. Furthermore, we had no impairment losses on goodwill and other intangible assets for fiscal 2012. Our current income taxes increased for fiscal 2012 and were only partially offset by our deferred income taxes. The effective tax rate decreased from 51.2% in fiscal 2011 to 41.1% in fiscal 2012 primarily due to changes in Japanese income tax rates.

Operating Results by Business Segment

We divide our businesses into four segments: Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John and Other (see “—Operations—Principal Products” above for further details of each segment’s principal products). In addition, starting with this annual report on Form 20-F for fiscal 2012, we also provide a breakdown of net sales attributable to each of the Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John and Other segments by key business unit.

Wacoal Business (Domestic)

Net Sales to External Customers. Net sales of Wacoal Business (Domestic) for fiscal 2012 were ¥115,870 million, as compared to ¥110,856 million for fiscal 2011, and exceeded the results for fiscal 2011 by 4.5%. This was primarily due to the strong performance of our core operating business, Wacoal brand business and the expansion of our specialty retail business. Net sales for Wacoal Business (Domestic) as a percentage of our total net sales increased to 67.4%, as compared to 67% for fiscal 2011.

The following table sets forth information with respect to our net sales by each key business unit of the Wacoal Business (Domestic) segment during fiscal 2012 and 2011:

Net Sales to External Customers (and Percentage) by Key Business Unit of Wacoal Business (Domestic)


	Year ended March 31,
	2012				2011
	(yen in millions)
Wacoal Brand Business Department	¥	57,414	49.6	%	¥	55,356	49.9	%
Wing Brand Business Department		28,871	24.9			29,003	26.2
Retail Business Department		10,921	9.4			8,644	7.8
Wellness Business Department		8,718	7.5			8,751	7.9
Catalog Sales Business Department		5,663	4.9			5,341	4.8
Other		4,283	3.7			3,761	3.4

Total	¥	115,870	100.0	%	¥	110,856	100.0	%

Net sales of the five key business units of Wacoal Business (Domestic) combined were ¥111,587 million, an increase of ¥4,492 million compared to ¥107,095 million for fiscal 2011.

•

Wacoal Brand Business Department: In our Wacoal Brand Business Department, core brasseries and bottom products showed strong performance due to our success in appealing to consumers through our product lineup and promotional activities based on our announcement entitled “Body Aging (physiological changes associated with aging),” which was based on the results of the Wacoal Corp. Human Science Research Center’s research. However, this was partially offset by sales of our undergarments, which fell below the results of the previous fiscal year due to competition and unsteady

weather conditions despite the strong performance of certain products using natural materials. Thus, overall sales of our core Wacoal brand business exceeded the results for fiscal 2011 by 3.7% as a result of the performance of our brassieres and bottom products.

•

Wing Brand Business Department: In our Wing Brand Business Department, although sales of our brassieres and bottom products showed steady performance, which was similar to that of our Wacoal brand business, sales of men’s innerwear fell below the results for the previous fiscal year due to the poor performance and clearance of Style Science series products. Thus, although in-store performance was steady, overall sales of our Wing brand business remained nearly unchanged from the results for fiscal 2011 due to clients’ inventory adjustments, which resulted in fewer deliveries of our products.

•

Retail Business Department: Regarding our Retail Business Department, sales at our direct retail store AMPHI expanded as a result of strong performance of our existing shops due to improvement of brand recognition and the opening of new stores. Sales from our Wacoal Factory Stores were steady in general due to our improvement in product lineup, despite the partial damage to certain stores as a result of the effects of the earthquake that struck northeastern Japan on March 11, 2011 and the subsequent tsunami. As a result, overall sales of our specialty retail business exceeded the results of fiscal 2011 by 26.3%.

•

Wellness Business Department: In our Wellness Business Department, despite the steady performance of sports tights from our sports conditioning wear “CW-X” brand and functionality-focused business pumps, overall sales from our wellness business remained unchanged from the results for the previous fiscal year due to a decrease in sales from TV infomercials subsequent to a decrease in the number of TV infomercials run after the March 11 earthquake and tsunami. As a result of the foregoing, net sales of our wellness products fell below net sales for fiscal 2011 by 0.4%.

•

Catalog Sales Business Department: In our Catalog Sales Business Department, overall sales exceeded the results for fiscal 2011 by 6% due to steady performance of catalog sales, which was partly attributable to the shifting of inventory from department stores to catalog resulting in an increase of catalog product selection, and the expansion of Internet sales through both our directly managed Internet shopping site (http://store.wacoal.jp/) and third-party shopping portal sites, including, among others, Rakuten (http://www.rakuten.co.jp).

Operating Costs and Expenses. Operating costs and expenses for our Wacoal Business (Domestic) segment increased 2.8% from ¥107,370 million for fiscal 2011 to ¥110,417 million for fiscal 2012, primarily due to our success in keeping our cost and expenses for fiscal 2012 at a level very close to that for fiscal 2011 relative to the increase in net sales. However, this is partly due to the aftermath of the earthquake and tsunami of March 2011 that forced us to take significant temporary cost-cutting measures, particularly in the first half of fiscal 2012. We do not expect to keep our cost and expenses at such a level if our net sales continue to increase at the same rate.

Operating Profit. As a result of the foregoing, the operating profit from our Wacoal Business (Domestic) segment was ¥8,172 million for fiscal 2012, as compared to ¥5,620 million for fiscal 2011. The operating margin increased to 6.9% for fiscal 2012, as compared to 5% for fiscal 2011, due to increased net sales and our success in reducing cost of sales and in improving our selling and administrative expenses ratio.

Wacoal Business (Overseas)

Net Sales to External Customers. Net sales for our Wacoal Business (Overseas) segment as a percentage of our total net sales increased to 12.5%, as compared to 12.1% for fiscal 2011.

The following table sets forth information with respect to our net sales by each key business unit of the Wacoal Business (Overseas) segment during fiscal 2012 and 2011:

Net Sales to External Customers (and Percentage) by Key Business Unit of Wacoal Business (Overseas)


	Year ended March 31,
	2012				2011
	(yen in millions)
Wacoal International Corp.	¥	10,418	48.7	%	¥	10,189	50.9	%
Wacoal China Co., Ltd.		6,007	28.1			5,179	25.9
Other		4,971	23.2			4,642	23.2

Total	¥	21,396	100.0	%	¥	20,010	100.0	%

•

United States. Net sales in the United States represented 48.7% of net sales for this segment for fiscal 2012, compared to 50.9% for fiscal 2011. We made aggressive efforts in expanding our U.S. market share and enhancing our product lineup at department stores, which are our major clients, as well as in expanding sales in countries neighboring the United States and Internet retailing. Despite the impact of exchange rate fluctuation, sales exceeded the results for fiscal 2011 as a result of the strong performance of our reasonably priced brassieres and functional bottom products and our Internet sales, which exceeded our original expectations. As a result, net sales in the United States increased 2.2% from ¥10,189 million for fiscal 2011 to ¥10,418 million for fiscal 2012, which was attributable entirely to Wacoal International Corp., which undertakes certain sales activities for our U.S. operations.

•

Asia (Excluding Japan). Net sales in Asia outside of Japan (including China, Hong Kong and Singapore) represented 45.7% of net sales for this segment in fiscal 2012, compared to 43.6% in fiscal 2011. During fiscal 2012, we aimed to expand sales in countries neighboring Japan. In our business in China, we made efforts to strengthen our product lineup and promote the opening of new stores mainly in inner mainland China. Although net sales exceeded the results for fiscal 2011 by ¥1,067 million, the growth in net sales slowed due to a significant decline in the number of visitors to department stores, which are our major clients, which in turn was attributable to certain government administrative guidance on the regulations on misleading advertisements and a lack of differentiation of our products from competing products and sales promotions. As a result, net sales from our business in China increased 12.9% from ¥7,609 million for fiscal 2011 to ¥8,587 million for fiscal 2012, of which ¥6,007 million was attributable to the Wacoal China Co., Ltd., our subsidiary that undertakes certain manufacturing and sales operations related to our business in China. Net sales for Wacoal China Co., Ltd. exceeded results for fiscal 2011 by ¥828 million or 16%.

•

Europe. Net sales in Europe represented 5.6% of net sales for this segment in fiscal 2012, compared to 5.5% in fiscal 2011.

•

Foreign Currency. The average noon buying rate for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York was ¥78.86 for fiscal 2012, as compared to ¥85.00 for fiscal 2011. The increase in net sales to external customers for this segment was reduced by approximately 45% due to the significant strengthening of yen against the U.S. dollar and other currencies of the markets in which we sell our products.

As a result of the foregoing, net sales to external customers for this segment increased 6.9% from ¥20,010 million for fiscal 2011 to ¥21,396 million for fiscal 2012.

Operating Costs and Expenses. Operating costs and expenses for our Wacoal Business (Overseas) segment increased 6.8% from ¥24,806 million for fiscal 2011 to ¥26,497 million for fiscal 2012 as a result of an increase in selling and administrative expenses incurred due to an increase in our number of stores in China, despite cost reduction efforts in the United States.

Operating Profit. As a result of the foregoing, the operating profit from our Wacoal Business (Overseas) segment was ¥1,440 million for fiscal 2012, as compared to ¥1,322 million for fiscal 2011. The operating margin

for this segment increased to 5.2% for fiscal 2012, as compared to 5.l% for fiscal 2011 mainly due to the an improvement in our sales-to-profit ratio accompanied by cost reduction efforts in the United States, which more than offset the operating loss suffered in our China business.

Peach John

Net Sales to External Customers. Net sales for our Peach John segment as a percentage of our total net sales increased to 8%, as compared to 7% for fiscal 2011. Sales from our core mail-order catalogs showed strong performance as a result of successful rescheduling of our catalog publication timing, which was in line with the change of our sales schedule. In addition, net sales from our domestic direct retail stores were above net sales for fiscal 2011 due to effective advertising campaigns and improved product lineups, despite a decrease in the number of shops as compared to the previous fiscal year. As for our directly managed overseas stores, although the seven stores operated in China showed weak performance, our two directly managed stores in Hong Kong showed strong performance. As a result of the foregoing, net sales to external customers for this segment increased 19.5% from ¥11,575 million for fiscal 2011 to ¥13,836 million for fiscal 2012.

Operating Costs and Expenses. Operating costs and expenses for our Peach John segment decreased 7.1% from ¥14,527 million for fiscal 2011 to ¥13,500 million for fiscal 2012 primarily due to efforts to cut labor costs and fixed expenses through the integration and elimination of business offices conducted during fiscal 2012, as well as a lower cost-to-sales ratio, which more than offset an increase in expenses incurred in connection with our business development in China and effect of our amortization costs that are recorded every year.

Operating Profit (Loss). As a result of the foregoing and our domestic business showing gradual improvement, we achieved operating profit with respect to our Peach John segment. The operating profit from our Peach John segment was ¥529 million for fiscal 2012, as compared to the operating loss of ¥2,879 million for fiscal 2011.

Other

The following table sets forth information with respect to our net sales by each key business unit of the Other business segment during fiscal 2012 and 2011:

Net Sales to External Customers (and Percentage) by Key Business Unit of Other


	Year ended March 31,
	2012				2011
	(yen in millions)
Lecien	¥	11,712	56.3	%	¥	11,717	50.7	%
Nanasai		7,998	38.5			10,331	44.7
Other		1,085	5.2			1,059	4.6

Total	¥	20,795	100.0	%	¥	23,107	100.0	%

Net Sales to External Customers. Net sales for our Other business segment as a percentage of our total net sales decreased to 12.1%, as compared to 13.9% for fiscal 2011. With respect to Lecien Corporation (“Lecien”), one of our major subsidiaries comprising this segment, sales from our core innerwear showed strong performance as a result of the expansion of offered products jointly developed with our major clients. However, net sales from the apparel business of Lecien, which offers outerwear products, fell below the results for fiscal 2011 due to a reduction in the number of unprofitable products. As a result, net sales from Lecien for fiscal 2012 remained generally at the same level as in fiscal 2011. As for Nanasai, another major subsidiary comprising this segment, net sales for fiscal 2012 fell significantly as compared to fiscal 2011 despite strong sales performance of our products. This was due to the completion of the shop renovations of department stores commenced during fiscal 2011, as well as the poor performance of the short term rental business of mannequins stemming from the restrained investments and cancellation of various events by our business partners caused by the impact of the March 2011 earthquake. As a result of the foregoing, net sales to external customers for this segment decreased 10% from ¥23,107 million for fiscal 2011 to ¥20,795 million for fiscal 2012.

Operating Costs and Expenses. Operating costs and expenses for our Other business segment decreased 3.9% from ¥27,357 million for fiscal 2011 to ¥26,303 million for fiscal 2012, primarily due to our efforts to achieve efficiency by cutting expenses, particularly for Nanasai.

Operating Profit. As a result of the foregoing, the operating profit from our Other business segment was ¥236 million for fiscal 2012, as compared to an operating profit of ¥338 million for fiscal 2011. The operating margin worsened to 0.9% for fiscal 2012, as compared to 1.2% for fiscal 2011, primarily due to the following factors: operating income for Nanasai fell in connection with a decrease in sales, despite our efforts to achieve efficiency by cutting expenses, and Lecien suffered an operating loss of ¥169 million as a result of an extraordinary loss of ¥806 million incurred in connection with the withdrawal from our employees’ pension fund. These factors were only partially offset by improved operating income at the business level.

Fiscal 2011 Compared to Fiscal 2010

Consolidated Operating Results

Net Sales

Consolidated net sales increased 1.2% from ¥163,548 million for fiscal 2010 to ¥165,548 million for fiscal 2011, despite the challenging conditions in the women’s apparel market and changes in consumer spending habits in Japan.

The following table summarizes a breakdown of our consolidated net sales by category of products for fiscal 2011 and 2010:

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


	Year ended March 31,
	2011				2010
	(yen in millions)
Innerwear:
Foundation and Lingerie	¥	116,127	70.1	%	¥	116,478	71.2	%
Nightwear		8,713	5.3			9,437	5.8
Children’s Underwear		1,476	0.9			1,608	1.0

Total Innerwear		126,316	76.3			127,523	78.0
Outerwear and Sportswear		17,397	10.5			17,125	10.5
Hosiery		1,666	1.0			1,702	1.0
Textile Products		7,493	4.5			7,420	4.5
Other		12,676	7.7			9,778	6.0

Total	¥	165,548	100.0	%	¥	163,548	100.0	%

By product category, net sales for the innerwear product category decreased ¥1,207 million or 0.9% from ¥127,523 million for fiscal 2010 to ¥126,316 million for fiscal 2011 primarily due to declines in net sales of foundation garments, lingerie, nightwear and children’s underwear. Net sales of hosiery also declined ¥36 million or 2.1% from ¥1,702 million for fiscal 2010 to ¥1,666 for fiscal 2011. The decrease in net sales of innerwear and hosiery were more than offset by the increases in net sales for outerwear and sportswear, textile and other products.

The following table summarizes a breakdown of our consolidated net sales by business segment for fiscal 2011 and 2010:

Net Sales to External Customers (and Percentage) by Business Segment


	Year ended March 31,
	2011				2010
	(yen in millions)
Wacoal Business (Domestic)	¥	110,856	67.0	%	¥	113,929	69.7	%
Wacoal Business (Overseas)		20,010	12.1			19,295	11.8
Peach John		11,575	7.0			13,079	8.0
Other		23,107	13.9			17,245	10.5

Total	¥	165,548	100.0	%	¥	163,548	100.0	%

By business segment, net sales of Wacoal Business (Overseas) increased by 3.7% from ¥19,295 million for fiscal 2010 to ¥20,010 for fiscal 2011 primarily due to a growth in sales in China, as well as the strong performance of new lower-priced brassiere and functional bottom products marketed in the United States. Net sales of the Other business segment also increased by ¥5,862 million or 34% from ¥17,245 million for fiscal 2010 to ¥23,107 million for fiscal 2011 primarily due to an increase in net sales attributable to Nanasai, resulting from the opening of new department stores and the remodeling of other stores, especially in the Kansai region of Japan, which accounted for an increase in rentals and sales of mannequins and fixtures.

Cost of Sales

Our cost of sales increased 1.9% from ¥80,101 million for fiscal 2010 to ¥81,659 million for fiscal 2011, primarily due to the consolidation of Lecien into our accounts for the entire fiscal 2011, as compared to eight months for fiscal 2010. Cost of sales as a percentage of net sales increased 0.3% from 49% for fiscal 2010 to 49.3% for fiscal 2011. The slight increase in the cost of sales as a percentage of net sales is primarily due to increased sales from our consolidated subsidiaries in Japan, which have higher cost as a percentage of net sales, despite Wacoal Corp.’s efforts to improve inventory management by achieving fewer returned goods and fewer losses from inventory write-downs.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses decreased 1% from ¥78,524 million for fiscal 2010 to ¥77,716 million for fiscal 2011. The selling, general and administrative expenses as a percentage of net sales decreased 1.1% from 48 % for fiscal 2010 to 46.9% for fiscal 2011. This decrease was primarily due to a decrease of ¥744 million in net periodic benefit costs in addition to our cost-cutting efforts including labor costs.

Impairment of Goodwill and Other Intangible Assets

When Peach John became our wholly owned subsidiary in fiscal 2008, we recognized Peach John’s trademark, catalog customer relationships and goodwill as intangible fixed assets. At the end of fiscal 2011, however, we evaluated these assets and recognized an impairment loss of ¥936 million in respect of catalog customer relationships and trademark and ¥836 million in respect of goodwill. Our impairment loss therefore increased by ¥749 million from an impairment loss of ¥1,023 million that we recognized with respect to customer relationships in fiscal 2010. See “Item 5.A. Operating Results—Critical Accounting Policies and Estimates—Valuation of Indefinite-lived Intangible Assets and Goodwill” and “Item 5.A. Operating Results—Critical Accounting Policies and Estimates— Impairment of Long-Lived Assets and Intangible Assets with Estimable Useful Lives.”

Operating Margin

Our operating margin (i.e., operating income as a percentage of net sales) increased to 2.7% for fiscal 2011, as compared to 2.3% for fiscal 2010. This increase was largely due to our cost-cutting efforts, despite the decreased sales from our existing businesses and recognition of impairment loss from Peach John.

Total Other Expenses, Net

Total other expenses, net, decreased ¥200 million from ¥674 million for fiscal 2010 to ¥474 million for fiscal 2011. This decrease was primarily due to an increase of ¥365 million in gain on the sale or exchange of marketable securities and investments as compared to fiscal 2010.

Net Income Attributable to Wacoal Holdings Corp.

Net income attributable to Wacoal Holdings Corp. for fiscal 2011 was ¥2,785 million, an increase of ¥310 million compared to ¥2,475 million for fiscal 2010. This increase was primarily due to a decrease in our selling, general and administrative expenses as a result of successful cost-cutting efforts, in addition to a slight increase in our net sales; these factors more than offset an increase in cost of sales. Our current income taxes increased for fiscal 2011 and were only partially offset by our deferred income taxes. The effective tax rate decreased from 52.5% in fiscal 2010 to 51.2% in fiscal 2011 primarily due to an increase in our change in valuation allowance, which more than offset the impact of our impairment losses on goodwill and decreases in permanently non-deductible expenses and certain other taxable items.

Operating Results by Business Segment

We divide our businesses into four segments: Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John and Other (see “—Operations—Principal Products” above for further details of each segment’s principal products). We have retrospectively modified our breakdown presentation to conform with the new presentation scheme adopted with the annual report on Form 20-F for fiscal 2012 by providing a breakdown of net sales attributable to each of the Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John and Other segments by key business unit.

Wacoal Business (Domestic)

Net Sales to External Customers. Net sales for our Wacoal Business (Domestic) segment as a percentage of our total net sales decreased to 67%, as compared to 69.7% for fiscal 2010. During fiscal 2011, despite signs of a partial economic recovery in the midst of the global financial crisis, the Japanese economy continued to remain weak due to continued deterioration in employment and consumer spending levels. Several service sectors, including department stores and general merchandisers, continued to face a challenging environment, as they confronted an increased number of cost-conscious consumers exercising cautious spending habits. Despite our launch of lower-priced products to address changes in consumer spending habits, sales of most of the products in this segment declined, primarily because of the challenging conditions in the women’s apparel market. As a result of the foregoing, net sales to external customers for this segment decreased 2.7% from ¥113,929 million for fiscal 2010 to ¥110,856 million for fiscal 2011.

The following table sets forth information with respect to our net sales by each key business unit of the Wacoal Business (Domestic) segment during fiscal 2011 and 2010:

Net Sales to External Customers (and Percentage) by Key Business Unit of Wacoal Business (Domestic)


	Year ended March 31,
	2011				2010
	(yen in millions)
Wacoal Brand Business Department	¥	55,356	49.9	%	¥	57,066	50.1	%
Wing Brand Business Department		29,003	26.2			30,836	27.1
Retail Business Department		8,644	7.8			7,128	6.2
Wellness Business Department		8,751	7.9			8,117	7.1
Catalog Sales Business Department		5,341	4.8			5,355	4.7
Other		3,761	3.4			5,427	4.8

Total	¥	110,856	100.0	%	¥	113,929	100.0	%

Net sales of the five key business units of Wacoal Business (Domestic) combined were ¥107,095 million, a decrease of ¥1,407 million compared to ¥108,502 million for fiscal 2010.

•

Wacoal Brand Business Department: In our Wacoal Brand Business Department, sales of most of the core brassieres showed strong performance as a result of the direct benefits of our campaign products, which have been well received by our consumers, and our successful promotional campaign based on the keyword “Body Aging (physiological changes associated with aging),” which stemmed from the results of Wacoal Corp. Human Science research Center’s research announced in April 2010. Conversely, sales of our new Style Science functional underwear series showed weak performance and overall sales of girdles were below the results from the previous fiscal year. Sales of our seasonal undergarments were also largely below the results from the previous fiscal year due to products sold by our competitors. In addition to the above, sales in March fell as a result of the impact of the earthquake and tsunami that struck northeastern Japan and, as a result, overall sales of our Wacoal Brand Business Department were below the results from the previous fiscal year.

•

Wing Brand Business Department: In our Wing Brand Business Department, delivery was suppressed largely due to clients’ inventory adjustments. Although in-store performance of brassieres was steady, sales of our undergarments were affected by mass merchandisers’ private-label brand products and the products sold by our competitors. Consequently, sales of girdles showed poor performance, and the results of these items were below the results from the previous fiscal year. With respect to men’s undergarments, although sales of products targeted at senior consumers and new brands expanded, sales were below the results from the previous fiscal year as a result of the poor performance of our basic Style Science products. Due to the above, overall sales of our Wing Brand Business Department were below the results from the previous fiscal year.

•

Retail Business Department: Regarding our Retail Business Department, sales of our reasonably priced brassiere products from our direct retail store APMHI showed a strong performance. Furthermore, overall sales exceeded the results from the previous fiscal year due to steady sales from our Wacoal Factory Stores in general, despite the partial impact of the March 2011 earthquake and tsunami. Although sales from our existing stores of Une Nana Cool Corp. (a subsidiary of Wacoal Corp. that engages in the retail store business) were below the results from the previous fiscal year, new store openings helped overall sales to exceed the results from the previous fiscal year.

•

Wellness Business Department: In our Wellness Business Department, because we actively covered the demand from a boom in running and trekking, sales of our “CW-X” brand products showed favorable performance. In addition, sales of our business footwear, which focuses on functionality showed favorable performance as a result of advertisements made in public transportation and a campaign for walking. As a result, overall sales from our Wellness Business Department exceeded the results from the previous fiscal year.

•

Catalog Sales Business Department: In our Catalog Sales Business Department, sales fell below the results from the previous fiscal year due to a slow start in purchases in our catalog sales as a result of the cool summer at the beginning of the season and lingering heat, as well as the impact of the March 2011 earthquake. However, our online sales showed favorable performance after the sales of limited items on the website gained significant popularity. As a result, overall sales from our Catalog Sales Business Department remained the same as the results from the previous fiscal year.

Operating Costs and Expenses. Operating costs and expenses for our Wacoal Business (Domestic) segment decreased 3.4% from ¥111,180 million for fiscal 2010 to ¥107,370 million for fiscal 2011, primarily due to a decrease in cost of sales and also due to a decrease in selling, general and administrative expenses. Decreases in cost of sales and selling, general and administrative expenses, in turn, are primarily attributable to a decrease in net sales and efforts to cut publicity and other costs at Wacoal Corp.

Operating Profit. As a result of the foregoing, the operating profit from our Wacoal Business (Domestic) segment was ¥5,620 million for fiscal 2011, as compared to ¥4,542 million for fiscal 2010. The operating margin increased to 5% for fiscal 2011, as compared to 3.9% for fiscal 2010, because the rate of decrease in operating costs and expenses more than offset the rate of decrease in net sales primarily due to our operating cost-cutting measures.

Wacoal Business (Overseas)

Net Sales to External Customers. Net sales for our Wacoal Business (Overseas) segment as a percentage of our total net sales increased to 12.1%, as compared to 11.8% for fiscal 2010.

The following table sets forth information with respect to our net sales by each key business unit of the Wacoal Business (Overseas) segment during fiscal 2011 and 2010:

Net Sales to External Customers (and Percentage) by Key Business Unit of Wacoal Business (Overseas)


	Year ended March 31,
	2011				2010
	(yen in millions)
Wacoal International Corp.	¥	10,189	50.9	%	¥	10,667	55.3	%
Wacoal China Co., Ltd.		5,179	25.9			4,042	20.9
Other		4,642	23.2			4,586	23.8

Total	¥	20,010	100.0	%	¥	19,295	100.0	%

•

United States. Net sales in the United States represented 50.9% of net sales for this segment for fiscal 2011, compared to 55.3% for fiscal 2010. In the United States, actual sales for fiscal 2011 were above those for fiscal 2010 due to the continued popularity of our reasonably priced brassieres and our supportive underwear bottoms, as well as the commencement of Internet sales. However, due to the effect of the U.S. dollar-Japanese yen exchange rate, net sales in the United States decreased 4.5% from ¥10,667 million for fiscal 2010 to ¥10,189 million for fiscal 2011, which was entirely attributable to Wacoal International Corp., which undertakes certain sales activities for our U.S. operations.

•

Asia (Excluding Japan). Net sales in Asia outside of Japan (including China, Hong Kong and Singapore) represented 43.6% of net sales for this segment in fiscal 2011, compared to 39.6% in fiscal 2010. In China, we continued to see strong growth despite economic uncertainties and put in efforts to develop our stores focusing on mainland China. Due to a lack of brand recognition, sales from our new stores were less than anticipated in our initial plan; however, such sales exceeded those for fiscal 2010. Since August 2009, we have been conducting a campaign featuring a famous Chinese actress with the aim of improving our brand recognition by Chinese consumers and expanding our sales. As a result, net sales from our business in China increased 15.2% from ¥6,603 million for fiscal 2010 to ¥7,609 million for fiscal 2011, of which ¥5,179 million was attributable to Wacoal China Co., Ltd., our

subsidiary that undertakes certain manufacturing and sales operations related to our business in China. Net sales for Wacoal China Co., Ltd. exceeded results for fiscal 2010 by ¥1,137 million or 28.1%.

•

Europe. Net sales in Europe represented 5.5% of net sales for this segment in fiscal 2011, compared to 5.2% in fiscal 2010.

•

Foreign Currency. The average noon buying rate for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York was ¥85.00 for fiscal 2011, as compared to ¥92.49 for fiscal 2010. The increase in net sales to external customers for this segment was reduced by approximately 64% due to the significant strengthening of yen against the U.S. dollar and other currencies of the markets in which we sell our products.

As a result of the foregoing, net sales to external customers for this segment increased 3.7% from ¥19,295 million for fiscal 2010 to ¥20,010 million for fiscal 2011.

Operating Costs and Expenses. Operating costs and expenses for our Wacoal Business (Overseas) segment increased 3.8% from ¥23,895 million for fiscal 2010 to ¥24,806 million for fiscal 2011 due to increases in both cost of sales and selling, general and our administrative expenses caused by the cost of opening new stores in China, as well as an increase in promotion-related expenses.

Operating Profit. As a result of the foregoing, the operating profit from our Wacoal Business (Overseas) segment was ¥1,322 million for fiscal 2011, as compared to ¥1,616 million for fiscal 2010. The operating margin for this segment decreased to 5.1% for fiscal 2011, as compared to 6.3% for fiscal 2010 mainly due to the increase in profits and sales as well as the effect of successful cost-cutting measures in the United States being outweighed by such things as the greater marketing costs we incurred in China, as we made efforts to increase Wacoal’s brand recognition.

Peach John

Net Sales to External Customers. Net sales for our Peach John segment as a percentage of our total net sales decreased to 7%, as compared to 8% for fiscal 2010. Peach John mail-order sales from our seasonal catalogs were below the sales for fiscal 2010 due to a general fall in catalog orders. In addition, net sales from our domestic direct retail stores fell below net sales for fiscal 2010 due to a decrease in the number of stores, resulting in a decrease in our domestic net sales compared to 2010. We actively worked to grow overseas by opening two new overseas direct retail stores in Hong Kong and five new stores in Shanghai. However, due to the relative significance of Peach John’s domestic business as compared to its overseas business, net sales to external customers for this segment decreased 11.5% from ¥13,079 million for fiscal 2010 to ¥11,575 million for fiscal 2011.

Operating Costs and Expenses. Operating costs and expenses for our Peach John segment decreased 1% from ¥14,680 million for fiscal 2010 to ¥14,527 million for fiscal 2011, primarily due to impairment charges on goodwill and other intangible assets that were recognized in the amount of ¥1,772 million for fiscal 2011, which more than offset the efficiencies we achieved by reducing our catalog circulation and improving our methods of advertising. These charges were the result of an evaluation of the recoverability of Peach John’s goodwill, catalog customer relationships and trademarks at the end of fiscal 2011. See “Item 5.A. Operating Results—Critical Accounting Policies and Estimates—Valuation of Indefinite-Lived Intangible Assets and Goodwill” and “Item 5.A. Operating Results—Critical Accounting Policies and Estimates—Impairment of Long-Lived Assets and Intangible Assets with Estimable Useful Lives.”

Operating Loss. As a result of the foregoing, the operating loss from our Peach John segment was ¥2,879 million for fiscal 2011, as compared to the operating loss of ¥1,592 million for fiscal 2010. Our operating loss worsened to 24.7% for fiscal 2011, as compared to 12.2% for fiscal 2010.

Other

The following table sets forth information with respect to our net sales by each key business unit of the Other business segment during fiscal 2011 and 2010:

Net Sales to External Customers (and Percentage) by Key Business Unit of Other


	Year ended March 31,
	2011				2010
	(yen in millions)
Lecien	¥	11,717	50.7	%	¥	8,751	50.7	%
Nanasai		10,331	44.7			7,501	43.5
Other		1,059	4.6			993	5.8

Total	¥	23,107	100.0	%	¥	17,245	100.0	%

Net Sales to External Customers. Net sales for our Other business segment as a percentage of our total net sales increased to 13.9%, as compared to 10.5% for fiscal 2010. This significant increase was principally due to Nanasai’s strong performance associated with openings of new department stores and remodeling of other stores, which amounted to a 37.7% increase in sales compared to 2010. Lecien, our other major subsidiary in our Other business segment, however, incurred a decrease in net sales despite the reorganization of poorly performing businesses and our allocation of management resources to Lecien because of increased competition from bulk retailers in our main inner and outerwear markets. Sales from our Art/Hobby business, which handles embroidery thread and fabrics for handicrafts, remained broadly at the same level; however, sales attributable to our lace fabrics business decreased. Nevertheless, because our financial statements for fiscal 2010 reflected only eight months of Lecien’s net sales compared to a full year for fiscal 2011, we reported an increase in sales attributable to Lecien for fiscal 2011. As a result of the foregoing, net sales to external customers for this segment increased 34% from ¥17,245 million for fiscal 2010 to ¥23,107 million for fiscal 2011.

Operating Costs and Expenses. Operating costs and expenses for our Other business segment increased 29.1% from ¥21,186 million for fiscal 2010 to ¥27,357 million for fiscal 2011, primarily due to increases in cost of sales and selling, general and administrative expenses associated with the inclusion of Lecien’s results for the entire fiscal 2011 compared to eight months for fiscal 2010.

Operating Profit (Loss). As a result of the foregoing, the operating profit from our Other business segment was ¥338 million for fiscal 2011, as compared to an operating loss of ¥737 million for fiscal 2010. The operating margin improved to 1.2% for fiscal 2011, as compared to an operating loss of 3.6% for fiscal 2010, due to the increase in sales attributable to Nanasai and our success in reducing expenses, which offset the inclusion of Lecien, which has a lower operating margin compared to our other businesses, for the full fiscal year.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of the financial statements requires our management to make estimates and assumptions. We believe that the following are some of the more critical judgment areas in applying our accounting policies in the preparation of our consolidated financial statements.

Allowance for Doubtful Receivables and Returns

We are required to assess the collectability of notes and accounts receivable. A considerable amount of judgment is required in assessing the ultimate realization of these notes and receivables, including the current creditworthiness of each applicable customer, taking into account business conditions, turnover of receivables and financial positions for significant customers. We believe that our allowance for doubtful receivables is adequate. However, in the event that a customer’s financial condition worsens, the allowance for doubtful receivables may increase and may adversely affect our financial condition and performance.

We allow our customers to return their unsold products when the customers meet certain criteria established by us as outlined in our applicable trade terms. We establish the allowance for estimated returns for each operating department based on historical experience with product returns, sales movements and the size of inventory on the retail level and on the situation of the retail industry overall. We review and revise the allowance every quarter, in consideration of actual returns, planned product discontinuances and promotional sales. We record the allowance for estimated returns as a reduction to sales. We believe that our allowance for returns is sufficient, however a weakening of store sales, or a higher rate of returns than our initial estimates, may have a negative impact on our financial condition or operating results.

Inventory Review

Inventories are stated at the lower of cost or market, cost being determined on a first-in, first-out basis for raw materials and on an average cost basis for work in process and finished products. Market value, or net realizable value, is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make a sale. A periodic review of inventory is performed in order to determine if inventory is properly stated at the lower of cost or market. Inventories are written down to the estimated net realizable values, if appropriate. Factors such as expected average selling price, expected average cost to make a sale, markdown rate, and class or type of inventories are analyzed to determine estimated net realizable value. We also consider potential disposal of inventories. Criteria utilized to quantify the factors we consider include historical results, judgments regarding future customer demand and other factors. We believe that the amount written down is appropriate. However, if market conditions and demand are less favorable than our projections, the amount we write down may increase and may adversely affect our financial condition or operating results.

Deferred Tax Assets

We currently have significant deferred tax assets, which are subject to periodic recoverability assessments. Realization of our deferred tax assets is principally dependent upon the realization of projected future taxable income. In estimating our future taxable income, we consider past operating results, the feasibility of ongoing tax planning strategies and other factors. Our judgments regarding future profitability may change due to future market conditions and other factors. These changes, if any, may require recognition of a significant valuation allowance for these deferred tax asset balances. In the event we determine that certain deferred tax assets may not be recoverable, such amounts will be reserved for and may adversely affect net income. We believe our deferred tax assets after adjustments for valuation allowance are recoverable. If we record lower-than-expected earnings and our deferred tax assets become unrecoverable, however, a valuation allowance must be recorded against the amount that is not likely to be recovered, and this may have a negative impact on our profit and loss.

Impairment Charges on Investments

Impairment charges on investments are charged to earnings when a decline in fair value below the cost is other than temporary. We periodically determine whether a decline in the fair value of marketable securities and investments is deemed to be other-than-temporary decline, based on criteria that include the duration and severity of market decline, the extent to which cost exceeds market value, our financial position and business outlook and our intent and ability to retain the impaired marketable securities and investments for sufficient period of time for anticipated recovery in market value.

We believe that the criteria for evaluating impairment are reasonable. However, changes in the market or circumstances of each individual investment due to unforeseen changes in economic and business assumptions could affect the valuations of the investments. Currently, we generally conclude that any other-than-temporary impairment has occurred when the decline in fair value below the carrying value continues for over nine consecutive months. We may also consider other factors, including our ability and intent to hold the applicable securities and the severity of the decline in fair value.

For fiscal 2012, we held securities with respect to which we recognized impairment charges, as well as securities with respect to which we did not recognize any impairment charges even though those securities had been in an unrealized loss position. Based on our assessment of the period of the decline in the fair values and

our assessment of the relevant companies’ earnings outlook, we concluded that the decline in fair value for the securities not subject to impairment charges was only temporary and, therefore, that impairment charges did not need to be recognized for these particular securities. At the end of fiscal 2012, we did not hold any security that had an unrealized holding loss of ¥100 million or more.

Valuation of Indefinite-Lived Intangible Assets and Goodwill

Under Accounting Standards Codification 350, “Intangible—Goodwill and Other,” we are required to perform an annual impairment test of our intangible assets with indefinite useful lives and goodwill. We also assess the impairment of such intangible assets and goodwill whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Some of the factors we consider important that could trigger an impairment review include the following:

•

significant underperformance relative to historical or projected future operating results;

•

significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

•

significant negative industry or economic trends; and

•

significant changes in risk-adjusted discount rates.

When we determine that the carrying amount of indefinite-lived intangible assets and goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, we evaluate the carrying amount of the assets based on their fair value. If the fair value is less than the carrying amount of the assets, we record an impairment loss based on the difference between the carrying amount and the fair value of the assets.

If we make an initial determination that the carrying amount of indefinite-lived intangible assets and goodwill may not be recoverable, we engage an independent appraiser to assist us in our determination of the fair values of our reporting units.

Goodwill

Significant assumptions used in this analysis include: future cash flows and the risk-adjusted discount rate. Future cash flows are based on the management’s cash flow projections for the future five years, after which future cash flows are estimated using the perpetuity growth rate of zero. The management’s cash flow projections are developed using estimates for expected future revenue growth rates, profit margins and working capital levels of the reporting units. The risk-adjusted discount rate is determined by the Capital Asset Pricing Model (“CAPM”) and we mainly utilize a weighted-average cost of capital (“WACC”) of 5.5%.

In our determination of the fair value of goodwill, we utilize a discounted cash flow analysis, as well as other relevant valuation approaches, including those based on the stock price and market capitalization of the acquired entity, and asset and liability structure of the reporting units.

As of March 31, 2012, we evaluated the recoverability of goodwill, which had a carrying value of ¥10,367 million, and concluded that there was no impairment in the carrying value of goodwill for any of our reporting units.

Trademark

In our determination of the fair value of trademark, we utilize the relief-from-royalty method and incorporate relevant unobservable inputs. Significant assumptions used in this analysis include future cash flows, the risk-adjusted discount rate and the rate of royalty. Future cash flows are based on the management’s cash flow projections for the future five years, after which future cash flows are estimated using the perpetuity growth rate of zero. The management’s cash flow projections are developed using estimates for expected future revenue growth rates, profit margins and working capital levels of the reporting units.

On March 31, 2012, we evaluated the recoverability of trademark and concluded that there was no impairment in the carrying value of trademark. We mainly used a risk-adjusted discount rate of 8.5% based on a WACC of 5.5% and an inherent risk spread of trademark of 3%. The rate of royalty used for valuation was 3%, which was based on the royalty ratio used in the actual transaction with a third party.

As a result of the evaluation performed for fiscal year 2012, we concluded that there was no impairment in the carrying value of the trademark.

Impairment of Long-Lived Assets and Intangible Assets with Estimable Useful Lives

The carrying values of long-lived assets and certain intangible assets, which have estimable useful lives of fixed numbers of years, are evaluated for impairment whenever there is an event or change in circumstances that indicates that such assets have been impaired or that the carrying amounts of such assets might not be recoverable. The carrying amount of an asset is not recoverable if it exceeds the sum of the undiscounted cash flows we expect will result from the use and eventual disposition of the asset. That assessment shall be based on the carrying amount of the asset at the date it is tested for recoverability, whether in use or under development. The impairment loss is measured as the amount by which the carrying amount of an asset exceeds its fair value.

Property, Plant and Equipment

In fiscal 2011, in accordance with the guidance for the impairment or disposal of property, plant and equipment, buildings and building improvements held and used with a carrying amount of ¥107 million were written down to their fair value of zero, because we decided to abandon an office building. An impairment charge of ¥107 million was included in earnings for fiscal 2011. For fiscal 2012, in accordance with the guidance noted above, we concluded that there was no material impairment with respect to the carrying value of our property, plant and equipment.

Customer Relationships

Additionally our customer relationships are included in the certain intangible assets assessed for impairment in the manner delineated above. In our determination of the fair value of customer relationships, we utilize the excess earnings method and incorporate relevant unobservable inputs. Significant assumptions used in this analysis include: future cash flows, the risk-adjusted discount rate and the existing customer percentage, which is the number of the orders received from customers upon acquisition of a company with existing customers as a percentage of the total number of all orders. Future cash flows are based on the management’s cash flow projections for the future five years. The management’s cash flow projections are developed using estimates for expected future earnings growth rates, rate of return and working capital ratio by reporting units. The risk-adjusted discount rate is determined by the CAPM and we mainly utilize a WACC of 5.5%.

As a result of the evaluation performed for fiscal 2012, we concluded that there was no impairment in the carrying value of customer relationships.

Revenue Recognition

We recognize revenue on sales to retailers, mail order catalog sales and Internet sales when persuasive evidence of an arrangement exists, delivery has occurred resulting in transfer of title and risk of loss, the sales price is fixed or determinable and collectability is reasonably assured. As for consignment sales, we recognize revenue when the products are sold to the ultimate customer. We recognize revenue on direct retail sales at our directly managed retail stores at the point of sale to the customer.

Employee Retirement Benefits

We provide a number of retirement benefit plans to a substantial portion of our employees. Our wholly owned subsidiary Wacoal Corp. has a contributory retirement plan. The amount of the projected retirement benefit obligation and pension costs are dependent on management’s assumptions used by actuaries in calculating such amount. The key assumptions include discount rates, expected long-term rate of return on plan assets, retirement

rates, mortality expectations and other factors. Our management believes that these actuarial assumptions and methods are appropriate in light of our circumstances. However, due to a change in an actuarial assumption, the amount of the projected retirement benefit plan liabilities and costs may be adversely affected.

Wacoal Corp.’s approach to establishing the discount rate is based upon long-term Japanese government bond rates and corporate bond indices. The discount rate assumption is based upon the five year average of the effective yields on the 17-year Japanese government bond, adjusted for an incremental yield of approximately 25 basis points that is achieved by selecting corporate bonds whose credit characteristics satisfy the quality requirements, but whose yields are slightly higher than the yields on Japanese government bonds. On March 31, 2012, the discount rate used for the contributory retirement plan was 1.9%. For other plans, similar indices and methods are used.

Wacoal Corp. determines the expected long-term rate of return on plan asset assumptions by evaluating both historical returns as well as estimates of future returns. Its expected return on assets was based on expected equity and debt securities returns weighted by the percentage of each of the major asset classes. Its estimate of the long-term rate of return on assets for the contributory retirement plan is 2.5% for fiscal 2012, 2011 and 2010. The estimated long-term rate of return is based on an asset allocation of equity securities of 33%, debt securities of 48%, life insurance company general accounts of 17% and short-term financing of 2%.

These assumptions have a significant effect on the amount of the obligation and periodic benefit cost reported. A change of 0.5% in the discount rate and the expected long-term rate of return on plan assets would have the following effects:


	Millions of yen						Thousands of U.S. dollars
	0.5% decrease			0.5% increase			0.5% decrease			0.5% increase
Discount rate
Effect on periodic benefit costs	¥	(99	)	¥	103		$	(1,201	)	$	1,250
Effect on benefit obligation		(1,803	)		1,680			(21,878	)		20,386
Expected long-term rate of return on plan assets		—			—			—			—
Effect on periodic benefit costs		135			(135	)		1,638			(1,638	)
Effect on benefit obligation		—			—			—			—

The other retirement plans provide for either lump-sum termination benefits or periodic payments under certain conditions. Benefits are usually paid as a lump sum at the earlier of the employee’s termination or the mandatory retirement age.

New Accounting Pronouncements

Fair Value Measurement

In January 2010, the Financial Accounting Standards Board (“FASB”) issued additional disclosure requirements for fair value measurements. According to the guidance, the fair value hierarchy disclosures are to be further disaggregated by class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the consolidated balance sheets. The guidance also requires additional disclosure about significant transfers between Levels 1 and 2 of the fair value hierarchy and separate disclosures about purchases, sales, issuance and settlements relating to Level 3 measurements. This guidance was effective for interim and annual reporting periods beginning after December 15, 2009, except for the requirement regarding the Level 3 activity, which was effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We adopted the guidance related to Level 3 activity beginning with the first quarter of fiscal 2012. Since the guidance related only to additional disclosures, it did not have an impact on our consolidated financial position, result of operations or cash flows as this guidance relates only to additional disclosures.

In May 2011, the FASB issued new guidance for fair value measurements. The guidance changes the wording used to describe the requirements for measuring fair value and for disclosing information about fair value measurements in order to improve consistency between U.S. GAAP and International Financial Reporting

Standards. Also, some amendments change particular principles or requirements for measuring fair value or for disclosing information about fair value measurements, which lead to an expansion of disclosure requirements. This guidance is effective during interim and annual periods beginning after December 15, 2011. We adopted this guidance from the interim period ended after December 15, 2011. Since this guidance related only to additional disclosures, it did not have an impact on our consolidated financial position, result of operations or cash flows.

Presentation of Comprehensive Income

In June 2011, the FASB issued revised guidance for the presentation of comprehensive income. This guidance requires displaying adjustments for items that are reclassified from other comprehensive income to net income in the statement in which the components of net income and the components of other comprehensive income are presented. This guidance does not change the items that must be reported in other comprehensive income, nor does it affect the calculation or reporting of earnings per share. In December 2011, the FASB amended its recently issued accounting guidance by deferring the effective date pertaining to the presentation of reclassifications of items out of accumulated comprehensive income. All other requirements in the guidance issued in June 2011 are not affected by this deferral. These requirements under the guidance are effective for interim and annual periods beginning after December 15, 2011. The adoption of this guidance is not expected to have an effect on our consolidated financial position, result of operations or cash flows as this guidance relates only to the presentation of comprehensive income.

Testing Goodwill for Impairment

In September 2011, the FASB issued new guidance that amends goodwill impairment testing. Under the revised guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of the reporting unit. The guidance does not change 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 tests performed for fiscal years, during interim and annual periods beginning after December 15, 2011. Since the guidance does not change how goodwill is calculated, it is not expected to have an impact on our consolidated financial position, result of operations or cash flows.

Multiemployer Plans

In September 2011, the FASB issued additional disclosure requirements for multiemployer plans. The objective of the guidance is to enhance the transparency of disclosures about (1) the significant multiemployer plans in which an employer participates; (2) the level of the employer’s participation in those plans; (3) the financial health of the plans and (4) the nature of the employer’s commitments to the plans. The disclosure requirements do not apply to an employer’s participation in multiple-employer plans. This guidance is effective for fiscal years ending after December 15, 2011. We adopted this guidance from the fiscal year ending after December 15, 2011. Since the guidance relates only to additional disclosures, it did not have an impact on our consolidated financial position, result of operations, or cash flows.

Change in the Fiscal Year End of Certain Subsidiaries

During the current consolidated fiscal year (fiscal 2012), the fiscal year ends of certain consolidated subsidiaries have been changed from December and February to March to be consistent with our fiscal year end. In connection with this change, we have made retroactive adjustments to the consolidated balance sheet, consolidated income statement, consolidated comprehensive income statement, consolidated shareholders’ equity statement, consolidated cash flow statement, market value of securities, per-share information, segment information, and status of sales, in order to reflect the change of fiscal year end at those consolidated subsidiaries.

B. 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, make capital investments and pay dividends without relying on substantial borrowings or other financing from outside of our group companies. Our borrowing requirements are not affected by seasonality. We believe that our working capital is adequate for our present requirements and for our business operations in the short-to-medium term. Thus, we do not believe that our business is substantially dependent on these facilities.

As of March 31, 2012 we had credit facilities at financial institutions totaling ¥46,157 million, a large majority of which was for short-term, yen-denominated borrowings with variable interest rates. Unused lines of credit for short-term financing as of March 31, 2012 amounted to ¥40,184 million. In general, all of our credit facilities have automatically renewed terms, and we are not aware of any issues with respect to any of our lenders that could cause these facilities to become unavailable.

Of this total credit, ¥28,910 million is available to Wacoal Holdings and our main subsidiary Wacoal Corp., but we have not drawn down from this credit line in recent years and have no current plans to use them in the near future. The remainder of the credit, totaling ¥17,247 million, is available for Lecien, Nanasai and our other subsidiaries, which had drawn down for working capital purposes a total of ¥5,973 million as of March 31, 2012, including borrowings by Wacoal Servicing Co., Ltd. of ¥3,238 million and borrowings by Nanasai of ¥1,800 million. Because our policy is to fund cash needs from our cash flows from operations, we do not expect this balance to increase significantly over the short-to-medium term. Even if any of our subsidiaries loses access to funds from our credit facilities, we believe that it is possible for other companies in our group to provide any necessary funds. We are not aware of any restrictions on the transfers of funds from a subsidiary to a parent company in the form of a cash dividend, loan or cash advance.

Our short-term loans as of March 31, 2012 were ¥5,780 million, a decrease of ¥372 million from ¥6,152 million as of March 31, 2011. Our long-term debt, primarily consisting of collateralized and unsecured bank loans, including the current portion, was ¥702 million as of March 31, 2012, an increase of ¥418 million from ¥284 million as of March 31, 2011.

The following table sets forth the annual maturities of long-term debt as of March 31, 2012:


Fiscal year ending March 31,	Long-term debt due
	(in millions)
2013	¥	64
2014		250
2015		50
2016		50
2017		50
Thereafter		238

Total		702

In connection with our acquisition of all outstanding common shares of Eveden in April 2012 for ¥19,961 million, we borrowed ¥12,000 million from a financial institution.

Additionally, we maintain the majority of our cash and cash equivalent assets in Japanese yen and generally refrain from using financial products for hedging purposes.

Cash Flows

Our consolidated cash flows for fiscal 2012, 2011 and 2010 were as follows:


	Fiscal year ending March 31,
	2012			2011			2010
	(in millions)
Net cash provided by operating activities	¥	10,060		¥	10,441		¥	9,463
Net cash used in investing activities		(3,467	)		(703	)		(3,573	)
Net cash used in financing activities		(2,824	)		(4,965	)		(5,363	)

Fiscal 2012 Compared to Fiscal 2011

Net Cash Provided by Operating Activities. Net cash provided by operating activities decreased by ¥381 million from ¥10,441 million for fiscal 2011 to ¥10,060 million for fiscal 2012, which reflects the result after adjusting the net income of ¥7,016 million for deferred taxes and equity in net income of affiliated companies, as well as depreciation expenses and an increase in payables.

Net Cash Used in Investing Activities. Net cash used in investing activities increased by ¥2,764 million from ¥703 million for fiscal 2011 to ¥3,467 million for fiscal 2012, due to the acquisition of marketable securities and tangible fixed assets, despite proceeds from the sale and redemption of marketable securities.

Net Cash Used in Financing Activities. Net cash used in financing activities decreased by ¥2,141 million from ¥4,965 million for fiscal 2011 to ¥2,824 million for fiscal 2012, due to the repayment of short-term bank loans and cash dividend payments.

Capital Expenditures

Capital expenditures were ¥2,708 million for fiscal 2012 (including ¥355 million for rebuilding and relocation of some of our properties, as discussed in “Item 4.D. Property, plant and equipment”), ¥2,652 million for fiscal 2011 and ¥3,981 million for fiscal 2010. These expenditures were primarily for the repair of office facilities of our domestic subsidiaries and the expansion of our specialty retail store network. Payments to acquire intangible assets were ¥846 million for fiscal 2012, ¥687 million for 2011 and ¥1,772 million for fiscal 2010. These payments are primarily composed of payments for information technology-related investments.

For fiscal 2012 we spent ¥355 million for office maintenance and repair, and we expect to spend ¥553 million in fiscal 2013. Although we currently do not have any concrete plans, we expect to continue to make expenditures for the expansion of our specialty retail store network (including costs for the development of new stores and the closure of underperforming stores) and for maintenance, to meet applicable legal requirements and to facilitate the manufacture of new products with new designs and specifications. Furthermore, we intend to evaluate and pursue opportunities for acquisitions, investments and other strategic transactions that we believe will help us achieve our business objectives, including extending our product offerings in Japan and in overseas markets and strengthening our capabilities in the Internet, catalog and other marketing channels. We expect to fund these capital expenditures and other expenditures through our cash from operations, existing cash reserves and other available sources of liquidity.

In fiscal 2009, we sold plants and other property in connection with the liquidation of our subsidiary Tokai Wacoal Sewing Corp. with a book value of ¥59 million. In fiscal 2011, we sold our Karasuyama Corporate Housing with a book value of ¥75 million and our Ikuta Corporate Housing with a book value of ¥152 million. In fiscal 2012, we sold our Nagaoka dormitory with a book value of ¥60 million and our Sapporo building with a book value of ¥79 million.

Cash Dividends

On May 15, 2012, our board of directors approved a fiscal year-end dividend of ¥100 per five shares of common stock to our shareholders on record as of March 31, 2012, and dividends in a total amount of ¥3,944 million were paid on June 5, 2012. Our basic policy regarding the distribution of profits to our

shareholders is to pay steady dividends and increase our earnings per share, while giving due consideration to the improvement of corporate value through active investment that will result in increased profitability. Based on our steady performance of the business results for the fiscal year ended March 31, 2012, we will amend the dividend payable for fiscal 2012 to 28.00 yen per share, an increase of 5.00 yen per share from 23.00 yen per share, as initially announced. For fiscal year ending March 31, 2013, we hope to be able to distribute 28.00 yen per share.

Share Repurchases

We repurchased 15,231 shares of common stock during fiscal 2012 from shareholders who held shares constituting less than one unit and requested that such shares be repurchased. See “Item 10.B. Memorandum and Articles of Association—Capital Stock—Distribution of Surplus—Unit Share System.”

C. Research and Development, Patents and Licenses, etc.

For more than 40 years, since the establishment of our Human Science Research Center, we have aimed to achieve harmony between the human body and clothing. In particular, we have conducted research into women’s body in order to accurately understand the Japanese woman’s physique. In order to accurately understand the Japanese woman’s physique, we have developed such things as a silhouette analysis system and a three-dimensional measuring system. However, we are also working on an even more advanced measurement of sensory comfort. Our research and development activities focus on addressing the proportional, physiological and mental aspects of garment design.

One of our most important research results was the Golden Canon, which we announced in 1995, and which provides a set of indicators that characterize the beautiful Japanese woman’s body. We also began applying new sales methods at that time. From 1995 to 1998, we participated in a project led by the Ministry of International Trade and Industry (presently the Ministry of Economy, Trade and Industry) enriching the basic study of sensory comfort and conducting research based on reactions to three factors: pressure, heat and touch. Based on this research, we are focused on developing new products that are not only comfortable for the wearer but also have a positive physiological effect. In 2000, we conducted an analysis on the physiological changes associated with aging throughout a 25-year period from the teenage years to the 40s. We named the principles of these changes SPIRAL Aging.

Our research and development activities for fiscal 2012 have been fruitful as we presented in July 2011 the second installment of our long-term aging research results on “Body Aging (physiological changes associated with aging),” as well as presented in February 2012 findings related to breast development among juniors and the necessity of training brassieres during such periods of physiological change. In terms of product development, our research and development activities supported the commodification of new products in the Style Science series that incorporate a “donut” mechanism that is unique to Wacoal, which provides support to the hip joints, thereby enabling the wearer of such undergarments to experience greater freedom in the forward and backward movement of the legs.

The cost of research and development for fiscal 2012 was approximately ¥801 million, compared to ¥815 million for fiscal 2011 and ¥778 million for fiscal 2010. We expect to maintain a similar level of research and development expenditures for fiscal 2013.

D. Trend Information.

Although the recovery and reconstruction efforts in the aftermath of the earthquake and tsunami that struck Japan in March 2011 in fiscal 2012 led to increased demand in certain areas, we believe it is difficult to expect full-scale economic growth in Japan due to continued appreciation of the yen and deflation. In addition, consumer spending in Japan has been stagnant due to uncertainties pertaining to a possible tax increase to fund the recovery effort, the funding status of the national pension plan and energy challenges, while we face population decline and aging of the population resulting from the decline in the birthrate. The foregoing factors may cause the Japanese domestic market to contract. As for the overseas markets, economic confusion triggered by the sovereign debt crisis in Greece affected the entire European continent and is increasing the uncertainties in the outlook for the Western industrial countries as well as the emerging countries whose economies had been expanding.

We aim to improve our profitability in Japan through business reform and strategic restructuring of our brand channels. In addition, we are working to increase market awareness of those business areas that continue to grow, such as our specialty retail stores, wellness business and men’s innerwear business. We are also putting our full efforts into the restructuring of our supply chain. We hope to turn our Peach John business into a business with a stable rate of return by improving its business model into one that can adapt to changes in the business environment and through the promotion of new products and international expansion.

The U.S. market remains one of our most important markets, and we expect its optimistic economic condition to remain through 2013. We will work to strengthen our product development capabilities, including for new products, while also actively expanding our sales channels and business into the countries surrounding the United States.

We expect that our business in China will continue to expand for fiscal 2013. We will continue to open new stores in response to market conditions and conduct promotion campaigns in order to increase awareness of our business. In connection with the foregoing efforts, we expect our human resources-related costs to increase, but to also be offset by an increase in net sales.

For a discussion of other trends that affect our business and operating results, see “Item 3.D. Risk Factors,” “Item 4.B. Business Overview” and “Item 5.A. Operating Results.”

The discussion above includes forward-looking statements based on management’s assumptions and beliefs as to the factors set forth above, as to market and industry conditions and as to our performance under those conditions, and is subject to the qualifications set forth in “Cautionary Statement Regarding Forward-Looking Statements,” which can be found immediately following the table of contents. Our actual results could vary significantly from these projections and could be influenced by a number of factors and uncertainties, including changes in the market and industry conditions, competition and other factors and risks as discussed in “Risk Factors” in Item 3.D. Additionally, unanticipated events and circumstances may affect our actual financial and operating results. As a result, no representation can be or is made with respect to the accuracy of the foregoing projections.

E. Off-Balance-Sheet Arrangements.

We have not created, and are not party to, any special-purpose or off-balance-sheet entities for the purpose of raising capital, incurring debt or operating our business. We do not have any arrangements or relationship with entities that are not consolidated into our financial statements that are reasonably likely to materially affect our liquidity or the availability of capital resources.

F. Tabular Disclosure of Contractual Obligations.

Contractual Obligations and Commitments

For information regarding debt obligations including amounts maturing in each of the next five years, see Note 9 to the consolidated financial statements.

The following table summarizes our contractual obligations as of March 31, 2012:


	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(millions of yen)
Long-term debt obligations		702		64		300		100		238
Capital (Finance) lease obligations		0		0		—		—		—
Operating lease obligations		1,694		321		542		427		404
Purchase obligations		9,118		9,118		—		—		—
Total		11,514		9,503		842		527		642

1.	Contractual obligations above exclude related interest payments as such payments are not material.

With respect to employee retirement plans, our general funding policy regarding funded plans is to contribute amounts computed in accordance with actuarial methods accepted by Japanese tax law (excluded from this table). We expect to contribute ¥1,813 million to our plans in the year ending March 31, 2013.

3.	Liabilities for unrecognized tax benefits of ¥267 million at March 31, 2012 are excluded from the table, as we are unable to make reasonable estimates regarding the amount of the tax benefits through March 31, 2013. See Note 16 to our consolidated financial statements regarding income taxes.

The total amount of our expected future pension payments is ¥20,145 million, to be paid by March 31, 2022. See Note 12 to our consolidated financial statements regarding termination and retirement plans. These payment amounts are not included in the table above because they are not contractually fixed as to amount or timing.

G. Safe Harbor.

All information that is not historical in nature disclosed under “Item 5.F. Tabular Disclosure of Contractual Obligations” is deemed to be a forward-looking statement. See “Cautionary Statement Regarding Forward-Looking Statements” for additional information.

Item 6. Directors, Senior Management and Employees.

A. Directors and Senior Management.

The following is a current list of our directors and corporate auditors:


Name (Date of Birth)	Position(s) and Office(s) with Wacoal Holdings	Date	Business Experience and Position(s) and Office(s)*
Yoshikata Tsukamoto (Jan. 29, 1948)	President and Representative Director	Apr. 1972	Joined Wacoal Corp.
		Nov. 1977	Director
		Nov. 1981	Managing Director
		Sep. 1984	Executive Vice President
		Sep. 1984 — present	Representative Director
		Jun. 1987 — present	President
		Jun. 2002	Corporate Officer
		Oct. 2005	Representative Director and President, and Corporate Officer of Wacoal Corp.
		Apr. 2011 — present	Representative Director and Chairman of Wacoal Corp.
Hideo Kawanaka (Jun. 25, 1942)	Director and Executive Vice President	Apr. 1965	Joined Isetan Co., Ltd.
		Jun. 1992	Director of Isetan Co., Ltd. and Manager of Matsudo Branch
		Jul. 1993	Representative Director and President of West Japan Railway Isetan Ltd.
		Jun. 2001	Corporate Officer and Managing Director, and General Manager of Management and General Affairs of OMRON Corporation
		Jun. 2004	Representative Director and Senior Manager, and Sales Manager of Matsuzakaya Co., Ltd.
		Jun. 2007	Advisor
		Jun. 2007	Senior Managing Director
		Nov. 2007	Director and Senior Corporate Officer of Wacoal Corp.
		Apr. 2008	Director and Vice President, and Corporate Officer of Wacoal Corp.
		Jun. 2009 — present	Director and Executive Vice President in charge of Management Reform
		Mar. 2011	Representative Director and Chairman of Peach John Co., Ltd.
		Apr. 2011 — present	Director and Vice Chairman of Wacoal Corp.
		Jun. 2011 — present	Representative Director and Chairman, and President of Peach John Co., Ltd.


Name (Date of Birth)	Position(s) and Office(s) with Wacoal Holdings	Date	Business Experience and Position(s) and Office(s)*
Ikuo Otani (Nov. 20, 1953)	Senior Managing Director	Mar. 1976	Joined Wacoal Corp.
Ikuo Otani (Nov. 20, 1953)	Senior Managing Director	Jun. 2004	Corporate Officer and General Manager of Business Management
		Jun. 2006	Director and Corporate Officer, and Supervisor of Business Management, of Wacoal Corp.
		Apr. 2008	Director and Corporate Officer, and General Manager of Corporate Planning Division, of Wacoal Corp.
		Apr. 2010	Director and Corporate Officer, and Supervisor of Accounting, of Wacoal Corp. General Manager of Corporate Planning Department
		Jun. 2010	Director in charge of Group Management and Corporate Planning
		Jun. 2011	Managing Director in charge of Group Management and General Manager of Corporate Planning
		Jun. 2012 — present	Senior Managing Director and General Manager of Corporate Planning
Hironobu Yasuhara (Dec. 28, 1951)	Director	Mar. 1975	Joined Wacoal Corp.
		Sep. 1996	Deputy General Manager of Guandong Wacoal Inc.
		Apr. 1997	General Manager of Beijing Wacoal Inc.
		Apr. 2004	Chief of Planning & Product Group of Wing Brand Business Department
		Apr. 2005	Corporate Officer/General Manager of Wing Brand Business Department
		Apr. 2006	Executive Corporate Officer/General Manager of Wing Brand Business Department of Wacoal Corp.
		Jun. 2006	Director and Executive Corporate Officer of Wacoal Corp./General Manager of Wing Brand Business Department
		Apr. 2008	Director and Senior Corporate Officer of Wacoal Corp./General Manager of Wing Brand Business Department
		Aug. 2009	Director and Senior Corporate Officer of Wacoal Corp./General Manager of Wing Brand Business Department/Chairman and Representative Director of Lecien Corporation (Part-time)
		Apr. 2010	Director and Senior Corporate Officer of Wacoal Corp./General Manager of Wacoal Brand Business Department
		Apr. 2011 — present	Representative Director and President, and Corporate Officer of Wacoal Corp.
		Jun. 2011 — present	Director


Name (Date of Birth)	Position(s) and Office(s) with Wacoal Holdings	Date	Business Experience and Position(s) and Office(s)*
Yuzo Ide (Sep. 24, 1954)	Director	Apr. 1977	Joined Wacoal Corp.
		Apr. 2001	Director and Vice Chairman of Wacoal America, Inc.
		Apr. 2006	Corporate Officer of Wacoal Corp.
		Apr. 2008	Director and Senior Corporate Officer of Wacoal Corp./General Manager of Wacoal Brand Business Department
		Apr. 2010	Director and Senior Corporate Officer of Wacoal Corp./General Manager of Wing Brand Business Department
		Apr. 2012 — present	Director and Senior Corporate Officer/General Manager of International Operations of Wacoal Corp.
		Jun. 2012 — present	Director
Mamoru Ozaki** (May 20, 1935)	Director	Jun. 1991	Commissioner of National Tax Agency
	Director	Jun. 1992	Administrative Vice-Minister of Finance
		May 1994	President of People’s Finance Corporation
		Oct. 1999	President of National Life Finance Corporation
		Feb. 2003 — present	Advisor of Yazaki Sogyo Corporation
		Jul. 2003	Advisor
		Jun. 2005 — present	Director
Morio Ikeda** (Dec. 25, 1936)	Director	Apr. 1961	Joined Shiseido Co., Ltd. (“Shiseido”)
		Apr. 1990	Director and Chief of Secretary’s Office of Shiseido
		Apr. 1995	Managing Director of Shiseido
		Jun. 1997	Representative Senior Managing Director of Shiseido
		Jun. 2000	Representative Director and Executive Vice President of Shiseido
		Jun. 2001	Representative Director and President of Shiseido
		Jun. 2005	Director and Chairman of Shiseido
		Jun. 2006 — present	Advisor to Shiseido
		Jun. 2010 — present	Director
Atsushi Horiba** (Feb. 5, 1948)	Director	Sep. 1972	Joined HORIBA, Ltd.
		Jun. 1982	Appointed Director and General Manager of Overseas Business of HORIBA Ltd.
		Jun. 1988	Appointed Senior Managing Director and General Manager of Sales Division of HORIBA Ltd.
		Jan. 1992	Appointed Representative Director and President of HORIBA Ltd.
		Jun. 2005 — present	Appointed Representative Director, Chairman, and President of HORIBA Ltd.
		Jun. 2008 — present	Director


Name (Date of Birth)	Position(s) and Office(s) with Wacoal Holdings	Date	Business Experience and Position(s) and Office(s)*
Mitsuo Yamamoto (Jan. 8, 1955)	Standing Corporate Auditor	Apr. 1977	Joined Wacoal Corp.
		Apr. 2005	General Manager of Human Affairs Department
		Apr. 2008	Corporate Officer of Wacoal Corp.
		Apr. 2011	General Manager of Personnel and Administration Planning Department
		Jun. 2011 — present	Corporate Auditor
Tomoki Nakamura (Jan. 22, 1958)	Standing Corporate Auditor	Apr. 1980	Joined Wacoal Corp.
		Oct. 2007	Accounting Manager of Wacoal Corp.
		Apr. 2008	Accounting Manager
		Apr. 2012	Corporate Auditor/Secretariat of Board of Corporate Auditors
		Jun. 2012 — present	Corporate Auditor
Akira Katayanagi** (Feb. 4, 1946)	Corporate Auditor	Apr. 1968	Joined Mitsubishi Bank Ltd.
		Jun. 1995	Director and Manager of Loan Department 1
		Apr. 1996	Director of The Bank of Tokyo-Mitsubishi, Ltd.
		Feb. 2000	Managing Director and Deputy Branch Manager of Nihonbashi Branch
		May 2001	Managing Director and Deputy Branch Office Manager of Osaka Branch Office
		Jul. 2011	Associate Senior Corporate Executive Office Manager of Osaka Branch Office
		May 2003	Associate Senior Corporate Executive Office
		Jun. 2003	Representative Director and President of DC Card Co., Ltd.
		Apr. 2007	Representative Director and Vice President of Mitsubishi UFJ NICOS Co., Ltd.
		Jun. 2008	Representative Director and Chairman of Mitsubishi UFJ NICOS Co., Ltd.
		Jun. 2010 — present	Corporate Auditor
		Apr. 2011	Director of Mitsubishi UFJ NICOS Co., Ltd.
		Jun. 2011 — present	Special Adviser of Mitsubishi UFJ NICOS Co., Ltd.
Tomoharu Kuda** (Dec. 7, 1946)	Corporate Auditor	Sep. 1972	Joined Deloitte Haskins & Sells
		Oct. 1979	Registered as Certified Public Accountant
		Sep. 1987	Transferred to London Office
		Feb. 1990	Partner of Deloitte Touche Tohmatsu
		Jun. 1997	Representative Partner of Deloitte Touche Tohmatsu
		Jul. 2007 — present	Corporate Auditor
Yoko Takemura** (Apr. 7, 1952)	Corporate Auditor	Apr. 1990	Registered as Lawyer (Tokyo), joins Miyake Imai Ikeda law firm.
	Corporate Auditor	Jan. 1997 — present	Partner at Miyake Imai Ikeda law firm.
		Jun. 2005 — present	Corporate Auditor

*	Appointments to Wacoal Corp. prior to October 2005 that continue to the present were transferred to Wacoal Holdings at the time of our transition to a holding company structure.

**	Identified as “independent officers” in our report on independent officers filed with the Tokyo Stock Exchange on March 31, 2012.

The terms of all of our directors expired in June 2012. The term as corporate auditor for Mr. Yamamoto expires in June 2015; the term as corporate auditor for Mr. Nakamura expires in June 2016; the term for Mr. Katayanagi as corporate auditor expires in June 2014; the term as corporate auditor for Mr. Kuda expires in June 2015; and the term as corporate auditor for Ms. Takemura expires in June 2013.

B. Compensation.

Policy on Director and Officer Compensation and Methodology of Compensation Calculation

Our compensation plan for directors and officers is established by our director and officer personnel and compensation advisory committee, which includes outside directors and thereby ensures a high level of objectivity and transparency in our compensation scheme.

Compensation for directors under this compensation plan is composed of a base salary, a performance-based cash bonus and stock options that reflect our business results on a medium and long-term basis, except that outside directors and corporate auditors who are not directly engaged in the execution of our business are provided with remuneration consisting of only a base salary, as performance-based compensation is inapplicable to such directors and auditors.

In setting target levels for director and officer compensation, the committee evaluates the compensation data of our competitors or similar-sized entities and sets compensation at levels that are appropriate after taking into account our business performance and size.

Certain aspects of compensation are also established pursuant to resolutions of our general meeting of shareholders:

•

The maximum amount of base salary is ¥350 million per year (excluding any salary payable as employee compensation) for directors and ¥75 million per year for corporate auditors, pursuant to a resolution of the 57th general meeting of shareholders held on June 29, 2005.

•

The amount of performance-based cash bonuses payable to directors is determined pursuant to a resolution of our general meeting of shareholders and is based on our performance for the fiscal year to which such general meeting relates.

•

The maximum amount payable in stock options is ¥70 million per year, pursuant to a resolution of our general meeting of shareholders held on June 27, 2008.

•

The retirement benefit plan for directors and officers was abolished as of June 29, 2005, when our general meeting of shareholders was held for that year.

Cash Compensation

Aggregate compensation, including bonuses, paid by us in fiscal 2012 to our directors and corporate auditors was ¥316 million. Of this total, ¥263 million was paid to our directors (including ¥26 million to our three outside directors) and ¥53 million was paid to our corporate auditors (including ¥22 million to our three outside corporate auditors). This includes one outside corporate auditor who resigned as of the conclusion of the general meeting of shareholders held on June 29, 2011. As of March 31, 2012, we had five directors, two corporate auditors, three outside directors and three outside corporate auditors.

Starting with its annual securities report for the year ended March 31, 2010, filed with the Ministry of Finance, a Japanese listed company is required to disclose the individual compensation of any director, executive officer

or corporate auditor if it is ¥100 million or more. For fiscal 2012, Yoshikata Tsukamoto, our president and representative director, received compensation in the amount of ¥161 million, composed of ¥130 million in base salary, ¥10 million as a cash bonus and ¥21 million in stock options.

Retirement Benefits

We terminated our retirement allowance benefit for our directors and corporate auditors. The balance of our existing liability for termination benefits for directors was ¥317 million at March 31, 2012 and ¥317 million at March 31, 2011. Subsidiaries still maintain plans for their directors and corporate auditors. In accordance with the guidance for determination of vested benefit obligation for a defined benefit pension plan, the subsidiaries recorded a liability for termination benefits for directors and corporate auditors at the amount that would be needed if all directors and corporate auditors were to resign at each balance sheet date. The liabilities for termination benefits for directors and corporate auditors as of March 31, 2012 were ¥382 million, compared to ¥385 million as of March 31, 2011, and were included in liability for termination and retirement benefits.

Stock Option Plans

We currently have eight stock option plans under which there are outstanding options for a total of 205,000 shares of our common stock:

•

First Stock Acquisition Rights: On September 1, 2008, we granted to five directors of Wacoal Holdings stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 40,000 shares of our common stock, of which 30,000 remain outstanding as of June 29, 2012. These rights became fully vested on September 2, 2008. Each person was granted a right to acquire an amount ranging from 4,000 to 19,000 shares of common stock.

•

Second Stock Acquisition Rights: On September 1, 2008, we granted to five directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 17,000 shares of our common stock, of which 17,000 remain outstanding as of June 29, 2012. These rights became fully vested on September 2, 2008. Each person was granted a right to acquire an amount ranging from 3,000 to 4,000 shares of common stock.

•

Third Stock Acquisition Rights: On September 1, 2009, we granted to four directors of Wacoal Holdings stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 35,000 shares of our common stock, of which 29,000 remain outstanding as of June 29, 2012. These rights became fully vested on September 2, 2009. Each person was granted a right to acquire an amount ranging from 4,000 to 20,000 shares of common stock.

•

Fourth Stock Acquisition Rights: On September 1, 2009, we granted to four directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 14,000 shares of our common stock, of which 14,000 shares are outstanding as of June 29, 2012. These rights became fully vested on September 2, 2009. Each person was granted a right to acquire an amount ranging from 3,000 to 4,000 shares of common stock.

•

Fifth Stock Acquisition Rights: On September 1, 2010, we granted to four directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 35,000 shares of our common stock, of which 35,000 shares are outstanding as of June 29, 2012. These rights became fully vested on September 2, 2010. Each person was granted a right to acquire an amount ranging from 4,000 to 21,000 shares of common stock.

•

Sixth Stock Acquisition Rights: On September 1, 2010, we granted to four directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 11,000 shares of our common stock, of which 11,000 shares are outstanding as of June 29, 2012. These rights became fully vested on September 2, 2010. Each person was granted a right to acquire an amount ranging from 3,000 to 4,000 shares of common stock.

•

Seventh Stock Acquisition Rights: On September 1, 2011, we granted to five directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 48,000 shares of our common stock, of which 48,000 shares are outstanding as of June 29, 2012. These rights became fully vested on September 2, 2011. Each person was granted a right to acquire an amount ranging from 4,000 to 24,000 shares of common stock.

•

Eighth Stock Acquisition Rights: On September 1, 2011, we granted to five directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 21,000 shares of our common stock, of which 21,000 shares are outstanding as of June 29, 2012. These rights became fully vested on September 2, 2011. Each person was granted a right to acquire an amount ranging from 3,000 to 5,000 shares of common stock.

All rights are exercisable from the day after the date of retirement up to (i) 20 years from the grant date or (ii) five years from the day after the date of retirement, whichever is earlier.

C. Board Practices.

Our articles of incorporation provide for a board of directors of not more than eight members and for not more than five corporate auditors. Shareholders elect the directors and corporate auditors at general shareholders’ meetings. The normal term of office of a director is one year and of a corporate auditor is four years. Directors and corporate auditors may serve any number of consecutive terms.

Our board of directors may elect one chairman, one president and one or more vice chairmen, executive vice presidents, senior managing directors and managing directors. Our board of directors elects, pursuant to its resolutions, one or more representative directors. Each representative director represents us generally in the conduct of our affairs. Our board of directors has the ultimate responsibility for the administration of our affairs. None of our directors is party to a service contract with Wacoal Holdings or any of its subsidiaries that provides for benefits upon termination of employment.

Under the Companies Act of Japan (the “Companies Act”), we must have at least three corporate auditors. At least half of the corporate auditors will be required to be persons who have not been a director, accounting counselor (in case that an accounting counselor is a judicial person, a member of such judicial person), executive officer, general manager or employee of Wacoal Holdings or any of its subsidiaries at any time in the past. Our corporate auditors may not at the same time be directors, accounting counselor (in case that an accounting counselor is a judicial person, a member of such judicial person), executive officers, general managers or employees of Wacoal Holdings or any of its subsidiaries. Together, our corporate auditors form our board of corporate auditors. Our corporate auditors have the duty to examine the financial statements and business reports proposed to be submitted by a representative director to the general shareholders’ meeting. Our corporate auditors also supervise the administration of our affairs by our directors. Corporate auditors are not required to be certified public accountants. They are required to participate in meetings of our board of directors but are not entitled to vote.

In December 2009, the Tokyo Stock Exchange introduced a listed company rule that requires that a listed company have at least one “independent officer,” which is defined as an outside director or corporate auditor with respect to whom there is no risk of a conflict of interest with general shareholders. Each listed company was required to submit a report on independent officers with the Tokyo Stock Exchange by March 31, 2010 disclosing whether the company had any independent officer, along with other related information. To the extent any company did not have an independent officer at that time, the company was required to select one at the general shareholders meeting related to the fiscal year that ended on or after March 1, 2010. In our report on independent officers submitted to the Tokyo Stock Exchange on March 31, 2010, we identified Messrs. Mamoru Ozaki and Atsushi Horiba, both of whom are outside directors (along with Mr. Kazuo Inamori who retired in June 2010), and Mr. Tomoharu Kuda and Ms. Yoko Takemura, both of whom are outside corporate auditors

(along with Yutaka Hasegawa who retired in June 2010), as independent officers. In our 2011 report we additionally identified Mr. Morio Ikeda who is an outside director, and Mr. Akira Katayanagi who is an outside corporate auditor. We identified these persons for the following reasons:

•

Mamoru Ozaki: Mr. Ozaki is the former commissioner of the National Tax Agency and administrative vice-minister of finance. We first retained him as advisor in July 2003 related to finance and China. We believe that Mr. Ozaki, with his broad insight into social issues, is qualified to serve as an outside director for us, as we seek to take on greater corporate social responsibility. Also, because he is capable of providing advice from the perspective of an individual who has never been employed by us, we believe that he is capable of serving us as an independent officer.

•

Morio Ikeda: We believe Mr. Ikeda, with his experience and broad insight as a management executive in the area of domestic and overseas business development, is qualified to serve as an outside director for us as we seek to strengthen our overseas business presence. Additionally, we believe that he is capable of serving us as an independent officer because he has the ability to provide us with advice from the perspective of an individual who has never been employed by us.

•

Atsushi Horiba: We believe Mr. Horiba, with his experience and insight into domestic and overseas business development, is qualified to serve as an outside director for us as we seek to strengthen our overseas business presence. Also, because he is capable of providing advice from the perspective of an individual who has never been employed by us, we believe that he is capable of serving us as an independent officer.

•

Akira Katayanagi: We believe Mr. Katayanagi, with his experience and broad insight in finance, is qualified to serve as an outside corporate auditor for us. Additionally, we believe that he is capable of serving us as an independent officer because he has the ability to provide us with advice from the perspective of an individual who has never been employed by us.

•

Tomoharu Kuda: Mr. Kuda was the former representative partner of Deloitte Touche Tohmatsu, our auditing firm, until he left the firm in June 2007. Since July 2007, he has been serving us as an outside corporate auditor. We believe Mr. Kuda meets the requirements for an independent officer as he had never participated in the audit of the Company during his career at Deloitte Touche Tohmatsu, is independent and neutral with respect to general shareholders, and has been serving as a corporate auditor with both supervisory and advisory function based on expert knowledge in accounting/finance gained in his career as a certified public accountant.

•

Yoko Takemura: We believe Ms. Takemura, with her legal expertise as a lawyer and years of experience in commercial affairs, is qualified to serve as an outside corporate auditor for us. Also, because she is capable of providing advice from the perspective of an individual who has never been employed by us, we believe that she is capable of serving us as an independent officer.

For further information regarding the new independent officer requirement, please see “Item 16G. Corporate Governance.”

In addition to corporate auditors, an independent certified public accountant or an audit corporation must be appointed at general meetings of shareholders as our independent auditor. This independent auditor has the duties to examine the financial statements proposed to be submitted by a representative director to the general meetings of shareholders and to report their opinion thereon to certain corporate auditors designated by the board of corporate auditors to receive such report (if such corporate auditors are not designated, all corporate auditors) and the directors designated to receive such report (if such directors are not designated, the directors who prepared the financial statements).

On May 9, 2007, we established a non-statutory director and officer personnel and compensation advisory committee, which consists of the following members: Ikuo Otani, chair of the committee, Mamoru Ozaki, Masashi Yamaguchi, Nobuhiro Matsuda and Shinsuke Fukazawa, the secretary. The committee was established with the goal of reforming the process of selecting our directors and officers and determining their compensation,

and promoting objectivity and transparency in the process. The committee will be responsible for recommending new candidates and candidates for promotion, evaluating their performance and setting their compensation, as well as suggesting areas for improvement in the foregoing processes.

Under the Companies Act and our articles of incorporation, we may enter into a liability limitation agreement with each outside director or corporate auditor which limits the maximum amount of liabilities owed to us arising in connection with a failure to execute duties to an amount equal to the minimum liability limit amount prescribed in the laws and regulations.

D. Employees.

The following table lists the number of our full-time employees as of March 31, 2012, 2011 and 2010:


	Total		Japan		Americas¹		Asia (other than Japan)		Europe
March 31, 2012:
Wacoal Business (Domestic)		7,229		7,229		—		—		—
Wacoal Business (Overseas)		7,520		—		1,752		5,727		41
Peach John		364		346		—		18		—
Other		1,411		565		5		841		—

Total		16,524		8,140		1,757		6,586		41

March 31, 2011:
Wacoal Business (Domestic)		7,241		7,241		—		—		—
Wacoal Business (Overseas)		7,004		—		1,593		5,374		37
Peach John		422		406		—		16		—
Other		1,346		614		5		727		—

Total		16,013		8,261		1,598		6,117		37

March 31, 2010:
Wacoal Business (Domestic)		7,453		7,453		—		—		—
Wacoal Business (Overseas)		6,349		—		1,646		4,664		39
Peach John		467		456		—		11		—
Other		1,417		681		3		733		—

Total		15,686		8,590		1,649		5,408		39

1.	Includes employees in the Caribbean.

During fiscal 2012, we had an average of 1,319 temporary employees.

Except for Nanasai, Peach John, Lecien and our five manufacturing subsidiaries in Japan, the employees of Wacoal Holdings and its Japanese subsidiaries are organized into one union. Each of Nanasai, Lecien and our five manufacturing subsidiaries in Japan has an independent union for its respective employees. A number of labor unions have been formed with respect to our subsidiaries organized outside of Japan. We believe that the relations between management and these various unions are satisfactory.

E. Share Ownership.

The following table lists the number of shares owned by our directors and corporate auditors as of June 29, 2012. As of such date, our directors and corporate auditors collectively held a total of 1,474,136 shares of our common stock as set forth below, and this number of shares constituted 1% of all outstanding shares of our common stock.


Name	No. of Shares		Percentage of Common Stock
Yoshikata Tsukamoto		1,353,136		*
Hideo Kawanaka		11,000		*
Ikuo Otani		6,000		*
Hironobu Yasuhara		6,000		*
Tadashi Yamamoto		10,000		*
Atsushi Horiba		3,000		*
Mitsuo Yamamoto		4,000		*
Tomoki Nakamura		70,000		*
Yoko Takemura		11,000		*

*	Less than 1% of our total outstanding common shares.

The following table lists the number of shares subject to the stock acquisition rights owned by our directors and corporate auditors as of June 29, 2012:


Name	No. of Shares Subject to Stock Acquisition Rights		Exercise Price per Share
Yoshikata Tsukamoto		84,000	¥	1
Hideo Kawanaka		24,000		1
Ikuo Otani		14,000		1
Tadashi Yamamoto		19,000		1
Hironobu Yasuhara		19,000		1
Yuzo Ide		16,000		1
Tomoki Nakamura		—		—
Yoko Takemura		—		—
Akio Shinozaki		13,000		1
Yasuyuki Nakatsutsumi		5,000		1
Masaya Wakabayashi		4,000		1
Kiyotaka Hiroshima		4,000		1

Other than as described in Item 6.B above, there are no arrangements that involve the issue or grant of our options, shares or securities to our employees.

PART III

Item 19. Exhibits.


Exhibit Number		Description
1.1		Articles of Incorporation of the Registrant (English Translation)*

1.2		Share Handling Regulations of the Registrant (English Translation)***

1.3		Regulations of the Board of Directors of the Registrant (English Translation)****

1.4		Regulations of the Board of Corporate Auditors of the Registrant (English Translation)*

2.1		Form of Amended and Restated Deposit Agreement, dated as of December 1, 1997, among Wacoal Corp., The Bank of New York, and all Owners from time to time of American Depositary Receipts issued thereunder, including the form of American Depositary Receipt (Incorporated by reference to the Registration Statement on Form F-6 (file no. 333-1634) filed on October 23, 1997)

8.1		Subsidiaries of the Registrant (See “Organizational Structure” in Item 4.C. of this Form 20-F)*****

11.1		Code of Ethics of the Registrant**

12.1		Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

12.2		Certification of the chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

13.1		Certification of the principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

13.2		Certification of the chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		Instance Document

101		Schema Document

101		Calculation Linkbase Document

101		Labels Linkbase Document

101		Presentation Linkbase Document

101		Definitions Linkbase Document

*	Incorporated by reference to the corresponding exhibit to our annual report on Form 20-F (File No. 000-11743) filed on July 7, 2006.

**	Incorporated by reference to the corresponding exhibit to our annual report on Form 20-F (File No. 000-11743) filed on July 20, 2007.

***	Incorporated by reference to the corresponding exhibit to our annual report on Form 20-F (File No. 000-11743) filed on July 16, 2010.

****	Incorporated by reference to the corresponding exhibit to our annual report on Form 20-F (File No. 000-11743) filed on July 15, 2011.

*****

Previously filed on July 13, 2012 as part of our annual report on Form 20-F.

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.


WACOAL HOLDINGS CORP.
	(Registrant)

	By	/s/ Ikuo Otani
		Ikuo Otani
		Senior Managing Director and General Manager of Corporate Planning

Date: August 8, 2012