SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of, June 2008
Commission File Number: 000-11743
WACOAL HOLDINGS CORP.
(Translation of Registrant's Name into English)
29, Nakajima-cho, Kisshoin, Minami-ku
Kyoto, Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1):
-----
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of
a Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7):
-----
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of
a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws of
the jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
EXHIBIT INDEX
Exhibit Date Description of Exhibit
------- ------------ ----------------------------------------------
1 June 3, 2008 Notice of the 60th Ordinary General Meeting of
Shareholders to be Held in Kyoto, Japan on
June 27, 2008
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WACOAL HOLDINGS CORP.
(Registrant)
By: /s/ Masaya Wakabayashi
------------------------------------
Masaya Wakabayashi
General Manager, Corporate Planning
Date: June 5, 2008
EXHIBIT 1
NOTICE OF THE 60TH ORDINARY GENERAL MEETING
OF SHAREHOLDERS
TO BE HELD IN KYOTO, JAPAN ON JUNE 27, 2008
(This is a translation from the original notice in the Japanese language
dispatched to shareholders in Japan. The financial statements included in this
Notice of the General Meeting of Shareholders are based upon accounting
principles and practices generally accepted in Japan.)
WACOAL HOLDINGS CORP.
KYOTO, JAPAN
Code Number: 3591
June 3, 2008
TO OUR SHAREHOLDERS
WACOAL HOLDINGS CORP.
29, Nakajima-cho
Kisshoin, Minami-ku
Kyoto 601-8530, Japan
Yoshikata Tsukamoto
Representative Director
NOTICE OF THE 60TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
This is to inform you that the Company's 60th ordinary general meeting of
shareholders will be held as described below.
You are cordially invited to attend the meeting.
IF YOU ARE UNABLE TO ATTEND THE MEETING, WE WOULD LIKE TO REQUEST THAT YOU
CAREFULLY EXAMINE THE REFERENCE MATERIALS SET FORTH BELOW AND MAIL YOUR BALLOT
SHOWING YOUR CONSENT OR DISSENT SO THAT WE RECEIVE IT NO LATER THAN JUNE 26,
2008 (THURSDAY) at 5:30 p.m.
Particulars
1. Date: Friday, June 27, 2008 at 10:00 a.m.
2. Place: The hall on the 10th floor of the Head Office of Wacoal Holdings
Corp., located at 29, Nakajima-cho, Kisshoin, Minami-ku, Kyoto,
Japan (on the west side of Nishi-Oji Station on the JR line)
(Please refer to the map on the back of this notice.)
3. Purpose of Meeting:
Matters to be reported:
1. Presentation of the Business Report, Consolidated Financial
Statements for the 60th fiscal year from April 1, 2007 through
March 31, 2008 and Audit Reports of the Independent Accountants
and the Board of Statutory Auditors for the Consolidated
Financial Statements
2. Presentation of the Financial Statements for the 60th fiscal year
from April 1, 2007 through March 31, 2008
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Matters to be resolved:
Agenda Item No. 1: Election of eight directors
Agenda Item No. 2: Election of one statutory auditor
Agenda Item No. 3: Payment of officers' bonuses
Agenda Item No. 4: Resolution regarding the amount and terms of stock
acquisition rights to be issued to directors as
stock options
4. Exercise of Voting Right
(1) Exercise of Voting Right by Proxy
If you are not able to attend the meeting, you can still exercise your
voting right by appointing another shareholder who has a voting right to
represent you at the meeting. Please note that such shareholder will be
required to submit a document which certifies such appointment.
(2) Amendments to the Supplementary Schedules and Reference Materials
Please note that any amendments to the supplementary schedules or the
reference materials will be posted and announced on the Company's website
(http://www.wacoalholdings.jp/).
**********
If you attend the meeting on the appointed date, please bring the ballot
with you and submit it to the meeting receptionist.
2
SUPPLEMENTARY SCHEDULES ON MATTERS TO BE REPORTED
BUSINESS REPORT
FOR THE PERIOD FROM APRIL 1, 2007 THROUGH MARCH 31, 2008
1. STATUS OF GROUP BUSINESS
(1) BUSINESS DEVELOPMENTS AND RESULTS
(A) SUMMARY OF OPERATIONS
During the fiscal year ended March 31, 2008 (fiscal year 2008), the
Japanese economy generally experienced slow growth in the first half year,
but growth in the corporate earnings was suspended in the second half of
the year due to fluctuations in the stock and foreign exchange markets and
other factors as a result of the sudden rise in the price of crude oil and
the U.S. sub-prime mortgage crisis. Consumer activity mirrored these
trends. Overseas, economic recovery in the U.S. has slowed, and the
economic recovery in Europe has moderated somewhat, although China and
other Asian economies continue to grow.
The early spring low temperatures, prolonged rainy season and high
summer temperatures affected the domestic women's fashion and clothing
industry and business results were decreased.
In this environment, our group (primarily Wacoal Corporation, which is
the core operating entity in our group) sought to improve the strength of
its products and endeavored to develop products focused on consumer needs.
With respect to the Wacoal and Wing brand business departments, our
core brassiere products showed favorable sales performance, but the overall
sales of the Wacoal brand business department were below the levels of the
same period in the prior fiscal year. This was largely due to the poor
sales performance of our Style Science series products which have new
features for the lower body that we are working to develop as our core
products for the lower body. On the other hand, the Wing brand business
department maintained the level of the same period of the prior fiscal year
due to favorable sales of the other products.
We are promoting our new growth strategy CAP21 (Corporate Activation
Project 21) in order to achieve accelerated growth. As a part of our
efforts in CAP21, we acquired 49% interest in Peach John Co., Ltd. ("Peach
John") in June 2006. Peach John has achieved a breakthrough with its own
catalog and Internet sales, and through sales at company stores across
Japan, of innerwear, outerwear and other products. Peach John has many
loyal customers, mainly young women and young career women. Following the
capital alliance, Wacoal and Peach John utilized their respective know-how
and broad customer base to develop their businesses synergistically, and in
January 2008, with the aim of speeding up and strengthening such business
development, Wacoal acquired the remaining 51% of Peach John through a
stock swap, making Peach John a wholly owned
3
subsidiary. Wacoal exchanged 3.44 million shares of treasury stock and 3.26
million shares of newly issued stock in connection the stock swap.
Additionally, in order to improve capital efficiency, Wacoal implemented a
buyback and cancellation of 3.9 million of its own shares. Please note that
for purposes of Wacoal's fiscal year 2008 consolidated financial
statements, Peach John is treated as having become a consolidated
subsidiary as of March 31, which means it is still treated as an
equity-method affiliate for purposes of Wacoal's consolidated income
statement.
With regard to our overseas business, sales in the U.S. have been
increasing over the last few years and the overall sales in overseas were
slightly better than the prior fiscal year. In Asia, our business in China
continues to show favorable expansion.
As a result, consolidated sales for fiscal year 2008, according to
U.S. Accounting Standards, were Y165,761 million, a 0.4% decrease compared
to the prior fiscal year.
In terms of profit, the operating income for fiscal year 2008 was
Y13,540 million, a 5.0% increase compared to the prior fiscal year.
Income before income taxes, equity in net income of affiliated
companies and minority interests for fiscal year 2008 was Y14,353 million,
a 3.1% increase compared to the prior fiscal year, and net income was
Y4,966 million, a 45.0% decrease compared to the prior fiscal year.
The reason for the significant decrease in net income was largely the
result of a Y4,694 million write-down of our 49% interest in Peach John,
which was acquired during the prior fiscal year as part of a capital
alliance. This loss, which we accounted for using the equity method, was
the result of a re-evaluation of the fair market value of Peach John's
stock following the creation of a sound five-year business plan taking into
account various changes in the business structure of the mail-order
industry that are being brought on by the spread of the Internet and
cellular phones.
Regarding sales by business category, sales of textile goods for
fiscal year 2008 were Y150,710 million, a 0.2% increase compared to the
prior fiscal year. Other sales during fiscal year 2008 were Y15,051
million, a 6.3% decrease compared to the prior fiscal year.
Regarding sales by location, Japan represented Y139,618 million, or
84.2%, of group sales, while Asia accounted for 4.6% and Europe and the
U.S. accounted for 11.2%.
Summary of operations by business segment of the Group is as follows.
(i) Textile goods and related products
In the spring, the Wacoal brand business department of Wacoal
Corporation, which is our core operating company, launched LALAN in spring,
our new campaign brassiere, which showed favorable sales performance. LALAN
meets the needs of women of all bust sizes due to a unique design that is
individually tailored to each size,
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and we believe that our new-style of advertising campaign, which differs
from traditional promotions that focus primarily on functionality, has
reached new consumers beyond our existing customer base. Additionally, our
switch in strategy from seasonal campaigns that promote new products to
increasing the number and variety of LALAN series products each season has
extended the sales period for our campaign products and resulted in an
improvement in sales and stock clearance rates. Fall/winter season sales of
Sugoi, our newly developed line of lingerie that utilizes new materials,
largely exceeded our expectations. This was due to wide acceptance of the
product's characteristics of being thinner, lighter and warmer than past
products, as well as extensive media coverage of the product name, which
gives the impression of a product that exceeds existing products in terms
of image and functionality. On the other hand, sales of products from our
Style Science brand category, which was introduced two years ago with new
features for the lower body, was well below the sales levels of previous
years. Our research shows that this was due to the fact that two years have
passed since the release of the original Hip Walker, and in-store
promotions have decreased. In addition, there has been a failure to capture
new customers, and our attempts to encourage existing customers to buy
replacement products have been ineffective. Due to poor sales performance
of our Style Science series products, overall sales of our Wacoal brand
business department were below the results of the previous fiscal year.
In our Wing brand business department, as with our Wacoal brand, our
core brassieres, particularly our standard products, performed well, as
have girdles, body-suits and lingerie. On the other hand, sales of our
Style Up Pants from our Style Science series have declined. Nevertheless, a
Style Science product for men, the Cross-Walker, was developed and
officially went on sale in department stores under the DAMS brand in
February 2008 and in chain stores under the BROS brand name in April 2008.
There has been a very favorable consumer response to both products, and we
expect this line to expand in the future.
With the scheduled introduction of special health checks and guidance
aimed at preventing metabolic syndrome in April 2008 as a backdrop, we
began selling Exwalker Style Science products at various locations,
including gyms and corporate health insurance associations in January of
this year. Although sales of our core lines of the Style Science series
products aimed at women in fiscal year 2007 were disappointing, we believe
that there are still good opportunities to capture new customers and
encourage existing customers to continue purchasing these products by
expanding our marketing channels and range of target customers and renewing
our promotional strategies.
Our specialty retail store business consists of Une Nana Cool, an
independently operated subsidiary, our Wacoal Corporation direct retail
store business for our Amphi, SUBITO and Sur La Plage brands, and our
Wacoal Factory Stores chain of factory outlet stores. Une Nana Cool's new
and existing stores, as well as LuncH, a new type of store concentrating on
lingerie, are all performing well and have shown fiscal year profits for
the first time. In addition, efforts to limit the opening of new stores and
focus on increasing and improving the earnings of existing stores have led
to improved results for our direct retail store business as well.
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Sales of outerwear, our core products in our mail-order business
catalogs, have been poor, but shoes and miscellaneous items have generally
performed well with varying degrees of performance depending on the type or
product. Sales from pamphlets placed in newspapers and from our online
store have been favorable. Continuing from the previous period, we have
improved our net results by revising our media costs and improving our
inventory.
As for our wellness business, net sales of our sports conditioning
wear CW-X, our core sports related product, were down as a result of
delivery adjustments for inventory regulation purposes and product returns
from stores. There was growth in the sales of leg-related products
associated with entry into a new type of business. However, overall sales
were lower than the previous fiscal year due to the negative effects of
weather on the performance of wet weather footwear and a reduction in
department store sales of leggings.
Sales of our semi-order innerwear business, Dubleve, were in line with
those of the previous fiscal year due to a failure to sufficiently capture
new customers as well as a decrease in the average purchase price per
customer.
Sales have been increasing in the U.S. over the last few years due to
an increasing demand for luxury items and an increase in transactions with
mid-level department stores that have not historically sold Wacoal products
but that are repositioning themselves as up-scale department stores.
However, decreased consumer confidence caused by the U.S. economic slowdown
has led to sluggish store sales, and other factors, such as inventory
adjustments, have also had an adverse effect, leading to sales levels that
are up only slightly over the previous fiscal year. Earnings were down
significantly due to decreased profitability and an increase in personnel
costs brought on by an increase in the number of sales staff in connection
with new store openings, as well as increases in other costs. In Asia,
Wacoal's business in China continues to grow. In addition to the expansion
of Wacoal brand products, we have begun to expand our youth orientated
brand, Amphi, and in the fiscal year ending March 2009, we plan to increase
sales through a three-brand structure, including the high value-added brand
Salute.
(ii) Others
As for Nanasai Co., Ltd. ("Nanasai"), the sales in the rental business
of mannequins and fixtures exceeded the sales of prior fiscal year due to
an increase in the number of orders, however, the sales in the interior
design and stores construction work were below the sales of prior fiscal
year due to the income-oriented efforts made to survive the severe
competition among competitors in competitive biddings. Furthermore, as for
the house design business which was succeeded by Nanasai from Wacoal Corp.
during the prior fiscal year, it was largely affected by the decrease in
the number of housing constructions following the enforcement of the
amended Building Standards Law. As a result, the overall sales remained the
same as the prior fiscal year. In terms of profit, it showed improvement
due to a thorough reduction of costs.
6
Segment Information by Type of Business
(Millions of yen)
Textile goods and
related products Others Total
----------------- ------- --------
Sales Y150,710 Y15,051 Y165,761
Percentage over the previous year 100.2% 93.7% 99.6%
(Notes)
1. Segment information is prepared based on the Consolidated Financial
Statement Regulations.
2. Business classification is classified into textile goods and related
products and others based on the type, quality, and resemblance in the
sales market of such products.
3. Core products of respective businesses:
- Textile goods and related products: innerwear (foundation,
lingerie, nightwear and children's innerwear), outerwear,
sportswear, hosiery, etc.
- Others: mannequins, shop design and implementation, restaurant,
culture, services, etc.
(B) FINANCING
The Company did not engage in any financing through the issuance
of common stock or bonds during this fiscal year.
(C) CAPITAL EXPENDITURES
The total amount of capital expenditures during fiscal year 2008
was Y1,211 million, including expenditures for the maintenance and
repair work of various buildings.
(D) ACQUISITION OF SHARES AND EQUITY OR SHARE SUBSCRIPTION RIGHTS IN
OTHER COMPANIES
On January 10, 2008, we acquired the remaining 51% of the total
number of issued shares in Peach John through a stock swap, in
addition to our stockholding ratio of 49%, making Peach John a wholly
owned subsidiary of our Company.
7
(2) CHANGES IN STATE OF ASSETS AND PROFIT AND LOSS
(i) Changes in Results of Operations and State of Assets of the Group
(Millions of yen, except per share amounts)
Fiscal year ended/as of March 31,
---------------------------------------------
2005 2006 2007 2008
--------- --------- --------- ---------
Net sales Y 160,968 Y 164,122 Y 166,410 Y 165,761
Operating income 11,766 1,333 12,896 13,540
Net income 6,790 2,821 9,029 4,966
Net income (per share) 47.17 19.60 63.18 35.14
Total assets 226,196 242,296 250,266 241,619
Total shareholders' equity 175,746 186,475 193,278 185,113
Shareholders' equity (per share) 1,220.93 1,295.72 1,374.89 1,291.41
----------
(Note) 1. The above amounts are based on U.S. Accounting Standards. Therefore,
operating income is shown instead of ordinary income.
2. Net income per share is calculated based on the number of average
shares issued (excluding the number of shares held as treasury stock)
during each fiscal year.
3. Shareholders' equity per share is calculated based on the number of
shares issued (excluding the number of shares held as treasury stock)
as of the end of the fiscal year.
4. Total shareholders' equity and shareholders' equity per share are
calculated using the total number of shareholders' equity recorded on
the consolidated balance sheet.
(ii) Changes in Results of Operations and State of Assets of the Company
(Millions of yen, except per share amounts)
Fiscal year ended/as of March 31,
---------------------------------------------
2005 2006 2007 2008
--------- --------- --------- ---------
Operating income Y 128,243 Y 70,504 Y 6,005 Y 10,863
Ordinary income 5,919 6,256 2,132 6,937
Net income 3,098 2,877 1,516 2,123
Net income per share 21.33 19.81 10.60 15.02
Total assets 196,641 154,925 150,325 150,081
Net assets 162,637 151,976 145,434 147,562
Net assets per share 1,129.67 1,055.83 1,034.56 1,029.44
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(Note) 1. Net income per share is calculated based on the number of average
shares issued (excluding the number of shares held as treasury stock)
during each fiscal year, excluding the number of shares owned by the
Company.
2. Net assets per share is calculated based on the number of shares
issued (excluding the number of shares held as treasury stock) as of
the fiscal year-end.
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3. While our core businesses had been sales of textile goods and related
products, they were replaced by income from lease and dividends, etc.
due to the corporate split implemented on October 1, 2005. Therefore,
such income is now stated as "Operating Income".
(3) BUSINESS STRATEGIES
The average age of our customers is on the rise as the population grows
older. Meanwhile, there have been changes in purchasing behavior of innerwear,
reflecting changes in the consumption behavior of young fashion consumers. In
order to respond to these changes in the average age of our customer and
diversification of consumers' values, we think it is necessary to create new
added value and build up a means of communication. Further, such changes in the
consumption behavior of young consumer create another low-end market and
intensify competition among businesses. We are facing a major challenge
regarding how we can succeed in such market conditions. Such changes are also
impacting distribution channels and therefore, we have an urgent need to
establish our operating bases in new channels as well as our existing channels,
such as department stores, chain stores and shops which have supported our
development over the years.
As it is difficult to expect for a large expansion in the domestic consumer
market on a long-term basis, we anticipate that it will be essential for us to
expand business overseas for future growth. The significant challenges that we
face now are to achieve further growth in the U.S. business which is our core
overseas operation and to expand business or make new entries in China and other
regions where high marketability is expected.
Facing these challenges, while we concentrate our resources on areas where
we are most competitive by selecting and focusing our business operations, we
are promoting our new growth strategy CAP21 (Corporate Activation Project 21) in
order to achieve accelerated growth by expanding our business operations by
broadening the scope of such competitive areas.
Your continued support and cooperation will be greatly appreciated.
(4) MAIN SEGMENT
Business Segment Description of business
---------------- -------------------------------------------------
TEXTILE AND RELATED PRODUCTS Manufacture and wholesale of intimate apparel
(particularly, foundation garments, lingerie, and
nightwear for women's and children's underwear),
outerwear, sportswear, hosiery and other textiles
and related products, and direct sale to
consumers of a portion of the products
OTHERS Manufacture and sale of mannequins, interior
design and construction work of stores,
restaurant businesses, cultural projects,
services and real estate business
(5) MAIN SALES OFFICES AND FACTORIES
(a) Main Sales Offices and Factories of the Company
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Head Office (Kyoto)
(b) Main Sales Offices and Factories of Subsidiaries
Wacoal Corp. (Kyoto), Peach John Co., Ltd. (Tokyo), Studio Five Corp.
(Tokyo), Kyushu Wacoal Manufacturing Corp. (Nagasaki), Nanasai Co.,
Ltd. (Kyoto), Torica Inc. (Osaka), Wacoal International Corp. (U.S.),
Wacoal America, Inc., Wacoal France S.A., Wacoal International Hong
Kong Co., Ltd., Wacoal Hong Kong Co., Ltd., Vietnam Wacoal Corp.,
Wacoal Investment Co., Ltd. (Taiwan), Guangdong Wacoal Inc. (China)
(6) EMPLOYEES
(i) Employees within Group
Number Increased / (Decreased)
Name of Business Segment Number of Employees from the end of Prior Fiscal Year
------------------------ ------------------- ---------------------------------
Textile and other related products 13,011 139
Others 365 (2)
Across the Company 165 7
------ ---
Total 13,541 144
====== ===
----------
(Note) 1. The number of employees is the number of personnel at work (excludes
the number of personnel seconded from our group to other groups, but
includes the number of personnel seconded from other groups to our
group).
2. Employees classified as "Across the Company" belong to management
divisions which cannot be classified into any specific segment.
3. The number of employees does not include the number of temporary
employees (the average number of temporary employees during the
period, including temporary staff and part-time workers, was 1,337).
(ii) Employees of the Company
Number of Number Increased / (Decreased)
Employees from the end of Prior Fiscal Year Average Age Average Years of Service
--------- --------------------------------- ----------- ------------------------
62 9 44.8 21.5
----------
(Note) The number of employees is the number of personnel at work (excludes
the number of personnel seconded from our group to other groups, but
includes the number of personnel seconded from other groups to our
group).
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(7) PRINCIPAL SUBSIDIARIES
Shareholding
Name of Company Location Stated Capital Ratio Main business Remarks
--------------- -------------- -------------- ------------ ----------------------- -------
(Millions of yen)
Wacoal Corp. Minami-ku, Y 5,000 100.0% Manufacture and sale of
Kyoto garments
Peach John Co., Ltd. Shibuya-ku, 90 100.0% Sale of garments
Tokyo
Nanasai Co., Ltd. Ukyo-ku, Kyoto 498 76.9% Manufacture and sale of
mannequins and display
fixtures; interior
design and construction
work of stores
(Thousands of dollars)
Wacoal International Corp. NY, U.S.A. $20,000 100.0% Investment in US
subsidiaries *1
Wacoal America, Inc. NY, U.S.A. 2,062 100.0% Manufacture and sale of
garments *2
----------
(Note) *1. Wacoal International Corp. is a wholly owned subsidiary of our
subsidiary, Wacoal Corp.
*2. Wacoal America Inc. is a wholly owned subsidiary of our subsidiary,
Wacoal International Corp.
2. STOCK INFORMATION
(1) TOTAL NUMBER OF SHARES AUTHORIZED TO BE ISSUED: 500,000,000 SHARES
(2) TOTAL NUMBER OF ISSUED AND OUTSTANDING SHARES: 143,378,085 SHARES
(Note) The total number of issued and outstanding shares was increased by
3,261,400 shares due to the implementation of the stock swap, and
decreased by 3,900,000 shares due to the cancellation of shares.
(3) TOTAL NUMBER OF SHARES HELD AS TREASURY STOCK: 35,998 SHARES
(4) TOTAL NUMBER OF SHAREHOLDERS AS OF THE END OF THIS FISCAL
YEAR: 10,447
(5) MAJOR SHAREHOLDERS:
Number of Shares Held by
Name of Shareholder Shareholder Shareholding Ratio
------------------- ------------------------ ------------------
(Thousands of shares) (%)
Hero & Co. 23,701 16.53
Meiji Yasuda Life Insurance Company 6,999 4.88
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Number of Shares Held by
Name of Shareholder Shareholder Shareholding Ratio
------------------- ------------------------ ------------------
(Thousands of shares) (%)
The Bank of Tokyo-Mitsubishi UFJ, Ltd. 6,986 4.87
Mika Noguchi 6,701 4.68
Nippon Life Insurance Company 5,460 3.81
The Bank of Kyoto, Ltd. 4,264 2.97
The Shiga Bank, Ltd. 3,376 2.36
The Dai-ichi Mutual Life Insurance Company 3,212 2.24
Mitsubishi UFJ Trust and Banking Corporation 3,050 2.13
Tokyo Marine & Nichido Fire Insurance Co., Ltd. 2,568 1.79
----------
(Notes) The shareholding ratio is calculated based on the number of shares
issued (excluding the number of shares held as treasury stock) as of
the end of fiscal year.
3. OFFICERS
(1) DIRECTORS AND AUDITORS (AS OF MARCH 31, 2008)
Position Name Responsibility Remarks
-------- ------------------- ------------------------------ ------------------
Representative Director Yoshikata Tsukamoto Representative Director and
President, Corporate Officer
of Wacoal Corp.
Senior Managing Director Shoichi Suezawa
Managing Director Hideo Kawanaka Director, Senior Corporate
Officer of Wacoal Corp.
Director Yuzo Ito Director, Senior Corporate
Officer of Wacoal Corp.
Director Tatsuya Kondo Director, Senior Corporate
Officer of Wacoal Corp.
Director Tadashi Yamamoto Director, Managing Corporate
Officer of Wacoal Corp.
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Position Name Responsibility Remarks
-------- ------------------- ------------------------------ ------------------
Director Kazuo Inamori Chairman Emeritus of Kyocera *1
Corporation, Honorary Adviser
of KDDI Corporation
Director Mamoru Ozaki Advisor to Yazaki Corporation, *1
Outside Director of Fuji Kyuko
Co., Ltd., Outside Director of
Kikkoman Corporation
Statutory Auditor Hajime Kotake *2
(Full-Time)
Statutory Auditor Kimiaki Shiraishi Statutory Auditor of Wacoal
Corp.
(Full-Time)
Statutory Auditor Yutaka Hasegawa Outside Statutory Auditor of *3
The Hyakugo Bank, Ltd.
Statutory Auditor Tomoharu Kuda Certified Public
Accountant *3, *4
Statutory Auditor Yoko Takemura Attorney-at-Law *3
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(Notes) *1. Mr. Kazuo Inamori and Mr. Mamoru Ozaki, Directors, are outside
directors as prescribed in Item 15, Article 2 of the Company Act.
*2 Mr. Hajime Kotake has many years of accounting experience at our
Accounting Department with a respectable degree of finance and
accounting knowledge.
*3 Mr. Yutaka Hasegawa, Mr. Tomoharu Kuda and Ms. Yoko Takemura,
Statutory Auditors, are outside statutory auditors as prescribed
in Item 16, Article 2 of the Company Act.
*4 Mr. Tomoharu Kuda is a public certified accountant with a
considerable degree of finance and accounting knowledge.
(2) REMUNERATIONS AND OTHER COMPENSATIONS PAID TO DIRECTORS AND STATUTORY
AUDITORS
Y272 million for 8 directors (of those, Y16 million for 2 outside
directors)
Y44 million for 5 statutory auditors (of those, Y19 million for 3 outside
statutory auditors)
----------
(Notes) *1 The above amount includes Y40 million of officers' bonuses (Y40
million to directors) which is to be resolved at this Ordinary
General Meeting of Shareholders.
13
*2 In addition to the above, we plan to pay Y28 million of accrued
benefits associated with the termination of payment of retirement
allowances determined by the resolution of the Ordinary General
Meeting of Shareholders held on June 29, 2005 to 2 directors and
1 statutory auditor who are to retire at the conclusion of this
Ordinary General Meeting of Shareholders.
14
(3) MAIN ACTIVITIES OF OUTSIDE DIRECTORS AND OUTSIDE STATUTORY AUDITORS
Category Name Main Activities
----------------- --------------- ------------------------------------------
Director Kazuo Inamori Mr. Inamori has attended the board of
directors' meeting 10 times out of 15 held
during fiscal year 2008 and has expressed
his opinions on the proposals and/or
discussions based on his comprehensive
knowledge of overall management.
Director Mamoru Ozaki Mr. Ozaki has attended the board of
directors' meeting 13 times out of 15 held
during fiscal year 2008 and has expressed
his opinions on the proposals and/or
discussions based on his comprehensive
knowledge and experience of financial
matters and/or Chinese business with broad
social insight.
Statutory Auditor Yutaka Hasegawa Mr. Hasegawa has attended the board of
directors' meeting 14 times out of 15 and
attended the board of statutory auditors'
meeting 16 times out of 17 held during
fiscal year 2008 and has expressed his
opinions based on his comprehensive
knowledge of financial matters.
Statutory Auditor Tomoharu Kuda Mr. Kuda has attended all board of
directors' meetings (10 times) and all
board of statutory auditors' meetings (10
times) held during fiscal year 2008 since
his assignment as statutory auditor on
July 1, 2007 and has expressed his
opinions on accounting and financial
matters from a professional perspective.
Statutory Auditor Yoko Takemura Ms. Takemura has attended all board of
directors' meetings (15 times) and all
board of statutory auditors' meetings (17
times) during fiscal year 2008 and has
expressed her opinions from professional
perspective as an attorney-at-law.
(4) MATTERS CONCERNING LIMITATION OF LIABILITY AGREEMENT
We amended our Articles of Incorporation at the 57th Ordinary General
Meeting of
15
Shareholders held on June 29, 2005 and at the 58th Ordinary General Meeting
of Shareholders held on June 29, 2006 to provide a provision regarding a
limitation of liability agreement to be executed with outside directors and
outside statutory auditors.
A summary of the limitation of liability agreement executed with all of our
outside directors and outside statutory auditors follows:
(Summary of Limitation of Liability Agreement)
The Company has executed an agreement with all of its outside directors and
outside statutory auditors to limit the liability for damages incurred due
to negligence of duties stipulated in Paragraph 1, Article 427 of the
Company Act, and the maximum amount of liability under such agreement is
the amount as provided by law or regulation.
4. MATTERS CONCERNING ACCOUNTING AUDITORS
(1) NAME OF ACCOUNTING AUDITOR
Deloitte Touche Tohmatsu
(2) REMUNERATIONS, ETC.
Amount of remuneration payable to the Y 95,000,000
accounting auditor for this fiscal period:
Total amount of money and other property benefits to be paid to Y147,528,000
the accounting auditor by the Company and its subsidiaries:
----------
(Notes)
1. The accounting audit agreement executed between the Company and
its accounting auditor does not distinguish between remuneration
for accounting under the Company Act and that for accounting
under the Financial Instruments and Exchange Law, and they cannot
be reliably distinguished. Therefore, the amount given above
represents the total amount of the remunerations for both
accountings.
2. Among our significant subsidiaries, Wacoal International Corp.
and Wacoal America, Inc. are subject to audits by other auditing
firms and not by our accounting auditor.
(3) NON-AUDIT SERVICES
We pay our accounting auditor fees incurred from consulting services for
establishing our group's regulations and security measures, which are not
included among the services specified under Paragraph 1, Article 2 of Certified
Public Accountants Law of Japan.
16
(4) POLICY ON DETERMINATION OF DISMISSAL AND NON-REAPPOINTMENT OF ACCOUNTING
AUDITOR
Other than when in the interest of the Company, if the above accounting
auditor violates and/or infringes the Company Act, the Certified Public
Accountant Law or other law or ordinance, or commits any indecent act, the
board of statutory auditors shall consider the dismissal or
non-reappointment of said accounting auditor, and if the dismissal or
non-reappointment is deemed appropriate, the board of statutory auditors
shall decide "to dismiss or not to reappoint the accounting auditor" with
the consent of all statutory auditors in accordance with the rules of the
board of statutory auditors, or shall request the board of directors that
the same be submitted as a proposal at the general meeting of shareholders,
and the board of directors shall discuss the same.
5. SYSTEM AND POLICIES OF COMPANY
(1) SYSTEM TO ENSURE APPROPRIATE BUSINESS CONDUCT
(i) System to ensure that execution of duties by directors and/or
employees is in compliance with the laws or regulations and the
Articles of Incorporation
- To ensure that all directors and employees of the group comply
with the laws or regulations and the Articles of Incorporation
and conducts business based on sound social norms, we have
enacted Corporate Ethics: Wacoal's Code of Conduct and Code of
Ethics for Corporate Officers and Employees.
- Directors will take the initiative to ensure compliance and
awareness of corporate ethics within the Group.
- In order to improve our system of compliance and consider any
compliance issues which may have a material impact on the Group,
we have established a Corporate Ethics Committee, which seeks to
increase awareness of and educate employees about corporate
ethics. Our Representative Director and President acts as the
chairperson, and our legal/compliance department is in charge of
the committee.
- We have established a system under which our legal/compliance
department is promptly notified if the Company becomes aware that
a director and/or employee of the group may have violated our
Corporate Ethics: Wacoal's Code of Conduct or Code of Ethics for
Corporate Officers and Employees, or of any other compliance
issues. We have also established an internal alert system (a
corporate ethics hotline). After being notified and/or alerted,
the legal/compliance department perform an investigation and
formulate preventive measures after discussions with the related
department. If the issue is critical, the legal/compliance
department will refer the matter to the corporate ethics
committee and will report the results of its review to the board
of directors and/or board of statutory auditors.
17
(ii) System concerning the Storage and Management of Information related to
Execution of Duties by Directors
- With the approval of our board of directors, we have enacted
Document Management Rules pursuant to which we store the
following documents (includes electromagnetic record) along with
any related materials:
Minutes of the general meeting of shareholders, minutes of board
of directors, minutes of group management committees, documents
for which a director is the final decision maker and any other
documents prescribed in the Document Management Rules
- The retention period for storage of the documents shall be ten
(10) years. The storage of these documents shall be subject to
the Document Management Rules, and the directors and statutory
auditors shall have access to these documents at all times.
(iii) Rules and Other Systems Concerning Loss and Risk Management
- In order to understand management risk within the Group in
general and to improve and/or strengthen our risk management
system, we have established a Risk Management Committee, for
which the director in charge of risk management acts as
chairperson.
- The Risk Management Committee prescribes risk management rules,
subject to the approval of the board of directors, which forms
the basis for our risk management system. The Risk Management
Committee clarifies the responsibilities by risk category
pursuant to these rules, and formulates a risk management system
that thoroughly and/or comprehensively controls potential risk
within the Group.
- The Risk Management Committee regularly reports on the operations
of the Group's risk management system to the board of directors.
(iv) System to Ensure Effective Execution of Duties by Directors
- In order to enhance appropriate decision-making by our directors,
we will appoint several independent outside directors.
- We will formulate a mid-term management plan to be shared by the
directors and/or employees within the Group and will direct and
confirm courses of action and business targets in the mid- to
short-term that are consistent with such plan.
- We will follow the business results of each Group company on a
monthly basis and report back to the board of directors. In
addition, by holding quarterly business meetings, we will confirm
the business results and the
18
implementation of measures and policies, consider measures in the
event targets are not achieved, and review such targets, as may
be necessary.
(v) System to Ensure Appropriate Business Conduct within Group Companies
- We have enacted and manage our Group companies in accordance with
our Group Management Rules, which prescribe basic policies
regarding the management of Group companies and matters to be
decided by our board of directors, as well as matters to be
reported to the Company.
- Any intercompany transaction must be fair and in compliance with
laws or regulations, accounting principles and/or the tax system.
- Our audit office will conduct internal audits (including an audit
of the establishment and/or operation of our compliance system
and risk management system) within the Group companies. The audit
office will report the results of its audits to the board of
directors and appropriate departments and will give guidance
and/or advice on system formulation to Group companies to ensure
the appropriate conduct of business.
(vi) System Concerning Assistants to Statutory Auditors and Matters
Concerning Independence of such Assistants from Directors
- To assist the statutory auditors, we have established an office
for our board of statutory auditors and will appoint assistants
to assist them.
- The statutory auditors will be consulted regarding the
appointment, evaluation, relocation and discipline of such
assistants, and their opinions will be respected.
(vii) Reporting System of Directors and Employees to the Statutory
Auditors, other Reporting Systems and other Systems to Ensure
Effective Audit by Statutory Auditors
- We will strive to conduct effective audits by our statutory
auditors by causing the directors and the employees to report to
the statutory auditors regarding the following matters in
addition to statutory matters:
Matters referred to the Group management committee
Matters which may have a material impact on the Group
Monthly and quarterly management conditions
Results of internal audits
Material violation of laws or regulations and/or our Articles of
Incorporation
The condition of our internal reporting/alerting system
19
Other significant matters
- Half of the statutory auditors will be independent outside
statutory auditors to enhance the transparency and neutrality of
management.
- The statutory auditors may order employees who belong to the
audit office to perform any matters that are required to provide
audit services.
- The board of statutory auditors may consult legal counsel,
certified public accountant, consultant or other outside advisor
as it deems necessary.
20
(2) POLICY REGARDING DETERMINATION OF DISTRIBUTION OF EARNINGS
Our basic policy regarding the distribution of profits to our shareholders
is to pay steady dividends and increase our net income per share, all the
while giving due consideration to the improvement of corporate value
through active investment that will result in increased profitability. As
for retained earnings, in light of the improvement of our corporate value,
we have actively invested in developing new specialty retail stores,
developing new points of contact with customers and actively investing in
overseas businesses. We are also concentrating on new business investments,
such as the entry into new markets, strategic business alliances and M&A
activities. We hope that these efforts will benefit our shareholders by
improving future profitability. We also intend to acquire treasury stock
from time to time, and we will try to improve our capital efficiency and
return profits to our shareholders.
(3) BASIC POLICY REGARDING CONTROL OF JOINT STOCK CORPORATIONS (KABUSHIKI
KAISHA)
(i) Details of Basic Policy
Since its establishment in 1949, the Company has strived to develop a
domestic market for female innerwear (undergarments), penetrate the
global market and establish the Company's business with the aim of
creating a global company through a 50-year long-term management plan
based on its business objectives of making women beautiful, assisting
women in becoming more beautiful and helping women realize their
desire to be beautiful. Moreover, as a leading female innerwear
company, the Company has built up the Wacoal brand, which has become
widely accepted by both domestic and international consumers.
Because the Company's corporate value is primarily generated from (i)
its strong market position and brand value in the intimate apparel
market, which have been cultivated over a long period of time; (ii)
its ability to develop highly functional, high value-added, attractive
products based on the results of scientific human research with a mid-
to long-term perspective; (iii) its superb product quality and support
engineering staff, as well as its highly productive global
manufacturing and supply systems employing superior sewing technology;
(iv) its close relationship of trust with distributors in various
sales channels, which link the Company with its customers; (v) the
trust of its customers that has been achieved through direct
communication and sales by the Company's beauty advisors, who are
well-trained and have a great deal of sales experience; and (vi) its
good social standing established through the promotion of various
social events, such as the Remmama Project and Pink Ribbon, its
corporate value and the common interests of its shareholders may be
damaged if the above factors are not secured and enhanced in the
mid-to long-term. Therefore, the Company believes that all personnel
who play a decision-making role in the formulation of its financial
and business policies should fully understand these points and be
capable of understanding securing and enhancing the Company's
corporate value and the common interests of its shareholders.
21
The Company has no objection to large-scale acquisitions of shares of
the Company, if it benefits the Company's corporate value and the
common interests of its shareholders. However, such large-scale
acquisitions do not always benefit a company's corporate value or the
common interests of its shareholders. For example, there are
large-scale acquisitions of shares which, when viewed in light of
their stated purpose and other factors, clearly prejudice corporate
value and shareholders' common interests, and there are also
large-scale acquisitions that force shareholders to sell their shares,
as well as those that do not provide the target company's Board of
Directors or its shareholders with sufficient time or information to
consider the terms of the acquisition or to propose alternatives and
those that require a target company to negotiate with the purchaser
for more favorable terms than those initially proposed.
In light of these circumstances, the Company believes that it is
essential that it be ready to implement countermeasures in response to
an acquisition of the Company's shares that is detrimental to its
corporate value or its shareholders' common interests by establishing
a system that enables its shareholders to determine whether or not to
accept such an acquisition and that enables its Board of Directors to
secure any necessary information and sufficient time to propose
alternatives or to negotiate with the prospective purchaser on behalf
of its shareholders.
(ii) Specific Details of Efforts
- Special efforts toward ensuring effective use of company assets,
appropriate formation of group companies and realization of other
basic policies
In February 2004, the Company formulated its Mid-Term Management
Plan 2004-06, under which the Company has continued to exert efforts
to secure and enhance its corporate value and the common interests of
its shareholders. In addition, the Company has been promoting CAP21
(Corporate Activation Project 21), a corporate activation project to
implement mid- to long-term strategies to further enhance its
corporate value, and it is considering expanding its business to
achieve faster growth with an eye toward M&A and strategic business
alliances, in addition to the reorganization and enhancement of its
existing businesses under the holding company structure. In January
2007, the Company formulated its Mid-Term Management Plan 2007-09 and
is promoting the goals of CAP21.
- Efforts to prevent the decision-making of financial and business
policies of the company from being controlled by inappropriate
personnel in light of the basic policies
At a meeting held on June 29, 2006 the Board of Directors
resolved to adopt certain measures based on the Basic Policy (as
defined below) pursuant to the resolutions adopted at the Company's
general meeting of shareholders held on June 29, 2006 approving the
amendment of its Articles of Incorporation. These amendments
authorized the adoption of a basic policy for measures against the
22
acquisition of a substantial shareholding of the Company (i.e.
defensive measures against takeovers) (the "Basic Policy on Defensive
Measures against Takeovers") for the purposes of securing or enhancing
corporate value and the common interests of shareholders, and adopted
certain measures under the Basic Policy on Defensive Measures against
Takeovers (the "Plan") in accordance with the amended Articles of
Incorporation.
The Plan enables its shareholders to determine whether or not to
accept an acquisition of the Company's shares and enables its Board of
Directors to secure any necessary information and sufficient time to
propose alternatives or to negotiate with the prospective purchaser on
behalf of its shareholders in order to prevent any acquisition of the
Company's shares that is detrimental to its corporate value or its
shareholders' common interests and to secure and enhance its corporate
value and the common interests of its shareholders.
The term "Purchase" as used in the Plan means a purchase or any
similar act which falls under (i) or (ii) below:
(i) the purchase of share certificates issued by the Company that
results in 20% or greater ownership by a shareholder of such
share certificates; or
(ii) a public tender offer for share certificates issued by the
Company that results in a combined ownership by the offeror and
any of its affiliates of more than 20% of such share
certificates.
If a purchaser intends to launch a Purchase of the shares of the
Company, such purchaser will be requested to submit to the
Company a document describing the information required to
consider the details of the Purchase, as well as an oath by such
purchaser that such purchaser will follow the procedures
prescribed by the Plan. Accordingly, the information provided by
the purchaser, the opinion of the Board of Directors or any
supporting materials, alternative proposals (if any) or other
information and/or materials will be submitted to the Independent
Committee, which consists of members who are independent from the
management (one outside director and two independent experts),
and the Independent Committee will evaluate and/or examine such
information and/or materials. The Independent Committee will also
evaluate and/or examine the terms and conditions of the Purchase,
consider the alternatives presented by the Board of Directors,
and negotiate with the purchaser or disclose information to the
shareholders whenever necessary, after separately obtaining
advice from independent experts.
If the purchaser fails to follow the procedures as prescribed by
the Plan or if the Purchase is deemed to fall under any of the
requirements as prescribed by the Plan as a result of the
examination of the terms and conditions of the Purchase or
discussions and/or negotiations with the purchaser, the
Independent Committee will advice the Board of Directors to
implement a gratis allocation of share acquisition rights. The
Board of Directors will
23
give the utmost respect to the advice provided by the Independent
Committee and will resolve to implement the gratis allocation of
the share acquisition rights. The Company will implement a gratis
allocation of the shares acquisition rights to those
shareholders, other than the Company, who are registered or
recorded in the Company's final register of shareholders or
register of beneficial shareholders as of the allocation date
that is separately determined, at such rate, as separately
determined, up to a maximum of two share acquisition rights for
every one common stock of the Company held.
The holder of share acquisition rights for the subscription of
new shares (with terms that prohibit the purchaser from
exercising such rights) is entitled to receive one share of the
Company by paying the amount as determined by the Board of
Directors in the resolution on the gratis allocation which shall
be at least one yen (Y1) but not exceeding one-half (1/2) of the
market value of one share of the Company. Also, the Company may
acquire the share acquisition rights that are held by
shareholders other than the purchaser, and in exchange, deliver
one share of the Company for every share acquisition right.
Promptly after passing such resolution, the Board of Directors
will disclose the outline of such resolution and other
information as deemed appropriate by the Board of Directors.
As with the effective period of the Basic Policy on Defensive
Measures against Takeovers, the effective period of the Plan will
expire upon the conclusion of the ordinary general meeting of
shareholders to be held in respect of the last fiscal year ending
within three (3) years after the conclusion of this Ordinary
General Meeting of Shareholders. However, the Plan may be changed
or terminated to reflect the change made to the Basic Policy on
Defensive Measures against Takeovers by and pursuant to the
resolution of the general meetings of shareholders, if the change
or termination of the Basic Policy on Defensive Measures against
Takeovers is resolved by a general meeting of shareholders.
Further, the Plan will be terminated if so resolved by the Board
of Directors.
There will be no direct, concrete impact on the shareholders by
the Plan's introduction, if the gratis allocation of share
acquisition rights is not implemented. On the other hand, if the
Plan and the gratis allocation of share acquisition rights are
both implemented, the shares held by the shareholders may be
diluted if the procedures for the exercise of share acquisition
rights are not followed. Provided, however, that no dilution will
take place if the shares are provided in consideration of share
acquisition rights acquired by the Company.
24
(iii) Judgment of Board of Directors as to Efforts under Item (ii)
above and Reasons Thereof
As stated in (ii) above, the Plan has was introduced in line with
the Basic Policy for the purposes of securing or enhancing
corporate value and the common interests of shareholders. In
particular, highly rational fairness and/or objectivity is
ensured under the Plan because (i) the Plan focuses on
shareholders' intentions, (ii) the Plan establishes reasonably
objective requirements, (iii) the Independent Committee shall
consist of independent persons, (iv) the Plan may not be
initiated unless a judgment by the Independent Committee is made,
(v) the Independent Committee may obtain advice from independent
experts at the expense of the Company, (vi) the effective period
is prescribed as three (3) years, and (vii) the Plan may be
terminated at any time by a general meeting of the shareholders
or the Board of Directors. The Plan is formulated for the
maintenance of corporate value and thus is in the common
interests of the shareholders. It is not intended to maintain the
status of the corporate officers of the Company.
25
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2008
(Millions of yen)
ASSETS
Item Amount
---- -------
CURRENT ASSETS 98,845
Cash and bank deposits 15,857
Time deposits and negotiable deposits 12,186
Marketable securities 12,614
Notes receivable 353
Accounts receivable-trade 22,337
Allowance for returns and doubtful receivables (3,145)
Inventories 30,020
Deferred tax assets 5,411
Other current assets 3,212
TANGIBLE FIXED ASSETS 51,548
Land 20,711
Buildings and structures 58,575
Machinery and equipment 14,448
Construction in progress 99
Accumulated depreciation (42,285)
OTHER ASSETS 91,226
Investments in affiliated companies 18,942
Investments 38,056
Goodwill 11,203
Other intangible assets 13,216
Prepaid pension costs 3,444
Deferred tax assets 1,462
Others assets 4,903
-------
TOTAL ASSETS 241,619
-------
LIABILITIES
Item Amount
---- -------
CURRENT LIABILITIES 36,010
Short-term bank loans 5,572
Notes payable 1,935
Accounts payable-trade 9,394
Accounts payable 6,327
Accrued payroll and bonuses 6,645
Accrued corporate taxes, etc 3,872
Current portion of long-term debt 48
Other current liabilities 2,217
LONG-TERM LIABILITIES 18,145
Long-term debt 81
Reserve for retirement benefit 2,181
Deferred tax liability 14,527
Others 1,356
-------
TOTAL LIABILITIES 54,155
-------
MINORITY INTERESTS 2,351
-------
SHAREHOLDERS' EQUITY
CAPITAL STOCK
COMMON STOCK 13,260
ADDITIONAL PAID-IN CAPITAL 29,262
RETAINED EARNINGS 136,589
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) 6,057
Foreign currency exchange adjustment 248
Unrealized gain on securities 5,295
Pension liability adjustment 514
TREASURY STOCK (55)
-------
TOTAL SHAREHOLDERS' EQUITY 185,113
-------
TOTAL LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY 241,619
-------
Amounts less than Y1 million are rounded down to the nearest Y1 million.
26
CONSOLIDATED INCOME STATEMENT
YEAR ENDED MARCH 31, 2008
(Millions of yen)
Item Amount
---- ----------------
Sales 165,761
Operating expenses
Cost of sales 83,127
Selling and general administrative expenses 69,094 152,221
------ -------
OPERATING INCOME 13,540
Other income and (expenses)
Interest income 303
Interest expense (78)
Dividend income 641
Gain on sale and exchange of marketable securities and/or
investment securities 715
Valuation loss on investment in securities (923)
Others (net) 155 813
------ -------
INCOME BEFORE INCOME TAXES, EQUITY IN NET INCOME OF
AFFILIATED COMPANIES AND MINORITY INTERESTS 14,353
Income taxes
Current 5,577
Deferred 276 5,853
------ -------
Income before equity in net income of affiliated 8,500
companies and minority interests
Equity in net income of affiliated companies (3,392)
Minority interests (142)
-------
NET INCOME 4,966
-------
Amounts less than Y1 million are rounded down to the nearest Y1 million.
27
CONSOLIDATED SHAREHOLDERS' EQUITY STATEMENT
YEAR ENDED MARCH 31, 2008
Shareholders' Equity
-------------------------------------------------------------------------------------
Accumulated
No. of Shares Additional other
Held Outside Common Paid-in Retained comprehensive Treasury
the Company Stock Capital Earnings income stock
------------- ----------- ----------- ----------- ------------- -----------
Thousand
Item shares Million Yen Million Yen Million Yen Million Yen Million Yen
---- ------------- ----------- ----------- ----------- ------------- -----------
As of March 31, 2007 140,577 13,260 25,242 140,666 19,274 (5,164)
Net income 4,966
Other comprehensive loss
Foreign currency exchange
adjustment (468)
Net unrealized gain on
securities (9,133)
Pension liability
adjustment (3,616)
Cash dividends paid
(Y22.0 per share) (3,093)
Purchase of treasury stock (3,936) (6,015)
Cancellation of treasury stock (5,950) 5,950
Issuance of new shares for
stock swap* 3,261 4,474
Diminution of treasury stock
for stock swap* 3,440 (454) 5,174
As of March 31, 2008 143,342 13,260 29,262 136,589 6,057 (55)
Amounts less than Y1 million are rounded down to the nearest Y1 million.
* These figures are a result of the stock swap agreement with Peach John Co.,
Ltd.
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES ON BASIC SIGNIFICANT MATTERS IN PREPARING CONSOLIDATED FINANCIAL
STATEMENTS
1. STANDARD OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
According to the provision specified under Paragraph 1, Article 148 of the
regulations for corporate accounting under the Company Act, the
consolidated financial statements have been prepared based on terms, format
and preparation methods based on the accounting standards generally
accepted in the United States. However, consistent with the foregoing
provision, some of descriptions and notes required under the accounting
standards generally accepted in the United States are omitted.
2. MATTERS REGARDING THE SCOPE OF CONSOLIDATION
(1) Number of consolidated subsidiaries: 38
(2) Major consolidated subsidiaries: Wacoal Corporation, Peach John Co.,
Ltd., Studio Five Corp., Kyushu Wacoal Manufacturing Corp., Nanasai
Co., Ltd., Torica Co., Ltd., Wacoal International Corp., Wacoal
America Inc., Wacoal France S.A., Wacoal International Hong Kong Co.,
Ltd., Wacoal Hong Kong Co., Ltd., Vietnam Wacoal Corp., Wacoal
Investment Co., Ltd., and Wacoal China Co., Ltd.
3. MATTERS REGARDING THE APPLICATION OF THE EQUITY METHOD
(1) Number of affiliates: 8
(2) Major affiliated companies: Shinyoung Wacoal Inc., Taiwan Wacoal Co,
Ltd. and Thai Wacoal Public Co., Ltd.
4. MATTERS REGARDING STANDARD OF ACCOUNTING PROCEDURE
(1) Valuation standard and method of Valuable Assets
(i) Marketable and investment securities
Based on the provisions of Financial Accounting Standards Board
("FASB") Standards No. 115, marketable securities and investment have
been classified as securities available for sale and valued at a fair
value.
Gain/loss on the marketable securities is calculated at the
acquisition cost using the moving average method. Moreover, unrealized
valuation profit/loss is classified and included in other
comprehensive income within shareholders' equity.
(ii) Inventories
29
The average cost method was mainly used for goods, products and
supplies, and the first-in first-out method was used for raw
materials, with both valued at the lower of the cost or market
accounting method.
(2) Depreciation Method of Significant Depreciable Assets
Depreciation method of fixed assets
The constant percentage method was mainly used for depreciation
of tangible fixed assets.
The fixed amount method was used for depreciation of intangible
assets. In accordance with FASB Standards No. 142 "Goodwill and Other
Intangible Assets", assets for which durable years cannot be
determined are not depreciated, but such assets undergo an impairment
examination at least once a year.
(3) Accounting basis of significant reserves
(i) Allowance for bad debts
In order to provide for bad debt losses in accounts receivable or
loans receivable, for certain debts such as debts of particular
concern, we consider the recoverability of individual accounts and
declare the estimated unrecoverable amounts using the bad debt ratio
for general accounts.
(ii) Allowance for returns
In order to clarify the corresponding relationship of sales and
returns, consideration is given to prior returned goods and the
estimated loss accompanying future returned goods is recorded.
(iii) Reserve for retirement benefits
In accordance with FASB Standards No. 87 "Employer's Accounting
for Pensions" and FASB Standards No. 158 "Employer's Accounting for
Defined Benefit Pension and Other Postretirement Plans", such amount
is reserved in order to prepare for retirement benefits for employees,
which is based on fair values of retirement pay liabilities and
pension assets as of the end of the current year.
(4) Other basic significant matters in preparing consolidated financial
statements
(i) Lease transaction
Based on the provisions of FASB Standards No. 13, capital leases
have been capitalized at fair value of the lease payments.
(ii) Accounting procedure for consumption tax, etc.
30
Accounting procedure for consumption tax, etc. is based on the
tax-excluded method.
(iii) Matters concerning business year of consolidated subsidiaries
The closing date of consolidated subsidiaries in Japan is
consistent with the consolidated closing date except for Peach John
Co., Ltd. and one other company. The closing date of Peach John Co.,
Ltd. and the other company is February 29 and the closing date of the
overseas consolidated subsidiaries is December 31. Financial
statements as of the closing date were used in the preparation of the
consolidated financial statements. However, necessary adjustments are
made for material transactions that took place during a period up to
the consolidated closing date.
(NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS)
1. Accumulated Depreciation of Tangible Fixed Assets: Y42,285 million
2. Accumulated Impairment Loss of Tangible Fixed Assets
The accumulated impairment loss of tangible fixed assets is included in the
accumulated depreciation on the consolidated balance sheet.
(NOTES ON PER SHARE DATA)
Shareholders' equity per share: Y1,291.41
Net income per share: Y 35.14
31
BALANCE SHEET
AS OF MARCH 31, 2008
(Millions of yen)
ASSETS
Item Amount
---- -------
CURRENT ASSETS 5,102
Cash and bank deposits 698
Marketable securities 2,898
Deferred income taxes 70
Others 1,434
FIXED ASSETS 144,979
TANGIBLE FIXED ASSETS 39,262
Buildings 19,000
Structures 435
Equipment and tools 1,575
Land 18,247
Others 4
INTANGIBLE FIXED ASSETS 588
Leasehold right 585
Others 2
INVESTMENT AND OTHER ASSETS 105,128
Investment securities 9,111
Stock of affiliated companies 95,542
Deferred tax assets 270
Others 205
-------
TOTAL ASSETS 150,081
-------
LIABILITIES
Item Amount
---- -------
CURRENT LIABILITIES 2,069
Notes payable 4
Borrowings from affiliated companies 1,000
Accrued liability 824
Accrued expenses 13
Accrued corporate taxes, etc. 89
Accrued bonuses 76
Reserve for officers' bonuses 40
Others 21
LONG-TERM LIABILITIES 448
Others 448
-------
TOTAL LIABILITIES 2,518
-------
NET ASSETS
SHAREHOLDERS' EQUITY 147,687
COMMON STOCK 13,260
ADDITIONAL PAID-IN CAPITAL 29,294
Capital reserve 29,294
RETAINED EARNINGS 105,187
Retained earnings reserve 3,315
Other retained earnings 101,872
Reserve of deferred gain on
sales of fixed assets 2,075
General reserve 95,000
Retained earnings carried
forward 4,797
TREASURY STOCK (54)
DIFFERENCE OF APPRECIATION AND CONVERSION (124)
OTHER SECURITIES VALUATION DIFFERENCE (124)
-------
TOTAL NET ASSETS 147,562
-------
TOTAL LIABILITIES AND NET ASSETS 150,081
-------
Amounts less than Y1 million are rounded down to the nearest Y1 million.
32
STATEMENT OF INCOME
YEAR ENDED MARCH 31, 2008
(Millions of yen)
Item Amount
---- --------------
Operating revenue
Income from rent 4,052
Dividend income 6,518
Others 292 10,863
-----
Operating cost
Cost of lease 2,031 2,031
----- ------
Operating Gross Income 8,832
Selling and general administrative expenses 2,027 2,027
----- ------
OPERATING INCOME 6,804
Non-operating income
Interest income 82
Dividends received 33
Gain on sell of marketable securities 0
Others 46 162
-----
Non-operating expenses
Interest expenses 13
Others 16 29
----- ------
ORDINARY INCOME 6,937
Extraordinary gains
Gains on sales of fixed assets 578 578
-----
Extraordinary loss
Loss on sales of fixed assets 108
Impairment loss 32
Valuation loss of affiliate stock 4,888 5,029
----- ------
PRE-TAX NET INCOME 2,486
Corporate tax, etc.
Corporate tax, resident tax and enterprise tax 457
Adjustment of corporate tax, etc. (94) 362
----- ------
NET INCOME 2,123
------
Amounts less than Y1 million are rounded down to the nearest Y1 million.
33
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEAR ENDED MARCH 31, 2008
(Millions of Yen)
Difference of
Shareholder's equity appreciation and
-------------------------------------------------------------- conversion
Additional ------------------------
paid-in Total
capital Retained earnings difference
--------- ------------------ Other of
Retained Other Total securities appreciation Total
Common Capital earnings retained Treasury shareholders' valuation and net
stock reserve reserve earnings stock equity difference conversion assets
------ ---------- -------- -------- -------- ------------- ---------- ------------ -------
Balance as of March 31, 2007 13,260 25,273 3,315 108,791 (5,163) 145,476 (41) (41) 145,434
Changes during the fiscal year
2008
Transfer from reserve for
deferred gain on sales of
fixed assets -- -- --
Transfer from contingent
reserve -- -- --
Dividends from surplus (3,092) (3,092) (3,092)
Transfer to contingent
reserve -- -- --
Net income 2,123 2,123 2,123
Acquisition of treasury
stock (6,014) (6,014) (6,014)
Cancellation of treasury
stock (5,949) 5,949 -- --
Issuance of new shares for
stock swap* 4,474 4,474 4,474
Diminution of treasury
stock for stock swap* (454) 5,173 4,719 4,719
Net change of items other
than shareholders' equity (83) (83) (83)
Total changes during
fiscal year 2008 -- 4,020 -- (6,918) 5,108 2,211 (83) (83) 2,127
Balance as of March 31, 2008 13,260 29,294 3,315 101,872 (54) 147,687 (124) (124) 147,562
Amounts less than Y1 million are rounded down to the nearest Y1 million.
* These figures are a result of the stock swap agreement with Peach John Co.,
Ltd.
34
(Note) Breakdown of other retained earnings
Reserve for deferred
gain on sales of Reserve for dividend Retained earnings
fixed assets averaging Contingent reserve carried forward Total
-------------------- -------------------- ------------------ ----------------- -------
Balance as of March 31, 2007 2,191 3,000 100,000 3,599 108,791
Changes during fiscal year 2008
Transfer from reserve for
deferred gain on sales of
fixed assets (116) 116 --
Transfer from contingent (8,000) 8,000 --
reserve
Dividends from surplus (3,092) (3,092)
Transfer to contingent
reserve (3,000) 3,000 --
Net income 2,123 2,123
Acquisition of treasury
stock
Cancellation of treasury
stock (5,949) (5,949)
Issuance of new shares for
stock swap*
Diminution of treasury stock
swap*
Net change of items other
than shareholders' equity
Total changes during
fiscal year 2008 (116) (3,000) (5,000) 1,197 (6,918)
Balance as of March 31, 2008 2,075 -- 95,000 4,797 101,872
Amounts less than Y1 million are rounded down to the nearest Y1 million.
* These figures are a result of the stock swap agreement with Peach John Co.,
Ltd.
35
NOTES TO THE NON-CONSOLIDATED FINANCIAL STATEMENTS
NOTES ON MATTERS RELATED TO SIGNIFICANT ACCOUNTING POLICIES
1. VALUATION STANDARDS AND METHOD OF ASSETS
Valuation standards and method of marketable securities
Stock of subsidiaries and affiliates are stated at cost based on the moving
average method. Other securities with market value are stated using the
market value method, based on market or other price on closing day for the
end of the year, and securities without market value are stated at cost
based on the moving average method. Furthermore, variance in valuation of
other securities is based on method of directly including all shareholders'
equity, and cost of sales is calculated based on the moving average method.
2. DEPRECIATION METHOD OF FIXED ASSETS
(1) Depreciation method of tangible fixed assets
Depreciation of tangible fixed assets is calculated based on the
constant percentage method; provided, however, that depreciation of
buildings (excluding facilities) acquired after April 1, 1998 is
calculated based on the fixed amount method.
Durable years for major items are as follows:
Buildings and structures 5 to 50 years
Machinery and vehicles: 2 to 4 years
Equipment and tools 2 to 20 years
(Change of Accounting Policies)
From fiscal year 2008, following the revisions made to the Corporation Tax
Law, we have changed to the depreciation method pursuant to the Corporation
Tax Law with respect to the tangible fixed assets acquired on and after
April 1, 2007. The effect of this change on the income statement is minor.
(Additional Information)
From fiscal year 2008, following the revisions made to the Corporate Tax
Law, the Company depreciates the difference between 5% of the acquisition
price and the memorandum price of the tangible fixed assets acquired on or
before March 31, 2007 equally in five years from the fiscal year following
the year in which the tangible fixed assets is depreciated to 5% of the
acquisition price, in accordance with the depreciation method under the
Corporate Tax Law before the revisions. Depreciation is recorded
accordingly. The effect of such change on the income statement is minor.
(2) Amortization method of intangible fixed assets
36
Amortization of intangible fixed assets is computed by the fixed
amount method.
3. ACCOUNTING BASIS OF RESERVES
(1) Accrued bonuses
In order to provide bonuses to employees, accrued bonuses are
reserved based on the anticipated amount to be paid.
(2) Reserve for officers' bonuses
In order to provide bonuses to officers, an amount for officers'
bonuses is reserved based on the anticipated amount to be paid.
4. OTHER BASIC SIGNIFICANT MATTERS IN PREPARING FINANCIAL STATEMENTS
(1) Processing method of lease transactions
Finance lease transactions, other than those in which the
ownership of the leased item is acknowledged to be transferred to the
borrower, are pursuant to accounting procedures based on the method
according to an ordinary lease transaction.
(2) Accounting procedures for consumption tax, etc.
Accounting procedures for consumption tax, etc. are as per the
tax-excluded method.
(Notes to the Balance Sheet)
1. Accumulated depreciation in tangible fixed assets: Y26,617 million
2. Short-term receivables from affiliates: Y 341 million
Short-term payables to affiliates: Y 1,471 million
3. Liabilities on Guarantee
The Company made the following guarantee for the borrowed indebtedness of
other companies from financial institutions:
Wacoal France Societe Anonyme: Y 206 million
(Notes to the Statement of Income)
Sales to affiliates: Y10,766 million
Other operating transactions with affiliates: Y 93 million
Non-operating transactions with affiliates: Y 13 million
37
(Notes to the Statements of Changes in Shareholders' Equity)
1. Number of issued shares as of the end of fiscal year ended March 31, 2008
Common Stock: 143,378,085 shares
2. Number of shares held as treasury stock as of the end of fiscal year ended
March 31, 2008
Common Stock: 35,998 shares
3. Resolution regarding distribution of earnings made during fiscal year 2008
Aggregate Amount of
Amount of Distribution per
Distribution Share
Resolution Type of Stock (million yen) (yen) Record Date Effective Date
---------- ------------- ------------- ---------------- -------------- --------------
At the Board of Common Stock 3,092 22.00 March 31, 2007 June 5, 2007
Directors' Meeting held
on May 29, 2007
4. Resolution regarding distribution of earnings to be made after the end of
fiscal year 2008
Aggregate Amount of
Amount of Distribution per
Source of Distribution Share
Resolution Type of Stock Distribution (million yen) (yen) Record Date Effective Date
---------- ------------- ------------ ------------- ---------------- -------------- --------------
At the Board of Common Stock Retained 3,583 25.00 March 31, 2008 June 4, 2008
Directors' Meeting held Earnings
on May 29, 2008
(Notes to Tax Effect)
1. Breakdown of deferred tax assets (millions of yen)
Valuation loss on investment securities Y 440
Reserve for bonus payment 30
Excess over depreciation and amortization and impairment loss 1,024
Others 269
--------
Total deferred tax asset 1,765
2. Breakdown of deferred tax liabilities (millions of yen)
Reserve for deferred gain on sales of fixed assets (Y1,424)
Others (0)
--------
Total deferred tax liability (1,424)
Total net deferred tax asset 340
38
(Notes to Related Parties)
1. Subsidiaries and affiliates
Balance as of
Transaction the fiscal
Amount year-end
Name of Company's Relationship with Nature of (millions of (millions of
Attribute Company Interest Related Party Transaction yen) Item yen)
--------- ------------ ----------- -------------------- -------------------- ------------ ---------- -------------
Subsidiary Wacoal Corp. 100% direct Holding of shares; Borrowings of money 1,000 Borrowings 1,000
dual appointments; (Note 1) from
managerial guidance; affiliated
lease of personal companies
property and/or real
estate Payment of interest 13 Accounts 5
(Note 1) payable
Fee for 65 -- --
administrative
management (Note 2)
Receipt of dividends 5,900 -- --
Lease of personal 3,073 Accounts 325
property and/or receivable
real estate (Note 3)
Fee for management 292 -- --
guidance (Note 4)
Business management 225 -- --
fee (Note 4)
Details and Policy on Determination of Transaction Terms
(Note 1) The payment of debts and/or payment of interest are determined at the
market rate.
(Note 2) The payment of fees for administrative management is determined each
fiscal year after negotiation with Wacoal Corp. based on the amount
presented by Wacoal Corp.
(Note 3) The price and other terms of the transaction are determined after price
negotiation in view of market condition.
(Note 4) The managerial guidance fees and/or business management fees are
determined each fiscal year after negotiation.
(Note 5) The transaction amount does not include consumption tax, etc., while
the balance as of the year-end includes the consumption tax, etc.
(NOTES ON PER SHARE DATA)
Net assets per share: Y1,029.44
Net income per share: Y 15.02
39
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
May 13, 2008
Board of Directors
Wacoal Holdings Corp.
Deloitte Touche Tohmatsu
Certified Public Accountants
Representative Partner and Engagement Partner
Yasuhiro Onishi (Seal)
Representative Partner and Engagement Partner
Hiroyuki Asaga (Seal)
Representative Partner and Engagement Partner
Akiyo Shimoida (Seal)
Pursuant to Paragraph 4, Article 444 of the Company Act, we have examined
the consolidated financial statement, i.e., the consolidated balance sheet, the
consolidated income statement, the consolidated shareholders' equity statement
and notes on consolidated financial statements of Wacoal Holdings Corp. for the
consolidated accounting year from April 1, 2007 to March 31, 2008.
Responsibility for preparation of the consolidated financial statements is borne
by the Company's management, and our responsibility is limited to our opinions
on such consolidated financial statement and from an independent standpoint.
In the course of such audit, our examination was made in accordance with
auditing standards generally accepted in Japan and all relevant auditing
procedures were carried out as are normally required. Accounting standards
require that we obtain reasonable assurance of the nonexistence of material
false representations in the consolidated financial statements. Our audit was
carried out based on a testing audit, and we also examined the representations
in the consolidated financial statements as a whole, including the evaluation of
accounting policies adopted by management, the method of application thereof,
and estimates produced by management. As a result of our audit, we conclude that
we have obtained a reasonable basis to express our opinion.
We are of the opinion that the consolidated financial statements of the
Company present fairly the financial position and the results of the operations
of the corporate group comprised of the Company and its consolidated
subsidiaries during the subject period in conformity with the accounting
standards generally accepted in the United States (Please refer to Note 1 of the
"Notes on Basic Significant Matters in Preparing Consolidated Financial
Statements") pursuant to the Paragraph 1, Article 148 of the regulations for
corporate accounting under the Company Act.
Neither we, nor any of our engagement partners who have been engaged in the
audit, have any interest in the Company required to be disclosed under the
Certified Public Accountants Law of Japan.
40
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
May 13, 2008
Board of Directors
Wacoal Holdings Corp.
Deloitte Touche Tohmatsu
Certified Public Accountants
Representative Partner and Engagement Partner
Yasuhiro Onishi (Seal)
Representative Partner and Engagement Partner
Hiroyuki Asaga (Seal)
Representative Partner and Engagement Partner
Akiyo Shimoida (Seal)
Pursuant to Item 1, Paragraph 2, Article 436 of the Company Act, we have
examined the balance sheet, the statement of income, statements of changes in
shareholders' equity and notes as well as the supplementary statement of Wacoal
Holdings Corp. for the 60th fiscal year from April 1, 2007 to March 31, 2008.
The accounting parts of the business report and supplementary statement audited
by us are those derived from the accounting books and records. Responsibility
for preparation of the financial statements and supplementary statement is borne
by the Company's management, and our responsibility is limited to our opinions
on such financial statements and supplementary statement from an independent
standpoint.
In the course of such audit, our examination was made in accordance with
auditing standards generally accepted in Japan and all relevant auditing
procedures were carried out as are normally required. Accounting standards
require that we obtain reasonable assurance of the nonexistence of material
false representations in the financial statements and supplementary statement.
Our audit was carried out based on a testing audit, and we also examined the
representations in the financial statements and supplementary statement as a
whole, including the evaluation of accounting policies adopted by management,
the method of application thereof, and estimates produced by management. As a
result of our audit, we conclude that we have obtained a reasonable basis to
express our opinion.
We are of the opinion that the financial statements and the supplementary
statement of the Company present fairly the financial position and the results
of the operations during the subject period in conformity with the accounting
standards generally accepted in Japan.
Neither we, nor any of our engagement partners who have been engaged in the
audit, have any interest in the Company required to be disclosed under the
Certified Public Accountants Law of Japan.
41
AUDIT REPORT
We, the Board of Statutory Auditors, have received the reports of the audit
procedures and results concerning the execution of duties by the Directors
during the 60th fiscal year, from April 1, 2007 to March 31, 2008, prepared by
each of the Statutory Auditors. After discussing the reports, we have prepared
this Audit Report and report as follows:
1. PROCEDURES AND DETAILS OF THE AUDITS BY THE STATUTORY AUDITORS AND THE
BOARD OF STATUTORY AUDITORS
The Board of Statutory Auditors prescribed the principles of audit and the
assignment of the business responsibilities, etc., received reports on the
audits and results from each of the Statutory Auditors, received reports
regarding the execution of duties by Directors and Accounting Auditor and
requested reports whenever necessary.
In conformity with the audit standards prescribed by the Board of Statutory
Auditors and in accordance with the principles of audit and the assignment of
the business responsibilities, etc., each of the Statutory Auditors have made
efforts in communicating with the Directors, internal audit department and other
employees and maintaining an environment for information gathering and auditing,
attended meetings of the Board of Directors and other important meetings,
received reports regarding the execution of duties by the Directors and
employees, investigated the conduct of the business and the assets and
properties of the Company at the head office and other principal offices and,
whenever necessary, requested explanations. Furthermore, we have monitored and
inspected the system to ensure that the execution of duties by Directors conform
with the laws or regulations and the Articles of Incorporation, the details of
the resolution of the Board of Directors concerning the establishment of a
system as required by the provisions of Paragraphs 1 and 3, Article 100 of the
Enforcement Regulations of the Company Act to ensure the appropriate business
conduct by a joint stock corporation (Kabushiki Kaisha) as well as the system
established pursuant to such resolution (internal control system). We have also
examined the details of the basic policies (as stipulated in Item 1, Article 127
of the Enforcement Regulations of the Company Act) and each effort (as
stipulated in Item 2 of said Article) as described in the business report. With
respect to subsidiaries, we made efforts to communicate and exchange information
with the directors and statutory auditors of the subsidiaries and, whenever
necessary, requested reports on the business from such subsidiaries. Based on
the above, we have examined the business report and its supplementary statements
for the subject fiscal year.
Furthermore, we have monitored and inspected whether the Accounting Auditor
has maintained independence and whether the audits have been conducted
appropriately, received reports from the Accounting Auditor on the execution of
duties and requested explanations whenever necessary. The Accounting Auditor has
reported to us that the "system to ensure the appropriate execution of duties"
(matters stipulated in each Item of Article 159 of the regulations for corporate
accounting under the Company Act) has been established pursuant to the "Quality
Control Standard for Audits" (October 28, 2005 Business Accounting Council), and
we requested explanations whenever necessary. Based on the above, we have
examined the financial statements (the balance sheet, the statement of income,
statements of changes in
42
shareholders' equity and notes) and its supplementary statement, as well as the
consolidated financial statements (the consolidated balance sheet, the
consolidated income statement, the consolidated shareholders' equity statement
and notes) for the subject fiscal year.
2. RESULTS OF THE AUDIT
(1) Results of the audit on the business report
(i) The business report and its supplementary statement present fairly the
Company's affairs in conformity with the applicable laws and
regulations of Japan and the Company's Articles of Incorporation.
(ii) With regard to the execution of duties by the Directors, there has
been no misconduct nor material matters that would constitute a
violation of any laws or regulations of Japan or the Company's
Articles of Incorporation.
(iii) In our opinion, the details of the resolution of the Board of
Directors regarding the internal control system are fair and we have
nothing to point out with regard to the execution of duties by
Directors concerning such internal control system.
(iv) We have nothing to point out with regard to the basic policies on the
nature of personnel who should control the determination of financial
and business policies of the Company as described in the business
report. Furthermore, in our opinion, each effort as stated in the
business report (pursuant to Item 2, Article 127 of the Enforcement
Regulation of the Company Act) is in line with such basic policy, is
not detrimental to the common interests of the shareholders of the
Company and is not intended to maintain the status of corporate
officer of the Company.
(2) Results of the audit of the financial statements and the supplementary
statement
In our opinion, the audit procedures and audit results received from
Deloitte Touche Tohmatsu, the Accounting Auditor, are appropriate.
(3) Results of audit of consolidated financial statements
In our opinion, the audit procedures and audit results received from
Deloitte Touche Tohmatsu, the Accounting Auditor, are appropriate.
May 16, 2008
Wacoal Holdings Corp.
Board of Statutory Auditors
Hajime Kotake (Seal)
Full-time Statutory Auditor
Kimiaki Shiraishi (Seal)
Full-time Statutory Auditor
Yutaka Hasegawa (Seal)
43
Statutory Auditor
Tomoharu Kuda (Seal)
Statutory Auditor
Yoko Takemura (Seal)
Statutory Auditor
(Note)
Mr. Yutaka Hasegawa, Mr. Tomoharu Kuda and Ms. Yoko Takemura, Statutory
Auditors, are outside statutory auditors as stipulated by Item 16, Article 2 and
Paragraph 3, Article 335 of the Company Act.
44
AGENDA AND REFERENCE MATERIALS
AGENDA ITEM NO. 1: ELECTION OF EIGHT DIRECTORS
The term of office of all eight (8) directors will expire at the conclusion
of this Ordinary General Meeting of Shareholders, and it is therefore proposed
that eight (8) directors be elected.
The candidates for director are as follows:
Brief Personal History Company
Candidate (including representation of shares owned
No. Name (Date of Birth) other companies, if any) by Candidate
--------- -------------------- ------------------------------------------ ------------
1. Yoshikata Tsukamoto April 1972
(January 29, 1948) Joined the Company 1,337,136
November 1977
Appointed Director
November 1981
Appointed Managing Director
September 1984
Appointed Executive Vice President and
Representative Director (acting)
June 1987
Appointed President and Director
(acting)
June 2002
Appointed Corporate Officer
October 2005
Appointed Representative Director and
President, Corporate Officer (acting)
of Wacoal Corp.
Appointed (Representative Director of
Wacoal Corp.; Chairman and Director of
Wacoal International Corp.; Chairman
and Director of Wacoal America Inc.)
2. Shoichi Suezawa March 1970 10,000
(June 13, 1947) Joined the Company
June 1996
Appointed Director
June 2002
Appointed Managing Director, Corporate
Officer
June 2003
Appointed Senior Corporate Officer
April 2005
Appointed Supervisor of Corporate Staff
June 2005
Appointed Senior Corporate Officer
October 2005
Appointed Director
Appointed Director and Senior Corporate
Officer of Wacoal Corp.
45
Brief Personal History Company
Candidate (including representation of shares owned
No. Name (Date of Birth) other companies, if any) by Candidate
--------- -------------------- ------------------------------------------ ------------
June 2006
Appointed Senior Managing Director
(acting) (President and Director of
Wacoal Investment Co., Ltd.)
3. Hideo Kawanaka April 1965 7,000
(June 25, 1942) Joined Isetan Co., Ltd.
June 1992
Appointed Director of Isetan Co., Ltd
Matsudo Branch Manager
July 1993
Appointed Representative Director and
President of West
Japan Railway Isetan Ltd.
June 2001
Appointed Corporate Officer and
Managing Director, General Manager of
Management and General Affairs of OMRON
Corporation
June 2004
Appointed Representative Director and
Senior Manager, Sales Manager
June 2007
Appointed Advisor to the Company
June 2007
Appointed Senior Managing Director
(acting)
November 2007
Appointed Director and Senior Corporate
Officer of Wacoal Corp.
April 2008
Appointed Director and Vice President,
Corporate Officer of Wacoal Corp.
(acting)
4. Tadashi Yamamoto March 1976 6,000
(November 14, 1952) Joined the Company
April 2002
Appointed General Manager of Human
Resources Department
June 2002
Appointed Corporate Officer
October 2005
Appointed Corporate Officer of Wacoal
Corp.
April 2006
Appointed General Manager of Personnel
and Administration Department of the
Company Managing Corporate Officer
(acting) of Wacoal Corp.
June 2006
Appointed Director of Wacoal Corp.
June 2006
Appointed Director (acting)
April 2008
Appointed Director and Senior Corporate
Officer (acting) of Wacoal Corp.
46
Brief Personal History Company
Candidate (including representation of shares owned
No. Name (Date of Birth) other companies, if any) by Candidate
--------- -------------------- ------------------------------------------ ------------
5. Tsuneo Shimizu March 1971 4,000
(October 30, 1948) Joined the Company
June 2002
Appointed Corporate Officer, Osaka
Branch (specialty store) Manager of
Wacoal Brand Operation Division
June 2005
Appointed Managing Corporate Officer
and General Manager of Wacoal Brand
Operation Division of Wacoal Corp.
April 2006
Appointed Senior Corporate Officer of
Wacoal Corp.
June 2006
Appointed Director and Senior Corporate
Officer of Wacoal Corp.
April 2008
Appointed Director and Senior Corporate
Officer, Assistant Manager of sales
Control Department (acting)
6. Kazuo Inamori April 1959 0
(January 30, 1932) Established Kyoto Ceramic Co., Ltd.
(currently Kyocera Corporation)
May 1966
Appointed President and Representative
Director of Kyoto Ceramic Co., Ltd.
April 1984
Established The Inamori Foundation,
Chairman (acting)
June 1984
Established DDI Corporation (currently
known as KDDI Corporation), Chairman
and Representative Director
June 1985
Appointed Chairman and Representative
Director and President of Kyocera
Corporation
June 1997
Appointed Chairman Emeritus and
Director of Kyocera Corporation
June 1997
Appointed Chairman Emeritus and
Director of DDI Corporation
June 2001
Appointed Honorary Adviser (acting) of
KDDI Corporation
June 2005
Appointed Chairman Emeritus (acting) of
Kyocera Corporation
June 2005
47
Brief Personal History Company
Candidate (including representation of shares owned
No. Name (Date of Birth) other companies, if any) by Candidate
--------- -------------------- ------------------------------------------ ------------
Appointed Director (acting) of the
Company
7. Mamoru Ozaki June 1991 0
(May 20, 1935) Appointed Commissioner of the National
Tax Agency
June 1992
Appointed Administrative Vice Minister
of Finance
May 1994
Appointed President of People's Finance
Corporation
October 1999
Appointed President of National Life
Finance Corporation
February 2003
Appointed Advisor to Yazaki Corporation
(acting)
July 2003
Appointed Advisor of the Company
June 2005
Director of the Company (acting)
8. Atsushi Horiba September 1972 0
(February 5, 1948) Joined HORIBA, Ltd.
June 1982
Appointed Director and General Manager
of Overseas Business
June 1989
Appointed Senior Managing Director and
General Manager of Sales Division
January 1992
Appointed Representative Director and
President
June 2005
Appointed Representative Director and
Chairman and President (acting)
(Note) 1. There are no special interests between the candidates and the Company.
2. Mr. Kazuo Inamori, Mr. Mamoru Ozaki and Mr. Atsushi Horiba are the
candidates for outside directors as required by the Company Act.
3. We recommend Mr. Kazuo Inamori as a candidate for outside director
because he has extensive experience and knowledge in the business
world as an entrepreneur and manager and we believe he can utilize his
strong leadership skills and knowledge to help strengthen our
management.
His tenure of office as outside director would be for three (3) years
following the conclusion of this Ordinary General Meeting of
Shareholders.
4. We recommend Mr. Mamoru Ozaki as a candidate for outside director
due to his long career (including in financial administration) and
extensive professional knowledge, and we believe he can utilize his
experience to enhance the transparency and objectivity of our
management.
48
His tenure of office as outside director of the Company would be three
(3) years following the conclusion of the Ordinary General Meeting of
Shareholders.
5. We recommend Mr. Asutshi Horiba as a candidate for outside director
due to his extensive experience as a manager and knowledge in overseas
business development for companies in and outside Japan and we believe
he can utilize his strong leadership skills and knowledge to help
strengthen our overseas business development.
6. Limitation of Liability Agreement with Outside Directors In order to
secure qualified personnel, our Articles of Incorporation prescribe
that we may execute a limitation of liability agreement with outside
directors to limit their liability for damages in certain instances,
and Mr. Kazuo Inamori and Mr. Mamoru Ozaki, the candidates for outside
director, have executed such limitation of liability agreement.
We plan to execute a limitation of liability agreement with Mr.
Atsushi Horiba, an outside director candidate.
A summary of the limitation of liability agreement is as follows:
- The maximum amount of liability for damages incurred due to
negligence of duties by the outside director shall be the
minimum liability amount as provided by Paragraph 1, Article
427 of the Company Act.
- The limitation of liability shall be accepted only if the
outside director executes his or her duties in good faith
and the liability is not the result of gross negligence.
AGENDA ITEM NO. 2: ELECTION OF ONE STATUTORY AUDITOR
The term of officer of Statutory Auditor Mr. Hajime Kotake will expire at
the conclusion of this Ordinary General Meeting of Shareholders. Accordingly,
the election of one statutory auditor has been proposed.
This agenda item has been approved by the board of statutory auditors.
The candidate for statutory auditor is as follows:
Brief Personal History Company
Candidate (including representation of other shares owned
No. Name (Date of Birth) companies, if any) by Candidate
--------- -------------------- ---------------------------------- ------------
1. Yoshio Kawashima March 1974 2,000
(February 5, 1952) Joined the Company
July 1997
Appointed full-time Manager of
Finance Department
June 2001
Appointed Business Management
Group Manager of Overseas
Business Division
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Brief Personal History Company
Candidate (including representation of other shares owned
No. Name (Date of Birth) companies, if any) by Candidate
--------- -------------------- ---------------------------------- ------------
April 2007
Audit Office Chief Manager
April 2008
Audit Office General Manager
(acting)
(Note) 1. There are no special interests between the candidate and the Company.
AGENDA ITEM NO. 3: PAYMENT OF OFFICERS' BONUSES
We propose that officers' bonuses of Y40 million in total be paid to our 6
current directors (excluding the outside directors) as of the end of the fiscal
year in consideration of the business results of the fiscal year ended March 31,
2008.
AGENDA ITEM NO. 4: RESOLUTION REGARDING THE AMOUNT AND TERMS OF STOCK
ACQUISITION RIGHTS TO BE ISSUED TO DIRECTORS AS STOCK OPTIONS
1. Reason for Proposal
The Company wishes to grant stock acquisition rights with an exercise price
of one (1) yen per share to its directors (excluding outside directors) as a
form of equity compensation, with the goal of providing directors with the
opportunity, like shareholders of the Company, to participate in the benefits of
increasing stock values as well as to bear the risks of declining stock values,
so as to further encourage such directors' desire to serve and improve the
Company.
Under the Company Act (Law No. 86 of 2005), granting stock acquisition
rights to directors is considered a form of remuneration, and we will therefore
ask that shareholders approve the amount and terms of the stock acquisition
rights to be granted.
The Company decided to base the proposed amount and terms of the stock
acquisition rights on the size of the Company, each director's degree of
contribution and how each director conducts his or her duties.
The Company believes that the terms of the proposal are appropriate, since
the stock options will be granted with the aim of providing stock acquisition
rights so that directors, like shareholders, will not only enjoy the benefit of
increasing stock values but also bear the risk of decreasing stock values, as
well as to further encourage their desire to serve and improve the Company.
Furthermore, stock acquisition rights will not be issued to outside
directors because outside directors are retained as part of the Company's
corporate governance strategy in order to improve corporate value by increasing
management transparency and ensuring fairness and independence.
2. Terms of the Proposal
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(1) At the 57th ordinary general meeting of shareholders held on June 29, 2005,
the remuneration of directors was limited to a maximum of Y350 million per
year. In this proposal we would like to pay Y70 million per fiscal year of
compensation to directors in the form of stock acquisition rights in
addition to cash remuneration, to begin on the date of the ordinary general
meeting of shareholders.
(2) The proposed terms of the provision of stock acquisition rights as stock
options to directors of the Company are as follows:
(i) Total number of stock acquisition rights and total number of shares
represented by the stock acquisition rights:
The maximum number of shares that can be acquired through the exercise of
stock acquisition rights during any one-year period beginning on the date
of the ordinary general meeting of shareholders (an "Allocation Year") is
70,000 ordinary shares of the Company (the "Maximum Annual Acquired
Shares").
If, following the conclusion of this Ordinary General Meeting of
Shareholders, there is a stock split or a reverse stock split, the
adjustment shall be made in accordance with the following calculation:
Maximum Annual Acquired Shares after adjustment =
Maximum Annual Acquired Shares before adjustment x stock split / reverse
stock split ratio
In addition, if it becomes appropriate to adjust the Maximum Annual
Acquired Shares, the Company may do so to the extent reasonable. Any
fractional shares as a result of the above adjustment will be rounded down
to the nearest whole share.
The maximum number of stock acquisition rights that can be issued in any
Allocation Year (the "Maximum Annual Issuance") is calculated by dividing
the Maximum Annual Acquired Shares of the Allocation Year, by the number of
shares in a trading unit of the Company. (If, following the conclusion of
this Ordinary General Meeting of Shareholders, there has been no adjustment
to the number of Maximum Annual Acquired Shares due to a stock split,
reverse stock split or other event, and the total number of shares in a
trading unit remains at the current 1,000 shares, the Maximum Annual
Issuance will be 70).
However, if there is an adjustment to the number of shares in a trading
unit in the middle of an Allocation Year and stock acquisition rights have
already been issued for such Allocation Year, the Maximum Annual Issuance
will be adjusted as follows:
Maximum Annual Issuance after adjustment = ((Maximum Annual Acquired Shares
immediately prior to the adjustment in the number of shares in a trading unit -
the number of shares represented by stock acquisition rights already issued for
such Allocation Year) / the new number of shares in a trading unit) + the number
of stock acquisition rights already issued for such Allocation Year
(ii) Class of shares represented by the stock acquisition rights and the
number of shares represented by each share acquisition right
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The stock acquisition rights will be for ordinary shares. The number of
shares represented by each stock acquisition right ("Conversion Ratio") is
the number of shares in a trading unit of the Company (currently, 1,000
shares) at the time such stock acquisition right is allocated.
Furthermore, following the allocation of the stock acquisition rights, if
the Company carries out a stock split or reverse stock split, the
Conversion Ratio will be adjusted as follows:
Conversion Ratio following adjustment =
Conversion Ratio prior to adjustment x stock split / reverse stock split ratio
In addition, if after the allocation of the stock acquisition rights it
becomes appropriate to adjust the Conversion Ratio, the Company may do so
to the extent reasonable.
Any fractional shares as a result of the above adjustment will be rounded
down to the nearest whole share.
(iii) Amount capitalized upon exercise of stock acquisition rights
The amount capitalized upon the exercise of each stock acquisition right
shall be the amount obtained by multiplying (i) the exercise price of one
(1) yen per share to be paid upon exercise of the stock acquisition rights
and (ii) the Conversion Ratio.
(iv) Exercise period for stock acquisition rights
The stock acquisition rights will be exercisable from the date immediately
following the grant date of the stock acquisition right for a period of not
more than 20 years to be set by the board of directors of the Company.
(v) Restriction on the acquisition of stock acquisition rights by transfer
The acquisition of stock acquisition rights by transfer is subject to
approval by resolution of the board of directors of the Company.
(vi) Other conditions relating to the exercise of stock acquisition rights
In principle, holders of stock acquisition rights may exercise their stock
acquisition rights from the date immediately following their loss of status
as director (including officers of a company that has adopted the committee
system), auditor or executive officer of the Company during the period
prescribed in (iv) above. Other stock acquisition right conditions shall be
determined at a general meeting of shareholders or the board of directors
of the Company where items regarding the offer stock acquisition rights
will be determined.
(3) There are currently eight directors, two of whom are outside directors.
However, if the Agenda Item No.1 (Election of Eight Directors) is approved
without amendment at this Ordinary General Meeting of Shareholders, the
number of directors will be eight, three of whom will be outside directors.
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(Additional Reference)
In addition to introducing a proposal for a stock option plan for directors
of the Company, upon resolution of the board of directors of the Company, we
plan to issue stock acquisition rights with the same details as those outlined
above to director's of the Company's subsidiary, Wacoal Corp., within one year
from the conclusion of this Ordinary General Meeting of Shareholders. The
Maximum Annual Acquired Shares will be 30,000 ordinary shares and the Maximum
Annual Issuance will be 30.
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