e20vf

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2011

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

FOR THE TRANSITION PERIOD FROM TO

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

DATE OF EVENT REQUIRING THIS SHELL COMPANY REPORT

Commission file number 000-11743

KABUSHIKI KAISHA WACOAL HOLDINGS

(Exact Name of Registrant as Specified in Its Charter)

WACOAL HOLDINGS CORP.

(Translation of Registrant’s Name Into English)

Japan
(Jurisdiction of Incorporation or Organization)

29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan
(Address of Principal Executive Offices)

Ikuo Otani

i-otani@wacoal.co.jp, +81-75-682-1028
29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan

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

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


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

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

None

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

None

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

Common Stock Outstanding:
140,848,478 shares

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

Yes þ No o

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

Yes o No þ

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

Yes þ No o

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

Yes þ No o

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


Large Accelerated Filer þ		Accelerated Filer o		Non-Accelerated Filer o

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


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

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

Item 17 o Item 18 o

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

Yes o No þ

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our company and our industry. You can identify these statements by the fact that they do not relate strictly to historic or current facts. The forward-looking statements discuss future expectations, identify strategies, contain projections of results of operations or of financial condition, or state other “forward-looking” information. In particular, the forward-looking statements may include statements relating to the impact of weak consumer spending in Japan and our other markets on our sales and profitability; the impact on our business of anticipated continued weakness of department stores and other general retailers in Japan; our ability to successfully develop, manufacture and market products in Japan and our other markets that meet the changing tastes and needs of consumers and to deliver high quality products; the highly competitive nature of our business and the strength of our competitors; our ability to successfully expand our network of our own specialty retail stores and achieve profitable operations at these stores; our ability to further develop our catalog and Internet sales capabilities; our ability to effectively manage our inventory levels; our ability to reduce costs; our ability to recruit and maintain qualified personnel; effects of irregular weather events on our business and performance; risks related to conducting our business internationally; risks from acquisitions and other strategic transactions with third parties; risks relating to intellectual property; risks relating to protection of personal information and our confidential information; risks relating to internal control; the impact of weakness in the Japanese equity markets on our holdings of Japanese equity securities; direct or indirect adverse effects on the Company of the major earthquake and tsunami that struck Northeast Japan on March 11, 2011 and the impact of any other natural disaster or epidemic on our business; and risks relating to return of investment for development of new market. Forward-looking statements are contained in the sections entitled “Item 3.D. Risk Factors”, “Item 4.B. Business Overview”, and “Item 5. Operating and Financial Review and Prospects”, and elsewhere in this annual report.

The forward-looking statements are subject to various risks and uncertainties. Information contained in the sections listed above and elsewhere in this annual report identifies factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

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

CERTAIN REFERENCES

As used in this annual report on Form 20-F, unless the context otherwise requires, the “Company” and “Wacoal Holdings” refer to Wacoal Holdings Corp., and “Wacoal”, “we”, “us”, “our” and similar terms refer to Wacoal Holdings Corp. and its consolidated subsidiaries.

The Company’s fiscal year-end is March 31. In this annual report, “fiscal 2011” refers to our fiscal year ended March 31, 2011, and other fiscal years are referred to in a corresponding manner.

CURRENCIES AND EXCHANGE RATES

We publish our financial statements in Japanese yen. In this annual report on Form 20-F, references to “U.S. dollars” or “$” are to the currency of the United States and references to “yen” or “¥” are to the currency of Japan.

Solely for your convenience, certain yen amounts in this annual report have been translated into U.S. dollars. The rate of translation is based on the noon buying rate for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York on the various dates specified where the translations are set forth in this annual report. References to the “noon buying rate” in this annual report refer to this rate. These translations should not be taken as assurances that the yen amounts actually represent these U.S. dollar amounts or that they were or could have been converted into U.S. dollars at the rate indicated or at any other rate. The noon buying rate was ¥80.64 to $1.00 on July 8, 2011.

PART I

Item 1. Identity of Directors, Senior Management and Advisers.

Not applicable.

Item 2. Offer Statistics and Expected Timetable.

Not applicable.

Item 3. Key Information.

A. Selected Financial Data.

The following selected historical consolidated financial data of Wacoal Holdings have been derived from the audited consolidated financial statements of Wacoal Holdings as of and for the fiscal years ended March 31, 2011, 2010, 2009, 2008 and 2007. The selected consolidated income statement data for the fiscal years ended March 31, 2011, 2010 and 2009, and the selected consolidated balance sheet data as of March 31, 2011 and 2010, are derived from the audited consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), included elsewhere in this annual report. The selected consolidated income statement data for the fiscal years ended March 31, 2008 and 2007, and selected consolidated balance sheet data as of March 31, 2009, 2008 and 2007, are derived from Wacoal Holdings’ audited consolidated financial statements not included in this annual report.


	Fiscal year ended/as of March 31,
	2011				2010		2009		2008		2007
	(yen in millions and U.S. dollars in thousands unless otherwise indicated)
Income Statement Data
Net sales	¥	165,726	$	2,002,489	¥	163,297	¥	172,276	¥	165,761	¥	166,410
Operating income		4,255		51,414		3,810		10,129		13,540		12,896
Net income attributable to Wacoal Holdings Corp.		2,615		31,597		2,524		5,230		4,966		9,029

Balance Sheet Data
Working capital¹	¥	56,073	$	677,537	¥	54,250	¥	58,676	¥	62,835	¥	58,047
Total assets		215,345		2,602,042		223,387		213,486		241,619		250,266
Short-term bank loans		6,117		73,913		7,941		5,221		5,572		5,822
Long-term debt (including current portion)		284		3,432		188		81		129		162
Common stock		13,260		160,222		13,260		13,260		13,260		13,260
Shareholders’ equity		166,967		2,017,484		171,630		165,873		185,113		193,278


	Fiscal year ended/as of March 31,
	2011				2010		2009		2008		2007
	(yen in millions and U.S. dollars in thousands unless otherwise indicated)
Per Common Share Data

Net income attributable to Wacoal Holdings Corp.
Basic	¥	18.53	$	0.22	¥	17.86	¥	36.75	¥	35.14	¥	63.18
Diluted	¥	18.51	$	0.22	¥	17.85	¥	36.74	¥	35.14	¥	63.18

Cash dividends declared
Japanese yen	¥	20		—	¥	20	¥	25	¥	25	¥	22
U.S. dollars		—	$	0.24	$	0.21	$	0.25	$	0.25	$	0.19
Other Data
Weighted average number of shares of common stock outstanding (thousands)		141,145		—		141,353		142,317		141,304		142,910


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

We publish our financial statements in yen. The following table sets forth information regarding the noon buying rates for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York, expressed in yen per $1.00 during the periods shown. The noon buying rate was ¥80.64 to $1.00 on July 8, 2011.


	Year ended March 31,
Yen exchange rates per U.S. dollar	2011		2010		2009		2008		2007
Period end	¥	82.76	¥	93.40	¥	99.15	¥	99.85	¥	117.56
Average rate during period		85.00		92.49		100.85		113.61		116.55
Highest rate during period		94.68		100.71		110.48		124.09		121.81
Lowest rate during period		78.74		86.12		87.80		96.88		110.07


Yen exchange rates	Highest rate		Lowest rate
per U.S. dollar	during period		during period
January 2011	¥	83.36	¥	81.56
February 2011		83.79		81.48
March 2011		82.98		78.74
April 2011		85.26		81.31
May 2011		82.12		80.12
June 2011		80.98		79.87


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

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

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

B. Capitalization and Indebtedness.

Not applicable.

C. Reasons for the Offer and Use of Proceeds.

Not applicable.

D. Risk Factors.

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

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

Despite the continuing adverse effects of the global financial crisis since 2008, the global economy has recently experienced some growth, albeit slow, as a result of the strong emerging economies. Developed economies, however, where we conduct most of our businesses remain weak. We also believe we are witnessing increased use of restrictive monetary policies by central banks to combat inflationary pressures caused by rising oil prices, and these policies could have an adverse effect on consumption in many jurisdictions. Although some observers expected the Japanese economy to continue its gradual recovery this year, its economic prospect has become uncertain in the aftermath of the major earthquake and tsunami that struck Northeast Japan in March of 2011.

During fiscal 2011, the Japanese market accounted for approximately 87.6% of our net sales, and the United States and European markets accounted for approximately 6.9%. In the major markets in which we operate, the continued weakness or deterioration in the economy may have a material adverse effect on our sales, results of operations and financial condition. Our businesses may be particularly sensitive to declines in consumer spending. In addition, another financial crisis may result in lower returns or losses on our financial investments.

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

In fiscal 2011, a substantial majority of our net sales were made to department stores, general merchandisers and other general retailers in Japan, and we expect that the majority of our net sales will continue to be made through department stores, general merchandisers and other general retailers in Japan for the foreseeable future.

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

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

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

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

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

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

The sale of intimate and other apparel is highly competitive, and we must compete for sales with a wide range of other apparel companies. In addition to competition from wholesalers and direct retailers in the mid- to high-end undergarment market in Japan, we must also compete against door-to-door sales, catalog and Internet sales, and new entrants to the intimate apparel market, including mass-market and specialty apparel companies, such as Fast Retailing Co., Ltd., as well as outerwear fashion manufacturers.

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

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

Our specialty retail store network expansion may not lead to improved sales and profits

As of March 31, 2011, we had a total of 146 domestic specialty retail stores, including 17 factory outlet stores. Through our domestic specialty retail stores, including those of Peach John Co., Ltd. (“Peach John”), we hope to increase our contact with younger women and other consumers who may have less awareness of our brand and products and who may be less likely to shop for intimate apparel in the general retail stores that carry our products.

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

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

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

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

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

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

Rapid changes in the retail market in Japan in recent years, such as declines in the number and sales of department stores, new controls on mass-merchandising stores, increases in sales at direct sales outlets and on the Internet, and declines in the prices of innerwear and the number of innerwear items sold per person, make it difficult for us to evaluate the performance of our specialty retail stores to date and to estimate whether we will achieve success in the future. Further investment is necessary in order to expand our specialty retail store business, including costs for the development of new stores and the closure of underperforming stores, and improvement costs for the specialty retail store brand. If new shops fail to secure the expected sales levels, if expenses such as shop rent or personnel costs increase due to changes in the market environment, or if the specialty retail store brand fails to be popular with customers, we may not be able to make sufficient gains to recover the investment.

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

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

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

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

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

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

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

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

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

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

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

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

Our business may be adversely affected by irregular weather events

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

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

We may face increasing risks relating to conducting business internationally

In fiscal 2011, approximately 87.6% of our net sales were made in Japan. However, we have gradually increased both the amount of goods we produce and the amount of raw materials we procure in lower-cost countries, such as China—a trend we expect to continue. In addition, we are making efforts to expand our product sales in overseas markets, including in the United States, Europe and China. These initiatives and trends may increasingly subject us to various risks relating to the conduct of our business abroad, including:

	•		differing consumer tastes and preferences in overseas markets;

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

	•		unexpected tax, legal or regulatory changes that may adversely impact our group;

	•		difficulty in staffing and managing widespread operations;

	•		changes in exchange rates;

	•		differing protection of intellectual property; and

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

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

As part of our CAP 21 strategic plan, we intend to evaluate and pursue opportunities for acquisitions, investments and other strategic transactions that we believe will help us achieve our business objectives, including extending our product offerings in Japan and in overseas markets and strengthening our capabilities in Internet, catalog and other marketing channels. Two of our key transactions are as follows:

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

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

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

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

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

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

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

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

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

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

	•		possible impairment charges to goodwill or intangible assets; and

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

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

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

Our pursuit of growth opportunities and new markets through international expansion, acquisitions, strategic alliances or otherwise will require significant resources, time and costs. There is no guarantee that we will generate results that are sufficient to cover the cost of making any such investment, even if we conduct an extensive due diligence investigation and other analyses prior to making the investment to maximize the probability of success and minimize the risks. Failure to recover the cost of investments could have a material adverse effect on our financial condition and results of operations.

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

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

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

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

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

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

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

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

As a result of yearly evaluations conducted by management and independent external auditors we have not discovered any material deficiencies including during fiscal 2011. However, we recognize that there are certain improvements that we should make with particular aspects of our internal controls.

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

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

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

Our holdings of equity securities expose us to market risks

We hold equity and other securities in a number of publicly traded Japanese companies. A significant drop in the value of these securities, or in the Japanese equity markets in general, could have an adverse impact on our financial results in the relevant reporting period. For example, although our balance sheet as of March 31, 2011 showed an unrealized gain on securities of ¥2,596 million, we were required to recognize a valuation loss on our equity securities holdings of ¥1,585 million for fiscal 2011. This loss recognition was primarily the result of a determination that a decrease in the fair market value of certain equity securities was other-than-temporary.

In addition, if there is a decrease in our pension assets due to adverse conditions in stock or bond markets or other factors, additional funding and accruals may be required, and such funding and accruals may adversely affect our performance and financial condition. For example, our selling, general and administrative expenses for fiscal 2009 increased as compared to such expenses for fiscal 2008, due in part to a significant increase in the actuarial loss in our pension plans caused by poor returns on the securities included in the plan assets.

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

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

We may suffer additional losses due to the major earthquake and tsunami that struck Japan on March 11, 2011, which may have a material adverse effect on our business in the near- to medium-term

The Tohoku region, particularly Miyagi, Fukushima and Iwate Prefectures, and the Kanto region, were significantly affected by the major earthquake and tsunami that struck on March 11, 2011. The earthquake caused some damage to our properties, including our store properties and office properties in Miyagi Prefecture, and while none of the damage was material, the full effect of the event on the Japanese economy is not yet clear. We may be adversely affected by the various consequences of the earthquake and tsunami, including near- to medium-term shortages in power supply particularly during the summer of 2011, as well as closure, suspension or relocation of the businesses of suppliers and other issues in the supply chain while the region’s economy and infrastructure are rebuilt and restructured. As a consequence we could have difficultly with sales or production in the near- to medium-term and we may be forced to recognize further impairment losses; see above “—Natural disasters and epidemics could affect our manufacturing abilities, results of operations or financial condition”. Furthermore, the overall Japanese economy could deteriorate. Any of the foregoing could result in material adverse effects on our business, financial condition and results of operations. See “—We may be adversely affected by the global economy, particularly with respect to Japan, the United States and Europe”.

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

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

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

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

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

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

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

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

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

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

Item 4. Information on the Company.

A. History and Development of the Company.

Wacoal Holdings Corp. is a joint stock corporation that was incorporated under the Commercial Code of Japan in 1949 with the name Wako Shoji Kabushiki Kaisha. Our name was changed to Wacoal Kabushiki Kaisha in 1957 and was further changed to Kabushiki Kaisha Wacoal (or Wacoal Corp.) in 1964.

In October 2005, we transitioned to a holding company structure by spinning off all of our operations into a new wholly-owned subsidiary. In connection with this, we changed our name to Wacoal Holdings Corp. and named our new subsidiary Wacoal Corp.

Our corporate headquarters are located at 29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan, and our telephone number at that location is +81-75-682-5111. Our agent in the United States is Wacoal America, Inc., located at 136 Madison Avenue New York, N.Y. 10016 U.S.A, and our telephone number at that location is +1-212-532-6100.

We conduct our business and operations principally in Japan. In addition, since our incorporation, we have established a number of overseas subsidiaries and joint venture companies, including in the United States, China, France, the United Kingdom and several countries in Southeast Asia. These subsidiaries and joint venture companies are described in “Item 4.B. Business Overview” and elsewhere in this annual report on Form 20-F.

In June 2006, we purchased 49% of the shares of Peach John for approximately ¥15,327 million. In January 2008, we acquired the remaining 51% of Peach John for ¥9,266 million, making it a wholly-owned subsidiary of Wacoal. Peach John is engaged in mail-order sales of women’s apparel and various other apparel products.

Lecien, which manufactures and sells women’s innerwear, clothing and accessories for the Japanese market, became our wholly-owned subsidiary as a result of a stock exchange on August 17, 2009.

For a discussion of recent and current capital expenditures and divestitures, please see “Item 5.B. Liquidity and Capital Resources—Capital Expenditures”.

We have not received any indication of any public takeover offers by third parties in respect of our shares, and we have no current intention to make any takeover offers in respect of other companies’ shares.

B. Business Overview.

Overview

We are a leading designer, manufacturer and marketer in Japan of women’s intimate apparel, with the largest share of the Japanese market for foundation garments and lingerie, according to a third-party private research organization. Foundation garments (primarily brassieres and girdles) and lingerie (primarily slips, bra-slips and women’s briefs) accounted for approximately 70.2% of our consolidated net sales for fiscal 2011. We also design, manufacture and sell nightwear, children’s underwear, outerwear, sportswear, hosiery and other apparel and textile products, and engage in restaurant businesses, certain cultural projects and (through our subsidiary, Nanasai Co., Ltd.) build interiors for commercial premises, including sales counters operated by our sales promoters in department stores and other retailers carrying our apparel. For further details on recent market conditions and competition, including the effects of the major earthquake and tsunami that struck Northeast Japan in March 2011, see “Operating and Financial Review and Prospects—Operating results—Overview—Key Industry Trends”.

We adopted guidance for segment reporting in accordance with U.S. GAAP in the year ending March 31, 2010. See note 21 to our consolidated financial statements for further details. We divide our businesses into four segments: Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John Business and Other. Further details of these segments and their principal products are provided below (see “—Operations—Principal Products” below for further details of these principal products).

Wacoal Business (Domestic)

This segment comprises 21 companies all of which are based in Japan, including Wacoal Corp. and Wacoal Holdings., and are principally engaged in the manufacture and distribution of apparel in Japan other than the businesses conducted by Peach John and Lecien. The core products in this segment include innerwear (foundation, lingerie, nightwear and children’s innerwear), outerwear, sportswear, hosiery, restaurant, culture and services.

Most of our business operations and sales are in Japan, where we believe that we have established broad brand recognition for high quality and fashion. In fiscal 2011, a substantial majority of our net sales were made to department stores, general merchandisers and other general retailers in Japan.

Wacoal Business (Overseas)

This segment comprises 19 companies, all of which are based outside Japan, and are principally engaged in the manufacture and distribution of apparel outside Japan. Included in this segment are our subsidiaries and affiliates in the United States, France, the United Kingdom, China, Vietnam and other countries in Asia. The core products in this segment include: innerwear (foundation, lingerie, nightwear and children’s innerwear), outerwear, sportswear and hosiery.

Peach John Business

This segment comprises Peach John and three other related companies, which are principally engaged in mail-order sales of women’s apparel and various other apparel products for the Japanese market. The core products in this segment include innerwear (foundation, lingerie, nightwear and children’s innerwear), outerwear and other textile-related products.

Other

This segment comprises 13 companies, including Nanasai and Lecien, which are principally engaged in the manufacture and sale of women’s innerwear and clothing for the Japanese market as well as, with regard to Nanasai, the manufacture and rental of mannequins and fixtures, and the interior design and construction of commercial premises including sales counters used by our sales representatives in departments stores and other general retailers that carry our apparel. The core products in this segment include innerwear (foundation, lingerie, nightwear and children’s innerwear), outerwear, and other textile-related products, as well as mannequins, shop design and implementation.

The following table sets forth information with respect to our net sales to external customers by business segment during fiscal 2011, 2010 and 2009:

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


	Year ended March 31,
	2011				2010				2009
	(yen in millions)
Wacoal Business (Domestic)	¥	110,856	66.9	%	¥	113,929	69.8	%	¥	124,228	72.1	%
Wacoal Business (Overseas)		20,052	12.1			18,899	11.6			22,323	13.0
Peach John Business		11,711	7.1			13,224	8.1			14,893	8.6
Other		23,107	13.9			17,245	10.5			10,832	6.3

Total	¥	165,726	100.0	%	¥	163,297	100.0	%	¥	172,276	100.0	%


1.		Eliminations were ¥12,919million, or 7.8% of our net sales, for 2011; ¥11,230 million, or 6.9% of our net sales, for 2010; and ¥10,861 million, or 6.3% of our net sales, for 2009.

The following table sets forth information with respect to our net sales by region during fiscal 2011, 2010 and 2009:

Net Sales (and Percentage) by Region


	Year ended March 31,
	2011				2010				2009
	(yen in millions)
Japan	¥	145,136	87.6	%	¥	144,048	88.2	%	¥	149,927	87.0	%
Asia (excluding Japan)		9,155	5.5			7,885	4.8			7,573	4.4
Americas and Europe		11,435	6.9			11,364	7.0			14,776	8.6

Total	¥	165,726	100.0	%	¥	163,297	100.0	%	¥	172,276	100.0	%


1.		Net sales in Europe were ¥1,127 million for fiscal 2011, ¥934 million for fiscal 2010 and ¥1,101 million for fiscal 2009. Net sales in Europe as a percentage of our total net sales were 0.7% for fiscal 2011, 0.6% for fiscal 2010 and 0.6% for fiscal 2009.

The following table sets forth information with respect to our net sales by category of products during fiscal 2011, 2010 and 2009:

Net Sales (and Percentage) by Product Category


	Year ended March 31,
	2011				2010				2009
	(yen in millions)
Innerwear:
Foundation and Lingerie	¥	116,285	70.2	%	¥	116,068	71.0	%	¥	123,368	71.6	%
Nightwear		8,725	5.2			9,438	5.8			11,019	6.4
Children’s Underwear		1,476	0.9			1,608	1.0			1,950	1.1

Total Innerwear	¥	126,486	76.3	%	¥	127,114	77.8	%	¥	136,337	79.1	%
Outerwear and Sportswear		17,400	10.5			17,241	10.6			15,498	9.0
Hosiery		1,666	1.0			1,701	1.0			1,657	1.0
Textile Products		7,498	4.5			7,462	4.6			6,270	3.6
Other		12,676	7.7			9,779	6.0			12,514	7.3

Total	¥	165,726	100.0	%	¥	163,297	100.0	%	¥	172,276	100.0	%

Key Business Strategies

Our key business strategies include the following:

Maintain leadership position in our core innerwear business

We believe that our leadership position in the women’s innerwear market in Japan and broad consumer association of the Wacoal brand with high-quality innerwear products are key strategic assets for our company. We intend to maintain and build on our leadership position by continuing to bring to market high-quality innerwear products with innovative features that appeal to women in Japan. We have also established the Wacoal brand as one with a reputation for high-quality products and high functionality in the U.S., European and ASEAN markets, and we are pursuing a policy of establishing the Wacoal brand in China and Vietnam as well. Additionally, we have begun developing our strategy for entering emerging economies such as Brazil and India as well as new markets such as Canada, Germany and Russia.

Expand our overseas businesses in order to decrease our reliance on the Japanese market

We will continue to make efforts to become a global firm in order to move beyond the Japanese apparel market, where potential growth will be limited by demographic trends. In this regard, we view China and the United States as our priority markets. The United States has historically been our largest overseas market, and as personal consumption in the United States continues to steadily recover from the economic downturn, the United States will continue to be a key market for our existing Wacoal brand products. In China, we are focused on developing relationships with local department stores and other retailers to strengthen our sales and distribution channels and on building consumer awareness of Wacoal as a premium brand for high-quality women’s innerwear. In addition, we are proactively seeking to develop our business operations in other markets and emerging economies, including through establishment of country specialists to implement customer acquisition strategies tailored to each country.

Implement effective structural reforms, particularly in our domestic innerwear business

We have increasingly focused our efforts on achieving stable profits in the challenging economic environment in Japan, where there is great uncertainty as to the future of our flagship innerwear products market and core sales channels—department stores, general merchandisers and specialty retail stores. Against these challenges, we will continue to engage in the following efforts:

	•		Improve our ability to respond quickly to market trends and operational productivity;

	•		Conduct ongoing review of operations and business structure from multiple perspectives and implement appropriate structural reforms from time to time to improve profitability; and

	•		Draw on our collective strengths across all areas of our business and leverage our research know-how that we have built over the years in order to expand into new low-price, high volume markets.

Identify promising business lines and flexibly shift resources into those lines to develop profitable brands

We aim to continue to develop new business lines by investing resources in the creation of new profitable brands. Recent examples of these efforts include our entry into the wellness business that capitalized on increasingly health-conscious consumers, as well as expansion of our men’s product lineups and development of our network of directly managed specialty retail stores.

Strengthen our ability to effectively manage across groups and countries

In order to effectively execute our strategies, we seek to strengthen our ability to manage across groups in a manner that will maximize the synergies from group collaboration. In addition, we seek to improve cross-border coordination in our value chain network in order to achieve better production and distribution, as well as cost reductions. Recent examples of these efforts include sharing of distribution networks and materials among our group companies, use of Wacoal Corp.’s research and development capabilities to develop products for Lecien and Peach John, and use of Lecien’s production base for our other group companies.

Continue to fulfill our corporate social responsibility by promoting our support for women

Since the founding of our business in 1949, we have made contributions to society by supporting women to flourish in their beauty. For example, as a company that has earned the trust of women consumers, we have a long and successful history of undertaking breast cancer awareness initiatives known as the “Pink Ribbon” initiatives. We seek to build on this success by providing more comprehensive support, such as breast cancer screening and launching brassiere products designed for breast cancer patients. We believe meeting our corporate social responsibility in this manner will help us understand and meet the needs of women, who will remain our key customer segment.

Operations

Principal Products

Our principal product categories are innerwear (consisting of foundation garments and lingerie, nightwear and children’s underwear), outerwear and sportswear, hosiery, textile products and other products.

Foundation Garments and Lingerie

Our foundation garments include brassieres, girdles and bodysuits (a one-piece combination brassiere and girdle). Most of these products are available in a variety of colors, with variations in lace, trim and detailing. Lingerie, consisting mainly of slips, bra-slips (a combination bra and slip), women’s briefs, undershirts and shorts, is produced in a variety of fashion styles. We market our foundation garments under a number of separate product lines, which are targeted at specific groups of consumers based on style, pricing and other factors.

Wacoal and Wing Products. We launch product campaigns for our core Wacoal brand and our Wing brand foundation garments and lingerie each year for the spring/summer and fall/winter seasons. Our business success depends in large part on the success of these seasonal product campaigns. In April of 2010 our Human Science Research Center announced its research results “Body Aging (physiological changes associated with aging)”. Through the campaign based on these results we were able to deepen consumers’ understanding about the importance of choosing undergarments that are suited to a changing body. Although originally dependent on seasonal item campaigns, the Body Aging based campaign has led to a rise in sales of our bra line items throughout the year.

	•		Wacoal Products: Through the spring/summer and fall/winter seasons of 2010, we continued our LALAN brassier campaign, which was launched in 2007, with the release of the “ribbon bra” and “just-right bra”. We also, as stated above, held our Body Aging promotion based on the findings of our Human Science Research Center through which we were able to plead the importance of suitable undergarments for the changes one’s body undergoes with age. Through this, we were able to grow our sales of our mature woman geared brands, LASÉE and Gra-P. In the future we intend to reorganize in favor of the volume zone and further strengthen our Parfage lines. Additionally, because demand for our Cross-Walker high-function bottoms from our Style Science series and our high-function undergarment Sugo-I have come around, we will be introducing new lines of products.

	•		Wing Products: In 2010 we introduced campaigns for S-style, Sofu-t, Kikonashi Bra, and iBra. As for bottoms, in spring we introduced Slim-up Pants from our Style Science series, and in fall we introduced Flat Shape. Regarding our high-function undergarments, we intend to compete with private brand products by introducing Yukurira, Funwari Thermal, and Rakunobi Thermal, which offer refined structure and production. For men’s innerwear following Cross Walker, we introduced our senior brand HAI and have begun development of our new added value product BROS sport.

Luxury Products. In addition to our Wacoal and Wing brand products, our product line also includes our luxury products Tréfle, PARFAGE, Salute, L’ge and Lesiage. We are continuing to expand the brand WACOAL DIA, including at our shop in the upscale Ginza shopping district in Tokyo, while limiting the number of stores and geographic areas in which it is available so as not to diminish its luxury image. Consistent with this policy, we have our direct sales outlet in Ginza and Tokyo Midtown in Roppongi, two of Japan’s foremost first class shopping areas.

Nightwear. We design and market women’s nightwear, including pajamas, negligees, nightgowns and robes. Our nightwear products feature specialty offerings, such as our tsumori chisato romantic line, which targets younger women, and our fashionable Grandér line targeted to mature women. Our nightwear products are primarily sold through department stores and chain stores.

Children’s Underwear. Our children’s underwear products include undergarments for girls and teenage women, children’s sleepwear and other targeted garment offerings. Our children’s wear is also primarily sold through department stores, although there has been a shift in the sales of children’s underwear in recent years away from general department stores and toward other stores that specialize in goods for children and infants.

Outerwear and Sportswear

Our outerwear and sportswear product line consists of women’s outerwear, including dresses, skirts, slacks, jackets and sweaters, and sportswear, featuring our CW-X product line. This product category has been the most successful of our products categories over the last three fiscal years, as net sales grew consistently from ¥15,498 million for fiscal 2009, or 9.0% of our total net sales, to ¥17,400 million for fiscal 2011, or 10.5% of our total net sales. Our outerwear products are sold principally through our catalog operations. Our CW-X product line, a high-function conditioning wear product that was developed from years of research and development, enjoys a strong reputation among athletes. We are continuing to expand this product line to develop new products that meet the needs of participants in various fields of sports, including lower-priced products with more limited functionality for general consumers rather than professional athletes. By doing so, we also aim to increase sales by achieving popularity among the general sporting public. As part of these efforts, we are expanding our sales in the United States, including major sports shops, through our subsidiary, Wacoal Sports Science Corp.

Hosiery

Our hosiery products include pantyhose, tights, knee-highs and anklets offered in various sizes and colors. We are developing high value-added products, with such effects as the stimulation of leg muscles to improve blood circulation, which prevents foot swelling by using different denier and yarn combinations. These pantyhose and other hosiery products are sold at department stores, as well as by television and catalog.

Textile and Other Products

We are engaged in several business lines that are ancillary to our core apparel business. We offer functionality-focused shoe products. Their designs, based on ergonomic research, have a structure that prevents feet from getting tired after many hours of wear, and are well-received by women who work in offices or who must stand for long hours at work, such as flight attendants. We also sell certain general merchandise, including items for handicrafts such as sewing materials and sundries such as pouches and handkerchiefs, which we categorize as textile products. We rent out mannequins and fixtures, and design and build interiors for commercial premises, including sales counters used by our sales representatives in department stores and other general retailers carrying our apparel. In addition, we operate a restaurant business and are involved in various cultural projects and events, including exhibits by artists from around the world.

Principal Markets and Methods of Distribution

We currently sell our products in Japan, the United States, China and certain countries in Europe and Southeast Asia. In all of our markets, we principally sell our apparel products to general retailers, although in Japan, we are seeking to expand our sales through our network of specialty retail stores, mail order catalogs and the Internet.

Japan

General Retailers

In our core Japan market, we principally sell our apparel products to department stores, general merchandisers and other general retailers. Sales to general retailers in Japan represented a substantial majority of our total worldwide sales in fiscal 2011. No single Wacoal customer constitutes 10% or more of our net sales, although our general retail customers that are consolidated companies in the Aeon Group collectively accounted for approximately 10% of our net sales in fiscal 2011.

Specialty Retail Stores

As part of our product and marketing strategy, we are developing a network of directly managed specialty retail stores. We began developing our specialty retail stores in 2001, and we had 123 stores in our network (excluding Peach John) in Japan as of March 31, 2011, including 16 factory outlet stores. The number of Peach John retails stores was 23, as of March 31, 2011, as compared to 27, as of March 31, 2010. In the near future we plan to pursue a policy of improving profitability of our existing stores, and prioritize the goal of making our direct sales outlets profitable at an early stage, rather than increasing the number of direct sales outlets.

Through our specialty retail stores we intend to reach younger customers and others who prefer shopping for intimate apparel at malls or specialty retail stores rather than at department stores and other general retailers. We also intend to generally increase our points of contact with customers, and reduce our reliance on the general retailer channel to market our foundation garment and lingerie products.

In addition to our core retail store brands, we operate Dublevé stores, which specialize in custom-made intimate apparel and which carry Wacoal brand products. At our factory outlet stores, we take older items that have not sold at our usual retail locations and sell them at discounted prices. We have expanded into several domestic large-scale outlet shopping malls as well. We believe that our factory outlet stores will continue to provide us with a new sales channel for discounted merchandise and additional opportunities for direct consumer contact and brand promotion.

Mail-Order Catalog Business and Internet Sales

We are seeking to expand our mail order catalog and Internet sales, to increase our points of contact with new customers and provide new selling channels for selected products. We are also seeking to expand our sales through the Internet as an alternate sales channel for selected products. Our Internet shopping site (http://store.wacoal.jp/) lists a number of over-the-counter innerwear products which are not included in our catalog sale items, and this approach expands the ways in which our customers can purchase Wacoal items. We have also sold innerwear, outerwear and other products through Peach John, our wholly-owned subsidiary since January 2008. Peach John generates approximately 70% of its net sales from the Internet with the remaining sales coming from mail orders.

United States

In the U.S. market, we sell foundation garments and lingerie through our Wacoal America subsidiary. While we sold both Wacoal brand products and licensed products of Donna Karan Intimates and DKNY brands through 2008, we terminated the relevant license agreements as of December 31, 2008. Since the beginning of 2009, we offer three of our own brands through Wacoal America: the ordinary Wacoal brand, the luxury brand Wacoal LUXE, and the sexy and fashionable brand b. tempt’d by wacoal.

We sell products in the U.S. market principally at high-end and other department stores. Wacoal America operates from one facility located in New Jersey and one facility located in New York. Our Wacoal Dominicana Corp. subsidiary manufactures products in the Dominican Republic and ships them to Wacoal America, which distributes them principally to retailers in the United States. Wacoal Sports Science Corp. in the United States is a wholly-owned subsidiary of Wacoal International Corp. established for the purpose of expanding our CW-X sportswear line globally.

China

In China, we produce innerwear and other garments primarily for sale in Japan and China. Our marketing strategy in China is currently focused on developing relationships with local department stores and other retailers to strengthen our sales and distribution channels and on building consumer awareness of Wacoal as a premium brand for high-quality women’s innerwear. We believe that this strategy will help us to achieve profitable sales growth in China over time, as the spending power and sophistication of Chinese shoppers increases together with continued economic growth.

In China, our subsidiaries Guangdong Wacoal Inc. and Wacoal China Co., Ltd. serve as manufacturing and marketing bases. We have sales offices in such major cities as Shanghai and Xining to carry out our marketing efforts. We also have a production facility in Dalian. Wacoal (Shanghai) Human Science R&D Co., Ltd., which supports our product planning facilities, is tasked with developing unique products for the Chinese market based on the principles of human science and ergonomics.

Other Asia

We market our products through subsidiaries and affiliates in South Korea and a number of other countries in Asia, including Hong Kong, Singapore, the Philippines, Thailand, Taiwan, Indonesia and Malaysia. In March 2007, we launched our innerwear brand sorci age in the ASEAN region (Malaysia, Indonesia, the Philippines and Singapore) with standardized design and price. Sorci age targets the 18 to 24 year old segment of the market, and we intend to develop this business with the aim of entering additional ASEAN markets.

Europe

Our Wacoal France subsidiary designs and markets foundation garments and lingerie in Europe. Most of these products are manufactured by our subsidiaries in China. Wacoal (UK) Limited in the United Kingdom imports Wacoal products from the United States and France and distributes the products through major department stores in London and other large cities in the United Kingdom.

Seasonality

We are not materially affected by seasonality.

Production and Sources of Supply

Wacoal Corp. produces our apparel products through its subsidiaries in Japan, China, Vietnam and the Dominican Republic and through our affiliated companies in South Korea, Thailand, Taiwan and Indonesia. Our apparel products are also produced by third party subcontractors in Japan. All of these products are produced according to our specifications, using materials that we supply.

We work with our affiliated companies and subcontractors to help them produce products that meet our specifications. For example, we supply them with cutting patterns and sewing machine attachments. We also provide certain of these entities with debt and equity financing for working capital and other purposes (including for the purchase of our sewing machines and other equipment), although such financing is not material to us.

The principal raw materials that we use in our apparel business include nylon and other synthetic fabrics, lace, stretch fabrics, cotton fabrics, fasteners, tape and threads. These materials are obtained from approximately 300 sources, most of them within Japan.

We have not experienced any significant difficulties in obtaining raw materials. However, although alternate sources of supply exist for our raw material requirements, we believe that our operations could be adversely affected by substantial increases in the price of such materials or by our suppliers having difficulty in obtaining materials essential to the manufacture of Wacoal products.

As described above, we depend on our relationships with subcontractors, joint ventures and suppliers to source and manufacture our products. We do not materially depend on patents or licenses or on new manufacturing processes for our business or profitability.

Government Regulation

We believe that regulation by governmental authorities in Japan and other countries where we operate does not significantly affect our business.

C. Organizational Structure.

The following table sets forth our significant subsidiaries, as well as the jurisdiction of incorporation and percentage of equity ownership that we hold directly or indirectly in each such subsidiary as of March 31, 2011:


	Jurisdiction of	Wacoal Holdings
Principal Subsidiaries	Incorporation	Equity Owned (%)
Wacoal Corp.	Japan	100
Peach John Co., Ltd.	Japan	100
Lecien Corporation	Japan	100
Kyushu Wacoal Manufacturing Corp.	Japan	100
Niigata Wacoal Sewing Corp.	Japan	100
Fukuoka Wacoal Sewing Corp.	Japan	100
Hokuriku Wacoal Sewing Corp.	Japan	100
Miyazaki Wacoal Sewing Corp.	Japan	100
Torica Inc.	Japan	57
Nanasai Co., Ltd.	Japan	82
Wacoal Dominicana Corp.	U.S.A.	100
Wacoal International Corp.	U.S.A.	100
Wacoal America, Inc.	U.S.A.	100
Wacoal Sports Science Corp.	U.S.A.	100
Wacoal (UK) LTD.	U.K.	100
Wacoal France S.A.	France	100
Wacoal Singapore Pte. Ltd.	Singapore	100
Wacoal Hong Kong Co., Ltd.	Hong Kong	80
Wacoal International Hong Kong Co., Ltd.	Hong Kong	100
Wacoal China Co., Ltd.	China	100
Guangdong Wacoal Inc.	China	100
Dalian Wacoal Co., Ltd.	China	100
Wacoal (Shanghai) Human Science R&D Co., Ltd.	China	100
Vietnam Wacoal Corp.	Vietnam	100
Philippine Wacoal Corp.	Philippines	67


1.		The percentage of equity owned is identical to the percentage of voting rights owned.

D. Property, Plants and Equipment.

The principal facilities that we currently use in our business are as follows:


		Floor Space
		(1,000 square	Principal Activities or
Facility	Location	feet)¹	Products Manufactured
Executive and sales office	Kyoto, Japan	344	Management, Sales and Administration
Western Japan distribution center	Shiga, Japan	424	Distribution
Kyoto South distribution center	Kyoto, Japan	284	Distribution
Tokyo distribution center	Tokyo, Japan	170	Distribution
Manufacturing plants:
Hokuriku Wacoal Sewing Corporation	Fukui, Japan	9	Lingerie
Kyushu Wacoal Manufacturing Corporation
Nagasaki plant	Nagasaki, Japan	88	Foundation Garments
Kumamoto plant	Kumamoto, Japan	26	Foundation Garments
Niigata Wacoal Sewing Corporation	Niigata, Japan	15	Nightwear
Fukuoka Wacoal Sewing Corporation	Fukuoka, Japan	32	Foundation Garments
Miyazaki Wacoal Sewing Corporation	Miyazaki, Japan	48	Children’s Innerwear, Foundation Garments
Torica Inc.	Tottori, Japan	262	Lingerie

Sales offices	Tokyo, Japan	160	Sales
	(3 offices)
	Sapporo, Japan	36	Sales
	Osaka, Japan	124	Sales
	Kyoto, Japan	144	Sales
	Fukuoka, Japan	16	Sales
SPIRAL Building	Tokyo, Japan	107	Cultural Activities
192 specialty retail stores and other select shops²	Tokyo, Osaka,	162	Retail sales
	Kanagawa and other
	locations in Japan
Peach John Co., Ltd.	Tokyo, Osaka and	135	Sales
	other locations in
	Japan
Nanasai Co., Ltd.	Kyoto, Japan	280	Mannequins, Sales
			Equipment
Lecien Corporation	Kyoto, Japan	267	Foundation Garments
Wacoal America, Inc.	New Jersey and	217	Management and Sales
	New York, U.S.
Wacoal Dominicana Corp.	Santo Domingo, Dominican Republic	169	Foundation Garments
Wacoal China Co., Ltd.	Beijing, China	152	Foundation Garments
Dalian Wacoal, Ltd.	Dalian, China	691	Foundation Garments
Wacoal Hong Kong Co., Ltd.	Hong Kong	74	Sales
Guangdong Wacoal Inc.	Guangzhou, China	70	Foundation Garments
Philippine Wacoal	Manila, Philippines	16	Sales
Vietnam Wacoal Corp.	Bien Hoa, Vietnam	163	Foundation Garments


1.		Of the foregoing facilities, our total owned space is 3,582,527 square feet and our total leased space is 1,157,101 square feet.

2.		As of March 31, 2011.

We are constantly engaged in upgrading, modernizing and revamping the operations of our manufacturing facilities, based on our assessment of market needs and prospects. As market conditions and our business objectives evolve, we adjust our capacity and utilization by opening, closing, expanding or downsizing production facilities accordingly. As a result, we believe it would require unreasonable effort to track the exact productive capacity and the extent of utilization of each of our manufacturing facilities with a reasonable degree of accuracy. We believe that our manufacturing facilities are generally all operating within normal operating capacity and not substantially below capacity.

We own all of the foregoing facilities except for the following, which we lease from third parties: (i) several of our sales offices (35,440 square feet), (ii) our 192 specialty retail stores as of March 31, 2011 (total of 162,065 square feet for all stores), (iii) our management and sales facilities for Peach John (134,526 square feet), (iv) our office and warehouse facility for Nanasai (88,861 square feet), (v) our management and sales facilities for Lecien (33,928 square feet), (vi) our management and sales facility for Wacoal America, Inc. (85,961square feet), (vii) our office and warehouse facility in China (68,189 square feet), (viii) our manufacturing facility in Dalian, China (486,260 square feet), our sales facility in Hong Kong (46,005 square feet), and (ix) our sales facility in Manila, Philippines (15,866 square feet).

We spent ¥624 million during fiscal 2011 to rebuild and relocate some of our office properties. Although we currently do not have any concrete plans, we expect to continue to make expenditures for the expansion of our specialty retail store network, for maintenance, to meet applicable legal requirements and to facilitate the manufacture of new products with new designs and specifications. Furthermore, we intend to evaluate and pursue opportunities for acquisitions, investments and other strategic transactions that we believe will help us achieve our business objectives, including extending our product offerings in Japan and in overseas markets and strengthening our capabilities in Internet, catalog and other marketing channels. We expect to fund these capital expenditures and other expenditures through our cash from operations, existing cash reserves and other available sources of liquidity. For additional information on our capital expenditures during fiscal 2011, 2010 and 2009 see “Item 5.B. Liquidity and Capital Resources—Capital Expenditures”.

We believe that there does not exist any material environmental issues that may affect the utilization of our assets.

We have no material tangible fixed assets other than those discussed above.

Item 4A. Unresolved Staff Comments.

None.

Item 5. Operating and Financial Review and Prospects.

A. Operating Results.

Overview

We are the leading designer, manufacturer and marketer of women’s intimate apparel in Japan, with the largest share of the Japanese market for foundation garments and lingerie. We also sell our foundation garments and lingerie products in several overseas markets. Sales of foundation garments (primarily brassieres and girdles) and lingerie (primarily slips, bra-slips and women’s briefs) accounted for approximately 70.2% of our consolidated net sales for fiscal 2011. Our outerwear and sportswear product category has been the most successful of our product categories over the last three fiscal years, as net sales grew consistently from ¥15,498 million for fiscal 2009, or 9.0% of our total net sales, to ¥17,400 million for fiscal 2011, or 10.5% of our total net sales. We also design, manufacture and sell nightwear, children’s underwear, hosiery and other apparel and textile products, and engage in several business lines that are ancillary to our core apparel business.

Revenues

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

The following table sets forth information with respect to our net sales by category of products for fiscal 2011, 2010 and 2009:

Net Sales (and Percentage) by Product Category


					Year ended March 31,
	2011				2010				2009
					(yen in millions)
Innerwear:
Foundation and Lingerie	¥	116,285	70.2	%	¥	116,068	71.0	%	¥	123,368	71.6	%
Nightwear		8,725	5.2			9,438	5.8			11,019	6.4
Children’s Underwear		1,476	0.9			1,608	1.0			1,950	1.1

Total Innerwear	¥	126,486	76.3	%	¥	127,114	77.8	%	¥	136,337	79.1	%
Outerwear and Sportswear		17,400	10.5			17,241	10.6			15,498	9.0
Hosiery		1,666	1.0			1,701	1.0			1,657	1.0
Textile Products		7,498	4.5			7,462	4.6			6,270	3.6
Other		12,676	7.7			9,779	6.0			12,514	7.3

Total	¥	165,726	100.0	%	¥	163,297	100.0	%	¥	172,276	100.0	%

For fiscal 2011, approximately 86% of the net sales of Wacoal Corp. (the net sales of which account for approximately 63% of our consolidated net sales) were apparel sales made on a wholesale basis to department stores, general merchandisers and other general retailers, and approximately 12% were apparel sales made through our own specialty retail stores, catalog sales and the Internet. Sales from our other businesses (which include restaurant businesses, cultural products and other services) comprised the remaining 2% of Wacoal Corp.’s net sales for fiscal 2011.

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

Cost of Sales

Our cost of sales arises principally from material and manufacturing costs related to the production of our apparel products. In the last couple of fiscal years, we successfully kept our cost of sales below the fiscal 2009 level through our cost reduction efforts involving raw material, manufacturing and inventory management. We plan to continue with such cost reduction efforts for the near to medium term.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses principally consist of employee compensation and benefit expenses and promotional expenses, such as advertising costs. Other selling, general and administrative expenses include shipment costs, payment fees (including outsourcing payments) and rental payments for our specialty retail stores. Our selling, general and administrative expenses do not include any impairment charges on long-lived assets or any gains or losses on the sale or disposal of property, plant and equipment. In recent years, our selling, general and administrative expenses have been affected by two countervailing factors: reduction in labor costs and increases in marketing efforts, particularly in our overseas markets. We expect two factors to continue to offset each other in varying degrees for the near to medium term.

Income Tax Expenses

Our income tax expenses depend on our taxable income, applicable statutory tax rates and the proportion of current and deferred income taxes. Our effective tax rate depends on a range of factors, including applicable statutory tax rates, permanently non-deductible expenses, unrecognized tax benefits, any valuation allowance with respect to tax loss carryforwards and tax exemptions. Our effective tax rate was 53.3% for 2011, 50.4% for fiscal 2010 and 42.1% for fiscal 2009. See “Item 5.A. Fiscal 2011 Compared to Fiscal 2010—Net Income Attributable to Wacoal Holdings Corp.”

Key Industry Trends

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

	•		Consumer spending in Japan has been stagnant in the aftermath of the worldwide financial crisis triggered by the Lehman shock in September 2008 that has led to a rapid deterioration in the global economy. Although there were signs of economic recovery in fiscal 2011, the women’s apparel industry in Japan in particular has continued to perform poorly due to the continued presence of cost conscious consumers, whose spending habits have been further adversely affected by the major earthquake and tsunami that struck Northeast Japan in March 2011.

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

	•		Due to adverse changes in consumer behavior and retail industry coupled with factors such as a decline in the female population (as disclosed by a Japanese Government research organization), the market for women’s innerwear garments in Japan shrank, and the prices of innerwear declined in terms of both overall prices and average price per item. The numbers of innerwear items purchased and owned per person also decreased according to a third-party private research organization.

	•		Specialty apparel, outerwear fashion and other manufacturers entered the innerwear market. These manufacturers offer their products by focusing on new elements, such as fashionability, lifestyle and price, rather than function and quality. Because the economic downturn has led consumers to become more price conscious, these new manufacturers and others have achieved a greater market share.

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

•

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

We have taken steps to address these key industry trends, in seeking to build on the core strengths of our market position and brand awareness with Japanese consumers. We continue to seek to sell higher-end products to reach consumers seeking high quality innerwear garments and to mitigate the adverse impact on sales and margins from lower priced garments. We have taken steps to reduce our cost structure, such as producing more products in lower-cost countries such as China and Vietnam, consolidating and modernizing our product distribution centers and expanding our early retirement program. We are also seeking to expand sales in overseas markets—in particular China, the United States and Europe, as well as in the ASEAN region, where we launched our sorci age brand—and increase sales through our own specialty retail stores, our catalog operations and the Internet. We also are researching expansion into emerging economies such as India and other new markets such as Russia and Canada. Pursuant to our CAP 21 strategic plan, we intend to extend our innerwear product offerings into the mid-price range and include more fashionable offerings in our product mix to help us reach a broader customer base. We believe that Peach John and Lecien will help us to advance these goals. We will continue to implement these steps and evaluate other strategies to address challenges and opportunities in the industry going forward.

Currency Fluctuations

We prepare our consolidated financial statements in Japanese yen. As a result, fluctuations in the exchange rates between the Japanese yen and other currencies may have a material effect on our results of operations, as well as on our reported value of our assets, liabilities, revenue and expenses as measured in Japanese yen. This in turn may materially affect reported earnings and the comparability of period-to-period results of operations. For purposes of our consolidated balance sheets, we translate assets and liabilities denominated in other currencies into Japanese yen at the prevailing market exchange rates as of the relevant balance sheet date. As a result, even if the amounts or values of these items remain unchanged in their respective local currencies, changes in exchange rates have an impact on the amounts or values of these items in our consolidated financial statements. For purposes of our consolidated income statements, revenue and expense items in local currencies are translated into Japanese yen at average exchange rates prevailing during the relevant period. Although the combined sales of our overseas subsidiaries increased by approximately ¥1,300 million for fiscal 2011 compared to such sales for fiscal 2010, if the applicable exchange rates for fiscal 2010 remained the same for fiscal 2011, the increase in such sales would be approximately ¥2,600 million.

Inflation

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

Environmental Matters

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

Results of Operations

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

Consolidated Operating Results


	Year ended March 31,
	2011					2010					2009
	(yen in millions)
Net sales	¥	165,726		100	%	¥	163,297		100.0	%	¥	172,276		100.0	%
Cost of sales		81,895		49.4	%		79,953		49.0	%		84,686		49.1	%
Selling, general and administrative expenses		77,592		46.8	%		78,392		48.0	%		77,399		44.9	%
Total other loss, net		(516	)	(0.3	%)		(687	)	(0.4	%)		(2,502	)	(1.5	%)
Net income attributable to Wacoal Holdings Corp.		2,615		1.6	%		2,524		1.5	%		5,230		3.0	%

The following table sets forth information with respect to our operating results by business segment during fiscal 2011, 2010 and 2009:

Operating Results by Business Segment


	Year ended March 31,
	2011					2010					2009
	(yen in millions)
Wacoal Business (Domestic)
Net Sales
External customers	¥	110,856		98.1	%	¥	113,929		98.5	%	¥	124,228		98.6	%
Intersegment		2,134		1.9	%		1,793		1.5	%		1,765		1.4	%
Total		112,990		100.0	%		115,722		100.0	%		125,993		100.0	%

Operating costs and expenses		(107,370	)	(95.0	%)		(111,180	)	(96.1	%)		(118,523	)	(94.1	%)

Operating profit	¥	5,620		5.0	%	¥	4,542		3.9	%	¥	7,470		5.9	%
Wacoal Business (Overseas)
Net Sales
External customers		20,052		76.6	%	¥	18,899		75.2	%	¥	22,323		78.4	%
Intersegment		6,121		23.4	%		6,226		24.8	%		6,148		21.6	%
Total		26,173		100.0	%		25,125		100.0	%		28,471		100.0	%

Operating costs and expenses		(24,852	)	(95.0	%)		(23,795	)	(94.7	%)		(26,903	)	(94.5	%)

Operating profit	¥	1,321		5.0	%	¥	1,330		5.3	%	¥	1,568		5.5	%
Peach John Business
Net Sales
External customers	¥	11,711		99.4	%	¥	13,224		99.9	%	¥	14,893		100.0	%
Intersegment		76		0.6	%		7		0.1	%		5		0.0	%
Total		11,787		100.0	%		13,231		100.0	%		14,898		100.0	%

Operating costs and expenses		(14,811	)	(125.7	%)		(14,556	)	(110.0	%)		(13,995	)	(93.9	%)

Operating profit (loss)		(¥3,024	)	(25.7	%)		(¥1,325	)	(10.0	%)	¥	903		6.1	%
Other
Net Sales:
External customers	¥	23,107		83.4	%	¥	17,245		84.3	%	¥	10,832		78.6	%
Intersegment		4,588		16.6	%		3,204		15.7	%		2,943		21.4	%
Total		27,695		100.0	%		20,449		100.0	%		13,775		100.0	%

Operating costs and expenses		(27,357	)	(98.8	%)		(21,186	)	(103.6	%)		(13,587	)	(98.6	%)

Operating profit (loss)	¥	338		1.2	%		(¥737	)	(3.6	%)	¥	188		1.4	%

Fiscal 2011 Compared to Fiscal 2010

Net Sales

Consolidated net sales increased 1.5% from ¥163,297 million for fiscal 2010 to ¥165,726 million for fiscal 2011, despite the challenging conditions in the women’s apparel market and changes in consumer spending habits in Japan.

Wacoal Brand

Innerwear. Overall domestic sales of brassieres, our main product, for fiscal 2011 were above the sales for fiscal 2010. This was mainly due to the impact of campaigns we conducted during fiscal 2011. Our Ribbon Bra, a product that we launched in January 2010 as part of our campaign brassiere LALAN series and which gained strong support from our consumers for its functionality and design, continued to perform strongly. We also continued our Body Aging promotion based on the findings of our Human Science Research Center, which we believe has led to an improvement in sales of brassieres overall. On the other hand, sales of our seasonal undergarments in general were below the results from fiscal 2010 due to products sold by our competitors. Additionally, we launched new products in our new Style Science functional underwear series in each of the four seasons in fiscal 2010, with an emphasis on the Cross-Walker, but the sales of these new products for fiscal 2011 were below the sales of this series for fiscal 2010 due to the overflow of products with similar functionality.

Domestic net sales of our core Wacoal brand products changed as follows, as compared to net sales for fiscal 2010.

	•		Core Brassieres: Net sales of most of our core brassieres showed strong performance, with an increase in net sales of 11.5%.

	•		Seasonal Undergarments: Net sales of these garments decreased by 19.3% as compared to net sales for fiscal 2010.

•

Girdles: Style Science functional underwear series showed weak performance and net sales of girdles decreased by 27.3% as compared to net sales for fiscal 2010.

As a result of the above, domestic net sales of our core Wacoal brand business were below our results for fiscal 2010.

Outside Japan, our net sales grew compared to fiscal 2010. b.tempte’d by Wacoal and our new lower-priced brassiere and functional bottom products marketed in the United States performed strongly. While these sales increased in dollar amounts, they decreased in Japanese yen amounts due to the strength of the Japanese yen against the dollar. Sales of our core Wacoal brand products in China grew.

Outerwear. Sales of our functional undergarment product, Sugo-I, were slightly below sales for fiscal 2010 due to a downturn in demand and the influence of other companies’ products. Fiscal 2011 sales of Gra-P, our value-added brand targeting senior consumers, exceeded the sales for fiscal 2010.

Thus, the overall sales for fiscal 2011 of our Wacoal brand products decreased as compared to sales for fiscal 2010 due to the poor performance of some products.

Wing Brand

In our Wing brand business, although sales of some of our campaign brassieres continued as planned and in-store sales were steady, our other brassiere and Style Science products performed poorly. For example, although our S-Style bra performed well in stores, it performed poorly overall. Sales of our Wing brand undergarments were lower than fiscal 2010 sales due to increased competition from private-label brands sold by specialty clothing stores and general merchandisers and by our clients’ inventory adjustments. The overall sales of our men’s innerwear products, which achieved continued growth during the fiscal 2011, exceeded fiscal 2010 sales. Among our men’s innerwear products, while the sales of products targeted at senior consumers and new products were strong, our core Style Science products struggled leading to an overall decrease in net sales. Thus, the overall sales of our Wing brand business fell below fiscal 2010 sales due primarily to the poor performance of our core women’s products, which more than offset any increased sales of our men’s innerwear products.

Net sales of our core Wing brand products changed as follows, as compared to net sales for fiscal 2010.

	•		In-store Sales of Brassieres: In-store net sales of brassieres was steady with an increase of 10.0% as compared to net sales for fiscal 2010.

	•		Undergarments: Net sales of undergarments decreased by 14.0% as compared to net sales for fiscal 2010.

	•		Girdles: Net sales of girdles showed poor performance with a decrease of 16.0% as compared to net sales for fiscal 2010.

	•		Men’s Innerwear: Net sales of our men’s innerwear products decreased by 12.0% as compared to net sales for fiscal 2010.

Due to the above, net sales of our Wing brand business were below the results from fiscal 2010 by 5.9% as compared to net sales for fiscal 2010.

Other Brands

Wellness Products. In our wellness business, sports-related products performed strongly primarily because of an increase in health conscious consumers. These products include our sports tights in our conditioning wear product, CW-X sports, and our functional wear for golf and running, Jyuryu. With the aim of furthering the brand recognition of our CW-X line, we opened our first retail store in January 2010 and have since opened 2 more new stores. Due to the successful openings of these stores, and the popularity of our products, sales of our CW-X line for fiscal 2011 increased as compared to sales for fiscal 2010. Similarly, our leggings and footwear products performed well. Sales of our body styling wear, Style Cover, and our highly fashionable and functional business footwear, Success Walk, increased as compared to sales for fiscal 2010. As a result of the foregoing, net sales of our wellness products exceeded net sales for fiscal 2010 by 7.0%.

Lecien Products. Net sales of Lecien’s innerwear and clothing products for fiscal 2011 were below its sales for fiscal 2010 due to the severe conditions of general merchandisers and increased competition by leading bulk retailers, despite our ongoing efforts to restructure our poorly performing businesses.

Luxury Products. Sales of our luxury products remained substantially the same compared to such sales for fiscal 2010.

Specialty Retail Business

AMPHI. In our specialty retail store business, sales of our reasonably-priced brassiere products from our direct retail store, AMPHI, showed a very strong performance and net sales attributable to such products increased 8.3% as compared to net sales for fiscal 2010. As a result, AMPHI performed well and sales for fiscal 2011 exceeded sales for fiscal 2010.

Wacoal Factory. Net sales for fiscal 2011 from our Wacoal Factory Store, which is located in outlet malls, exceeded net sales for fiscal 2010 by 1.5%.

Une Nana Cool. Although net sales from our existing stores were below the results from fiscal 2010, new store openings helped net sales to exceed the results from fiscal 2010. Net sales increased by 1.1% as compared to net sales for fiscal 2010.

Peach John. Although we made efforts to improve net sales through Peach John’s retail stores by continuing to develop products sold only at those retail stores and by holding advertising campaigns, net sales for fiscal 2011 declined as compared to net sales for fiscal 2010 primarily due to weakening catalogue sales and lower in-store sales. The decrease in the number of Peach John retail stores from 27, as of March 31, 2010, to 23, as of March 31, 2011 also contributed to the decrease in net sales. In 2012, we intend to move or close four stores and open three new branch stores in areas which we believe will be more popular. Although we have changed our business strategy away from relying on catalogue sales, the results of this change have yet to be seen in relation to Peach John.

As a result of the foregoing, overall sales of our specialty retail store business for fiscal 2011 increased as compared to sales for fiscal 2010. We are currently focused on improvement of profitability of our specialty retail business, and as part of these efforts, we have been reorganizing our shop brands to consolidate them into AMPHI as the “master shop brand” from fiscal 2010 as well as moving away from catalogue sales and focusing more resources on our more profitable stores.

Catalogue and Online Sales Business

In our Wacoal brand catalog sales business, although the number of purchasers of our core catalog sales remained broadly the same between fiscal 2011 and fiscal 2010, the average amount spent per customer was lower, and as a result, sales for fiscal 2011 fell below fiscal 2010 sales. Peach John mail-order sales from our seasonal catalogs for fiscal 2011 were all below the sales for fiscal 2010 due to a fall in Peach John catalog orders. Because when we issued our summer catalogues in early summer it was still cool and when we issued our fall catalogues it was still warm, our sales were depressed due to the mismatch in the weather and the items in our catalogues. In contrast to our catalog business, the number of purchasers at our Wacoal Web Store and sales increased for fiscal 2011, even though the average amount spent per customer remained largely unchanged as compared to the average amount for fiscal 2010. The growth in our online business was mainly a result of our expanded product categories and an active Internet advertising campaign, which we plan to continue in fiscal 2012. As a result, the overall sales from our catalog and online sales business remained largely the same for fiscal 2011 as compared to sales for fiscal 2010.

Other Businesses

Fiscal 2011 net sales attributable to our mannequin and fixture rental business, as well as interior design and remodeling business, which we conduct through our subsidiary Nanasai, increased due to the opening of new department stores and the remodeling of other stores especially in the Kansai region of Japan, which accounted for an increase in rentals and sales.

Cost of Sales

Our cost of sales increased 2.4% from ¥79,953 million for fiscal 2010 to ¥81,895 million for fiscal 2011, primarily due to the consolidation of Lecien into our accounts for the entire fiscal 2011, as compared to eight months for fiscal 2010. Cost of sales as a percentage of net sales increased 0.4%, from 49.0% for fiscal 2010 to 49.4% for fiscal 2011. The slight increase in the cost of sales as a percentage of net sales is primarily due to increased sales from our consolidated subsidiaries in Japan, which have higher cost as a percentage of net sales, despite Wacoal Corp’s efforts to improve inventory management by achieving fewer returned goods and fewer losses from inventory write-downs.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses decreased 1.0% from ¥78,392 million for fiscal 2010 to ¥77,592 million for fiscal 2011. The selling, general and administrative expenses as a percentage of net sales decreased 1.2% from 48.0% for fiscal 2010 to 46.8% for fiscal 2011. This decrease was primarily due to a decrease of ¥747 million in net periodic benefit costs in addition to our cost-cutting efforts including labor costs.

Impairment of Goodwill and Other Intangible Assets

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

Operating Margin

Our operating margin (i.e., operating income as a percentage of net sales) increased to 2.6% for fiscal 2011, as compared to 2.3% for fiscal 2010. This increase was largely due to our cost-cutting efforts, despite the decreased sales from our existing businesses and recognition of impairment loss from Peach John.

Total Other Loss, Net

Total other loss, net, decreased ¥171 million from ¥687 million for fiscal 2010 to ¥516 million for fiscal 2011. This decrease was primarily due to an increase of ¥367 million in gain on the sale or exchange of marketable securities and investments as compared to fiscal 2010.

Net Income Attributable to Wacoal Holdings Corp.

Net income attributable to Wacoal Holdings Corp. for fiscal 2011 was ¥2,615 million, an increase of ¥91 million compared to ¥2,524 million for fiscal 2010. This increase was primarily due to a decrease in our selling, general and administrative expenses as a result of successful cost-cutting efforts, in addition to a slight increase in our net sales; these factors more than offset an increase in cost of sales. Our current income taxes increased for fiscal 2011 and were only partially offset by our deferred income taxes. The effective tax rate increased from 50.4% in fiscal 2010 to 53.3% in fiscal 2011 primarily due to an increase in our change in valuation allowance, which more than offset the impact of our impairment losses on goodwill and decreases in permanently non-deductible expenses and certain other taxable items.

Segment Information

Wacoal Business (Domestic)

Net Sales to External Customers. Net sales for our Wacoal Business (Domestic) segment as a percentage of our total net sales decreased to 66.9%, as compared to 69.8% for fiscal 2010. During fiscal 2011, despite signs of a partial economic recovery in the midst of the global financial crisis, the Japanese economy continued to remain weak due to continued deterioration in employment and consumer spending levels. Several service sectors, including department stores and general merchandisers, continued to face a challenging environment, as they confronted an increased number of cost-conscious consumers exercising cautious spending habits. Despite our launch of lower-priced products to address changes in consumer spending habits, sales of most of the products in this segment declined, primarily because of the challenging conditions in the women’s apparel market. As a result of the foregoing, net sales to external customers for this segment decreased 2.7% from ¥113,929 million for fiscal 2010 to ¥110,856 million for fiscal 2011.

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

Operating Profit. As a result of the foregoing, the operating profit from our Wacoal Business (Domestic) segment was ¥5,620 million for fiscal 2011, as compared to ¥4,542 million for fiscal 2010. The operating margin increased to 5.0% for fiscal 2011, as compared to 3.9% for fiscal 2010, because the rate of decrease in operating costs and expenses more than offset the rate of decrease in net sales primarily due to our operating cost-cutting measures.

Wacoal Business (Overseas)

Net Sales to External Customers. Net sales for our Wacoal Business (Overseas) segment as a percentage of our total net sales increased to 12.1%, as compared to 11.6% for fiscal 2010.

	•		United States. Net sales in the United States represented 51.0% of net sales for this segment for fiscal 2011, compared to 55.0% for fiscal 2010. In the United States, actual sales for fiscal 2011 above those for fiscal 2010 due to the continued popularity of our reasonably priced brassieres and our supportive underwear bottoms as well as the commencement of Internet sales. However, due to the effect of the U.S. dollar-Japanese yen exchange rate, net sales in the United States decreased 1.7% from ¥10,391 million for fiscal 2010 to ¥10,219 million for fiscal 2011.

	•		Asia (Excluding Japan). Net sales in Asia outside of Japan (including China, Hong Kong and Singapore) represented 43.4% of net sales for this segment in fiscal 2011, compared to 40.1% in fiscal 2010. In China, we continued to see strong growth despite economic uncertainties and put in efforts to develop our stores focusing on mainland China. Due to a lack of brand recognition, sales from our new stores were less than anticipated in our initial plan; however, such sales exceeded those for fiscal 2010. Since August 2009, we have been conducting a campaign featuring a famous Chinese actress with the aim of improving our brand recognition by Chinese consumers and expanding our sales. As a result, net sales from our business in China increased 15.2% from ¥6,603 million for fiscal 2010 to ¥7,609 million for fiscal 2011.

	•		Europe. Net sales in Europe represented 5.6% of net sales for this segment in fiscal 2011, compared to 4.9% in fiscal 2010.

	•		Foreign Currency. The average noon buying rate for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York was ¥85.00 for fiscal 2011, as compared to ¥92.49 for fiscal 2010. The increase in net sales to external customers for this segment was reduced by approximately 50% due to the significant strengthening of yen against the U.S. dollar and other currencies of the markets in which we sell our products.

As a result of the foregoing, net sales to external customers for this segment increased 6.1% from ¥18,899 million for fiscal 2010 to ¥20,052 million for fiscal 2011.

Operating Cost and Expenses. Operating cost and expenses for our Wacoal Business (Overseas) segment increased 4.4% from ¥23,795 million for fiscal 2010 to ¥24,852 million for fiscal 2011 due to increases in both cost of sales and selling, general and our administrative expenses caused by the cost of opening new stores in China and as well as an increase in promotion-related expenses.

Operating Profit. As a result of the foregoing, the operating profit from our Wacoal Business (Overseas) segment was ¥1,321 million for fiscal 2011, as compared to ¥1,330 million for fiscal 2010. The operating margin for this segment decreased to 5.0% for fiscal 2011, as compared to 5.3% for fiscal 2010 mainly due to the increase in profits and sales as well as the effect of successful cost-cutting measures in the United States being outweighed by such things as the greater marketing costs we incurred in China, as we made efforts to increase Wacoal’s brand recognition.

Peach John Business

Net Sales to External Customers. Net sales for our Peach John Business segment as a percentage of our total net sales decreased to 7.1%, as compared to 8.1% for fiscal 2010. Peach John mail-order sales from our seasonal catalogs were below the sales for fiscal 2010 due to a general fall in catalog orders. In addition, net sales from our domestic direct retail stores fell below net sales for fiscal 2010 due to a decrease in the number of stores, resulting in a decrease of 11.1% in our domestic net sales compared to 2010. We actively worked to grow overseas by opening two new overseas direct retail stores in Hong Kong and five new stores in Shanghai. However, due to the relative significance of Peach John’s domestic business as compared to its overseas business net sales to external customers for this segment decreased 11.4% from ¥13,224 million for fiscal 2010 to ¥11,711 million for fiscal 2011.

Operating Cost and Expenses. Operating cost and expenses for our Peach John Business segment increased 1.8% from ¥14,556 million for fiscal 2010 to ¥14,811 million for fiscal 2011, primarily due to impairment charges on goodwill and other intangible assets that were recognized in the amount of ¥1,772 million for fiscal 2011, which more than offset the efficiencies we achieved by reducing our catalogue circulation and improving our methods of advertising. These charges were the result of an evaluation of the recoverability of Peach John’s goodwill, catalog customer relationships and trademarks at the end of fiscal 2011. See “Item 5.A. Operating Results—Critical Accounting Policies and Estimates— Valuation of Indefinite-lived Intangible Assets and Goodwill” and “Item 5.A. Operating Results—Critical Accounting Policies and Estimates— Impairment of Long-Lived Assets and Intangible Assets with Estimable Useful Lives”.

Operating Loss. As a result of the foregoing, the operating loss from our Peach John Business segment was ¥3,024 million for fiscal 2011, as compared to the operating loss of ¥1,325 million for fiscal 2010. Our operating loss worsened to 25.7% for fiscal 2011, as compared to 10.0% for fiscal 2010.

Other

Net Sales to External Customers. Net sales for our Other Business segment as a percentage of our total net sales increased to 13.9%, as compared to 10.5% for fiscal 2010. This significant increase was principally due to Nanasai’s strong performance associated with openings of new department stores and remodeling of other stores, which amounted to a 37.6% increase in sales compared to 2010. Lecien, our other major subsidiary in our Other Business segment, however, incurred a decrease in net sales despite the reorganization of poorly performing businesses and our allocation of management resources to Lecien because of increased in competition from bulk retailers in our main inner and outerwear markets. Sales from our Art/Hobby business, which handles embroidery thread and fabrics for handicrafts, remained broadly at the same level; however, sales attributable to our lace fabrics business decreased. Nevertheless, because our financial statements for fiscal 2010 reflected only eight months of Lecien’s net sales compared to a full year for fiscal 2011, we reported an increase in sales attributable to Lecien for fiscal 2011. As a result of the foregoing, net sales to external customers for this segment increased 34.0% from ¥17,245 million for fiscal 2010 to ¥23,107 million for fiscal 2011.

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

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

Fiscal 2010 Compared to Fiscal 2009

Net Sales

Consolidated net sales decreased 5.2% from ¥172,276 million for fiscal 2009 to ¥163,297 million for fiscal 2010.

Wacoal Brand

Innerwear. The overall sales of brassieres, our main product, for fiscal 2010 were below the sales for fiscal 2009. This was the case despite the strong performance of our Ribbon Bra, a product that we launched in January 2010 as part of our campaign brassiere LALAN series and that gained strong support from our consumers for its functionality and design, because this strong performance was more than offset by the poor performance of other brassiere products. We launched new products in our new Style Science functional underwear series in each of the four seasons in fiscal 2010, with an emphasis on the Cross-Walker, but the sales of these new products for fiscal 2010 were below the sales of this series for fiscal 2009. Although the summer products from our Sugoi seasonal undergarments performed well, overall sales from this series were below the sales for fiscal 2009 due to the poor performance of our usual autumn and winter products, which were affected by increased competition from our competitors’ products. Outside Japan, b.tempte’d by Wacoal and our new lower-priced brassiere and functional bottom products marked in the United States performed strongly, and sales of our coal Wacoal brand products in China grew.

Outerwear. In contrast to the performance of our innerwear products, our new outerwear product, Sugo-T, achieved sales exceeding our expectations, and fiscal 2010 sales of Gra-P, our value-added brand targeting senior consumers, exceeded the sales for fiscal 2009.

Thus, the overall sales for fiscal 2010 of our Wacoal brand products fell below the sales for fiscal 2009 due primarily to generally weak sales of our innerwear products, which more than offset gains in sales of our outerwear and other products sold under the Wacoal brand.

Wing Brand

In our Wing brand business, although sales of some of our campaign brassieres continued as planned, our other brassiere and Style Science products performed poorly. As in our Wacoal brand business, sales of our Wing brand undergarments were lower than fiscal 2009 sales due to increased competition from private-label brands sold by specialty clothing stores and general merchandisers. The overall sales of our men’s innerwear products, which achieved significant growth during the fiscal 2010 as a result of an increase in new store openings, exceeded fiscal 2009 sales. This was primarily due to the performance of our Cross-Walker products, which were sold mainly by general merchandisers under the BROS brand and more than offset the decreased sales of DAMS at department stores as compared to fiscal 2009 sales. Thus, the overall sales of our Wing brand business fell below fiscal 2009 sales due primarily to the poor performance of our core women’s products, which more than offset any increased sales of our men’s innerwear products.

Other Brands

Luxury Products. Sales of our luxury products fell below sales for fiscal 2009, primarily because sales of our department store product PARFAGE, along with other luxury products, fell below the sales for fiscal 2009.

Wellness Products. In our wellness business, sports-related products performed strongly primarily because of an increase in health conscious consumers. These products include our new sports tights in our conditioning wear product, CW-X sports, and our functional wear for golf and running, Jyuryu. With the aim of furthering the brand recognition of our CW-X line, we opened our first retail store in January 2010 and one additional store in February 2010. Due to the successful openings of these stores, sales of our CW-X line for fiscal 2010 increased as compared to sales for fiscal 2009. Similarly, our leggings and footwear products performed well. Sales of our body styling wear, Style Cover, and our highly fashionable and functional business footwear, Success Walk, increased as compared to sales for fiscal 2009. As a result of the foregoing, overall sales of our wellness products exceeded the sales for fiscal 2009.

Lecien Products. Net sales of Lecien’s innerwear and clothing products for fiscal 2010 were below its sales for fiscal 2009 due to the severe conditions of general merchandisers.

Licensed Products. As a result of the termination of our manufacturing and distribution license for Donna Karan (DKI, DKNY) products during fiscal 2009, we did not carry any licensed products in the United States for fiscal 2010.

Specialty Retail Business

AMPHI. In our specialty retail store business, we focused our expansion on our retail store AMPHI. Despite an increase in the number of customers and sales volume that we achieved primarily through price reductions, the average amount spent per customer for fiscal 2010 was lower for fiscal 2009, resulting in decreased sales for fiscal 2010.

Wacoal Factory. Sales for fiscal 2010 from our Wacoal Factory Store, which is located in outlet malls, exceeded the sales for fiscal 2009.

Une Nana Cool. Our subsidiary specialty retail business, Une Nana Cool Corp., experienced a decrease in sales at existing stores compared to fiscal 2009 primarily due to a decrease in the number of customers visiting shopping centers where our shops are located. Sales for fiscal 2010 at Une Nana Cool, however, did not change materially as compared to sales from fiscal 2009, because sales from our new store openings offset decreased sales at our existing stores.

Peach John. Although we made efforts to improve net sales through Peach John’s retail stores by continuing to develop products sold only at those retail stores, net sales for fiscal 2010 at retail stores declined as compared to net sales for fiscal 2009, primarily due to a decrease in the overall number of shoppers at the shopping malls and other buildings in which Peach John is a tenant. The decrease in the number of Peach John retail stores from 28, as of March 31, 2009, to 27, as of March 31, 2010, also resulted in decreased net sales.

As a result of the foregoing, overall sales of our specialty retail store business for fiscal 2010 increased as compared to sales for fiscal 2009. We are currently focused on improvement of profitability of our specialty retail business, and as part of these efforts, we have been reorganizing our shop brands to consolidate them into AMPHI as the “master shop brand” from fiscal 2010.

Catalogue and Online Sales Business

In our Wacoal brand catalog sales business, although the number of purchasers of our core catalog sales remained broadly the same between fiscal 2010 and fiscal 2009, the average amount spent per customer was lower, and as a result, sales for fiscal 2010 fell below fiscal 2009 sales. Peach John mail-order sales from our seasonal catalogs for fiscal 2010 were all below the sales for fiscal 2009 due to a fall in Peach John catalog orders. In contrast to our catalog business, the number of purchasers at our Wacoal Web Store and sales increased for fiscal 2010, even though the average amount spent per customer remained largely unchanged as compared to the average amount for fiscal 2009. The growth in our online business was mainly a result of our expanded product categories and an active Internet advertising campaign. As a result, the overall sales from our catalog and online sales business increased for fiscal 2010.

Other Businesses

Fiscal 2010 net sales attributable to our mannequin and fixture rental business, as well as interior design and remodeling business, which we conduct through our subsidiary Nanasai, decreased due to reduced orders primarily resulting from poor sales at department stores, suspension and termination of store remodeling and downsizing that accompanies the economic deterioration.

Cost of Sales

Our cost of sales decreased 5.6% from ¥84,686 million for fiscal 2009 to ¥79,953 million for fiscal 2010, primarily due to a decrease in net sales, which more than offset the impact of our acquisition of Lecien in August 2009. Cost of sales as a percentage of net sales decreased 0.1%, from 49.1% for fiscal 2009 to 49.0% for fiscal 2010. The slight improvement in cost of sales as a percentage of net sales is primarily due to the absence of losses, including a liquidation expense of ¥630 million, associated with the liquidation of Tokai Wacoal Sewing Corp., which we recognized as cost in fiscal 2009. The cost of sales would have increased slightly for fiscal 2010 without the effect of these losses, despite our efforts to improve inventory management by achieving fewer returned goods and fewer losses from inventory write-downs, as well as improved efficiencies in overseas production.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased 1.3% from ¥77,399 million for fiscal 2009 to ¥78,392 million for fiscal 2010. This increase was primarily due to an increase in our net periodic benefit costs, which in turn was primarily attributable to the increased amortization of actuarial losses, as well as the impact of our acquisition of Lecien in August 2009, which more than offset any cost-reduction efforts. The amortization of actuarial losses increased for fiscal 2010, because of the significant valuation loss in plan assets as of the end of fiscal 2009 that were required to be amortized starting in fiscal 2010. The selling, general and administrative expenses as a percentage of net sales increased by 3.1% from 44.9% for fiscal 2009 to 48.0% for fiscal 2010. The greater increase in the selling, general and administrative expenses as a percentage of net sales, as compared to the increase in the absolute number, is primarily due to the decrease in net sales.

Impairment of Goodwill and Other Intangible Assets

When Peach John became our wholly-owned subsidiary in fiscal 2008, we recognized Peach John’s catalog customer relationships as an intangible fixed asset with the intent to depreciate it using the straight-line method over a period of seven years. At the end of fiscal 2010, however, we evaluated the recoverability of this asset and recognized an impairment loss of approximately ¥1,023 million as a result. In addition, we also recognized an impairment loss of ¥71 million with respect to Lecien, after we evaluated the recoverability of the goodwill we recognized when we acquired a 100% interest in Lecien in August 2009.

Operating Margin

Our operating margin (i.e., operating income as a percentage of net sales) decreased to 2.3% for fiscal 2010, as compared to 5.9% for fiscal 2009, because the rate of decrease in our operating costs and expenses was not sufficient to offset the rate of decrease in net sales, and we recognized significantly larger impairment charges for fiscal 2010. The slower rate of decrease in our operating costs and expenses were primarily attributable to stagnant sales through department stores and general merchandisers, which have historically yielded a greater operating margin through higher prices for us than other distribution channels, combined with decreased operating margin of our Peach John Business, as we incurred increased personnel and other costs from store openings and other expansion efforts to market the business.

Total Other Loss, Net

Total other loss, net, decreased ¥1,815 million from ¥2,502 million for fiscal 2009 to ¥687 million for fiscal 2010. This decrease was primarily due to a decrease in impairment charges on marketable securities and investments.

Net Income Attributable to Wacoal Holdings Corp.

Net income attributable to Wacoal Holdings Corp. for fiscal 2010 was ¥2,524 million, a decrease of ¥2,706 million compared to ¥5,230 million for fiscal 2009. The smaller decrease in net income attributable to Wacoal Holdings Corp. as compared to the decrease in income before income taxes, equity in net income (loss) of affiliated companies, and net loss (income) attributable to noncontrolling interests is primarily due to the decrease in income taxes. Although our current income taxes increased for fiscal 2010, it was more than offset by the decrease in our deferred income taxes. However, the effective tax rate increased from 42.1% in fiscal 2009 to 50.4% in fiscal 2010, primarily due to an increase in permanently non-deductible expenses as a percentage of taxable income, unrecognized tax benefits and undistributed earnings of foreign subsidiaries, which more than offset a decrease in the valuation allowance for tax loss carryforwards. The decrease in the valuation allowance for tax loss carryforwards was due to a reversal in the valuation allowance as a result of changes in our legal structure. Accordingly, we utilized ¥721 million of tax loss carryforwards, and recognized the tax benefits of ¥293 million for the year ended March 31, 2010.

Segment Information

Wacoal Business (Domestic)

Net Sales to External Customers. Net sales for our Wacoal Business (Domestic) segment as a percentage of our total net sales decreased to 69.7%, as compared to 72.1% for fiscal 2009. During fiscal 2010, despite signs of a partial economic recovery in the midst of the global financial crisis, the Japanese economy continued to remain weak due to continued deterioration in employment and consumer spending levels. Several service sectors, including department stores and general merchandisers, continued to face a challenging environment, as they confronted an increased number of cost-conscious consumers exercising cautious spending habits. Despite our launch of lower-priced products to address changes in consumer spending habits, sales of most of the products in this segment declined, primarily because of the challenging conditions in the women’s apparel market. As a result of the foregoing, net sales to external customers for this segment decreased 8.3% from ¥124,228 million for fiscal 2009 to ¥113,929 million for fiscal 2010.

Operating Cost and Expenses. Operating cost and expenses for our Wacoal Business (Domestic) segment decreased 6.2% from ¥118,523 million for fiscal 2009 to ¥111,180 million for fiscal 2010, primarily due to a decrease in cost of sales and also due to a decrease in selling, general and administrative expenses. Decreases in cost of sales and selling, general and administrative expenses, in turn, are primarily attributable to a decrease in net sales and efforts to cut publicity and other costs at Wacoal Corp.

Operating Profit. As a result of the foregoing, the operating profit from our Wacoal Business (Domestic) segment was ¥4,542 million for fiscal 2010, as compared to ¥7,470 million for fiscal 2009. The operating margin decreased to 3.9% for fiscal 2010, as compared to 5.9% for fiscal 2009, because the rate of decrease in operating costs and expenses was not sufficient to offset the rate of decrease in net sales. The slower rate of decrease in operating costs and expenses was primarily attributable to stagnant sales through department stores and general merchandisers, which generally yield a greater operating margin for us than other distribution channels.

Wacoal Business (Overseas)

Net Sales to External Customers. Net sales for our Wacoal Business (Overseas) segment as a percentage of our total net sales decreased to 11.6%, as compared to 13.0% for fiscal 2009.

	•		United States. Net sales in the United States represented 55.0% of net sales for this segment for fiscal 2010, compared to 61.3% for fiscal 2009. In the United States, sales for fiscal 2010 were significantly lower than for fiscal 2009 as a result of decreased sales at department stores caused by deterioration in the general economic conditions and consumer spending. In addition, we had lower sales as a result of the termination of our manufacturing and distribution license for Donna Karan (DKI, DKNY) products during fiscal 2009. Sales of Wacoal Luxe products were below fiscal 2009 sales due to weak performance of premium-price products sold at high-end department stores. On the other hand, b.tempt’d by Wacoal, our sexy and fashionable brand launched in the beginning of fiscal 2010, contributed to net sales, as the product gained support from business partners and customers. In addition, our new lower-priced brassiere and functional bottom products performed strongly.

	•		Asia (Excluding Japan). Net sales in Asia outside of Japan (including China, Hong Kong and Singapore) represented 40.1% of net sales for this segment in fiscal 2010, compared to 33.8% in fiscal 2009. In China, we have been successful in gradually expanding our business and market share with our existing shops (mainly in the department store channel), by developing a three-brand system that includes our core Wacoal brand, our youth-oriented brand, AMPHI, and our high value-added brand, Salute. Since August 2009, we have been conducting a campaign featuring the famous Chinese actress with the aim of improving our brand recognition by Chinese consumers and expanding our sales. As a result, net sales from our business in China exceeded net sales for fiscal 2009.

	•		Europe. Net sales in Europe represented 4.9% of net sales for this segment in fiscal 2010, compared to 4.9% in fiscal 2009.

•

Foreign Currency. The average noon buying rate for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York was ¥92.49 for fiscal 2010, as compared to ¥100.85 for fiscal 2009. Approximately 60% of the decrease in net sales to external customers for this segment is attributable to the significant strengthening of yen against the U.S. dollars and other currencies of the markets in which we sell our products.

As a result of the foregoing, net sales to external customers for this segment decreased 15.3% from ¥22,323 million for fiscal 2009 to ¥18,899 million for fiscal 2010.

Operating Cost and Expenses. Operating cost and expenses for our Wacoal Business (Overseas) segment decreased 11.6% from ¥26,903 million for fiscal 2009 to ¥23,795 million for fiscal 2010 due to decreases in both cost of sales and selling, general and our administrative expenses. These decreases, in turn, were primarily due to declines in net sales in countries other than China and our cost-reduction efforts.

Operating Profit. As a result of the foregoing, the operating profit from our Wacoal Business (Overseas) segment was ¥1,330 million for fiscal 2010, as compared to ¥1,568 million for fiscal 2009. The operating margin for this segment decreased to 5.3% for fiscal 2010, as compared to 5.5% for fiscal 2009. While the termination of license agreements in connection with distribution in the United States of licensed Donna Karan products helped to improve the operating margin for this segment, these gains in the operating margin were offset by the greater marketing costs we incurred in Asia outside Japan, particularly in China, as we made efforts to increase Wacoal’s brand recognition.

Peach John Business

Net Sales to External Customers. Net sales for our Peach John Business segment as a percentage of our total net sales decreased to 8.1%, as compared to 8.6% for fiscal 2009. Peach John mail-order sales from our seasonal catalogs were below the sales for fiscal 2009 due to a general fall in catalog orders. In addition, sales from our direct retail stores fell below the sales for fiscal 2009 due to stagnant sales at existing stores, as well as a slight decrease in the number of stores. As a result of the foregoing, net sales to external customers for this segment decreased 11.2% from ¥14,893 million for fiscal 2009 to ¥13,224 million for fiscal 2010.

Operating Cost and Expenses. Operating cost and expenses for our Peach John Business segment increased 4.0% from ¥13,995 million for fiscal 2009 to ¥14,556 million for fiscal 2010, primarily due to impairment charges on other intangible assets that were recognized for fiscal 2010 but not for fiscal 2009. These charges were the result of an evaluation of the recoverability of Peach John’s catalog customer relationships at the end of fiscal 2010. Operating cost and expenses for this segment also increased due to an increase in selling, general and administrative expenses that more than offset a decrease in cost of sales. The increase in selling, general and administrative expenses is attributable to the increased personnel and other costs associated with marketing of the business, which were not sufficiently offset by a reduction in the number of catalogs issued and of advertisements in public transportation. Because of our continued expansion efforts in China, we expect to see an increase in selling, general and administrative expenses for fiscal 2011.

Operating Loss. As a result of the foregoing, the operating loss from our Peach John Business segment was ¥1,325 million for fiscal 2010, as compared to the operating profit of ¥903 million for fiscal 2009. The operating margin decreased to -10.0% for fiscal 2010, as compared to 6.1% for fiscal 2009.

Other

Net Sales to External Customers. Net sales for our Other Business segment as a percentage of our total net sales increased to 10.5%, as compared to 6.3% for fiscal 2009. This increase was principally due to our August 2009 acquisition of a 100% interest in Lecien, whose accounts were consolidated for the rest of fiscal 2010. Lecien’s sales for fiscal 2010, however, were below its sales for fiscal 2009 due to the severe conditions of general merchandisers, which are Lecien’s core sales channel. Sales from the Art/Hobby business, which handles embroidery thread and fabrics for handicrafts, remained broadly at the same level for fiscal 2009 mainly due to the steady performance of the sales of domestically-made printing fabrics. However, Nanasai performance negatively impacted our sales. Nanasai’s sales were lower than for fiscal 2009 due to reduced orders primarily resulting from poor sales at department stores, suspension and termination of store remodeling and downsizing that accompanied the economic deterioration. There was also a downward pressure on price, as competition through auctions intensified. As a result of the foregoing, net sales to external customers for this segment increased 59.2% from ¥10,832 million for fiscal 2009 to ¥17,245 million for fiscal 2010.

Operating Cost and Expenses. Operating cost and expenses for our Other Business segment increased 55.9% from ¥13,587 million for fiscal 2009 to ¥21,186 million for fiscal 2010, primarily due to increases in cost of sales and selling, general and administrative expenses associated with our acquisition of Lecien.

Operating Loss. As a result of the foregoing, the operating loss from our Other Business segment was ¥737 million for fiscal 2010, as compared to an operating profit of ¥188 million for fiscal 2009. The operating margin worsened to -3.6% for fiscal 2010, as compared to 1.4% for fiscal 2009, because the rate of decrease in operating costs and expenses was not sufficient to offset the rate of decrease in net sales. Inclusion of Lecien, with a lower operating margin, as a consolidated subsidiary contributed to the decrease in the operating margin.

Critical Accounting Policies and Estimates

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

Allowance for Doubtful Receivables and Returns

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

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

Inventory Review

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

Deferred Tax Assets

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

Impairment Charges on Investments

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

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

For fiscal 2011, we held securities with respect to which we recognized impairment charges, as well as securities with respect to which we did not recognize any impairment charges even though those securities had been in an unrealized loss position. Based on our assessment of the period of the decline in the fair values and our assessment of the relevant companies’ earnings outlook, we concluded that the decline in fair value for the securities not subject to impairment charges was only temporary and therefore that impairment charges did not need to be recognized for these particular securities. The total of unrealized holding losses for the securities, each of which had an unrealized holding loss of ¥100 million or more at the end of fiscal 2011, was as follows:

Period during which fair value was below

carrying value

(as of March 31, 2011)

Over three

Over six

Up to three

months, up to

months

six months

nine months

(in million yen)

Carrying value, less fair value

—

212

Valuation of Indefinite-lived Intangible Assets and Goodwill

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

	•		significant underperformance relative to historical or projected future operating results;

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

	•		significant negative industry or economic trends; and

	•		significant changes in risk-adjusted discount rates.

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

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

Goodwill

Significant assumptions used in this analysis include: future cash flows and the risk-adjusted discount rate. Future cash flows are based on the management’s cash flow projections for the future five years, after which future cash flows are estimated using the perpetuity growth rate of zero. The management’s cash flow projections are developed using estimates for expected future revenue growth rates, profit margins and working capital levels of the reporting units. The risk-adjusted discount rate is determined by the Capital Asset Pricing Model (CAPM) and we mainly utilize a weighted average cost of capital (WACC) of 5.2%.

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

As of March 31, 2011, we evaluated the recoverability of goodwill, which had a carrying value of ¥11,203 million, and concluded that there was an impairment of ¥836 million in the carrying value of goodwill. Due to the potential impact of the risk-adjusted discount rate on fair value, we performed a sensitivity analysis: a 0.5% increase in the risk-adjusted discount rate would result in a further impairment of ¥552 million.

Trademark

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

On March 31, 2011, we evaluated the recoverability of trademark and concluded that there was no impairment in the carrying value of trademark. We mainly used a risk-adjusted discount rate of 8.16% based on a WACC of 5.2% and an inherent risk spread of trademark of 3.0%. The rate of royalty used for valuation was 3.0%, which was based on the royalty ratio used in the actual transaction with a third party.

As a result of the evaluation performed for fiscal 2011, we recognized an impairment loss of ¥559 million. Due to the potential impact of the risk-adjusted discount rate on fair value, we performed a sensitivity analysis: a 0.5% increase in the risk-adjusted discount rate would result in the additional of impairment of ¥315 million.

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

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

Property, Plants and Equipment

In accordance with the guidance for the impairment or disposal of property, plants and equipment, buildings and building improvements held and used with a carrying amount of ¥107 million were written down to their fair value of zero, because we decided to abandon an office building. An impairment charge of ¥107 million was included in earnings for fiscal 2011.

Customer Relationships

Additionally our customer relationships are included in the certain intangible assets assessed for impairment in the manner delineated above. In our determination of the fair value of customer relationships, we utilize the excess earnings method and incorporate relevant unobservable inputs. Significant assumptions used in this analysis include: future cash flows, the risk-adjusted discount rate and the existing customer percentage, which is the number of the orders received from customers upon acquisition of a company with existing customers as a percentage of the total number of all orders. Future cash flows are based on the management’s cash flow projections for the future five years. The management’s cash flow projections are developed using estimates for expected future earnings growth rates, rate of return and working capital ratio by reporting units. The risk-adjusted discount rate is determined by the Capital Asset Pricing Model (CAPM) and we mainly utilize a weighted average cost of capital (WACC) of 5.2%.

As a result of the evaluation performed for fiscal 2011, we have recognized an impairment loss of ¥377 million. Due to the potential impact of the risk-adjusted discount rate on the fair value, we performed a sensitivity analysis: a 0.5% increase in the risk-adjusted discount rate would result in the additional of impairment of ¥15 million.

Revenue Recognition

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

Employee Retirement Benefits

We provide a number of retirement benefit plans to a substantial portion of our employees. Our wholly-owned subsidiary Wacoal Corp. has a contributory retirement plan and certain of our other subsidiaries have qualified pension plans. The amount of the projected retirement benefit obligation and pension costs are dependent on management’s assumptions used by actuaries in calculating such amount. The key assumptions include discount rates, expected long-term rate of return on plan assets, retirement rates, mortality expectations and other factors. Our management believes that these actuarial assumptions and methods are appropriate in light of our circumstances. However, due to a change in an actuarial assumption, the amount of the projected retirement benefit plan liabilities and costs may be adversely affected.

Wacoal Corp.’s approach to establishing the discount rate is based upon long term Japanese government bond rates and corporate bond indices. The discount rate assumption is based upon the five year average of the effective yields on the 20-year Japanese government bond, adjusted for an incremental yield of approximately 25 basis points that is achieved by selecting corporate bonds whose credit characteristics satisfy the quality requirements but whose yields are slightly higher than the yields on Japanese government bonds. On March 31, 2011, the discount rate used for the contributory retirement plan was 2.4%. For other plans, similar indices and methods are used.

Wacoal Corp. determines the expected long-term rate of return on plan asset assumptions by evaluating both historical returns as well as estimates of future returns. Its expected return on assets was based on expected equity and debt securities returns weighted by the percentage of each of the major asset classes. Its estimate of the long-term rate of return on assets for the contributory retirement plan is 2.5% for fiscal 2011, 2010 and 2009. The estimated long-term rate of return is based on an asset allocation of equity securities of 33%, debt securities of 48%, life insurance company general accounts of 17% and short term financing of 2%.

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


							Thousands of
	Millions of yen						U.S. dollars
	0.5%			0.5%			0.5%			0.5%
	decrease			increase			decrease			increase
Discount rate
Effect on periodic benefit costs	¥	(97	)	¥	100		¥	(1,172	)	¥	1,208
Effect on benefit obligation		(1,692	)		1,526			(20,445	)		18,439
Expected long-term rate of return on plan assets
Effect on periodic benefit costs		133			(134	)		1,607			(1,619	)
Effect on benefit obligation		—			—			—			—

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

New Accounting Pronouncements

Fair Value Measurement

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

In May 2011, the FASB issued new guidance for fair value measurements. The guidance changes the wording used to describe the requirements for measuring fair value and for disclosing information about fair value measurements in order to improve consistency between U.S. GAAP and International Financial Reporting Standards. Also, some amendments change particular principles or requirements for measuring fair value or for disclosing information about fair value measurements, and will lead to an expansion of disclosure requirements. This guidance is effective during interim and annual periods beginning after December 15, 2011. We are currently evaluating the potential impact, if any, of the adoption of this guidance.

Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses

In July 2010, the FASB issued additional disclosure requirements for financing receivables and allowance for credit losses. This guidance requires enhanced disclosures regarding the quality of the credit risk inherent in our financing receivables, how that credit risk is assessed in calculating the allowance for credit losses, changes in such allowance and the reasons for those changes. It also requires disclosures relating to the accounting policies for financing receivables and allowance for credit losses. We adopted this guidance from the interim period ending after December 15, 2010. Since this guidance related only to additional disclosures, it did not have an impact on our consolidated financial position, result of operations, or cash flows.

Presentation of Comprehensive Income

In June 2011, the FASB issued revised guidance for the presentation of comprehensive income. This guidance requires displaying adjustments for items that are reclassified from other comprehensive income to net income in the statement in which the components of net income and the components of other comprehensive income are presented. This guidance does not change the items that must be reported in other comprehensive income, nor does it affect the calculation or reporting of earnings per share. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. This amendment does not have an impact on the consolidated financial position, result of operations or cash flows as this guidance relates only to the presentation of comprehensive income.

B. Liquidity and Capital Resources.

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

As of March 31, 2011 we had credit facilities at financial institutions totaling ¥28,841 million, a large majority of which was for short-term, yen-denominated borrowings with variable interest rates. In general, all of our credit facilities have automatically renewed terms, and we are not aware of any issues with respect to any of our lenders that could cause these facilities to become unavailable.

Of this total credit, ¥13,900 million is available to Wacoal Holdings and our main subsidiary Wacoal Corp., but we have not drawn down from this credit line in recent years and have no current plans to use them in the near future. The remainder of the credit is available for Lecien, Nanasai and our other subsidiaries, which had drawn down for working capital purposes a total of ¥6,401 million as of March 31, 2011, including borrowings by Wacoal Servicing Co. Ltd. of ¥3,464 million and borrowing by Nanasai of ¥2,200 million. Because our policy is to fund cash needs from our cash flows from operations, we do not expect this balance to increase significantly over the short to medium term. Even if any of our subsidiaries loses access to funds from our credit facilities, we believe that it is possible for other companies in our group to provide any necessary funds. We are not aware of any restrictions on the transfers of funds from a subsidiary to a parent company in the form of a cash dividend, loan or cash advance.

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

Cash Flows

Our consolidated cash flows for fiscal 2011, 2010 and 2009 were as follows:


	Fiscal year ending March 31,
	2011			2010			2009
	(in millions)
Net cash provided by operating activities	¥	10,054		¥	9,449		¥	8,168
Net cash used in investing activities		(1,546	)		(2,698	)		(4,714	)
Net cash used in financing activities		(4,899	)		(5,438	)		(7,448	)

Fiscal 2011 Compared to Fiscal 2010

Cash Provided by Operating Activities. Net cash provided by operating activities increased by ¥605 million from ¥9,449 million for fiscal 2010 to ¥10,054 million for fiscal 2011. This was primarily due to substantial progress achieved in cost-reduction efforts and to a decrease in inventory combined with an increase in cash flows due to increased sales. Cash inflows from operating activities consisted mainly of cash received from customers and cash outflows are mainly payments for production costs, selling, general and administrative expenses, and income taxes.

Net Cash Used in Investing Activities. Net cash used in investing activities decreased by ¥1,152 million from ¥2,698 million for fiscal 2010 to ¥1,546 million for fiscal 2011. This decrease was primarily due to a decrease in our purchases of marketable securities, tangible and intangible properties and investments, as well as an increase in our sales of investments, which collectively more than offset a significant decrease in gains from disposition of marketable securities.

Net Cash Used in Financing Activities. Net cash used in financing activities decreased by ¥539 million from ¥5,438 million for fiscal 2010 to ¥4,899 million for fiscal 2011. This decrease was primarily due to reduced cash distributions, reduction in repurchases, reduced repayment of long-term obligations and a new loan, which collectively more than offset a significant repayment of short-term loans.

Capital Expenditures

Capital expenditures were ¥2,662 million for fiscal 2011 (including ¥624 million for rebuilding and relocation of some of our properties, as discussed in “Item 4.D. Property, plants and equipment”), ¥3,998 million for fiscal 2010 and ¥2,362 million for fiscal 2009. These expenditures were primarily for the repair of office facilities of our domestic subsidiaries and the expansion of our specialty retail store network. Payments to acquire intangible assets were ¥671 million in 2011, ¥1,755 million for fiscal 2010 and ¥1,846 million for fiscal 2009. These payments primarily comprised of payments for information technology-related investments.

For fiscal 2011 we spent ¥624 million for office maintenance and repair, and we expect to spend ¥517 million in fiscal 2012. Although we currently do not have any concrete plans, we expect to continue to make expenditures for the expansion of our specialty retail store network (including costs for the development of new stores and the closure of underperforming stores) and for maintenance, to meet applicable legal requirements and to facilitate the manufacture of new products with new designs and specifications. Furthermore, we intend to evaluate and pursue opportunities for acquisitions, investments and other strategic transactions that we believe will help us achieve our business objectives, including extending our product offerings in Japan and in overseas markets and strengthening our capabilities in the Internet, catalog and other marketing channels. We expect to fund these capital expenditures and other expenditures through our cash from operations, existing cash reserves and other available sources of liquidity.

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

Cash Dividends

On May 13, 2011, our board of directors approved a fiscal year-end dividend of ¥100 per five shares of common stock to our shareholders on record as of March 31, 2011, and dividends in a total amount of ¥2,816 million were paid on June 6, 2011. Our current policy is to pay cash dividends once a year, and we seek to pay stable cash dividends based on our consideration of numerous factors, including our ability to improve our enterprise value through investments using retained earnings, ability to improve our net income per share and results of operations.

Share Repurchases

We repurchased 36,084 shares of common stock during fiscal 2011 from shareholders who held shares constituting less than one unit and requested that such shares be repurchased. See “Item 10.B. Memorandum and Articles of Association—Capital Stock—Distribution of Surplus— Unit Share System”. On November 26, 2010, our board of directors approved resolutions to repurchase up to 550 thousand shares of common stock up to a total purchase amount of ¥614 million. Pursuant to this board of directors resolution, we had repurchased 550 thousand shares of common stock for a total purchase price of ¥614 million as of November 29, 2010.

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

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

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

Our research and development activities for fiscal 2011 have been very fruitful as we have been able to succeed in producing new products by improving and building on our existing products. For example, we have announced our long-term aging research results on “body aging (physiological changes associated with aging)”, which were well received by consumers. We have also proposed aging conscious products and new products from our Style Science series.

The cost of research and development for fiscal 2011 was approximately ¥815 million, compared to ¥778 million for fiscal 2010 and ¥768 million for fiscal 2009. We expect to maintain a similar level of research and development expenditures for fiscal 2012.

D. Trend Information.

The global economy is seeing continued growth due to the gradual expansion of emerging markets; however, there is a continued concern that rising oil prices and inflation could lead to economic stagnation. In Japan, economic recovery has been dampened by the effects of the major earthquake and tsunami that struck Northeast Japan in March 2011, which not only caused loss of life and economic devastation but has changed consumer behavior. While it is difficult to anticipate macroeconomic trends, we expect that a recovery in consumer spending will take time. In Japan, our main sales channels (i.e., department stores, general merchandisers and specialty retail stores) continue to perform poorly, and we expect that the difficult economic conditions will continue for fiscal 2012.

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

The U.S. market remains one of our most important markets, and we expect its optimistic economic condition to remain through 2012. We will work to strengthen our product development capabilities, including for new products, while also actively expanding our sales channels and business into the countries surrounding the United States.

We expect that our business in China will continue to expand for fiscal 2012. We will continue to open new stores in response to market conditions and conduct promotion campaigns in order to increase awareness of our business.

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

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

E. Off-Balance Sheet Arrangements.

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

F. Tabular Disclosure of Contractual Obligations.

Contractual Obligations and Commitments

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

The following table summarizes our contractual obligations as of March 31, 2011:


			Less than		1-3		3-5		More than
	Total		1 year		years		years		5 years
	(millions of yen)
Long-term debt obligations		276		63		213		—		—
Capital (Finance) lease obligations		8		7		1		—		—
Operating lease obligations		2,850		819		968		418		645
Purchase obligations		6,591		6,591		—		—		—
Total		9,911		7,554		1,274		432		651


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

2.		With respect to employee retirement plans, our general funding policy regarding funded plans is to contribute amounts computed in accordance with actuarial methods accepted by Japanese tax law (excluded from this table). We expect to contribute ¥1,838 million to our plans in the year ending March 31, 2012.

3.		Liabilities for unrecognized tax benefits of ¥188 million at March 31, 2011 are excluded from the table, as we are unable to make reasonable estimates regarding the amount of the tax benefits through March 31, 2012. See note 16 to our consolidated financial statements regarding income taxes.

4.		The total amount of our expected future pension payments is ¥20,530 million to be paid by March 31, 2021. See note 12 to our consolidated financial statements regarding termination and retirement plans. These payment amounts are not included in the table above because they are not contractually fixed as to amount or timing.

G. Safe Harbor.

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

Item 6. Directors, Senior Management and Employees.

A. Directors and Senior Management.

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


	Position(s) and
Name	Office(s) with
(Date of	Wacoal		Business Experience and Position(s) and
Birth)	Holdings	Date	Office(s)^*

Yoshikata Tsukamoto	President and Representative Director	Apr. 1972	Joined Wacoal Corp.
(Jan. 29, 1948)		Nov. 1977	Director
		Nov. 1981	Managing Director
		Sep. 1984	Executive Vice President
		Sep. 1984 — present	Representative Director
		Jun. 1987 — present	President
		Jun. 2002	Corporate Officer
		Oct. 2005	Representative Director and President, Corporate Officer of Wacoal Corp.
		Oct. 2005 — present	Representative Director and Chairman of Wacoal Corp.

Hideo Kawanaka	Director and Executive Vice President	Apr. 1965	Joined Isetan Co., Ltd.
(Jun. 25, 1942)	Director and Executive Vice President	Jun. 1992	Director of Isetan Co., Ltd. and manager of Matsudo Branch
		Jul. 1993	Representative Director and President of West Japan Railway Isetan Ltd.
		Jun. 2001	Corporate Officer and Managing Director, General Manager of Management and General Affairs of OMRON Corporation
		Jun. 2004	Representative Director and Senior Manager, Sales Manager of Matsuzakaya Co., Ltd.
		Jun. 2007	Advisor
		Jun. 2007	Senior Managing Director
		Nov. 2007	Director and Senior Corporate Officer of Wacoal Corp.
		Apr. 2008	Director and Vice President, Corporate Officer of Wacoal Corp.
		Jun. 2009 — present	Director and Executive Vice President in charge of Management Reform
		Mar. 2011 — present	Representative Director and Chairman of Peach John Co., Ltd.
		Apr. 2011 — present	Director and Vice Chairman of Wacoal Corp.


	Position(s) and
Name	Office(s) with
(Date of	Wacoal		Business Experience and Position(s) and
Birth)	Holdings	Date	Office(s)^*

Ikuo Otani	Managing Director	Mar. 1976	Joined Wacoal Corp.
(Nov. 20, 1953)		Jun. 2001	Corporate Officer and Manager of Business Management
		Jun. 2006	Director and Corporate Officer, and Supervisor of Business Management, of Wacoal Corp.
		Apr. 2008	Director and Corporate Officer, and General Manager of Corporate Planning Division, of Wacoal Corp.
		Apr. 2010	Director and Corporate Officer, and Supervisor of Accounting, of Wacoal Corp.
			General Manager of Corporate Planning Department
		Jun. 2010	Director, in charge of Group Management and Corporate Planning
		Jun. 2011	Managing Director and General Manager of Corporate Planning

Hironobu Yasuhara	Director	Mar. 1975	Joined Wacoal Corp.
(Dec. 28, 1951)		Sep. 1996	Deputy General Manager of Guandong Wacoal Inc.
		Apr. 1997	General Manager of Beijing Wacoal Inc.
		Apr. 2004	Chief of Planning & Product Group of Wing Brand Business Department
		Apr. 2005	Corporate Officer/General Manager of Wing Brand Business Department
		Apr. 2006	Executive Corporate Officer/General Manager of Wing Brand Business Department of Wacoal Corp.
		Jun. 2006	Director and Executive Corporate Officer of Wacoal Corp./General Manager of Wing Brand Business Department
		Apr. 2008	Director and Senior Corporate Officer of Wacoal Corp./General Manager of Wing Brand Business Department
		Aug. 2009	Director and Senior Corporate Officer of Wacoal Corp./General Manager of Wing Brand Business Department/Chairman and Representative Director of Lecien Corporation (Part-time)
		Apr. 2010	Director and Senior Corporate Officer of Wacoal Corp./General Manager of Wacoal Brand Business Department
		Apr. 2011 — present	Representative Director and President, Corporate Officer of Wacoal Corp.
		Jun. 2011 — present	Director


	Position(s) and
Name	Office(s) with
(Date of	Wacoal		Business Experience and Position(s) and
Birth)	Holdings	Date	Office(s)^*

Tadashi Yamamoto	Director	Mar. 1976	Joined Wacoal Corp.
(Nov. 14, 1952)		Apr. 2002	General Manager of Human Resources Department
		Jun. 2002	Corporate Officer
		Oct. 2005	Corporate Officer of Wacoal Corp.
		Apr. 2006	General Manager of Personnel and Administration Department
		Apr. 2006	Managing Corporate Officer of Wacoal Corp.
		Jun. 2006	Director
		Jun. 2006	Director and Managing Corporate Officer of Wacoal Corp.
		Apr. 2008 — present	Director in charge of International Affairs
		Apr. 2008 — present	Director and Senior Corporate Officer of Wacoal Corp.

Mamoru Ozaki**	Director	Jun. 1991	Commissioner of National Tax Agency
(May 20, 1935)		Jun. 1992	Administrative Vice-Minister of Finance
		May 1994	President of People’s Finance Corporation
		Oct. 1999	President of National Life Finance Corporation
		Feb. 2003 — present	Advisor of Yazaki Sogyo Corporation
		Jul. 2003	Advisor
		Jun. 2005 — present	Director

Morio Ikeda**	Director	Apr. 1961	Joined Shiseido Co., Ltd. (“Shiseido”)
(Dec. 25, 1936)		Apr. 1990	Director and Chief of Secretary’s Office of Shiseido
		Apr. 1995	Managing Director of Shiseido
		Jun. 1997	Representative Senior Managing Director of Shiseido
		Jun. 2000	Representative Director and Executive Vice President of Shiseido
		Jun. 2001	Representative Director and President of Shiseido
		Jun. 2005	Director and Chairman of Shiseido
		Jun. 2006 — present	Advisor to Shiseido
		Jun. 2010 — present	Director


	Position(s) and
Name	Office(s) with
(Date of	Wacoal		Business Experience and Position(s) and
Birth)	Holdings	Date	Office(s)^*

Atsushi Horiba**	Director	Sep. 1972	Joined HORIBA, Ltd.
(Feb. 5, 1948)		Jun. 1982	Appointed Director and General Manager of Overseas Business of HORIBA Ltd.
		Jun. 1988	Appointed Senior Managing Director and General Manager of Sales Division of HORIBA Ltd.
		Jan. 1992	Appointed Representative Director and President of HORIBA Ltd.
		Jun. 2005 — present	Appointed Representative Director, Chairman, and President of HORIBA Ltd.
		Jun. 2008 — present	Director

Yoshio Kawashima	Standing Corporate Auditor	Mar. 1974	Joined Wacoal Corp.
(Feb. 5, 1952)	Standing Corporate Auditor	Jul. 1997	Appointed Manager of Finance Department
		Jun. 2001	Appointed Business Management Group Manager of Overseas Business Division
		Apr. 2007	General Manager of Internal Audit Department
		Jun. 2008 — present	Corporate Auditor

Mitsuo Yamamoto	Standing Corporate Auditor	Apr. 1977	Joined Wacoal Corp.
(Jan. 8, 1955)		Apr. 2005	General Manager of Human Affairs Department
		Apr. 2008	Corporate Officer of Wacoal Corp.
		Apr. 2011 — present	General Manager of Personnel and Administration Planning Department
		Jun. 2011 — present	Corporate Auditor

Akira Katayanagi**	Corporate Auditor	Apr. 1968	Joined Mitsubishi Bank Ltd.
(Feb. 4, 1946)		Jun. 1995	Director and manager of Loan Department 1
		Apr. 1996	Director of The Bank of Tokyo-Mitsubishi, Ltd.
		Feb. 2000	Managing Director and Deputy Branch Manager of Nihonbashi Branch
		May 2001	Managing Director and Deputy Branch Office Manager of Osaka Branch Office
		Jul. 2011	Associate Senior Corporate Executive Office Manager of Osaka Branch Office
		May 2003	Associate Senior Corporate Executive Office
		Jun. 2003	Representative Director and President of DC Card Co., Ltd.
		Apr. 2007	Representative Director and Vice President of Mitsubishi UFJ NICOS Co., Ltd.
		Jun. 2008 — present	Representative Director and Chairman of Mitsubishi UFJ NICOS Co., Ltd.
		Jun. 2010 — present	Corporate Auditor


	Position(s) and
Name	Office(s) with
(Date of	Wacoal		Business Experience and Position(s) and
Birth)	Holdings	Date	Office(s)^*

Tomoharu Kuda**	Corporate Auditor	Sep. 1972	Joined Deloitte Haskins & Sells
(Dec. 7, 1946)		Oct. 1979	Registered as Certified Public Accountant
		Sep. 1987	Transferred to London Office
		Feb. 1990	Partner of Deloitte Touche Tohmatsu
		Jun. 1997	Representative Partner of Deloitte Touche Tohmatsu
		Jul. 2007 — present	Corporate Auditor

Yoko Takemura**	Corporate Auditor	Apr. 1990	Registered as lawyer (Tokyo), joins Miyake Imai Ikeda law firm.
(Apr. 7, 1952)		Jan. 1997 — present	Partner at Miyake Imai Ikeda law firm.
		Jun. 2005 — present	Corporate Auditor


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

**		Identified as “independent officers” in our report on independent officers filed with the Tokyo Stock Exchange on March 31, 2011.

The terms of all of our directors expire in June 2011. The term as corporate auditor for Ms. Takemura expires in June 2013; the term as corporate auditor for Mr. Kuda expires in June 2011, but he will be reelected at our shareholders meeting, and his new term will expire in 2015; Mr. Yamamoto will be elected as corporate auditor at our shareholders meeting, and his term will expire in 2015; the term as corporate auditor for Mr. Kawashima expires in June 2012; and, the term as corporate auditor for Mr. Katayanagi expires in June 2014.

B. Compensation.

Cash Compensation

Aggregate compensation, including bonuses, paid by us in fiscal 2011 to our directors and corporate auditors was ¥299 million. Of this total, ¥246 million was paid to our directors (including ¥26 million to our four outside directors) and ¥53 million was paid to our corporate auditors (including ¥21 million to our four outside corporate auditors). This includes one director, one outside director and one outside corporate auditor who resigned as of the conclusion of the general meeting of shareholders held on June 29, 2010. As of March 31, 2011, we had four directors, two corporate auditors, three outside directors and three outside corporate auditors.

Starting with its annual securities report for the year ended March 31, 2010 filed with the Ministry of Finance, a Japanese listed company is required to disclose the individual compensation of any director, executive officer or corporate auditor if it is ¥100 million or more. For fiscal 2011, Yoshikata Tsukamoto, our President and Representative Director, received compensation in the amount of ¥160 million, comprised of ¥128 million in base salary, ¥10 million as a cash bonus and ¥22 million in stock options.

Retirement Benefits

We terminated our retirement allowance benefit for our directors and corporate auditors. The balance of our existing liability for termination benefits for directors was ¥317 million at March 31, 2011 and ¥339 million at March 31, 2010. Subsidiaries still maintain plans for their directors and corporate auditors. In accordance with the guidance for determination of vested benefit obligation for a defined benefit pension plan, the subsidiaries recorded a liability for termination benefits for directors and corporate auditors at the amount that would be needed if all directors and corporate auditors were to resign at each balance sheet date. The liabilities for termination benefits for directors and corporate auditors as of March 31, 2011 were ¥385 million, compared to ¥377 million as of March 31, 2010, and were included in liability for termination and retirement benefits.

Stock Option Plans

We currently have six stock option plans under which there are outstanding options for a total of 148,000 shares of our common stock:

	•		First Stock Acquisition Rights: On September 1, 2008, we granted to five directors of Wacoal Holdings stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 40,000 shares of our common stock, of which 30,000 remain outstanding as of July 12, 2011. These rights became fully vested on September 2, 2008. Each person was granted a right to acquire an amount ranging from 4,000 to 19,000 shares of common stock.

	•		Second Stock Acquisition Rights: On September 1, 2008, we granted to five directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per shares a total of 17,000 shares of our common stock, of which 17,000 remain outstanding as of July 12, 2011. These rights became fully vested on September 2, 2008. Each person was granted a right to acquire an amount ranging from 3,000 to 4,000 shares of common stock.

	•		Third Stock Acquisition Rights: On September 1, 2009, we granted to four directors of Wacoal Holdings stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 35,000 shares of our common stock, of which 35,000 remain outstanding as of July 12, 2011. These rights became fully vested on September 2, 2009. Each person was granted a right to acquire an amount ranging from 4,000 to 20,000 shares of common stock.

	•		Fourth Stock Acquisition Rights: On September 1, 2009, we granted to four directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 14,000 shares of our common stock, of which 14,000 shares are outstanding as of July 12, 2011. These rights became fully vested on September 2, 2009. Each person was granted a right to acquire an amount ranging from 3,000 to 4,000 shares of common stock.

	•		Fifth Stock Acquisition Rights: On July 30, 2010, we granted to four directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 35,000 shares of our common stock, of which 35,000 shares are outstanding as of July 12, 2011. These rights became fully vested on September 2, 2010. Each person was granted a right to acquire an amount ranging from 3,000 to 4,000 shares of common stock.

	•		Sixth Stock Acquisition Rights: On July 30, 2010, we granted to four directors of Wacoal stock acquisition rights to acquire for an exercise price of ¥1 per share a total of 11,000 shares of our common stock, of which 11,000 shares are outstanding as of July 12, 2011. These rights became fully vested on September 2, 2010. Each person was granted a right to acquire an amount ranging from 3,000 to 4,000 shares of common stock.

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

C. Board Practices.

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

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

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

In December 2009, the Tokyo Stock Exchange introduced a listed company rule that requires that a listed company have at least one “independent officer”, which is defined as an outside director or corporate auditor with respect to whom there is no risk of a conflict of interest with general shareholders. Each listed company was required to submit a report on independent officers with the Tokyo Stock Exchange by March 31, 2010 disclosing whether the company had

any independent officer, along with other related information. To the extent any company did not have an independent officer at that time, the company was required to select one at the general shareholders meeting related to the fiscal year that ended on or after March 1, 2010. In our report on independent officers submitted to the Tokyo Stock Exchange on March 31, 2010, we identified Messrs. Mamoru Ozaki and Atsushi Horiba, both of whom are outside directors (along with Mr. Kazuo Inamori, who retired in June 2010), and Tomoharu Kuda and Yoko Takemura, both of whom are outside corporate auditors (along with Yutaka Hasegawa who retired in June 2010), as independent officers. In our 2011 report we additionally identified Mr. Morio Ikeda, whom is an outside director, and Mr. Akira Katayanagi, whom is an outside corporate auditor. We identified these persons for the following reasons:

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

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

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

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

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

•

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

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

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

On May 9, 2007, we established a non-statutory director and officer personnel and compensation advisory committee, which consists of the following members: Ikuo Otani, chair of the committee, Mamoru Ozaki, Masashi Yamaguchi, Tomoki Nakamura and Naoki Hagiwara, the secretary. The committee was established with the goal of reforming the process of selecting our directors and officers and determining their compensation, and promoting objectivity and transparency in the process. The committee will be responsible for recommending new candidates and candidates for promotion, evaluating their performance and setting their compensation, as well as suggesting areas for improvement in the foregoing processes.

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

D. Employees.

The following table lists the number of our full-time employees as of March 31, 2011, 2010 and 2009:


							Asia (other
	Total		Japan		Americas¹		than Japan)		Europe
March 31, 2011:
Wacoal Business (Domestic)		7,241		7,241		—		—		—
Wacoal Business (Overseas)		6,974		—		1,671		5,262		41
Peach John Business		422		406		—		16		—
Other		1,346		614		5		727		—

Total		15,983		8,261		1,676		6,005		41


							Asia (other
	Total		Japan		Americas¹		than Japan)		Europe

March 31, 2010:
Wacoal Business (Domestic)		7,453		7,453		—		—		—
Wacoal Business (Overseas)		6,277		—		1,596		4,643		38
Peach John Business		467		456		—		11		—
Other		1,417		681		3		733		—

Total		15,614		8,590		1,599		5,387		38

March 31, 2009:
Wacoal Business (Domestic)		7,471		7,471		—		—		—
Wacoal Business (Overseas)		6,206		—		1,665		4,505		36
Peach John Business		463		453		—		10		—
Other		336		336		—		—		—

Total		14,476		8,260		1,665		4,515		36


1.		Includes employees in the Caribbean.

During fiscal 2011, we had an average of 1,354 temporary employees.

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

E. Share Ownership.

The following table lists the number of shares owned by our directors and corporate auditors as of July 12, 2011. As of such date, our directors and corporate auditors collectively held a total of 1,400,136 shares of our common stock as set forth below, and this number of shares constituted 0.99% of all outstanding shares of our common stock.


			% of Common
Name	No. of Shares		Stock
Yoshikata Tsukamoto		1,351,136	*
Hideo Kawanaka		10,000	*
Ikuo Otani		5,000	*
Hironobu Yasuhara		4,000	*
Tadashi Yamamoto		9,000	*
Atsushi Horiba		3,000	*
Yoshio Kawashima		9,000	*
Yoko Takemura		9,000	*


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

The following table lists the number of shares subject to the stock acquisition rights owned by our directors and corporate auditors as of July 12, 2011.


	No. of Shares
	Subject to
	Stock
	Acquisition		Exercise Price per
Name	Rights		Share
Yoshikata Tsukamoto		60,000	¥	1
Hideo Kawanaka		17,000		1
Ikuo Otani		10,000		1
Tadashi Yamamoto		13,000		1
Yoshio Kawashima		—		—
Yoko Takemura		—		—

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

Item 7. Major Shareholders and Related Party Transactions.

A. Major Shareholders.

As of March 31, 2011, 140,848,478 shares of our common stock were outstanding, which excludes 2,529,607 shares of treasury stock held by Wacoal Holdings.

The following table shows information regarding each shareholder who, to our knowledge, beneficially owned more than 5% of our common stock as of March 31, 2011.


			Percentage of Total
Name of Shareholder	Number of Shares		Shares Outstanding
Tradewinds Global Investors, LLC*		13,843,880		9.66	%
Mitsubishi UFJ Financial Group, Inc.**		12,939,772		9.2	%


*		Based on the most recent Schedule 13G that was filed on February 14, 2011 by Tradewinds Global Investors, LLC, with the Securities and Exchange Commission, which disclosed its and its affiliates’ beneficial ownership of shares of our common stock. We are also aware of a substantial shareholding report, dated November 27, 2009, filed by Tradewinds Global Investors, LLC under the Financial Instruments and Exchange Law of Japan. This substantial shareholding report indicates that Tradewinds Global Investors, LLC held 22,231,834 shares of our common stock as of November 25, 2009, representing approximately 15.5% of our total issued shares as of that date. For the purpose of this table, we have included the more recent shareholding information related to Tradewinds Global Investors, LLC.

**		Based on the most recent Schedule 13G that was filed on February 8, 2011 by Mitsubishi UFJ Financial Group, Inc., with the Securities and Exchange Commission, which disclosed its and its affiliates’ beneficial ownership of shares of our common stock.

Under the Financial Instruments and Exchange Law of Japan, any person who beneficially holds more than 5% of the total issued shares of a company listed on any Japanese stock exchange or traded on the over-the-counter market must file a report of substantial shareholding with the relevant local finance bureau. A similar report must be filed, with certain exceptions, if the percentage of shares held by a holder, either solely or jointly as a group, as applicable, of more than 5% of the total issued shares of a company, increases or decreases by 1% or more in the overall shareholding, or if any change to a material matter set forth in any previously filed reports occurs. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Reporting of Substantial Shareholdings”.

Over the past three years, based on filings made with the Kanto Local Finance Bureau, the number of our shares beneficially held by Tradewinds Global Investors, LLC has changed from (i) 24,400,408 shares, or 16.94% of our total issued shares, as of August 2, 2007, to (ii) 25,990,188 shares, or 18.05% of our total issued shares, as of October 31, 2007, to (iii) 24,277,194 shares, or 16.93% of our total issued shares, as of September 30, 2008, to (iv) 22,818,964 shares, or 15,92% of our total issued shares, as of October 28, 2008 to (v) 20,738,579 shares, or 14.46% of our total issued shares, as of January 15, 2009, to (vi) 22,231,834 shares, or 15.51% of our total issued shares as of November 25, 2009, and to (vii) 20,573,798 shares, or 14.35% of our total issued shares, as of October 8, 2010, pursuant to the most recent filing.

Our major shareholders have the same voting rights as other shareholders. To the extent known to us, we are not directly or indirectly owned or controlled by any other corporation, any government, or any other natural or legal person or persons severally or jointly. We do not know of any arrangements that may, at a subsequent date, result in a change of control of us.

As of March 31, 2011, 21,837,244 shares, or approximately 15.5% of the outstanding shares of our common stock, were held of record by 58 residents of the United States. The 16,164,550 shares of our common stock held of record by The Bank of New York Mellon on March 31, 2011 underlay the 3,232,910 American Depositary Shares of Wacoal Holdings held of record by 13 persons. Because some of these shares and ADRs evidencing our American Depositary Shares were held by brokers or other nominees, the number of record holders with addresses in the United States might not fully show the number of beneficial owners in the United States.

B. Related Party Transactions.

Wacoal purchases merchandise from numerous suppliers throughout the world, including from certain affiliates. Wacoal purchased merchandise from affiliates in the amount of ¥1,131 million in fiscal 2011.

Wacoal also sells supplies, materials and products to certain affiliates. Aggregate sales to affiliates were ¥537 million in fiscal 2011.

Certain of our subsidiaries provide short-term loans to each other. As of March 31, 2011, the outstanding balance of such loans was ¥5,499 million.

We also received royalties from certain affiliates in the amount of ¥201 million in fiscal 2011.

We do not consider the amounts involved in these transactions to be material to our business.

C. Interests of Experts and Counsel.

Not applicable.

Item 8. Financial Information.

A. Consolidated Statements and Other Financial Information.

Consolidated Financial Statements

See “Item 17. Financial Statements”.

Legal and Arbitration Proceedings

There are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or to which any of our property is subject.

Dividends and Divided Policy

See “Item 5.B. Liquidity and Capital Resources—Cash Dividends” and “Item 10.B. Memorandum and Articles of Association—Capital Stock—Distributions of Surplus”.

B. Significant Changes.

Except as provided above and elsewhere in this annual report on Form 20-F, there has been no significant change in our financial position since March 31, 2011, the date of our consolidated financial statements included in this annual report on Form 20-F.

Item 9. The Offer and Listing.

A. Offer and Listing Details.

Price Range of Shares

Our common stock has been listed on the Tokyo Stock Exchange since 1964 and is traded on the First Section of that exchange. It is also listed on the Osaka Securities Exchange in Japan. Additionally, our American Depositary Shares are quoted for trading on the Nasdaq Capital Market in the U.S. The depositary of the ADSs is The Bank of New York Mellon. Each ADS represents five shares of our common stock.

The following table sets forth for the periods shown the reported high and low sales prices of our common stock on the First Section of the Tokyo Stock Exchange and of our ADSs on the NASDAQ Capital Market. The last reported sale price of our common shares on the Tokyo Stock Exchange on July 11, 2011 was ¥1,014, and the last reported sale price of our ADSs on the NASDAQ Capital Market on July 11, 2011 was $62.29.


	Tokyo Stock Exchange				NASDAQ Capital Market
	Price Per Share				Price Per ADS
	High		Low		High		Low
Fiscal year ended March 31,
2007	¥	1,821	¥	1,358	$	80.99	$	57.00
2008		1,620		1,229		77.48		51.26
2009		1,573		844		76.85		35.15
2010		1,340		928		67.66		53.75
2011		1,240		890		73.04		55.71

Fiscal quarter ended/ending
March 31, 2009	¥	1,240	¥	1,053	$	69.99	$	52.50
June 30, 2009		1,340		1,138		67.66		57.08
September 30, 2009		1,260		1,088		66.72		59.86
December 31, 2009		1,167		928		63.86		53.75
March 31, 2010		1,178		989		64.29		54.98
June 30, 2010		1,240		1,011		66.01		55.71
September 30, 2010		1,218		1,062		71.90		60.70
December 31, 2010		1,185		1,054		72.97		65.37
March 31, 2011		1,199		890		73.04		56.89
June 30, 2011		1,066		928		66.23		57.77

Month ended
January 31, 2011	¥	1,199	¥	1,097	$	73.04	$	67.47
February 28, 2011		1,150		1,082		69.90		66.97
March 31, 2011		1,117		890		68.11		56.89
April 30, 2011		1,065		1,000		64.96		59.67
May 31, 2011		1,066		967		66.23		59.75
June 30, 2011		1,005		928		62.37		57.77

B. Plan of Distribution.

Not applicable.

C. Markets.

See “Item 9.A. Offer and Listing Details” for information on the markets on which our common stock and ADSs are listed or quoted.

D. Selling Shareholders.

Not applicable.

E. Dilution.

Not applicable.

F. Expenses of the Issue.

Not applicable.

Item 10. Additional Information.

A. Share Capital.

Not applicable.

B. Memorandum and Articles of Association.

The following summarizes certain provisions of our organizational documents and applicable Japanese law. This summary is qualified in its entirety by reference to the Companies Act and our articles of incorporation, share handling regulations and regulations of the board of directors, each as filed as an exhibit to this annual report on Form 20-F.

Organization

Wacoal Holdings is a joint stock corporation (kabushiki kaisha) incorporated in Japan governed by the Companies Act. It is registered in the Commercial Register (shogyo tokibo) maintained by the Kyoto Local Registry Office of the Ministry of Justice.

Objects and Purposes

Article 2 of our articles of incorporation provides the following objectives of Wacoal Holdings:

1. To control and manage the business activities of the companies which are engaged in the following businesses by holding the shares of such companies:

	(1)		manufacture and sale of clothing and apparel and sundries pertaining to clothing and apparel;

	(2)		manufacture, sale and installation of furniture, bedding, interior decorations and other home furnishings;

	(3)		manufacture and sale of cosmetics, soap, cleansers, medical supplies and quasi-drugs and sale of health food;

	(4)		management of facilities for cultural, welfare, educational, sporting, entertainment, beauty and restaurant use, and manufacture and sale of commodities, provision of service, technical guidance and consulting pertaining to the above facilities;

	(5)		sale, purchase and brokerage of objects of art and curios and management and operation of picture galleries;

	(6)		acquisition, lease, alienation and technical guidance of intangible property rights such as industrial property rights and copyrights on literature, art, artistic handicraft, music, images and voice;

	(7)		publishing and advertising business;

	(8)		sale, purchase, lease, brokerage and management of real estate;

	(9)		lease and brokerage of personal property;

	(10)		non-life insurance agency, insurance agency under the Automobile Liability Security Law and life insurance solicitation agency;

	(11)		planning, design, supervision, execution, consulting and sale of construction work and interior decoration;

	(12)		sale of building materials and sale of equipment and apparatus pertaining to housing such as fittings, furniture, utensils, kitchens, modular baths and toilets;

	(13)		planning, design, supervision and consulting relating to community development, urban development and environmental conditioning;

	(14)		planning, design, supervision, execution and consulting relating to landscaping, gardening and stonecutting;

	(15)		production, sale and lease of trees, plants and materials for gardening;

	(16)		data processing, provision of information and development, purchase, sale, lease and consulting relating to computer hardware and software;

	(17)		processing of jewelry, precious metals and accessories and manufacture and sale of watches, eyeglasses, footwear, bags and umbrellas;

	(18)		money lending, loan agency, guarantee, holding of and investment in securities and credit card business;

	(19)		dispatching of workers;

	(20)		education, training and consulting relating to development of ability of the human resource to appropriately adapt to profession;

	(21)		undertaking of financial and accounting affairs, calculation of wages, etc., preparation of documents relating to internal and external transactions, reception and telephone switching affairs, telephone marketing, translation and interpretation, operation of office and communication equipment and system programming, etc.;

	(22)		warehousing;

	(23)		manufacture and sale of mannequins and display equipment;

	(24)		investments incidental to Items (1) through (23) above; and

	(25)		any and all business incidental or relate to Items (1) through (24) above.

2. Any and all business incidental or related to any of the foregoing.

Directors

Under the Companies Act, our board of directors has the executive power and duty to manage our affairs, and each representative director, who is elected from among the directors by our board of directors, has the corporate authority to represent our company in all respects. Under both the Companies Act and our regulations of the board of directors, our directors must refrain from engaging in any business which competes with that of our company, unless approved by our board of directors. Any director who has a material interest in the subject matter of a resolution to be taken by our board of directors cannot vote on such resolution.

The Companies Act and our articles of incorporation provide that the remuneration of directors and corporate auditors be determined at a general meeting of shareholders. Except as stated below, neither the Companies Act nor our articles of incorporation sets forth any special provision as to a director’s or corporate auditor’s power to vote in connection with his or her compensation, the borrowing powers exercisable by a representative director (subject to requisite internal authorizations as required by the Companies Act), the retirement age of any director or corporate auditor or any requirement to hold any shares of our capital stock.

The Companies Act specifically requires a resolution of the board of directors of a corporation to, among other things, acquire or dispose of material assets, borrow substantial amounts of money, employ or discharge from employment important employees, such as executive officers, and establish, change or abolish a material corporate division such as a branch office. A resolution of our board of directors is also specifically required for the establishment of a control system to ensure the adequacy of our affairs, such as a control system to ensure the exercise of our directors’ duty to comply with laws and regulations and our articles of incorporation. Our regulations of the board of directors require a resolution of our board of directors for the borrowing of significant amounts of money or the guarantee of debt by Wacoal Holdings. Our regulations of the board of directors also require a resolution of our board of directors to approve any transaction between Wacoal Holdings and one of its directors, any allocation of the remuneration and bonuses of directors as previously determined or approved by the general meeting of our shareholders and any determination of the amount and manner of payment of retirement allowances or condolence money payable to directors, the determination of which has been previously entrusted to our board of directors by the general meeting of our shareholders in accordance with the Companies Act.

Capital Stock

General

Effective as of January 5, 2009, a new central book-entry transfer system for listed shares of Japanese companies was established pursuant to the Act Concerning Book-Entry Transfer of Corporate Bonds, Shares, etc. and regulations thereunder (collectively, the “Book-Entry Transfer Act”), and this system is applied to the shares of our common stock. Under this system, shares of all Japanese companies listed on any Japanese stock exchange are dematerialized, and shareholders of listed shares must have accounts at account management institutions to hold their shares unless such shareholder has an account at Japan Securities Depository Center, Inc. (“JASDEC”), the only institution that is designated by the relevant authorities as a clearing house under the Book-Entry Transfer Act. “Account management institutions” are financial instruments business operators (i.e., securities companies), banks, trust companies and certain other financial institutions which meet the requirements prescribed by the Book-Entry Transfer Act. Transfer of shares of our common stock is effected exclusively through entry in the records maintained by JASDEC and the account management institutions. Title to our shares passes to the transferee at the time when the transfer of the shares is recorded at the transferee’s account at an account management institution. The holder of an account at an account management institution is presumed to be the legal holder of the shares recorded in such account.

Under the Companies Act and the Book-Entry Transfer Act, in order for a shareholder to assert against us its rights to which it is entitled as of the record date (such as the right to vote at a general meeting of shareholders or receive dividends), the shareholder must have its name and address registered in our register of shareholders. Under the central book-entry transfer system, shareholders must notify the relevant account management institutions of information prescribed in the Book-Entry Transfer Act and our share handling regulations, including their names and addresses. The registration on the register of shareholders is made upon our receipt of necessary information from JASDEC (as described in “—Record Date” below). On the other hand, in order for a shareholder to assert directly against us its rights to which it is entitled regardless of record dates (such as certain “minority shareholders’ rights”, including the right to propose a matter to be considered at a general meeting of shareholders, but excluding the right to request us to purchase or sell shares constituting less than a full unit as described in “—Unit Share System” below), JASDEC will, upon the shareholder’s request, issue a notice of certain information including the name and address of such shareholder to us. Thereafter, the shareholder would be required to present us with a receipt of the request of the notice in accordance with our share handling regulations. Under the Book-Entry Transfer Act, the shareholder must exercise such shareholders’ right within four weeks after the notice above has been given.

Non-resident shareholders are required to appoint a standing proxy in Japan or provide a mailing address in Japan. Each such shareholder must give notice of the standing proxy or mailing address to the relevant account management institution. The notice will be forwarded to the company through JASDEC. Japanese securities companies and commercial banks customarily act as standing proxies and provide related services for standard fees. Notices from the company to non-resident shareholders are delivered to such standing proxies or mailing addresses.

The registered holder of the deposited shares underlying the American Depositary Shares (ADSs) is the depositary for the ADSs. Accordingly, holders of ADSs are not able to directly assert shareholders’ rights against us.

Authorized Shares

Under our articles of incorporation, we are authorized to issue 500,000,000 shares of common stock with no par value.

Distributions of Surplus

General

Under the Companies Act, distributions of cash or other assets by a joint stock corporation to its shareholders, so called “dividends”, are referred to as “distributions of Surplus” (“Surplus” is defined in “—Restriction on Distributions of Surplus” below). Subject to certain limitations described in “—Restriction on Distributions of Surplus” below, we may make any number of distributions of Surplus per fiscal year to shareholders or pledgees of record as of March 31 of each year or any other record date set by our board of directors of which not less than two weeks’ prior public notice must be given. Distributions of Surplus are required in principle to be authorized by a resolution of a general meeting of our shareholders, but may also be made pursuant to a resolution of our board of directors if all the requirements described in (a) through (c) are met:

	(a)		our articles of incorporation provide that the board of directors has the authority to decide to make distributions of Surplus;

	(b)		the normal term of office of our directors is not longer than one year; and

	(c)		our non-consolidated annual financial statements and certain documents for the latest fiscal year present fairly its assets and profit or loss, as required by ordinances of the Ministry of Justice.

We currently meet the requirements in (a) and (b) above.

We are not obligated to pay any dividends that remain unclaimed for a period of three years after the date on which they first become payable.

Distributions of Surplus may be made in cash or in-kind in proportion to the number of shares held by each shareholder. A resolution of a general meeting of our shareholders or our board of directors authorizing a distribution of Surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders and the effective date of the distribution. If a distribution of Surplus is to be made in-kind, we may, pursuant to a resolution of a general meeting of our shareholders or our board of directors, as the case may be, grant a right to our shareholders to require us to make such distribution in cash instead of in-kind. If no such right is granted to the shareholders, the relevant distribution of Surplus must be approved by a special resolution of a general meeting of our shareholders (see “—Voting Rights” below with respect to a “special resolution”).

In Japan the “ex-dividend” date and the record date for dividends precede the date of determination of the amount of the dividend to be paid. The market price of shares generally goes ex-dividend on the third business day prior to the record date.

Restriction on Distributions of Surplus

When we make a distribution of Surplus, we must set aside in our additional paid-in capital and/or legal reserve an amount equal to one-tenth of the amount of Surplus so distributed until the sum of our additional paid-in capital and legal reserve reaches one-quarter of our stated capital.

The amount of Surplus at any given time must be calculated in accordance with the following formula:

A + B + C + D - (E + F + G)

In the above formula:


“A”	=	the total amount of other capital surplus and other retained earnings, each such amount being that appearing on our non-consolidated balance sheet as of the end of the last fiscal year

“B”	=	(if we have disposed of our treasury stock after the end of the last fiscal year) the amount of the consideration for such treasury stock received by us less the book value thereof

“C”	=	(if we have reduced our stated capital after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to additional paid-in capital or legal reserve (if any)

“D”	=	(if we have reduced our additional paid-in capital or legal reserve after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to stated capital (if any)

“E”	=	(if we have cancelled our treasury stock after the end of the last fiscal year) the book value of such treasury stock

“F”	=	(if we have distributed Surplus to our shareholders after the end of the last fiscal year) the total book value of the Surplus so distributed

“G”	=	certain other amounts set forth in ordinances of the Ministry of Justice, including (if we have reduced Surplus and increased its stated capital, additional paid-in capital or legal reserve after the end of the last fiscal year) the amount of such reduction and (if we have distributed Surplus to our shareholders after the end of the last fiscal year) the amount set aside in our additional paid-in capital or legal reserve (if any) as required by ordinances of the Ministry of Justice

The aggregate book value of Surplus distributed by us may not exceed a prescribed distributable amount (the “Distributable Amount”), as calculated on the effective date of such distribution. The Distributable Amount at any given time is equal to the amount of Surplus less the aggregate of (i) the book value of our treasury stock, (ii) the amount of consideration for any of our treasury stock disposed of by us after the end of the last fiscal year and (iii) certain other amounts set forth in ordinances of the Ministry of Justice, including (if the sum of one-half of goodwill and the deferred assets exceeds the total of stated capital, additional paid-in capital and legal reserve, each such amount being that appearing on our non-consolidated balance sheet as of the end of the last fiscal year) all or certain part of such exceeding amount as calculated in accordance with the ordinances of the Ministry of Justice.

If we have become, at our option, a company with respect to which the consolidated balance sheet should also be taken into consideration in the calculation of the Distributable Amount (renketsu haito kisei tekiyo kaisha), we will be required to further deduct from the amount of Surplus a certain amount which is calculated based on our non-consolidated and consolidated balance sheets as of the end of the previous fiscal year as provided by ordinance of the Ministry of Justice.

If we have prepared interim financial statements as described below, and if such interim financial statements have been approved by our board of directors or (if so required by the Companies Act) by a general meeting of our shareholders, then the Distributable Amount must be adjusted to take into account the amount of profit or loss and the amount of consideration for any of our treasury stock disposed of by us, during the period in respect of which such interim financial statements have been prepared. We may prepare non-consolidated interim financial statements consisting of a balance sheet as of any date subsequent to the end of the last fiscal year and an income statement for the period from the first day of the current fiscal year to the date of such balance sheet. Interim financial statements so prepared by us must be audited by our corporate auditors and independent auditor, as required by the ordinances of the Ministry of Justice.

Stock Splits

We may at any time split our shares in issue into a greater number of shares by resolution of our board of directors, and may in principle amend our articles of incorporation to increase the number of the authorized shares to be issued in proportion to the relevant stock split pursuant to a resolution of our board of directors rather than a special shareholders resolution (as described in “—Voting Rights” below), which is otherwise required for amending our articles of incorporation.

When a stock split is to be made, we must give public notice of the stock split, specifying the record date thereof, at least two weeks prior to the record date. Under the central book-entry transfer system operated by JASDEC, we must also give notice to JASDEC regarding a stock split at least two weeks prior to the relevant record date. On the effective date of the stock split, the number of shares recorded in all accounts held by our shareholders at account managing institutions or JASDEC will be increased in accordance with the applicable ratio.

Consolidation of Shares

We may at any time consolidate our shares in issue into a smaller number of shares by a special shareholders resolution (as described in “—Voting Rights” below). When a consolidation of shares is to be made, we must give public notice or notice to each shareholder at least two weeks prior to the effective date of the consolidation of shares. Under the central book-entry transfer system operated by JASDEC, we must also give notice to JASDEC regarding a consolidation of shares at least two weeks prior to the effective date of the consolidation of shares. On the effective date of the consolidation of shares, the number of shares recorded in all accounts held by our shareholders at account managing institutions or JASDEC will be decreased in accordance with the applicable ratio. We must disclose the reason for the consolidation of shares at the general meeting of shareholders at which the resolution is proposed.

General Meeting of Shareholders

Pursuant to our articles of incorporation, an ordinary general meeting of our shareholders is convened in June of each year. In addition, we may hold an extraordinary general meeting of our shareholders whenever necessary.

Notice of a shareholders’ meeting, setting forth the place, time and purpose thereof, must be mailed to each shareholder having voting rights (or, in the case of a non-resident shareholder, to the resident proxy or mailing address thereof in Japan) at least two weeks prior to the date set for the meeting. Under the Companies Act, such notice may be given to shareholders by electronic means, subject to the consent of the relevant shareholders.

Any shareholder or group of shareholders holding at least 3% of the total number of voting rights (see “—Unit Share System” below) for a period of six months or more may request the convocation of a general meeting of our shareholders for a particular purpose by specifying the purpose and reason for convocation to our representative director. Unless such shareholders’ meeting is convened promptly or a convocation notice of a meeting which is to be held not later than eight weeks from the day of such demand is dispatched, the requesting shareholder may, upon obtaining a court approval, convene such shareholders’ meeting.

Any shareholder or group of shareholders holding at least 300 voting rights or 1% of the total number of voting rights for six months or more may propose a matter to be considered at a general meeting of our shareholders and may request to include a summary of the proposal of such matter in the notice to shareholders, by submitting a request to a representative director at least eight weeks prior to the date set for such meeting.

Voting Rights

A holder of shares constituting one or more whole units (see “—Unit Share System” below) is entitled to one vote for each whole unit of shares, except that, in general, the following holders are not entitled to vote:

	•		Wacoal Holdings (through its treasury shares) and

	•		corporate shareholders and certain other entities one-quarter or more of the total voting rights of which are directly or indirectly held by Wacoal Holdings.

Except as otherwise provided by law or by our articles of incorporation, a resolution can be adopted at a general meeting of our shareholders by a majority of the total number of voting rights represented at the meeting. Under the Companies Act and our articles of incorporation, the quorum for the election of directors and corporate auditors is one-third of the total number of voting rights. Our shareholders are not entitled to cumulative voting in the election of directors. Shareholders may exercise their voting rights through proxies, provided that the proxies are also shareholders holding voting rights. Our shareholders also may cast their votes in writing. Holders of shares who do not attend a general meeting of our shareholders may also exercise their voting rights by electronic means if our board of directors approves such method of exercising voting rights.

The Companies Act provides that certain important matters are to be approved by a “special resolution” of a general meeting of shareholders. Under our articles of incorporation, the quorum for a special resolution is one-third of the total number of voting rights and the approval of at least two-thirds of the voting rights represented at the meeting is required for adopting a special resolution. Such important matters include:

	(a)		purchase of shares by us from a specific shareholder other than our subsidiary;

	(b)		consolidation of shares;

	(c)		issuance or transfer of new shares or existing shares held by us as treasury stock to persons other than shareholders at a “specially favorable” price;

	(d)		issuance of stock acquisition rights (including those incorporated in bonds with stock acquisition rights) to persons other than our shareholders under “specially favorable” conditions;

	(e)		removal of our corporate auditor;

	(f)		exemption from liability of our directors, corporate auditors or independent auditors;

	(g)		reduction of stated capital (subject to certain exceptions);

	(h)		distribution of Surplus in-kind with respect to which shareholders are not granted the right to require us to make a cash distribution instead of an in-kind distribution;

	(i)		any amendment to our articles of incorporation (except for such amendments that may be made without approval by shareholders under the Companies Act);

	(j)		transfer of all or a substantial portion of our business;

	(k)		acquisition of the business of another company requiring approval of the shareholders;

	(l)		dissolution, merger or consolidation requiring approval of our shareholders;

	(m)		corporate split requiring approval of our shareholders; and

	(n)		establishment of a parent and wholly-owned subsidiary relationship by way of a share transfer (kabushiki-iten) or share exchange (kabushiki-kokan) requiring approval of the shareholders.

Rights to be Allotted Shares

The holders of our shares of capital stock have no pre-emptive rights under our articles of incorporation. Authorized but unissued shares may be issued at such times and upon such terms as our board of directors determines, subject to limitations as to the offering of new shares at a “specifically favorable” price mentioned under “—Voting Rights” above. Our board of directors may, however, determine that our shareholders will be given subscription rights regarding a particular issuance of new shares, in which case such rights must be given on uniform terms to all shareholders as of a record date of which not less than two weeks prior public notice must be given. Each shareholder to whom such rights are given must also be given notice of the expiration thereof at least two weeks’ prior to the date on which such rights expire.

The right to receive allotments of new shares may not be transferred. However, we may allot stock acquisition rights to shareholders without consideration and such stock acquisition rights are transferable. See “—Stock Acquisition Rights” below.

Stock Acquisition Rights

We may issue stock acquisition rights (shinkabu yoyakuken). Holders of stock acquisition rights are entitled to acquire shares from us upon payment of the applicable exercise price and subject to other terms and conditions thereof. We may also issue bonds with stock acquisition rights (shinkabu yoyakuken-tsuki shasai). The issuance of stock acquisition rights and bonds with stock acquisition rights may be authorized by our board of directors unless it is made under “specially favorable” conditions, as described in “—Voting Rights” above.

Liquidation Rights

In the event of our liquidation, the assets remaining after payment of all debts and liquidation expenses and taxes will be distributed among the holders of our shares of common stock in proportion to the respective numbers of shares held by each holder.

Record Date

March 31 of each year is the record date for the determination of our shareholders entitled to receive our year-end dividends and to vote at the ordinary general meeting of our shareholders with respect to that fiscal year. In addition, we may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice.

Under the Book Entry Transfer Act, we are required to give notice of each record date to JASDEC at least two weeks prior to such record date. JASDEC is required to promptly give us notice of the names and addresses of our shareholders, the number of shares of common stock held by them and other relevant information as of such record date.

Acquisition by Us of Our Capital Stock

We may acquire our shares of capital stock (i) by soliciting all of our shareholders to offer to sell shares held by them (in such case, certain terms of such acquisition, such as the total number of shares to be purchased and the total amount of consideration, will be set by an ordinary

resolution of a general meeting of our shareholders in advance, and such acquisition will be effected pursuant to a resolution of our board of directors), (ii) from a specific shareholder other than any of our subsidiaries (pursuant to a special resolution of a general meeting of our shareholders), (iii) from any of our subsidiaries (pursuant to a resolution of our board of directors), or (iv) by way of purchase on any Japanese stock exchange on which the shares are listed or by way of tender offer (in either case pursuant to an ordinary resolution of a general meeting of our shareholders or a resolution of our board of directors). In the case of (ii) above, any other shareholder may make a request to our representative director that such other shareholder be included as a seller in the proposed purchase, provided that no such right will be available if the purchase price or any other consideration to be received by the relevant specific shareholder does not exceed the last trading price of the shares on the relevant stock exchange on the day immediately preceding the date on which the resolution mentioned in (ii) above was adopted (or, if there is no trading in the shares on the stock exchange or if the stock exchange is not open on such day, the price at which the shares are first traded on such stock exchange thereafter).

The total amount of the purchase price of shares may not exceed the Distributable Amount, as described in “—Distributions of Surplus—Restriction on Distributions of Surplus” above.

The Companies Act permits us to hold shares acquired by us as treasury stock. Treasury stock may be held by us for any time period and may be cancelled by resolution of our board of directors. We may also transfer shares held by us as treasury stock to any person, subject to a resolution of our board of directors and subject also to other requirements similar to those applicable to the issuance of new shares. We may also utilize our treasury stock for the purpose of transfer to any person upon the exercise of stock acquisition rights or for the purpose of acquiring another company by way of merger, share exchange or corporate split through the exchange of treasury stock for shares or assets of the acquired company. No specific approval by our board of directors or shareholders at a meeting of shareholders is required for such utilization of treasury stock, although the grant of the relevant stock acquisition rights or the relevant merger, share exchange or corporate split must be approved by our board of directors or shareholders at our shareholders’ meeting, as the case may be.

Unit Share System

Under our articles of incorporation, 1,000 shares constitute one “unit”. Our board of directors is permitted to reduce the number of shares constituting a unit or to abolish the unit share system in its entirety by amending our articles of incorporation without approval by the shareholders. The number of shares constituting one unit may not exceed 1,000 or 1/200 of the issued shares.

Under the unit share system, a shareholder has one vote for each unit of shares held by it. Shares not constituting a full unit carry no voting rights and are excluded for the purposes of calculating the quorum for voting purposes. Moreover, under our articles of incorporation, holders of shares constituting less than one unit do not have other shareholder rights, except that such holders may not be deprived of certain rights specified in the Companies Act or an ordinance of the Ministry of Justice, including the right to receive distribution of Surplus.

Under the central book-entry transfer system operated by JASDEC, shares constituting less than one unit are generally transferable. Under the rules of the Japanese stock exchanges, however, shares constituting less than one unit do not comprise a trading unit, except in limited circumstances, and accordingly may not be sold on the Japanese stock exchanges.

A holder of shares representing less than one unit may at any time request us to purchase its shares. These shares will be purchased at (i) the closing price of the shares reported by the Tokyo Stock Exchange on the day when the request to purchase is received by the share registration agent or (ii) if no sale has taken place on the Tokyo Stock Exchange on that day, then the price at which sale of shares is effected on such stock exchange immediately thereafter.

Our articles of incorporation provide that a holder of shares representing less than one unit may request us to sell any shares we may have to such holder so that the holder can raise its holding up to a whole unit. These shares will be sold at (i) the closing price of the shares reported by the Tokyo Stock Exchange on the day when the request to sell is received by the share registration agent or (ii) if no sale has taken place on the Tokyo Stock Exchange on that day, then the price at which sale of shares its effected on such stock exchange immediately thereafter.

On May 27, 2011, we announced our intent to examine decreasing the number of shares that constitute a unit in light of a number of factors, including stock market trends, our share price, demand for and supply of our shares, and costs and benefits.

Sale by Us of Shares Held by Shareholder Whose Location Is Unknown

We are not required to send a notice to a shareholder if a notice to the shareholder fails to arrive at the registered address of the shareholder in our register of shareholders or at the address otherwise notified to us continuously for five years or more.

In addition, we may sell or otherwise dispose of shares of common stock for which the location of the shareholder is unknown. Generally, if (i) notices to a shareholder fail to arrive continuously for five years or more at the shareholder’s registered address in our register of shareholders or at the address otherwise notified to us, and (ii) the shareholder fails to receive dividends on the shares continuously for five years or more at the address registered in our register of shareholders or at the address otherwise notified to us, we may sell or otherwise dispose of the shareholder’s shares after giving at least three months’ prior public and individual notice, and hold or deposit the proceeds of such sale or disposal of shares for such shareholder.

Reporting of Substantial Shareholdings

Pursuant to the Financial Instruments and Exchange Law of Japan and regulations thereunder, a person or group of persons beneficially holding more than 5% of the total issued shares (for this purpose shares issuable to such persons or group of persons upon conversion of convertible securities or exercise of stock acquisition rights are taken into account in determining both the number of shares held by such persons or group of persons and the issuer’s total issued shares) of a company listed on any Japanese stock exchange or traded on the over-the-counter market is required to file with the director of a competent local finance bureau within five business days a report containing the identity of such person or persons, the purpose of such holding and certain other information prescribed by regulations. A similar report must also be made (with certain exceptions) if the percentage of such holding subsequently increases or decreases by 1% or more or if any change occurs in material matters set out in reports previously filed. Any such report will be filed with the relevant local finance bureau through the Electronic Disclosure for Investors’ Network (EDINET) system. Copies of such report must also be furnished to the issuers of such shares.

Liability to Further Calls or Assessments

All of our currently outstanding shares, including shares represented by the ADSs, are fully paid and nonassessable.

Miscellaneous

On May 8, 2009, our board of directors approved amendments to our basic policy for measures against the acquisition of a substantial shareholding (i.e., defensive measures against takeovers, or the “Rights Plan”), which policy has been in effect since June 2006. These amendments were approved at the ordinary general meeting of our shareholders held on June 26, 2009. For the purposes of securing or enhancing enterprise value and the common interests of our shareholders, the amendment allows our board of directors to obtain a resolution of a general meeting of our shareholders to implement a gratis allocation of stock acquisition rights.

The outline of the Rights Plan is as follows:

(a)

Formulation of Procedures for Implementation of the Rights Plan

Under the Rights Plan, we will demand that any third party purchaser who launches or proposes a purchase or any similar act, provide information in advance concerning the purchase and ensure sufficient time and information to consider the purchase.

(b)

Gratis Allocation of Stock Acquisition Rights and Independent Committee

If the purchase falls under certain prescribed conditions such as, the purchaser fails to comply with the procedures as prescribed by the Rights Plan, or in the event of any purchase that threatens our corporate value and the common interests of our shareholders, an independent committee will advise our board of directors to implement a gratis allocation of stock acquisition rights with terms that prohibit the purchaser from exercising such rights and with call rights for the stock acquisition rights in exchange for our stock.

Even if the purchase falls under the prescribed conditions, if the independent committee determines that it is reasonable to obtain a resolution of a general meeting of our shareholders to implement a gratis allocation of stock acquisition rights, it will recommend to our board of directors that a general meeting of our shareholders be convened and that the implementation of a gratis allocation of stock acquisition rights be placed on the agenda.

We will give the utmost respect to the advice provided by the independent committee in order to prevent our board of directors from making an arbitrary decision concerning any trigger or non-trigger of a gratis allocation of stock acquisition rights or other matters concerning the purchase. We will ensure transparency by seeking the judgment of the independent committee, which will be comprised of members appointed from (i) our outside directors, (ii) our outside corporate auditors or (iii) independent experts (experienced company managers, persons with a governmental background, legal counsel, certified public accountants, academic experts, etc.) who will be independent from our executive officers as well as through timely disclosure of relative information to our shareholders.

There are no sinking fund provisions relating to us.

C. Material Contracts.

None.

D. Exchange Controls.

There are no foreign exchange control laws or regulations in Japan that materially affect the import or export of capital, including the availability of cash and cash equivalents for use by our company, or the remittance of dividends or other payments to nonresident holders of our shares or ADSs.

The Foreign Exchange and Foreign Trade Law of Japan and its related cabinet orders and ministerial ordinances (the “Foreign Exchange Regulations”) govern the acquisition and holding of shares of our capital stock by “exchange non-residents” and by “foreign investors”. The Foreign Exchange Regulations currently in effect do not, however, affect transactions between exchange non-residents to purchase or sell shares outside Japan using currencies other than Japanese yen.

Exchange non-residents are:

	•		individuals who do not reside in Japan; and

	•		corporations whose principal offices are located outside Japan.

Generally, branches and other offices of non-resident corporations that are located within Japan are regarded as residents of Japan. Conversely, branches and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents.

Foreign investors are:

	•		individuals who are exchange non-residents;

	•		corporations that are organized under the laws of foreign countries or whose principal offices are located outside of Japan; and

	•		corporations (i) 50% or more of whose shares are held, directly or indirectly, by individuals who are exchange non-residents and/or corporations (x) that are organized under the laws of foreign countries or (y) whose principal offices are located outside of Japan or (ii) a majority of whose officers, or officers having the power of representation, are individuals who are exchange non-residents.

In general, the acquisition of shares of a Japanese company (such as the shares of our capital stock) by an exchange non-resident from a resident of Japan is not subject to any prior filing requirements. In certain limited circumstances, however, the Minister of Finance may require prior approval of an acquisition of this type. While prior approval, as described above, is not required, in the case where a resident of Japan transfers shares of a Japanese company (such as the shares of our capital stock) for consideration exceeding ¥100 million to an exchange non-resident, the resident of Japan who transfers the shares is required to report on the transfer to the Minister of Finance within 20 days from the date of the transfer, unless the transfer was made through a bank or financial instruments business operator licensed under Japanese law.

If a foreign investor acquires shares of a Japanese company that is listed on a Japanese stock exchange (such as the shares of our capital stock) or that is traded on an over-the-counter market in Japan and, as a result of the acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds 10% or more of the issued shares of the relevant company, the foreign investor must file a report of the acquisition with the Minister of Finance and any other competent Ministers having jurisdiction over that Japanese company by the 15th day of the month following the month of the acquisition. In limited circumstances, such as where the foreign investor is in a country that is not listed on an exemption schedule in the Foreign Exchange Regulations, or where that Japanese company is engaged in certain businesses designated by the Foreign Exchange Regulations, a prior notification of the acquisition must be filed with the Minister of Finance and any other competent Ministers, who may then modify or prohibit the proposed acquisition.

Under the Foreign Exchange Regulations, dividends paid on and the proceeds from sales in Japan of shares of our capital stock held by non-residents of Japan may generally be converted into any foreign currency and repatriated abroad.

E. Taxation.

Japanese Taxation

The discussion below is not a comprehensive description of all of the Japanese tax consequences that may be relevant with respect to the ownership and disposition of common stock or ADSs. We urge you to consult your own tax advisor regarding your particular circumstances and the Japanese tax consequences to you of owning and disposing of common stock or ADSs.

The following is a summary of the principal Japanese tax consequences (limited to national taxes) to holders of common stock or ADSs who are either individuals who are not residents of Japan or non-Japanese corporations without a permanent establishment in Japan (“non-resident Holders”).

This summary is based upon the tax laws of Japan, as well as on the Income Tax Treaty between Japan and the United States (the “Treaty”), all as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect. Such change could materially and adversely affect the tax consequences described below.

For purposes of this discussion, an “Eligible U.S. Holder” is a U.S. Holder (defined below) that:

(a) Is a resident of the United States for purposes of the Treaty, as applicable from time to time;

(b) Does not maintain a permanent establishment or fixed base in Japan to which shares of common stock or ADSs are attributable and through which the U.S. Holder carries on or has carried on business (or, in the case of an individual, performs or has performed independent personal services); and

(c) Is not otherwise ineligible for benefits under the Treaty with respect to income and gain derived in connection with the shares of common stock or ADSs.

This summary does not discuss any aspects of Japanese tax law other than income taxation, inheritance and gift taxation. Investors are urged to consult their tax advisors regarding the Japanese and other tax consequences of acquiring, owning and disposing of our common stock or ADSs. In particular, where relevant, investors are urged to confirm their status as Eligible U.S. Holders with their tax advisors and to discuss with their tax advisors any possible consequences of their failure to qualify as Eligible U.S. Holders.

Generally, a non-resident Holder is subject to withholding of Japanese income tax on dividends paid by Japanese corporations. Stock splits are, in general, not subject to withholding of Japanese income tax.

In general, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to a non-resident Holder is 20%. With respect to dividends paid on listed shares issued by a Japanese corporation (such as the shares of Wacoal Holdings) to any corporate or individual shareholders (including those shareholders who are non-resident Holders), except for any individual shareholder who holds 5% (3% for dividends due and payable on or after October 1, 2011) or more of the outstanding total of the shares issued by the relevant Japanese corporation, the aforementioned 20% withholding tax rate is reduced to (i) 7% for dividends due and payable on or before December 31, 2013 and (ii) 15% for dividends due and payable on or after January 1, 2014.

Under the Treaty, the maximum rate of Japanese withholding tax which may be imposed on dividends paid by a Japanese corporation to an Eligible U.S. Holder that is a portfolio investor is generally limited to 10% of the gross amount actually distributed, and Japanese withholding tax with respect to dividends paid by a Japanese corporation to an Eligible U.S. Holder that is a pension fund is exempt from Japanese taxation by way of withholding or otherwise unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension fund.

The amount of such withholding tax imposed on dividends payable to the holders of our common stock and ADSs who reside in a country other than the United States is dependent upon the provisions of such treaties, conventions or agreements as may exist between such country and Japan. If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by Wacoal Holdings to any particular non-resident Holder is lower than the withholding tax rate otherwise applicable under Japanese tax law or any particular non-resident Holder is exempt from Japanese income tax with respect to such dividends under the income tax treaty applicable to such particular non-resident Holder, such non-resident Holder who is entitled to a reduced rate of or exemption from Japanese withholding tax on payment of dividends on shares of common stock by Wacoal Holdings is required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax on Dividends in advance through Wacoal Holdings to the relevant tax authority before the payment of dividends. A standing proxy for non-resident Holders of a Japanese corporation may provide this application service. With respect to ADSs, this

reduced rate or exemption is applicable if The Bank of New York Mellon or its agent submits two Application Forms (one before payment of dividends, the other within eight months after Wacoal Holdings’ fiscal year-end). To claim this reduced rate or exemption, any relevant non-resident Holder of ADSs will be required to file a proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other information or documents as may be required by the depositary. A non-resident Holder who is entitled, under an applicable income tax treaty, to a reduced treaty rate lower than the withholding tax rate otherwise applicable under Japanese tax law or an exemption from the withholding tax, but failed to submit the required application in advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate under an applicable tax treaty (if such non-resident Holder is entitled to a reduced treaty rate under the applicable income tax treaty) or the whole of the withholding tax withheld (if such non-resident Holder is entitled to an exemption under the applicable income tax treaty) from the relevant Japanese tax authority.

Gains derived from the sale of shares of common stock or ADSs outside Japan by a non-resident Holder holding such shares of common stock or ADSs as portfolio investors are, in general, not subject to Japanese income or corporation tax. Eligible U.S. Holders are not subject to Japanese income or corporation tax with respect to such gains under the Treaty.

Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired our common stock or ADSs as legatee, heir or donee, even though neither the individual nor the decedent nor the donor is a resident in Japan.

Holders of our common stock or ADSs should consult their tax advisors regarding the effect of these taxes and, in the case of U.S. Holders, the possible application of the Estate and Gift Tax Treaty between the United States and Japan.

U.S. Federal Income Taxation

The following is a summary of the material U.S. federal income tax consequences of the ownership and disposition of common stock or ADSs. The following discussion is not exhaustive of all possible tax considerations. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), regulations promulgated under the Code by the U.S. Treasury Department (including proposed and temporary regulations), rulings, current administrative interpretations and official pronouncements of the Internal Revenue Service (the “IRS”), and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect. Such change could materially and adversely affect the tax consequences described below. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.

This discussion does not address state, local, or foreign tax consequences of the ownership and disposition of common stock or ADSs. See “—Japanese Taxation” above.

The United States-Japan income tax treaty may apply to income and gain derived from our common stock or ADSs. Where relevant, U.S. Holders (defined below) are urged to confirm with their tax advisors whether they are entitled to the benefits provided under the United States-Japan income tax treaty.

This summary is for general information only and does not address all aspects of U.S. federal income taxation that may be important to a particular holder in light of its investment or tax circumstances or to holders subject to special tax rules, such as: banks; financial institutions; insurance companies; dealers in stocks, securities, or currencies; traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; tax-exempt organizations; real estate investment trusts; regulated investment companies; qualified retirement plans, individual retirement accounts, and other tax-deferred accounts; expatriates of the United States; persons subject to the alternative minimum tax; persons holding common stock or ADSs as part of a straddle, hedge, conversion transaction, or other integrated transaction; persons who acquired common stock or ADSs pursuant to the exercise of any employee stock option or otherwise as compensation for services; persons actually or constructively holding 10% or more of our voting stock; and U.S. Holders (as defined below) whose functional currency is other than the U.S. dollar.

This discussion is not a comprehensive description of all of the U.S. federal tax consequences that may be relevant with respect to the ownership and disposition of common stock or ADSs. We urge you to consult your own tax advisor regarding your particular circumstances and the U.S. federal income and estate tax consequences to you of owning and disposing of common stock or ADSs, as well as any tax consequences arising under the laws of any state, local, or foreign or other tax jurisdiction and the possible effects of changes in U.S. federal or other tax laws.

This summary is directed solely to holders that hold their common stock or ADSs as capital assets within the meaning of Section 1221 of the Code, which generally means as property held for investment. For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of common stock or ADSs that is any of the following:

	•		a citizen or resident of the United States or someone treated as a U.S. citizen or resident for U.S. federal income tax purposes;

	•		a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

	•		an estate, the income of which is subject to U.S. federal income taxation regardless of its source;

	•		a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust; or

	•		a trust in existence on August 20, 1996 that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

The term “Non-U.S. Holder” means a beneficial owner of common stock or ADSs that is not a U.S. Holder. As described in “—Taxation of Non-U.S. Holders” below, the tax consequences to a Non-U.S. Holder may differ substantially from the tax consequences to a U.S. Holder.

If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of common stock or ADSs, the U.S. federal income tax consequences to a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. A holder of common stock or ADSs that is a partnership and the partners in such partnership should consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of common stock or ADSs.

ADSs

As relates to the ADSs, this discussion is based in part upon the representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

Generally, a holder of ADSs will be treated as the owner of the underlying common stock represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if the holder exchanges ADSs for the underlying common stock represented by those ADSs. The holder’s adjusted tax basis in the common stock will be the same as the adjusted tax basis of the ADSs surrendered in exchange therefor, and the holding period for the common stock will include the holding period for the surrendered ADSs.

Taxation of U.S. Holders

The discussion in “Distributions on Common Stock or ADSs” and “Dispositions of Common Stock or ADSs” below assumes that we will not be treated as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. For a discussion of the rules that apply if we are treated as a PFIC, see the discussion in “—Passive Foreign Investment Company” below.

Distributions on Common Stock or ADSs

General. Subject to the discussion in “—Passive Foreign Investment Company” below, if you actually or constructively receive a distribution on common stock or ADSs, you must include the distribution in gross income as a taxable dividend on the date of your (or in the case of ADSs, the depositary’s) receipt of the distribution, but only to the extent of our current or accumulated earnings and profits, as calculated under U.S. federal income tax principles. Such amount must be included without reduction for any Japanese taxes withheld. Dividends paid by us will not be eligible for the dividends-received deduction allowed to corporations with respect to dividends received from certain domestic corporations. Dividends paid by us may or may not be eligible for preferential rates applicable to qualified dividend income, as described below.

To the extent a distribution exceeds our current and accumulated earnings and profits, it will be treated first as a non-taxable return of capital to the extent of your adjusted tax basis in the common stock or ADSs, and thereafter as capital gain. Preferential tax rates for long-term capital gain may be applicable to non-corporate U.S. Holders.

We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, you should expect that a distribution will generally be reported as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.

Qualified Dividend Income. With respect to non-corporate U.S. Holders (i.e., individuals, trusts, and estates), for taxable years beginning before January 1, 2013, dividends that are treated as qualified dividend income (“QDI”) are taxable at a maximum tax rate of 15%. Among other requirements, dividends generally will be treated as QDI if either (i) our ordinary shares are readily tradable on an established securities market in the United States, or (ii) we are eligible for the benefits of a comprehensive income tax treaty with the United States which includes an information exchange program and which is determined to be satisfactory by the U.S. Treasury. The IRS has determined that the United States-Japan income tax treaty is satisfactory for this purpose. In addition, for dividends to be treated as QDI, we must not be a PFIC (as discussed below) for either the taxable year in which the dividend was paid or the preceding taxable year. We do not believe that we were a PFIC for the preceding taxable year or will be a PFIC for the current taxable year. However, please see the discussion under “—Passive Foreign Investment Company” below. Additionally, in order to qualify for QDI treatment, you generally must have held the ordinary shares for more than 60 days during the 121-day period beginning 60 days prior to the ex-dividend date. However, your holding period will be reduced for any period during which the risk of loss is diminished.

Foreign Currency Distributions. You must include a dividend paid in foreign currency (e.g., Japanese yen) in income as a U.S. dollar amount based on the exchange rate in effect on the date such dividend is received, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, you generally will not recognize a foreign currency gain or loss. However, if you convert the foreign currency into U.S. dollars on a later date, you must include in income any gain or loss resulting from any exchange rate fluctuations. The gain or loss will be equal to the difference between (i) the U.S. dollar value of the amount you included in income when the dividend was received and (ii) the amount that you receive on the conversion of the foreign currency into U.S. dollars. Such gain or loss will generally be ordinary income or loss and U.S. source for U.S. foreign tax credit purposes.

In-Kind Distributions. Distributions to you of new common stock or ADSs or rights to subscribe for new common stock or ADSs that are received as part of a pro rata distribution to all of our shareholders will not be subject to U.S. federal income tax. The adjusted tax basis of the new common stock or ADSs or rights so received will be determined by allocating your adjusted tax basis in the old common stock or ADSs between the old common stock or ADSs and the new common stock or ADSs or rights received, based on their relative fair market values on the date of distribution. However, in the case of a distribution of rights to subscribe for common stock or ADSs, the adjusted tax basis of the new rights will be zero if the fair market value of the new rights is less than 15% of the fair market value of the old common stock or ADSs on the date of distribution and you do not make an election to determine the adjusted tax basis of the rights by allocation as described above. Your holding period for the new common stock or ADSs or rights will generally include the holding period for the old common stock or ADSs on which the distribution was made.

Foreign Tax Credits. Subject to certain conditions and limitations, including potential limitations under the United States-Japan income tax treaty, any Japanese taxes paid on or withheld from distributions from us and not refundable to you may be credited against your U.S. federal income tax liability or, alternatively, may be deducted from your taxable income. This election is made on a year-by-year basis and applies to all foreign taxes paid by you or withheld from you that year.

Distributions will constitute foreign source income for foreign tax credit limitation purposes. The foreign tax credit limitation is calculated separately with respect to specific classes of income. For this purpose, distributions characterized as dividends distributed by us will generally constitute “passive category income” or, in the case of certain U.S. Holders, “general category income”. Special limitations may apply if a dividend is treated as QDI (as defined above).

Since the rules governing foreign tax credits are complex, you should consult your own tax advisor regarding the availability of foreign tax credits in your particular circumstances.

The U.S. Treasury has expressed concerns that parties to whom ADSs are pre-released may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. Holders of ADSs. Such actions would also be inconsistent with the claiming of the preferential tax rates applicable to QDI, as defined above. Accordingly, the creditability of Japanese taxes and the availability of such preferential tax rates could be affected by future actions that may be taken by the U.S. Treasury or parties to whom ADSs are pre-released.

Dispositions of Common Stock or ADSs

Subject to the discussion in “—Passive Foreign Investment Company” below, you generally will recognize taxable gain or loss realized on the sale or other taxable disposition of common stock or ADSs equal to the difference between the U.S. dollar value of (i) the amount realized on the disposition (i.e., the amount of cash plus the fair market value of any property received), and (ii) your adjusted tax basis in the common stock or ADSs. Such gain or loss will be capital gain or loss.

If you have held the common stock or ADSs for more than one year at the time of disposition, such capital gain or loss will be long-term capital gain or loss. Preferential tax rates for long-term capital gain (currently, with a maximum rate of 15% for taxable years beginning before January 1, 2013) will apply to non-corporate U.S. Holders. If you have held the common stock or ADSs for one year or less, such capital gain or loss will be short-term capital gain or loss taxable as ordinary income at your marginal income tax rate. The deductibility of capital losses is subject to limitations.

Generally, any gain or loss recognized will not give rise to foreign source income for U.S. foreign tax credit purposes, unless a different result is achieved under the United States-Japanese income tax treaty. You should consult your own tax advisor regarding the effect of such treaty on the source of income.

You should consult your own tax advisor regarding the U.S. federal income tax consequences if you receive currency other than U.S. dollars upon the disposition of common stock or ADSs.

Passive Foreign Investment Company

We generally will be a PFIC under Section 1297 of the Code if, for a taxable year, either (i) 75% or more of our gross income for such taxable year is passive income (the “income test”) or (ii) 50% or more of the average percentage, generally determined by fair market value, of our assets during such taxable year either produce passive income or are held for the production of passive income (the “asset test”). “Passive income” includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.

Certain “look through” rules apply for purposes of the income and asset tests described above. If we own, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, we generally will be treated as if we (i) held directly a proportionate share of the other corporation’s assets, and (ii) received directly a proportionate share of the other corporation’s income. In addition, passive income does not include any interest, dividends, rents, or royalties that are received or accrued by us from a “related person” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to income of such related person that is not passive income.

Under the income and asset tests, whether or not we are a PFIC will be determined annually based upon the composition of our income and the composition and valuation of our assets, all of which are subject to change. In determining that we are not a PFIC, we are relying on our projected revenues and projected capital expenditures. If our actual revenues and capital expenditures do not match our projections, we may become a PFIC. For example, if we do not spend enough of the cash (a passive asset) we raise from any financing transactions we may undertake, the relative percentage of our passive assets will increase. In addition, our determination is based on a current valuation of our assets, including goodwill (generally an active asset). In calculating goodwill, we have valued our total assets based on our market capitalization, determined using the market price of our ordinary shares. If our market capitalization is less than anticipated or subsequently declines, this will decrease the value of our goodwill and we may become a PFIC. Furthermore, we have made a number of assumptions regarding the amount of value allocable to goodwill. We believe our valuation approach is reasonable. However, it is possible that the IRS will challenge the valuation of our assets, including goodwill, which may result in our being a PFIC.

Default PFIC Rules under Section 1291 of the Code. If we are treated as a PFIC with respect to a U.S. Holder, the U.S. federal income tax consequences to the U.S. Holder of the ownership and disposition of common stock or ADSs will depend on whether such U.S. Holder makes an election to treat us as a qualified electing fund (“QEF”) under Section 1295 of the Code (a “QEF Election”) or a mark-to-market election under Section 1296 of the Code (a “Mark-to-Market Election”). A U.S. Holder owning common stock or ADSs while we were or are a PFIC that has not made either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a “Non-Electing U.S. Holder”.

If you are a Non-Electing U.S. Holder, you will be subject to the default tax rules of Section 1291 of the Code with respect to:

	•		any “excess distribution” paid on common stock or ADSs, which means the excess (if any) of the total distributions received by you during the current taxable year over 125% of the average distributions received by you during the three preceding taxable years (or during the portion of your holding period for the common stock or ADSs prior to the current taxable year, if shorter); and

	•		any gain recognized on the sale or other taxable disposition (including a pledge) of common stock or ADSs.

			Under these default tax rules:

	•		any excess distribution or gain will be allocated ratably over your holding period for the common stock or ADSs;

	•		the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC will be treated as ordinary income in the current year;

	•		the amount allocated to each of the other years will be treated as ordinary income and taxed at the highest applicable tax rate in effect for that year; and

	•		the resulting tax liability from any such prior years will be subject to the interest charge applicable to underpayments of tax.

In addition, notwithstanding any election you may make, dividends that you receive from us will not be eligible for the preferential tax rates applicable to QDI (as discussed above in “—Distributions on Common Stock or ADSs”) if we are a PFIC either in the taxable year of the distribution or the preceding taxable year, but will instead be taxable at rates applicable to ordinary income.

Special rules for Non-Electing U.S. Holders will apply to determine U.S. foreign tax credits with respect to foreign taxes imposed on distributions on common stock or ADSs.

If we are a PFIC for any taxable year during which you hold common stock or ADSs, we will continue to be treated as a PFIC with respect to you for all succeeding years during which you hold common stock or ADSs, regardless of whether we actually continue to be a PFIC.

If we are treated as a PFIC in any year with respect to you, you will be required to file an annual return on IRS Form 8621 regarding distributions received on common stock or ADSs and any gain realized on the disposition of common stock or ADSs.

QEF Election. We currently do not intend to prepare or provide you with certain tax information that would permit you to make a QEF Election to avoid the adverse tax consequences associated with owning PFIC stock.

Mark-to-Market Election. U.S. Holders may make a Mark-to-Market Election, but only if the common stock or ADSs are marketable stock. The ADSs will be “marketable stock” as long as they remain listed on the Nasdaq Market and are regularly traded. Stock is “regularly traded” for any calendar year during which it is traded (other than in de minimis quantities) on at least 15 days during each calendar quarter. There can be no assurances, however, that our ADSs will be treated, or continue to be treated, as regularly traded.

If you own (or owned) ADSs while we are (or were) a PFIC and you make a Mark-to-Market Election, you generally will not be subject to the default rules of Section 1291 of the Code discussed above. Rather, you generally will be required to recognize ordinary income for any increase in the fair market value of the ADSs for each taxable year that we are a PFIC. You will also be allowed to deduct as an ordinary loss any decrease in the fair market value to the extent of net marked-to-market gain previously included in prior years. Your adjusted tax basis in the ADSs will be adjusted to reflect the amount included or deducted.

The Mark-to-Market Election will be effective for the taxable year for which the election is made and all subsequent taxable years, unless the ADSs cease to be marketable stock or the IRS consents to the revocation of the election. You should consult your own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.

One or more of our subsidiaries may also be classified as PFICs now or in the future, and furthermore, we or one or more of our subsidiaries may invest in the equity of other foreign corporations that are PFICs. In such cases, U.S. Holders will be subject to the PFIC rules with respect to their indirect ownership interests in such PFICs. U.S. Holders will not be able to make a QEF Election or a Mark-to-Market Election with respect to any of our subsidiaries that are PFICs, and there can be no assurance that U.S. Holders will be able to make such elections with respect to any other PFICs in which we or any of our subsidiaries invests.

Since the PFIC rules are complex, you should consult your own tax advisor regarding them and how they may affect the U.S. federal income tax consequences of the ownership and disposition of common stock or ADSs.

Legislative Developments

Signed into law March 30, 2010, the Health Care and Education Reconciliation Act provides, among other things, with respect to taxable years beginning after December 31, 2012, certain U.S. persons, including individuals, estates and trusts, will be subject to an additional 3.8% Medicare tax on unearned income. For individuals, the additional Medicare tax applies to the lesser of (i) “net investment income” or (ii) the excess of “modified adjusted gross income” over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). “Net investment income” generally equals the taxpayer’s gross investment income reduced by the deductions that are allocable to such income.

You should consult your tax advisors regarding the implications of the additional Medicare tax resulting from your ownership and disposition of ordinary shares.

Information Reporting and Backup Withholding

Generally, information reporting requirements will apply to distributions on common stock or ADSs or proceeds on the disposition of common stock or ADSs paid within the United States (and, in certain cases, outside the United States) to U.S. Holders other than certain exempt recipients, such as corporations. Furthermore, backup withholding (currently at 28%) may apply to such amounts if the U.S. Holder fails to (i) provide a correct taxpayer identification number, (ii) report interest and dividends required to be shown on its U.S. federal income tax return, or (iii) make other appropriate certifications in the required manner. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9.

Backup withholding is not an additional tax. Amounts withheld as backup withholding from a payment to you may be credited against your U.S. federal income tax liability and you may obtain a refund of any excess amounts withheld by filing the appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

Taxation of Non-U.S. Holders

Distributions on Common Stock or ADSs

Subject to the discussion in “—Information Reporting and Backup Withholding” below, as a Non-U.S. Holder, you generally will not be subject to U.S. federal income tax, including withholding tax, on distributions received on common stock or ADSs, unless the distributions are effectively connected with a trade or business that you conduct in the United States (and, if an applicable income tax treaty so requires, attributable to a permanent establishment that you maintain in the United States).

If distributions are effectively connected with a U.S. trade or business (and, if applicable, attributable to a U.S. permanent establishment), you generally will be subject to tax on such distributions in the same manner as a U.S. Holder, as described in “—Taxation of U.S. Holders—Distributions on Common Stock or ADSs” above. In addition, any such distributions received by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

Dispositions of Common Stock or ADSs

Subject to the discussion in “—Information Reporting and Backup Withholding” below, as a Non-U.S. Holder, you generally will not be subject to U.S. federal income tax, including withholding tax, on any gain recognized on a sale or other taxable disposition of common stock or ADSs, unless (i) the gain is effectively connected with a trade or business that you conduct in the United States (and, if an applicable income tax treaty so requires, attributable to a permanent establishment that you maintain in the United States), or (ii) you are an individual and are present in the United States for at least 183 days in the taxable year of the disposition, and certain other conditions are present.

If you meet the test in clause (i) above, you generally will be subject to tax on any gain that is effectively connected with your conduct of a trade or business in the United States in the same manner as a U.S. Holder, as described in “—Taxation of U.S. Holders—Dispositions of Common Stock or ADSs” above. Effectively connected gain realized by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

If you meet the test in clause (ii) above, you generally will be subject to tax at a 30% rate on the amount by which your U.S. source capital gain exceeds your U.S. source capital loss.

Information Reporting and Backup Withholding

Payments to Non-U.S. Holders of distributions on, or proceeds from the disposition of, common stock or ADSs are generally exempt from information reporting and backup withholding. However, a Non-U.S. Holder may be required to establish that exemption by providing certification of non-U.S. status on an appropriate IRS Form W-8.

F. Dividends and Paying Agents.

Not applicable.

G. Statement by Experts.

Not applicable.

H. Documents on Display.

Documents referred to in this annual report on Form 20-F that have been filed with the SEC and Wacoal Holdings’ annual reports on Form 20-F, periodic reports on Form 6-K and other documents with the SEC can be inspected and copied without charge at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Investors may also get copies by writing the SEC and paying the prescribed fee. Our SEC filings are also available to the public on the SEC’s website (located at www.sec.gov) and from commercial document retrieval services.

In addition, documents referred to in this annual report filing may be inspected at our Kyoto headquarters, located at 29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan.

I. Subsidiary Information.

Not applicable.

Item 11. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk, including changes in prices of marketable securities and marketable investments, interest rates and foreign exchange rates. We use derivative financial instruments to reduce our exposure to market risks from changes in interest rates and foreign exchange rates. The instruments primarily used are foreign exchange forward contracts and interest rate swaps. We believe our credit risk is minimal on these transactions, as the counterparties are major financial institutions. We do not hold or issue financial instruments for trading purposes.

Equity Price Risk

Maturities and fair values of our marketable securities as of March 31, 2011 were as follows (yen in millions):

Due

after

from

Due

Year ended

Due

one to

two to

three to

four to

after

March 31,

Debt

within

two

three

four

five

Equity

2011

securities

one year

years

securities

Cost

4,467

1,098

102

464

210

728

1,865

22,165

Fair value

4,562

1,105

103

475

214

743

1,922

29,137

Maturities and fair values of our marketable securities as of March 31, 2010 were as follows (yen in millions):

Due

after

from

Due

Year ended

Due

one to

two to

three to

four to

after

March 31,

Debt

within

two

three

four

five

Equity

2010

securities

one year

years

securities

Cost

6,374

2,684

1,098

102

263

210

2,017

23,841

Fair value

6,529

2,739

1,110

103

274

211

2,092

32,652

We hold marketable securities for short-term investment. In general, highly-liquid and low-risk instruments are preferred in the portfolio. Marketable securities included in other assets are held as longer-term investments. Our investments in equity securities consist mainly of stocks of financial institutions. As of March 31, 2011, we held available-for-sale marketable equity securities with a fair value of ¥29,137 million. The historical cost of these securities is ¥22,165 million, and gross unrealized gains and losses of ¥7,488 and ¥516 million, respectively have been recognized since the time the securities were acquired.

Impairment charges on investments are charged to earnings when a decline in fair value below the cost is other than temporary. We make a determination each quarter, and we principally consider that an other-than-temporary impairment has occurred when the decline in fair value below the carrying value continues for over nine consecutive months. We may also consider other factors, including our ability and intent to hold the applicable investment securities and the severity of the decline in fair value. Other-than-temporary impairment charges were ¥1,585 million for fiscal 2011 and ¥1,460 million for fiscal 2010.

Foreign Exchange Risk

Our international operations expose us to the risk of changes in foreign currency exchange rates. We occasionally use forward currency exchange contracts to manage our exposure to foreign currency fluctuation on the transactions denominated in foreign currencies.

The following table summarizes our forward currency contracts as of March 31, 2011:


								Weighted
								average
	Notional amount		Notional amount		Fair value			contractual rates
	(in millions except for weighted average contractual rates)
Purchases to sell foreign currencies		$2	¥	198	¥	(6	)		88.2


								Weighted
								average
	Notional amount		Notional amount		Fair value			contractual rates
	(in millions except for weighted average contractual rates)
Purchases to buy foreign currencies	$	30	¥	2,541	¥	(13	)		83.5

The following table summarizes our forward currency contracts as of March 31, 2010:


								Weighted
								average
	Notional amount		Notional amount		Fair value			contractual rates
	(in millions except for weighted average contractual rates)
Purchases to sell foreign currencies	$	10	¥	923	¥	(43	)		90.0


							Weighted
							average
	Notional amount		Notional amount		Fair value		contractual rates
	(in millions except for weighted average contractual rates)
Purchases to buy foreign currencies	$	32	¥	2,932	¥	30		91.5

We recorded a decrease in the fair value of our derivative contract of ¥8 million in other income since it was not designated as a hedge in fiscal 2011 and an increase of ¥103 million in fiscal 2010.

Interest Rate Risk

As of March 31, 2011, our interest rate risk on short-term borrowings (¥6,117 million) and lease obligations (¥8 million) was immaterial. We do not expect interest rates to rise sharply in the near future. Although our lease obligations have fixed interest rates, the amount outstanding is not material. As of March 31, 2010, our interest rate risk on short-term borrowings (¥7,941 million) and lease obligations (¥51 million) was immaterial.

The following table provides information about our lease obligations that are sensitive to changes in interest rates as of March 31, 2011.

Lease Obligations (Including Due Within One Year)
Wacoal Holdings and Subsidiaries


			Expected maturity date
Year ended			(yen in millions)												Estimated
March 31, 2011	Total		2012		2013		2014		2015		2016		Thereafter		fair value
Lease obligations		8		7		1		—		—		—		—		8

The following table provides information about our lease obligations that are sensitive to changes in interest rates as of March 31, 2010.

Lease Obligations (Including Due Within One Year)
Wacoal Holdings and Subsidiaries


			Expected maturity date
Year ended			(yen in millions)												Estimated
March 31, 2010	Total		2011		2012		2013		2014		2015		Thereafter		fair value
Lease obligations		51		46		5		—		—		—		—		51

We had no outstanding interest rate swaps as of March 31, 2011 or March 31, 2010.

Item 12. Description of Securities Other than Equity Securities.

A. Debt Securities.

Not applicable.

B. Warrants and Rights.

Not applicable.

100

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies.

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.

On May 25, 2009, our board of directors adopted an updated shareholder rights plan that was subsequently approved at the ordinary general meeting of our shareholders held on June 26, 2009. For a summary of the general terms and effect of the plan, please see “Item 10. Additional Information—B. Memorandum and Articles of Association—Capital Stock—Miscellaneous”.

Item 15. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

As required by Securities Exchange Act Rule 13a-15(b), our management, including our principal executive officer and principal financial officer, conducted an evaluation, as of the end of the period covered by this report, of the effectiveness of our company’s disclosure controls and procedures as defined in Securities Exchange Act Rule 13a-15(e) and 15d-15(e). Based on that evaluation, our principal executive officer and principal financial officer concluded that our company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

As required by Securities Exchange Act Rule 13a-15(d), our management, including our principal executive officer and principal financial officer, also conducted an evaluation of our company’s internal control over financial reporting to determine whether any changes occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our company’s internal control over financial reporting. Based on that evaluation, our management concluded that there has been no such change during the period covered by this report, and that our internal controls are functioning effectively.

(b) Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The company’s internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

	•		pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

	•		provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

102

•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of internal control over financial reporting as of March 31, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (the COSO criteria).

Based on its assessment, management concluded that, as of March 31, 2011, our internal control over financial reporting was effective based on the COSO criteria.

Our independent registered public accounting firm, Deloitte Touche Tohmatsu LLC, has issued an attestation report on the effectiveness of our internal control over financial reporting as of March 31, 2011, as stated in its report which appears on page F-3.

(c) Attestation Report of the Registered Public Accounting Firm

This report appears on page F-3.

(d) Changes in Internal Control Over Financial Reporting

Item 16A. Audit Committee Financial Expert.

Our board of auditors has determined that Tomoharu Kuda qualifies as an “audit committee financial expert” as defined in Item 16A of Form 20-F. Mr. Kuda was appointed as an outside corporate auditor pursuant to the Japanese Companies Act on June 28, 2007, and is independent from us and our management. Please refer to Item 6.A for more information regarding Mr. Kuda.

103

Item 16B. Code of Ethics.

We have adopted a code of ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our code of ethics, which was amended on January 31, 2007 primarily to reflect Wacoal’s transition to a holding company structure, is incorporated by reference as an exhibit to this annual report on Form 20-F.

Item 16C. Principal Accountant Fees and Services.

Fees and Services of Deloitte Touche Tohmatsu LLC

Deloitte Touche Tohmatsu LLC (DTT) serves as Wacoal Holdings’ principal accountant. The following table presents fees for audit and other services rendered by DTT for fiscal 2011 and 2010.

DTT Fees for Audit and Other Services
(yen in millions)


	Years ended March 31,
	2011		2010
Audit fees	¥	206	¥	223
Audit related fees		11		13
Tax fees		24		30
All other fees		20		21

Total	¥	261	¥	287

Audit Fees include fees billed for professional services rendered for audits of Wacoal Holdings’ annual consolidated financial statements, statutory audits of Wacoal Holdings and its subsidiaries, and the audit of Wacoal Holdings’ internal controls over financial reporting.

Audit Related Fees include fees billed for assurance and related services, such as due diligence, accounting consultations and audits in connection with mergers and acquisitions.

Tax Fees include fees billed for services related to tax compliance, including the preparation of tax returns and claims for refunds, and tax planning and tax advice, including assistance with tax audits and appeals.

All Other Fees include fees billed for services related to the costs of consultation regarding information security measures and risk management.

Policy on Pre-Approval of Audit and Non-Audit Services of Independent Auditors

With respect to audit and audit related services, each year we require our independent auditors to submit to us their annual audit plan, including their fee estimate for carrying out the audit plan, which is then submitted to our Corporate Planning Division for evaluation. Thereafter, our board of corporate auditors determines whether to pre-approve the audit plan, which decision is based in part on the recommendations of the Corporate Planning Division.

104

The pre-approval of our board of corporate auditors is required before our independent auditors may perform any non-audit related services. Non-audit related services must be limited to providing advice on matters relating to taxation, mergers and acquisitions and internal accounting controls.

Item 16D. Exemptions from the Listing Standards for Audit Committees.

With respect to the requirements of Rule 10A-3 under the Securities Exchange Act of 1934 relating to listed company audit committees, which apply to us through Rules 4350(d)(3) and 4350(d)(2)(A)(ii) of the NASD Manual, we rely on an exemption provided by paragraph (c)(3) of that Rule available to foreign private issuers with boards of corporate auditors meeting certain requirements. For a Nasdaq-listed Japanese company with a board of corporate auditors, the requirements for relying on paragraph (c)(3) of Rule 10A-3 are as follows:

	•		the board of corporate auditors must be established, and its members must be selected, pursuant to Japanese law expressly requiring such a board for Japanese companies that elect to have a corporate governance system with corporate auditors;

	•		Japanese law must and does require the board of corporate auditors to be separate from the board of directors;

	•		none of the members of the board of corporate auditors may be elected by management, and none of the listed company’s executive officers may be a member of the board of corporate auditors;

	•		Japanese law must and does set forth standards for the independence of the members of the board of corporate auditors from the listed company or its management; and

	•		the board of corporate auditors, in accordance with Japanese law or the registrant’s governing documents, must be responsible, to the extent permitted by Japanese law, for the appointment, retention and oversight of the work of any registered public accounting firm engaged (including, to the extent permitted by Japanese law, the resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the listed company, including its principal accountant which audits its consolidated financial statements included in its annual reports on Form 20-F.

			To the extent permitted by Japanese law:

	•		the board of corporate auditors must establish procedures for (i) the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

	•		the board of corporate auditors must have the authority to engage independent counsel and other advisers, as it determines necessary to carry out its duties; and

105

•

the listed company must provide for appropriate funding, as determined by its board of corporate auditors, for payment of (i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for us, (ii) compensation to any advisers employed by the board of corporate auditors, and (iii) ordinary administrative expenses of the board of corporate auditors that are necessary or appropriate in carrying out its duties.

In our assessment, our board of corporate auditors, which meets the requirements for reliance on the exemption in paragraph (c)(3) of Rule 10A-3 described above, is not materially less effective than an audit committee meeting all the requirements of paragraph (b) of Rule 10A-3 (without relying on any exemption provided by that Rule) at acting independently of management and performing the functions of an audit committee as contemplated therein.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.


			(b)		(c) Total Number of		(d) Maximum
	(a) Total		Average		Shares Purchased as		Number of Shares
	Number of		Price Paid		Part of Publicly		That May Yet Be
	Shares		Per Share		Announced Plans or		Purchased Under the
	Purchased		(yen)		Programs		Plans or Programs
Apr. 1 — Apr. 30, 2010		969		1,180		—		—
May 1 — May 31, 2010		1,129		1,162		—		—
Jun. 1 — Jun. 30, 2010		1,055		1,034		—		—
Jul. 1 — Jul. 31, 2010		2,828		1,105		—		—
Aug. 1 — Aug. 31, 2010		1,176		1,180		—		—
Sept. 1 — Sept. 30, 2010		9,821		1,150		—		—
Oct. 1 — Oct. 31, 2010		4,280		1,156		—		—
Nov. 1 — Nov. 30, 2010		552,769		1,112		550,000		—
Dec. 1 — Dec. 31, 2010		6,101		1,116		—		—
Jan. 1 — Jan. 31, 2011		2,264		1,155		—		—
Feb. 1 — Feb. 28, 2011		2,721		1,134		—		—
Mar. 1 — Mar. 31, 2011		971		1,083		—		—
Total		586,084		1,118		550,000		—


1.		For each month, the number of shares shown in column (a) in excess of the number of shares shown in column (c) represents the aggregate number of shares representing less than one unit that Wacoal Holdings purchased from the holders thereof upon their request. For an explanation of the right of such holders, see “Capital Stock—Unit Share System” under Item 10.B of this annual report on Form 20-F.

2.		On November 26, 2010, our board of directors approved a share repurchase plan pursuant to which we may purchase up to 550,000 shares of common stock on November 29, 2010 up to a total purchase price of ¥614 million.

106

Item 16F. Change in Registrant’s Certifying Accountant.

Not applicable.

Item 16G. Corporate Governance.

Nasdaq provides that a foreign private issuer, such as us, may follow its home country practice in lieu of certain of its qualitative listing requirements, provided that it discloses in its annual reports filed with the Securities and Exchange Commission each requirement that it does not follow and describes the home country practice followed in lieu of each such requirement.

Independent Directors

Nasdaq requires that a majority of an issuer’s board of directors be independent and that such independent directors have regularly scheduled meetings at which only they are present. For large Japanese companies, including us, which employ a corporate governance system based on a board of corporate auditors, the Companies Act has no independence requirement with respect to directors. The task of overseeing management and accounting firms is assigned to the corporate auditors, who are separate from the company’s management. Large Japanese companies, including us, are currently required to have at least half of their corporate auditors meet independence requirements under the Companies Act. An outside corporate auditor is defined as a corporate auditor who has never served as a director, accounting counselor (in case that an accounting counselor is a judicial person, a member of such judicial person), executive officer, general manager or employee of the company or any of its subsidiaries. Currently, we have three outside corporate auditors.

	•		identify of any independent officer,

	•		reasons for the qualification (including any selection process),

	•		officer’s relationship with the company,

	•		disclosure of relevant incentive compensation, and

	•		resources and other support provided to the independent officer.

To the extent any company did not have an independent officer at that time, the company was required to select one at the general shareholders meeting related to the fiscal year that ended on or after March 1, 2010. In addition, a listed company must submit an updated report on independent officers in connection with any change to these officers up to two weeks before such change, which normally takes place at the general shareholders meeting.

107

Audit Committee

Nasdaq requires that each issuer adopt a formal written audit committee charter meeting certain requirements, have an audit committee consisting of at least three members who are independent, and satisfy certain other criteria. Like a majority of Japanese companies, we do not have an audit committee—we employ the corporate auditor system as described above. Under this system, the board of corporate auditors is a legally separate and independent body from the board of directors. The function of the board of corporate auditors is similar to that of independent directors, including those who are members of the audit committee, of a U.S. company: to monitor the performance of the directors and review and express opinion on the method of auditing by the company’s accounting firm and on such accounting firm’s audit reports for the protection of the company’s shareholders. Large Japanese companies, including us, are required to have at least three corporate auditors. Currently, we have five corporate auditors, three of whom are outside corporate auditors as described above. We have also identified them in our report on independent directors to the Tokyo Stock Exchange as “independent officers”. See “Item 6.C. Board Practices” for the list of these independent officers. In addition, as discussed above, our corporate auditors serve a longer term than our directors.

Under Nasdaq’s listing rules that are currently applicable to foreign private issuers, including us, all members of a company’s audit committee must be independent as defined under Nasdaq’s requirements, and the audit committee must have certain defined responsibilities with respect to the company’s independent auditors. However, we have availed ourselves of paragraph (c)(3) of Rule 10A-3 of the Exchange Act with respect to these requirements—paragraph (c)(3) provides a general exemption from the audit committee requirements to a foreign private issuer with a board of corporate auditors, subject to certain requirements which continue to be applicable under Rule 10A-3.

Compensation Committee

Nasdaq requires that independent directors determine (or recommend to the board of directors for determination) the compensation of an issuer’s chief executive officer and all of its other executive officers. In lieu of these requirements—and consistent with generally accepted corporate governance practice in Japan—the maximum amount of the compensation of our directors is approved by our shareholders, and our board of directors determines the compensation of our directors based on recommendations by our non-statutory officer personnel and compensation advisory committee. See also “Item 6.C. Board Practices” for a discussion of our non-statutory officer personnel and compensation advisory committee.

Nominating Committee

Nasdaq requires that director nominees be selected, or recommended for selection by the board of directors, either by a majority of an issuer’s independent directors, or by a nominating committee comprised solely of independent directors. In lieu of these requirements—and consistent with generally accepted corporate governance practice in Japan—based on recommendations by our officer personnel and compensation advisory committee, our board of directors selects our director nominees to be recommended for election by our shareholders. See also “Item 6.C. Board Practices” for a discussion of our non-statutory officer personnel and compensation advisory committee.

108

We have also been granted the following exemptions by Nasdaq:

Distribution of Annual Reports to Shareholders

We are exempt from Nasdaq’s requirement that there be a distribution to shareholders of copies of our annual report containing our audited financial statements a reasonable period of time prior to our annual meeting of shareholders. In accordance with our articles of incorporation, we hold an annual meeting of shareholders in June of each year. Also, in accordance with Japanese law, we distribute to shareholders, prior to the annual meeting of shareholders, copies of a report of business operations, together with our audited consolidated financial statements prepared in accordance with Japanese GAAP in Japanese. Concurrently with such distribution, we distribute Japanese GAAP audited consolidated financial statements in English to the depository for the ADSs and instruct the depository to distribute the same to the registered ADS holders in a timely manner. As a reporting company under the Securities Exchange Act of 1934, we are required to prepare financial statements in accordance with U.S. GAAP for inclusion in our annual report on Form 20-F, which must be filed within six months after the end of each fiscal year.

Quorum

We are exempt from Nasdaq’s requirement that there be a provision in the by-laws for a quorum for any meeting of the holders of common stock and that such quorum be not less than 33 1/3% of the outstanding shares of the common voting stock. In accordance with the Companies Act, however, under our articles of incorporation no quorum is required for the adoption of resolutions at a general meeting of our shareholders, except for (i) the election of directors and corporate auditors for which the quorum will not be less than one-third of the total voting rights and (ii) resolutions for other specified issues required by the Companies Act (the “special shareholders resolutions”), including an amendment to the articles of incorporation, a reduction of stated capital, dissolution, merger or consolidation requiring shareholders resolution, the transfer of the whole or an important part of the business, the taking over of the whole of the business of any other corporation requiring shareholders resolution, share exchange or share transfer requiring shareholders resolution for the purpose of establishing 100% parent-subsidiary relationships, splitting of the corporation requiring shareholders’ resolution and any offering of new shares at a “specially favorable” price (or any offering of the stock acquisition rights to subscribe for, or acquire its shares at “specially favorable” conditions) to any persons other than shareholders. The quorum for special shareholder resolutions must be at least one-third of the total voting rights and the approval of the holders of at least two-thirds of the voting rights represented at the applicable shareholders’ meeting is necessary. This approach is consistent with generally accepted business practices of publicly-held companies in Japan.

Shareholder Proxies

We are exempt from Nasdaq’s requirement that a Nasdaq-listed company solicit proxies, provide proxy statements for all meetings of shareholders and provide copies of such proxy solicitation to Nasdaq. The Companies Act requires us to send ballots to all shareholders with voting rights, together with the notice of shareholders’ meeting. Although we may choose to solicit proxies from all shareholders with voting rights instead of voting by ballot, we, in common with the majority of public companies in Japan, provide our shareholders with the opportunity to vote directly by ballot.

109

Review of Related Party Transactions

We are exempt from Nasdaq’s requirement that a Nasdaq-listed company conduct an appropriate review of all related party transactions for potential conflict of interests and that all such transactions be approved by such company’s audit committee or other independent body of the board of directors. The Companies Act provides that approval of the board of directors is required for any transaction between Wacoal Holdings and any of its directors or any transaction between Wacoal Holdings and any third party where such transaction involves a conflict of interest situation between Wacoal Holdings and a director. No director can engage in any business which competes with the business of Wacoal Holdings unless he is permitted to do so by the board of directors. All material related party transactions between Wacoal Holdings, its subsidiaries, directors and major shareholders must be disclosed in Wacoal Holdings’ securities report filed annually with the relevant local finance bureau.

Shareholder Approval

We are exempt from Nasdaq’s requirement that a Nasdaq-listed company seek shareholder approval in connection with the issuance of securities with stock subscription rights to our directors, officers or key employees.

110

PART III

Item 17. Financial Statements.

The information required by this item is set forth beginning on page F-2 of this annual report on Form 20-F.

Item 18. Financial Statements.

We have responded to Item 17 in lieu of responding to this item.

Item 19. Exhibits.

Exhibits filed as part of this annual report on Form 20-F.


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

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

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

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

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

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

11.1		Code of Ethics of the Registrant**

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

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

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

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

101		Instance Document

101		Schema Document

101		Calculation Linkbase Document

101		Labels Linkbase Document

101		Presentation Linkbase Document

101		Definition Linkbase Document


*		Incorporated by reference to the corresponding exhibit to our annual report on Form 20-F (File No. 000-11743) filed on July 29, 2006.

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

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

111

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Wacoal Holdings Corp.
Kyoto, Japan

We have audited the accompanying consolidated balance sheets of Wacoal Holdings Corp. and subsidiaries (the “Companies”) as of March 31, 2011 and 2010, and the related consolidated statements of income, comprehensive (loss) income, equity, and cash flows for each of the three years in the period ended March 31, 2011, which are all expressed in Japanese yen. These financial statements are the responsibility of the Companies’ management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Wacoal Holdings Corp. and subsidiaries as of March 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

Our audits also comprehended the translation of the Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2. The translation of the financial statement amounts into U.S. dollars has been made solely for convenience of readers outside of Japan.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companies’ internal control over financial reporting as of March 31, 2011, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 29, 2011 expressed an unqualified opinion on the Companies’ internal control over financial reporting.

/s/ Deloitte Touche Tohmatsu LLC

Kyoto, Japan

June 29, 2011

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Wacoal Holdings Corp.
Kyoto, Japan

We have audited the internal control over financial reporting of Wacoal Holdings Corp. and subsidiaries (the “Companies”) as of March 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Companies’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Companies’ internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Companies maintained, in all material respects, effective internal control over financial reporting as of March 31, 2011, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended March 31, 2011 of the Companies and our report dated June 29, 2011 expressed an unqualified opinion on those financial statements.

/s/ Deloitte Touche Tohmatsu LLC

Kyoto, Japan

June 29, 2011

F-3

Wacoal Holdings Corp. and Subsidiaries

Consolidated Balance Sheets
March 31, 2011 and 2010


							Thousands of
							U.S. Dollars
	Millions of Yen						(Note 2)
	2011			2010			2011
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	¥	26,981		¥	24,317		$	326,015
Time deposits		698						8,434

Total		27,679			24,317			334,449
Marketable securities (Notes 3, 19 and 20)		4,819			6,529			58,229
Notes and accounts receivable:
Trade notes		500			469			6,042
Trade accounts (Note 17)		20,371			21,116			246,145
Allowance for returns and doubtful receivables (Note 4)		(1,549	)		(1,972	)		(18,717	)
Inventories (Note 5)		30,956			32,103			374,045
Deferred income taxes (Note 16)		5,134			4,595			62,035
Other current assets (Notes 17, 19 and 20)		2,586			2,776			31,247


Total current assets		90,496			89,933			1,093,475


PROPERTY, PLANT AND EQUIPMENT:
Land (Notes 9, 17 and 20)		21,774			22,012			263,097
Buildings and building improvements (Notes 9, 11, 17 and 20)		60,322			61,585			728,879
Machinery and equipment		14,023			14,773			169,442
Construction in progress		93			103			1,124

Total		96,212			98,473			1,162,542
Accumulated depreciation		(46,467	)		(46,653	)		(561,467	)


Net property, plant and equipment		49,745			51,820			601,075


OTHER ASSETS:
Investments in affiliated companies (Note 6)		14,702			14,769			177,646
Investments (Notes 3, 9, 19 and 20)		32,672			35,828			394,780
Goodwill (Notes 7, 8 and 20)		10,367			11,203			125,266
Other intangible assets (Notes 7, 8 and 20)		10,325			12,351			124,759
Prepaid pension expense (Note 12)		158			263			1,909
Deferred income taxes (Note 16)		879			935			10,621
Other		6,001			6,285			72,511


Total other assets		75,104			81,634			907,492


TOTAL	¥	215,345		¥	223,387		$	2,602,042

See notes to consolidated financial statements.

F-4


							Thousands of
							U.S. Dollars
	Millions of Yen						(Note 2)
	2011			2010			2011

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Short-term bank loans (Note 9)	¥	6,117		¥	7,941		$	73,913
Notes and accounts payable:
Trade notes		1,623			2,174			19,611
Trade accounts (Note 17)		10,507			9,161			126,957
Other payables		5,700			5,975			68,874
Accrued payroll and bonuses		6,201			5,927			74,928
Income taxes payable (Note 16)		1,870			2,105			22,595
Current portion of long-term debt (Notes 9 and 19)		70			108			846
Other current liabilities (Notes 12, 16, 19 and 20)		2,335			2,292			28,214


Total current liabilities		34,423			35,683			415,938


LONG-TERM LIABILITIES:
Long-term debt (Notes 9 and 19)		214			80			2,586
Liability for termination and retirement benefits (Note 12)		2,200			2,269			26,583
Deferred income taxes (Note 16)		7,441			9,380			89,910
Other long-term liabilities (Notes 11, 12 and 16)		2,200			2,422			26,583


Total long-term liabilities		12,055			14,151			145,662


COMMITMENTS AND CONTINGENCIES (Notes 9 and 10)

EQUITY

WACOAL HOLDINGS CORP. SHAREHOLDERS’ EQUITY (Notes 13 and 22):
Common stock, no par value — authorized, 500,000,000 shares in 2011 and 2010; issued 143,378,085 shares in 2011 and 2010		13,260			13,260			160,222
Additional paid-in capital (Note 14)		29,401			29,366			355,256
Retained earnings		136,946			137,155			1,654,737
Accumulated other comprehensive loss (Note 15):
Foreign currency translation adjustments		(10,344	)		(7,505	)		(124,989	)
Unrealized gain on securities		2,596			3,669			31,368
Pension liability adjustments (Note 12)		(2,002	)		(1,783	)		(24,190	)

Total accumulated other comprehensive loss		(9,750	)		(5,619	)		(117,811	)
Less treasury stock at cost — 2,529,607 shares and 2,179,739 shares in 2011 and 2010		(2,890	)		(2,532	)		(34,920	)

Total Wacoal Holdings Corp. shareholders’ equity		166,967			171,630			2,017,484


NONCONTROLLING INTERESTS		1,900			1,923			22,958

Total equity		168,867			173,553			2,040,442


TOTAL	¥	215,345		¥	223,387		$	2,602,042

F-5

Wacoal Holdings Corp. and Subsidiaries

Consolidated Statements of Income
Years Ended March 31, 2011, 2010 and 2009


										Thousands of
										U.S. Dollars
	Millions of Yen									(Note 2)
	2011			2010			2009			2011

NET SALES (Note 17)	¥	165,726		¥	163,297		¥	172,276		$	2,002,489


OPERATING COSTS AND EXPENSES:
Cost of sales (Notes 12 and 17)		81,895			79,953			84,686			989,548
Selling, general and administrative (Notes 1, 7, 12, 14 and 17)		77,592			78,392			77,399			937,554
Impairment charges on property, plant and equipment (Note 20)		107			23			29			1,293
Impairment charges on goodwill (Notes 8 and 20)		836			71						10,101
Impairment charges on other intangible assets (Notes 8 and 20)		936			1,023						11,310
Loss on sale or disposal of property, plant and equipment — net		105			25			33			1,269


Total operating costs and expenses		161,471			159,487			162,147			1,951,075


OPERATING INCOME		4,255			3,810			10,129			51,414


OTHER INCOME (EXPENSES):
Interest income		135			144			274			1,631
Interest expense		(88	)		(98	)		(75	)		(1,063	)
Dividend income		643			619			677			7,769
Gain on sale or exchange of marketable securities and investments — net (Note 3)		374			7			19			4,519
Impairment charges on marketable securities and investments (Note 3)		(1,585	)		(1,460	)		(3,550	)		(19,152	)
Other — net (Notes 1 and 20)		5			101			153			61


Total other loss — net		(516	)		(687	)		(2,502	)		(6,235	)


INCOME BEFORE INCOME TAXES, EQUITY IN NET INCOME OF AFFILIATED COMPANIES, AND NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS (Note 16)		3,739			3,123			7,627			45,179


INCOME TAXES (Note 16):
Current		3,463			3,161			2,717			41,844
Deferred		(1,471	)		(1,587	)		496			(17,774	)


Total income taxes		1,992			1,574			3,213			24,070


INCOME BEFORE EQUITY IN NET INCOME OF AFFILIATED COMPANIES, AND NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		1,747			1,549			4,414			21,109

EQUITY IN NET INCOME OF AFFILIATED COMPANIES (Note 6)		990			907			893			11,963


NET INCOME		2,737			2,456			5,307			33,072

NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(122	)		68			(77	)		(1,475	)


NET INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.	¥	2,615		¥	2,524		¥	5,230		$	31,597

(Continued)

F-6

Wacoal Holdings Corp. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income
Years Ended March 31, 2011, 2010 and 2009


									Thousands of
									U.S. Dollars
	Millions of Yen								(Note 2)
	2011			2010		2009			2011

NET INCOME	¥	2,737		¥	2,456	¥	5,307		$	33,072

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX (Note 15):
Foreign currency translation adjustments		(2,915	)		795		(8,710	)		(35,223	)
Unrealized (losses) gains on securities		(1,072	)		3,351		(4,978	)		(12,953	)
Pension liability adjustments		(219	)		1,600		(3,897	)		(2,646	)


OTHER COMPREHENSIVE (LOSS) INCOME		(4,206	)		5,746		(17,585	)		(50,822	)


COMPREHENSIVE (LOSS) INCOME		(1,469	)		8,202		(12,278	)		(17,750	)

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(47	)		49		105			(568	)


COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO WACOAL HOLDINGS CORP.	¥	(1,516	)	¥	8,251	¥	(12,173	)	$	(18,318	)

See notes to consolidated financial statements.

F-8

Wacoal Holdings Corp. and Subsidiaries

Consolidated Statements of Equity
Years Ended March 31, 2011, 2010 and 2009


				Millions of Yen
	Shares of											Accumulated						Total Wacoal
	Outstanding					Additional						Other						Holdings Corp.
	Common Stock			Common		Paid-in			Retained			Comprehensive			Treasury			Shareholders’			Noncontrolling
	(Thousands)			Stock		Capital			Earnings			Income (Loss)			Stock			Equity			Interests			Total Equity

BALANCE, APRIL 1, 2008		143,342		¥	13,260	¥	29,262		¥	136,589		¥	6,057		¥	(55	)	¥	185,113		¥	2,351		¥	187,464

Net income										5,230									5,230			77			5,307
Other comprehensive loss													(17,403	)					(17,403	)		(182	)		(17,585	)
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥125 per 5 shares of common stock										(3,584	)								(3,584	)					(3,584	)
Cash dividends paid to noncontrolling interests																						(83	)		(83	)
Repurchase of treasury stock		(2,891	)													(3,537	)		(3,537	)					(3,537	)
Share-based compensation granted (Note 14)							54												54						54
Purchase of common shares of the Company’s subsidiary																						(69	)		(69	)


BALANCE, MARCH 31, 2009		140,451			13,260		29,316			138,235			(11,346	)		(3,592	)		165,873			2,094			167,967

Net income										2,524									2,524			(68	)		2,456
Other comprehensive income													5,727						5,727			19			5,746
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥125 per 5 shares of common stock										(3,511	)								(3,511	)					(3,511	)
Cash dividends paid to noncontrolling interests																						(76	)		(76	)
Repurchase of treasury stock		(1,372	)													(1,540	)		(1,540	)					(1,540	)
Sale of treasury stock		11														13			13						13
Share-based compensation granted and exercised (Note 14)		4					50									5			55						55
Purchase and sales of common shares of the Company’s subsidiaries																						(46	)		(46	)
Distribution of treasury stock to acquire a subsidiary (Note 7)		2,104								(93	)					2,582			2,489						2,489


BALANCE, MARCH 31, 2010		141,198			13,260		29,366			137,155			(5,619	)		(2,532	)		171,630			1,923			173,553

Net income										2,615									2,615			122			2,737
Other comprehensive loss													(4,131	)					(4,131	)		(75	)		(4,206	)
Cash dividends paid to Wacoal Holdings Corp. shareholders, ¥100 per 5 shares of common stock										(2,824	)								(2,824	)					(2,824	)
Cash dividends paid to noncontrolling interests																						(70	)		(70	)
Repurchase of treasury stock		(586	)													(655	)		(655	)					(655	)
Sale of treasury stock		236					(15	)								297			282						282
Share-based compensation granted (Note 14)							50												50						50


BALANCE, MARCH 31, 2011		140,848		¥	13,260	¥	29,401		¥	136,946		¥	(9,750	)	¥	(2,890	)	¥	166,967		¥	1,900		¥	168,867

(Continued)

F-9

Wacoal Holdings Corp. and Subsidiaries

Consolidated Statements of Equity
Years Ended March 31, 2011, 2010 and 2009


	Thousands of U.S. Dollars (Note 2)
									Accumulated						Total Wacoal
			Additional						Other						Holdings Corp.
	Common		Paid-in			Retained			Comprehensive			Treasury			Shareholders’			Noncontrolling
	Stock		Capital			Earnings			Loss			Stock			Equity			Interests			Total Equity

BALANCE, MARCH 31, 2010	$	160,222	$	354,833		$	1,657,263		$	(67,896	)	$	(30,594	)	$	2,073,828		$	23,236		$	2,097,064

Net income							31,597									31,597			1,475			33,072
Other comprehensive loss										(49,915	)					(49,915	)		(907	)		(50,822	)
Cash dividends paid to Wacoal Holdings Corp. shareholders, $1 per 5 shares of common stock							(34,123	)								(34,123	)					(34,123	)
Cash dividends paid to noncontrolling interests																			(846	)		(846	)
Repurchase of treasury stock													(7,915	)		(7,915	)					(7,915	)
Sale of treasury stock				(181	)								3,589			3,408						3,408
Share-based compensation granted (Note 14)				604												604						604


BALANCE, MARCH 31, 2011	$	160,222	$	355,256		$	1,654,737		$	(117,811	)	$	(34,920	)	$	2,017,484		$	22,958		$	2,040,442

See notes to consolidated financial statements.

(Concluded)

F-10

Wacoal Holdings Corp. and Subsidiaries

Consolidated Statements of Cash Flows
Years Ended March 31, 2011, 2010 and 2009


										Thousands of
										U.S. Dollars
	Millions of Yen									(Note 2)
	2011			2010			2009			2011

OPERATING ACTIVITIES:
Net income	¥	2,737		¥	2,456		¥	5,307		$	33,072
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,678			4,807			4,546			56,525
Share-based compensation (Note 14)		50			55			54			604
Provision for returns and doubtful receivables — net		(378	)		(360	)		(725	)		(4,567	)
Deferred income taxes		(1,471	)		(1,587	)		496			(17,774	)
Loss on sale or disposal of property, plant and equipment — net		105			25			33			1,269
Impairment charges on property, plant and equipment (Note 20)		107			23			29			1,293
Impairment charges on goodwill (Notes 8 and 20)		836			71						10,101
Impairment charges on other intangible assets (Notes 8 and 20)		936			1,023						11,310
Gain on sale or exchange of marketable securities and investments — net (Note 3)		(374	)		(7	)		(19	)		(4,519	)
Impairment charges on marketable securities and investments (Note 3)		1,585			1,460			3,550			19,152
Equity in net income of affiliated companies, less dividends		(566	)		(492	)		(296	)		(6,839	)
Changes in assets and liabilities:
Decrease in notes and accounts receivable		421			1,794			2,109			5,087
Decrease (increase) in inventories		420			806			(2,494	)		5,075
Decrease in other current assets		125			331			105			1,510
Increase (decrease) in notes and accounts payable		1,007			(2,525	)		841			12,168
(Decrease) increase in liability for termination and retirement benefits		(315	)		439			(1,209	)		(3,806	)
(Decrease) increase in accrued expenses, income taxes payable and other current liabilities		(166	)		996			(3,550	)		(2,006	)
Other		317			134			(609	)		3,829


Net cash provided by operating activities		10,054			9,449			8,168			121,484


INVESTING ACTIVITIES:
Increase in time deposits — net		(730	)								(8,821	)
Proceeds from sales and redemption of marketable securities		3,253			12,131			7,124			39,306
Payments to acquire marketable securities		(1,286	)		(7,846	)		(5,439	)		(15,539	)
Proceeds from sales of property, plant and equipment		550			468			159			6,646
Capital expenditures		(2,662	)		(3,998	)		(2,362	)		(32,165	)
Payments to acquire intangible assets (Note 8)		(671	)		(1,755	)		(1,846	)		(8,108	)
Proceeds from sales of investments		988			5			30			11,938
Payments to acquire investments		(975	)		(2,019	)		(1,871	)		(11,781	)
Cash balances of subsidiary acquired through share exchanges (Note 7)					362
Other		(13	)		(46	)		(509	)		(157	)


Net cash used in investing activities		(1,546	)		(2,698	)		(4,714	)		(18,681	)


FINANCING ACTIVITIES:
Decrease in short-term bank loans — net		(1,798	)		(442	)		(279	)		(21,725	)
Proceeds from issuance of long-term debt		200									2,417
Repayments of long-term debt		(104	)		(350	)		(48	)		(1,257	)
Repurchase of treasury stock		(655	)		(1,148	)		(3,537	)		(7,914	)
Sale of treasury stock		282			13						3,407
Dividends paid on common stock		(2,824	)		(3,511	)		(3,584	)		(34,123	)

Net cash used in financing activities		(4,899	)		(5,438	)		(7,448	)		(59,195	)


EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(945	)		65			(1,110	)		(11,419	)


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS — (Forward)	¥	2,664		¥	1,378		¥	(5,104	)	$	32,189

(Continued)

F-11

Wacoal Holdings Corp. and Subsidiaries

Consolidated Statements of Cash Flows
Years Ended March 31, 2011, 2010 and 2009


								Thousands of
								U.S. Dollars
	Millions of Yen							(Note 2)
	2011		2010		2009			2011

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS — (Forward)	¥	2,664	¥	1,378	¥	(5,104	)	$	32,189

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		24,317		22,939		28,043			293,826


CASH AND CASH EQUIVALENTS, END OF YEAR	¥	26,981	¥	24,317	¥	22,939		$	326,015


ADDITIONAL CASH FLOW INFORMATION:
Cash paid for:
Interest	¥	91	¥	98	¥	75		$	1,100
Income taxes		3,627		2,078		7,268			43,826

NONCASH INVESTING ACTIVITIES:
Fair value of certain marketable securities received in exchange for other marketable securities with a carrying values of ¥5 million in 2010			¥	11	¥	9
Acquisition of marketable securities by assuming payment obligation	¥	200						$	2,417
Acquisition of subsidiary through share exchange (Note 7)				2,489

See notes to consolidated financial statements.

(Concluded)

F-12

Wacoal Holdings Corp. and Subsidiaries

Notes to Consolidated Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

		Basis of Financial Statements — Wacoal Holdings Corp. (the “Company”) and subsidiaries are predominantly engaged in one industry, the manufacture and sale of apparel, including foundation garments, lingerie, nightwear and outerwear in Japan, the United States of America, Europe and certain Asian countries.

		The accompanying consolidated financial statements, stated in Japanese yen, have been prepared on the basis of accounting principles generally accepted in the United States of America.

		Consolidation — The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries (collectively, the “Companies”). All intercompany transactions and balances are eliminated.

		Foreign subsidiaries of the Company have a fiscal year ending December 31. Two domestic subsidiaries have a fiscal year ending February 28. The accounts of those subsidiaries are included in the Company’s consolidated financial statements based on the subsidiaries’ fiscal year. There were no material intervening events that occurred with respect to these subsidiaries.

		On August 17, 2009, the Company acquired the outstanding common shares of Lecien Corp. (“Lecien”) with a fiscal year ended March 31, 2010. Lecien’s results of operations were included in the Company’s consolidated statements of income for the year ended March 31, 2010 from August 1, 2009.

		Investments in affiliated companies where the Company’s ownership is 20% to 50% are accounted for using the equity method.

		Significant influence is generally deemed to exist if the Companies have an ownership interest in the voting stock of the investee of between 20% to 50%, although other factors are considered in determining whether the equity method of accounting is appropriate.

		*Use of Estimates —* The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

		Cash and Cash Equivalents — Cash and cash equivalents include all time deposits and certificates of deposit (all of which are interest-bearing) with original maturities of three months or less.

		Foreign Currency Translation — Assets and liabilities of foreign subsidiaries have been translated to Japanese yen at period-end exchange rates and income and expenses have been translated using average exchange rates for the period. Translation adjustments resulting from the process of translating financial statements, net of tax, are included in other comprehensive income (loss), a separate component of equity. Exchange gains and losses resulting from foreign currency transactions and the conversion of monetary assets and liabilities denominated in foreign currencies are included in other income (expenses) in the consolidated statements of income.

F-13

		Foreign currency translation losses for the year ended March 31, 2011 were ¥142 million ($1,716 thousand). Foreign currency translation gains for the years ended March 31, 2010 and 2009 were ¥43 million and ¥35 million, respectively. They have been included in other — net of other income (expenses).

		Marketable Securities and Investments — The Companies classify their marketable securities and investments as either trading or available-for-sale. Trading securities are bought and held principally for the purpose of selling them in the near term. Trading securities are recorded at fair value and unrealized holding gains and losses on trading securities are included in earnings. Available-for-sale securities are carried at fair value with a corresponding recognition of unrealized holding gains or losses (net of tax) in other comprehensive (loss) income, a separate component of equity, until realized. Equity securities that do not have readily determinable fair values are recorded at cost. Gains and losses on sales of investments are computed based on cost determined using the average cost method.

		If a decline in the fair value of marketable securities and investments is determined to be other than temporary, an impairment charge is recorded in the consolidated statements of income. The Companies periodically determine whether a decline in the fair value of marketable securities and investments is deemed to be other than temporary based on criteria that include the duration of the market decline, the extent to which cost exceeds market value, the financial position and business outlook of the issuer and the intent and ability of the Companies to retain the impaired marketable securities and investments for a sufficient period of time for anticipated recovery in market value.

		Allowance for Sales Returns — Allowance for sales returns is estimated based on historical products returns experience, sales movements, and the overall retail industry situation.

		*Allowance for Doubtful Receivables* - Allowance for doubtful notes and receivables is estimated based on historical collection experience and additional information including current economic conditions and creditworthiness of each applicable customer.

		Inventories — Inventories are stated at the lower of cost or market, cost being determined on the first-in, first-out method for raw materials and the average cost method for work in process and finished products. Cost includes net prices paid for materials purchased, production labor cost, factory overhead and charges for customs duties.

		Property, Plant and Equipment — Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Depreciation of property, plant and equipment is computed by the declining-balance method, except for buildings acquired on or after April 1, 1998, which are depreciated using the straight-line method, based upon the estimated useful lives of the assets. The estimated useful lives are as follows:


Buildings and building improvements:		5 - 50 years (Mainly 38 years)

Machinery and equipment:		2 - 20 years (Mainly 5 years)

Depreciation expenses for the years ended March 31, 2011, 2010 and 2009 are ¥2,828 million ($34,171 thousand), ¥3,016 million and ¥3,050 million, respectively.

Impairment of Long-Lived Assets — The carrying values of long-lived assets, held and used by the Companies, are evaluated for impairment whenever there is an event or change in circumstances that indicates that such assets have been impaired or that the carrying amounts of such assets might not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. That assessment shall be based on the carrying amount of the asset at the date it is tested for recoverability, whether in use or under development. The impairment loss is measured as the amount by which the carrying amount of a long lived asset exceeds its fair value.

F-14

Goodwill and Other Intangible Assets — Goodwill represents the excess of the purchase price over the related underlying tangible and intangible net asset values of business acquired.

Goodwill and other intangible assets with indefinite useful lives are tested for impairment annually, or more frequently if conditions indicate an earlier review is necessary. The goodwill is allocated to the reporting unit in which the business that created the goodwill resides. To test for goodwill impairment, the carrying value of each reporting unit is compared with its fair value. If the carrying value of the goodwill is considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset.

To test for other intangible assets with indefinite useful lives, the carrying value of an intangible asset is compared with its fair value. If the carrying value of the other intangible assets with indefinite useful lives is considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset.

Other intangible assets with estimable useful lives consist primarily of customer relationship and software and are amortized over their estimated useful lives using the straight-line method. The estimated useful lives are as follows:


Customer relationship:		7 years

Software:		5 years

Asset Retirement Obligations — The Companies have obligations arising from contractual commitments to remove leasehold improvements from leased facilities and return the property to a specified condition when the lease terminates. The Companies recognize asset retirement obligations at the inception of a lease. The asset retirement obligation is measured with an expected present value technique based on historical experience and recorded in other long-term liabilities in the consolidated balance sheets and is subsequently adjusted for changes in estimated disposal costs. The difference between the gross expected future cash flow and its present value is accreted over the life of the related lease, which is determined using best estimate because the Companies’ lease contracts generally have automatic renewal articles. The associated estimated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over its useful life.

Termination and Retirement Plans — Termination and retirement benefits are accounted for in accordance with the guidance for retirement benefits. The Companies amortize net actuarial gains and losses and prior service cost over the average employees’ remaining service period by a declining-balance method and by a straight-line method, respectively. Provisions for termination and retirement benefits include those for directors and corporate auditors of the Companies.

The Companies do not recognize a gain or loss on settlement of the pension obligation when the cost of all settlements in a year is less than or equal to the sum of the service cost and interest cost components of net periodic pension cost for the plan for the year.

Leases — Certain non-cancelable leases are classified as capital leases and the leased assets are included as part of property, plant and equipment. Other leases are classified as operating leases and are not capitalized. The payments on such leases are recorded as expense. The rental expense under operating leases is recognized on a straight-line basis.

Treasury Stock — The Companies account for treasury stock under the cost method and include treasury stock as a component of equity.

Acquisitions — The Company accounts for acquisitions using the acquisition method in accordance with the guidance for business combinations. The Company allocates the purchase price to the assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition, including intangible assets that can be identified and named. The purchase price in excess of the fair value of the net assets and liability is recorded as goodwill.

F-15

Revenue Recognition — The Companies recognize revenue on sales to retailers, mail order catalog sales and internet sales when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred resulting in transfer of title and risk of loss, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured. As for consignment sales, the Companies recognize revenue when the products are sold to the ultimate customer. The Companies recognize revenue on direct retailing sales at the Companies’ directly managed retail stores at the point of sale to the customer.

Shipping and Handling Costs — Shipping and handling fees billed to customers are classified in net sales. Shipping and handling costs are expensed as incurred. Shipping and handling costs for the years ended March 31, 2011, 2010 and 2009 were ¥5,698 million ($68,850 thousand), ¥5,324 million and ¥4,895 million, respectively, and have been included in selling, general and administrative expenses.

Advertising Expenses — Advertising costs are expensed as incurred. Advertising expenses for the years ended March 31, 2011, 2010 and 2009 were ¥12,003 million ($145,034 thousand), ¥11,643 million and ¥13,624 million, respectively, and have been included in selling, general and administrative expenses.

Research and Development Costs — Research and development costs are expensed as incurred. Research and development costs for the years ended March 31, 2011, 2010 and 2009 were ¥815 million ($9,848 thousand), ¥778 million and ¥768 million, respectively, and have been included in selling, general and administrative expenses.

Income Taxes — The provision for income taxes is determined under the asset and liability method in accordance with the guidance for income taxes. Under this method, deferred tax assets and liabilities are determined for temporary differences between the financial statement and tax bases of assets and liabilities and tax loss carry forwards at presently enacted tax rates. A valuation allowance is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized in the future.

The Companies assess their income tax positions and record tax benefits for all years subject to examination based upon their evaluation of the facts, circumstances and information available as of the end of fiscal year. For those tax positions only where there is greater than 50 percent likelihood that the tax position will be sustained, the Companies record the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

Share-Based Compensation — Share-based compensation is accounted for in accordance with the guidance for stock compensation. The Company measures share-based compensation cost at the grant date, based on the fair value of the award and recognizes the cost over the requisite service period, which is the vesting period. The fair value of the award is estimated using the Black-Scholes option-pricing model.

Derivatives — Derivative instruments, including certain derivative instruments embedded in other contracts, are accounted for in accordance with the guidance for derivatives and hedging. Because such derivative instruments are not designated as a hedge, changes in the fair value are recorded in earnings.

Reclassifications — Certain reclassifications have been made to the prior years’ financial statements to conform to the current year’s presentation.

F-16

Recent Accounting Pronouncements:

Fair Value Measurements — In January 2010, the FASB issued additional disclosure requirements for fair value measurements. According to the guidance, the fair value hierarchy disclosures are to be further disaggregated by class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the consolidated balance sheets. The guidance also requires additional disclosure about significant transfers between Levels 1 and 2 of the fair value hierarchy, and separate disclosures about purchase, sales, issuance and settlements relating to Level 3 measurement. This guidance was effective for interim and annual reporting periods beginning after December 15, 2009 except for the requirement regarding the Level 3 activity which is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. These amendments do not have an impact on the consolidated financial position, result of operations or cash flows as this guidance relates only to additional disclosures.

In May 2011, the FASB issued the new guidance for fair value measurements. The guidance changes the wording used to describe requirements for measuring fair value and for disclosing information about fair value measurements in order to improve consistency between U.S. GAAP and International Financial Reporting Standards. Also, some amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements, which leads to an expansion of the disclosure requirements. This guidance is effective during interim and annual periods beginning after December 15, 2011. The Companies are currently evaluating the potential impact, if any, of the adoption of this guidance.

Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses — In July 2010, the FASB issued additional disclosure requirements for financing receivables and allowance for credit losses. This guidance requires enhanced disclosures regarding the quality of the credit risk inherent in the entity’s financing receivables, how that credit risk is assessed in calculating the allowance for credit losses, changes in such allowance and the reasons for those changes. It also requires disclosures relating to the accounting policies for financing receivables and allowance for credit losses. The Companies adopted this guidance from the interim period ending after December 15, 2010. Since this guidance related only to additional disclosures, it did not have an impact on the Companies’ consolidated financial position, result of operations, or cash flows.

Presentation of Comprehensive Income — In June 2011, the FASB issued revised guidance for the presentation of Comprehensive Income. This guidance requires displaying adjustments for items that are reclassified from other comprehensive income to net income in the statement in which the components of net income and the components of other comprehensive income are presented. This guidance does not change the items that must be reported in other comprehensive income, nor does it affect the calculation or reporting of earnings per share. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. This amendment does not have an impact on the consolidated financial position, result of operations or cash flows as this guidance relates only to the presentation of comprehensive income.

TRANSLATION INTO U.S. DOLLAR STATEMENTS

The financial statements are stated in Japanese yen, the currency of the country in which the Company is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for convenience of readers outside of Japan and have been made at the rate of ¥82.76 to $1, the noon buying rate for yen in New York City as of March 31, 2011. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at the above or any other rate.

F-17

MARKETABLE SECURITIES AND INVESTMENTS

Available-for-Sale Securities — The fair value of debt and marketable equity securities classified as available-for-sale is based on quoted market prices as of March 31, 2011 and 2010. The cost, gross unrealized gain and loss and the fair value of available-for-sale securities by major security type were as follows:


	Millions of Yen
			Gross		Gross
			Unrealized		Unrealized
2011	Cost		Gain		Loss		Fair Value

Current:
National debt securities	¥	510	¥	3			¥	513
Corporate debt securities		1,300		4	¥	27		1,277
Mutual fund		2,657		117		2		2,772


Total	¥	4,467	¥	124	¥	29	¥	4,562


Noncurrent:
Equity securities	¥	22,165	¥	7,488	¥	516	¥	29,137


	Millions of Yen
			Gross		Gross
			Unrealized		Unrealized
2010	Cost		Gain		Loss		Fair Value

Current:
National debt securities	¥	1,160	¥	10			¥	1,170
Corporate debt securities		1,885		12	¥	42		1,855
Bank debt securities		100		0				100
Mutual fund		3,229		176		1		3,404


Total	¥	6,374	¥	198	¥	43	¥	6,529


Noncurrent:
Equity securities	¥	23,841	¥	9,415	¥	604	¥	32,652


	Thousands of U.S. Dollars
			Gross		Gross
			Unrealized		Unrealized
2011	Cost		Gain		Loss		Fair Value

Current:
National debt securities	$	6,163	$	36			$	6,199
Corporate debt securities		15,708		48	$	326		15,430
Mutual fund		32,105		1,413		24		33,494


Total	$	53,976	$	1,497	$	350	$	55,123


Noncurrent:
Equity securities	$	267,823	$	90,478	$	6,235	$	352,066

F-18

There were no available-for-sale securities which have been in a continuous unrealized loss position for more than 12 months as of March 31, 2011 and 2010. Gross unrealized holding losses and fair values of available-for-sale securities, all of which have been in a continuous unrealized loss position for less than 12 months as of March 31, 2011 and 2010, were as follows:


	Millions of Yen				Thousands of U.S. Dollars
			Gross				Gross
			Unrealized				Unrealized
2011	Fair Value		Loss		Fair Value		Loss

Current:
Corporate debt securities	¥	673	¥	27	$	8,132	$	326
Mutual fund		9		2		109		24


Total	¥	682	¥	29	$	8,241	$	350


Noncurrent:
Equity securities	¥	6,009	¥	516	$	72,608	$	6,235


	Millions of Yen
			Gross
			Unrealized
2010	Fair Value		Loss

Current:
Corporate debt securities	¥	643	¥	42
Mutual fund		44		1

Total	¥	687	¥	43


Noncurrent:
Equity securities	¥	3,867	¥	604

The unrealized losses on available-for-sale securities were caused primarily by a general decline in stock prices in Japan as of the end of the fiscal year. The Companies periodically determine whether a decline in the fair value of available-for-sale securities is deemed to be other than temporary based on criteria that includes the duration of market decline, the extent to which cost exceeds market value, the financial position and business outlook of the issuer and the intent and ability of the Companies to retain the impaired available-for-sale securities for sufficient period of time for anticipated recovery in market value as described in Note 1. No available-for-sale securities were identified that meet the Companies’ criterion for recognition of an impairment loss on available-for-sale securities in unrealized loss position presented above. Therefore, the Companies do not believe the unrealized losses represent an other-than-temporary impairment as of March 31, 2011 and 2010.

Future maturities of debt securities and mutual fund classified as available-for-sale excluding mutual fund without fixed maturities as of March 31, 2011 were as follows:


					Thousands of
	Millions of Yen				U.S. Dollars
			Fair				Fair
	Cost		Value		Cost		Value

Due within one year	¥	1,098	¥	1,105	$	13,268	$	13,351
Due after one year through five years		1,504		1,535		18,173		18,548
Due after five years through ten years		700		682		8,458		8,241


Total	¥	3,302	¥	3,322	$	39,899	$	40,140

F-19

Proceeds from sales of available-for-sale securities were ¥1,602 million ($19,357 thousand), ¥795 million and ¥304 million for the years ended March 31, 2011, 2010 and 2009, respectively. The gross realized gains on the sales of available-for-sale securities for the years ended March 31, 2011, 2010 and 2009 were ¥354 million ($4,277 thousand), ¥4 million and ¥0 million, respectively. The gross realized losses on the sales of available-for-sale securities for the years ended March 31, 2011 and 2010 were ¥37 million ($447 thousand) and ¥3 million, respectively. No realized losses were recorded for the year ended March 31, 2009.

During the years ended March 31, 2010 and 2009, the Companies exchanged certain equity securities for other marketable securities. The Companies recorded the newly received securities at fair value and recognized a gain of ¥6 million and ¥2 million in the years ended March 31, 2010 and 2009, respectively. There was no such exchange of marketable securities for the year ended March 31, 2011.

The amount of impairment charges the Companies recognized on available-for-sale securities in which declines in fair value are other than temporary are ¥1,366 million ($16,506 thousand), ¥1,445 million and ¥3,547 million in the years ended March 31, 2011, 2010 and 2009, respectively.

Trading Securities — The Company’s subsidiary in the United States of America has trading securities consisting of mutual funds, which are recorded as marketable securities at the fair value of ¥257 million ($3,105 thousand) as of March 31, 2011. There were no trading securities recorded in marketable securities as of March 31, 2010. The Company recorded a gain of ¥39 million ($471 thousand) which is included in other — net of other income (expense) for the year ended March 31, 2011 that relates to trading securities still held as of March 31, 2011.

The Company’s subsidiary in the United States of America adopted a non-qualified deferred compensation plan and trust agreement. Investments consist of several mutual funds, which are recorded as investments at the fair market value of ¥92 million ($1,112 thousand) and ¥91 million as of March 31, 2011 and 2010, respectively. The Company recorded gains of ¥13 million ($157 thousand) and ¥30 million which are included in other — net of other income for the years ended March 31, 2011 and 2010, respectively that relates to trading securities still held as of March 31, 2011 and 2010, respectively, and ¥23 million of trading loss as other expense for the year ended March 31, 2009 that relates to trading securities still held as of March 31, 2009.

Cost-Method Securities — Investments in non-marketable equity securities for which there are no readily determinable fair values were accounted for using the cost method and aggregated ¥3,443 million ($41,602 thousand) and ¥3,085 million as of March 31, 2011 and 2010, respectively. Investments in non-marketable equity securities are reviewed annually or upon the occurrence of an event for other-than-temporary impairment. The Companies recognized impairment charges on investments in non-marketable equity securities of ¥219 million ($2,646 thousand), ¥15 million and ¥3 million in the years ended March 31, 2011, 2010 and 2009, respectively.

F-20

VALUATION AND QUALIFYING ACCOUNTS

Information related to the Companies’ allowance for doubtful receivables was as follows:


										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011

Balance at beginning of year	¥	116		¥	82		¥	77		$	1,401
Increase due to change in scope of consolidation (Note 7)					28
Charged to costs and expenses		13			38			13			157
Balances written-off/reversed		(30	)		(32	)		(8	)		(362	)


Balance at end of year	¥	99		¥	116		¥	82		$	1,196

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


										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011

Balance at beginning of year	¥	1,856		¥	2,197		¥	3,068		$	22,426
Increase due to change in scope of consolidation (Note 7)					15
Charged to costs and expenses		1,450			1,856			2,197			17,521
Balances utilized		(1,856	)		(2,212	)		(3,068	)		(22,426	)


Balance at end of year	¥	1,450		¥	1,856		¥	2,197		$	17,521

INVENTORIES

The components of inventories as of March 31, 2011 and 2010 were as follows:


					Thousands of
	Millions of Yen				U.S. Dollars
	2011		2010		2011

Finished products	¥	26,576	¥	27,752	$	321,121
Work in process		3,300		3,263		39,874
Raw materials		1,080		1,088		13,050


Total	¥	30,956	¥	32,103	$	374,045

INVESTMENTS IN AFFILIATED COMPANIES

Investments are accounted for using the equity method of accounting if the investment provides the Companies the ability to exercise significant influence, but not control, over an investee. Significant influence is generally deemed to exist if the Companies have an ownership interest in the voting stock of the investee of between 20% to 50%, although other factors are considered in determining whether the equity method of accounting is appropriate. The Companies record investments in equity method investees meeting these characteristics as “Investments in affiliated companies.” Under the equity method, the Companies record their proportionate share of an affiliated companies’ income or loss based on the most recently available financial statements.

F-21

The Companies’ investments in affiliated companies and percentage of ownership as of March 31, 2011 and 2010 include, among others, the following companies:


	Percentage of Ownership (%)
Name of Investee	2011		2010

Thai Wacoal Public Company Limited		34		34
Shinyoung Wacoal Inc.		25		25
Indonesia Wacoal Co., Ltd.		42		42
Taiwan Wacoal Co., Ltd.		50		50
House of Rose Co., Ltd.		20		20

Aggregate values of carrying amounts and fair values of investments in affiliated companies which have quoted market price as of March 31, 2011 and 2010 were as follows:


					Thousands of
	Millions of Yen				U.S. Dollars
	2011		2010		2011

Carrying amount	¥	8,766	¥	8,814	$	105,921
Aggregate value of quoted market price		7,735		7,768		93,463

The following tables represent the affiliated companies’ summarized information from the balance sheets as of March 31, 2011 and 2010, and statements of operations for the years ended March 31, 2011, 2010 and 2009.


					Thousands of
	Millions of Yen				U.S. Dollars
	2011		2010		2011

Current assets	¥	31,148	¥	30,303	$	376,366
Noncurrent assets		28,646		29,221		346,133


Total	¥	59,794	¥	59,524	$	722,499


Current liabilities	¥	7,569	¥	7,165	$	91,457
Long-term liabilities		6,373		6,143		77,006
Equity		45,852		46,216		554,036


Total	¥	59,794	¥	59,524	$	722,499


							Thousands of
	Millions of Yen						U.S. Dollars
	2011		2010		2009		2011

Net sales	¥	50,833	¥	49,130	¥	57,488	$	614,222
Gross profit		27,196		25,948		30,388		328,613
Income before income taxes		3,947		3,730		3,630		47,692
Net income		3,039		2,777		2,832		36,721

Dividends received from the affiliated companies were ¥424 million ($5,123 thousand), ¥415 million and ¥597 million during the years ended March 31, 2011, 2010 and 2009, respectively.

Retained earnings include net undistributed earnings of affiliated companies in the amount of ¥14,910 million ($180,159 thousand) and ¥14,369 million as of March 31, 2011 and 2010, respectively.

F-22

ACQUISITIONS

Lecien — On August 17, 2009, the Company acquired all the outstanding common shares of Lecien which primarily manufactures and sells innerwear, lace, handicrafts and tapestries, through share exchange. This aimed to expand its business field. This enables the Company to maintain the growth of its innerwear business in the domestic market by making its presence known in the new market and developing new and different products, sales methods and channels, as well as pricing strategies.

This transaction was accounted for as an acquisition. Lecien’s results of operations were included in the Company’s consolidated statements of income for the year ended March 31, 2010 from August 1, 2009. Lecien’s results of operations and change in financial position between August 1, 2009 and August 17, 2009 were not significant.

The purchase cost of the acquisition was ¥2,489 million, which was the fair value of the shares distributed to the shareholders of Lecien. As consideration for the acquisition, the Company distributed 2,104,063 shares of treasury stock to the shareholders of Lecien. Those shares were valued at ¥1,183 per share which was the stock price on the acquisition date of August 17, 2009.

The purchase price of Lecien’s shares was allocated based upon the estimated fair value of the identifiable assets acquired and liabilities assumed. As a result of the allocation of basis of investment in Lecien, the Company recognized goodwill of ¥71 million.

Lecien’s net sales and net loss included in the Company’s consolidated statement of income for the year ended March 31, 2010 were ¥8,751 million and ¥245 million, respectively.

The costs of the business combinations were ¥121 million, which were included in selling, general and administrative.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.


	Millions of
	Yen
	2010

Cash	¥	362
Trade notes and receivable		3,381
Other current assets		1,841
Property, plant, and equipment		2,164
Investments		1,101
Goodwill		71
Other intangible assets		144
Other assets		798

Total assets acquired		9,862

Current liabilities		5,725
Long-term liabilities		1,602

Total liabilities assumed		7,327


Noncontrolling interests		46


Net assets acquired	¥	2,489

F-23

Unaudited Pro Forma Results

Unaudited pro forma financial information was presented below as if the acquisition of Lecien occurred at the beginning of the 2009 and fiscal year.


	Millions of Yen
	2010		2009

Pro forma sales	¥	167,621	¥	188,374
Pro forma operating income		3,272		10,115
Pro forma net income attributable to Wacoal Holdings Corp.		1,864		4,970


	Millions of Yen
	2010		2009

Pro forma net income attributable to Wacoal Holdings Corp. per share:
Basic	¥	13.19	¥	34.92
Diluted		13.18		34.92

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill — The changes in the carrying amount of goodwill for the years ended March 31, 2011 and 2010 were as follows:


	Peach John Segment
	2011
	Millions of			Thousands of
	Yen			U.S. Dollars

Balance at beginning of year:
Goodwill	¥	11,203		$	135,367
Accumulated impairment losses

Total		11,203			135,367

Impairment losses		(836	)		(10,101	)

Total		(836	)		(10,101	)

Balance at end of year:
Goodwill		11,203			135,367
Accumulated impairment losses		(836	)		(10,101	)


Total	¥	10,367		$	125,266


	Millions of Yen
	2010
	Peach
	John		Other
	Segment		Segment			Total

Balance at beginning of year:
Goodwill	¥	11,203				¥	11,203
Accumulated impairment losses

Total		11,203					11,203

Goodwill acquired during year			¥	71			71
Impairment losses				(71	)		(71	)

Total

Balance at end of year:
Goodwill		11,203					11,203
Accumulated impairment losses


Total	¥	11,203				¥	11,203

F-24

		During the year ended March 31, 2011, the Company recorded an impairment charges on goodwill of ¥836 million ($10,101 thousand) in Peach John Segment. See Note 20 for further information.

		During the year ended March 31, 2010, goodwill of Other segment was recorded from acquired business of Lecien as further described in Note 7. Lecien segment was tested for impairment in the fourth quarter, after the annual forecasting process. The Company identified a decline in fair value of Lecien and recognized an impairment loss of ¥71 million, which was included in impairment charges on goodwill in the Other segment. See Note 20 for further information.

		*Other Intangible Assets —* The components of acquired intangible assets excluding goodwill as of March 31, 2011 and 2010 were as follows:


	2011
					Thousands of
	Millions of Yen				U.S. Dollars
			Accumulated				Accumulated
	Gross		Amortization		Gross		Amortization
	Carrying		and Impairment		Carrying		and Impairment
Year Ended March 31	Amount		Loss		Amount		Loss

Amortized intangible assets:
Customer relationship	¥	3,361	¥	2,636	$	40,611	$	31,851
Software		7,517		3,655		90,829		44,164
Other		1,294		413		15,636		4,989


Total	¥	12,172	¥	6,704	$	147,076	$	81,004


Unamortized intangible assets:
Trademark	¥	5,316	¥	559	$	64,234	$	6,755
Other		100				1,208


Total	¥	5,416	¥	559	$	65,442	$	6,755


	2010
	Millions of Yen
			Accumulated
	Gross		Amortization
	Carrying		and Impairment
Year Ended March 31	Amount		Loss

Amortized intangible assets:
Customer relationship	¥	3,361	¥	1,983
Software		7,486		2,851
Other		1,326		404


Total	¥	12,173	¥	5,238


Unamortized intangible assets:
Trademark	¥	5,316
Other		100


Total	¥	5,416

Other intangible assets acquired during the year ended March 31, 2011 totaled ¥671 million ($8,108 thousand) which primarily consist of software of ¥646 million ($7,806 thousand) with estimated useful life of 5 years.

F-25

		During the year ended March 31, 2011, the Company recorded an impairment charge on other intangible assets of ¥377 million ($4,555 thousand) and ¥559 million ($6,755 thousand), for the customer relationship and trademark, respectively, in Peach John Segment. See Note 20 for further information.

		During the year ended March 31, 2010, the Company recorded an impairment charge on other intangible assets of ¥1,023 million for customer relationship in Peach John Segment. See Note 20 for further information.

		Aggregate amortization expenses for the years ended March 31, 2011, 2010 and 2009 related to other intangible assets and future estimated amortization expense as of March 31, 2011, 2010 and 2009 were as follows:


	Millions of		Thousands of
	Yen		U.S. Dollars
	2011		2011
Year Ended March 31
Aggregate amortization expense
2011	¥	1,850	$	22,354
Year Ending March 31
Estimated amortization expense
2012		1,463		17,678
2013		1,237		14,947
2014		991		11,974
2015		597		7,214
2016		134		1,619


Total	¥	4,422	$	53,432


	Millions of
	Yen
	2010
Year Ended March 31
Aggregate amortization expense
2010	¥	1,791
Year Ending March 31
Estimated amortization expense
2011		1,468
2012		1,413
2013		1,231
2014		999
2015		747


Total	¥	5,858


	Millions of
	Yen
	2009
Year Ended March 31
Aggregate amortization expense
2009	¥	1,496
Year Ending March 31
Estimated amortization expense
2010		1,570
2011		1,541
2012		1,441
2013		1,251
2014		967


Total	¥	6,770

F-26

SHORT-TERM BANK LOANS AND LONG TERM DEBT

Short-term bank loans as of March 31, 2011 and 2010 consisted of the following:


					Thousands of
	Millions of Yen				U.S. Dollars
	2011		2010		2011

Collateralized bank loans	¥	500	¥	3,350	$	6,042
Unsecured bank loans		5,617		4,591		67,871


Total	¥	6,117	¥	7,941	$	73,913

		The weighted-average annual interest rates on short-term bank loans as of March 31, 2011 and 2010 were 0.8% and 1.3%, respectively.

		Unused lines of credit for short-term financing as of March 31, 2011 and 2010, aggregated ¥22,579 million ($272,825 thousand) and ¥21,401 million, respectively. Companies compensate banks for these facilities in the form of commitment fees, which were not material during the years ended March 31, 2011 and 2010.

		Long-term debt as of March 31, 2011 and 2010 are summarized below. The interest rates and maturities are for loans as of March 31, 2011.


							Thousands of
	Millions of Yen						U.S. Dollars
	2011			2010			2011

Collateralized bank loans, with floating interest at 2.0%, maturing through 2013	¥	76		¥	137		$	918
Unsecured bank loans, with fixed interest at 1.8%, maturing through 2014		200						2,417
Capital lease obligation		8			51			97

Total		284			188			3,432

Less current portion		(70	)		(108	)		(846	)


Long-term debt, less current portion	¥	214		¥	80		$	2,586

The annual maturities of long-term debt as of March 31, 2011 were as follows:


	Millions of		Thousands of
Year Ending March 31	Yen		U.S. Dollars

2012	¥	70	$	846
2013		14		169
2014		200		2,417


Total	¥	284	$	3,432

F-27

A subsidiary has pledged assets as security for loans. As of March 31, 2011 and 2010, assets pledged as collateral for bank loans were as follows:


					Thousands of
	Millions of Yen				U.S. Dollars
	2011		2010		2011

Land	¥	803	¥	1,015	$	9,703
Buildings		460		412		5,558
Investments				977


Total	¥	1,263	¥	2,404	$	15,261

		As of March 31, 2010, investments pledged includes ¥280 million of shares of the Company which are presented as treasury stock on the consolidated balance sheet.

		As is customary in Japan, both short-term and long-term loans are made under general agreements which provide that security and guarantees for future and present indebtedness will be given upon request of the bank and the bank has the right to offset cash deposits against obligations that have become due or, in the event of default, against all obligations due to the bank.

10.

LEASES

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


	Millions of		Thousands of
Year Ending March 31	Yen		U.S. Dollars

2012	¥	819	$	9,896
2013		727		8,784
2014		241		2,912
2015		213		2,574
2016		205		2,477
Thereafter		645		7,794


Total	¥	2,850	$	34,437

Rental expenses were ¥5,147 million ($62,192 thousand), ¥5,252 million and ¥4,800 million for the years ended March 31, 2011, 2010 and 2009, respectively.

11.

ASSET RETIREMENT OBLIGATIONS

The Companies recorded the fair value of asset retirement obligations in order to recognize legal obligations associated with the removal of leasehold improvements from leased facilities and return of the property to a specified condition when the lease terminates.

F-28

A reconciliation of the beginning and ending aggregate carrying amount of the asset retirement obligation was as follows:


							Thousands of
	Millions of Yen						U.S. Dollars
	2011			2010			2011

Balance at beginning of year	¥	594		¥	443		$	7,177
Increase due to change in scope of consolidation (Note 7)					97
Accretion expense		20			11			242
Liabilities incurred		231			66			2,791
Liabilities settled		(177	)		(22	)		(2,139	)
Changes due to translation of foreign currencies		(5	)		(1	)		(60	)


Balance at end of year	¥	663		¥	594		$	8,011

12.

TERMINATION AND RETIREMENT PLANS

		*Employee Retirement Plans —* The Companies sponsor termination and retirement benefit plans that cover substantially all employees. Benefits are based on the employee’s years of service, position and performance. If the termination is involuntary or caused by death, the employee is usually entitled to greater payments than in the case of voluntary termination.

		The Companies have a contributory defined retirement benefit plan, several partially funded plans administered by independent trustees and several unfunded termination plans administered by the Companies. Benefits under the contributory defined retirement benefit plan are usually paid in a lump sum at the earlier of termination or retirement, although periodic payments are available under certain conditions. Benefits under the other termination and retirement benefit plan are paid either as lump-sum payments or periodic payments under certain conditions. The benefits are usually paid as a lump-sum payment, if the employee resigns before the mandatory retirement age.

F-29

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


							Thousands of
	Millions of Yen						U.S. Dollars
	2011			2010			2011

Change in benefit obligations:
Benefit obligations at beginning of year	¥	33,454		¥	32,946		$	404,229
Service cost		833			916			10,065
Interest cost		712			764			8,603
Participants’ contributions		71			73			858
Actuarial (gain) loss		(593	)		181			(7,165	)
Benefits paid from plan assets		(708	)		(607	)		(8,555	)
Settlement paid from plan assets		(926	)		(767	)		(11,189	)
Settlement paid by the Companies		(118	)		(129	)		(1,426	)
Increase due to change in scope of consolidation (Note 7)					77

Benefit obligations at end of year		32,725			33,454			395,420


Change in plan assets:
Fair value of plan assets at beginning of year	¥	31,743		¥	29,069		$	383,555
Actual return on plan assets		(768	)		2,461			(9,280	)
Employer contributions		1,566			1,515			18,922
Participants’ contributions		71			72			858
Benefit payments		(708	)		(607	)		(8,555	)
Settlement payments		(926	)		(767	)		(11,189	)

Fair value of plan assets at end of year		30,978			31,743			374,311


Funded status at end of year	¥	(1,747	)	¥	(1,711	)	$	(21,109	)

Amounts recognized in the consolidated balance sheets as of March 31, 2011 and 2010 consist of:


							Thousands of
	Millions of Yen						U.S. Dollars
	2011			2010			2011

Prepaid pension expense	¥	158		¥	263		$	1,909
Accrued expenses		(90	)		(82	)		(1,087	)
Liability for termination and retirement benefits		(1,815	)		(1,892	)		(21,931	)


	¥	(1,747	)	¥	(1,711	)	$	(21,109	)

Amounts recognized in accumulated other comprehensive loss as of March 31, 2011 and 2010 were as follows:


							Thousands of
	Millions of Yen						U.S. Dollars
	2011			2010			2011

Actuarial loss	¥	(6,874	)	¥	(7,196	)	$	(83,060	)
Prior service benefit		3,497			4,189			42,255


	¥	(3,377	)	¥	(3,007	)	$	(40,805	)

F-30

The accumulated benefit obligation for all defined benefit plans as of March 31, 2011 and 2010 were as follows:


					Thousands of
	Millions of Yen				U.S. Dollars
	2011		2010		2011

Accumulated benefit obligation	¥	32,272	¥	32,727	$	389,947

The projected benefit obligations and the fair value of the plan assets for the Company’s pension plans with projected benefit obligations in excess of plan assets, and the accumulated benefit obligations and the fair value of the plan assets for the Company’s pension plans with accumulated benefit obligations in excess of plan assets were as follows:


					Thousands of
	Millions of Yen				U.S. Dollars
	2011		2010		2011

Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligations	¥	2,505	¥	2,505	$	30,268
Fair value of plan assets		600		531		7,250

Plans with accumulated benefit obligations in excess of plan assets:
Accumulated benefit obligations		2,505		2,505		30,268
Fair value of plan assets		600		531		7,250

Net periodic benefit costs for the Companies’ plans consisted of the following for the years ended March 31, 2011, 2010 and 2009:


										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011

Service cost	¥	833		¥	916		¥	812		$	10,065
Interest cost		712			764			751			8,603
Expected return on plan assets		(758	)		(705	)		(774	)		(9,159	)
Amortization of actuarial loss		1,255			1,814			919			15,165
Amortization of prior service benefit		(691	)		(691	)		(691	)		(8,349	)


	¥	1,351		¥	2,098		¥	1,017		$	16,325

		The unrecognized net actuarial loss and prior service benefit are being amortized over 12 years (the average remaining service life of active participants) using the declining-balance method and the straight-line method, respectively.

		Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the years ended March 31, 2011, 2010 and 2009 were as follows:


										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011

Current year actuarial (loss) gain	¥	(933	)	¥	1,575		¥	(6,800	)	$	(11,274	)
Amortization of actuarial loss		1,255			1,814			919			15,165
Amortization of prior service benefit		(691	)		(691	)		(691	)		(8,349	)


	¥	(369	)	¥	2,698		¥	(6,572	)	$	(4,458	)

F-31

The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next year are summarized as follows:


	Millions of			Thousands of
	Yen			U.S. Dollars
	2011			2011

Actuarial loss	¥	1,203		$	14,536
Prior service benefit		(691	)		(8,349	)

The Companies use a March 31 measurement date for their plans. The weighted-average assumptions used as of March 31, in computing the benefit obligations shown above were as follows:


	2011			2010

Discount rate		2.4	%		2.3	%
Rate of increase in future compensation		0.0	%		0.0	%

The weighted-average assumptions used as of March 31, in computing the net periodic benefit cost shown above were as follows:


	2011			2010			2009

Discount rate		2.3	%		2.5	%		2.5	%
Rate of increase in future compensation		0.0	%		0.0	%		0.0	%
Expected long-term rate of return on plan assets		2.5	%		2.5	%		2.5	%

		The Company’s wholly owned subsidiary, Wacoal Corp.’s approach to establishing the discount rate is based upon long term Japanese government bond rates and corporate bond indices. The discount rate assumption is based upon the effective yields as of March 31, 2011 on the Japanese government bonds whose maturity dates would be the same as timing of the expected future benefit payments, adjusted for an incremental yield of approximately 25 basis points that is achieved by selecting corporate bonds whose credit characteristics satisfy the quality requirements but whose yields are slightly higher than the yields on Japanese government bonds. For other plans, similar indices and methods are used.

		The expected long-term rate of return on plan assets is derived proportionally from return assumptions determined for each of the major asset classes. The return expectations for each of the asset classes are based largely on assumptions about economic growth and inflation, which are supported by long-term historical data. The estimated long-term rate of return is based on an asset allocation of equity securities of 33.0%, debt securities of 48.0%, life insurance company general accounts of 17.0% and short-term financing of 2.0%.

		The Companies’ investment strategy is to maintain actual asset weightings within a preset range of target allocations. The Companies’ investments are broadly diversified, typically consisting primarily of equity and debt securities. The Companies believe these ranges represent an appropriate risk profile for the planned benefit payments of the plans based on the timing of the estimated benefit payment.

		The asset allocation as of March 31, 2011 and 2010 was as follows:


	2011			2010

Equity securities		37.1	%		41.0	%
Debt securities		40.9	%		41.9	%
Life insurance company general accounts		16.1	%		13.9	%
Short-term financing		5.9	%		3.2	%

F-32

		The target allocation percentages are reviewed and approved by the Pension Committee. The actual allocations for 2011 and 2010 are different from the target allocation percentages primarily because Wacoal Corp. maintained additional equity securities as the separate plan asset which was contributed to the plan based on an agreement between Wacoal Corp. and employees and are not governed by the Pension Committee. As such, the actual allocation percentage of equity securities to the total plan assets is higher than the target allocation, and similarly, the actual allocation for the other types of assets are lower than the target allocation.

		The following table presents the Companies’ plan assets using the fair value hierarchy as of March 31, 2011. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant unobservable inputs.


	Millions of Yen
2011	Level 1		Level 2		Level 3	Total

Equity securities:
Japanese companies	¥	5,693				¥	5,693
Foreign companies		865					865
Pooled funds (a)			¥	3,405			3,405
Debt securities:
Japanese government bonds		1,921					1,921
Japanese municipal bonds				5			5
Japanese corporate bonds				118			118
Foreign government bonds		708					708
Pooled funds (b)				9,924			9,924
Life insurance company general accounts				4,974			4,974
Other types of investments:
Equity long/short hedge funds (c)				1,529			1,529
Short-term financing				1,836			1,836


Total	¥	9,187	¥	21,791		¥	30,978


	Millions of Yen
2010	Level 1		Level 2		Level 3	Total

Equity securities:
Japanese companies	¥	6,112				¥	6,112
Foreign companies		829					829
Pooled funds (a)			¥	4,476			4,476
Debt securities:
Japanese government bonds		1,705					1,705
Japanese municipal bonds				17			17
Japanese corporate bonds				177			177
Foreign government bonds		660					660
Pooled funds (b)				10,742			10,742
Life insurance company general accounts				4,406			4,406
Other types of investments:
Equity long/short hedge funds (c)				1,592			1,592
Short-term financing				1,027			1,027


Total	¥	9,306	¥	22,437		¥	31,743

F-33


	Thousands of U.S. Dollars
2011	Level 1		Level 2		Level 3	Total

Equity securities:
Japanese companies	$	68,789				$	68,789
Foreign companies		10,452					10,452
Pooled funds (a)			$	41,143			41,143
Debt securities:
Japanese government bonds		23,212					23,212
Japanese municipal bonds				60			60
Japanese corporate bonds				1,426			1,426
Foreign government bonds		8,555					8,555
Pooled funds (b)				119,913			119,913
Life insurance company general accounts				60,101			60,101
Other types of investments:
Equity long/short hedge funds (c)				18,475			18,475
Short-term financing				22,185			22,185


Total	$	111,008	$	263,303		$	374,311


(a)		This class includes common stock of approximately 73% Japanese companies and 27% foreign companies as of March 31, 2011, and those percentages were 75% and 25%, respectively, as of March 31, 2010.

(b)		This class includes approximately 46% of Japanese government bonds, 2% of Japanese municipal bonds, 38% of foreign government bonds, and 14% of corporate bonds as of March 31, 2011, and those percentages were 48%, 2%, 37%, and 13%, respectively, as of March 31, 2010.

(c)		This class includes hedge funds that invest both long and short in approximately 51% of Japanese common stocks and 49% of foreign common stocks as of March 31, 2011, and those percentages were 51% and 49%, respectively, as of March 31, 2010.

		Equity securities and debt securities presented in Level 1 are primarily valued using a market approach on the quoted market prices of identical instruments. Municipal bonds and corporate bonds presented in Level 2 are primarily valued using quoted prices for identical instruments in markets that are not active. Pooled funds in equity securities or debt securities and equity long/short hedge funds which are categorized in Level 2 are valued by the sponsor of the fund primarily based on quoted prices in both active and inactive market for identical instruments which comprise funds. Life insurance company general accounts is the contracts with the insurance companies with guaranteed rate of return and capital, and those value are based on addition of original value and return.

		The general funding policy of the funded plans is to contribute amounts computed in accordance with actuarial methods accepted by Japanese tax law. The Companies expect to contribute ¥1,838 million ($22,209 thousand) to their plans in the year ending March 31, 2012.

		The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


	Millions of		Thousands of
Year Ending March 31	Yen		U.S. Dollars

2012	¥	1,978	$	23,900
2013		1,772		21,411
2014		1,852		22,378
2015		1,964		23,731
2016		2,029		24,517
Thereafter		10,935		132,129

F-34

		*Multiemployer Plan —* Some subsidiaries participate in multiemployer plans. The aggregated amount of the contribution to the plans were ¥56 million ($677 thousand) and ¥42 million for the years ended March 31, 2011 and 2010, respectively. There was no cost recognized for the year ended March 31, 2009 as the Companies did not have a multiemployer plan during the year ended March 31, 2009. As it is probable that certain subsidiaries will withdraw from the plan, the Companies assessed the probability and recognized the estimated withdrawal liability of ¥774 million ($9,352 thousand) as of March 31, 2011.

		*Defined Contribution Plan —* A subsidiary has a defined contribution plan. The amounts of cost recognized for its contribution to the plan were ¥28 million ($338 thousand) and ¥20 million for the years ended March 31, 2011 and 2010, respectively. There was no cost recognized for the year ended March 31, 2009 as the Companies did not have a defined contribution plan during the year ended March 31, 2009.

		*Employee Early Retirement Program —* The Companies provide additional benefits to employees that elect to participate in the Companies’ early retirement program. Retirement benefits of ¥348 million ($4,205 thousand), ¥361 million and ¥157 million were paid in addition to normal benefits and charged to selling, general and administrative for the years ended March 31, 2011, 2010 and 2009, respectively.

		*Termination Plan for Directors and Corporate Auditors —* The Company had and certain subsidiaries have termination plans for directors and corporate auditors. Payment of termination benefits to directors and corporate auditors is made in a lump-sum upon termination and requires the approval of the shareholders before payment. In June 2005, the Company rescinded its termination plan for directors and corporate auditors upon the approval of its shareholders. The amount of benefit for each individual was fixed as of June 29, 2005 and will remain frozen until the retirement of each respective director and corporate auditor. The outstanding liabilities were ¥317 million ($3,830 thousand) as of March 31, 2011, ¥339 million as of March 31, 2010 and 2009, and were recorded in other long-term liabilities. Subsidiaries still maintain plans for their directors and corporate auditors. In accordance with the guidance for determination of vested benefit obligation for a defined benefit pension plan, the subsidiaries recorded a liability for termination benefits for directors and corporate auditors at the amount that would be needed if all directors and corporate auditors were to resign at each balance sheet date. The liabilities for termination benefits for directors and corporate auditors as of March 31, 2011 and 2010 were ¥385 million ($4,652 thousand) and ¥377 million, respectively, and were included in liability for termination and retirement benefits.

13.

EQUITY

Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:

	(a)		Dividends

			Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria. The Board of Directors of companies with board committees (an appointment committee, compensation committee and audit committee) can also do so because such companies with board committees already, by nature, meet the criteria under the Companies Act, even though such companies have an audit committee instead of the Board of Corporate Auditors.

			The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to a certain limitation and additional requirements. Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.

F-35

	(b)		Increases/decreases and transfer of common stock, reserve and surplus

			The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.

	(c)		Treasury stock

			The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by specific formula.

14.

SHARE-BASED COMPENSATION

		The Company adopted an annual stock option plan in the year ended March 31, 2009. Under the stock option plan, the Company granted shares of its common stock to directors of the Company excluding outside directors and directors of the Company’s wholly owned subsidiary, Wacoal Corp., in the years ended March 31, 2011, 2010 and 2009. The Company believes that such awards better align the interests of its directors with those of its shareholders, by sharing both risk and return from fluctuations in stock prices and giving motivation to enhance its corporate value. The compensation cost is measured at fair value on the grant date. Options vest over one year in proportion to the service months of directors, and are exercisable from the day after the date of retirement up to (i) twenty years from the grant date or (ii) five years from the day after the date of retirement, whichever is earlier.

		The fair value of the options is estimated by using the Black-Scholes option-pricing model with following assumptions.

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


	2011			2010			2009

Expected dividends		1.7	%		2.1	%		2.0	%
Expected volatility		31.5	%		30.6	%		24.7	%
Risk-free interest rate		0.2	%		0.5	%		1.0	%
Expected term	3.6		years	4.0		years	4.8		years

F-36

A summary of option activity under the Plan as of March 31, 2011, and changes for the year ended March 31, 2011, were as follows:


										Millions		Thousands of
			Yen		U.S. Dollars		Years			of Yen		U.S. Dollars
							Weighted-Average
			Weighted-Average				Remaining
	Shares		Exercise Price				Contractual Term			Aggregate Intrinsic Value

Outstanding as of April 1, 2010		102,000	¥	1	$	0.01
Granted		46,000		1		0.01
Exercised
Forfeited or expired
Outstanding as of March 31, 2011		148,000		1		0.01	17.0		years	¥	155	$	1,873
Exercisable as of March 31, 2011		15,000		1		0.01		4.0			16		193

		The total intrinsic value of options exercised was ¥5 million for the year ended March 31, 2010. There were no options exercised for the years ended March 31, 2011 and 2009.

		Total compensation costs recognized for the years ended March 31, 2011, 2010 and 2009 were ¥50 million ($604 thousand), ¥55 million and ¥54 million, respectively. The total recognized tax benefits related thereto for the years ended March 31, 2011, 2010 and 2009 were ¥20 million ($242 thousand), ¥22 million and ¥22 million, respectively.

		The weighted-average grant date fair values of options granted for the years ended March 31, 2011, 2010 and 2009 were ¥1,081 ($13), ¥1,084 and ¥1,137, respectively.

		As of March 31, 2011, there were ¥9 million ($109 thousand) of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over three months.

15.

OTHER COMPREHENSIVE (LOSS) INCOME

The changes in the components of accumulated other comprehensive income (loss) including amounts attributable to noncontrolling interests were as follows:


	Millions of Yen
	2011									2010							2009
				Tax																Tax
	Pre-Tax			(Expense)			Net			Pre-Tax		Tax			Net		Pre-Tax			(Expense)			Net
	Amount			Credit			Amount			Amount		Expense			Amount		Amount			Credit			Amount

Foreign currency translation adjustments	¥	(3,003	)	¥	88		¥	(2,915	)	¥	870	¥	(75	)	¥	795	¥	(9,402	)	¥	692		¥	(8,710	)
Unrealized (loss) gain on securities:
Amount arising during the year		(2,843	)		1,170			(1,673	)		4,319		(1,735	)		2,584		(10,092	)		4,030			(6,062	)
Reclassification adjustments		1,014			(413	)		601			1,293		(526	)		767		1,828			(744	)		1,084

Net unrealized (loss) gain		(1,829	)		757			(1,072	)		5,612		(2,261	)		3,351		(8,264	)		3,286			(4,978	)


Pension liability adjustment:
Amount arising during the year		(933	)		380			(553	)		1,575		(641	)		934		(6,800	)		2,768			(4,032	)
Reclassification adjustment		564			(230	)		334			1,123		(457	)		666		228			(93	)		135

Net unrealized (loss) gain		(369	)		150			(219	)		2,698		(1,098	)		1,600		(6,572	)		2,675			(3,897	)


Other comprehensive (loss) income	¥	(5,201	)	¥	995		¥	(4,206	)	¥	9,180	¥	(3,434	)	¥	5,746	¥	(24,238	)	¥	6,653		¥	(17,585	)

F-37


	Thousands of U.S. Dollars
	2011
				Tax
	Pre-Tax			(Expense)			Net
	Amount			Credit			Amount

Foreign currency translation adjustments	$	(36,286	)	$	1,063		$	(35,223	)
Unrealized loss on securities:
Amount arising during the year		(34,352	)		14,137			(20,215	)
Reclassification adjustments		12,252			(4,990	)		7,262

Net unrealized loss		(22,100	)		9,147			(12,953	)


Pension liability adjustment:
Amount arising during the year		(11,274	)		4,592			(6,682	)
Reclassification adjustment		6,816			(2,780	)		4,036

Net unrealized loss		(4,458	)		1,812			(2,646	)


Other comprehensive loss	$	(62,844	)	$	12,022		$	(50,822	)

16.

INCOME TAXES

Domestic and foreign components of income before income taxes, equity in net income of affiliated companies, and net (income) loss attributable to noncontrolling interests were summarized as follows:


										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011

Japan	¥	9,097		¥	9,445		¥	12,553		$	109,920
Foreign		(5,358	)		(6,322	)		(4,926	)		(64,741	)


Total	¥	3,739		¥	3,123		¥	7,627		$	45,179

Domestic and foreign components of income taxes expense consist of:


										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011

Current:
Japan	¥	2,882		¥	2,851		¥	2,214		$	34,824
Foreign		581			310			503			7,020


	¥	3,463		¥	3,161		¥	2,717		$	41,844


Deferred:
Japan	¥	(1,398	)	¥	(1,726	)	¥	522		$	(16,892	)
Foreign		(73	)		139			(26	)		(882	)


	¥	(1,471	)	¥	(1,587	)	¥	496		$	(17,774	)


Total income taxes	¥	1,992		¥	1,574		¥	3,213		$	24,070

F-38

		Income taxes in Japan applicable to the Companies, imposed by the national, prefectural and municipal governments, in the aggregate resulted in normal effective statutory tax rates of approximately 40.7% for the years ended March 31, 2011, 2010 and 2009. Foreign subsidiaries are subject to income taxes of the countries in which they operate.

		The Companies are subject to a number of different taxes based on income. The effective income tax rates differed from the normal statutory rates for the following reasons for the years ended March 31, 2011, 2010 and 2009:


	2011			2010			2009

Normal Japanese statutory rates		40.7	%		40.7	%		40.7	%
Increase (decrease) in taxes resulting from:
Permanently non-deductible expenses		10.3			13.0			5.8
Change in valuation allowance		18.2			(7.9	)		4.1
Undistributed earnings of associated companies		3.1			2.6			(2.1	)
Differences in foreign subsidiaries’ tax rate		(4.4	)		(5.4	)		(3.4	)
Tax exemption		(0.8	)		(1.1	)		(0.3	)
Unrecognized tax benefits		3.1			6.5			(1.0	)
Impairment losses on goodwill		(12.9	)
Other — net		(4.0	)		2.0			(1.7	)


Effective tax rates		53.3	%		50.4	%		42.1	%

The approximate effect of temporary differences and tax loss carryforwards that gave rise to deferred tax balances as of March 31, 2011 and 2010 were as follows:


											Thousands of
	Millions of Yen										U.S. Dollars
	2011					2010					2011
	Deferred			Deferred		Deferred			Deferred		Deferred			Deferred
	Tax			Tax		Tax			Tax		Tax			Tax
	Assets			Liabilities		Assets			Liabilities		Assets			Liabilities

Sales returns	¥	550				¥	783				$	6,646
Allowance for doubtful receivables		50					333					604
Accruals not currently deductible		333					298					4,024
Inventory valuation		1,816					1,583					21,943
Accrued bonuses		1,342					1,166					16,216
Impairment charges on marketable securities and investments		1,541					1,571					18,620
Advanced depreciation on property, plant and equipment				¥	1,679				¥	1,712				$	20,288
Undistributed earnings of associated companies					1,846					1,852					22,305
Net unrealized gain on marketable securities and investments					2,904					3,762					35,089
Net realized gain on exchange of investments					1,920					2,187					23,200
Capitalized supplies		232					205					2,803
Enterprise taxes		190					173					2,296
Accrued vacation		763					832					9,219
Asset retirement obligation		268					238					3,238
Pension expense		1,484					1,351					17,931
Tangible fixed assets		1,624					1,442					19,623
Tax loss carryforwards		4,053					3,185					48,973
Intangible assets					2,233					2,726					26,982
Investment in subsidiaries		540			1,042		540			1,878		6,525			12,591
Other temporary differences		478			160		138			119		5,776			1,933

Total		15,264			11,784		13,838			14,236		184,437			142,388
Valuation allowance		(4,910	)				(3,452	)				(59,328	)


Total	¥	10,354		¥	11,784	¥	10,386		¥	14,236	$	125,109		$	142,388

F-39

The valuation allowance increased by ¥1,458 million ($17,617 thousand) and ¥1,809 million for the years ended March 31, 2011 and 2010, respectively.

As a result of changing the Companies’ legal structure, the Companies reversed certain of valuation allowance for the year ended March 31, 2010. Accordingly, the Companies utilized ¥721 million of tax loss carryforwards, and recognized the tax benefits of ¥293 million for the year ended March 31, 2010.

As of March 31, 2011, certain subsidiaries had loss carryforwards which are available to offset future taxable income of such subsidiaries expiring as follows:


	Millions of		Thousands of
Year Carryforward Expires	Yen		U.S. Dollars

2012	¥	181	$	2,187
2013		730		8,821
2014		989		11,950
2015		564		6,815
2016		1,097		13,255
2017		2,736		33,059
2018		3,015		36,431
Thereafter		941		11,370


Total	¥	10,253	$	123,888

There was no portion of undistributed earnings of foreign subsidiaries and foreign corporate joint ventures which were deemed to be permanently invested as of March 31, 2011 and 2010.

A reconciliation of beginning and ending amount of unrecognized tax benefits was as follows:


										Thousands of
	Millions of Yen									U.S. Dollars
	2011			2010			2009			2011

Balance at beginning of year	¥	321		¥	106		¥	420		$	3,879
Additions based on tax positions related to the current year		58			232			20			701
Additions for tax positions of prior years					50
Reductions for tax positions of prior years		(191	)		(41	)					(2,308	)
Settlements with tax authorities					(26	)		(334	)


Balance at end of year	¥	188		¥	321		¥	106		$	2,272

Total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is ¥188 million ($2,272 thousand) and ¥321 million as of March 31, 2011 and 2010, respectively.

Based on each of the items of which the Company is aware as of March 31, 2011, no significant changes to the unrecognized tax benefits are expected within the next twelve months.

The Companies recognize interest and penalties accrued related to unrecognized tax benefits in income taxes in the consolidated statements of income. Total amounts of interest and penalties recognized in the consolidated statements of income for the years ended March 31, 2011, 2010 and 2009 were not material.

F-40

The Companies file income tax returns in Japan and various foreign tax jurisdictions. In Japan the Companies are no longer subject to regular income tax examinations by the tax authorities for years before 2009 with few exceptions. For other countries, the Companies are no longer subject to regular income tax examinations by the tax authorities for years before 2006 with few exceptions. In the year ended March 31, 2009, the transfer pricing examination of certain domestic subsidiaries’ 2002 to 2007 fiscal year and certain the U.S. subsidiaries’ 2003 and 2004 fiscal year was completed.

17.

RELATED PARTY TRANSACTIONS

The Companies purchase merchandise from numerous suppliers throughout the world, including certain affiliated companies of the Companies. The Companies purchased merchandise from affiliated companies in the amount of ¥1,131 million ($13,666 thousand), ¥1,209 million and ¥1,674 million in the fiscal years ended March 31, 2011, 2010 and 2009, respectively. The accounts payable to affiliated companies were ¥0 million ($4 thousand) and ¥15 million as of March 31, 2011 and 2010, respectively.

The Companies also sell supplies, materials and products to certain affiliated companies. Aggregate sales to affiliated companies were ¥537 million ($6,489 thousand), ¥354 million and ¥958 million in fiscal years ended March 31, 2011, 2010 and 2009. The accounts receivable from affiliated companies were ¥91 million ($1,100 thousand) and ¥60 million as of March 31, 2011 and 2010, respectively.

The Companies earn royalties from the use of the Wacoal Brand by certain affiliated companies. The amount of royalty revenue earned was ¥201 million ($2,429 thousand), ¥199 million and ¥206 million in the fiscal years ended March 31, 2011, 2010 and 2009, respectively. Other accounts receivables from affiliated companies, which are categorized in other current assets in the consolidated balance sheets, were ¥158 million ($1,909 thousand) and ¥163 million as of March 31, 2011 and 2010, respectively.

Transaction between the Company and President’s Immediate Family — During the year ended March 31, 2010, the Company purchased the building and land which were owned by the president’s immediate family to use as a Company’s memorial house for the price based on a certification of real estate appraisal. The building and land included in the consolidated balance sheet as of March 31, 2010 were ¥35 million and ¥539 million, respectively. There were no such transactions during the year ended March 31, 2011.

18.

EARNINGS PER SHARE AND AMERICAN DEPOSITARY RECEIPT

Basic net income attributable to Wacoal Holdings Corp. per share has been computed by dividing net income attributable to Wacoal Holdings Corp. by the weighted-average number of common stock outstanding during each year. Diluted net income attributable to Wacoal Holdings Corp. per share assumes the dilution that could occur if share-based option to issue common stock were exercised.

The computation of earnings per American Depositary Receipt (“ADR”), each ADR representing 5 shares of common stock, is based on the weighted-average number of common shares outstanding. The weighted-average number of common stock outstanding used in the computations of basic net income attributable to Wacoal Holdings Corp. per share was 141,145,190 shares for 2011, 141,353,141 shares for 2010 and 142,316,921 shares for 2009. The weighted-average number of diluted common stock outstanding used in the computations of diluted net income attributable to Wacoal Holdings Corp. per share was 141,260,186 shares, 141,423,315 shares and 142,336,296 shares for 2011, 2010 and 2009, respectively.

F-41

19.

FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

Fair Value of Financial Instruments

The carrying amounts and fair values of financial instruments as of March 31, 2011 and 2010 were as follows:


	Millions of Yen						Thousands of U.S. Dollars
	Carrying						Carrying			Fair
2011	Amount			Fair Value			Amount			Value

Assets:
Marketable securities (Notes 3 and 20)	¥	4,819		¥	4,819		$	58,229		$	58,229
Investments (Notes 3 and 20)		29,229			29,229			353,178			353,178
Foreign exchange contracts (Note 20)		24			24			290			290


Total assets	¥	34,072		¥	34,072		$	411,697		$	411,697


Liabilities:
Foreign exchange contracts (Note 20)	¥	(49	)	¥	(49	)	$	(592	)	$	(592	)
Long-term debt including current portion		(276	)		(276	)		(3,335	)		(3,335	)


Total liabilities	¥	(325	)	¥	(325	)	$	(3,927	)	$	(3,927	)


	Millions of Yen
	Carrying
2010	Amount			Fair Value

Assets:
Marketable securities (Notes 3 and 20)	¥	6,529		¥	6,529
Investments (Notes 3 and 20)		32,743			32,743
Foreign exchange contracts (Note 20)		61			61


Total assets	¥	39,333		¥	39,333

Liabilities:
Foreign exchange contracts (Note 20)	¥	(78	)	¥	(78	)
Long-term debt including current portion		(137	)		(137	)


Total liabilities	¥	(215	)	¥	(215	)

The carrying amounts of all other financial instruments approximate their estimated fair values.

Foreign Exchange Contracts — The Companies are exposed to foreign currency exchange risks on the transactions denominated in foreign currencies relating to its ongoing business operations. Such risks are primarily managed by using foreign currency exchange contracts. The Companies measure forward currency exchange contracts at the fair value since they are not designated as a hedge.

F-42

Long-Term Debt — The fair values for long-term debt are estimated by discounted cash flow analysis, using rates currently available for similar types of borrowings with similar terms and remaining maturities.

Limitations — Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Concentration of Credit Risk — The Companies’ business consists primarily of sales of women’s intimate apparel to a large number of diverse customers in the Japanese retail industry, which include well established department stores, general merchandise stores and other general retailers and specialty stores. No single customer constitutes 10.0% or more of the total sales, although the general retail customers that are consolidated companies in the Aeon Group collectively accounted for approximately 10.0%, 10.4% and 9.8% of the total sales in fiscal years ended March 31, 2011, 2010 and 2009, respectively.

20.

FAIR VALUE MEASUREMENTS

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

Level 1	—	Inputs are quoted prices in active markets for identical assets or liabilities.

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

Level 3	—	Inputs are unobservable.

F-43

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2011 and 2010 were as follows:


	Millions of Yen
2011	Level 1		Level 2			Level 3	Total

Assets:
Marketable securities:
Government bonds	¥	503					¥	503
Municipal bonds			¥	10				10
Corporate bonds				1,277				1,277
Mutual funds		257		2,772				3,029

Total marketable securities		760		4,059				4,819

Investments:
Listed shares		29,137						29,137
Mutual funds		92						92

Total investments		29,229						29,229

Derivative instruments:
Foreign exchange contracts				24				24


Total assets	¥	29,989	¥	4,083			¥	34,072


Liabilities:
Derivative instruments:
Foreign exchange contracts			¥	(49	)		¥	(49	)


	Millions of Yen
2010	Level 1		Level 2			Level 3	Total

Assets:
Marketable securities:
Government bonds	¥	1,160					¥	1,160
Municipal bonds			¥	10				10
Corporate bonds				1,855				1,855
Bank debt securities				100				100
Mutual funds				3,404				3,404

Total marketable securities		1,160		5,369				6,529

Investments:
Listed shares		32,743						32,743
Derivative instruments:
Foreign exchange contracts				61				61


Total assets	¥	33,903	¥	5,430			¥	39,333


Liabilities:
Derivative instruments:
Foreign exchange contracts			¥	(78	)		¥	(78	)

F-44


	Thousands of U.S. Dollars
2011	Level 1		Level 2			Level 3	Total

Assets:
Marketable securities:
Government bonds	$	6,078					$	6,078
Municipal bonds			$	121				121
Corporate bonds				15,430				15,430
Mutual funds		3,106		33,494				36,600

Total marketable securities		9,184		49,045				58,229

Investments:
Listed shares		352,066						352,066
Mutual funds		1,112						1,112

Total investments		353,178						353,178

Derivative instruments:
Foreign exchange contracts				290				290


Total assets	$	362,362	$	49,335			$	411,697


Liabilities:
Derivative instruments:
Foreign exchange contracts			$	(592	)		$	(592	)

Marketable securities and investments presented in Level 1 are valued using an unadjusted quoted market price in active markets with sufficient volume and frequency of transactions. Bonds presented in Level 2 are valued by the financial institution using quoted market price for identical instruments in markets that are not active, and mutual funds presented in Level 2 are valued by the financial institution based on quoted prices in both active and inactive market for identical instruments which comprise funds.

As presented in Note 3, the Companies recorded impairment charges on marketable securities and investments if a decline in fair value of marketable securities and investments is determined to be other than temporary.

Derivative instruments are comprised of foreign currency exchange contracts. Financial instruments presented in Level 2 are valued using quotes obtained from third parties.

The changes in the fair value of the foreign currency exchange contracts are recorded in earnings, since the foreign currency exchange contracts are not designate as a hedge. The Companies recognized a loss of ¥8 million ($97 thousand), gains of ¥103 million and ¥62 million in other — net of other income (expenses) in the years ended March 31, 2011, 2010 and 2009, respectively.

The Companies recorded the derivative instruments as other current assets and other current liabilities in the consolidated balance sheets at fair value of ¥24 million ($290 thousand) and ¥49 million ($592 thousand), respectively as of March 31, 2011. The derivative instruments are presented as other current assets and other current liabilities in the consolidated balance sheets at fair value of ¥61 million and ¥78 million as of March 31, 2010.

F-45

Assets Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis as of March 31, 2011 and 2010 were as follows:


	Millions of Yen
2011	Level 1	Level 2	Level 3		Total		Total Losses

Buildings and building improvements							¥	(107	)
Investments:
Unlisted shares			¥	17	¥	17		(219	)
Goodwill (Note 8)				10,367		10,367		(836	)
Trademark (Note 8)				4,757		4,757		(559	)
Customer relationship (Note 8)				725		725		(377	)


							¥	(2,098	)


	Millions of Yen
2010	Level 1	Level 2	Level 3		Total		Total Losses

Land			¥	6	¥	6	¥	(4	)
Buildings and building improvements				16		16		(19	)
Goodwill (Note 8)								(71	)
Customer relationship (Note 8)				1,378		1,378		(1,023	)


							¥	(1,117	)


	Thousands of U.S. Dollars
2011	Level 1	Level 2	Level 3		Total		Total Losses

Buildings and building improvements							$	(1,293	)
Investments:
Unlisted shares			$	205	$	205		(2,646	)
Goodwill (Note 8)				125,266		125,266		(10,101	)
Trademark (Note 8)				57,480		57,480		(6,755	)
Customer relationship (Note 8)				8,760		8,760		(4,555	)


							$	(25,350	)

Buildings and building improvements held and used with a carrying amount of ¥107 million ($1,293 thousand) were written down to their fair value of zero, because the Company decided to abandon an office building. An impairment charge of ¥107 million ($1,293 thousand) was included in earrings for the year ended March 31, 2011 in Wacoal Business (Domestic) Segment.

Certain unlisted securities with a carrying amount of ¥236 million ($2,852 thousand) were written down to their fair value of ¥17 million ($205 thousand) in connection with the decline in fair value, which was mainly caused by a downturn of investees’ business operations. Impairment charges of ¥219 million ($2,646 thousand) were included in earrings for the year ended March 31, 2011. These unlisted securities presented in Level 3 are valued based on the net assets value of the investees adjusted using cash flows and other factors that would impact the fair value.

F-46

As of the end of March 31, 2011, goodwill with a carrying amount of ¥11,203 million ($135,367 thousand) is written down to its implied fair value of ¥10,367 million ($125,266 thousand), resulting in an impairment charge of ¥836 million ($10,101 thousand), which is included in earnings for the year ended March 31, 2011. As of the end of March 31, 2010, goodwill with a carrying amount of ¥71 million was written down to its implied fair value of zero, resulting in an impairment charge of ¥71 million, which was included in earnings for the year ended March 31, 2010. To measure the fair values of the reporting units, the Company used the expected present value of future cash flows and incorporated relevant unobservable inputs, such as management’s internal assumptions about future cash flows and appropriately risk-adjusted discount rates, which reflected the management’s estimate of assumptions that market participants would use in pricing the asset in a current transaction as of the measurement date.

Trademark with a carrying amount of ¥5,316 million ($64,234 thousand) as of March 31, 2011, was written down to its fair of ¥4,757 million ($57,479 thousand), resulting in recognition of an impairment charge of ¥559 million ($6,755 thousand) for the year ended March 31, 2011. The impairment arose due to the decline in its fair value, which was mainly caused by a downturn in consumption because of the general market condition. To measure the fair value of the trademark, the Company utilizes the relief-from-royalty-method and incorporates relevant unobservable inputs, such as management’s internal assumptions about future cash flows, the rate of royalty, and appropriately risk-adjusted discount rate, which reflected the management’s estimate of assumptions that market participants would use in pricing the asset in a current transaction as of the measurement date. Future cash flows are based on the management’s cash flow projections for the future five years, and after five these years, future cash flows was estimated using the perpetuity growth rate of zero %. The management’s cash flow projections were developed using estimates for expected future revenue growth rates, profit margins and working capital levels of the reporting units. The rate of royalty used for the valuation was based on the actual royalty ratio used in transactions. The risk-adjusted discount rate represents a weighted average cost of capital (WACC) adjusted for inherent risk spread.

There was no impairment loss recognized related to the trademark for the years ended March 31, 2010 and 2009.

Customer relationship with a carrying amount of ¥1,102 million ($13,316 thousand) as of March 31, 2011 and ¥2,401 million as of March 31, 2010 were written down to its fair of ¥725 million ($8,760 thousand), resulting in recognition of impairment charges of ¥377 million ($4,555 thousand) for the year ended March 31, 2011, and ¥1,378 million, resulting in recognition of impairment charges of ¥1,023 million for the year ended March 31, 2010. The impairments recorded for these years arose due to the decline in its fair value, which was mainly caused by a downturn in consumption because of the general market condition. To measure the fair value of the customer relationship, the Company uses the excess earnings method and incorporates relevant unobservable inputs, such as management’s internal assumptions about future cash flows, the percentage of orders that the Company expects to receive from the customers existed at the point of acquisition and appropriately risk-adjusted discount rate, which reflected the management’s estimate of assumptions that market participants would use in pricing the asset in a current transaction as of the measurement date. The future cash flows are projected in the same way as described in the trademark. The percentage of orders that the Company expects to receive from the customers existed at the point of acquisition was estimated based on the historical trend of the percentage of sales to the pre-acquisition customers. Risk-adjusted discount rate representing a WACC was determined using the Capital Asset Pricing Model.

There was no impairment loss recognized for the customer relationship for the year ended March 31, 2009.

F-47

21.

SEGMENT INFORMATION

Operating Segment Information

The Companies have three reportable segments: “Wacoal business (domestic),” “Wacoal business (overseas),” and “Peach John,” which are based on their location and brands. These segments represent components of the Companies for which separate financial information is available and for which operating profit (loss) is reviewed regularly by the management in deciding how to allocate the Companies’ resources and in assessing their performance. The accounting policies used for these reportable segments are the same as those described in the summary of significant accounting policies in Note 1.

“Wacoal business (domestic)” segment primarily produces and sells innerwear (consisting of foundation, lingerie, nightwear and children’s innerwear), outerwear, sportswear and hosiery. “Wacoal business (overseas)” segment produces and sells innerwear (consisting of foundation, lingerie, nightwear and children’s innerwear), outerwear, sportswear and hosiery. “Peach John” segment produces and sells innerwear (consisting of foundation, lingerie, nightwear and children’s innerwear), outerwear, and other textile-related products, which are sold with “Peach John” brand.

Information about operating results and assets for each segment as of and for the years ended March 31, 2011, 2010 and 2009 was as follows:


	Millions of Yen
	Wacoal		Wacoal
	Business		Business
2011	(Domestic)		(Overseas)		Peach John			Other		Elimination			Consolidated

Net sales:
External customers	¥	110,856	¥	20,052	¥	11,711		¥	23,107				¥	165,726
Intersegment		2,134		6,121		76			4,588	¥	(12,919	)

Total		112,990		26,173		11,787			27,695		(12,919	)		165,726
Operating cost and expenses:
Operating cost and expenses		107,370		24,852		12,763			27,357		(12,919	)		159,423
Amortization on other intangible assets (Note 8)						276								276
Impairment charges on goodwill (Note 20)						836								836
Impairment charges on other intangible assets (Note 20)						936								936

Total		107,370		24,852		14,811			27,357		(12,919	)		161,471

Operating profit (loss)		5,620		1,321		(3,024	)		338					4,255


Total assets		202,054		26,788		21,453			20,910		(55,860	)		215,345


	Millions of Yen
	Wacoal		Wacoal
	Business		Business
2010	(Domestic)		(Overseas)		Peach John			Other			Elimination			Consolidated

Net sales:
External customers	¥	113,929	¥	18,899	¥	13,224		¥	17,245					¥	163,297
Intersegment		1,793		6,226		7			3,204		¥	(11,230	)

Total		115,722		25,125		13,231			20,449			(11,230	)		163,297
Operating cost and expenses:
Operating cost and expenses		111,180		23,795		13,053			21,115			(11,230	)		157,913
Amortization on other intangible assets (Note 8)						480									480
Impairment charges on goodwill (Note 20)									71						71
Impairment charges on other intangible assets (Note 20)						1,023									1,023

Total		111,180		23,795		14,556			21,186			(11,230	)		159,487

Operating profit (loss)		4,542		1,330		(1,325	)		(737	)					3,810


Total assets		205,136		26,632		24,803			20,535			(53,719	)		223,387

F-48


	Millions of Yen
	Wacoal		Wacoal
	Business		Business
2009	(Domestic)		(Overseas)		Peach John		Other		Elimination			Consolidated

Net sales:
External customers	¥	124,228	¥	22,323	¥	14,893	¥	10,832				¥	172,276
Intersegment		1,765		6,148		5		2,943	¥	(10,861	)

Total		125,993		28,471		14,898		13,775		(10,861	)		172,276
Operating cost and expenses:
Operating cost and expenses		118,523		26,903		13,515		13,587		(10,861	)		161,667
Amortization on other intangible assets (Note 8)						480							480

Total		118,523		26,903		13,995		13,587		(10,861	)		162,147

Operating profit (loss)		7,470		1,568		903		188					10,129


Total assets		198,590		25,406		27,030		13,751		(51,291	)		213,486


	Thousands of U.S. Dollars
	Wacoal		Wacoal
	Business		Business
2011	(Domestic)		(Overseas)		Peach John			Other		Elimination			Consolidated

Net sales:
External customers	$	1,339,487	$	242,291	$	141,506		$	279,205				$	2,002,489
Intersegment		25,786		73,961		918			55,437	$	(156,102	)

Total		1,365,273		316,252		142,424			334,642		(156,102	)		2,002,489
Operating cost and expenses:
Operating cost and expenses		1,297,366		300,290		154,217			330,558		(156,102	)		1,926,329
Amortization on other intangible assets (Note 8)						3,335								3,335
Impairment charges on goodwill (Note 20)						10,101								10,101
Impairment charges on other intangible assets (Note 20)						11,310								11,310

Total		1,297,366		300,290		178,963			330,558		(156,102	)		1,951,075

Operating profit (loss)		67,907		15,962		(36,539	)		4,084					51,414


Total assets		2,441,445		323,683		259,219			252,658		(674,963	)		2,602,042

The Companies account for intersegment sales and transfers at cost plus a markup. Operating profit (loss) represents net sales less operating costs and expenses. Amortization and impairment charges on other intangible assets only represent amortization and impairment charges on customer relationships or trademark related to the acquisition of Peach John, and do not include any other intangibles such as software.

F-49

Products and Service Information

Information by products and services for the years ended March 31, 2011, 2010 and 2009 was as follows:


							Thousands of
	Millions of Yen						U.S. Dollars
	2011		2010		2009		2011

Innerwear:
Foundation and lingerie	¥	116,285	¥	116,068	¥	123,368	$	1,405,087
Nightwear		8,725		9,438		11,019		105,425
Children’s underwear		1,476		1,608		1,950		17,835

Sub total		126,486		127,114		136,337		1,528,347


Outerwear/Sportswear	¥	17,400	¥	17,241	¥	15,498	$	210,247
Hosiery		1,666		1,701		1,657		20,130
Other textile goods and related products		7,498		7,462		6,270		90,599
Others		12,676		9,779		12,514		153,166


Total	¥	165,726	¥	163,297	¥	172,276	$	2,002,489

Geographic Information

Information by major geographic area as of and for the years ended March 31, 2011, 2010 and 2009 was as follows:


							Thousands of
	Millions of Yen						U.S. Dollars
	2011		2010		2009		2011

Net sales:
Japan	¥	145,136	¥	144,048	¥	149,927	$	1,753,697
Asia		9,155		7,885		7,573		110,621
Americas and Europe		11,435		11,364		14,776		138,171

Consolidated	¥	165,726	¥	163,297	¥	172,276	$	2,002,489


Long-lived assets:
Japan	¥	45,820	¥	47,392	¥	45,221	$	553,649
Asia		2,344		2,527		1,827		28,323
Americas and Europe		1,581		1,901		1,991		19,103

Consolidated	¥	49,745	¥	51,820	¥	49,039	$	601,075

Net sales are attributed to countries or areas based on the location of sellers.

Countries or areas are classified according to geographical proximity. Long-lived assets represent property, plant and equipment.

22. SUBSEQUENT EVENTS

On May 13, 2011, the Board of Directors resolved to pay a cash dividend of ¥100 ($1) per 5 shares of common stock to holders of record as of March 31, 2011 (aggregate amount of ¥2,817 million ($34,038 thousand)).

* * * * * *

F-50


			Page
PART I
ITEM 1. Identity of Directors, Senior Management and Advisers			1
ITEM 2. Offer Statistics and Expected Timetable			1
ITEM 3. Key Information			1
ITEM 4. Information on the Company			14
ITEM 4A. Unresolved Staff Comments			27
ITEM 5. Operating and Financial Review and Prospects			27
ITEM 6. Directors, Senior Management and Employees			58
ITEM 7. Major Shareholders and Related Party Transactions			68
ITEM 8. Financial Information			70
ITEM 9. The Offer and Listing			70
ITEM 10. Additional Information			72
ITEM 11. Quantitative and Qualitative Disclosures about Market Risk			97
ITEM 12. Description of Securities Other than Equity Securities			100
PART II
ITEM 13. Defaults, Dividend Arrearages and Delinquencies			102
ITEM 14. Material Modifications to Rights of Security Holders and Use of Proceeds			102
ITEM 15. Controls and Procedures			102
ITEM 16A. Audit Committee Financial Expert			103
ITEM 16B. Code of Ethics			104
ITEM 16C. Principal Accountant Fees and Services			104
ITEM 16D. Exemptions from the Listing Standards for Audit Committees			105
ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers			106
ITEM 16F. Change in Registrant’s Certifying Accountant			107
ITEM 16G. Corporate Governance			107
PART III
ITEM 17. Financial Statements			111
ITEM 18. Financial Statements			111
ITEM 19. Exhibits			111
SIGNATURES			112
Index to Consolidated Financial Statements			F-1
EX-1.3 Regulations of the Board of Directors of the Registrant (English Translation)
EX-12.1 Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-12.2 Certification of the chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-13.1 Certification of the principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-13.2 Certification of the chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT


	WACOAL HOLDINGS CORP. (Registrant)
	By	/s/ Ikuo Otani
		Ikuo Otani
		Director and General Manager of Corporate Planning


		Page

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-2

FINANCIAL STATEMENTS:

Consolidated Balance Sheets, March 31, 2011 and 2010		F-4

Consolidated Statements of Income, Years Ended March 31, 2011, 2010 and 2009		F-6

Consolidated Statements of Comprehensive (Loss) Income, Years Ended March 31, 2011, 2010 and 2009		F-8

Consolidated Statements of Equity, Years Ended March 31, 2011, 2010, 2009		F-9

Consolidated Statements of Cash Flows, Years Ended March 31, 2011, 2010 and 2009		F-11

Notes to Consolidated Financial Statements		F-13