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<TITLE>WACOAL HOLDINGS CORP.</TITLE>
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<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
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<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, DC 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 20-F</B>
</DIV>

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)&nbsp;OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
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</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OR</B>

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    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
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    <TD><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>FOR THE FISCAL YEAR ENDED <U>MARCH 31, 2006</U>
</B>
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<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OR</B>

</DIV>
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    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>FOR THE TRANSITION PERIOD FROM&nbsp; <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> TO <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>OR</B></DIV>

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
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    <TD><B>SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>DATE OF EVENT REQUIRING THIS SHELL COMPANY REPORT&nbsp; <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Commission file number </B><U><B>0-11743</B></U>

</DIV>
<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>KABUSHIKI KAISHA WACOAL HOLDINGS</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact Name of Registrant as Specified in Its Charter)</DIV>



<DIV align="Center" style="font-size: 24pt; margin-top: 6pt"><B>WACOAL HOLDINGS CORP.</B></DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 0pt">(Translation of Registrant&#146;s Name Into English)
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Japan</B><BR>
(Jurisdiction of Incorporation or Organization)

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan</B><BR>
(Address of Principal Executive Offices)

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Securities registered or to be registered pursuant to Section 12(b) of the Act:

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U>None</U>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Securities registered or to be registered pursuant to Section 12(g) of the Act:

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Common Stock<BR>
(Title of class)

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">American Depositary Receipts (each representing 5 shares of such Common Stock)<BR>
(Title of class)

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U>None</U>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Indicate
the number of outstanding shares of each of the issuer&#146;s classes
of capital or common stock as of the close of the period <BR>covered by the annual report.

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Common Stock Outstanding:

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">144,016,685 shares

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule&nbsp;405 of
the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Yes
<FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&nbsp;13 or
<font style="white-space: nowrap"> 15(d)</font> of the Securities Exchange Act of 1934.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Yes
<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Yes
<FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of &#147;accelerated filer and large accelerated filer&#148; in
Rule&nbsp;12b-2 of the Exchange Act. (Check one):
</DIV>

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<TR valign="bottom">
    <TD align="center" valign="top">Large Accelerated Filer <FONT face="Wingdings">&#254;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Accelerated Filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Non-Accelerated Filer <FONT face="Wingdings">&#111;</FONT></TD>
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</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark which financial statement item the registrant has elected to follow.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Item17
<FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item18 <FONT face="Wingdings">&#111;</FONT></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If this is an annual report, indicate by check mark whether the registrant is a shell company (as
defined in Rule&nbsp;12b-2 of the Exchange Act).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Yes
<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT></DIV>



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<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This annual report contains forward-looking statements that are based on our current
expectations, assumptions, estimates and projections about our company and our industry. The
forward-looking statements are subject to various risks and uncertainties. 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 &#147;forward-looking&#148; information. In
particular, the forward-looking statements may include statements relating to our development and
sale of products, the expansion and operation of our SPA (Specialty store retailer of Private label
Apparel) store network, our sales activities through catalog and Internet channels, the
implementation of our CAP 21 strategic plan through strategic investments, acquisitions and other
initiatives, continued development of our overseas business and operations, developments in our
product sourcing and manufacturing practices and strategies, sales efforts, expenses, outcomes of
contingencies and financial results. Forward-looking statements are contained in the sections
entitled &#147;Item&nbsp;3.D. Risk Factors&#148;, &#147;Item&nbsp;4.B. Business Overview&#148;, and &#147;Item&nbsp;5. Operating and
Financial Review and Prospects&#148;, and elsewhere in this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information contained in such sections 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. You should understand that it is not
possible to predict or identify all such factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTAIN REFERENCES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used in this annual report, unless the context otherwise requires, the &#147;Company&#148; and
&#147;Wacoal Holdings&#148; refer to Wacoal Holdings Corp., and &#147;Wacoal&#148;, &#147;we,&#148; &#147;us,&#148; &#147;our&#148; and similar terms
refer to Wacoal Holdings Corp. and its consolidated subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s fiscal year end is March&nbsp;31. In this annual report, &#147;fiscal year 2006&#148; refers
to the Company&#146;s fiscal year ended March&nbsp;31, 2006, and other fiscal years are referred to in a
corresponding manner.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CURRENCIES AND EXCHANGE RATES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We publish our financial statements in Yen. In this annual report, references to &#147;U.S.
dollars&#148; or &#147;$&#148; are to the currency of the United States and references to &#147;Yen&#148; or &#147;&#165;&#148; are to the
currency of Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;noon
buying rate&#148; 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 in U.S. dollars at the rate indicated or at any other rate. The noon
buying rate was &#165;115.65 to $1.00 on July&nbsp;5, 2006.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
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<A name="tocpage"></A>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>TABLE OF CONTENTS</B></U>
</DIV>

<DIV align="center">
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    <TD nowrap align="right"><u>Page</u></TD>
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<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">PART I</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#102">ITEM 1. Identity of Directors, Senior Management and Advisers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#103">ITEM 2. Offer Statistics and Expected Timetable</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#104">ITEM 3. Key Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#105">ITEM 4. Information on Wacoal Holdings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#106">ITEM 4A. Unresolved Staff Comments</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#107">ITEM 5. Operating and Financial Review and Prospects</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#108">ITEM 6. Directors, Senior Management and Employees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#109">ITEM 7. Major Shareholders and Related Party Transactions</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#110">ITEM 8. Financial Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#111">ITEM 9. The Offer and Listing</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#112">ITEM 10. Additional Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#113">ITEM 11. Quantitative and Qualitative Disclosures about Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#114">ITEM 12. Description of Securities Other than Equity Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115">PART II</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#116">ITEM 13. Defaults, Dividend Arrearages and Delinquencies</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#117">ITEM 14. Material Modifications to Rights of Security Holders and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#118">ITEM 15. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#119">ITEM 16A. Audit Committee Financial Expert</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#120">ITEM 16B. Code of Ethics</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#121">ITEM 16C. Principal Accountant Fees and Services</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#122">ITEM 16D. Exemptions from the Listing Standards for Audit Committees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#123">ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#124">PART III</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#125">ITEM 17. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#126">ITEM 18. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#127">ITEM 19. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#128">SIGNATURES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#129">Index to Consolidated Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#130">INDEX OF EXHIBITS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv1w1.htm">EX-1.1 Articles of Incorporation of the Registrant (English Translation)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv1w2.htm">EX-1.2 Share Handling Regulations of the Registrant (English Translation)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv1w3.htm">EX-1.3 Regulations of the Board of Directors of the Registrant (English Translation)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv1w4.htm">EX-1.4 Regulations of the Board of Corporate Auditors of the Registrant (English Translation)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv2w1.htm">EX-2.1 Specimen common stock certificate of the Registrant (English Translation)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv8w1.htm">EX-8.1 Subsidiaries of the Registrant</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv12w1.htm">EX-12.1 Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv12w2.htm">EX-12.2 Certification of the chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv13w1.htm">EX-13.1 Certification of the principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01181exv13w2.htm">EX-13.2 Certification of the chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt">
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART I</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. Identity of Directors, Senior Management and Advisers.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 2. Offer Statistics and Expected Timetable.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 3. Key Information.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;Selected Financial Data.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;31, 2006, 2005, 2004, 2003 and 2002. The selected consolidated income
statement data for the fiscal years ended March&nbsp;31, 2006, 2005 and 2004, and the selected
consolidated balance sheet data as of March&nbsp;31, 2006 and 2005, 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 Form 20-F. In
addition, the following table presents selected consolidated income statement data for the fiscal
years ended March&nbsp;31, 2003 and 2002, and selected consolidated balance sheet data as of March&nbsp;31,
2004, 2003 and 2002, derived from Wacoal Holdings&#146; audited Consolidated Financial Statements not
included in this Form 20-F.
</DIV>

<P align="center" style="font-size: 10pt">1
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23">(Yen in millions and U.S. Dollars in thousands, unless otherwise indicated)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 0px solid #000000">Year ended/as of March 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2002</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">164,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,397,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">160,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">163,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">163,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">162,829</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,186</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,983</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Working capital<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,910</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,295</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">242,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,062,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">226,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">218,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">223,985</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">186,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,587,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,839</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,205</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt (including
capital leases)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">463</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Per American Depositary
Share (5 shares of common
stock):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income (basic and
fully diluted)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends
declared:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Japanese Yen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">U.S. dollars</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number of
shares of common stock
outstanding (thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149,986</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1.</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&#147;Working capital&#148; means the amount of &#147;total current assets&#148; less &#147;total current liabilities&#148;.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#165;115.65 to $1.00 on July&nbsp;5, 2006.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000">Year ended March 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Yen exchange rates per U.S. dollar<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2002</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Period end<SUP style="font-size: 85%; vertical-align: text-top">2</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132.70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average rate during period<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Highest rate during period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134.77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lowest rate during period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116.55</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Yen exchange rates</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Highest rate</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Lowest rate</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">per U.S. dollar</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">during period</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">during period</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.82</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110.07</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111.66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;2006 (through July 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.92</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">1.</TD>
    <TD>&nbsp;</TD>
    <TD>All figures have been derived from figures released through the web site of the Federal
Reserve Bank of New York.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">2.</TD>
    <TD>&nbsp;</TD>
    <TD>The noon buying rate on such dates may differ from the rates used in preparation of our
financial statements as of such dates.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">3.</TD>
    <TD>&nbsp;</TD>
    <TD>Average rates are calculated using the average of the exchange rates on the last day of each
month during the period.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Capitalization and Indebtedness.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;Reasons for the Offer and Use of Proceeds.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>D.&nbsp;Risk Factors.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Wacoal Holdings, and a material decline in the trading price of our
common stock and American Depositary Shares, or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Continued weak consumer spending in Japan would hurt our business</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal year 2006, the Japanese market accounted for approximately 88% of our sales, and
we expect that our sales in Japan will account for approximately an equivalent proportion of our
sales in fiscal year 2007. As a result, we believe that the general level of consumer spending in
Japan has a significant impact on our sales and profitability. Consumer spending in Japan was
generally weak for a prolonged period prior to fiscal year 2006, which we believe had a negative
impact on our sales and profitability during such period. Although consumer spending showed some
recovery in fiscal year 2006, we do not know whether such recovery will continue, and we do not
expect that any continued recovery in consumer spending in Japan &#151; including spending in our core
women&#146;s intimate apparel market &#151; will be significant enough to result in material increases in our
sales. We believe that this environment will make it more difficult for us to increase our sales
and profitability.
</DIV>

<P align="center" style="font-size: 10pt">3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Continued difficulties faced by department stores and other general retailers in Japan would hurt our business</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal year 2006, a substantial majority of our total sales were made to department stores,
general merchandise stores and other general retailers in Japan. Although we are attempting to
increase our sales made through our own SPA (Specialty store retailer of Private label Apparel)
stores, our catalog business and our Internet operations, we expect that the large majority of our
total sales will continue to be made through department stores and other general retailers in Japan
for the foreseeable future<I>.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In recent years, many 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, and high debt levels. A large number of prominent
Japanese general retailers have suffered significant declines in sales and profitability, and some
of these companies have become insolvent. Although a number of general retailers have announced
restructuring plans and other efforts to improve their profitability and performance, the outlook
for the sector remains uncertain, and poor performance in the sector could persist.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Continued weakness in the general merchandise retail sector in Japan could cause our business
and financial performance and condition to materially suffer for a number of reasons. For example,
it will be difficult for us to increase our sales if the performance of our general retail
customers does not improve, because we make most of our sales through these customers. The failure
of one or more of our important general retail customers could materially harm our business due to
the immediate loss of sales formerly represented by a failed retailer and our potential inability
to collect some or all of our outstanding accounts receivable from that retailer. In addition,
increased consolidation in the Japanese general retail sector may allow our customers to increase
their bargaining power in negotiating pricing and other terms of trade with us, which could hurt
our business and performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our success depends on our ability to effectively anticipate and respond to consumer tastes and preferences and deliver high-quality products</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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 sales, operations and financial
condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we believe that we have established broad brand recognition in our core Japanese
market for our high quality and fashionable women&#146;s innerwear garments, and that this brand
recognition is very important for our ability to target the high end of the women&#146;s innerwear
market. Our brand image may suffer if merchandise misjudgments or similar problems, such as the
temporary recall of our <I>3-D NAMI NAMI </I>summer 2005 campaign product due to a defect, cause consumers
to believe that we are not able to offer attractive fashions and top-quality products. If
</DIV>

<P align="center" style="font-size: 10pt">4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">any event were to occur that harms our reputation for producing high-quality products, our
sales, operations and financial condition would materially suffer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may not be able to increase sales of our products designed for younger women and mature women</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our future sales growth and profitability will depend in part on our ability
to increase our sales of innerwear and other products to younger women and mature women. Increased
sales to younger women are important to increase our market reach and develop brand loyalty with
consumers at a relatively early age, while sales to mature women will be increasingly important as
Japan&#146;s population ages and mature women become a growing proportion of our total market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To achieve these sales goals, we are implementing a strategy of selling apparel aimed at
younger women (in addition to other consumers) through our own SPA specialty retail stores. We
also believe that our recently announced strategic alliance with Peach John will help us develop
and market a broader range of innerwear products that are attractive to younger women. We are
attempting to increase sales to mature women through special product lines (such as our La Vie
Ais&#233;e and Gra-P intimate apparel lines) that are targeted to mature women. However, we cannot
assure you that our efforts to achieve consistent and profitable sales growth from these targeted
consumers will be successful. For example, risks that may negatively affect our efforts to sell
more products to younger women include intense competition for these consumers from lower-priced
intimate apparel and from other specialty retail store operators, our relative inexperience in
managing our own stores and the greater need for more fashionable products for younger women, which
may increase the risk of predicting and reacting to fashion trends and other product development
issues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We are subject to inventory risks that could negatively impact our operating results</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We review our inventories on a regular basis for their salability and for indications of
obsolescence to determine if a write down to market value is necessary. The revaluation of
inventories is based on the age of inventories, likelihood of obsolescence, actual product
movements, changes in market demand, and other factors. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Improvement in our profitability will depend in large part on our ability to reduce costs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reducing our costs of conducting business is a key element of our strategy to improve our
profitability and business performance. In recent years we have taken certain steps intended to
</DIV>

<P align="center" style="font-size: 10pt">5
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">reduce our costs, and we expect to continue these efforts. For example, to improve the efficiency
of our product distribution system, we have reduced the number of our distribution centers from 18
in 1998 to 5 as of March&nbsp;31, 2006. In addition, we are seeking to produce or otherwise source more
of our apparel in China, Vietnam and other lower-cost countries. We also expanded our early
retirement program and have taken other steps to reduce our labor costs in Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, 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. For instance, most of our intimate apparel products are aimed at the higher
end of the market and require high quality fabric, which often must be custom made to our
specifications. Although in fiscal year 2006 we produced 27.2% of our products on a revenue basis
in China, Vietnam and other lower-cost countries, there is a shortage of fabric suppliers in these
countries that can meet our requirements for high quality fabric, and we expect this shortage to
continue. Also, workforce restructuring and similar measures may require us to obtain the support
of labor unions and other constituencies and to make severance payments and incur other costs,
which may harm our financial performance. For example, we incurred severance and retirement
expenses of &#165;7,521&nbsp;million in connection with our expanded early retirement program and the closure
of one of our factories during the fiscal year ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our SPA specialty retail store network may not be successful</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2006 we had a total of 98 SPA specialty retail stores, including 5 factory
outlet stores. Our target is to expand our SPA store network to approximately 105 stores by March
2007. Through our SPA specialty retail stores, 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, there are a number of risks that we must address in order for our SPA 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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our SPA 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We must compete for good store locations with other retailers pursuing
similar strategies.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We must effectively recruit personnel, control inventory, market our
stores and new product lines and otherwise operate our stores successfully.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We are developing and marketing distinct lines of intimate apparel for our
SPA 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.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">6
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We opened our first SPA store in 2002. This limited period of operational
history makes it difficult for us to evaluate the performance of our SPA stores to
date, and to estimate whether we will achieve success in the future.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may experience difficulties in successfully increasing our catalog and Internet sales</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 margins on our 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. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>It may be difficult for us to attract and retain highly qualified personnel</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business success depends significantly on our ability to attract, train and retain
qualified personnel. The competition for qualified personnel in Japan is intensifying due to
factors such as increased demand for labor as a result of improved economic conditions, and a
gradual reduction of the working population due to demographic trends in Japan. Our ability to
attract qualified personnel depends in large part on our ability to establish and maintain a
positive image among students and other potential future employees. We are particularly dependent
on employees with knowledge and experience in the areas of product planning and manufacturing
technology. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our business is highly competitive</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The sale of intimate and other apparel is highly competitive. We compete for sales with a
range of other apparel companies. Our principal intimate apparel competitors in Japan are Triumph,
Charle and Cecille, and we also compete with a number of other mass market and specialty apparel
companies, such as Fast Retailing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. We believe that our
strategy of focusing on the higher end of the intimate apparel market helps us to mitigate the
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 we cannot make assurances that our strategy will be successful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
</DIV>

<P align="center" style="font-size: 10pt">7
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our business is affected by seasonality</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business performance and results are affected by seasonality. We typically launch new
intimate apparel product campaigns for the spring/summer and fall/winter seasons of each year. Our
business success depends in large part on the success of these seasonal product campaigns. Also,
seasonal fluctuations may affect our inventory levels, since we produce and acquire merchandise in
advance of peak selling periods and often before new fashion trends are confirmed by consumer
purchases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in seasonal weather patterns may also adversely affect our sales. For example, Japan
experienced unseasonably warm weather in the fall and winter of 2005, which adversely affected our
sales of campaign products for those seasons. We cannot predict future weather patterns or the
effect that weather patterns may have on our sales and profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may face increasing risks relating to conducting business internationally</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal year 2006, approximately 88% of our sales were made in Japan, and we source and
manufacture most of our apparel in Japan. However, we anticipate that over time, an increasing
portion of our apparel will be produced outside of Japan to take advantage of lower costs available
in countries such as China. Also, we are trying to expand our product sales in overseas markets,
including the U.S., Europe and China. These initiatives and trends may cause us to become
increasingly subject to various risks relating to the conduct of business abroad, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>differing consumer tastes and preferences in overseas markets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>political and economic instability in countries where we source, manufacture or sell
our products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unexpected legal or regulatory changes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>trade protection measures and import or export licensing requirements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>potentially negative consequences from changes in tax laws;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fluctuations in currency exchange rates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>difficulty in staffing and managing widespread operations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>differing protection of intellectual property;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>difficulties in collecting accounts receivable because of distance and different
legal rules; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>public health or similar problems in our important overseas markets or
sourcing/production centers.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">8
</DIV>

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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our dependency on outside suppliers creates business risks for our company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We obtain fabric and other materials for our products from a variety of outside suppliers,
most of which are located in Japan. Our reliance on outside suppliers exposes us to certain
business risks. For example, if key materials for our products are not available or if there are
disruptions in supply, we may not be able to manufacture and deliver our products to our customers
in a timely manner. This risk to our company may increase in the future, as an increasing number
of our suppliers are shifting their operations from Japan to lower-cost countries such as China.
Although we generally maintain alternate sources of supply, we rely on a small number of suppliers
for certain key materials for our products, and we may have particular trouble if any of these key
suppliers suffer insolvency or other business problems, or otherwise stop doing business with us.
If the cost of our supplies increase and we are not able to pass on these cost increases to our
customers, our margins and profitability will suffer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may not be successful with acquisitions and other strategic transactions with third parties</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 the Internet, catalog and other marketing channels. For example,
in May&nbsp;2006 we announced our 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 store sales. In the transaction, we will acquire 49% of Peach
John&#146;s outstanding shares for cash of &#165;14,994&nbsp;million ($127.63&nbsp;million).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any acquisitions or other strategic transactions that we pursue 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other potential risks that may arise from our strategic transactions include the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>difficulty and expense of assimilating the operations, technology and personnel
of an acquired business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our inability to retain the management, key personnel and other employees of an
acquired business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our inability to maintain an acquired company&#146;s relationships with customers,
suppliers and other key third parties;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>exposure to legal claims for activities of the acquired business prior to the
acquisition; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the diversion of our management&#146;s attention from our core business.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any of these or any other material risks occur, it could have an adverse effect on the
business we acquire, as well as the operations, financial condition and cash flow of our existing
operations.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We face risks in our business relating to intellectual property rights</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, and may in the future,
assert 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&#096; results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We must comply with laws and regulations regarding privacy and the protection of customer information</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. For example, we suspended our Internet business from November
17, 2005 until February&nbsp;7, 2006, after we discovered that personal information of our customers had
improperly been obtained by a third party through unauthorized access to our electronic records.
Any failure by us or third parties to whom we entrust any of our operations to properly protect our
customers&#146; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>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</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning with our annual report on Form 20-F for our fiscal year ending March&nbsp;31, 2007, we
will be required to document and test our internal control procedures in order to satisfy the
requirements of Section&nbsp;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. During the course
of our testing and related coordination with our independent accountants, we may identify
deficiencies which we may not be able to remediate in time to meet the deadline imposed by the
Sarbanes-Oxley Act of 2002 for compliance with the requirements of Section&nbsp;404. In this regard we
note that our independent accountants, Deloitte Touche Tohmatsu, have notified
us of potential deficiencies in our internal controls with respect to our information system
security, the internal controls of several subsidiaries, and a possible deficiency in our
monitoring ability. Although we are committed to addressing these deficiencies, we may not be able
to successfully
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">implement revised controls and procedures, and our revised controls and procedures
may not be effective in remedying all of the identified deficiencies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we fail to achieve and maintain the adequacy of our internal controls, as such standards
are modified, supplemented or amended from time to time, we may not be able to conclude in our
annual reports that we have effective internal controls over financial reporting in accordance with
Section&nbsp;404 of the Sarbanes-Oxley Act of 2002. Moreover, effective internal controls are necessary
for us to produce reliable financial reports and are 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our holdings of equity securities expose us to risks</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We hold equity securities in a number of publicly traded Japanese companies. A significant
drop in the value of these securities could have an adverse impact on our financial results in the
relevant reporting period. In particular, negative performance in the Japanese equity securities
markets could adversely impact the value of our equity securities holdings. For example, in fiscal
years ended March&nbsp;31, 2005 and 2006, we recognized valuation losses on our equity securities
holdings of &#165;618&nbsp;million and &#165;65&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may be adversely affected by our employee benefit obligations</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain retirement and other benefit plans for a substantial number of our employees.
Some of our plans obligate us to provide certain defined levels of benefits in the future in
accordance with the terms of the applicable plans. Regarding these employee benefit obligations
and the related plan assets, we fund and accrue the cost of employee benefits to a level that we
believe is sufficient based on conservative accounting policies. However, if returns from
investment assets decrease 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 profitability and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>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</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is possible that we may be classified as a passive foreign investment company (a &#147;PFIC&#148;)
for U.S. federal income tax purposes for the taxable year ended March&nbsp;31, 2006, or for the current
or any future taxable years. Such characterization could result in adverse U.S. tax consequences
to U.S. holders of our stock or ADSs. For example, if we are a PFIC, U.S. holders of our stock or
ADSs would be subject to increased tax liabilities under U.S. tax laws and regulations and
burdensome reporting requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The determination of whether or not we are a passive foreign investment company is made on an
annual basis and depends on the composition of our income and assets, including goodwill.
Specifically, we will be classified as a PFIC for U.S. tax purposes if, after applying certain
look-through rules, either 50&nbsp;percent or more of the gross value of our assets, based on
annual quarterly averages, are passive assets, or 75&nbsp;percent or more of our annual gross income is
passive income. The composition of our assets will be affected by the extent to which we increase
or reduce our active business assets and/or our cash, investment securities, and other passive
assets.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, if our acquisitions of active business assets, capital expenditures and
certain other uses of cash do not match our projections, the likelihood that we are or will be
classified as a PFIC may also increase. We cannot assure you that we will not be classified as a
PFIC for the taxable year ended March&nbsp;31, 2006, or for the current or any future taxable year. See
&#147;Item&nbsp;10.E. Taxation&#151;U.S. Federal Income Taxation&#151;U.S. Holders&#151;Passive Foreign Investment
Companies&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>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</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>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</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 holders of
record on our register of shareholders or our register of beneficial shareholders. 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&#146;s ADSs as instructed by the
holder and will pay to the holder the dividends and distributions collected from us. However, in
the holder&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>There are restrictions on the withdrawal of shares from our depositary receipt facility</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our ADS program, each ADS represents the right to receive five shares of our common
stock. To withdraw any shares, a holder of ADSs has to surrender for cancellation American
Depositary Receipts, or ADRs, evidencing 200 ADSs or any integral multiple thereof. Each ADR bears
a legend to that effect. As a result, holders of ADSs are unable to withdraw fractions of shares
or units or receive any cash settlement from the depositary in lieu of withdrawal of fractions of
shares or units. Holders of shares representing less than one unit, or 1,000 shares, may require
us to repurchase those shares, whereas holders of ADSs representing less than one unit of shares
are unable to exercise this right because the holders of these ADSs are unable to withdraw the
underlying shares. Under our ADS program, an ADS holder cannot cause the depositary to require us
to repurchase fractions of shares or units on its behalf. For a further
discussion of the Japanese unit share system, see &#147;Item&nbsp;10.B. Memorandum and Articles of
Association&#151;Capital Stock&#151;Unit Share System&#148;.
</DIV>

<P align="center" style="font-size: 10pt">12
</DIV>

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<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4. Information on Wacoal Holdings.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;History and Development of Wacoal Holdings.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings Corp. is a joint stock corporation that was incorporated under the laws 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our corporate headquarters are located at 29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto
601-8530, Japan. Our telephone number is 81-75-682-5111.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 U.S., China, France, the U.K., and several countries in Southeast Asia. These
subsidiaries and joint venture companies are described in Item&nbsp;4.B. (Business Overview), and
elsewhere in this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following diagram shows our corporate organization. Unless otherwise indicated, Wacoal
Holdings Corp. owns 100% of the voting securities of the first-tier subsidiaries included in the
diagram below and Wacoal Corp. owns 100% of the voting securities of all other domestic and
overseas subsidiaries, with the exceptions of Hokuriku Wacoal Sewing Corp. (90% owned by Wacoal
Corp.), Torica Inc. (53% owned by Wacoal Corp.), Wacoal Hong Kong Co., Ltd. (60% owned by Wacoal
Corp. and 40% owned by Wacoal Taiwan, which in turn is 50% indirectly owned by Wacoal Corp.) and
Philippine Wacoal Corp. (67% owned by Wacoal Corp.).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June&nbsp;2, 2006, we entered into an agreement to purchase 49% of the shares of Peach
John Co., Ltd. Peach John Co., Ltd. is engaged in the mail-order sales of women&#146;s apparel and
various other apparel products. The purchase price is &#165;14,994&nbsp;million ($127.63&nbsp;million).
</DIV>

<P align="center" style="font-size: 10pt">13
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<IMG src="k01181k0118101.gif" alt="(FLOW CHART)">
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a discussion of recent and current capital expenditures, please see &#147;Item&nbsp;5.B.
Liquidity and Capital Resources &#151; Capital Expenditures&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146; shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Business Overview.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a leading designer, manufacturer and marketer in Japan of women&#146;s intimate apparel,
with the largest share of the Japanese market for foundation garments and lingerie. Foundation
garments (primarily brassieres and girdles) and lingerie (primarily slips, bra-slips and ladies&#146;
briefs) accounted for approximately 73.0% of our consolidated net sales for fiscal year 2006. We
also design, manufacture and sell nightwear, children&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 year 2006, a
substantial
majority of our total sales were made to department stores, general merchandise stores and
other general retailers in Japan.
</DIV>

<P align="center" style="font-size: 10pt">14
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the U.S. market, our subsidiary Wacoal America, Inc. is engaged in sales of foundation
garments and lingerie using the Wacoal brand, the Donna Karan Intimates (DKI)&nbsp;brand and the DKNY
brand. Wacoal America, Inc. operates from one facility in New Jersey and one facility in New York
and employs approximately 304 people. One of our subsidiaries, Wacoal Dominicana Corp.,
manufactures products in the Dominican Republic and ships these products to Wacoal America, which
in turn distributes the products mostly to retailers in the U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In France, our subsidiary Wacoal France S.A. designs and markets foundation garments and
lingerie in Europe. Most of these products are manufactured by our subsidiaries in Southeast Asia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2002 we established Wacoal (UK)&nbsp;Limited in the U.K, which markets Wacoal products
to Harrods, Selfridges and other major department stores in London and other large cities in the
U.K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In China, our subsidiaries Guangdong Wacoal Inc. and Wacoal China Co., Ltd. serve as
manufacturing and marketing bases. We also hold a minority ownership interest in a joint venture
company, Shanghai Yadie Fashion Co., Ltd., which serves as a production base for our foundation
garments, all of which are shipped to Wacoal in Japan. In November&nbsp;2002, we established Wacoal
(Shanghai) Human Science R&#038;D Co., Ltd. in China as a wholly-owned subsidiary. We are using this
subsidiary to help expand our sales in China, including by developing intimate apparel and other
products designed for the Chinese market. We have also expanded our operations in China through
our new Dalian production facility, which we opened in August&nbsp;2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vietnam Wacoal Corp., which we established in Vietnam as a part of the expansion of our
overseas manufacturing bases, commenced operations in April&nbsp;1998. We also 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information with respect to our total sales by category of
products during the fiscal years ended March&nbsp;31, 2006, 2005 and 2004:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Total Sales (and Percentage) by Product Category</B><BR>
(Yen in millions)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 0px solid #000000">Year ended March 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Innerwear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foundation Garments
and Lingerie</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">119,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,020,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">73.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">114,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">71.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">115,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">70.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Nightwear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Children&#146;s Underwear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total Innerwear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,128,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outerwear and Sportswear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hosiery</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Textile Products</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">164,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,397,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">160,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">163,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">15
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information with respect to our total sales by region
during the fiscal years ended March&nbsp;31, 2006, 2005, and 2004:
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Total Sales (and Percentage) by Region</B><BR>
(Yen in millions)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 0px solid #000000">Year ended March 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">143,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,221,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">87</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">89</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">144,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">89</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">United States and Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Asia (excluding Japan)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">164,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,397,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">163,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Key business strategies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our key business strategies include the following:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Maintain leadership position in our core innerwear business</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our leadership position in the women&#146;s innerwear market in Japan and broad
consumer recognition of our Wacoal brand as standing for 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Pursue growth opportunitie</I></B><I>s</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will seek to achieve profitable growth in our business by pursuing opportunities that we
believe will allow us to leverage our market leadership and brand awareness in our core Japan
market. Our efforts to achieve growth will include the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expanding our mid-priced innerwear offerings for young women, with an
emphasis on more fashionable products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>strengthening channels other than our traditional general retail store
channel, such as our SPA specialty retail store network, internet and catalog sales and
our <I>Dublev&#233; </I>custom-made intimate apparel business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expanding our overseas businesses, particularly in the United States and
China and in ASEAN countries through the introduction of a new ASEAN-wide product line in
the spring/summer of 2007; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>continuing to develop and expand our active wear business, including our CW-X product
line, our X-FIT product group and our other Wellness products.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">16
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Reducing costs and pursuing increased efficiencies</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will seek to improve our business and financial performance through cost reductions and
greater efficiency in our operations. In the past several years, we have made gains in this area
by consolidating our production resources and distribution facilities in Japan, producing more
garments and sourcing more materials in China and other lower-cost countries in Asia, and carrying
out an early-retirement program and other efforts with respect to our work force in Japan. We will
continue to seek improvements in our operating efficiency and cost base as a core part of our
business strategy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Principal Products</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal product categories are innerwear (consisting of foundation garments and
lingerie, nightwear and children&#146;s underwear), outerwear and sportswear, hosiery, textile products
and other products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Foundation garments and lingerie</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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), ladies&#146; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Wacoal brand product campaign for spring 2005 featured our <I>Decollete Make Bra </I>and <I>Hip
Decollete</I>, our Summer 2005 Wacoal campaign featured our <I>3-D NAMI-NAMI </I>and our fall/winter 2005/2006
Wacoal campaign featured our <I>Hip Walker </I>and our <I>Decollete Make Bra</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We offer foundation garments and lingerie under our Wing label through general retailers.
Recent campaign products for our Wing brand include our <I>Cute Up Bra </I>and <I>Natural Fit Bra </I>for spring
and summer 2005, and our <I>Style Up Pants </I>and <I>Arrange Bra </I>for fall/winter 2005/2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that sales to mature women will represent an increasingly important part of our
business over time, as Japan&#146;s population ages and mature women become a growing proportion of the
apparel market. To address this opportunity, we have developed our <I>La Vie Ais&#233;e </I>and <I>Gra-P </I>product
lines, and we intend to develop additional products in the future for this market segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our product line also includes our luxury products <I>Tr&#233;fle, PARFAGE, SALUTE, L&#146;ge </I>and <I>Lesiage</I>,
targeted to the highest market segment. In February&nbsp;2004, we launched <I>WACOAL DIA </I>as a new luxury
brand and opened the brand&#146;s first shop in the upscale Ginza shopping district in Tokyo. We aim to
position <I>WACOAL DIA </I>as a prestige shop brand that is associated with high levels of quality and
service.
</DIV>

<P align="center" style="font-size: 10pt">17
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>SPA Specialty Retail Stores. </I>As part of our product and marketing strategy, we are developing
a network of directly managed specialty retail stores, which we describe as &#147;SPA&#148; (Specialty store
retailer of Private label Apparel) stores. We began developing our SPA specialty retail stores in
2001, and we had 98 stores in our SPA network as of June&nbsp;30, 2006, including 5 factory outlet
stores. Our target is to build a network of approximately 105 SPA stores by March&nbsp;2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through our SPA specialty retail stores we intend to reach younger customers and others who
prefer shopping for intimate apparel at malls or specialty 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are segmenting our SPA specialty retail stores to target particular customer groups and
selling opportunities. Our <I>une nana cool </I>SPA stores are targeted towards younger women, our <I>SUBITO</I>
SPA stores focus on intimate apparel for active career women, our <I>amphi </I>SPA stores are located near
train stations and other convenient urban locations, to reach customers with limited time for
shopping, and our <I>sur la plage </I>SPA stores are located in suburban areas. We expect that over time
our segmented stores will represent most of the growth in our SPA specialty retail store network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to our five core SPA store brands described above, we operate <I>Dublev&#233; </I>SPA stores,
which specialize in custom-made intimate apparel, and <I>CLAIRE </I>SPA stores, which carry Wacoal brand
products. In addition, we opened two factory outlet stores during fiscal year 2005, and three
additional factory outlet stores during fiscal year 2006. We believe that our factory outlet
stores will provide us with a new sales channel for discounted merchandise and an additional
opportunity for direct consumer contact and brand promotion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mail-order Catalog Business and Internet Sales. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our catalog sales (including Internet sales) were &#165;6,561&nbsp;million yen during fiscal year 2006.
Our main catalog is <I>LOVE BODY</I>, which targets women 40 and over and focuses on outerwear as well as
selected innerwear items. Our <I>wannabe </I>catalog targets women between 18 and 30 and focuses
primarily on innerwear.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also seeking to expand our sales through the Internet, as an alternate sales channel
for selected products. Our Internet shopping site (<U>www.e-shop.wacoal.co.jp</U>) currently
targets younger women and focuses primarily on innerwear, including items sold under our <I>une nana
cool </I>brand.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Nightwear</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We design and market women&#146;s nightwear, including pajamas, negligees, nightgowns and robes.
Our nightwear products feature specialty offerings, such as our <I>tsumori chisato </I>romantic line
targeted to younger women, our fashionable <I>Grand&#233;r </I>line targeted to mature women and our
comfortable <I>Be At Ease </I>line for sleeping and other relaxing activities in the home. Our nightwear
products are primarily sold through department stores and chain stores.
</DIV>

<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Children&#146;s underwear</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our children&#146;s underwear products include undergarments for teenage women, children&#146;s
sleepwear and other targeted garment offerings. Our children wear is also primarily sold through
department stores, although there has been a shift of sales of children&#146;s underwear in recent years
away from general department stores and toward other stores that specialize in goods for children
and infants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Outerwear and sportswear</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our outerwear and sportswear product line principally consists of women&#146;s outerwear, including
dresses, skirts, slacks, jackets and sweaters, and active wear, featuring our Wellness products.
In fiscal year 2005, we consolidated our women&#146;s outerwear business by closing our Point Up
subsidiary and its operations, which had been unprofitable in recent years. We are continuing to
market women&#146;s outerwear products through our catalog operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our active wear business has achieved significant growth in recent years, led by our Wellness
products. The focus of our Wellness product line is our <I>CW-X </I>conditioning wear line, which had
revenues of approximately &#165;2,589&nbsp;million during fiscal year 2006 (an increase of 7.2% over fiscal
year 2005). Sales of X-Fit, a new group of high-functional innerwear products that we launched
under our CW-X line in February of 2005, were also strong at &#165;325&nbsp;million. Other Wellness offerings
include our <I>Nul </I>brand sportswear for jogging and lifestyle activities. We believe that we can
further develop our Wellness product line by leveraging our strong brand awareness and our
experience and expertise in fashion and human science gained through our core intimate apparel
business. As part of these efforts, we are expanding our retail network for our
Wellness line in the United States (including through major sports shops) through our U.S.
subsidiary Wacoal Sports Science Corp.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Hosiery</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our hosiery products include pantyhose, tights, knee-highs and anklets offered in various
sizes and colors, with different denier and yarn combinations. We currently offer a variety of
hosiery products under several different labels, including our <I>Carlson </I>and <I>CV </I>brands. To extend
our hosiery product line and reach new customers, in spring 2004 we launched &#147;Wacoal Panty
Stocking,&#148; a collaborative product with Seven-Eleven Japan, Co., Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other products</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are engaged in several business lines that are ancillary to our core apparel business. Our
Nanasai subsidiary builds 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 housing and restaurant business, and we are also involved in cultural
projects and events.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Principal Markets and Methods of Distribution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently sell our products in Japan, the United States, China and certain countries in
Europe and Southeast Asia.
</DIV>

<P align="center" style="font-size: 10pt">19
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Japan</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our core Japan market, we principally sell our apparel products to department stores,
general merchandise stores and other general retailers and to specialty stores. Sales to general
retailers in Japan represented a substantial majority of our total worldwide sales in fiscal year
2006. No single Wacoal customer constitutes 10% or more of our total sales, although our general
retail customers affiliated with the Aeon Group collectively accounted for approximately 10.2% of
our total sales in fiscal year 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also market our products in Japan by catalog mail order, direct sales, through the Internet
and through our SPA specialty retail stores. As discussed above, we intend to expand our SPA store
network over time, with the target of having approximately 105 stores by March&nbsp;2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>United States</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the U.S. market, we sell foundation garments and lingerie through our Wacoal America
subsidiary. These products are sold under our Wacoal brand and under the Donna Karan Intimates
(DKI)&nbsp;brand and the DKNY brand pursuant to licensing arrangements. 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 and has approximately 304
employees. Our Wacoal Dominicana Corp. subsidiary manufactures products in the Dominican Republic
and ships these products to Wacoal America, which distributes the products principally to retailers
in the U.S.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2002, we established Wacoal Sports Science Corp. in the United States as a
wholly-owned subsidiary of Wacoal International Corp. for the purpose of expanding our CW-X
sportswear line globally.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>China</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In China, we produce innerwear and other garments 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&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In China, our subsidiaries Guangdong Wacoal Inc. and Wacoal China Co., Ltd. serve as
manufacturing and marketing bases. We have also expanded our operations in China through our new
Dalian production facility, which we opened in August&nbsp;2003. We intend to use our Wacoal (Shanghai)
Human Science R&#038;D Co., Ltd. subsidiary to help expand our sales in China, including by developing
intimate apparel and other products designed for the Chinese market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At present we are developing a sales network in China that is focused on our existing
production and marketing hubs. Through this network, we plan to market our products in
approximately 200 department stores in China by December&nbsp;2006, increasing to approximately 250
department stores by December&nbsp;2008. We have established a sales office in Dalian to strengthen our
marketing efforts in China. In 2003, we established a sales and design office in
</DIV>

<P align="center" style="font-size: 10pt">20
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Shanghai as part
of efforts to improve our product design and development capabilities in China. In order to
underpin the new office&#146;s product-planning functions, we have established a Wacoal human science
research center in Shanghai tasked with developing unique products for the local market based on
the principles of human science and ergonomics.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other Asia</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the spring/summer season of 2007, we intend to launch a new ASEAN-wide product line that
will target the 18 to 25&nbsp;year old segment of the market with a moderate to inexpensively priced
line of innerwear products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Europe</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Wacoal France subsidiary designs and markets foundation garments and lingerie in Europe.
Most of these products are manufactured by our subsidiaries in Southeast Asia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2002, we established Wacoal (UK)&nbsp;Limited in the U.K, which imports Wacoal products
from the U.S. and France and distributes the products to Harrods, Selfridges and other major
department stores in London and other large cities in the U.K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Seasonality</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business performance and results are affected by seasonality. 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. Our business success depends in large part on the success of these
seasonal product campaigns. Also, seasonal fluctuations may affect our inventory levels, since we
produce and acquire merchandise in advance of peak selling periods and sometimes before new fashion
trends are confirmed by consumer purchases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in seasonal weather patterns and extreme weather events may adversely affect our
sales. For example, a series of cold waves during the second half of fiscal year 2006 contributed
to increased purchases of winter wear and a strong general start to sales of spring wear for 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Production and Sources of Supply</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We produce our apparel products directly at the Wacoal Corp. parent level through our
subsidiaries in Japan, China, Vietnam and the Dominican Republic and through our joint venture
companies in South Korea, Thailand, Taiwan and Indonesia. Our apparel products are also produced
on a third party basis through subcontractors in Japan. All of these products are produced
according to our specifications, using materials that we supply.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We work with our joint venture companies and subcontractors to help them produce products that
meet our specifications. For example, we supply them with cutting patterns and with sewing machine
attachments. We also provide certain of these entities with debt and equity
</DIV>

<P align="center" style="font-size: 10pt">21
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 over 300 sources, most of them within Japan. In fiscal year 2006, we
obtained approximately 24% of our raw materials on a cost basis from five suppliers, with the
largest supplier representing approximately 6% of our raw material costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Government Regulation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that regulation by governmental authorities in Japan and other countries where we
operate does not significantly affect our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;Organizational Structure.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Jurisdiction of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Wacoal Holdings</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"> Principal Subsidiaries</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Incorporation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Equity Owned (%)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Studio Five Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal Dublev&#233; Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tokai Wacoal Sewing Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kyushu Wacoal Manufacturing Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Niigata Wacoal Sewing Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fukuoka Wacoal Sewing Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hokuriku Wacoal Sewing Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">90</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Miyazaki Wacoal Sewing Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Torica Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">53</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nanasai Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Japan</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">67</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal Dominicana Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal International Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal America, Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal Sports Science Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal (UK)&nbsp;LTD.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">U.K.</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal France S.A.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">France</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">22
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Jurisdiction of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Wacoal Holdings</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"> Principal Subsidiaries</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Incorporation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Equity Owned (%)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal Singapore Pte. Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Singapore</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal Hong Kong Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Hong Kong</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">80</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal International Hong Kong Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Hong Kong</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal China Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">China</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guangdong Wacoal Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">China</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dalian Wacoal Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">China</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wacoal (Shanghai) Human Science R&#038;D Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">China</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vietnam Wacoal Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">Vietnam</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Philippine Wacoal Corp.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">The Philippines</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">67</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;2005 we transitioned to a holding company structure by spinning off all of our
operations into a new wholly-owned subsidiary, Wacoal Corp. We believe this holding company
structure will help us to more effectively make strategic and other management decisions and
allocate resources more efficiently, and will help our operating companies to actively execute
their business plans with clearer responsibility and authority. We also believe that the holding
company structure will be a more efficient structure for carrying out any future changes to our
corporate structure, including any future M&#038;A transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please see Item&nbsp;4.A. for a diagram that shows our corporate organization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>D.&nbsp;Property, Plants and Equipment.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal facilities that we currently use in our business are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Floor</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Space</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(1,000</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">square</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Principal Activities or</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"> Facility</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Location</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">feet)<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Products Manufactured</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive and sales office
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kyoto, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">344</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Management, Sales and Administration</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Western Japan distribution center
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shiga, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">428</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Distribution</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kyoto South distribution center
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kyoto, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">91</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Distribution</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tokyo distribution center
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tokyo, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">168</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Distribution</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Manufacturing plants:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;Tokai Wacoal Sewing Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shizuoka, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">22</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;Hokuriku Wacoal Sewing Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fukui, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">40</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lingerie</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;Kyushu Wacoal Manufacturing<BR>
&nbsp;&nbsp;&nbsp;Corporation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nagasaki plant
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nagasaki, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">88</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Kumamoto plant
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kumamoto, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">42</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;Niigata Wacoal Sewing Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Niigata, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">15</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nightwear</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;Fukuoka Wacoal Sewing Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fukuoka, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">32</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;Miyazaki Wacoal Sewing Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Miyazaki, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">48</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Children&#146;s Innerwear, Foundation Garments</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;Torica Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tottori, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">290</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lingerie</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">146<SUP style="font-size: 85%; vertical-align: text-top">2</SUP> SPA specialty retail
stores and other select shops
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tokyo, Osaka, Kanagawa and
other locations in Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">139</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Retail sales</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Vietnam Wacoal Corp.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bien Hoa, Vietnam
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">163</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Wacoal Dominicana Corp.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Santo Domingo,


</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">92</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dominican Republic
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Wacoal China Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
Beijing, China
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">115</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">23
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Floor</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Space</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(1,000</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">square</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Principal Activities or</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"> Facility</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Location</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">feet)<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Products Manufactured</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Guangdong Wacoal Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Guangzhou, China
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">70</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dalian Wacoal, Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dalian, China
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">72</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">General Fashions Corp.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Puerto Rico
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">26</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Foundation Garments</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sales offices with warehouse facilities
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tokyo, Japan<BR>
(5 offices)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">219</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Sales</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sapporo, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">36</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sales</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Osaka, Japan<BR>
(1 office)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">124</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sales</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kyoto, Japan<BR>
(2 offices)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">337</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Sales</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fukuoka, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">54</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sales</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Wacoal America Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New Jersey and
New York, U.S.
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">200</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Management and Sales</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SPIRAL Building
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tokyo, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">107</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cultural Activities</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Nanasai Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kyoto, Japan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">214</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mannequins, Sales Equipment</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">1.</TD>
    <TD>&nbsp;</TD>
    <TD>Of the foregoing facilities, our total owned space is 3,575,439 square feet and our total
leased space is 448,917 square feet.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">2.</TD>
    <TD>&nbsp;</TD>
    <TD>As of June&nbsp;30, 2006.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We own all of the foregoing facilities except for the following, which we lease from
third parties: (i)&nbsp;several of our sales offices in Tokyo (78,739 square feet), (ii)&nbsp;our office and
warehouse facility for Nanasai (98,511 square feet), (iii)&nbsp;our sewing factory for Torica (6,584
square feet), (iv)&nbsp;our management and sales facility for Wacoal America (69,096 square feet), (v)
our 146 SPA specialty retail stores as of March&nbsp;31, 2006 (total of 139,047 square feet for all
stores), (vi)&nbsp;General
Fashions Corp., our sewing factory in Puerto Rico (25,778 square feet) and (vii)&nbsp;our office and
warehouse facility in China (31,162 square feet).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As discussed earlier in this report, we intend to increase the number of our SPA specialty
retail stores, with the target of having approximately 105 stores by March&nbsp;2007. In general, we
intend to lease the space for these stores, although we will incur capital expenses in improving
the interiors of the stores to our specifications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We spent approximately &#165;430&nbsp;million during fiscal year 2006 for expansion of our SPA specialty
retail store network. For additional information on our capital expenditures during the fiscal
years ended March&nbsp;31, 2006, 2005 and 2004, see &#147;Item&nbsp;5.B. Liquidity and Capital Resources &#150;
Capital Expenditures&#148;. We expect to spend approximately &#165;300&nbsp;million for further expansion of the
SPA network in fiscal year 2007. We have no plans to materially expand or improve our facilities
beyond the existing level, apart from our plans to expand our SPA specialty retail store network as
described above. We expect to continue to make expenditures for maintenance, to meet applicable
legal requirements and to facilitate the manufacture of new products with new designs and
specifications. We expect to fund these capital expenditures and other expenditures through our
cash from operations, existing cash reserves and other available sources of liquidity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have no material tangible fixed assets other than those discussed above.
</DIV>

<P align="center" style="font-size: 10pt">24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4A. Unresolved Staff Comments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 5. Operating and Financial Review and Prospects.</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a leading designer, manufacturer and marketer in Japan of women&#146;s intimate apparel,
with the largest share of the Japanese market for foundation garments and lingerie. Sales of
foundation garments (primarily brassieres and girdles) and lingerie (primarily slips, bra-slips and
ladies&#146; briefs) accounted for approximately 73.0% of our consolidated net sales for fiscal year
2006. We also design, manufacture and sell nightwear, children&#146;s underwear, outerwear, sportswear,
hosiery and other apparel and textile products, and engage in several business lines that are
ancillary to our core apparel business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Revenues</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We principally generate revenues from sales of innerwear (consisting of foundation garments
and lingerie, nightwear and children&#146;s underwear); outerwear and sportswear; hosiery, textile
products; and other products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information with respect to our total sales by category of
products for the fiscal years ended March&nbsp;31, 2006, 2005 and 2004:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 0px solid #000000">Year ended March 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Innerwear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foundation Garments
and Lingerie</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">119,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,020,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">73.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">114,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">71.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">115,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">70.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Nightwear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Children&#146;s Underwear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total Innerwear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,128,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outerwear and Sportswear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hosiery</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Textile Products</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">164,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,397,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">160,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">163,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Total Sales (and Percentage) by Product Category</B><BR>
(Yen in millions)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal year 2006, approximately 88% of the sales of Wacoal Corp. (the total sales of
which account for approximately 80% of Wacoal Group&#146;s sales on a consolidated basis) were apparel
sales made on a wholesale basis to department stores, general merchandise stores and other general
retailers, and approximately 8% were apparel sales made through our own SPA specialty retail
stores, catalog sales and the Internet. Sales from our other businesses (which include store and
home design services, restaurant businesses, cultural products and other services) comprised the
remaining 4% of Wacoal Corp.&#146;s sales in fiscal year 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<P align="center" style="font-size: 10pt">25
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Cost of Sales</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our cost of sales arises principally from material and manufacturing costs related to the
production of our apparel products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Selling, General and Administrative Expenses</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our selling, general and administrative expenses principally consist of employee compensation
and benefit expenses and promotional expenses, such as advertising costs and expenses associated
with remodeling our sales counters at department stores. Other selling, general and administrative
expenses include shipment costs, payment fees (including outsourcing payments) and rental payments
for our SPA shops. Our selling, general and administrative expenses do not include any impairment
charges on long-lived assets or any losses on the sale or disposal of property, plant and
equipment. However, these expenses are included in operating costs and expenses and thus impact
our operating income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Key Industry Trends</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that the following have been key trends in our industry during the last three
fiscal years:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consumer spending in Japan was generally weak for a prolonged period prior to fiscal
year 2006. Although there were some signs of recovery in fiscal year 2006, the
generally stagnant level of consumer spending in recent years has negatively impacted
performance at general retailers, our key distribution channel.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The sale of lower priced women&#146;s innerwear garments in Japan&#151;to a large degree
manufactured in China and other lower-cost countries&#151;has increased. This has generally
resulted in a greater degree of price competition in our industry.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>There has been increased demand for higher-end innerwear products. This development
(combined with increased demand for lower-end products) has resulted in greater market
segmentation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Manufacturers are increasingly focused on reducing their costs, including by
sourcing fabric and producing garments in China and other lower-cost countries.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Alternative marketing concepts for women&#146;s innerwear garments, such as catalog
marketing and e-commerce, are becoming more prevalent as apparel companies seek to
diversify their sales channels and reach new customer groups.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the last three fiscal years, 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 believe that our strategic emphasis on higher-end products has helped us 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&#151;in particular China, the U.S. and Europe&#151;and
</DIV>

<P align="center" style="font-size: 10pt">26
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">increase sales through our own SPA specialty retail stores, our catalog operations and the
Internet. 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 products mix to
help us reach a broader customer base. We believe that our strategic alliance with Peach John will
help us to advance this goal. We will continue to implement these steps and evaluate other
strategies to address challenges and opportunities in the industry going forward.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Policies.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Valuation of Inventories</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories are stated at the lower of cost or market, cost being substantially determined on
the first-in, first-out method for raw materials and average cost method for work in process and
finished products. We review our inventories on a regular basis for their salability and for
indications of obsolescence to determine if a write down to market value is necessary. The
revaluation of inventories is based on the age of inventories, likelihood of obsolescence, actual
product movements, changes in market demand and other factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Allowance for Doubtful Receivables and Returns</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are required to assess the collectibility 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. In
the event that a customer&#146;s financial condition worsens, the allowance for doubtful receivables may
increase and may adversely affect our financial condition and performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 based on historical experience, and we regularly review and revise the
allowance if necessary, in consideration of actual returns, planned product discontinuances and
promotional sales. We record the allowance for estimated returns as a reduction to sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Deferred Tax Assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently have significant deferred tax assets and liabilities, which are subject to
periodic recoverability assessments. Realization of our deferred tax assets is principally
dependent upon the achievement of projected future taxable income. 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. A valuation allowance will be
</DIV>

<P align="center" style="font-size: 10pt">27
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Impairment of Investment Securities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An impairment of investment securities is charged to earnings when a decline in fair value
below the cost is other than temporary. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Impairment of Long-Lived Assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When we determine that long-lived assets and certain intangible assets held have been impaired
based on estimated future cash flows, the amount of carrying value in excess of the fair market
value of such assets is recognized as impairment loss. We believe that our assessment of estimated
future cash flows and the fair values of such assets has been reasonably performed. However,
changes in estimated future cash flows and fair values may affect our impairment assessment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Employee Retirement Plans</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Corp.&#146;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&nbsp;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. At March&nbsp;31, 2006, the discount rate used for the
contributory retirement plan was 2.5%. For other plans, similar indices and methods are used.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
</DIV>

<P align="center" style="font-size: 10pt">28
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">retirement plan is 2.5%, 2.5% and 2.5% for the years ended March&nbsp;31, 2006, 2005 and
2004, respectively. The estimated long-term rate of return is based on an asset allocation of
equity securities of 33.0%, debt securities of 50.0% and other investments of 17.0%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These assumptions have a significant effect on the amount of the obligation and periodic
benefit cost reported. A half-percentage-point change in the discount rate and the expected
long-term rate of return on plan assets would have the following effects:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">0.5 Percentage</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">0.5 Percentage</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">0.5 Percentage</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">0.5 Percentage</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">point decrease</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">point increase</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">point decrease</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">point increase</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rate:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect on periodic benefit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&#165;</TD>
    <TD align="right">(49</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(417</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">511</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect on benefit obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(50</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(425</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">511</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected long-term rate of return
on plan assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect on periodic benefit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(132</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,123</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect on benefit obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146;s termination or the mandatory retirement age.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>New Accounting Pronouncements.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Exchanges of Nonmonetary Assets, an Amendment to Accounting Principle Board (&#147;APB&#148;) Opinion
No.&nbsp;29 &#151; </I></B>In December&nbsp;2004, the FASB issued SFAS No.&nbsp;153, &#147;Exchanges of Nonmonetary Assets, an
Amendment to APB Opinion No.&nbsp;29&#148;. SFAS No.&nbsp;153 eliminates the exception to measure exchanges at
fair value for exchanges of similar productive assets and replaces it with a general exception for
exchange transactions that do not have commercial substance. SFAS No.&nbsp;153 is effective for
nonmonetary exchanges in fiscal periods beginning after June&nbsp;15, 2005. We do not expect the
adoption of SFAS No.&nbsp;153 to have a material effect on our consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Inventory Costs, an Amendment of ARB No.&nbsp;43, Chapter&nbsp;4 </I></B><B>- </B>In November&nbsp;2004, the Financial
Accounting Standards Board (&#147;FASB&#148;) issued SFAS No.&nbsp;151, &#147;Inventory Costs, an amendment of ARB No.
43, Chapter&nbsp;4&#148;. This statement clarifies accounting for abnormal amounts of idle facility expense,
freight, handling costs and wasted material. Additionally, SFAS No.&nbsp;151 requires that allocation
of fixed production overhead to inventory be based on the normal capacity of the production
facilities. The provisions of SFAS No.&nbsp;151 are applicable to inventory costs incurred during
fiscal years beginning after June&nbsp;15, 2005. We do not expect the adoption of SFAS No.&nbsp;151 to have
a material effect on our consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Accounting Changes and Error Corrections. </I></B>In May&nbsp;2005, the FASB issued SFAS No.&nbsp;154,
&#147;Accounting Changes and Error Corrections &#151; a replacement of APB Opinion No.&nbsp;20 and FASB Statement
No.&nbsp;3&#148; (&#147;SFAS 154&#148;). SFAS 154 replaces APB Opinion No.&nbsp;20, &#147;Accounting Changes&#148; and SFAS No.&nbsp;3
&#147;Reporting Accounting Changes in Interim Financial Statements,&#148; and provides guidance on the
accounting for and reporting of accounting changes and error corrections.
</DIV>

<P align="center" style="font-size: 10pt">29
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SFAS 154 establishes
retrospective application, or the latest practicable date, as the required method for reporting a
change in accounting principle and the reporting of a correction of an error. SFAS 154 is
effective for accounting changes and corrections of errors made in fiscal years beginning after
December&nbsp;15, 2005. We do not expect the adoption of SFAS No.&nbsp;154 to have a material effect on our
consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments</I></B><I>. </I>In
November&nbsp;2005, the FASB issued FSP FAS 115-1 and FAS 124-1, &#147;The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments&#148; (&#147;FSP 115-1&#148;). FSP 115-1 provides guidance
on determining when investments in certain debt and equity securities are considered impaired,
whether that impairment is other-than-temporary, and on measuring such impairment loss. FSP 115-1
also includes accounting considerations subsequent to the recognition of an other-than-temporary
impairment and requires certain disclosures about unrealized losses that have not been recognized
as other-than-temporary impairments. FSP 115-1 is required to be applied to reporting periods
beginning after December&nbsp;15, 2005. We do not expect the adoption of FSP 115-1 to have a material
effect on our consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;Operating Results</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain data from our consolidated statements of income for the
last three fiscal years:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15">(Yen in millions and U.S. Dollars in thousands)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 0px solid #000000">Year ended/as of March 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">164,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,397,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">160,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">163,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">717,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,638</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and
administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">593,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,472</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,516</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,902</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Fiscal Year 2006 Compared to Fiscal Year 2005</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sales. </I>Consolidated net sales increased approximately 2.0% in fiscal year 2006, from &#165;160,968
million to &#165;164,122&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of our mainstay innerwear products (consisting of foundation wear, night wear and
children&#146;s underwear), which comprised 80.7% of total consolidated sales, increased 3.6% in fiscal
year 2006, to &#165;132,531&nbsp;million. Although sales of our Wacoal brand products in the first quarter
were below expectations, partly due to the temporary recall of our <I>3-D NAMI NAMI </I>summer campaign
products for defect concerns, in July our campaign product <I>Hip Walker </I>received favorable media
coverage because of its innovative functionality and achieved favorable sales of 701,000 units.
Our <I>Kaiteki NAVI </I>product group released in connection with &#147;warm biz&#148; (a general campaign in Japan
encouraging offices to turn down their thermostats during the winter and encouraging employees to
wear an extra layer of clothing) also showed favorable sales of 730,000 units.
</DIV>

<P align="center" style="font-size: 10pt">30
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our Wing brand segment, sales fell below expectations because of the lack of novelty in our
summer campaign product <I>Natural fit bra</I>. On the other hand, our autumn campaign product <I>Style Up
Pants </I>enjoyed popularity and achieved strong sales of 650,000 units. <I>Style Up Pants</I>, like our
Wacoal branded <I>Hip Walker</I>, enhance mobility by stimulating the muscles, which results in shaping up
of the hips. This is because the garment actually trains the muscles, which goes beyond
traditional correction underwear or &#147;shape correction wear&#148;. We believe this revolutionary
functionality has acquired support from many women. These products were both developed at our
state-of-the-art Human Science Research Center. We plan to continue to develop products with
unique functionality such as these and market them as our new <I>Style Science </I>series of products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of our luxury brand products also contributed to our overall increase in sales, with
sales of our <I>Tr&#233;fle </I>brand increasing 17% to &#165;1,978&nbsp;million. Sales of our products targeted at the
middle-aged and senior markets also showed steady performance, with sales of our <I>La Vie Ais&#233;e </I>and
<I>Gra-P </I>brands increasing 11% and 18% to &#165;5,408&nbsp;million and &#165;2,243&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Overseas sales were strong overall. Our sales in Asia outside of Japan (including China, Hong
Kong, Singapore and the Philippines) grew 11.8% to &#165;5,785&nbsp;million from &#165;5,176&nbsp;million and
represented 3.5% of total consolidated sales in fiscal year 2006 versus 3.2% of total consolidated
sales in fiscal year 2005. Sales in China grew 42.4% over the previous year, which contributed to
our overall strong performance in Asia. In the U.S., which represented 8.5% of our total
consolidated sales in fiscal year 2006, sales increased by approximately 14.8% on a dollar basis in
fiscal year 2006 as compared to fiscal year 2005. Sales growth in the U.S. was largely due
to stronger consumer spending and growing awareness of our Wacoal brand. In addition, our
single-piece construction seamless iBra product achieved strong sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our other apparel businesses, sales of outerwear and sportswear in fiscal year 2006
decreased 5.2% to &#165;9,128&nbsp;million as compared to fiscal year 2005. Within this category, sportswear
posted strong sales growth, led by growth in our CW-X conditioning wear line as well as growth in
X-Fit, our new group of high-functional innerwear products that was launched under our CW-X line in
February of 2005. However, the closure of our outerwear sales subsidiary Point Up, Inc. in January
of 2005 and the resulting decrease in sales more than offset our strength in sportswear. Hosiery
sales (which include products sold under our Carlson label) helped to support our sales results in
fiscal year 2006, increasing 2.7% to &#165;2,462&nbsp;million. This performance was due in part to continued
favorable sales of our &#147;Wacoal Panty Stocking,&#148; a collaborative product with Seven-Eleven Japan,
Co., Ltd. that was launched in spring 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales from our other businesses decreased 2.1% to &#165;15,403&nbsp;million, which was primarily due to
a decrease in orders in our model room decorating business and a decrease in orders in the store
design and construction business conducted by our subsidiary Nanasai Co., Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of sales. </I>Our cost of sales increased approximately 0.3% in fiscal year 2006, to &#165;84,322
million from &#165;84,041&nbsp;million in fiscal year 2005. Cost of sales as a percentage of net sales
decreased by 0.8%, from 52.2% in fiscal year 2005 to 51.4% in fiscal year 2006. This improvement
in our gross margin was primarily due to increased production overseas and strong sales of many of
our campaign products, which generally have higher margins.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Selling, general and administrative expenses. </I>Selling, general and administrative expenses
were &#165;69,720&nbsp;million in fiscal year 2006, a decrease of 3.3% from &#165;72,128&nbsp;million in fiscal year
2005. This decrease was partly due to a decrease in advertising costs, a decrease in retirement
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">related costs as a result of our adoption of a new retirement system in July&nbsp;2005 and higher
returns on our pension fund assets, which helped to reduce our expense for pension liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Special voluntary retirement related expenses. </I>We recorded &#165;6,931&nbsp;million of special
additional allowances and reemployment support expenses in connection with our special voluntary
retirement program and &#165;590&nbsp;million of special allowances paid to retiring employees in connection
with the closure of our Fukushima Wacoal factory during the fiscal year ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other income (expenses), net. </I>We had net other income of &#165;2,133&nbsp;million in fiscal year 2006,
as compared to net other income of &#165;313&nbsp;million in fiscal year 2005. This was largely due to a
gain of &#165;1,149&nbsp;million upon the exchange of shares of UFJ Holdings held by Wacoal Corp. and Nanasai
Co., Ltd. for shares of Mitsubishi UFJ Financial Group, the surviving entity in the merger of
Mitsubishi Tokyo Financial Group and UFJ Financial Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net income. </I>Net income in fiscal year 2006 was &#165;2,821&nbsp;million, or &#165;98 per American Depository
Receipt (&#147;ADR&#148;, equivalent to five shares of common stock), versus &#165;6,790&nbsp;million or &#165;236 per ADR
in fiscal year 2005. The decrease in our net income in fiscal year 2006 (in spite of our improved
operating results) was primarily due to the recognition of a one-time government subsidy in fiscal
year 2005 in the amount of &#165;7,100&nbsp;million from the return of the substitutional portion of our
employee pension fund to the Japanese government in fiscal year 2005, which
resulted in higher net income for fiscal year 2005 and &#165;7,521&nbsp;million of one-time expenses
that were incurred in fiscal year 2006 in connection with our expanded early retirement program and
the closure of our Fukushima Wacoal factory as noted above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Fiscal Year 2005 Compared to Fiscal Year 2004</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sales. </I>Consolidated net sales decreased 1.3% in fiscal year 2005, from &#165;163,155&nbsp;million to
&#165;160,968&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of our mainstay innerwear products (consisting of foundation wear, night wear and
children&#146;s underwear), which comprised 79.5% of total consolidated sales, decreased 1.6% in fiscal
year 2005, to &#165;127,958&nbsp;million. A principal factor in this decrease was lower than expected sales
of our campaign products during fiscal year 2005, including our <I>NAMI-NAMI </I>T-shirt bra (580,000
units sold) and our <I>Kanjiru </I>and <I>Shakitto </I>bra and underwear (1,160,000 units sold). We believe that
sales performance for these campaign items was hurt by the fact that we did not introduce new
Wacoal brand campaign items in fiscal year 2005 &#150; the <I>NAMI-NAMI </I>T-shirt bra and the <I>Kanjiru </I>and
<I>Shakitto </I>bras marketed as campaign items in fiscal year 2005 were updated versions of products that
had been campaign items in fiscal year 2004. Additionally, Japan experienced unseasonably warm
weather in the fall and winter months during fiscal year 2005, which adversely affected our sales
of cold-weather campaign products for those seasons. We also believe that the series of unusually
severe typhoons during the fall in Japan negatively impacted consumer spending generally, including
on our products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of our high-end innerwear garments helped to support our sales performance in fiscal
year 2005, reflecting our success in targeting the high-end of the Japanese market. Several of our
high-end innerwear product lines achieved significant sales growth in fiscal year 2005, including
Gra-P (&#165;1,893&nbsp;million in sales, representing a 24% increase over fiscal year 2004); La Vie Ais&#233;e
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(&#165;4,888&nbsp;million in sales, representing an 11% increase over fiscal year 2004); and L&#146;ge (&#165;1,144
million in sales, representing a 9% increase over fiscal year 2004).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Overseas sales were mixed. Our sales in Asia outside of Japan (including China, Hong Kong,
Singapore and the Philippines) grew slightly to &#165;5,176&nbsp;million, representing 3.2% of total
consolidated sales in fiscal year 2005 versus 3.0% of total consolidated sales in fiscal year 2004.
Sales grew 22.1% over the previous year in China overall, and sales were particularly strong in
Shanghai, where growth in disposable income helped to increase sales of our high-end products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the U.S., which represented 7.3% of our total consolidated sales in fiscal year 2005, sales
increased by approximately 3.5% on a dollar basis in fiscal year 2005 as compared to fiscal year
2004. However, the reduced value of the dollar against the yen resulted in a 3% decrease in U.S.
sales in fiscal year 2005 on a yen basis. Sales growth in the U.S. was largely due to stronger
consumer spending and growing awareness of our Wacoal brand. Sales in Europe &#150; representing
approximately 0.6% of our total sales &#150; were down 11.8% in fiscal year 2005 as compared to fiscal
year 2004. This decrease was largely due to our decision to stop selling to a number of
mass-market retailers in France, as part of our increased focus on higher-end consumers in our
European markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our other apparel businesses, sales of outerwear and sportswear in fiscal year 2005
decreased 7.5% to &#165;9,628&nbsp;million as compared to fiscal year 2004. Within this category,
sportswear posted strong sales growth of 19% over fiscal year 2004, led by 22% sales growth in
our CW-X conditioning wear line. We believe that this sales growth in our CW-X line reflects the
appeal of our human science approach among active consumers. However, this strong performance was
more than offset by a nearly 40% decrease in outerwear sales in fiscal year 2005, which was largely
due to the closure of our outerwear subsidiary Point Up, Inc. in January&nbsp;2005 after consistently
unprofitable performance. Hosiery sales (which include products sold under our Carlson label)
helped to support our sales results in fiscal year 2005, increasing by &#165;600&nbsp;million, or 33.4%, to
&#165;2,398&nbsp;million. This performance was due in part to favorable sales of our &#147;Wacoal Panty
Stocking,&#148; a collaborative product with Seven-Eleven Japan, Co., Ltd. that was launched in spring
2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales from our other businesses (which include the sale of mannequins, store design and
construction, restaurant businesses, cultural projects and other services) declined to &#165;15,734
million in fiscal year 2005, or 3.0%, from &#165;16,210&nbsp;million in fiscal year 2004. We stopped selling
pre-fabricated houses in fiscal year 2005, which had not been a profitable business for us &#150; the
sales decline in this category resulted largely from our termination of the housing business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of sales. </I>Our cost of sales decreased approximately 0.7% in fiscal year 2005, to &#165;84,041
million from &#165;84,638&nbsp;million in fiscal year 2004. Cost of sales as a percentage of net sales
increased by 0.3%, from 51.9% in fiscal year 2004 to 52.2% in fiscal year 2005. The reduction in
our aggregate gross margin primarily resulted from our price reductions on campaign items that sold
more poorly than expected, as described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Selling, general and administrative expenses. </I>Selling, general and administrative expenses
were &#165;72,128&nbsp;million in fiscal year 2005, a decrease of 0.5% from &#165;72,472&nbsp;million in fiscal year
2004. Contributing to this aggregate decrease were &#165;1,201&nbsp;million in personnel cost reductions due
to higher returns on our pension fund assets. These expense reductions were partially offset by
the following increases in expenses:
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a one-time charge of &#165;826&nbsp;million related to the return of the substitutional
portion of our employee pension fund to the Japanese government (this one-time charge
represents a settlement loss which is calculated as a ratio of the obligation settled
to the total employee pension fund obligation immediately prior to settlement, times
the net unrecognized gain/loss immediately prior to settlement);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a &#165;718&nbsp;million charge due to an increased number of employees electing to take early
retirement under our early retirement program, which was revised in fiscal year 2005 to
implement less restrictive eligibility requirements; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an increase in advertising costs of &#165;363&nbsp;million.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The net reduction in these expenses did not keep pace with the reduction in our sales, which led to
an increase in our selling, general and administrative expenses as a percentage of sales from 44.4%
for fiscal year 2004 to 44.8% for fiscal year 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other income (expenses), net. </I>We had net other income of &#165;313&nbsp;million in fiscal year 2005, as
compared to net other income of &#165;1,516&nbsp;million in fiscal year 2004. This result was mainly
attributable to the devaluation of our investment securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net income. </I>Net income in fiscal year 2005 was &#165;6,790&nbsp;million, or &#165;236 per American
Depository Receipt (&#147;ADR&#148;, equivalent to five shares of common stock), versus &#165;99 in fiscal year
2004. This increase in net income was primarily due to the recognition of a one-time government
subsidy in the amount of &#165;7,100&nbsp;million from the return of the substitutional portion of our
employee pension fund to the Japanese government.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Liquidity and Capital Resources.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our main source of liquidity is cash from operations. Our cash from operations has allowed us
to fund our working capital requirements and our capital expenditures (including our SPA specialty
retail store expansion and the construction of our new distribution center in the Kansai region of
Japan) and make dividend payments without material borrowings or other external financing. We
believe that we will consistently generate and maintain sufficient cash from operations to cover
our needs for working capital for our operations and for our anticipated capital requirements and
other expenditures (including for the planned capital expenditures in fiscal 2007 noted below and
for our announced capital alliance with Peach John) for the foreseeable future. Some of our
subsidiaries also currently maintain credit facilities with bank lenders for working capital
purposes.
</DIV>


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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cash Flows</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our consolidated cash flows for fiscal year 2004, 2005 and 2006 were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 0px solid #000000"><B>Fiscal Year Ending March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">(in millions of yen)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">5,201</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,069</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,528</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,328</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,428</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,138</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Cash provided by operating activities.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities decreased by 64.8% in fiscal year 2006, to &#165;719
million from &#165;2,045&nbsp;million in fiscal year 2005. While sales increased and tax expenditures
decreased, the decrease in cash provided by operating activities was primarily the result of
special additional allowances and reemployment support expenses in connection with our special
voluntary retirement program, as well as a special allowance paid to retiring employees following
the dissolution of Fukushima Wacoal Sewing Corp. Because these were one-time expenses, we expect
cash provided by operating activities to increase during the current fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities decreased by 60.7% in fiscal year 2005, to &#165;2,045
million from &#165;5,201&nbsp;million in fiscal year 2004. The decrease resulted largely from lower gross
margins due to price reductions on campaign items that sold more poorly than expected and from
higher levels of accounts receivable and inventories at the end of fiscal year 2005. The buildup
of accounts receivable and inventories resulted mainly from sales from our spring 2005 product
campaign, which began earlier than usual. Also, an increase in taxes payable during fiscal year
2004 resulted in a large tax payment during fiscal year 2005, which was recorded as a decrease
of other current liabilities. These negative factors offset the positive impact on sales (and cash
provided by operating activities) during fiscal year 2005 arising from the relatively high level of
returned goods in March&nbsp;2004, so that the price tags of such goods could be changed in line with a
new legal requirement as of April&nbsp;1, 2004 that all prices be inclusive of consumption tax. The
effect of this return of goods was to shift some sales (and cash generated from those sales) from
fiscal year 2004 to fiscal year 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net cash used in investing activities.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities was &#165;2,069&nbsp;million in fiscal year 2006, as compared to
&#165;5,528&nbsp;million used by investing activities in fiscal year 2005, due to our acquisition of shares
of publicly traded Japanese companies and the purchase of fixed assets related to our Western Japan
Distribution Center. We anticipate using approximately &#165;15,000&nbsp;million of our available cash
during the current fiscal year in connection with our capital alliance with Peach John Co., Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities was &#165;5,528&nbsp;million in fiscal year 2005, as compared to
&#165;1,328&nbsp;million provided by investing activities in fiscal year 2004. This change in fiscal year
2005 was mainly attributable to an increase in capital expenditures in connection with our new
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;distribution center in the Kansai district of Japan and an increase of &#165;2,985&nbsp;million in investment
securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net cash used in financing activities.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities was &#165;3,428&nbsp;million in fiscal year 2006, versus net cash
provided by financing activities of &#165;296&nbsp;million in fiscal year 2005, primarily due to the payment
of dividends and the repayment of short-term bank loans. We expect to spend a similar amount
during the current fiscal year primarily for the payment of dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities was &#165;296&nbsp;million in fiscal year 2005 versus net cash
used in financing activities of &#165;6,138&nbsp;million in fiscal year 2004. This change in fiscal year
2005 was primarily attributable to an increase in short-term bank borrowings and reduced
repurchases of treasury stock as well as a dividend increase from 13.5 yen to 15 yen.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Capital expenditures.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures in fiscal years 2006, 2005 and 2004 were &#165;6,456&nbsp;million, &#165;5,418&nbsp;million
and &#165;2,338&nbsp;million, respectively. We made capital expenditures in 2006 primarily in connection
with the completion of our Western Japan distribution center, as well as the continued expansion of
our SPA specialty retail store network and investment in IT infrastructure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal year 2007, we expect that our principal capital expenditures will be approximately
&#165;1,100&nbsp;million for IT infrastructure, approximately &#165;700&nbsp;million for improvements to our overseas
sales locations and factories, approximately &#165;400&nbsp;million for improvements to our domestic factory
and office locations and approximately &#165;300&nbsp;million for the continued expansion of our SPA
specialty retail store network. We expect to finance these capital expenditures with cash from our
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;Research and Development, Patents and Licenses.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through our Human Science Research Center, we conduct research and development activities
focused on the relationship between the human body and garments, which we believe enable us to
produce better products. Since the establishment of the Human Science Research Center in 1964, we
have conducted a long-term study of the female body designed to accurately understand the Japanese
woman&#146;s body as a three dimensional shape. Through these research activities, we have developed
specialized equipment, such as silhouette analysis equipment and three-dimensional measuring
equipment, and we are currently working on equipment that we believe will provide advanced
measurements of sensory comfort.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our research and development activities are based on the proportional, physiological and
mental aspects of garment design. Since 1995, we have participated in a project led by the
Ministry of Economy, Trade and Industry (formerly the Ministry of International Trade and Industry)
for the study of sensory comfort and have conducted basic research based on reactions to three
basic stimuli: 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.
</DIV>

<P align="center" style="font-size: 10pt">36
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently the Human Science Research Center&#146;s product development team, basic research team
and development factory team are working on priority issues such as focusing research and
development on addressing customer needs and establishing a product development database. Our
research and development successes during the previous fiscal year include commercialization of
several high value-add products, including our hip training pants, our tummy training pants and
pajamas that incorporate new functionality to support more pleasant sleep and relaxation. In
addition, we undertook an analysis of teen development and published our findings regarding the
changes that girls&#146; figures go through during puberty. Based on this research we have made
improvements to our products and developed a method by which customers can choose products that fit
their particular figure at various stages of puberty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, we established a sales and design office in Shanghai as part of efforts to improve
our product design and development capabilities in China. In order to underpin the new office&#146;s
product-planning functions, we also established Wacoal (Shanghai) Human Science R&#038;D Co., Ltd. in
Shanghai, which is focused on developing unique products for the China market based on the
principles of human science and ergonomics.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because many of our marketing and production personnel contribute to the development of new
products and styles, it is not practicable to determine the precise amount of expenditures on our
product research and development activities, but we believe that we spent approximately &#165;638
million, &#165;707&nbsp;million and &#165;751&nbsp;million in fiscal years 2006, 2005 and 2004, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>D.&nbsp;Trend Information.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a discussion of other trends that affect our business and operating results, see &#147;Item
3.D. Risk Factors&#148;, &#147;Item&nbsp;4.B. Business Overview&#148;, &#147;Item&nbsp;5. New Accounting Pronouncements &#150;
Transfer of the Substitutional Portion of Employee Pension Fund Liabilities&#148; and &#147;Item&nbsp;5.A.
Operating Results&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>E.&nbsp;Off-Balance Sheet Arrangements.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>F.&nbsp;Tabular Disclosure of Contractual Obligations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Contractual Obligations and Commitments</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For information regarding debt obligations including amounts maturing in each of the next five
years, see note 6 to the consolidated financial statements.
</DIV>

<P align="center" style="font-size: 10pt">37
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes our contractual obligations as of March&nbsp;31, 2006.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 0px solid #000000"><B>Fiscal Year Ending March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Less than</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">1-3</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">3-5</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">More than</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">1 year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">5 years</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19">(in millions of yen)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-Term Debt Obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital (Finance) Lease
Obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Lease Obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">676</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,046</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,063</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital Expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,026</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,046</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,063</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">1.</TD>
    <TD>&nbsp;</TD>
    <TD>Contractual obligations above exclude related interest payments, as such payments are not
material.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">2.</TD>
    <TD>&nbsp;</TD>
    <TD>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. We expect to contribute &#165;2,360&nbsp;million to our plans in the year ending March&nbsp;31,
2007.</TD>
</TR>

</TABLE>

<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 6. Directors, Senior Management and Employees.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;Directors and Senior Management.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a current list of Wacoal Holdings&#146; directors and corporate auditors:
</DIV>
<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Position(s) and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Office(s) with Wacoal</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Business Experience and Position(s) and</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">(Date of Birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Holdings</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Office(s) with Wacoal Holdings</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="7" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yoshikata Tsukamoto
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representative Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1972<BR>
Nov 1977
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joins Wacoal Corp.<BR>
Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Jan&nbsp;29, 1948)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nov 1981
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Sep 1984 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representative Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sep 1984
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Vice President</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1987
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2003 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President Corporate Officer*</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">38
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Position(s) and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Office(s) with Wacoal</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Business Experience and Position(s) and</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">(Date of Birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Holdings</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Office(s) with Wacoal Holdings</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="7" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shoichi Suezawa
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Managing
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mar 1970
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joins Wacoal Corp.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Jun&nbsp;13, 1947)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1994
</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Chief of Accounting Group and Financial Group,
Management Control Division</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1996
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1998
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Chief of Management Planning Office and General
Manager of Accounting and Financial
Department</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supervisor for Personnel, General
Administration and Accounting Staffs</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director and Corporate Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Supervisor for Personnel, General
Administration, Accounting and Business
Strategy Staff and Chief of President&#146;s Office</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Corporate Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supervisor for Corporate Staff</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Managing Corporate Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2006 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Managing Director</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yuzo Ito
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mar 1970
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joins Wacoal Corp.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Mar&nbsp;15, 1948)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1995
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">General Manager of Innerwear Merchandise Sales
Department, Wing Brand Operation Division</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1997
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Deputy General Manager of Wing Brand Operation
Division and General Manager of Innerwear
Merchandise Sales Department</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Manager of Wing Brand Operation Division</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Corporate Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Apr 2005 &#151; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Supervisor for Wacoal Brand Operation Division
and Wing Brand Operation Division*</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2005 &#151; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Managing Corporate Officer*</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Oct 2005 &#151; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tatsuya Kondo
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mar 1966
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joins Wacoal Corp.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Oct&nbsp;17, 1947)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Manager of Wellness Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2002 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Corporate Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Apr 2005 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">General Manager of Direct Marketing Operation
Division and Supervisor for Wellness
Department*</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2005 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Corporate Officer*</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tadashi Yamamoto
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mar 1976
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joins Wacoal Corp.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Nov 14, 1952)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Manager of Human Resources Department</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Apr 2006 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Manager of Personnel and Administration Department</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2006 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">39
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Position(s) and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Office(s) with Wacoal</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Business Experience and Position(s) and</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">(Date of Birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Holdings</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Office(s) with Wacoal Holdings</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="7" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kazuo Inamori
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1959
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Established Kyoto Ceramic Co., Ltd. (currently Kyocera Corporation)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Jan 30, 1932)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;1966
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Representative Director of Kyoto
Ceramic Co., Ltd.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Apr 1984 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Established The Inamori Foundation; President</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1984
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Established DDI Corporation (currently KDDI
Corporation); Chairman and Representative
Director</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1985
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman and Representative Director of Kyocera
Corporation</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1997
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Chairman Emeritus and Director of Kyocera
Corporation (retired as Director in Jun 2005)</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman Emeritus and Director of DDI
Corporation</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2001 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Honorary Adviser of KDDI Corporation</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2005 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman Emeritus of Kyocera Corporation</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2005 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of Wacoal Corp. (presently Wacoal
Holdings Corp.)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mamoru Ozaki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1991
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director-General of National Tax Agency</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(May&nbsp;20, 1935)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1992
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Administrative Vice-Minister of Finance</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;1994
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Governor of People&#146;s Finance Corporation</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Oct 1999
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Governor of National Life Finance Corporation</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Feb 2003 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisor of Yazaki Sogyo Corporation</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jul 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisor of Wacoal Corp.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2005 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of Wacoal Corp. (presently Wacoal
Holdings Corp.)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Michihiko Kato
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Standing Corporate
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mar 1972
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joins Wacoal Corp.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Jul&nbsp;2, 1947)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1997
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Manager of Administration Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1998
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Chief of Secretary&#146;s Office and General Manager
of Administration Department</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Chief of President&#146;s Office and General Manager
of Administration Department</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supervisor for Corporate Communication Center</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2004 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Standing Corporate Auditor</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hajime Kotake
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Standing Corporate
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mar 1972
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joins Wacoal Corp.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Jan 26, 1949)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1996
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Manager of Department Store Accounting and
General Administration Group of Osaka Sales
Office</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1998
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Manager of Business Administration Group of
Wacoal Brand Operation Division</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sep 2000
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">General Manager of Business Administration
Department of Wacoal Brand Operation Division</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2004 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Standing Corporate Auditor</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">40
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Position(s) and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Office(s) with Wacoal</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Business Experience and Position(s) and</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">(Date of Birth)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Holdings</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Office(s) with Wacoal Holdings</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="7" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Noboru Unabara
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Feb 1962
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joins Tsuda Certified Public Accountants Office</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Feb&nbsp;26, 1935)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1965
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Registered as certified public accountant</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;1968
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joins Tohmatsu Awoki &#038; Co. (currently Deloitte
Touche Tohmatsu)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nov 1972
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Partner of Tohmatsu Awoki &#038; Co.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;1974
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representative partner of Tohmatsu Awoki &#038; Co.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2000 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor of Wacoal Corp. (presently
Wacoal Holdings Corp.)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yutaka Hasegawa
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1962
</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Joined
Mitsubishi Bank, Ltd. (currently Bank of Tokyo-Mitsubishi UFJ,
Ltd.)</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Oct 8, 1939)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1989
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of Mitsubishi Bank, Ltd.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;1993
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director of Mitsubishi Bank, Ltd.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1996
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Managing Director of Bank of Tokyo Mitsubishi,
Ltd. (following merger of Mitsubishi Bank,
Ltd. and Bank of Tokyo Ltd.)</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 1998
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Director and President of Diamong Business
Consulting <I>Kabushiki Kaisha </I>(currently
Mitsubishi UFJ Research &#038; Consulting Co.,
Ltd.)</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jan 1999
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Statutory Auditor of Tokyo-Mitsubishi
Securities <I>Kabushiki Kaisha </I>(currently
Mitsubishi UFJ Securities Co., Ltd.)</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jun 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Full time Statutory Auditor of Bank of
Tokyo-Mitsubishi, Ltd. (currently Bank of
Tokyo- Mitsubishi UFJ, Ltd.)</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jan 2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Full-time Statutory Auditor of Bank of
Tokyo-Mitsubishi UFJ, Ltd. (following merger
of Bank of Tokyo-Mitsubishi, Ltd. and UFJ
Bank</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2006 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yoko Takemura
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Apr 1990
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Registered as lawyer (Tokyo), joins Miyake Imai Ikeda law firm.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(Apr 7, 1952)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jan 1997 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Partner at Miyake Imai Ikeda law firm.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Jun 2005 &#150; present
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Auditor of Wacoal Corp. (presently
Wacoal Holdings Corp.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>This position was transferred to our new wholly owned subsidiary Wacoal Corp. at the time of
our transition to a holding company structure.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of all of our directors expire in June&nbsp;2007. The term as corporate auditor for
Mr.&nbsp;Unabara expires in June&nbsp;2007, the terms as corporate auditor for Messrs.&nbsp;Kato and Kotake expire
in June&nbsp;2008, the term as corporate auditor for Ms.&nbsp;Takemura expires in June&nbsp;2009, and the term as
corporate auditor for Mr.&nbsp;Hasegawa expires in June&nbsp;2010.
</DIV>

<P align="center" style="font-size: 10pt">41
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Compensation.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aggregate compensation, including bonuses, paid by Wacoal Holdings in fiscal year 2006 to our
directors and corporate auditors was &#165;268&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A provision in the amount of &#165;11&nbsp;million was made during fiscal year 2006 to provide
retirement allowance for directors and corporate auditors of Wacoal Holdings. The balance of our
liability for termination benefits for directors and corporate auditors was &#165;72&nbsp;million and &#165;615
million at March&nbsp;31, 2006 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have a stock option plan for directors, corporate auditors or any other employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;Board Practices.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings&#146; Articles of Incorporation provide for a board of directors of not more than
seven members and for not more than five corporate auditors. Shareholders elect the directors and
corporate auditors at general shareholders&#146; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of directors may elect one chairman, one president and one or more vice chairman,
executive vice presidents, senior managing directors and managing directors. The board of
directors elects, pursuant to its resolutions, one or more representative directors. Each
representative director represents Wacoal Holdings generally in the conduct of its affairs. The
board of directors has the ultimate responsibility for the administration of Wacoal Holdings&#146;
affairs. None of Wacoal Holdings&#146; directors is party to a service contract with Wacoal Holdings or
any of its subsidiaries that provides for benefits upon termination of employment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Company Law of Japan (the &#147;Company Law&#148;), Wacoal Holdings 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 during the past. The 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, these corporate auditors form a
board of corporate auditors. The corporate auditors have the duty to examine the financial
statements and business reports which are submitted by the board of directors to the general
shareholders&#146; meeting. The corporate auditors also supervise the administration of Wacoal
Holdings&#146; affairs by the directors. Corporate auditors are not required to be, and Wacoal
Holdings&#146; corporate auditors are not, certified public accountants. They are required to
participate in meetings of the board of directors but are not entitled to vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Company Law and Wacoal Holdings&#146; Articles of Incorporation, Wacoal Holdings may
enter into a liability limitation agreement with each outside director or corporate auditor which
limits the maximum amount of their liabilities owed to Wacoal Holdings arising in connection with
their failure to execute their duties to an amount equal to the minimum liability limit amount
prescribed in the laws and regulations.
</DIV>

<P align="center" style="font-size: 10pt">42
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have a remuneration committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Exemption from Certain Corporate Governance Requirements of NASDAQ.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to home country practice exemptions granted by NASDAQ, we are permitted to follow
certain corporate governance practices complying with Japanese laws, regulations and stock exchange
rules in lieu of NASDAQ&#146;s corporate governance listing requirements. These exemptions and the
practices that we follow are described below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Distribution of annual reports to shareholders. </I>We are exempt from NASDAQ&#146;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
unconsolidated financial statements prepared in accordance with Japanese GAAP in
Japanese. Concurrently with such distribution, we distribute Japanese GAAP audited
unconsolidated 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. The English version contains a statement that, upon request by an
interested party, we will provide the party with a copy of our annual report on Form
20-F. 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Independent directors. </I>We are exempt from NASDAQ&#146;s requirement that there be
independent directors on our board of directors. Currently, for a foreign issuer,
NASDAQ requires that there be two independent directors on its board of directors. For
large Japanese companies, including us, which employ a corporate governance system
based on a board of corporate auditors, the Company Law 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&#146;s management.
Large Japanese companies, including us, are currently required to have at least half of
their corporate auditors meet independence requirements under the Company Law. 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Audit committee. </I>We are exempt from NASDAQ&#146;s requirements with respect to the audit
committee of the board of directors. Like a majority of Japanese companies, we do not
have an audit committee &#150; 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</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">43
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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&#146;s accounting
firm and on such accounting firm&#146;s audit reports for the protection of the company&#146;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. In addition, as discussed above,
our corporate auditors serve a longer term than our directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under NASDAQ&#146;s listing rules that are currently applicable to foreign private issuers,
including us, all members of a company&#146;s audit committee must be independent as defined
under NASDAQ&#146;s requirements, and the audit committee must have certain defined
responsibilities with respect to the company&#146;s independent auditors. However, we have
availed ourselves of paragraph (c)(3) of Rule&nbsp;10A-3 of the Exchange Act with respect to
these requirements &#150; 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&nbsp;10A-3.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Quorum. </I>We are exempt from NASDAQ&#146;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 Company Law, however, under our Articles of Incorporation no
quorum is required for the adoption of resolutions at a general meeting of
shareholders, except for (i)&nbsp;the election of directors and corporate auditors for which
the quorum shall not be less than one-third of the total voting rights and (ii)
resolutions for other specified issues required by the Company Law (the &#147;special
shareholders resolutions&#148;), 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 into two or more corporations requiring
shareholders&#146; resolution and any offering of new shares at a &#147;specially favorable&#148;
price (or any offering of the stock acquisition rights to subscribe for, or acquire its shares at a &#147;specially favorable&#148; 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. This approach is
consistent with generally accepted business practices of publicly-held companies in
Japan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Shareholder proxies. </I>We are exempt from NASDAQ&#146;s requirement that the Company
solicit proxies, provide proxy statements for all meetings of shareholders and provide
copies of such proxy solicitation to NASDAQ. The Company Law requires the Company to
send ballots to all shareholders with voting rights, together with the notice of
shareholders&#146; meeting. Although the Company may choose to solicit proxies from all
shareholders with voting rights instead of voting by ballot, the Company, in</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">44
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>common
with the majority of public companies in Japan, provides its shareholders with the
opportunity to vote directly by ballot.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Review of related party transactions. </I>We are exempt from NASDAQ&#146;s requirement that
the Company conduct an appropriate review of all related party transactions for
potential conflict of interests and that all such transactions be approved by the
Company&#146;s audit committee or other independent body of the board of directors. The
Company Law provides that approval of the board of directors is required for any
transaction between the Company and any of its directors or any transaction between the
Company and any third party where such transaction involves a conflict of interest
situation between the Company and a director. No director can engage in any business
which competes with the business of the Company unless he is permitted to do so by the
board of directors. All related party transactions between the Company, its
subsidiaries directors and major shareholders must be disclosed in the Company&#146;s
securities report filed annually with the Minister of Finance of Japan.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>D.&nbsp;Employees.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table lists the number of our full-time employees as of March&nbsp;31, 2006, 2005 and
2004:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Asia (other</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Japan</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S.<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">than Japan)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Others</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Textile Products
and Related
Products</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Textile Products
and Related
Products</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Textile Products
and Related
Products</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 1pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes employees in the Caribbean.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal year 2006, we had an average of 1,616 temporary employees.
</DIV>

<P align="center" style="font-size: 10pt">45
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except for Nanasai and our seven manufacturing subsidiaries in Japan, the employees of Wacoal
Holdings and our Japanese subsidiaries are organized into one union. Each of Nanasai and our seven
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 the various unions are satisfactory.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>E.&nbsp;Share Ownership.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table lists the number of shares owned by Wacoal Holdings&#146; directors and
corporate auditors as of June&nbsp;30, 2006. As of such date, our directors and corporate auditors
collectively held a total of 1,386,136 shares of our common stock as set forth below, and this
number of shares constituted 0.96% of all outstanding shares of our common stock.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>No. of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>% of Common Stock</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yoshikata Tsukamoto</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,335,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shoichi Suezawa</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yuzo Ito</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tatsuya Kondo</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tadashi Yamamoto</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michihiko Kato</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hajime Kotake</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noboru Unabara</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yoko Takemura</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Less than 1% of our total outstanding common shares.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not issued any options or other securities to purchase shares of our capital
stock to any director or corporate auditor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no arrangements that involve the issue or grant of options, shares or securities of
Wacoal Holdings to our employees.
</DIV>

<DIV align="left">
<A name="109"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 7. Major Shareholders and Related Party Transactions.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;Major Shareholders.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, 144,016,685 shares of our common stock were issued and outstanding,
including 100,752 shares of treasury stock, which are held by Wacoal Holdings. Beneficial
ownership of Wacoal Holdings&#146; common stock in the table below was prepared from publicly available
records of the filings made by Wacoal Holdings&#146; shareholders regarding their ownership of Wacoal
Holdings&#146; common stock under the Securities and Exchange Law of Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Securities and Exchange Law of Japan, any person who becomes, beneficially and
solely or jointly, a holder, including but not limited to a deemed holder who manages shares for
another holder pursuant to a discretionary investment agreement, of more than 5% of the shares with
voting rights of a company listed on a Japanese stock exchange (including ADSs representing such
shares) must file a report concerning the shareholding with the director of the relevant local
finance bureau. A similar report must be filed, with certain exceptions, if the percentage of
shares
</DIV>

<P align="center" style="font-size: 10pt">46
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">held by a holder, solely or jointly, of more than 5% of the total issued shares of a company
increases or decreases by 1% or more, or if any change to a material matter set forth in any
previously filed reports occurs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on publicly available information, the following table sets forth the beneficial
ownership of holders of more than 5% of Wacoal Holdings&#146; common stock as of the dates indicated in
the reports described below.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percentage of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name of Shareholder</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Shares Outstanding</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NWQ Investment Management Co., LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,820,106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13.07</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mitsubishi UFJ Financial Group, Inc. and its joint holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,587,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.74</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of shares owned by NWQ Investment Management Co, LLC is based on a report
filed under the Securities and Exchange Law of Japan stating that NWQ Investment Management Co, LLC
held or was deemed to beneficially hold 18,820,106 shares of Wacoal Holdings&#146; common stock as of
April&nbsp;11, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of shares owned by Mitsubishi UFJ Financial Group, Inc. and its joint holders is
based on a report filed under the Securities and Exchange Law of Japan stating that Mitsubishi UFJ
Financial Group, Inc. and its joint holders held or were deemed to beneficially hold12,587,173
shares of Wacoal Holdings&#146; common stock as of April&nbsp;30, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on information made publicly available on or after April&nbsp;1, 2003, the following table
describes transactions resulting in a 1% or greater change in the percentage ownership held by
major beneficial owners of Wacoal Holdings&#146; common stock.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percentage</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Date of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Prior to</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>After the</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name of Shareholder</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Transaction</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Transaction</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Issued</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Changed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Transaction</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Issued</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mitsubishi Tokyo Financial Group
and its joint holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Jul 31, 2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,955,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.35</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,788,381</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,166,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.25</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NWQ Investment Management Co.,
LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">Feb 2, 2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,523,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,523,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.78</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mitsubishi UFJ Financial Group,
Inc. and its joint holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Oct 31, 2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,514,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,143,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,657,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NWQ Investment Management Co.,
LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Dec 14, 2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,523,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,602,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,916,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NWQ Investment Management Co.,
LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Feb 7, 2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,916,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,602,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,518,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.78</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NWQ Investment Management Co.,
LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Feb 28, 2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,518,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,624,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,142,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NWQ Investment Management Co.,
LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Apr 11, 2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,142,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,677,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,820,106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.07</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, approximately 8,135,561 shares, or 5.6% of the outstanding shares
of our common stock other than in the form of American Depositary Shares, were held of record by 55
residents of the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 16,045,880 shares of our common stock held of record by The Bank of New York on March&nbsp;31,
2006 underlay the 3,209,176 American Depositary Shares of Wacoal Holdings held of record by 9
persons.
</DIV>

<P align="center" style="font-size: 10pt">47
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent known to Wacoal Holdings, Wacoal Holdings is 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not know of any arrangements that may, at a subsequent date, result in a change of
control of Wacoal Holdings Corp.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Related Party Transactions.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal purchases merchandise from numerous suppliers throughout the world, including from
certain affiliates. Wacoal purchased merchandise from affiliates in the amount of &#165;1,811&nbsp;million
($15,415 thousand) in fiscal year ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal also sells supplies, materials and products to certain affiliates. Aggregate sales to
affiliates were &#165;1,494&nbsp;million ($12,717 thousand) in fiscal years ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not consider the amounts involved in such transactions to be material to its
business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;Interests of Experts and Counsel.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left">
<A name="110"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 8. Financial Information.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;Consolidated Statements and Other Financial Information.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Consolidated Financial Statements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;17. Financial Statements&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Legal Proceedings</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Dividends and Divided Policy</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;10.B. Memorandum and Articles of Association &#150; Capital Stock &#150; Distributions of
Surplus&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Significant Changes.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as provided above and elsewhere in this annual report, there has been no significant
change in our financial position since March&nbsp;31, 2006, the date of our consolidated financial
statements included in this annual report.
</DIV>

<P align="center" style="font-size: 10pt">48
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="111"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 9. The Offer and Listing.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;Offer and Listing Details.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Price Range of Shares</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 SmallCap Market
in the U.S. The depositary of the ADSs is The Bank of New York. Each ADS represents five shares
of our common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
SmallCap Market. The last reported sale price of our common shares on the Tokyo Stock Exchange on
July&nbsp;5, 2006 was 1,613, and the last reported sale price of our ADSs on the Nasdaq SmallCap Market
on July&nbsp;5, 2006 was 68.81.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Tokyo Stock Exchange</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Nasdaq SmallCap Market</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Price Per Share</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Price Per ADS</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Low</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">High</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Low</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal year ended March&nbsp;31,</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">846</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58.77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal quarter ended/ending</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47.43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47.43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.95</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68.92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58.77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61.37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;30, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Month ended/to</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,567</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;30, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65.51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;30, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;5, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68.45</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Plan of Distribution.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">49
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;Markets.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;9.A. Offering and Listing Details&#148; for information on the markets on which our
common stock and ADSs are listed or quoted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>D.&nbsp;Selling Shareholders.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>E.&nbsp;Dilution.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>F.&nbsp;Expenses of the Issue.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left">
<A name="112"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 10. Additional Information.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;Share Capital.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Memorandum and Articles of Association.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A copy of Wacoal Holdings&#146; Articles of Incorporation, amended as of June&nbsp;29, 2005, is being
filed as an exhibit to this annual report on Form 20-F. See &#147;Item&nbsp;10.H. Documents on Display&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summarizes certain provisions of Wacoal Holdings&#146; organizational documents and
applicable Japanese law. This summary is qualified in its entirety by reference to the Company Law
and Wacoal Holdings&#146; Articles of Incorporation, the Share Handling Regulations and the Regulations
of the Board of Directors, each filed as an exhibit to this annual
report on Form&nbsp;20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Organization</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings is a joint stock corporation <I>(kabushiki kaisha) </I>incorporated in Japan under
the Company Law. It is registered in the Commercial Register <I>(shogyo tokibo) </I>maintained by the
Kyoto Local Registry Office of the Ministry of Justice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Objects and purposes</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article&nbsp;2 of the Articles of Incorporation of Wacoal Holdings provides the following
objectives of Wacoal Holdings.:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;To control and manage the business activities of the companies which are engaged in the
following businesses by holding the shares of such companies:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacture and sale of clothing and apparel and sundries pertaining to
clothing and apparel;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">50
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacture, sale and installation of furniture, bedding, interior decorations
and other home furnishings;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacture and sale of cosmetics, soap, cleansers, medical supplies and
quasi-drugs and sale of health food;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sale, purchase and brokerage of objects of art and curios and management and
operation of picture galleries;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>publishing and advertising business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(8)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sale, purchase, lease, brokerage and management of real estate;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(9)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>lease and brokerage of personal property;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(10)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>nonlife insurance agency, insurance agency under the Automobile Liability
Security Law and life insurance solicitation agency;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(11)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>planning, design, supervision, execution, consulting and sale of construction
work and interior decoration;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(12)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sale of building materials and sale of equipment and apparatus pertaining to
housing such as fittings, furniture, utensils, kitchens, modular baths and toilets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(13)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>planning, design, supervision and consulting relating to community development,
urban development and environmental conditioning;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(14)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>planning, design, supervision, execution and consulting relating to
landscaping, gardening and stonecutting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(15)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>production, sale and lease of trees, plants and materials for gardening;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(16)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>data processing, provision of information and development, purchase, sale,
lease and consulting relating to computer hardware and software;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(17)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>processing of jewelry, precious metals and accessories and manufacture and sale
of watches, eyeglasses, footwear, bags and umbrellas;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(18)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>money lending, loan agency, guarantee, holding of and investment in securities
and credit card business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(19)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>dispatching of workers;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">51
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(20)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>education, training and consulting relating to development of ability of the
human resource to appropriately adapt to profession;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(21)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(22)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>warehousing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(23)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacture and sale of mannequins and display equipment;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(24)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>investments incidental to Items (1)&nbsp;through (23)&nbsp;above; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(25)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any and all business incidental or relate to Items (1)&nbsp;through (24)&nbsp;above.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;Any and all business incidental or related to any of the foregoing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Directors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Company Law, 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
the Board of Directors, has the corporate authority to represent our company in all respects.
Under both the Company Law and the Regulations of the Board of Directors of Wacoal Holdings, our
directors must refrain from engaging in any business which competes
with that of our company, unless
approved by the Board of Directors. Any director who has a material interest in the subject matter
of a resolution to be taken by the Board of Directors cannot vote on such resolution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company Law and our Articles of Incorporation provide that the remuneration of
directors and corporate auditors shall be determined at a general meeting of shareholders. Except
as stated below, neither the Company Law nor our Articles of Incorporation sets forth any special
provision as to a director&#146;s or corporate auditor&#146;s power to vote in connection with his or her
compensation, the borrowing powers exercisable by a representative director (or a director who is
given the power by a representative director to exercise such powers), the retirement age of any
director or corporate auditor or any requirement to hold any shares
of our capital stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company Law 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 the Board of Directors is also specifically required for the establishment
of a control system to ensure the adequacy of Wacoal Holdings&#146; affairs, such as a control system to
ensure the exercise of our directors&#146; duty to comply with laws and regulations and the Articles of
Incorporation of Wacoal Holdings. The Regulations of the Board of Directors of our company require
a resolution of the Board of Directors for the long-term
</DIV>

<P align="center" style="font-size: 10pt">52
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">borrowing or lending 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 the 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 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 the Board of Directors by the general
meeting of shareholders in accordance with the Company Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Capital stock</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authorized Capital</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article&nbsp;6 of the Articles of Incorporation of Wacoal Holdings provides that the total number
of shares it is authorized to issue is 500,000,000 shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Distributions of Surplus</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Company Law, distributions of cash or other assets by a joint stock corporation to
its shareholders, so called &#147;dividends,&#148; are referred to as &#147;distributions of Surplus&#148; (&#147;Surplus&#148;
is defined in &#147;Restriction on Distributions of Surplus&#148; below). Subject to certain limitations
described in &#147;Restriction on Distributions of Surplus&#148; below, Wacoal Holdings may make any number of distributions of
Surplus per fiscal year to shareholders or pledgees of record as of March&nbsp;31 of
each year or any other record date set by the Board of Directors of which not less than two weeks&#146;
prior public notice must be given. Distributions of Surplus are required in principle to be
authorized by a resolution of a general meeting of shareholders, but may also be made pursuant to a
resolution of the Board of Directors if all the requirements described in (a)&nbsp;through (c)&nbsp;are met:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Wacoal Holdings&#146; Articles of Incorporation provide that the Board of Directors has
the authority to decide to make distributions of Surplus;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the normal term of office of Wacoal Holdings&#146; directors is not longer than one
year; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Wacoal Holdings&#146; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of Wacoal Holdings, at present, the requirements in (a)&nbsp;and (b)&nbsp;above are met.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal
Holdings is not obligated to pay any dividends that remain unclaimed for a period of three years
after the date on which they first become payable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 shareholders or the 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
</DIV>

<P align="center" style="font-size: 10pt">53
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">date of
the distribution. If a distribution of Surplus is to be made in-kind, Wacoal
Holdings may, pursuant to a resolution of a general meeting of shareholders or
the Board of Directors, as the case may be, grant a right to its shareholders to require Wacoal Holdings 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
shareholders (see &#147;Voting rights&#148; with respect to a &#147;special resolution&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Japan the &#147;ex-dividend&#148; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restriction on Distributions of Surplus</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When Wacoal Holdings makes a distribution of Surplus, it must set aside in its
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 its additional
paid-in capital and legal reserve reaches one-quarter of its stated capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of Surplus at any given time must be calculated in accordance with the following
formula:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">A
&#043; B &#043; C &#043; D &#150; (E &#043; F &#043; G)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the above formula:
</DIV>
<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#147;A&#148;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">=
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the total amount of other capital surplus and other retained earnings, each
such amount being that appearing on Wacoal Holdings&#146; non-consolidated balance sheet as
of the end of the last fiscal year</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#147;B&#148;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">=
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(if Wacoal Holdings has disposed of its treasury stock after the end of the
last fiscal year) the amount of the consideration for such treasury stock received by
Wacoal Holdings less the book value thereof</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#147;C&#148;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">=
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(if Wacoal Holdings has reduced its 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)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#147;D&#148;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">=
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(if Wacoal Holdings has reduced its 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)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#147;E&#148;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">=
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(if Wacoal Holdings has cancelled its treasury stock after the end of the
last fiscal year) the book value of such treasury stock</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#147;F&#148;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">=
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(if Wacoal Holdings has distributed Surplus to its shareholders after the end
of the last fiscal year) the total book value of the Surplus so distributed</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#147;G&#148;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">=
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">certain other amounts set forth in ordinances of the Ministry of Justice,
including (if Wacoal Holdings has reduced Surplus and increased its stated</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">54
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">capital,
additional paid-in capital or legal reserve after the end of the last fiscal year) the
amount of such reduction and (if Wacoal Holdings has distributed Surplus to its
shareholders after the end of the last fiscal year) the amount set aside in its
additional paid-in capital or legal reserve (if any) as required by ordinances of the
Ministry of Justice</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate book value of Surplus distributed by Wacoal Holdings may not exceed a prescribed
distributable amount (the &#147;Distributable Amount&#148;), as calculated on the effective date of such
distribution. The Distributable Amount at any given time shall be equal to the amount of Surplus
less the aggregate of (a)&nbsp;the book value of its treasury stock, (b)&nbsp;the amount of consideration for
any of its treasury stock disposed of by it after the end of the last fiscal year and (c)&nbsp;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 Wacoal Holdings&#146; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Wacoal Holdings has
become, at its option, a company with respect to which the consolidated
balance sheet should also be taken into consideration in the calculation of the Distributable
Amount (<I>renketsu haito kisei tekiyo kaisha</I>), it will be required to further deduct from the amount
of Surplus a certain amount which is calculated based on its non-consolidated and consolidated balance sheets
as of the end of the previous fiscal year as provided by ordinance of the Ministry of Justice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Wacoal Holdings has prepared interim financial statements as described below, and if such
interim financial statements have been approved by the Board of Directors or (if so required by the
Company Law) by a general meeting of 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 its
treasury stock disposed of by it, during the period in respect of which such interim financial
statements have been prepared. Wacoal Holdings 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 Wacoal Holdings must be
audited by its corporate auditors and independent certified public accountants, as required by
ordinances of the Ministry of Justice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General Meeting of Shareholders</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Articles of Incorporation of Wacoal Holdings, an ordinary general meeting of
shareholders of Wacoal Holdings shall be convened in June of each year. In addition, Wacoal
Holdings may hold an extraordinary general meeting of shareholders whenever necessary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice of a shareholders&#146; 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 Company Law, such notice may be given to shareholders by electronic
means, subject to the consent of the relevant shareholders.
</DIV>


<P align="center" style="font-size: 10pt">55
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any shareholder or group of shareholders holding at least 300 voting rights (see &#147;Unit Share
System&#148; below) or one percent of the total number of voting rights for six months or more may
propose a matter to be considered at a general meeting of shareholders and may propose to describe
such matter together with a summary of the proposal to be submitted by shareholder in the notice to
shareholders attending such general meeting, by submitting a written request to a representative
director at least eight weeks prior to the date set for such meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Voting Rights</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder of shares constituting one or more whole units (see &#147;Unit Share System&#148; below) is
entitled to one vote for each whole unit of shares. However, in general, neither Wacoal Holdings
nor any corporate shareholder or certain other entity one-quarter or more of the total voting
rights of which are directly or indirectly held by Wacoal Holdings, has voting rights in respect of
the shares held by Wacoal Holdings or such entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise provided by law or by the Articles of Incorporation of Wacoal Holdings, a
resolution can be adopted at a general meeting of shareholders by a majority of the total number of
voting rights represented at the meeting. Under the Company Law and Wacoal Holdings&#146; Articles of
Incorporation, however, the quorum for the election of directors and corporate auditors is
one-third of the total number of voting rights. Wacoal Holdings&#146; 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. Wacoal
Holdings&#146; shareholders also may cast their votes in writing. Holders of shares who do not attend a
general meeting of shareholders may also exercise their voting rights by electronic means if the
Board of Directors approves such method of exercising voting rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company Law provides that certain important matters shall be approved by a &#147;special
resolution&#148; of a general meeting of shareholders. Under Wacoal Holdings&#146; 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:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) purchase of shares by Wacoal Holdings from a specific shareholder other than Wacoal
Holdings&#146; subsidiary;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) consolidation of shares;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) issuance or transfer of new shares or existing shares held by Wacoal Holdings as
treasury stock to persons other than shareholders at a &#147;specially favorable&#148; price;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) issuance of stock acquisition rights (including those incorporated in bonds with
stock acquisition rights) to persons other than shareholders under &#147;specially favorable&#148;
conditions;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) removal of Wacoal Holdings&#146; corporate auditor;
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)
partial exemption from liability of Wacoal Holdings&#146; directors, corporate
auditors or independent auditors;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) reduction of stated capital (subject to certain exceptions);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)
distribution of Surplus in kind with respect to which shareholders are not
granted the right to require Wacoal Holdings to make a cash
distribution instead of an in-kind
distribution;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) any amendment to Wacoal Holdings&#146; Articles of Incorporation (except for such
amendments that may be made without approval by shareholders under the Company Law);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) transfer of all or a substantial portion of Wacoal Holdings&#146; business;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) acquisition of the business of another company requiring
approval of the shareholders;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) dissolution, merger or consolidation requiring approval of the shareholders;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) corporate split requiring approval of the shareholders; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) establishment of a parent and wholly-owned subsidiary relationship by way of a
share transfer (<I>kabushiki-iten</I>) or share exchange (<I>kabushiki-kokan</I>) requiring approval of the shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rights to be Allotted Shares</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The holders of Wacoal Holdings&#146; shares of capital stock have no pre-emptive rights under its
Articles of Incorporation. Authorized but unissued shares may be issued at such times and upon
such terms as the Board of Directors determines, subject to limitations as to the offering of
new shares at a &#147;specifically favorable&#148; price mentioned under &#147;Voting Rights&#148; above. The Board of
Directors may, however, determine that shareholders of a particular class of stock shall be given
subscription rights regarding a particular issuance of new shares of that class, in which case such
rights must be given on uniform terms to all shareholders of that class of stock as of a record
date of which not less than two weeks&#146; 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&#146;
prior to the date on which such rights expire.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The right to receive allotments of new shares may not be transferred. However, Wacoal
Holdings may allot stock acquisition rights to shareholders without consideration and such stock
acquisition rights are transferable. See &#147;Stock Acquisition Rights&#148; below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Acquisition Rights</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings may issue stock acquisition rights (<I>shinkabu yoyakuken</I>). Holders of stock
acquisition rights are entitled to acquire shares from Wacoal Holdings upon payment of the
applicable exercise price and subject to other terms and conditions thereof. Wacoal Holdings may
also issue bonds with stock acquisition rights (<I>shinkabu yoyakuken-tsuki shasai</I>). The issuance of
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">stock acquisition rights and bonds with stock acquisition rights may be authorized by the
Board of Directors unless it is made under &#147;specially favorable&#148; conditions, as described in
&#147;Voting Rights&#148; above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Liquidation Rights</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a liquidation of Wacoal Holdings, 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Record Date</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March&nbsp;31 of each year is the record date for the determination of shareholders entitled to receive Wacoal
Holdings&#146; year-end dividends and to vote at the ordinary general meeting of shareholders with
respect to the fiscal year ending on such date. In addition, Wacoal Holdings may set a record
date for determining the shareholders and/or beneficial shareholders entitled to other rights and
for other purposes by giving at least two weeks&#146; prior public notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Acquisition by Wacoal Holdings of its Capital Stock</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal
Holdings may acquire its shares of capital stock (i)&nbsp;by soliciting all of its 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, shall be set by an ordinary
resolution of a general meeting of shareholders in advance, and such acquisition shall be effected
pursuant to a resolution of the Board of Directors), (ii)&nbsp;from a specific shareholder other than
any of Wacoal Holdings&#146; subsidiaries (pursuant to a special resolution of a general meeting of
shareholders), (iii)&nbsp;from any of Wacoal Holdings&#146; subsidiaries (pursuant to a resolution of the
Board of Directors), or (iv)&nbsp;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 shareholders or a resolution of the Board of Directors). In the case of (ii)
above, any other shareholder may make a request to Wacoal Holding&#146;s 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).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The total amount of the purchase price of the shares may not exceed the Distributable Amount, as
described in &#147;Distributions of Surplus &#151; Restriction on distributions of Surplus.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company Law permits Wacoal Holdings to hold shares acquired by it as treasury stock.
Treasury stock may be held by Wacoal Holdings for any time period and may be cancelled by
resolution of its Board of Directors. Wacoal Holdings may also transfer shares held
by it as treasury stock to any person, subject to a resolution of its Board of Directors and subject also to
other requirements similar to those applicable to the issuance of new shares. Wacoal Holdings may
also utilize its 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.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">No specific approval by the 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 the Board of Directors or shareholders at Wacoal Holdings&#146; shareholders&#146;
meeting, as the case may be.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Unit Share System</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Wacoal Holdings&#146; Articles of Incorporation, 1,000 shares constitute one &#147;unit.&#148; The
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 Wacoal Holdings&#146; Articles of Incorporation
without approval by the shareholders. The number of shares constituting one unit may not exceed 1,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings&#146; Articles of Incorporation and Share Handling Regulations provide that, in general, no
stock certificates shall be issued with respect to any shares constituting less than
one unit. Consequently, no certificates for shares other than a full unit or an integral multiple
thereof will be issued (except for the purpose of protection of the holders of shares constituting
less than one unit). As the transfer of shares normally requires delivery of the relevant stock
certificates, any fraction of a unit for which no stock certificates are issued will not be
transferable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the unit share system, a shareholder has one vote for each unit of shares held by it.
Shares not constituting a full unit will carry no voting rights and will be excluded for the purposes of
calculating the quorum for voting purposes. Moreover, under Wacoal Holdings&#146; Articles of
Incorporation, holders of shares constituting less than one unit will not have other shareholder
rights, except that such holders may not be deprived of certain rights specified in the Company Law
or an ordinance of the Ministry of Justice, including the right to receive distribution of Surplus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder of shares constituting less than one unit may require Wacoal Holdings to purchase
such shares at their market value. The request of such purchase may not be withdrawn without
Wacoal Holdings&#146; consent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder who owns ADRs evidencing less than 200 ADSs will indirectly own less than a whole
unit. Although, as discussed above, under the unit share system holders of less than a unit have
the right to require Wacoal Holdings to purchase their shares, holders of ADRs evidencing ADSs that
represent other than integral multiples of whole units are unable to withdraw the underlying shares
of capital stock representing less than a unit and, therefore, are unable, as a practical matter,
to exercise the rights to require Wacoal Holdings to purchase such underlying shares. As a result,
access to the Japanese markets by holders of ADRs through the withdrawal mechanism will not be
available for dispositions of shares in lots of less than a unit. The unit share system does not
affect the transferability of ADSs, which may be transferred in lots of any size.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reporting of Substantial Shareholdings</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Securities and Exchange Law of Japan and regulations thereunder, a person or
group of persons beneficially holding more than 5% of the total shares with voting rights (for this
purpose shares issuable upon exercise of stock acquisition rights held by the person or persons are
counted in the calculation of the holding and the total shares in issue) 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
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Miscellaneous</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings&#146; Articles of Incorporation has authorized the adoption of a basic policy for
measures against the acquisition of a substantial shareholding (i.e., defensive measures
against takeovers) (the &#147;Basic Policy&#148;) for the purposes of securing or enhancing corporate value
and the common interests of shareholders. The Board of Directors of Wacoal Holdings has adopted
certain measures (the &#147;Plan&#148;) under the Basic Policy in accordance with the Articles of
Incorporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The outline of the Plan is as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Formulation of Procedures for Implementation of the Plan
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Plan, Wacoal Holdings will demand that any third party (a &#147;Purchaser&#148;) who
launches or proposes a purchase or any similar act (a &#147;Purchase&#148;) provide information in
advance concerning such Purchase, and after Wacoal Holdings ensures sufficient time to
obtain such information and consider such Purchase, Wacoal Holdings will present a plan of the management
of Wacoal Holdings to its shareholders or otherwise negotiate with the Purchaser.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Gratis Allocation of Share Acquisition Rights and Independent Committee
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Purchaser fails to comply with the procedures as prescribed by the Plan and
conducts a Purchase, or in the event of any Purchase by a Purchaser that threatens the
corporate value of Wacoal Holdings and the common interests of its shareholders, Wacoal
Holdings will conduct a gratis allocation of acquisition rights for the subscription of new
shares with terms that prohibit the Purchaser from exercising such rights and with call
rights for the acquisition of new shares from Wacoal Holdings by shareholders other
than the Purchaser (the &#147;Share Acquisition Rights&#148;) at such time and in the manner
prescribed in Article&nbsp;277 et al. of the Company Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall comply with the Regulations of the Independent Committee in order to
prevent the Board of Directors from making an arbitrary decision concerning the trigger or
non-trigger of the gratis allocation of the Share Acquisition Rights or other matters
concerning the acquisition. In addition, Wacoal Holdings shall ensure transparency by
seeking the judgment of an Independent Committee, which will be comprised of members
appointed from (i)&nbsp;outside directors of Wacoal Holdings, (ii)&nbsp;outside corporate auditors of
Wacoal Holdings or (iii)&nbsp;independent experts (experienced company managers, persons with a
governmental background, legal counsel, certified public accountants, academic experts,
etc.) who shall be independent from the executive officers of Wacoal Holdings as well as
through timely disclosure of relative information to its shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">There are no sinking fund provisions relating to Wacoal Holdings.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;Material Contracts.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>D.&nbsp;Exchange Controls.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>E.&nbsp;Taxation.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The discussion below is not intended to constitute a complete analysis of all tax consequences
relating to the acquisition, ownership and disposition of the ADSs. Prospective purchasers of the
ADSs should consult their own tax advisors concerning the tax consequences of their particular
situations.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a general summary of the material U.S. federal and Japanese tax consequences
of the acquisition, ownership and disposition of shares of our common stock or ADSs by an investor
that holds those shares or ADSs as capital assets within the meaning of Section&nbsp;1221 of the
Internal Revenue Code of 1986, as amended (the &#147;Code&#148;). This summary does not purport to address
all the material tax consequences that may be relevant to holders of our common stock or ADSs and
does not take into account the specific circumstances of any particular investors, some of which
(such as tax-exempt entities, banks and financial institutions, insurance companies,
broker-dealers, traders in securities that elect to use a mark-to-market method of accounting for
their securities holdings, investors liable for alternative minimum tax, investors that own or are
treated as owning 10% or more of our voting stock, investors that hold shares of our common stock
or ADSs as part of a straddle, hedge, conversion transaction or other integrated transaction and
investors whose functional currency is not the U.S. dollar) may be subject to special tax rules.
This summary is based on the tax laws of the United States and Japan, judicial decisions, published
rulings, administrative pronouncements and United States Treasury regulations, as in effect on the
date hereof, as well as on the current income tax convention between the United States and Japan,
all of which are subject to change (possibly with retroactive effect), and to differing
interpretations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Holders (as defined below) should note that the Income Tax Treaty between United States
and Japan (the &#147;Treaty&#148;) may apply to income and gain derived from the shares of our common stock
or ADSs. Where relevant, U.S. Holders are urged to confirm with their tax advisors whether they
are entitled to the benefits provided under the Treaty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this discussion, a &#147;U.S. Holder&#148; is any beneficial owner of shares of our
common stock or ADSs that, for U.S. federal income tax purposes, is:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an individual citizen or resident of the United States,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a corporation or other entity taxable as a corporation for U.S. federal income
tax purposes organized in or under the laws of the United States or any political
subdivision thereof,</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an estate the income of which is subject to U.S. federal income tax without
regard to its source, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a trust, if such trust validly elects to be treated as a U.S. person for U.S.
federal income tax purposes, or if (a)&nbsp;a court within the U.S. can exercise primary
supervision over its administration and (b)&nbsp;one or more U.S. persons have the authority
to control all of the substantial decisions of such trust.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a partnership (including for this purpose any entity treated as a partnership for U.S. tax
purposes) is a beneficial owner of shares of our common stock or ADSs, the U.S. tax treatment of a
partner in the partnership will generally depend on the status of the partner and the activities of
the partnership. A holder of shares of our common stock or ADSs that is a partnership and partners
in such partnership should consult their individual tax advisors about the U.S. federal income tax
consequences of holding and disposing of shares of our common stock or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An &#147;Eligible U.S. Holder&#148; is a U.S. Holder that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;is a resident of the United States for purposes of the Treaty, as applicable from time to
time;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;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
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A &#147;Non-U.S. Holder&#148; is any beneficial owner of shares of common stock or ADSs that is not a
U.S. Holder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary does not address any aspects of U.S. federal tax law other than income taxation
and 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 U.S. federal, state
and local and Japanese and other tax consequences of acquiring, owning and disposing of shares 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, taking into account the earlier assumptions, for purposes of the Treaty and for
U.S. federal income and Japanese tax purposes, owners of ADSs will be treated as the owners of the
shares of common stock represented by those ADSs, and exchanges of shares of common stock for ADSs,
and exchanges of ADSs for shares of common stock, will not be subject to U.S. federal income or
Japanese tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Japanese Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the principal Japanese tax consequences (limited to national
taxes) to holders of shares of common stock and of ADSs who are either individuals who are not
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">residents of Japan or non-Japanese corporations without a permanent establishment in Japan
(&#147;non-resident Holders&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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% 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)&nbsp;7% for
dividends due and payable on or before March&nbsp;31, 2008 and (ii)&nbsp;15% for dividends due and payable
thereafter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 depositary or its agent submits two Application Forms (one before
payment of dividends, the other within eight months after Wacoal Holdings&#146; 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
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Holder is entitled to an exemption under the applicable income tax treaty) from the relevant
Japanese tax authority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of shares 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 U.S. and Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>U.S. Federal Income Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>U.S. Holders</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Taxation of Distributions</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion in &#147;Passive Foreign Investment Companies&#148; below, the gross amount of
any distribution made by us in respect of our shares of common stock or ADSs (without reduction for
Japanese withholding taxes) will constitute a taxable dividend to the extent paid out of our
current or accumulated earnings and profits, as determined for U.S. federal income tax purposes.
If you are a non-corporate U.S. Holder, dividends paid to you in taxable years beginning before
January&nbsp;1, 2011, that constitute qualified dividend income will be taxable to you at a maximum tax
rate of 15% provided that you hold our ADSs or common stock for more than 60&nbsp;days during the
120-day period beginning 60&nbsp;days before the ex-dividend date and meet other holding period
requirements. A dividend generally will be included in the gross income of a U.S. Holder when the
dividend is actually or constructively received by the U.S. Holder, in the case of shares of common
stock, or by the depositary, in the case of ADSs. The dividend will not be eligible for the
dividends-received deduction generally allowed to U.S. corporations under the Code. A dividend
paid in Japanese yen will be included in gross income in a U.S. dollar amount based on the Japanese
yen/U.S. dollar exchange rate in effect on the date that dividend is included in the income of the
U.S. Holder, regardless of whether the payment is in fact converted into U.S. dollars. Generally,
any gain or loss resulting from currency exchange fluctuations during the period from the date the
dividend payment is included in the gross income of a U.S. Holder through the date that payment is
converted into U.S. dollars (or otherwise disposed of) will be treated as U.S. source ordinary
income or loss and will not be eligible for the special tax rate applicable to qualified dividend
income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent, if any, that the amount of any distribution received by a U.S. Holder in
respect of shares of our common stock or ADSs exceeds our current and accumulated earnings and
profits, as determined for U.S. federal income tax purposes, the distribution first will be treated
as a tax-free return of the U.S. Holder&#146;s adjusted tax basis in those shares or ADSs, and any
balance in excess of that adjusted tax basis will be treated as capital gain.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions of additional shares of common stock that are made to U.S. Holders with respect
to their shares of common stock or ADSs and that are part of a pro rata distribution to all of our
shareholders generally will not be subject to U.S. federal income tax. The basis of the new shares
of common stock so received will be determined by allocating the U.S. Holder&#146;s basis in the old
shares of common stock or ADSs between the old shares of common stock or ADSs and the new shares of
common stock received, based on their relative fair market values on the date of distribution.
However, the basis of the new shares will be zero if the fair market value of the new shares is
less than 15% of the fair market value of the old shares of common stock or ADSs at the time of
distribution and the U.S. Holder does not make an election to determine the basis of the new shares
by allocation as described above. A U.S. Holder&#146;s holding period in the new shares will generally
include the holding period of the old shares of common stock or ADSs on which the distribution was
made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in
respect of shares of our common stock or ADSs will constitute income from sources outside the
United States, and generally will be treated separately, together with other items of &#147;passive
income&#148; (or, in the case of some U.S. holders, &#147;financial services income&#148;) in computing foreign
tax credit limitations. For taxable years beginning after December&nbsp;31, 2006, the foreign tax
credit limitation categories will consist of only &#147;passive income&#148; and &#147;general category income&#148;.
&#147;Financial services income&#148; may be treated as &#147;generally category income&#148; if the U.S. Holder meets
certain requirements. Special foreign tax credit rules apply to qualified dividend income received
by individuals. Subject to generally applicable limitations under U.S. federal income tax law and
the Treaty, any Japanese withholding tax imposed in respect of the dividend may be claimed as a
credit against the U.S. federal income tax liability of a U.S. Holder (or as a deduction from that
U.S. Holder&#146;s taxable income, if that U.S. Holder elects). To the extent a refund of the Japanese
withholding tax is available to a U.S. Holder, the amount of tax withheld that is refundable may
not be claimed as a credit. U.S. Holder that (i)&nbsp;has held shares of our common stock or ADSs for
less than a specified minimum period during which it is not protected from risk of loss, (ii)&nbsp;is
obligated to make payments related to the dividends, or (iii)&nbsp;holds the shares of common stock or
ADSs in an arrangement in which the holder&#146;s expected economic profit, after non-U.S. taxes, is
insubstantial, will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid
on our shares of common stock or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investors are urged to consult their tax advisors regarding the availability of the foreign
tax credit under their particular circumstances. The Internal Revenue Service (the &#147;IRS&#148;) has
expressed concern that parties to whom ADSs are released may be taking actions that are
inconsistent with the claiming of foreign tax credits by U.S. Holders of ADSs. Accordingly,
investors should be aware that the discussion above regarding the creditability of Japanese
withholding tax on dividends could be affected by future actions that may be taken by the IRS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Taxation of Capital Gains</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion in &#147;Passive Foreign Investment Companies&#148; below, a U.S. Holder&#146;s tax
basis in an ADS generally will equal the U.S. Holder&#146;s cost of that ADS in U.S. dollars. In
general, upon a sale or other disposition of shares of our common stock or ADSs, a U.S. Holder will
recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference
between the U.S. dollar value of the amount realized and the U.S. Holder&#146;s tax basis, also
determined in U.S. dollars, in those shares or ADSs. That gain or loss generally will be capital
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">gain or loss and, if the U.S. Holder&#146;s holding period for those shares or ADSs exceeds one
year, will be long-term capital gain or loss. Some U.S. Holders, including individuals, are
eligible for preferential rates (generally 15%) in respect of long-term capital gain recognized in
taxable years beginning before January&nbsp;1, 2011. A U.S. Holder may deduct any loss resulting from
the sale or exchange of shares or ADSs only against other capital gains. For a U.S. Holder who is
an individual, up to $3,000 of capital loss in excess of capital gains may be deducted against
ordinary income. Excess losses may be carried forward. Any gain or loss recognized by a U.S.
Holder in respect of the sale or other disposition of shares of our common stock or ADSs generally
will be treated as U.S. source income or loss for foreign tax credit purposes, except that a loss
will be treated as foreign source loss to the extent a U.S. Holder received dividends that were
includible in the &#147;financial services income&#148; basket during the 24-month period prior to the sale
or other disposition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Passive Foreign Investment Companies</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is possible that we may be classified as a passive foreign investment company (a &#147;PFIC&#148;)
for U.S. federal income tax purposes for the taxable year ended March&nbsp;31, 2006, or for the current
or future taxable years. If we are classified as a PFIC, U.S. Holders who own our stock or ADSs
during the taxable year in which we become or are a PFIC generally will be subject to increased
U.S. tax liabilities and reporting requirements for that taxable year and all succeeding years,
regardless of whether we continue to meet the income or asset test for PFIC status, although
shareholder elections may apply in certain circumstances. U.S. Holders should consult their own
tax advisors regarding our status as a PFIC and the consequences of an investment in a PFIC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A company is considered a PFIC for any taxable year if either
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;at least 75% of its gross income is passive income, or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;at least 50% of the value of its assets (based on an average of the quarterly values of
the assets during a taxable year) is attributable to assets that produce or are held for the
production of passive income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be treated as owning our proportionate share of the assets and earning our
proportionate share of the income of any other corporation in which we own, directly or indirectly,
more than 25% (by value) of the stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We must make a separate determination each year as to whether we are a PFIC. As a result, our
PFIC status may change. The determination of whether or not we are a PFIC depends on the
composition of our income and assets, including goodwill, from time to time. The composition of
our assets will be affected by the extent to which we increase or reduce our active business assets
and/or our cash, investment securities and other passive assets. In addition, if our actual
acquisitions and capital expenditures do not match our projections, the likelihood that we are or
will be classified as a PFIC may also increase. We cannot assure you that we were not a PFIC for
prior taxable years and cannot predict whether we will be treated as a PFIC or for the current or
any future taxable year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are a PFIC for any taxable year during which you hold stock or ADSs, you will be subject
to special tax rules with respect to any &#147;excess distribution&#148; that you receive and any gain you
realize from a sale or other disposition (including a pledge) of the stock or ADSs, unless you
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">make a &#147;mark-to-market&#148; election as discussed below. Distributions you receive in a taxable
year that are greater than 125% of the average annual distributions you received during the shorter
of the three preceding taxable years or your holding period for the stock or ADSs will be treated
as an excess distribution. Under these special tax rules:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;the excess distribution or gain will be allocated ratably over your holding period for the
stock or ADSs,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;the amount allocated to the current taxable year, and any taxable year prior to the first
taxable year in which we were a PFIC, will be treated as ordinary income, and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;the amount allocated to each other year will be subject to tax at the highest tax rate in
effect for that year and the interest charge generally applicable to underpayments of tax will be
imposed on the resulting tax attributable to each such year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tax liability for amounts allocated to years prior to the year of disposition or &#147;excess
distribution&#148; cannot be offset by any net operating losses, and gains (but not losses) realized on
the sale of the stock or ADSs cannot be treated as capital, even if you hold the stock or ADSs as
capital assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are a PFIC, you may avoid taxation under the rules described above by making a
&#147;qualified electing fund&#148; election to include your share of our income on a current basis, or a
&#147;deemed sale&#148; election once we no longer qualify as a PFIC. However, you may make a qualified
electing fund election only if we agree to furnish you annually with certain tax information, and
we do not presently intend to prepare or provide such information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Alternatively, a U.S. Holder of &#147;marketable stock&#148; in a PFIC may make a mark-to-market
election for stock of a PFIC to elect out of the tax treatment discussed three paragraphs above.
If you make a mark-to-market election for the stock or ADSs, you will include in income each year
an amount equal to the excess, if any, of the fair market value of the stock or ADSs as of the
close of your taxable year over your adjusted basis in such stock or ADSs. You are allowed a
deduction for the excess, if any, of the adjusted basis of the stock or ADSs over their fair market
value as of the close of the taxable year. However, deductions are allowable only to the extent of
any net mark-to-market gains on the stock included in your income for prior taxable years. Amounts
included in your income under a mark-to-market election, as well as gain on the actual sale or
other disposition of the stock or ADSs, are treated as ordinary income. Ordinary loss treatment
also applies to the deductible portion of any mark-to-market loss on the stock or ADSs, as well as
to any loss realized on the actual sale or disposition of the stock or ADSs, to the extent that the
amount of such loss does not exceed the net mark-to-market gains previously included for such stock
or ADSs. Your basis in the stock or ADSs will be adjusted to reflect any such income or loss
amounts. The tax rules that apply to distributions by corporations which are not passive foreign
investment companies would apply to distributions by us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The mark-to-market election is available only for stock which is regularly traded on a
national securities exchange that is registered with the Securities and Exchange Commission or on
Nasdaq, or an exchange or market that the U.S. Secretary of the Treasury determines has rules
sufficient to ensure that the market price represents a legitimate and sound fair market value.
The ADSs are listed on the Nasdaq SmallCap Market. Accordingly, the mark-to-market election would
be available to you if we were to become a PFIC.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid by a PFIC are not &#147;qualified dividend income&#148; for purposes of the preferential
tax rate on qualified dividends discussed above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you hold stock or ADSs in any year in which we are a PFIC, you would be required to file
Internal Revenue Service Form&nbsp;8621 regarding distributions received on the stock or ADSs and any
gain realized on the disposition of the stock or ADSs even if we cease to be a PFIC. U.S. Holders
are urged to consult their tax advisors including the advisability of making &#147;protective&#148; qualified
electing fund election or an election to mark the shares to market on an annual basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Non-U.S. Holders</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Non-U.S. Holder generally will not be subject to any U.S. federal income or withholding tax
in respect of distributions on shares of our common stock or ADSs unless the Non-U.S. Holder
conducts a trade or business within the United States and the distributions are effectively
connected with that trade or business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Non-U.S. Holder generally will not be subject to U.S. federal income tax in respect of gain
recognized on a sale or other disposition of our shares of common stock or ADSs, unless (i)&nbsp;the
gain is effectively connected with a trade or business conducted by the Non-U.S. Holder within the
United States, or (ii)&nbsp;the Non-U.S. Holder is an individual who was present in the United States
for 183 or more days in the taxable year of the disposition and other conditions exist.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends and gains that are effectively connected with a Non-U.S. Holder&#146;s conduct of a trade
or business in the United States generally will be subject to tax in the same manner as they would
be for U.S. Holder. Effectively connected dividends and gains received by a corporate Non-U.S.
Holder may also be subject to an additional branch profits tax at a 30% rate or a lower tax treaty
rate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special rules may apply a Non-U.S. Holder resident of a country with a treaty with the United
States requiring the dividend income or gains to be attributable to U.S. permanent establishment in
order to be subject to U.S. federal income tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Backup Withholding and Information Reporting</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, information reporting requirements will apply to dividends in respect of our
shares of common stock or the ADSs or the proceeds received on the sale, exchange or redemption of
shares 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, and a backup withholding
tax may apply (at a 28% rate through 2010) to such amounts if the U.S. Holder fails to provide an
accurate taxpayer identification number or to report interest and dividends required to be shown on
its U.S. federal income tax returns. The amount of any backup withholding from a payment to a U.S.
Holder will be allowed as credit against the U.S. Holder&#146;s U.S. federal income tax liability
provided that the appropriate returns are filed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup
withholding by providing certification of its foreign status to the payor, under penalties of
perjury, on IRS Form W-8BEN.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>F.&nbsp;Dividends and Paying Agents.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>G.&nbsp;Statement by Experts.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>H.&nbsp;Documents on Display.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Documents referred to in this Annual Report on Form 20-F that have been filed with the SEC and
Wacoal Holdings&#146; 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&#146;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&#146;s website
(located at <U>www.sec.gov</U>) and from commercial document retrieval services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, documents referred to in this 20-F filing may be inspected at our Kyoto
headquarters, located at 29 Nakajima-cho, Kisshoin, Minami-ku, Kyoto 601-8530, Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>I.&nbsp;Subsidiary Information.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 11. Quantitative and Qualitative Disclosures about Market Risk.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Market Risk Exposures</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to market risk, including changes in foreign exchange rates, interest rates and
prices of marketable securities and marketable investments. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equity Price Risk</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We hold marketable securities for short-term investment. In general, highly-liquid and
low-risk instruments are preferred in the portfolio. Marketable investments included in other
assets are held as longer-term investments. Our investments in equity securities consist mainly of
stocks of financial institutions. We do not hold marketable securities and marketable investments
for trading purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maturities and fair values of such marketable securities and marketable investments were as
follows:
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">Due</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">Due</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">Due</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">Due</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">after</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">from</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">from</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">from</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">Due</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">ended</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">one to</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">two to</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">three to</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">four to</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">after</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">March 31,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">Debt</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">Due within</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">two</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">three</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">four</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">five</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">five</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">Equity</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">securities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">one year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">securities</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,492</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fair Value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,842</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Foreign Exchange Risk</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our international operations expose us to the risk of changes in foreign currency exchange
rates. To manage this exposure, we may utilize foreign exchange forward contracts. At March&nbsp;31,
2006, we had no open forward currency contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Interest Rate Risk</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our exposure to the market risk of changes in interest rates relates primarily to our debt
obligations. We have long-term debt with both fixed rates and floating rates. Our interest rate
risks are not material due to the amounts of short-term borrowings (&#165;6,392&nbsp;million) and long-term
debt (&#165;66&nbsp;million).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables provide information about our financial obligations that are sensitive to
changes in interest rates.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Long-term debt (including due within one year)<BR>
Wacoal Holdings and subsidiaries</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Year ended</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23">Expected maturity date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Estimated</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">March 31, 2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000">(Yen in millions and percent)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">fair value</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2008</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2011</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Thereafter</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lease Obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<A name="114"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 12. Description of Securities Other than Equity Securities.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">70
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="115"></A>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II</B>
</DIV>

<DIV align="left">
<A name="116"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 13. Defaults, Dividend Arrearages and Delinquencies.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>

<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 14. Material Modifications to Rights of Security Holders and Use of Proceeds.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>





<DIV align="left">
<A name="118"></A>
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 15. Controls and Procedures.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required by Securities Exchange Act Rule&nbsp;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&#146;s disclosure controls and
procedures as defined in Securities Exchange Act Rule&nbsp;13a-15(e) and 15d-15(e). Based on that
evaluation, our principal executive officer and principal financial officer concluded that our
company&#146;s disclosure controls and procedures were effective as of the end of the period covered by
this report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required by Securities Exchange Act Rule&nbsp;13a-15(d), our management, including our principal
executive officer and principal financial officer, also conducted an evaluation of our company&#146;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&#146;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.
</DIV>


<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16A. Audit Committee Financial Expert.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of corporate auditors of Wacoal Holdings has determined that Wacoal Holdings does
not have an &#147;audit committee financial expert&#148; as defined in Item&nbsp;16A of Form 20-F serving on the
board of corporate auditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings believes that the combined knowledge, skills and experience of the board of
corporate auditors, and their authority to engage outside experts as they deem appropriate to
provide them with advice on matters related to their responsibilities, enable them, as a group, to
act effectively in the fulfillment of their tasks and responsibilities required under the
Sarbanes-Oxley Act of 2002.
</DIV>

<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16B. Code of Ethics.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings has adopted a code of ethics that applies to its principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing
similar functions. A copy of Wacoal Holdings&#146; code of ethics is attached as an exhibit to this
annual report on Form 20-F.
</DIV>

<P align="center" style="font-size: 10pt">71
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="121"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16C. Principal Accountant Fees and Services.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Fees and Services of Deloitte Touche Tohmatsu.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deloitte Touche Tohmatsu (DTT)&nbsp;has served as Wacoal Holdings&#146; principal accountant for the
three years ended March&nbsp;31, 2006. The following table presents fees for audit and other services
rendered by DTT for the years ended March&nbsp;31, 2005 and March&nbsp;31, 2006.
</DIV>












<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DTT Fees for Audit and Other Services</B><BR>
(Yen in millions)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000">Years ended March 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit Related Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">180</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Audit Fees </I>include fees billed for professional services rendered for audits of Wacoal
Holdings&#146; annual consolidated financial statements, reviews of consolidated quarterly statements
and statutory audits of the Company and its subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Audit Related Fees </I>include fees billed for assurance and related services, such as due
diligence, accounting consultations and audits in connection with mergers and acquisitions,
employee benefit plan audits, internal control reviews and consultations concerning financial
accounting and reporting standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tax Fees </I>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, tax services for employee benefit plans and assistance with respect to
requests for rulings from tax authorities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Fees </I>include fees billed for services related to consultation on matters such as
compliance with the Sarbanes-Oxley Act of 2002.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Policy on Pre-Approval of Audit and Non-Audit Services of Independent Auditors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to audit and audit related services, each year we require our independent
auditors to submit to us its annual audit plan, including its 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<P align="center" style="font-size: 10pt">72
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="122"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16D. Exemptions from the Listing Standards for Audit Committees.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>


<P align="center" style="font-size: 10pt">73
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">







<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART III</B>
</DIV>

<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 17. Financial Statements.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this item is set forth beginning on page F-2 of this annual
report.
</DIV>

<DIV align="left">
<A name="126"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 18. Financial Statements.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have responded to Item&nbsp;17 in lieu of responding to this item.
</DIV>

<DIV align="left">
<A name="127"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 19. Exhibits.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits filed as part of this Annual Report.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">1.1</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Articles of Incorporation of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">1.2</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Share Handling Regulations of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">1.3</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Regulations of the Board of Directors of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">1.4</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Regulations of the Board of Corporate Auditors of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">2.1</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Specimen common stock certificate of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">2.2</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Form of Deposit Agreement dated as of January&nbsp;15, 1977, as amended and restated as of
October&nbsp;1, 1982, among Wacoal Corp., ChaseMellon Shareholder Services, as Depositary,
and all Holders from time to time of American Depositary Receipts issued thereunder
(Previously filed)</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">8.1</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Subsidiaries of the Registrant</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">11.1</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Code of Ethics for Directors, Corporate Officers and Employees of Wacoal Corporation
(incorporated by reference to the annual report on Form&nbsp;20-F filed on July&nbsp;8, 2005)</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">12.1</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Certification of the principal executive officer pursuant to Section&nbsp;302 of the
Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">12.2</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Certification of the chief financial officer pursuant to Section&nbsp;302 of the
Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">13.1</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Certification of the principal executive officer pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt"><!-- Blank Space -->
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="right">&nbsp;</TD>
    <TD valign="top" align="right">13.2</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:0px; text-indent:-0px">Certification of the chief financial officer pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">74
</DIV>


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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Wacoal Holdings Corp. and Subsidiaries</B>
</DIV>

<DIV align="left">
<A name="129"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Index</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Page</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#200">REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">F-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">FINANCIAL STATEMENTS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#202">Consolidated
Balance Sheets, March&nbsp;31, 2006 and 2005</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">F-3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#203">Consolidated
Statements of Income, Years Ended March&nbsp;31, 2006, 2005 and
2004</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">F-4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#204">Consolidated Statements of Comprehensive Income, Years Ended March&nbsp;31, 2006,
2005 and 2004</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">F-5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#205">Consolidated Statements of Shareholders&#146; Equity, Years Ended March&nbsp;31, 2006,
2005 and 2004</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">F-6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#206">Consolidated
Statements of Cash Flows, Years Ended March&nbsp;31, 2006, 2005 and
2004</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">F-7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#207">Notes
to Consolidated Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">F-9</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SCHEDULES:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Schedules are omitted because they are not applicable, not required, or because the required
information is included in the consolidated financial statements or notes thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Financial statements and summarized financial information of 50%-or-less-owned persons are not
presented because they are in the aggregate not significant.
</DIV>



<P align="center" style="font-size: 10pt">F-1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="200"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To the Board of Directors and Shareholders of

</DIV>

<DIV align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings Corp.</DIV>



<DIV align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Kyoto, Japan:</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have audited the accompanying consolidated balance sheets of Wacoal Holdings Corp. and
Subsidiaries (the &#147;Companies&#148;) as of March&nbsp;31, 2006 and 2005, and the related consolidated
statements of income, comprehensive income, shareholders&#146; equity and cash flows for each of the
three years in the period ended March&nbsp;31, 2006, all expressed in Japanese yen. These financial
statements are the responsibility of the Companies&#146; management. Our responsibility is to express
an opinion on these financial statements based on our audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. The
Companies are not required to have, nor were we engaged to perform, an audit of their internal
control over financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Companies&#146; internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain information required by Statement of Financial Accounting Standards No.&nbsp;131, &#147;Disclosures
about Segments of an Enterprise and Related Information&#148; has not been presented in the accompanying
financial statements. In our opinion, presentation of segment information concerning the Company&#146;s
operations is required for a complete presentation of the Company&#146;s consolidated financial
statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, except for the omission of segment information, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of
Wacoal Holdings Corp. and Subsidiaries as of March&nbsp;31, 2006 and 2005, and the results of their
operations and their cash flows for each of the three years in the period ended March&nbsp;31, 2006 in
conformity with accounting principles generally accepted in the United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As discussed in Note 15 to the consolidated financial statements, on June&nbsp;2, 2006, Wacoal Holdings
Corp. acquired 49% of the shares of Peach John Co., Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">June&nbsp;16, 2006
</DIV>


<P align="center" style="font-size: 10pt">F-2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Wacoal Holdings Corp. and Subsidiaries</B>

</DIV>

<DIV align="left">
<A name="202"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Consolidated Balance Sheets<BR>
March&nbsp;31, 2006 and 2005</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Note 2)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT ASSETS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99,038</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Time deposits and certificates of deposit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,293</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,893</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">169,331</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Marketable securities (Note 3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,699</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">278,337</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Notes and accounts receivable:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Trade notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,899</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Trade accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">197,412</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Allowance for returns and doubtful receivables (Note 4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,778</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,214</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,647</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories (Note 5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">230,975</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes (Note 11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,347</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,915</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">942,569</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">PROPERTY, PLANT AND EQUIPMENT:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,978</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,567</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Buildings and building improvements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">505,005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Machinery and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,373</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Construction in progress</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">801,132</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40,616</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(39,827</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(345,727</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">455,405</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OTHER ASSETS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investments in affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,474</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investments (Note 3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">448,723</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes (Note 11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,444</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Lease deposits and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,830</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,062</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">664,471</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TOTAL</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">242,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">226,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,062,445</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">LIABILITIES AND SHAREHOLDERS&#146; EQUITY</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CURRENT LIABILITIES:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term bank loans (Note 6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">54,409</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Notes and accounts payable:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Trade notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,704</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Trade accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,296</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,533</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued payroll and bonuses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,797</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,373</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current portion of long-term debt (Notes 6 and 14)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">290</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,990</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302,392</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">LONG-TERM LIABILITIES:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term debt (Notes 6 and 14)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">272</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Liability for termination and retirement benefits (Note 8)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,622</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,343</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes (Note 11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109,312</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,380</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,893</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152,307</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">MINORITY INTERESTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">COMMITMENTS AND CONTINGENCIES (Note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">SHAREHOLDERS&#146; EQUITY (Note 9):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock, no par value -
authorized, 500,000,000 and 229,900,000 shares in 2006 and 2005;
issued 144,016,685 shares in 2006 and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,870</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214,862</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Retained earnings (Note 15)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,145,003</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accumulated other comprehensive income (loss) (Note 10):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(736</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,820</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,264</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized gain on securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121,816</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total accumulated other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less treasury stock at cost - 100,752 and 72,245 shares in 2006
and 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(117</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(73</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(996</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">186,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,587,291</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TOTAL</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">242,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">226,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,062,445</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See notes to consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Wacoal Holdings Corp. and Subsidiaries</B>

</DIV>

<DIV align="left">
<A name="203"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Consolidated Statements of Income<BR>
Years Ended March&nbsp;31, 2006, 2005 and 2004</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Note 2)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NET SALES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">164,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">160,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">163,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,397,021</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OPERATING COSTS AND EXPENSES (INCOME):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">717,756</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">593,463</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment charges on long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,226</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss on sale or disposal of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,209</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Government subsidy (Note 8)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Special retirement related expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,020</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating costs and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,385,674</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OPERATING INCOME</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,347</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OTHER INCOME (EXPENSES):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,813</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(79</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(113</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(477</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividend income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,196</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on sale or exchange of investments (Note 3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,096</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment charges on investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(65</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(618</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(142</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(553</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other &#151; net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(108</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(919</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other income (expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,156</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">INCOME BEFORE INCOME TAXES, EQUITY IN NET INCOME OF AFFILIATED COMPANIES, AND MINORITY INTERESTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,503</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">INCOME TAXES (Note 11):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,817</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,809</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,254</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,398</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,419</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">INCOME BEFORE EQUITY IN NET INCOME OF AFFILIATED COMPANIES, AND MINORITY INTERESTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,279</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,084</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EQUITY IN NET INCOME OF AFFILIATED COMPANIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">871</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,551</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">MINORITY INTERESTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(360</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(142</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,622</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NET INCOME</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EARNINGS PER SHARE (Note 13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EARNINGS PER AMERICAN DEPOSITARY RECEIPT (5 shares of common stock) (Note 13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.83</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See notes to consolidated financial statements.

</DIV>

<P align="center" style="font-size: 10pt">F-4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Wacoal Holdings Corp. and Subsidiaries</B>

</DIV>

<DIV align="left">
<A name="204"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Consolidated Statements of Comprehensive Income<BR>
Years Ended March&nbsp;31, 2006, 2005 and 2004</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Note 2)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NET INCOME</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,013</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OTHER COMPREHENSIVE INCOME (LOSS), NET OF
TAX (Note 10):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,565</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,251</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gains (losses)&nbsp;on securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(266</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,935</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minimum pension liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OTHER COMPREHENSIVE INCOME</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,186</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">COMPREHENSIVE INCOME</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">14,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">116,199</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See notes to consolidated financial statements.

</DIV>

<P align="center" style="font-size: 10pt">F-5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Wacoal Holdings Corp. and Subsidiaries</B>

</DIV>

<DIV align="left">
<A name="205"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Consolidated Statements of Shareholders&#146; Equity<BR>
Years Ended March&nbsp;31, 2006, 2005 and 2004</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shares of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Outstanding</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Additional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Accumulated Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Common Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Paid-in</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Retained</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Treasury</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Capital</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Income (Loss)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BALANCE, APRIL 1, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">131,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(9,086</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(43</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends paid, &#165;68 per 5 shares of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,978</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase of treasury stock for retirement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,600</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,449</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase of treasury stock &#151; other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BALANCE, MARCH 31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends paid, &#165;75 per 5 shares of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,159</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase of treasury stock &#151; other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BALANCE, MARCH 31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143,944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(73</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends paid, &#165;100 per 5 shares of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,878</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase of treasury stock &#151; other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BALANCE, MARCH 31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">134,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(117</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars (Note 2)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Accumulated</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Additional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Paid-in</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Retained</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Treasury</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Capital</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Income (Loss)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BALANCE, MARCH 31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">112,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">214,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,145,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(621</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends paid, $0.85 per 5 shares of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,499</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase of treasury stock &#151; other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(375</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BALANCE, MARCH 31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">112,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">214,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,145,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">115,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(996</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See notes to consolidated financial statements.

</DIV>

<P align="center" style="font-size: 10pt">F-6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Wacoal Holdings Corp. and Subsidiaries</B>

</DIV>

<DIV align="left">
<A name="206"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Consolidated Statements of Cash Flows<BR>
Years Ended March&nbsp;31, 2006, 2005 and 2004</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Note 2)</TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">OPERATING ACTIVITIES:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net income to net cash provided by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,222</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,809</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,254</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,398</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss on sale or disposal of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,209</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Impairment charges on long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,226</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Government subsidy</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Gain on sale or exchange of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,656</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(571</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(932</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,096</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Impairment charges on investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">553</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Undistributed earnings of affiliates, less dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(674</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(448</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(726</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,737</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Changes in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">(Increase) in notes and accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,296</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,350</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,032</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Decrease (increase)&nbsp;in inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(878</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,124</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,332</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Increase in other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(958</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,046</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(346</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,155</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">(Decrease) increase in notes and accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,145</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">(Decrease) increase in liability for termination and retirement benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,068</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,603</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Increase (decrease)&nbsp;in accrued expenses, income taxes and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,655</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(657</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,190</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(459</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,120</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">INVESTING ACTIVITIES:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales and redemption of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,757</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payments to acquire marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,525</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(51,111</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56,019</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(183,223</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">513</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,367</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,478</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,456</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,418</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,338</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,954</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payments to acquire investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,905</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,985</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(776</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(67,288</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payments to acquire investments in affiliated companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,690</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Increase) decrease in other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(325</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(749</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net cash provided by (used in) investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,069</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,528</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,612</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">FINANCING ACTIVITIES:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase (decrease)&nbsp;in short-term bank loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(409</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,481</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from issuance of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayments of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(116</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(380</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(158</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(987</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,456</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(375</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividends paid on common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,878</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,159</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,978</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,498</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,428</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,138</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29,179</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(194</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,052</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NET INCREASE (DECREASE)&nbsp;IN CASH AND CASH EQUIVALENTS &#151; (Forward)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(4,302</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3,248</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(36,619</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">(Continued)
</DIV>



<P align="center" style="font-size: 10pt">F-7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Wacoal Holdings Corp. and Subsidiaries</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Consolidated Statements of Cash Flows<BR>
Years Ended March&nbsp;31, 2006, 2005 and 2004</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Note 2)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NET INCREASE (DECREASE)&nbsp;IN CASH AND
CASH EQUIVALENTS &#151; (Forward)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(4,302</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3,248</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(36,619</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205,950</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CASH AND CASH EQUIVALENTS, END OF YEAR</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">19,893</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">27,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">169,331</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ADDITIONAL CASH FLOW INFORMATION:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash paid for:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">477</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,846</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,594</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NONCASH INVESTING ACTIVITIES:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fair value of marketable
securities received in exchange
for certain other marketable
securities with a recorded
amount of &#165;172&nbsp;million ($1,464
thousand) in 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,244</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See notes to consolidated financial statements.
</DIV>



<P align="center" style="font-size: 10pt">F-8
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Wacoal Holdings Corp. and Subsidiaries</B>
</DIV>


<DIV align="left">
<A name="207"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Notes to Consolidated Financial Statements</B>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Basis of Financial Statements </I></B>- On October&nbsp;1, 2005, Wacoal Holdings Corp. (the &#147;Company&#148;) that
was formerly known as &#147;Wacoal Corp.&#148; spun off all of the Company&#146;s business into a new wholly
owned subsidiary and changed over to a holding company structure. The Company&#146;s 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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
except for the omission of segment information as required by Statement of Financial
Accounting Standards (&#147;SFAS&#148;) No.&nbsp;131, &#147;Disclosures about Segments of an Enterprise and
Related Information&#148;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Consolidation </I></B>- The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiaries (collectively, the &#147;Companies&#148;). All significant intercompany
transactions and balances are eliminated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certain foreign subsidiaries of the Company have a fiscal year ending December&nbsp;31. The
accounts of those subsidiaries are included in the Company&#146;s consolidated financial statements
based on the subsidiaries&#146; fiscal year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Investments in affiliated companies where the Company&#146;s ownership is 20% to 50% are accounted
for using the equity method.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Use of Estimates &#151; </I></B>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Cash and Cash Equivalents </I></B>- 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, which can be withdrawn at face value at any time without diminution of
principal.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Foreign Currency Translation </I></B>- Assets and liabilities of international subsidiaries have been
translated to Japanese yen at period-end exchange rates and income and expenses have been
translated using weighted average exchange rates for the period. Translation adjustments are
included in other comprehensive income (loss), a separate component of shareholders&#146; 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 the
consolidated statements of income.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Marketable Securities and Investments </I></B>- The Companies classify their marketable debt and
equity securities as available-for-sale and carry them at fair value with a corresponding
recognition of unrealized holding gains or losses (net of tax) in other comprehensive income
(loss), a separate component of shareholders&#146; 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.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-9
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If decline in the fair value of marketable securities is determined to be other than
temporary, an impairment charge is recorded in the consolidated statements of income. The
Companies 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.
The Companies may also consider other factors, including their ability and intent to hold the
applicable investment securities until maturity, and the severity of the decline in fair
value.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Inventories </I></B>- Inventories are stated at the lower of cost or market, cost being substantially
determined on the first-in, first-out method for raw materials and the average cost method for
work in process and finished products.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Property, Plant and Equipment </I></B>- Property, plant and equipment is stated at cost less
accumulated depreciation. Depreciation of property, plant and equipment is computed by the
declining-balance method, except for buildings acquired on or after April&nbsp;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:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="59%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Buildings and building improvements:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">5 - 50&nbsp;years (Mainly 38&nbsp;years)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Machinery and equipment:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">5 - 20&nbsp;years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Impairment of Long-Lived Assets </I></B>- 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Companies recorded &#165;614&nbsp;million ($5,226 thousand) and &#165;2,574&nbsp;million in impairment charges
on long-lived assets for the years ended March&nbsp;31, 2006 and 2004, respectively, which resulted
from the impairment of primarily a building related to the Companies&#146; branch office in Nagoya
in 2006 and land and buildings related to a warehouse in 2004. No impairment charges were
recorded in the year ended March&nbsp;31, 2005. In 2004, as a result of changes in business plans
in which the Companies reconsidered the intended use of the land and warehouse, the Companies
evaluated the recoverability of the assets and recognized an impairment. The fair values of
the land and warehouse were determined by an independent appraisal. In 2006, the Company
determined to close its Nagoya office and to demolish the building. The office was closed on
March&nbsp;31, 2006 and the Companies recognized an impairment of the asset to be abandoned.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Derivatives </I></B>- Derivative instruments, including certain derivative instruments embedded in
other contracts are accounted for in accordance with SFAS No.&nbsp;133, &#147;Accounting for Derivative
Instruments and Hedging Activities&#148;, SFAS No.&nbsp;138, &#147;Accounting for Certain Derivative
Instruments and Certain Hedging Activities an Amendment of FASB Statement No.&nbsp;133,&#148; and SFAS
No.&nbsp;149, &#147;Amendment of Statement 133 on Derivative Instruments and Hedging Activities.&#148;
Changes in the fair value of a derivative are recorded in other comprehensive income (loss)&nbsp;or
in earnings, depending on its intended use. Changes in fair value of foreign currency forward
exchange contracts designated as fair value hedges of recognized assets and liabilities and
firm commitments are recognized in income. Changes in fair value of forward exchange
contracts designated and qualifying as cash flow hedges of recognized assets and liabilities
and firm commitments are reported in accumulated other comprehensive income. These amounts
are reclassified into income in the same period as the hedged items affect income.<BR></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-10
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Asset Retirement Obligations &#151; </I></B>The Companies have leased facilities obligations from
contractual commitments to remove leasehold improvements and return the property to a
specified condition when the lease terminates. The Companies did not recognize any asset
retirement obligations associated with leased facilities. Lease contracts have automatic
renewal articles and the Companies currently intend to operate these facilities indefinitely
and are therefore unable to reasonably estimate the fair value of any legal obligations the
Companies may have because of indeterminate closure dates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Termination and Retirement Plans </I></B>- Termination and retirement benefits are accounted for in
accordance with SFAS No.&nbsp;87, &#147;Employers&#146; Accounting for Pensions&#148;. Provisions for termination
and retirement benefits include those for directors and corporate auditors of the Companies.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As allowed under SFAS No.&nbsp;88 &#147;Employers&#146; Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits&#148;, the Companies do not recognize
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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Advertising Expenses &#151; </I></B>Advertising costs are expensed as incurred. Advertising expenses for
the years ended March&nbsp;31, 2006, 2005 and 2004 were &#165;11,888&nbsp;million ($101,192 thousand),
&#165;13,241&nbsp;million and &#165;12,878&nbsp;million, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Revenue Recognition &#151; </I></B>The Companies recognize revenue on sales to retailers when (1)
persuasive evidence of an arrangement exists, (2)&nbsp;delivery has occurred resulting in transfer
of title and risk of loss, (3)&nbsp;the sales price is fixed or determinable, and (4)
collectibility is reasonably assured. Retail sales are recognized at the point of sale. The
Companies establish allowances for estimated returns based on historical experience. As for
consignment sales, the Companies recognize revenue when the products are sold to the ultimate
customer.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Shipping and Handling Costs &#151; </I></B>Shipping and handling costs are included in selling, general,
and administrative expenses.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Income Taxes &#151; </I></B>The provision for income taxes is determined under the liability method
pursuant to SFAS No.&nbsp;109, &#147;Accounting for Income Taxes&#148;. Under this method, deferred tax
assets and liabilities are determined for temporary differences between the financial
statements and tax bases of assets and liabilities 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Provisions are made for taxes on undistributed earnings and cumulative translation adjustments
of foreign subsidiaries whose earnings are not deemed to be permanently invested.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Reclassifications &#151; </I></B>Certain reclassifications have been made to the prior years&#146; financial
statements to conform with the current year&#146;s presentation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Recent Accounting Pronouncements:</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Inventory Costs, an Amendment of ARB No.&nbsp;43, Chapter&nbsp;4 </I></B><B>- </B>In November&nbsp;2004, the Financial
Accounting Standards Board (&#147;FASB&#148;) issued SFAS No.&nbsp;151, &#147;Inventory Costs, an amendment of ARB
No.&nbsp;43, Chapter&nbsp;4&#148;. This statement clarifies the accounting for abnormal amounts of idle
facility expense, freight, handling costs and wasted material. Additionally, SFAS No.&nbsp;151
requires that allocation of fixed production overhead to inventory be based on the normal
capacity of the production facilities. The provisions of SFAS No.&nbsp;151 are applicable to
inventory costs incurred during fiscal years beginning after June&nbsp;15, 2005. The Companies do
not expect the adoption of SFAS No.&nbsp;151 to have a material effect on the consolidated
financial statements.<BR></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-11
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Exchanges of Nonmonetary Assets, an Amendment to Accounting Principle Board (&#147;APB&#148;) Opinion
No.&nbsp;29 &#151; </I></B>In December&nbsp;2004, the FASB issued SFAS No.&nbsp;153, &#147;Exchanges of Nonmonetary Assets, an
Amendment to APB Opinion No.&nbsp;29&#148;. SFAS No.&nbsp;153 eliminates the exception to measure exchanges
at fair value for exchanges of similar productive assets and replaces it with a general
exception for exchange transactions that do not have commercial substance. SFAS No.&nbsp;153 is
effective for nonmonetary exchanges in fiscal periods beginning after June&nbsp;15, 2005. The
Companies do not expect the adoption of SFAS No.&nbsp;153 to have a material effect on the
consolidated financial statements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Accounting Changes and Error Corrections </I></B>- In May&nbsp;2005, the FASB issued SFAS No.&nbsp;154,
&#147;Accounting Changes and Error Corrections &#151; a replacement of APB Opinion No.&nbsp;20 and FASB
Statement No.&nbsp;3&#148; (&#147;SFAS 154&#148;). SFAS 154 replaces APB Opinion No.&nbsp;20, &#147;Accounting Changes&#148; and
SFAS No.&nbsp;3 &#147;Reporting Accounting Changes in Interim Financial Statements,&#148; and provides
guidance on the accounting for and reporting of accounting changes and error corrections.
SFAS 154 establishes retrospective application, or the latest practicable date, as the
required method for reporting a change in accounting principle and the reporting of a
correction of an error. SFAS 154 is effective for accounting changes and corrections of
errors made in fiscal years beginning after December&nbsp;15, 2005. The Companies do not expect
the adoption of SFAS No.&nbsp;154 to have a material effect on the consolidated financial
statements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments </I></B>- In
November&nbsp;2005, the FASB issued FSP FAS 115-1 and FAS 124-1, &#147;The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments&#148; (&#147;FSP 115-1&#148;).
FSP 115-1 provides guidance on determining when investments in certain debt and equity
securities are considered impaired and whether that impairment is other-than-temporary and on
measuring such impairment loss. FSP 115-1 also includes accounting considerations subsequent
to the recognition of an other-than-temporary impairment and requires certain disclosures
about unrealized losses that have not been recognized as other-than-temporary impairments.
FSP 115-1 is required to be applied to reporting periods beginning after December&nbsp;15, 2005.
The companies do not expect the adoption of FSP 115-1 to have a material effect on the
consolidated financial statements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>TRANSLATION INTO U.S. DOLLAR STATEMENTS</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 &#165;117.48 to $1, the buying rate for yen in New York City at March&nbsp;31, 2006.
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.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-12
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>3</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>MARKETABLE SECURITIES AND INVESTMENTS</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair value of marketable debt and equity securities is based on quoted market prices at
March&nbsp;31, 2006 and 2005. The fair values of the marketable debt and equity securities were as
follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Gain</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loss</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Corporate debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,591</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,690</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Mutual fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,530</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">National debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,888</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">32,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">32,699</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noncurrent:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">26,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">51,842</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Gain</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loss</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Corporate debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">19,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">19,926</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,497</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Mutual fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,404</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,436</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">National debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,537</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">43,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">43,396</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noncurrent:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">30,674</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Gain</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loss</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Corporate debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">115,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">115,688</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,458</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Mutual fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,072</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">National debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,119</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">277,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,562</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">278,337</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noncurrent:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">216,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">225,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">441,284</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-13
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Gross unrealized holding losses and fair values of marketable debt and equity securities which
had been in a continuous unrealized loss position for less than 12&nbsp;months at March&nbsp;31, 2006
and 2005 were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loss</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loss</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Corporate debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">42,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,488</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Mutual fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">579</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">National debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">152,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noncurrent:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,098</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loss</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Corporate debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Mutual fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noncurrent:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">There were no securities which had been in a continuous unrealized loss position over 12
months at March&nbsp;31, 2006 and 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Future maturities of debt securities classified as available-for-sale at March&nbsp;31, 2006 were
as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Due within one year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">153,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">153,456</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Due after one year through five years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,364</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Due after five years through ten years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,149</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">31,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">31,246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">265,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">265,969</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-14
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Proceeds from sales of available-for-sale securities were &#165;2,903&nbsp;million ($24,711 thousand),
&#165;2,697&nbsp;million and &#165;2,631&nbsp;million for the years ended March&nbsp;31, 2006, 2005 and 2004,
respectively. The gross realized gains on the sales of available-for-sale securities for the
years ended March&nbsp;31, 2006, 2005 and 2004 were &#165;510&nbsp;million ($4,341 thousand), &#165;572&nbsp;million
and &#165;932&nbsp;million, respectively. The gross realized losses on the sales of available-for-sale
securities for the years ended March&nbsp;31, 2005 and 2004 were &#165;9&nbsp;million and &#165;4&nbsp;million,
respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the year ended March&nbsp;31, 2006, the Companies exchanged certain equity securities for
other securities. The Companies recorded the newly received securities at fair value and
recognized a gain of &#165;1,149&nbsp;million ($9,780 thousand) in the year ended March&nbsp;31, 2006. No
such exchanges were made in the years ended March&nbsp;31, 2005 and 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Companies recognized impairment charges on investments of &#165;65&nbsp;million ($553 thousand),
&#165;618&nbsp;million and &#165;142&nbsp;million in the years ended March&nbsp;31, 2006, 2005 and 2004, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Investments in non-marketable equity securities for which there is no readily determinable
fair value were accounted for using the cost method and aggregated &#165;874&nbsp;million ($7,440
thousand) and &#165;805&nbsp;million at March&nbsp;31, 2006 and 2005, respectively. Each investment in
non-marketable equity securities is reviewed annually for impairment or upon the occurrence of
an event or change in circumstances that may have a significant adverse effect on the carrying
value of the investment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>VALUATION AND QUALIFYING ACCOUNTS</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Information related to the Companies&#146; allowance for doubtful receivables was as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">613</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charged to costs and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">247</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balances written-off/reversed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(77</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(77</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Information related to the Companies&#146; allowance for returns was as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,233</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charged to costs and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,864</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balances utilized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,142</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,991</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,066</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,233</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,864</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-15
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INVENTORIES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Inventories at March&nbsp;31, 2006 and 2005 were as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Finished products</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">22,507</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">22,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">191,581</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Work in process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,047</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,347</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">27,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">26,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">230,975</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SHORT-TERM BANK LOANS AND LONG-TERM DEBT</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Short-term bank loans at March&nbsp;31, 2006 and 2005 consisted of the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unsecured bank loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">54,409</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Collateralized bank loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>

<TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
<TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
<TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">54,409</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The weighted average annual interest rates on short-term bank loans as of March&nbsp;31, 2006 and
2005 were 0.5% and 1.1%, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Long-term debt at March&nbsp;31, 2006 and 2005 consisted of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unsecured loans principally from banks and an
insurance company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lease obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">562</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">562</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">290</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">272</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The annual maturities of long-term debt at March&nbsp;31, 2006 were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Millions</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Year Ending March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">290</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">272</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">562</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-16
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In 2005, assets pledged as collateral for short-term bank loans and long-term debt were
property, plant and equipment with a net book value of &#165;224&nbsp;million. In 2006, no assets were
pledged as collateral.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As is customary in Japan, the Companies maintain deposit balances with banks and certain
financial institutions with which they have short- or long-term borrowings. Such deposit
balances are not legally or contractually restricted as to withdrawal.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, collateral must be given if requested by a lending bank and such bank has the
right to offset cash deposited with it against any long- or short-term debt or obligation that
becomes due and, in case of default and certain other specified events, against all other debt
payable to the bank. The Companies have never received such requests for additional
collateral.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>LEASES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Companies lease most of store premises, some of distribution centers, and certain
equipments. These operating leases expire at various dates through 2013. Most leases have
automatic renewal articles and allow the Companies to extend the lease term beyond the initial
base period, subject to terms agreed to at lease inception. Future minimum rental commitments
on non-cancelable operating leases are presented below:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Year Ending March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">676</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,754</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,490</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,511</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">534</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,546</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,358</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,561</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">42,220</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Rental expenses were &#165;3,844&nbsp;million ($32,720 thousand), &#165;3,703&nbsp;million and &#165;3,174&nbsp;million for
the years ended March&nbsp;31, 2006, 2005 and 2004, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>TERMINATION AND RETIREMENT PLANS</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Employee Retirement Plans </I></B>- The Companies sponsor termination and retirement benefit plans
that cover substantially all employees. Benefits are based on the employee&#146;s years of
service, position in the Companies 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Companies have a contributory retirement plan, several partially funded plans administered
by independent trustees and several unfunded termination plans administered by the Companies.
Benefits are usually paid in a lump sum at the earlier of termination or retirement, although
periodic payments are available under certain conditions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The retirement plans provide 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&#146;s
termination or the mandatory retirement age.<BR></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-17
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Companies use a March&nbsp;31 measurement date for the majority of its plans. The
weighted-average assumptions used as of March&nbsp;31, in computing the benefit obligation
liabilities shown above were as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rate of increase in future compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The weighted-average assumptions used as of March&nbsp;31, in computing the net periodic benefit
cost shown above were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected long-term rate of return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rate of increase in future compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Our wholly owned subsidiary, Wacoal Corp.&#146;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&nbsp;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. For other plans, similar indices and methods are used.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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 50.0%, and
other investments of 17.0%, which was changed in 2006. Asset allocation at March&nbsp;31, 2005 was
equity securities of 60.0%, debt securities of 22.0% and other investments of 18.0%.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The Companies&#146; investment strategy is to maintain actual asset weightings within a preset
range of target allocations. The Companies&#146; 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. This asset allocation differed from the existing
asset allocation at March&nbsp;31, 2006 as disclosed below due to a rapid increase in the fair
market value of equity securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The asset allocation at March&nbsp;31, 2006 and 2005 was as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="74%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">57.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">35.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">25.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Life insurance company general accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The Company applied for an exemption from the obligation to pay benefits for future employee
services related to the substitutional portion in accordance with the Defined Benefit Pension
Plan Law enacted in April&nbsp;2002 and received approval from the government in January&nbsp;2003. In
January&nbsp;2004, the Company received approval for exemption of the benefit obligation for past
service related to the substitutional portion. In September&nbsp;2004, the substitutional portion
of the benefit obligation and related plan assets were transferred to the government.<BR>
</DIV>

<P align="center" style="font-size: 10pt">F-18
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">In accordance with the Emerging Issue Task Force (&#147;EITF&#148;) Issue 03-2, &#147;Accounting for the
Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund
Liabilities&#148; (&#147;EITF 03-2&#148;), the Company accounted for the entire separation process upon
completion of the transfer to the government of the substitutional portion of the benefit
obligation and related plan assets as the culmination of a series of steps in a single
settlement transaction. The transfer resulted in the Company recording a subsidy from the
government of &#165;7,100&nbsp;million representing the difference between the substitutional portion of
the accumulated benefit obligation and the related plan assets. In addition, the Company
recorded a gain from derecognition of previously accrued salary progression of &#165;1,716&nbsp;million,
and a settlement loss from recognition of actuarial losses of &#165;2,644&nbsp;million in the year ended
March&nbsp;31, 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The following provides a reconciliation of benefit obligations, plan assets and funded status
of the plans:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in benefit obligation:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Benefit obligation at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">36,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">54,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">310,529</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,146</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Participants&#146; contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Actuarial gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,113</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,906</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prior service liabilities incurred due to plan amendment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,833</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(49,650</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Benefits paid from plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(281</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(218</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,392</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Settlement paid from plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,361</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,846</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,097</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Settlement paid by the Companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(287</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(354</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,443</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Return of substitutional portion of employee pension
fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,594</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Benefit obligation at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">278,235</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in plan assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fair value of plan assets at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,513</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">241,539</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Actual return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,581</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Employer contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,682</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,829</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Participants&#146; contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Benefit payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(281</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(218</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,392</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Settlement payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,361</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,846</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,097</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Return of substitutional portion of employee pension
fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,777</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fair value of plan assets at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">305,243</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Funded status:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Funded status at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,173</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,008</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrecognized net actuarial gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">769</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,327</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,546</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrecognized prior service benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,192</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net amount recognized in long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">38,730</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">F-19
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Net periodic benefit costs for the Companies&#146; plans consisted of the following for the year
ended March&nbsp;31:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest cost on projected benefit obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,146</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(608</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(629</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(642</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,176</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Derecognition of previously accrued salary
progression</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,716</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Settlement (gain)&nbsp;loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(256</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,179</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,346</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">In July&nbsp;2005, the Company amended its retirement plan to change the interest rate used to
determine periodic pension payments. Before the amendment, the interest rate was fixed at
4.3%. Under the amended plan, the interest rate is floating and determined based on the
interest rate of the Japanese government bond within the range of 2.0% to 5.0%. The resulting
prior service benefit is being amortized using the straight-line method over 12&nbsp;years.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The accumulated benefit obligation for all domestic defined benefit plans was &#165;30,691&nbsp;million
($261,244 thousand) and &#165;33,615&nbsp;million at March&nbsp;31, 2006 and 2005, respectively.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts recognized in the consolidated
balance sheets consist of &#151; Accrued
benefit cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">4,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">6,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">38,730</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The aggregate projected benefit obligation, accumulated benefit obligation and aggregate fair
value of plan assets for the plans with accumulated benefit obligation in excess of plan
assets at March&nbsp;31, 2005 were &#165;33,454&nbsp;million, &#165;30,610&nbsp;million and &#165;27,824&nbsp;million,
respectively. There were no material plans with accumulated benefit obligation in excess of
plan assets at March&nbsp;31, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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
&#165;2,360&nbsp;million ($20,089 thousand) to their plans in the year ending March&nbsp;31, 2007.<BR>
</DIV>

<P align="center" style="font-size: 10pt">F-20
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The following benefit payments, which reflect expected future service, as appropriate, are
expected to be paid as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="74%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Year Ending March 31</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11,551</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,764</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,985</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,488</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,666</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">2012 - 2016</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,612</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Companies also provide additional benefits to employees that elect to participate in the
Companies&#146; early retirement program. Retirement benefits of &#165;364&nbsp;million ($3,098 thousand),
&#165;718&nbsp;million and &#165;167&nbsp;million were paid in addition to normal benefits and charged to
&#147;selling, general and administrative&#148; for the years ended March&nbsp;31, 2006, 2005 and 2004,
respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In November&nbsp;2005, the Company announced a special voluntary retirement plan to eliminate
approximately 300 positions to improve the labor structure at March&nbsp;31, 2006. Employees who
would be more than 50&nbsp;years-old at March&nbsp;31, 2006 could apply to this program. As of March
31, 2006, the Company had eliminated 362 positions and paid the special benefit of &#165;6,931
million ($58,998 thousand). In March&nbsp;2006, Fukushima Wacoal Sewing Corp., a subsidiary of the
Companies, terminated its operation and paid a special termination benefit of &#165;590&nbsp;million
($5,022 thousand) to its employees. Those payments were also charged to special retirement
related expenses. In addition to those charges, a gain on settlement of &#165;256&nbsp;million ($2,179
thousand) was credited to selling, general and administrative.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Termination Plan for Directors and Corporate Auditors </I></B>- The Company and certain subsidiaries
had 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&nbsp;2005, the Company rescinded its
termination plan for directors and corporate auditors upon the approval of shareholders&#146;
meeting. The amount of benefit were fixed by individuals as of June&nbsp;29, 2005 and will be
frozen until the retirement of directors and corporate auditors. The outstanding liability at
March&nbsp;31, 2006 was &#165;397&nbsp;million ($3,380 thousand) and was recorded in other long-term
liabilities. Subsidiaries still maintain plans for their directors and corporate auditors.
In accordance with EITF 88-1, the subsidiaries record 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 liability for termination
benefits for directors and corporate auditors at March&nbsp;31, 2006 and 2005 was &#165;72&nbsp;million ($613
thousand) and &#165;615&nbsp;million, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SHAREHOLDERS&#146; EQUITY</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Through May&nbsp;1, 2006, Japanese companies are subject to the Commercial Code of Japan (the
&#147;Code&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Code requires that all shares of common stock be issued with no par value and at least 50%
of the issue price of new shares is required to be recorded as common stock and the remaining
net proceeds are required to be presented as additional paid-in capital, which is included in
capital surplus. The Code permits Japanese companies, upon approval of the Board of
Directors, to issue shares to existing shareholders without consideration by way of a stock
split. Such issuance of shares generally does not give rise to changes within the
shareholders&#146; accounts.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-21
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Code also provides that an amount of 10% or more of the aggregate amount of cash dividends
and certain other appropriations of retained earnings associated with cash outlays applicable
to each period (such as bonuses to directors) shall be appropriated as a legal reserve (a
component of retained earnings) until the total of such reserve and additional paid-in capital
equals 25% of common stock. The amount of total legal reserve and additional paid-in capital
that exceeds 25% of the common stock may be available for dividends by resolution of the
shareholders after transferring such excess in accordance with the Code. In addition, the
Code permits the transfer of a portion of additional paid-in capital and legal reserve to the
common stock by resolution of the Board of Directors. The Company&#146;s legal reserve amount,
which is included in retained earnings, totals &#165;4,252&nbsp;million ($36,193 thousand) and &#165;4,209
million as of March&nbsp;31, 2006 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Code allows Japanese companies to purchase treasury stock and dispose of such treasury
stock upon resolution of the Board of Directors. The aggregate purchased amount of treasury
stock cannot exceed the amount available for future dividends plus the amount of common stock,
additional paid-in capital or legal reserve that could be transferred to retained earnings or
other capital surplus other than additional paid-in capital upon approval of such transfer at
the annual general meeting of shareholders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition to the provision that requires an appropriation for a legal reserve in connection
with the cash outlays, the Code also imposes certain limitations on the amount of capital
surplus and retained earnings available for dividends. The amount of capital surplus and
retained earnings available for dividends under the Code was &#165;110,061&nbsp;million ($936,849
thousand) as of March&nbsp;31, 2006, based on the amount recorded in the Company&#146;s general books of
account.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Dividends are approved by the shareholders at a meeting held subsequent to the end of the
fiscal year to which the dividends are applicable. Semiannual interim dividends may also be
paid upon resolution of the Board of Directors, subject to certain limitations imposed by the
Code.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On May&nbsp;1, 2006, a new corporate law (the &#147;Corporate Law&#148;) became effective, which reformed and
replaced the Code with various revisions that would, for the most part, be applicable to
events or transactions which occur on or after May&nbsp;1, 2006 and for the fiscal years ending on
or after May&nbsp;1, 2006. The significant changes in the Corporate Law that affect financial and
accounting matters are summarized below;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(a)&nbsp;Dividends<BR><BR>

Under the Corporate Law, 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 such as; (1)&nbsp;having the Board of Directors, (2)&nbsp;having independent
auditors, (3)&nbsp;having the Board of Corporate Auditors, and (4)&nbsp;the term of service of the
directors is prescribed as one year rather than two years of normal term by its articles of
incorporation, the Board of Directors may declare dividends (except for dividends in kind) if
the company has prescribed so in its articles of incorporation. 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 above criteria under the Corporate Law, even though such companies have an audit
committee instead of the Board of Corporate Auditors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to
shareholders subject to a certain limitation and additional requirements.<BR></TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-22
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. Under the Code,
certain limitations were imposed on the amount of capital surplus and retained earnings
available for dividends. The Corporate Law also 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 &#165;3&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(b)&nbsp;Increases/decreases and transfer of common stock, reserve and surplus
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Corporate Law 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 Code, the aggregate amount of additional paid-in capital and
legal reserve that exceeds 25% of the common stock may be made available for dividends by
resolution of the shareholders. Under the Corporate Law, the total amount of additional
paid-in capital and legal reserve may be reversed without limitation of such threshold. The
Corporate Law 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(c)&nbsp;Treasury stock and treasury stock acquisition rights
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Corporate Law 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Corporate Law also provides that companies can purchase both treasury stock acquisition
rights and treasury stock.
</DIV>


<P align="center" style="font-size: 10pt">F-23
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>10.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>OTHER COMPREHENSIVE INCOME (LOSS)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The changes in the components of accumulated other comprehensive income (loss)&nbsp;were reported net
of income taxes as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="34" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Pre-Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(Expense)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Net</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Pre-Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(Expense)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Net</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Pre-Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(Expense)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Net</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Credit</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Credit</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Credit</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(261</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(325</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(1,686</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(1,565</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized gain (loss)&nbsp;on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized holding gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,531</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(334</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(221</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,781</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,588</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Reclassification adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(816</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(484</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(76</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(45</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net unrealized gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,199</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(410</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(266</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,844</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,677</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minimum pension liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(666</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,725</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,339</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(5,460</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(505</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">19,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(8,448</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,451</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Pre-Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(Expense)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Net</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Credit</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">28,473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,222</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,251</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized gain (loss)&nbsp;on securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized holding gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(47,080</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,054</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Reclassification adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,946</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,119</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net unrealized gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44,254</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,935</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">138,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(46,476</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">92,186</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>11.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INCOME TAXES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income before income taxes, equity in net income of affiliated companies, and minority interests
is summarized as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">39,964</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,229</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(710</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(259</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,461</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29,503</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Income taxes are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,719</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,098</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,817</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(1,845</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3,196</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(15,705</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(131</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(1,809</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(3,254</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(15,398</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,419</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">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&nbsp;31, 2006, 2005 and 2004:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Normal Japanese statutory rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">42.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase in taxes resulting from:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Permanently non-deductible expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Change in valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Undistributed earnings of foreign subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional tax charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Differences in subsidiaries&#146; tax rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Tax exemption</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Tax loss on investment in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other &#151; net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effective tax rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">42.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">48.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">55.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">In the year ended March&nbsp;31, 2004, the Companies were assessed with additional income taxes
plus interest of &#165;760&nbsp;million as a result of an income tax audit for the fiscal years ended
March&nbsp;31, 1998 through 2003 conducted by the Japanese tax authorities.
</DIV>

<P align="center" style="font-size: 10pt">F-25
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The approximate effect of temporary differences and tax loss carryforwards that gave rise to
deferred tax balances at March&nbsp;31, 2006 and 2005 were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Assets</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Assets</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Assets</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Liabilities</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sales returns</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,037</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for doubtful receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventory valuation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued bonuses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intercompany profits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Valuation loss on investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">624</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on sales of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,922</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Undistributed earnings of foreign subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,114</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gain on securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,301</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net realized gain on exchange of equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,557</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capitalized supplies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">343</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Enterprise taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued vacation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pension expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax loss carryforwards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other temporary differences</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">769</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">305</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123,731</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147,199</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,651</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,645</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,053</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">109,678</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">147,199</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">A valuation allowance was recorded against the deferred tax assets, primarily related to loss
carryforwards, of certain domestic and foreign subsidiaries. The valuation allowance increased
by &#165;6&nbsp;million ($51 thousand) and &#165;460&nbsp;million for the years ended March&nbsp;31, 2006 and 2005,
respectively, and decreased by &#165;14&nbsp;million for the year ended March&nbsp;31, 2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">At March&nbsp;31, 2006, certain subsidiaries had loss carryforwards which are available to offset
future taxable income of such subsidiaries expiring as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Millions</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Year Carryforward Expires</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">979</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">979</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,520</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,133</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,397</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2012</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,780</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2013</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,320</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Indefinitely until utilized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,162</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">84,270</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The portion of the undistributed earnings of foreign subsidiaries which are deemed to be
permanently invested amounted to &#165;5,758&nbsp;million ($49,013 thousand) at March&nbsp;31, 2006. It is not
practicable to determine the unrecognized deferred tax liability on these earnings.
</DIV>

<P align="center" style="font-size: 10pt">F-26
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>12.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>RELATED PARTY TRANSACTIONS</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Companies purchase merchandise from numerous suppliers throughout the world, including
certain affiliates of the Companies. The Companies purchased merchandise from affiliates in
the amount of &#165;1,811&nbsp;million ($15,415 thousand), &#165;1,805&nbsp;million, and &#165;2,437&nbsp;million in the
fiscal years ended March&nbsp;31, 2006, 2005 and 2004. The accounts payable to affiliates were &#165;26
million ($221 thousand) and &#165;2&nbsp;million at March&nbsp;31, 2006 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Companies also sell supplies, materials and products to certain affiliates. Aggregate
sales to affiliates were &#165;1,494&nbsp;million ($12,717 thousand), &#165;1,679&nbsp;million, and &#165;1,259&nbsp;million
in fiscal years ended March&nbsp;31, 2006, 2005 and 2004. The accounts receivable from affiliates
were &#165;176&nbsp;million ($1,498 thousand) and &#165;286&nbsp;million at March&nbsp;31, 2006 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>13.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>EARNINGS PER SHARE AND AMERICAN DEPOSITARY RECEIPT</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company accounts for its earnings per share in accordance with SFAS No.&nbsp;128, &#147;Earnings per
Share.&#148; Basic net income per share has been computed by dividing net income available to
common shareholders by the weighted-average number of common shares outstanding during each
year. Fully diluted income per share is not computed as there are no common stock
equivalents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The computation of earnings per American Depositary Receipt (&#147;ADR&#148;), each ADR representing 5
shares of common stock, is based on the weighted average number of common shares outstanding.
The average number of common shares outstanding used in the computations was 143,933,607
shares for 2006, 143,956,284 shares for 2005 and 146,226,674 shares for 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>14.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Fair Value of Financial Instruments &#151; </I></B>The carrying amount of cash and cash equivalents and
short term bank loans approximates fair value because of the short maturities of these
instruments. The fair values of current and noncurrent marketable securities, as presented in
Note 3, are primarily estimated based on quoted market prices for these securities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair value of long-term debt including current portion at March&nbsp;31, 2006 and 2005 was &#165;66
million ($562 thousand) and &#165;160&nbsp;million, respectively. These fair values are based on
comparisons of instruments with similar terms and maturities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Forward Currency Exchange Contracts </I></B>- The Company occasionally uses forward currency exchange
contracts to manage its exposure to foreign currency fluctuation on the transactions dominated
in foreign currencies. At March&nbsp;31, 2005, the notional amount of its open forward currency
contract was for the purchase of $3,000 thousand U.S. dollars. The Company recorded the
changes in the fair value of the derivative contract of &#165;10&nbsp;million in other income since it
was not designated as a hedge in the year ended March&nbsp;31, 2005. No derivative contact was
outstanding as of March&nbsp;31, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>Concentration of Credit Risk &#151; </I></B>The Companies&#146; business consists primarily of sales of women&#146;s
intimate apparel to a large number of diverse customers in the Japanese retail industry, which
include well established department stores. The Company&#146;s management believes that no
concentration of credit risk existed at March&nbsp;31, 2006.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-27
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>15.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUBSEQUENT EVENT</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On June&nbsp;2, 2006, the Company entered into an agreement to purchase 49% of the shares of Peach
John Co., Ltd. Peach John Co., Ltd. is engaged in the mail-order sales of women&#146;s apparel and
various other apparel products. The purchase price is &#165;14,994&nbsp;million ($127,630 thousand).
Results for recent fiscal years were as follows;</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">16,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,471</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,096</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,162</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The Board of Directors of the Company intends to propose for approval at the shareholders&#146;
meeting to be held on June&nbsp;29, 2006, payment of a cash dividend of 100 ($0.85) per 5 shares of
common stock to holders of record as of March&nbsp;31, 2006 for the year then ended (aggregate
amount of 2,878&nbsp;million ($24,498 thousand)).
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 6pt">* * * * * *
</DIV>



<P align="center" style="font-size: 10pt">F-28
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left">
<A name="128"></A>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>SIGNATURES</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wacoal Holdings hereby certifies that it meets all of the requirements for filing on Form 20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its
behalf.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5" align="center">WACOAL HOLDINGS<BR>
(Registrant)<BR>
&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Ikuko Otani
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Ikuo Otani&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">General Manager, Corporate Planning&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Date: July&nbsp;7, 2006

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="130"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>INDEX OF EXHIBITS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Articles of Incorporation of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Share Handling Regulations of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Regulations of the Board of Directors of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Regulations of the Board of Corporate Auditors of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Specimen common stock certificate of the Registrant (English Translation)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Form of Deposit Agreement dated as of January&nbsp;15, 1977, as amended and restated as of
October&nbsp;1, 1982, among Wacoal Corp., ChaseMellon Shareholder Services, as Depositary,
and all Holders from time to time of American Depositary Receipts issued thereunder
(Previously filed)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">8.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Subsidiaries of the Registrant</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">11.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Code of Ethics for Directors, Corporate Officers and Employees of Wacoal Corporation
(incorporated by reference to the annual report on Form&nbsp;20-F filed on July&nbsp;8, 2005)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">12.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of the principal executive officer pursuant to Section&nbsp;302 of the
Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">12.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of the chief financial officer pursuant to Section&nbsp;302 of the
Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of the principal executive officer pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of the chief financial officer pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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WACOAL HOLDINGS CORP.
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED
MARCH 31, 2006
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
TO
OR
o
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
0-11743
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)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of class)
American Depositary Receipts (each representing 5 shares of such Common Stock)
(Title of class)
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:
144,016,685 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 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 financial statement item the registrant has elected to follow.
Item17
þ
Item18
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
Table of Contents
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that are based on our current
expectations, assumptions, estimates and projections about our company and our industry. The
forward-looking statements are subject to various risks and uncertainties. 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 our development and
sale of products, the expansion and operation of our SPA (Specialty store retailer of Private label
Apparel) store network, our sales activities through catalog and Internet channels, the
implementation of our CAP 21 strategic plan through strategic investments, acquisitions and other
initiatives, continued development of our overseas business and operations, developments in our
product sourcing and manufacturing practices and strategies, sales efforts, expenses, outcomes of
contingencies and financial results. 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 information contained in such sections 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. You should understand that it is not
possible to predict or identify all such factors.
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.
Table of Contents
CERTAIN REFERENCES
As used in this annual report, 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 year 2006" refers
to the Company's fiscal year ended March 31, 2006, and other fiscal years are referred to in a
corresponding manner.
CURRENCIES AND EXCHANGE RATES
We publish our financial statements in Yen. In this annual report, 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 in U.S. dollars at the rate indicated or at any other rate. The noon
buying rate was ¥115.65 to $1.00 on July 5, 2006.
TABLE OF CONTENTS
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 Wacoal Holdings
13
ITEM 4A. Unresolved Staff Comments
25
ITEM 5. Operating and Financial Review and Prospects
25
ITEM 6. Directors, Senior Management and Employees
38
ITEM 7. Major Shareholders and Related Party Transactions
46
ITEM 8. Financial Information
48
ITEM 9. The Offer and Listing
49
ITEM 10. Additional Information
50
ITEM 11. Quantitative and Qualitative Disclosures about Market Risk
69
ITEM 12. Description of Securities Other than Equity Securities
70
PART II
ITEM 13. Defaults, Dividend Arrearages and Delinquencies
71
ITEM 14. Material Modifications to Rights of Security Holders and Use of Proceeds
71
ITEM 15. Controls and Procedures
71
ITEM 16A. Audit Committee Financial Expert
71
ITEM 16B. Code of Ethics
71
ITEM 16C. Principal Accountant Fees and Services
72
ITEM 16D. Exemptions from the Listing Standards for Audit Committees
73
ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
73
PART III
ITEM 17. Financial Statements
74
ITEM 18. Financial Statements
74
ITEM 19. Exhibits
74
SIGNATURES
Index to Consolidated Financial Statements
F-1
INDEX OF EXHIBITS
EX-1.1 Articles of Incorporation of the Registrant (English Translation)
EX-1.2 Share Handling Regulations of the Registrant (English Translation)
EX-1.3 Regulations of the Board of Directors of the Registrant (English Translation)
EX-1.4 Regulations of the Board of Corporate Auditors of the Registrant (English Translation)
EX-2.1 Specimen common stock certificate of the Registrant (English Translation)
EX-8.1 Subsidiaries of the Registrant
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
Table of Contents
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, 2006, 2005, 2004, 2003 and 2002. The selected consolidated income
statement data for the fiscal years ended March 31, 2006, 2005 and 2004, and the selected
consolidated balance sheet data as of March 31, 2006 and 2005, 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 Form 20-F. In
addition, the following table presents selected consolidated income statement data for the fiscal
years ended March 31, 2003 and 2002, and selected consolidated balance sheet data as of March 31,
2004, 2003 and 2002, derived from Wacoal Holdings' audited Consolidated Financial Statements not
included in this Form 20-F.
1
Table of Contents
(Yen in millions and U.S. Dollars in thousands, unless otherwise indicated)
Year ended/as of March 31,
2006
2005
2004
2003
2002
Net sales
¥
164,122
$
1,397,021
¥
160,968
¥
163,155
¥
163,709
¥
162,829
Operating income
1,333
11,347
11,766
3,016
7,264
7,186
Net income
2,821
24,013
6,790
2,902
2,898
4,983
Working capital
1
75,208
640,177
85,330
89,951
90,910
90,295
Total assets
242,296
2,062,445
226,196
224,803
218,105
223,985
Capital stock
13,260
112,870
13,260
13,260
13,260
13,260
Shareholders' equity
186,475
1,587,291
175,746
170,758
160,839
168,205
Long-term debt (including
capital leases)
32
272
99
122
455
463
Per American Depositary
Share (5 shares of common
stock):
Net income (basic and
fully diluted)
98
0.83
236
99
97
166
Cash dividends
declared:
Japanese Yen
100
—
100
75
68
68
U.S. dollars
—
0.85
0.93
0.72
0.58
0.51
Weighted average number of
shares of common stock
outstanding (thousands)
143,934
143,934
143,956
146,227
148,772
149,986
1.
"Working capital" means the amount of "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 ¥115.65 to $1.00 on July 5, 2006.
Year ended March 31,
Yen exchange rates per U.S. dollar
1
2006
2005
2004
2003
2002
Period end
2
117.48
107.22
104.18
118.07
132.70
Average rate during period
3
113.67
107.28
112.75
121.10
125.13
Highest rate during period
120.93
114.30
120.55
133.40
134.77
Lowest rate during period
104.41
102.26
104.18
115.71
116.55
2
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Yen exchange rates
Highest rate
Lowest rate
per U.S. dollar
during period
during period
February 2006
118.95
115.82
March 2006
119.07
115.89
April 2006
118.66
113.79
May 2006
113.46
110.07
June 2006
116.42
111.66
July 2006 (through July 5)
115.65
114.92
1.
All figures have been derived from figures released through the web site 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 Wacoal Holdings, and a material decline in the trading price of our
common stock and American Depositary Shares, or ADSs.
Continued weak consumer spending in Japan would hurt our business
During fiscal year 2006, the Japanese market accounted for approximately 88% of our sales, and
we expect that our sales in Japan will account for approximately an equivalent proportion of our
sales in fiscal year 2007. As a result, we believe that the general level of consumer spending in
Japan has a significant impact on our sales and profitability. Consumer spending in Japan was
generally weak for a prolonged period prior to fiscal year 2006, which we believe had a negative
impact on our sales and profitability during such period. Although consumer spending showed some
recovery in fiscal year 2006, we do not know whether such recovery will continue, and we do not
expect that any continued recovery in consumer spending in Japan — including spending in our core
women's intimate apparel market — will be significant enough to result in material increases in our
sales. We believe that this environment will make it more difficult for us to increase our sales
and profitability.
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Continued difficulties faced by department stores and other general retailers in Japan would hurt our business
In fiscal year 2006, a substantial majority of our total sales were made to department stores,
general merchandise stores and other general retailers in Japan. Although we are attempting to
increase our sales made through our own SPA (Specialty store retailer of Private label Apparel)
stores, our catalog business and our Internet operations, we expect that the large majority of our
total sales will continue to be made through department stores and other general retailers in Japan
for the foreseeable future
.
In recent years, many 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, and high debt levels. A large number of prominent
Japanese general retailers have suffered significant declines in sales and profitability, and some
of these companies have become insolvent. Although a number of general retailers have announced
restructuring plans and other efforts to improve their profitability and performance, the outlook
for the sector remains uncertain, and poor performance in the sector could persist.
Continued weakness in the general merchandise retail sector in Japan could cause our business
and financial performance and condition to materially suffer for a number of reasons. For example,
it will be difficult for us to increase our sales if the performance of our general retail
customers does not improve, because we make most of our sales through these customers. The failure
of one or more of our important general retail customers could materially harm our business due to
the immediate loss of sales formerly represented by a failed retailer and our potential inability
to collect some or all of our outstanding accounts receivable from that retailer. In addition,
increased consolidation in the Japanese general retail sector may allow our customers to increase
their bargaining power in negotiating pricing and other terms of trade with us, which could hurt
our business and performance.
Our success depends on our ability 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 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 sales, operations and financial
condition.
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. Our brand image may suffer if merchandise misjudgments or similar problems, such as the
temporary recall of our
3-D NAMI NAMI
summer 2005 campaign product due to a defect, cause consumers
to believe that we are not able to offer attractive fashions and top-quality products. If
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any event were to occur that harms our reputation for producing high-quality products, our
sales, operations and financial condition would materially suffer.
We may not be able to increase sales of our products designed for younger women and mature women
We believe that our future sales growth and profitability will depend in part on our ability
to increase our sales of innerwear and other products to younger women and mature women. Increased
sales to younger women are important to increase our market reach and develop brand loyalty with
consumers at a relatively early age, while sales to mature women will be increasingly important as
Japan's population ages and mature women become a growing proportion of our total market.
To achieve these sales goals, we are implementing a strategy of selling apparel aimed at
younger women (in addition to other consumers) through our own SPA specialty retail stores. We
also believe that our recently announced strategic alliance with Peach John will help us develop
and market a broader range of innerwear products that are attractive to younger women. We are
attempting to increase sales to mature women through special product lines (such as our La Vie
Aisée and Gra-P intimate apparel lines) that are targeted to mature women. However, we cannot
assure you that our efforts to achieve consistent and profitable sales growth from these targeted
consumers will be successful. For example, risks that may negatively affect our efforts to sell
more products to younger women include intense competition for these consumers from lower-priced
intimate apparel and from other specialty retail store operators, our relative inexperience in
managing our own stores and the greater need for more fashionable products for younger women, which
may increase the risk of predicting and reacting to fashion trends and other product development
issues.
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.
We review our inventories on a regular basis for their salability and for indications of
obsolescence to determine if a write down to market value is necessary. The revaluation of
inventories is based on the age of inventories, likelihood of obsolescence, actual product
movements, changes in market demand, and other factors. 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 depend in large part on our ability to reduce costs
Reducing our costs of conducting business is a key element of our strategy to improve our
profitability and business performance. In recent years we have taken certain steps intended to
5
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reduce our costs, and we expect to continue these efforts. For example, to improve the efficiency
of our product distribution system, we have reduced the number of our distribution centers from 18
in 1998 to 5 as of March 31, 2006. In addition, we are seeking to produce or otherwise source more
of our apparel in China, Vietnam and other lower-cost countries. We also expanded our early
retirement program and have taken other steps to reduce our labor costs in Japan.
However, 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. For instance, most of our intimate apparel products are aimed at the higher
end of the market and require high quality fabric, which often must be custom made to our
specifications. Although in fiscal year 2006 we produced 27.2% of our products on a revenue basis
in China, Vietnam and other lower-cost countries, there is a shortage of fabric suppliers in these
countries that can meet our requirements for high quality fabric, and we expect this shortage to
continue. Also, workforce restructuring and similar measures may require us to obtain the support
of labor unions and other constituencies and to make severance payments and incur other costs,
which may harm our financial performance. For example, we incurred severance and retirement
expenses of ¥7,521 million in connection with our expanded early retirement program and the closure
of one of our factories during the fiscal year ended March 31, 2006.
Our SPA specialty retail store network may not be successful
As of June 30, 2006 we had a total of 98 SPA specialty retail stores, including 5 factory
outlet stores. Our target is to expand our SPA store network to approximately 105 stores by March
2007. Through our SPA specialty retail stores, 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 SPA 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 SPA 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.
•
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
SPA 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.
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•
We opened our first SPA store in 2002. This limited period of operational
history makes it difficult for us to evaluate the performance of our SPA stores to
date, and to estimate whether we will achieve success in the future.
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 margins on our 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. 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.
It may be difficult for us to attract and retain highly qualified personnel
Our business success depends significantly on our ability to attract, train and retain
qualified personnel. The competition for qualified personnel in Japan is intensifying due to
factors such as increased demand for labor as a result of improved economic conditions, and a
gradual reduction of the working population due to demographic trends in Japan. Our ability to
attract qualified personnel depends in large part on our ability to establish and maintain a
positive image among students and other potential future employees. We are particularly dependent
on employees with knowledge and experience in the areas of product planning and manufacturing
technology. 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 is highly competitive
The sale of intimate and other apparel is highly competitive. We compete for sales with a
range of other apparel companies. Our principal intimate apparel competitors in Japan are Triumph,
Charle and Cecille, and we also compete with a number of other mass market and specialty apparel
companies, such as Fast Retailing.
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. We believe that our
strategy of focusing on the higher end of the intimate apparel market helps us to mitigate the
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 we cannot make assurances that our strategy will 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
7
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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 results of operations.
Our business is affected by seasonality
Our business performance and results are affected by seasonality. We typically launch new
intimate apparel product campaigns for the spring/summer and fall/winter seasons of each year. Our
business success depends in large part on the success of these seasonal product campaigns. Also,
seasonal fluctuations may affect our inventory levels, since we produce and acquire merchandise in
advance of peak selling periods and often before new fashion trends are confirmed by consumer
purchases.
Changes in seasonal weather patterns may also adversely affect our sales. For example, Japan
experienced unseasonably warm weather in the fall and winter of 2005, which adversely affected our
sales of campaign products for those seasons. We cannot predict future weather patterns or the
effect that weather patterns may have on our sales and profitability.
We may face increasing risks relating to conducting business internationally
In fiscal year 2006, approximately 88% of our sales were made in Japan, and we source and
manufacture most of our apparel in Japan. However, we anticipate that over time, an increasing
portion of our apparel will be produced outside of Japan to take advantage of lower costs available
in countries such as China. Also, we are trying to expand our product sales in overseas markets,
including the U.S., Europe and China. These initiatives and trends may cause us to become
increasingly subject to various risks relating to the conduct of business abroad, including:
•
differing consumer tastes and preferences in overseas markets;
•
political and economic instability in countries where we source, manufacture or sell
our products;
•
unexpected legal or regulatory changes;
•
trade protection measures and import or export licensing requirements;
•
potentially negative consequences from changes in tax laws;
•
fluctuations in currency exchange rates;
•
difficulty in staffing and managing widespread operations;
•
differing protection of intellectual property;
•
difficulties in collecting accounts receivable because of distance and different
legal rules; and
•
public health or similar problems in our important overseas markets or
sourcing/production centers.
8
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Our dependency on outside suppliers creates business risks for our company
We obtain fabric and other materials for our products from a variety of outside suppliers,
most of which are located in Japan. Our reliance on outside suppliers exposes us to certain
business risks. For example, if key materials for our products are not available or if there are
disruptions in supply, we may not be able to manufacture and deliver our products to our customers
in a timely manner. This risk to our company may increase in the future, as an increasing number
of our suppliers are shifting their operations from Japan to lower-cost countries such as China.
Although we generally maintain alternate sources of supply, we rely on a small number of suppliers
for certain key materials for our products, and we may have particular trouble if any of these key
suppliers suffer insolvency or other business problems, or otherwise stop doing business with us.
If the cost of our supplies increase and we are not able to pass on these cost increases to our
customers, our margins and profitability will suffer.
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 the Internet, catalog and other marketing channels. For example,
in May 2006 we announced our 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 store sales. In the transaction, we will acquire 49% of Peach
John's outstanding shares for cash of ¥14,994 million ($127.63 million).
Any acquisitions or other strategic transactions that we pursue 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; and
•
the diversion of our management's attention from our core business.
If any of these or any other material risks occur, it could have an adverse effect on the
business we acquire, as well as the operations, financial condition and cash flow of our existing
operations.
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We face risks in our business relating to intellectual property rights
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, and may in the future,
assert 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.
We must comply with laws and regulations regarding privacy and the protection of customer information
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. For example, we suspended our Internet business from November
17, 2005 until February 7, 2006, after we discovered that personal information of our customers had
improperly been obtained by a third party through unauthorized access to our electronic records.
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.
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 our fiscal year ending March 31, 2007, we
will be 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. During the course
of our testing and related coordination with our independent accountants, we may identify
deficiencies which we may not be able to remediate in time to meet the deadline imposed by the
Sarbanes-Oxley Act of 2002 for compliance with the requirements of Section 404. In this regard we
note that our independent accountants, Deloitte Touche Tohmatsu, have notified
us of potential deficiencies in our internal controls with respect to our information system
security, the internal controls of several subsidiaries, and a possible deficiency in our
monitoring ability. Although we are committed to addressing these deficiencies, we may not be able
to successfully
10
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implement revised controls and procedures, and our revised controls and procedures
may not be effective in remedying all of the identified deficiencies.
If we fail to achieve and maintain the adequacy of our internal controls, as such standards
are modified, supplemented or amended from time to time, we may not be able to conclude in 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 are 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 risks
We hold equity securities in a number of publicly traded Japanese companies. A significant
drop in the value of these securities could have an adverse impact on our financial results in the
relevant reporting period. In particular, negative performance in the Japanese equity securities
markets could adversely impact the value of our equity securities holdings. For example, in fiscal
years ended March 31, 2005 and 2006, we recognized valuation losses on our equity securities
holdings of ¥618 million and ¥65 million, respectively.
We may be adversely affected by our employee benefit obligations
We maintain retirement and other benefit plans for a substantial number of our employees.
Some of our plans obligate us to provide certain defined levels of benefits in the future in
accordance with the terms of the applicable plans. Regarding these employee benefit obligations
and the related plan assets, we fund and accrue the cost of employee benefits to a level that we
believe is sufficient based on conservative accounting policies. However, if returns from
investment assets decrease 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 profitability and financial condition.
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
It is possible that we may be classified as a passive foreign investment company (a "PFIC")
for U.S. federal income tax purposes for the taxable year ended March 31, 2006, or for the current
or any future taxable years. Such characterization could result in adverse U.S. tax consequences
to U.S. holders of our stock or ADSs. For example, if we are a PFIC, U.S. holders of our stock or
ADSs would be subject to increased tax liabilities under U.S. tax laws and regulations and
burdensome reporting requirements.
The determination of whether or not we are a passive foreign investment company is made on an
annual basis and depends on the composition of our income and assets, including goodwill.
Specifically, we will be classified as a PFIC for U.S. tax purposes if, after applying certain
look-through rules, either 50 percent or more of the gross value of our assets, based on
annual quarterly averages, are passive assets, or 75 percent or more of our annual gross income is
passive income. The composition of our assets will be affected by the extent to which we increase
or reduce our active business assets and/or our cash, investment securities, and other passive
assets.
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In addition, if our acquisitions of active business assets, capital expenditures and
certain other uses of cash do not match our projections, the likelihood that we are or will be
classified as a PFIC may also increase. We cannot assure you that we will not be classified as a
PFIC for the taxable year ended March 31, 2006, or for the current or any future taxable year. See
"Item 10.E. Taxation—U.S. Federal Income Taxation—U.S. Holders—Passive Foreign Investment
Companies".
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 holders of
record on our register of shareholders or our register of beneficial shareholders. 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.
There are restrictions on the withdrawal of shares from our depositary receipt facility
Under our ADS program, each ADS represents the right to receive five shares of our common
stock. To withdraw any shares, a holder of ADSs has to surrender for cancellation American
Depositary Receipts, or ADRs, evidencing 200 ADSs or any integral multiple thereof. Each ADR bears
a legend to that effect. As a result, holders of ADSs are unable to withdraw fractions of shares
or units or receive any cash settlement from the depositary in lieu of withdrawal of fractions of
shares or units. Holders of shares representing less than one unit, or 1,000 shares, may require
us to repurchase those shares, whereas holders of ADSs representing less than one unit of shares
are unable to exercise this right because the holders of these ADSs are unable to withdraw the
underlying shares. Under our ADS program, an ADS holder cannot cause the depositary to require us
to repurchase fractions of shares or units on its behalf. For a further
discussion of the Japanese unit share system, see "Item 10.B. Memorandum and Articles of
Association—Capital Stock—Unit Share System".
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ITEM 4. Information on Wacoal Holdings.
A. History and Development of Wacoal Holdings.
Wacoal Holdings Corp. is a joint stock corporation that was incorporated under the laws 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. Our telephone number is 81-75-682-5111.
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 U.S., China, France, the U.K., 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.
The following diagram shows our corporate organization. Unless otherwise indicated, Wacoal
Holdings Corp. owns 100% of the voting securities of the first-tier subsidiaries included in the
diagram below and Wacoal Corp. owns 100% of the voting securities of all other domestic and
overseas subsidiaries, with the exceptions of Hokuriku Wacoal Sewing Corp. (90% owned by Wacoal
Corp.), Torica Inc. (53% owned by Wacoal Corp.), Wacoal Hong Kong Co., Ltd. (60% owned by Wacoal
Corp. and 40% owned by Wacoal Taiwan, which in turn is 50% indirectly owned by Wacoal Corp.) and
Philippine Wacoal Corp. (67% owned by Wacoal Corp.).
On
June 2, 2006, we entered into an agreement to purchase 49% of the shares of Peach
John Co., Ltd. Peach John Co., Ltd. is engaged in the mail-order sales of women's apparel and
various other apparel products. The purchase price is ¥14,994 million ($127.63 million).
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For a discussion of recent and current capital expenditures, 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. Foundation
garments (primarily brassieres and girdles) and lingerie (primarily slips, bra-slips and ladies'
briefs) accounted for approximately 73.0% of our consolidated net sales for fiscal year 2006. 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.
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 year 2006, a
substantial
majority of our total sales were made to department stores, general merchandise stores and
other general retailers in Japan.
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In the U.S. market, our subsidiary Wacoal America, Inc. is engaged in sales of foundation
garments and lingerie using the Wacoal brand, the Donna Karan Intimates (DKI) brand and the DKNY
brand. Wacoal America, Inc. operates from one facility in New Jersey and one facility in New York
and employs approximately 304 people. One of our subsidiaries, Wacoal Dominicana Corp.,
manufactures products in the Dominican Republic and ships these products to Wacoal America, which
in turn distributes the products mostly to retailers in the U.S.
In France, our subsidiary Wacoal France S.A. designs and markets foundation garments and
lingerie in Europe. Most of these products are manufactured by our subsidiaries in Southeast Asia.
In January 2002 we established Wacoal (UK) Limited in the U.K, which markets Wacoal products
to Harrods, Selfridges and other major department stores in London and other large cities in the
U.K.
In China, our subsidiaries Guangdong Wacoal Inc. and Wacoal China Co., Ltd. serve as
manufacturing and marketing bases. We also hold a minority ownership interest in a joint venture
company, Shanghai Yadie Fashion Co., Ltd., which serves as a production base for our foundation
garments, all of which are shipped to Wacoal in Japan. In November 2002, we established Wacoal
(Shanghai) Human Science R&D Co., Ltd. in China as a wholly-owned subsidiary. We are using this
subsidiary to help expand our sales in China, including by developing intimate apparel and other
products designed for the Chinese market. We have also expanded our operations in China through
our new Dalian production facility, which we opened in August 2003.
Vietnam Wacoal Corp., which we established in Vietnam as a part of the expansion of our
overseas manufacturing bases, commenced operations in April 1998. We also 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.
The following table sets forth information with respect to our total sales by category of
products during the fiscal years ended March 31, 2006, 2005 and 2004:
Total Sales (and Percentage) by Product Category
(Yen in millions)
Year ended March 31,
2006
2005
2004
Innerwear
Foundation Garments
and Lingerie
¥
119,875
$
1,020,386
73.0
%
¥
114,895
71.4
%
¥
115,674
70.9
%
Nightwear
10,440
88,866
6.4
10,746
6.7
11,823
7.2
Children's Underwear
2,216
18,863
1.3
2,317
1.4
2,583
1.6
Total Innerwear
132,531
1,128,115
80.7
127,958
79.5
130,080
79.7
Outerwear and Sportswear
9,128
77,698
5.6
9,628
6.0
10,409
6.4
Hosiery
2,462
20,957
1.5
2,398
1.5
1,798
1.1
Textile Products
4,598
39,139
2.8
5,250
3.2
4,658
2.9
Other
15,403
131,112
9.4
15,734
9.8
16,210
9.9
Total
¥
164,122
$
1,397,021
100.0
%
¥
160,968
100.0
%
¥
163,155
100.0
%
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The following table sets forth information with respect to our total sales by region
during the fiscal years ended March 31, 2006, 2005, and 2004:
Total Sales (and Percentage) by Region
(Yen in millions)
Year ended March 31,
2006
2005
2004
Japan
¥
143,514
$
1,221,604
87
%
142,993
89
%
¥
144,896
89
%
United States and Europe
14,823
126,175
9
12,799
8
13,302
8
Asia (excluding Japan)
5,785
49,242
4
5,176
3
4,957
3
Total
¥
164,122
$
1,397,021
100
%
160,968
100
%
¥
163,155
100
%
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 recognition of our Wacoal brand as standing for 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.
Pursue growth opportunitie
s
We will seek to achieve profitable growth in our business by pursuing opportunities that we
believe will allow us to leverage our market leadership and brand awareness in our core Japan
market. Our efforts to achieve growth will include the following:
•
expanding our mid-priced innerwear offerings for young women, with an
emphasis on more fashionable products;
•
strengthening channels other than our traditional general retail store
channel, such as our SPA specialty retail store network, internet and catalog sales and
our
Dublevé
custom-made intimate apparel business;
•
expanding our overseas businesses, particularly in the United States and
China and in ASEAN countries through the introduction of a new ASEAN-wide product line in
the spring/summer of 2007; and
•
continuing to develop and expand our active wear business, including our CW-X product
line, our X-FIT product group and our other Wellness products.
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Reducing costs and pursuing increased efficiencies
We will seek to improve our business and financial performance through cost reductions and
greater efficiency in our operations. In the past several years, we have made gains in this area
by consolidating our production resources and distribution facilities in Japan, producing more
garments and sourcing more materials in China and other lower-cost countries in Asia, and carrying
out an early-retirement program and other efforts with respect to our work force in Japan. We will
continue to seek improvements in our operating efficiency and cost base as a core part of our
business strategy.
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), ladies' 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.
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.
Our Wacoal brand product campaign for spring 2005 featured our
Decollete Make Bra
and
Hip
Decollete
, our Summer 2005 Wacoal campaign featured our
3-D NAMI-NAMI
and our fall/winter 2005/2006
Wacoal campaign featured our
Hip Walker
and our
Decollete Make Bra
.
We offer foundation garments and lingerie under our Wing label through general retailers.
Recent campaign products for our Wing brand include our
Cute Up Bra
and
Natural Fit Bra
for spring
and summer 2005, and our
Style Up Pants
and
Arrange Bra
for fall/winter 2005/2006.
We believe that sales to mature women will represent an increasingly important part of our
business over time, as Japan's population ages and mature women become a growing proportion of the
apparel market. To address this opportunity, we have developed our
La Vie Aisée
and
Gra-P
product
lines, and we intend to develop additional products in the future for this market segment.
Our product line also includes our luxury products
Tréfle, PARFAGE, SALUTE, L'ge
and
Lesiage
,
targeted to the highest market segment. In February 2004, we launched
WACOAL DIA
as a new luxury
brand and opened the brand's first shop in the upscale Ginza shopping district in Tokyo. We aim to
position
WACOAL DIA
as a prestige shop brand that is associated with high levels of quality and
service.
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SPA Specialty Retail Stores.
As part of our product and marketing strategy, we are developing
a network of directly managed specialty retail stores, which we describe as "SPA" (Specialty store
retailer of Private label Apparel) stores. We began developing our SPA specialty retail stores in
2001, and we had 98 stores in our SPA network as of June 30, 2006, including 5 factory outlet
stores. Our target is to build a network of approximately 105 SPA stores by March 2007.
Through our SPA specialty retail stores we intend to reach younger customers and others who
prefer shopping for intimate apparel at malls or specialty 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.
We are segmenting our SPA specialty retail stores to target particular customer groups and
selling opportunities. Our
une nana cool
SPA stores are targeted towards younger women, our
SUBITO
SPA stores focus on intimate apparel for active career women, our
amphi
SPA stores are located near
train stations and other convenient urban locations, to reach customers with limited time for
shopping, and our
sur la plage
SPA stores are located in suburban areas. We expect that over time
our segmented stores will represent most of the growth in our SPA specialty retail store network.
In addition to our five core SPA store brands described above, we operate
Dublevé
SPA stores,
which specialize in custom-made intimate apparel, and
CLAIRE
SPA stores, which carry Wacoal brand
products. In addition, we opened two factory outlet stores during fiscal year 2005, and three
additional factory outlet stores during fiscal year 2006. We believe that our factory outlet
stores will provide us with a new sales channel for discounted merchandise and an additional
opportunity 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.
Our catalog sales (including Internet sales) were ¥6,561 million yen during fiscal year 2006.
Our main catalog is
LOVE BODY
, which targets women 40 and over and focuses on outerwear as well as
selected innerwear items. Our
wannabe
catalog targets women between 18 and 30 and focuses
primarily on innerwear.
We are also seeking to expand our sales through the Internet, as an alternate sales channel
for selected products. Our Internet shopping site (
www.e-shop.wacoal.co.jp
) currently
targets younger women and focuses primarily on innerwear, including items sold under our
une nana
cool
brand.
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
targeted to younger women, our fashionable
Grandér
line targeted to mature women and our
comfortable
Be At Ease
line for sleeping and other relaxing activities in the home. Our nightwear
products are primarily sold through department stores and chain stores.
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Children's underwear
Our children's underwear products include undergarments for teenage women, children's
sleepwear and other targeted garment offerings. Our children wear is also primarily sold through
department stores, although there has been a shift of 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 principally consists of women's outerwear, including
dresses, skirts, slacks, jackets and sweaters, and active wear, featuring our Wellness products.
In fiscal year 2005, we consolidated our women's outerwear business by closing our Point Up
subsidiary and its operations, which had been unprofitable in recent years. We are continuing to
market women's outerwear products through our catalog operations.
Our active wear business has achieved significant growth in recent years, led by our Wellness
products. The focus of our Wellness product line is our
CW-X
conditioning wear line, which had
revenues of approximately ¥2,589 million during fiscal year 2006 (an increase of 7.2% over fiscal
year 2005). Sales of X-Fit, a new group of high-functional innerwear products that we launched
under our CW-X line in February of 2005, were also strong at ¥325 million. Other Wellness offerings
include our
Nul
brand sportswear for jogging and lifestyle activities. We believe that we can
further develop our Wellness product line by leveraging our strong brand awareness and our
experience and expertise in fashion and human science gained through our core intimate apparel
business. As part of these efforts, we are expanding our retail network for our
Wellness line in the United States (including through major sports shops) through our U.S.
subsidiary Wacoal Sports Science Corp.
Hosiery
Our hosiery products include pantyhose, tights, knee-highs and anklets offered in various
sizes and colors, with different denier and yarn combinations. We currently offer a variety of
hosiery products under several different labels, including our
Carlson
and
CV
brands. To extend
our hosiery product line and reach new customers, in spring 2004 we launched "Wacoal Panty
Stocking," a collaborative product with Seven-Eleven Japan, Co., Ltd.
Other products
We are engaged in several business lines that are ancillary to our core apparel business. Our
Nanasai subsidiary builds 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 housing and restaurant business, and we are also involved in cultural
projects and events.
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.
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Table of Contents
Japan
In our core Japan market, we principally sell our apparel products to department stores,
general merchandise stores and other general retailers and to specialty stores. Sales to general
retailers in Japan represented a substantial majority of our total worldwide sales in fiscal year
2006. No single Wacoal customer constitutes 10% or more of our total sales, although our general
retail customers affiliated with the Aeon Group collectively accounted for approximately 10.2% of
our total sales in fiscal year 2006.
We also market our products in Japan by catalog mail order, direct sales, through the Internet
and through our SPA specialty retail stores. As discussed above, we intend to expand our SPA store
network over time, with the target of having approximately 105 stores by March 2007.
United States
In the U.S. market, we sell foundation garments and lingerie through our Wacoal America
subsidiary. These products are sold under our Wacoal brand and under the Donna Karan Intimates
(DKI) brand and the DKNY brand pursuant to licensing arrangements. 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 and has approximately 304
employees. Our Wacoal Dominicana Corp. subsidiary manufactures products in the Dominican Republic
and ships these products to Wacoal America, which distributes the products principally to retailers
in the U.S.
In August 2002, we established Wacoal Sports Science Corp. in the United States as a
wholly-owned subsidiary of Wacoal International Corp. for the purpose of expanding our CW-X
sportswear line globally.
China
In China, we produce innerwear and other garments 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 also expanded our operations in China through our new
Dalian production facility, which we opened in August 2003. We intend to use our Wacoal (Shanghai)
Human Science R&D Co., Ltd. subsidiary to help expand our sales in China, including by developing
intimate apparel and other products designed for the Chinese market.
At present we are developing a sales network in China that is focused on our existing
production and marketing hubs. Through this network, we plan to market our products in
approximately 200 department stores in China by December 2006, increasing to approximately 250
department stores by December 2008. We have established a sales office in Dalian to strengthen our
marketing efforts in China. In 2003, we established a sales and design office in
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Shanghai as part
of efforts to improve our product design and development capabilities in China. In order to
underpin the new office's product-planning functions, we have established a Wacoal human science
research center in Shanghai tasked with developing unique products for the local 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 the spring/summer season of 2007, we intend to launch a new ASEAN-wide product line that
will target the 18 to 25 year old segment of the market with a moderate to inexpensively priced
line of innerwear products.
Europe
Our Wacoal France subsidiary designs and markets foundation garments and lingerie in Europe.
Most of these products are manufactured by our subsidiaries in Southeast Asia.
In January 2002, we established Wacoal (UK) Limited in the U.K, which imports Wacoal products
from the U.S. and France and distributes the products to Harrods, Selfridges and other major
department stores in London and other large cities in the U.K.
Seasonality
Our business performance and results are affected by seasonality. 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. Our business success depends in large part on the success of these
seasonal product campaigns. Also, seasonal fluctuations may affect our inventory levels, since we
produce and acquire merchandise in advance of peak selling periods and sometimes before new fashion
trends are confirmed by consumer purchases.
Changes in seasonal weather patterns and extreme weather events may adversely affect our
sales. For example, a series of cold waves during the second half of fiscal year 2006 contributed
to increased purchases of winter wear and a strong general start to sales of spring wear for 2006.
Production and Sources of Supply
We produce our apparel products directly at the Wacoal Corp. parent level through our
subsidiaries in Japan, China, Vietnam and the Dominican Republic and through our joint venture
companies in South Korea, Thailand, Taiwan and Indonesia. Our apparel products are also produced
on a third party basis through subcontractors in Japan. All of these products are produced
according to our specifications, using materials that we supply.
We work with our joint venture companies and subcontractors to help them produce products that
meet our specifications. For example, we supply them with cutting patterns and with sewing machine
attachments. We also provide certain of these entities with debt and equity
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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 over 300 sources, most of them within Japan. In fiscal year 2006, we
obtained approximately 24% of our raw materials on a cost basis from five suppliers, with the
largest supplier representing approximately 6% of our raw material costs.
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 2006:
Jurisdiction of
Wacoal Holdings
Principal Subsidiaries
Incorporation
Equity Owned (%)
Wacoal Corp.
Japan
100
Studio Five Corp.
Japan
100
Wacoal Dublevé Corp.
Japan
100
Tokai Wacoal Sewing Corp.
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
90
Miyazaki Wacoal Sewing Corp.
Japan
100
Torica Inc.
Japan
53
Nanasai Co., Ltd.
Japan
67
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
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Jurisdiction of
Wacoal Holdings
Principal Subsidiaries
Incorporation
Equity Owned (%)
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.
The Philippines
67
In October 2005 we transitioned to a holding company structure by spinning off all of our
operations into a new wholly-owned subsidiary, Wacoal Corp. We believe this holding company
structure will help us to more effectively make strategic and other management decisions and
allocate resources more efficiently, and will help our operating companies to actively execute
their business plans with clearer responsibility and authority. We also believe that the holding
company structure will be a more efficient structure for carrying out any future changes to our
corporate structure, including any future M&A transactions.
Please see Item 4.A. for a diagram that shows our corporate organization.
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
428
Distribution
Kyoto South distribution center
Kyoto, Japan
91
Distribution
Tokyo distribution center
Tokyo, Japan
168
Distribution
Manufacturing plants:
Tokai Wacoal Sewing Corporation
Shizuoka, Japan
22
Foundation Garments
Hokuriku Wacoal Sewing Corporation
Fukui, Japan
40
Lingerie
Kyushu Wacoal Manufacturing
Corporation
Nagasaki plant
Nagasaki, Japan
88
Foundation Garments
Kumamoto plant
Kumamoto, Japan
42
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
290
Lingerie
146
2
SPA specialty retail
stores and other select shops
Tokyo, Osaka, Kanagawa and
other locations in Japan
139
Retail sales
Vietnam Wacoal Corp.
Bien Hoa, Vietnam
163
Foundation Garments
Wacoal Dominicana Corp.
Santo Domingo,
92
Foundation Garments
Dominican Republic
Wacoal China Co., Ltd.
Beijing, China
115
Foundation Garments
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Floor
Space
(1,000
square
Principal Activities or
Facility
Location
feet)
1
Products Manufactured
Guangdong Wacoal Inc.
Guangzhou, China
70
Foundation Garments
Dalian Wacoal, Ltd.
Dalian, China
72
Foundation Garments
General Fashions Corp.
Puerto Rico
26
Foundation Garments
Sales offices with warehouse facilities
Tokyo, Japan
(5 offices)
219
Sales
Sapporo, Japan
36
Sales
Osaka, Japan
(1 office)
124
Sales
Kyoto, Japan
(2 offices)
337
Sales
Fukuoka, Japan
54
Sales
Wacoal America Inc.
New Jersey and
New York, U.S.
200
Management and Sales
SPIRAL Building
Tokyo, Japan
107
Cultural Activities
Nanasai Co., Ltd.
Kyoto, Japan
214
Mannequins, Sales Equipment
1.
Of the foregoing facilities, our total owned space is 3,575,439 square feet and our total
leased space is 448,917 square feet.
2.
As of June 30, 2006.
We own all of the foregoing facilities except for the following, which we lease from
third parties: (i) several of our sales offices in Tokyo (78,739 square feet), (ii) our office and
warehouse facility for Nanasai (98,511 square feet), (iii) our sewing factory for Torica (6,584
square feet), (iv) our management and sales facility for Wacoal America (69,096 square feet), (v)
our 146 SPA specialty retail stores as of March 31, 2006 (total of 139,047 square feet for all
stores), (vi) General
Fashions Corp., our sewing factory in Puerto Rico (25,778 square feet) and (vii) our office and
warehouse facility in China (31,162 square feet).
As discussed earlier in this report, we intend to increase the number of our SPA specialty
retail stores, with the target of having approximately 105 stores by March 2007. In general, we
intend to lease the space for these stores, although we will incur capital expenses in improving
the interiors of the stores to our specifications.
We spent approximately ¥430 million during fiscal year 2006 for expansion of our SPA specialty
retail store network. For additional information on our capital expenditures during the fiscal
years ended March 31, 2006, 2005 and 2004, see "Item 5.B. Liquidity and Capital Resources –
Capital Expenditures". We expect to spend approximately ¥300 million for further expansion of the
SPA network in fiscal year 2007. We have no plans to materially expand or improve our facilities
beyond the existing level, apart from our plans to expand our SPA specialty retail store network as
described above. We expect to continue to make expenditures for maintenance, to meet applicable
legal requirements and to facilitate the manufacture of new products with new designs and
specifications. We expect to fund these capital expenditures and other expenditures through our
cash from operations, existing cash reserves and other available sources of liquidity.
We have no material tangible fixed assets other than those discussed above.
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ITEM 4A. Unresolved Staff Comments
Not Applicable
ITEM 5. Operating and Financial Review and Prospects.
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. Sales of
foundation garments (primarily brassieres and girdles) and lingerie (primarily slips, bra-slips and
ladies' briefs) accounted for approximately 73.0% of our consolidated net sales for fiscal year
2006. We also design, manufacture and sell nightwear, children's underwear, outerwear, sportswear,
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 total sales by category of
products for the fiscal years ended March 31, 2006, 2005 and 2004:
Year ended March 31,
2006
2005
2004
Innerwear
Foundation Garments
and Lingerie
¥
119,875
$
1,020,386
73.0
%
¥
114,895
71.4
%
¥
115,674
70.9
%
Nightwear
10,440
88,866
6.4
10,746
6.7
11,823
7.2
Children's Underwear
2,216
18,863
1.3
2,317
1.4
2,583
1.6
Total Innerwear
132,531
1,128,115
80.7
127,958
79.5
130,080
79.7
Outerwear and Sportswear
9,128
77,698
5.6
9,628
6.0
10,409
6.4
Hosiery
2,462
20,957
1.5
2,398
1.5
1,798
1.1
Textile Products
4,598
39,139
2.8
5,250
3.2
4,658
2.9
Other
15,403
131,112
9.4
15,734
9.8
16,210
9.9
Total
¥
164,122
$
1,397,021
100.0
%
¥
160,968
100.0
%
¥
163,155
100.0
%
Total Sales (and Percentage) by Product Category
(Yen in millions)
In fiscal year 2006, approximately 88% of the sales of Wacoal Corp. (the total sales of
which account for approximately 80% of Wacoal Group's sales on a consolidated basis) were apparel
sales made on a wholesale basis to department stores, general merchandise stores and other general
retailers, and approximately 8% were apparel sales made through our own SPA specialty retail
stores, catalog sales and the Internet. Sales from our other businesses (which include store and
home design services, restaurant businesses, cultural products and other services) comprised the
remaining 4% of Wacoal Corp.'s sales in fiscal year 2006.
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.
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Cost of Sales
Our cost of sales arises principally from material and manufacturing costs related to the
production of our apparel products.
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 and expenses associated
with remodeling our sales counters at department stores. Other selling, general and administrative
expenses include shipment costs, payment fees (including outsourcing payments) and rental payments
for our SPA shops. Our selling, general and administrative expenses do not include any impairment
charges on long-lived assets or any losses on the sale or disposal of property, plant and
equipment. However, these expenses are included in operating costs and expenses and thus impact
our operating income.
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 was generally weak for a prolonged period prior to fiscal
year 2006. Although there were some signs of recovery in fiscal year 2006, the
generally stagnant level of consumer spending in recent years has negatively impacted
performance at general retailers, our key distribution channel.
•
The sale of lower priced women's innerwear garments in Japan—to a large degree
manufactured in China and other lower-cost countries—has increased. This has generally
resulted in a greater degree of price competition in our industry.
•
There has been increased demand for higher-end innerwear products. This development
(combined with increased demand for lower-end products) has resulted in greater market
segmentation.
•
Manufacturers are increasingly focused on reducing their costs, including by
sourcing fabric and producing garments in China and other lower-cost countries.
•
Alternative marketing concepts for women's innerwear garments, such as catalog
marketing and e-commerce, are becoming more prevalent as apparel companies seek to
diversify their sales channels and reach new customer groups.
During the last three fiscal years, 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 believe that our strategic emphasis on higher-end products has helped us 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 U.S. and Europe—and
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increase sales through our own SPA specialty retail stores, our catalog operations and the
Internet. 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 products mix to
help us reach a broader customer base. We believe that our strategic alliance with Peach John will
help us to advance this goal. We will continue to implement these steps and evaluate other
strategies to address challenges and opportunities in the industry going forward.
Critical Accounting Policies.
Our consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America. 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.
Valuation of Inventories
Inventories are stated at the lower of cost or market, cost being substantially determined on
the first-in, first-out method for raw materials and average cost method for work in process and
finished products. We review our inventories on a regular basis for their salability and for
indications of obsolescence to determine if a write down to market value is necessary. The
revaluation of inventories is based on the age of inventories, likelihood of obsolescence, actual
product movements, changes in market demand and other factors.
Allowance for Doubtful Receivables and Returns
We are required to assess the collectibility 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. 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 based on historical experience, and we regularly review and revise the
allowance if necessary, in consideration of actual returns, planned product discontinuances and
promotional sales. We record the allowance for estimated returns as a reduction to sales.
Deferred Tax Assets
We currently have significant deferred tax assets and liabilities, which are subject to
periodic recoverability assessments. Realization of our deferred tax assets is principally
dependent upon the achievement of projected future taxable income. 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. A valuation allowance will be
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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.
Impairment of Investment Securities
An impairment of investment securities is charged to earnings when a decline in fair value
below the cost is other than temporary. 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.
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.
Impairment of Long-Lived Assets
When we determine that long-lived assets and certain intangible assets held have been impaired
based on estimated future cash flows, the amount of carrying value in excess of the fair market
value of such assets is recognized as impairment loss. We believe that our assessment of estimated
future cash flows and the fair values of such assets has been reasonably performed. However,
changes in estimated future cash flows and fair values may affect our impairment assessment.
Employee Retirement Plans
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. At March 31, 2006, the discount rate used for the
contributory retirement plan was 2.5%. 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
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retirement plan is 2.5%, 2.5% and 2.5% for the years ended March 31, 2006, 2005 and
2004, respectively. The estimated long-term rate of return is based on an asset allocation of
equity securities of 33.0%, debt securities of 50.0% and other investments of 17.0%.
These assumptions have a significant effect on the amount of the obligation and periodic
benefit cost reported. A half-percentage-point change 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 Percentage
0.5 Percentage
0.5 Percentage
0.5 Percentage
point decrease
point increase
point decrease
point increase
Discount rate:
Effect on periodic benefit costs
¥
(49
)
¥
60
$
(417
)
$
511
Effect on benefit obligation
(50
)
60
(425
)
511
Expected long-term rate of return
on plan assets:
Effect on periodic benefit costs
133
(132
)
1,132
(1,123
)
Effect on benefit obligation
0
0
0
0
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.
Exchanges of Nonmonetary Assets, an Amendment to Accounting Principle Board ("APB") Opinion
No. 29 —
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets, an
Amendment to APB Opinion No. 29". SFAS No. 153 eliminates the exception to measure exchanges at
fair value for exchanges of similar productive assets and replaces it with a general exception for
exchange transactions that do not have commercial substance. SFAS No. 153 is effective for
nonmonetary exchanges in fiscal periods beginning after June 15, 2005. We do not expect the
adoption of SFAS No. 153 to have a material effect on our consolidated financial statements.
Inventory Costs, an Amendment of ARB No. 43, Chapter 4
-
In November 2004, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 151, "Inventory Costs, an amendment of ARB No.
43, Chapter 4". This statement clarifies accounting for abnormal amounts of idle facility expense,
freight, handling costs and wasted material. Additionally, SFAS No. 151 requires that allocation
of fixed production overhead to inventory be based on the normal capacity of the production
facilities. The provisions of SFAS No. 151 are applicable to inventory costs incurred during
fiscal years beginning after June 15, 2005. We do not expect the adoption of SFAS No. 151 to have
a material effect on our consolidated financial statements.
Accounting Changes and Error Corrections.
In May 2005, the FASB issued SFAS No. 154,
"Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB Statement
No. 3" ("SFAS 154"). SFAS 154 replaces APB Opinion No. 20, "Accounting Changes" and SFAS No. 3
"Reporting Accounting Changes in Interim Financial Statements," and provides guidance on the
accounting for and reporting of accounting changes and error corrections.
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SFAS 154 establishes
retrospective application, or the latest practicable date, as the required method for reporting a
change in accounting principle and the reporting of a correction of an error. SFAS 154 is
effective for accounting changes and corrections of errors made in fiscal years beginning after
December 15, 2005. We do not expect the adoption of SFAS No. 154 to have a material effect on our
consolidated financial statements.
The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments
.
In
November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1, "The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments" ("FSP 115-1"). FSP 115-1 provides guidance
on determining when investments in certain debt and equity securities are considered impaired,
whether that impairment is other-than-temporary, and on measuring such impairment loss. FSP 115-1
also includes accounting considerations subsequent to the recognition of an other-than-temporary
impairment and requires certain disclosures about unrealized losses that have not been recognized
as other-than-temporary impairments. FSP 115-1 is required to be applied to reporting periods
beginning after December 15, 2005. We do not expect the adoption of FSP 115-1 to have a material
effect on our consolidated financial statements.
A. Operating Results
The following table sets forth certain data from our consolidated statements of income for the
last three fiscal years:
(Yen in millions and U.S. Dollars in thousands)
Year ended/as of March 31,
2006
2005
2004
Net sales
¥
164,122
$
1,397,021
¥
160,968
¥
163,155
Cost of sales
84,322
717,756
84,041
84,638
Selling, general and
administrative expenses
69,720
593,463
72,128
72,472
Other income (expenses), net
2,133
18,156
313
1,516
Net income
2,821
24,013
6,790
2,902
Fiscal Year 2006 Compared to Fiscal Year 2005
Sales.
Consolidated net sales increased approximately 2.0% in fiscal year 2006, from ¥160,968
million to ¥164,122 million.
Sales of our mainstay innerwear products (consisting of foundation wear, night wear and
children's underwear), which comprised 80.7% of total consolidated sales, increased 3.6% in fiscal
year 2006, to ¥132,531 million. Although sales of our Wacoal brand products in the first quarter
were below expectations, partly due to the temporary recall of our
3-D NAMI NAMI
summer campaign
products for defect concerns, in July our campaign product
Hip Walker
received favorable media
coverage because of its innovative functionality and achieved favorable sales of 701,000 units.
Our
Kaiteki NAVI
product group released in connection with "warm biz" (a general campaign in Japan
encouraging offices to turn down their thermostats during the winter and encouraging employees to
wear an extra layer of clothing) also showed favorable sales of 730,000 units.
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In our Wing brand segment, sales fell below expectations because of the lack of novelty in our
summer campaign product
Natural fit bra
. On the other hand, our autumn campaign product
Style Up
Pants
enjoyed popularity and achieved strong sales of 650,000 units.
Style Up Pants
, like our
Wacoal branded
Hip Walker
, enhance mobility by stimulating the muscles, which results in shaping up
of the hips. This is because the garment actually trains the muscles, which goes beyond
traditional correction underwear or "shape correction wear". We believe this revolutionary
functionality has acquired support from many women. These products were both developed at our
state-of-the-art Human Science Research Center. We plan to continue to develop products with
unique functionality such as these and market them as our new
Style Science
series of products.
Sales of our luxury brand products also contributed to our overall increase in sales, with
sales of our
Tréfle
brand increasing 17% to ¥1,978 million. Sales of our products targeted at the
middle-aged and senior markets also showed steady performance, with sales of our
La Vie Aisée
and
Gra-P
brands increasing 11% and 18% to ¥5,408 million and ¥2,243 million, respectively.
Overseas sales were strong overall. Our sales in Asia outside of Japan (including China, Hong
Kong, Singapore and the Philippines) grew 11.8% to ¥5,785 million from ¥5,176 million and
represented 3.5% of total consolidated sales in fiscal year 2006 versus 3.2% of total consolidated
sales in fiscal year 2005. Sales in China grew 42.4% over the previous year, which contributed to
our overall strong performance in Asia. In the U.S., which represented 8.5% of our total
consolidated sales in fiscal year 2006, sales increased by approximately 14.8% on a dollar basis in
fiscal year 2006 as compared to fiscal year 2005. Sales growth in the U.S. was largely due
to stronger consumer spending and growing awareness of our Wacoal brand. In addition, our
single-piece construction seamless iBra product achieved strong sales.
In our other apparel businesses, sales of outerwear and sportswear in fiscal year 2006
decreased 5.2% to ¥9,128 million as compared to fiscal year 2005. Within this category, sportswear
posted strong sales growth, led by growth in our CW-X conditioning wear line as well as growth in
X-Fit, our new group of high-functional innerwear products that was launched under our CW-X line in
February of 2005. However, the closure of our outerwear sales subsidiary Point Up, Inc. in January
of 2005 and the resulting decrease in sales more than offset our strength in sportswear. Hosiery
sales (which include products sold under our Carlson label) helped to support our sales results in
fiscal year 2006, increasing 2.7% to ¥2,462 million. This performance was due in part to continued
favorable sales of our "Wacoal Panty Stocking," a collaborative product with Seven-Eleven Japan,
Co., Ltd. that was launched in spring 2004.
Sales from our other businesses decreased 2.1% to ¥15,403 million, which was primarily due to
a decrease in orders in our model room decorating business and a decrease in orders in the store
design and construction business conducted by our subsidiary Nanasai Co., Ltd.
Cost of sales.
Our cost of sales increased approximately 0.3% in fiscal year 2006, to ¥84,322
million from ¥84,041 million in fiscal year 2005. Cost of sales as a percentage of net sales
decreased by 0.8%, from 52.2% in fiscal year 2005 to 51.4% in fiscal year 2006. This improvement
in our gross margin was primarily due to increased production overseas and strong sales of many of
our campaign products, which generally have higher margins.
Selling, general and administrative expenses.
Selling, general and administrative expenses
were ¥69,720 million in fiscal year 2006, a decrease of 3.3% from ¥72,128 million in fiscal year
2005. This decrease was partly due to a decrease in advertising costs, a decrease in retirement
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related costs as a result of our adoption of a new retirement system in July 2005 and higher
returns on our pension fund assets, which helped to reduce our expense for pension liability.
Special voluntary retirement related expenses.
We recorded ¥6,931 million of special
additional allowances and reemployment support expenses in connection with our special voluntary
retirement program and ¥590 million of special allowances paid to retiring employees in connection
with the closure of our Fukushima Wacoal factory during the fiscal year ended March 31, 2006.
Other income (expenses), net.
We had net other income of ¥2,133 million in fiscal year 2006,
as compared to net other income of ¥313 million in fiscal year 2005. This was largely due to a
gain of ¥1,149 million upon the exchange of shares of UFJ Holdings held by Wacoal Corp. and Nanasai
Co., Ltd. for shares of Mitsubishi UFJ Financial Group, the surviving entity in the merger of
Mitsubishi Tokyo Financial Group and UFJ Financial Group.
Net income.
Net income in fiscal year 2006 was ¥2,821 million, or ¥98 per American Depository
Receipt ("ADR", equivalent to five shares of common stock), versus ¥6,790 million or ¥236 per ADR
in fiscal year 2005. The decrease in our net income in fiscal year 2006 (in spite of our improved
operating results) was primarily due to the recognition of a one-time government subsidy in fiscal
year 2005 in the amount of ¥7,100 million from the return of the substitutional portion of our
employee pension fund to the Japanese government in fiscal year 2005, which
resulted in higher net income for fiscal year 2005 and ¥7,521 million of one-time expenses
that were incurred in fiscal year 2006 in connection with our expanded early retirement program and
the closure of our Fukushima Wacoal factory as noted above.
Fiscal Year 2005 Compared to Fiscal Year 2004
Sales.
Consolidated net sales decreased 1.3% in fiscal year 2005, from ¥163,155 million to
¥160,968 million.
Sales of our mainstay innerwear products (consisting of foundation wear, night wear and
children's underwear), which comprised 79.5% of total consolidated sales, decreased 1.6% in fiscal
year 2005, to ¥127,958 million. A principal factor in this decrease was lower than expected sales
of our campaign products during fiscal year 2005, including our
NAMI-NAMI
T-shirt bra (580,000
units sold) and our
Kanjiru
and
Shakitto
bra and underwear (1,160,000 units sold). We believe that
sales performance for these campaign items was hurt by the fact that we did not introduce new
Wacoal brand campaign items in fiscal year 2005 – the
NAMI-NAMI
T-shirt bra and the
Kanjiru
and
Shakitto
bras marketed as campaign items in fiscal year 2005 were updated versions of products that
had been campaign items in fiscal year 2004. Additionally, Japan experienced unseasonably warm
weather in the fall and winter months during fiscal year 2005, which adversely affected our sales
of cold-weather campaign products for those seasons. We also believe that the series of unusually
severe typhoons during the fall in Japan negatively impacted consumer spending generally, including
on our products.
Sales of our high-end innerwear garments helped to support our sales performance in fiscal
year 2005, reflecting our success in targeting the high-end of the Japanese market. Several of our
high-end innerwear product lines achieved significant sales growth in fiscal year 2005, including
Gra-P (¥1,893 million in sales, representing a 24% increase over fiscal year 2004); La Vie Aisée
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(¥4,888 million in sales, representing an 11% increase over fiscal year 2004); and L'ge (¥1,144
million in sales, representing a 9% increase over fiscal year 2004).
Overseas sales were mixed. Our sales in Asia outside of Japan (including China, Hong Kong,
Singapore and the Philippines) grew slightly to ¥5,176 million, representing 3.2% of total
consolidated sales in fiscal year 2005 versus 3.0% of total consolidated sales in fiscal year 2004.
Sales grew 22.1% over the previous year in China overall, and sales were particularly strong in
Shanghai, where growth in disposable income helped to increase sales of our high-end products.
In the U.S., which represented 7.3% of our total consolidated sales in fiscal year 2005, sales
increased by approximately 3.5% on a dollar basis in fiscal year 2005 as compared to fiscal year
2004. However, the reduced value of the dollar against the yen resulted in a 3% decrease in U.S.
sales in fiscal year 2005 on a yen basis. Sales growth in the U.S. was largely due to stronger
consumer spending and growing awareness of our Wacoal brand. Sales in Europe – representing
approximately 0.6% of our total sales – were down 11.8% in fiscal year 2005 as compared to fiscal
year 2004. This decrease was largely due to our decision to stop selling to a number of
mass-market retailers in France, as part of our increased focus on higher-end consumers in our
European markets.
In our other apparel businesses, sales of outerwear and sportswear in fiscal year 2005
decreased 7.5% to ¥9,628 million as compared to fiscal year 2004. Within this category,
sportswear posted strong sales growth of 19% over fiscal year 2004, led by 22% sales growth in
our CW-X conditioning wear line. We believe that this sales growth in our CW-X line reflects the
appeal of our human science approach among active consumers. However, this strong performance was
more than offset by a nearly 40% decrease in outerwear sales in fiscal year 2005, which was largely
due to the closure of our outerwear subsidiary Point Up, Inc. in January 2005 after consistently
unprofitable performance. Hosiery sales (which include products sold under our Carlson label)
helped to support our sales results in fiscal year 2005, increasing by ¥600 million, or 33.4%, to
¥2,398 million. This performance was due in part to favorable sales of our "Wacoal Panty
Stocking," a collaborative product with Seven-Eleven Japan, Co., Ltd. that was launched in spring
2004.
Sales from our other businesses (which include the sale of mannequins, store design and
construction, restaurant businesses, cultural projects and other services) declined to ¥15,734
million in fiscal year 2005, or 3.0%, from ¥16,210 million in fiscal year 2004. We stopped selling
pre-fabricated houses in fiscal year 2005, which had not been a profitable business for us – the
sales decline in this category resulted largely from our termination of the housing business.
Cost of sales.
Our cost of sales decreased approximately 0.7% in fiscal year 2005, to ¥84,041
million from ¥84,638 million in fiscal year 2004. Cost of sales as a percentage of net sales
increased by 0.3%, from 51.9% in fiscal year 2004 to 52.2% in fiscal year 2005. The reduction in
our aggregate gross margin primarily resulted from our price reductions on campaign items that sold
more poorly than expected, as described above.
Selling, general and administrative expenses.
Selling, general and administrative expenses
were ¥72,128 million in fiscal year 2005, a decrease of 0.5% from ¥72,472 million in fiscal year
2004. Contributing to this aggregate decrease were ¥1,201 million in personnel cost reductions due
to higher returns on our pension fund assets. These expense reductions were partially offset by
the following increases in expenses:
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•
a one-time charge of ¥826 million related to the return of the substitutional
portion of our employee pension fund to the Japanese government (this one-time charge
represents a settlement loss which is calculated as a ratio of the obligation settled
to the total employee pension fund obligation immediately prior to settlement, times
the net unrecognized gain/loss immediately prior to settlement);
•
a ¥718 million charge due to an increased number of employees electing to take early
retirement under our early retirement program, which was revised in fiscal year 2005 to
implement less restrictive eligibility requirements; and
•
an increase in advertising costs of ¥363 million.
The net reduction in these expenses did not keep pace with the reduction in our sales, which led to
an increase in our selling, general and administrative expenses as a percentage of sales from 44.4%
for fiscal year 2004 to 44.8% for fiscal year 2005.
Other income (expenses), net.
We had net other income of ¥313 million in fiscal year 2005, as
compared to net other income of ¥1,516 million in fiscal year 2004. This result was mainly
attributable to the devaluation of our investment securities.
Net income.
Net income in fiscal year 2005 was ¥6,790 million, or ¥236 per American
Depository Receipt ("ADR", equivalent to five shares of common stock), versus ¥99 in fiscal year
2004. This increase in net income was primarily due to the recognition of a one-time government
subsidy in the amount of ¥7,100 million from the return of the substitutional portion of our
employee pension fund to the Japanese government.
B. Liquidity and Capital Resources.
Our main source of liquidity is cash from operations. Our cash from operations has allowed us
to fund our working capital requirements and our capital expenditures (including our SPA specialty
retail store expansion and the construction of our new distribution center in the Kansai region of
Japan) and make dividend payments without material borrowings or other external financing. We
believe that we will consistently generate and maintain sufficient cash from operations to cover
our needs for working capital for our operations and for our anticipated capital requirements and
other expenditures (including for the planned capital expenditures in fiscal 2007 noted below and
for our announced capital alliance with Peach John) for the foreseeable future. Some of our
subsidiaries also currently maintain credit facilities with bank lenders for working capital
purposes.
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Cash Flows
Our consolidated cash flows for fiscal year 2004, 2005 and 2006 were as follows:
Fiscal Year Ending March 31,
2006
2005
2004
(in millions of yen)
Net cash provided by operating activities
¥
719
¥
2,045
¥
5,201
Net cash provided by (used in) investing activities
(2,069
)
(5,528
)
1,328
Net cash provided by (used in) financing activities
(3,428
)
296
(6,138
)
Cash provided by operating activities.
Net cash provided by operating activities decreased by 64.8% in fiscal year 2006, to ¥719
million from ¥2,045 million in fiscal year 2005. While sales increased and tax expenditures
decreased, the decrease in cash provided by operating activities was primarily the result of
special additional allowances and reemployment support expenses in connection with our special
voluntary retirement program, as well as a special allowance paid to retiring employees following
the dissolution of Fukushima Wacoal Sewing Corp. Because these were one-time expenses, we expect
cash provided by operating activities to increase during the current fiscal year.
Net cash provided by operating activities decreased by 60.7% in fiscal year 2005, to ¥2,045
million from ¥5,201 million in fiscal year 2004. The decrease resulted largely from lower gross
margins due to price reductions on campaign items that sold more poorly than expected and from
higher levels of accounts receivable and inventories at the end of fiscal year 2005. The buildup
of accounts receivable and inventories resulted mainly from sales from our spring 2005 product
campaign, which began earlier than usual. Also, an increase in taxes payable during fiscal year
2004 resulted in a large tax payment during fiscal year 2005, which was recorded as a decrease
of other current liabilities. These negative factors offset the positive impact on sales (and cash
provided by operating activities) during fiscal year 2005 arising from the relatively high level of
returned goods in March 2004, so that the price tags of such goods could be changed in line with a
new legal requirement as of April 1, 2004 that all prices be inclusive of consumption tax. The
effect of this return of goods was to shift some sales (and cash generated from those sales) from
fiscal year 2004 to fiscal year 2005.
Net cash used in investing activities.
Net cash used in investing activities was ¥2,069 million in fiscal year 2006, as compared to
¥5,528 million used by investing activities in fiscal year 2005, due to our acquisition of shares
of publicly traded Japanese companies and the purchase of fixed assets related to our Western Japan
Distribution Center. We anticipate using approximately ¥15,000 million of our available cash
during the current fiscal year in connection with our capital alliance with Peach John Co., Ltd.
Net cash used in investing activities was ¥5,528 million in fiscal year 2005, as compared to
¥1,328 million provided by investing activities in fiscal year 2004. This change in fiscal year
2005 was mainly attributable to an increase in capital expenditures in connection with our new
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distribution center in the Kansai district of Japan and an increase of ¥2,985 million in investment
securities.
Net cash used in financing activities.
Net cash used in financing activities was ¥3,428 million in fiscal year 2006, versus net cash
provided by financing activities of ¥296 million in fiscal year 2005, primarily due to the payment
of dividends and the repayment of short-term bank loans. We expect to spend a similar amount
during the current fiscal year primarily for the payment of dividends.
Net cash provided by financing activities was ¥296 million in fiscal year 2005 versus net cash
used in financing activities of ¥6,138 million in fiscal year 2004. This change in fiscal year
2005 was primarily attributable to an increase in short-term bank borrowings and reduced
repurchases of treasury stock as well as a dividend increase from 13.5 yen to 15 yen.
Capital expenditures.
Capital expenditures in fiscal years 2006, 2005 and 2004 were ¥6,456 million, ¥5,418 million
and ¥2,338 million, respectively. We made capital expenditures in 2006 primarily in connection
with the completion of our Western Japan distribution center, as well as the continued expansion of
our SPA specialty retail store network and investment in IT infrastructure.
In fiscal year 2007, we expect that our principal capital expenditures will be approximately
¥1,100 million for IT infrastructure, approximately ¥700 million for improvements to our overseas
sales locations and factories, approximately ¥400 million for improvements to our domestic factory
and office locations and approximately ¥300 million for the continued expansion of our SPA
specialty retail store network. We expect to finance these capital expenditures with cash from our
operations.
C. Research and Development, Patents and Licenses.
Through our Human Science Research Center, we conduct research and development activities
focused on the relationship between the human body and garments, which we believe enable us to
produce better products. Since the establishment of the Human Science Research Center in 1964, we
have conducted a long-term study of the female body designed to accurately understand the Japanese
woman's body as a three dimensional shape. Through these research activities, we have developed
specialized equipment, such as silhouette analysis equipment and three-dimensional measuring
equipment, and we are currently working on equipment that we believe will provide advanced
measurements of sensory comfort.
Our research and development activities are based on the proportional, physiological and
mental aspects of garment design. Since 1995, we have participated in a project led by the
Ministry of Economy, Trade and Industry (formerly the Ministry of International Trade and Industry)
for the study of sensory comfort and have conducted basic research based on reactions to three
basic stimuli: 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.
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Currently the Human Science Research Center's product development team, basic research team
and development factory team are working on priority issues such as focusing research and
development on addressing customer needs and establishing a product development database. Our
research and development successes during the previous fiscal year include commercialization of
several high value-add products, including our hip training pants, our tummy training pants and
pajamas that incorporate new functionality to support more pleasant sleep and relaxation. In
addition, we undertook an analysis of teen development and published our findings regarding the
changes that girls' figures go through during puberty. Based on this research we have made
improvements to our products and developed a method by which customers can choose products that fit
their particular figure at various stages of puberty.
In 2002, we established a sales and design office in Shanghai as part of efforts to improve
our product design and development capabilities in China. In order to underpin the new office's
product-planning functions, we also established Wacoal (Shanghai) Human Science R&D Co., Ltd. in
Shanghai, which is focused on developing unique products for the China market based on the
principles of human science and ergonomics.
Because many of our marketing and production personnel contribute to the development of new
products and styles, it is not practicable to determine the precise amount of expenditures on our
product research and development activities, but we believe that we spent approximately ¥638
million, ¥707 million and ¥751 million in fiscal years 2006, 2005 and 2004, respectively.
D. Trend Information.
For a discussion of other trends that affect our business and operating results, see "Item
3.D. Risk Factors", "Item 4.B. Business Overview", "Item 5. New Accounting Pronouncements –
Transfer of the Substitutional Portion of Employee Pension Fund Liabilities" and "Item 5.A.
Operating Results".
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 6 to the consolidated financial statements.
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The following table summarizes our contractual obligations as of March 31, 2006.
Fiscal Year Ending March 31,
Less than
1-3
3-5
More than
Total
1 year
years
years
5 years
(in millions of yen)
Long-Term Debt Obligations
0
Capital (Finance) Lease
Obligations
66
34
32
Operating Lease Obligations
4,960
676
1,175
1,046
2,063
Capital Expenditures
0
Total
5,026
710
1,207
1,046
2,063
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. We expect to contribute ¥2,360 million to our plans in the year ending March 31,
2007.
ITEM 6. Directors, Senior Management and Employees.
A. Directors and Senior Management.
The following is a current list of Wacoal Holdings' directors and corporate auditors:
Position(s) and
Name
Office(s) with Wacoal
Business Experience and Position(s) and
(Date of Birth)
Holdings
Date
Office(s) with Wacoal Holdings
Yoshikata Tsukamoto
Representative Director
Apr 1972
Nov 1977
Joins Wacoal Corp.
Director
(Jan 29, 1948)
Nov 1981
Managing Director
Sep 1984 – present
Representative Director
Sep 1984
Executive Vice President
Jun 1987
President
Jun 2002
Corporate Officer
Jun 2003 – present
President Corporate Officer*
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Position(s) and
Name
Office(s) with Wacoal
Business Experience and Position(s) and
(Date of Birth)
Holdings
Date
Office(s) with Wacoal Holdings
Shoichi Suezawa
Senior Managing
Mar 1970
Joins Wacoal Corp.
(Jun 13, 1947)
Director
Apr 1994
Chief of Accounting Group and Financial Group,
Management Control Division
Jun 1996
Director
Jun 1998
Chief of Management Planning Office and General
Manager of Accounting and Financial
Department
Apr 2002
Supervisor for Personnel, General
Administration and Accounting Staffs
Jun 2002
Managing Director and Corporate Officer
Apr 2003
Supervisor for Personnel, General
Administration, Accounting and Business
Strategy Staff and Chief of President's Office
Jun 2003
Senior Corporate Officer
Apr 2005
Supervisor for Corporate Staff
Jun 2005
Senior Managing Corporate Officer
Jun 2006 – present
Senior Managing Director
Yuzo Ito
Director
Mar 1970
Joins Wacoal Corp.
(Mar 15, 1948)
Apr 1995
General Manager of Innerwear Merchandise Sales
Department, Wing Brand Operation Division
Jun 1997
Director
Apr 2001
Deputy General Manager of Wing Brand Operation
Division and General Manager of Innerwear
Merchandise Sales Department
Apr 2002
General Manager of Wing Brand Operation Division
Jun 2002
Corporate Officer
Jun 2003
Managing Director
Jun 2003
Senior Corporate Officer
Apr 2005 — present
Supervisor for Wacoal Brand Operation Division
and Wing Brand Operation Division*
Jun 2005 — present
Senior Managing Corporate Officer*
Oct 2005 — present
Director
Tatsuya Kondo
Director
Mar 1966
Joins Wacoal Corp.
(Oct 17, 1947)
Apr 2001
General Manager of Wellness Department
Jun 2002 – present
Director
Jun 2002
Corporate Officer
Jun 2003
Senior Corporate Officer
Apr 2005 – present
General Manager of Direct Marketing Operation
Division and Supervisor for Wellness
Department*
Jun 2005 – present
Managing Corporate Officer*
Tadashi Yamamoto
Director
Mar 1976
Joins Wacoal Corp.
(Nov 14, 1952)
Apr 2002
General Manager of Human Resources Department
Jun 2002
Corporate Officer
Apr 2006 – present
General Manager of Personnel and Administration Department
Jun 2006 – present
Director
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Table of Contents
Position(s) and
Name
Office(s) with Wacoal
Business Experience and Position(s) and
(Date of Birth)
Holdings
Date
Office(s) with Wacoal Holdings
Kazuo Inamori
Director
Apr 1959
Established Kyoto Ceramic Co., Ltd. (currently Kyocera Corporation)
(Jan 30, 1932)
May 1966
President and Representative Director of Kyoto
Ceramic Co., Ltd.
Apr 1984 – present
Established The Inamori Foundation; President
Jun 1984
Established DDI Corporation (currently KDDI
Corporation); Chairman and Representative
Director
Jun 1985
Chairman and Representative Director of Kyocera
Corporation
Jun 1997
Chairman Emeritus and Director of Kyocera
Corporation (retired as Director in Jun 2005)
Chairman Emeritus and Director of DDI
Corporation
Jun 2001 – present
Honorary Adviser of KDDI Corporation
Jun 2005 – present
Chairman Emeritus of Kyocera Corporation
Jun 2005 – present
Director of Wacoal Corp. (presently Wacoal
Holdings Corp.)
Mamoru Ozaki
Director
Jun 1991
Director-General of National Tax Agency
(May 20, 1935)
Jun 1992
Administrative Vice-Minister of Finance
May 1994
Governor of People's Finance Corporation
Oct 1999
Governor of National Life Finance Corporation
Feb 2003 – present
Advisor of Yazaki Sogyo Corporation
Jul 2003
Advisor of Wacoal Corp.
Jun 2005 – present
Director of Wacoal Corp. (presently Wacoal
Holdings Corp.)
Michihiko Kato
Standing Corporate
Mar 1972
Joins Wacoal Corp.
(Jul 2, 1947)
Auditor
Jun 1997
General Manager of Administration Department
Jun 1998
Director
Apr 2001
Chief of Secretary's Office and General Manager
of Administration Department
Apr 2002
Chief of President's Office and General Manager
of Administration Department
Jun 2002
Corporate Officer
Apr 2003
Supervisor for Corporate Communication Center
Jun 2004 – present
Standing Corporate Auditor
Hajime Kotake
Standing Corporate
Mar 1972
Joins Wacoal Corp.
(Jan 26, 1949)
Auditor
Apr 1996
Manager of Department Store Accounting and
General Administration Group of Osaka Sales
Office
Apr 1998
Manager of Business Administration Group of
Wacoal Brand Operation Division
Sep 2000
General Manager of Business Administration
Department of Wacoal Brand Operation Division
Jun 2002
Corporate Officer
Jun 2004 – present
Standing Corporate Auditor
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Table of Contents
Position(s) and
Name
Office(s) with Wacoal
Business Experience and Position(s) and
(Date of Birth)
Holdings
Date
Office(s) with Wacoal Holdings
Noboru Unabara
Corporate Auditor
Feb 1962
Joins Tsuda Certified Public Accountants Office
(Feb 26, 1935)
Apr 1965
Registered as certified public accountant
May 1968
Joins Tohmatsu Awoki & Co. (currently Deloitte
Touche Tohmatsu)
Nov 1972
Partner of Tohmatsu Awoki & Co.
May 1974
Representative partner of Tohmatsu Awoki & Co.
Jun 2000 – present
Corporate Auditor of Wacoal Corp. (presently
Wacoal Holdings Corp.)
Yutaka Hasegawa
Corporate Auditor
Apr 1962
Joined
Mitsubishi Bank, Ltd. (currently Bank of Tokyo-Mitsubishi UFJ,
Ltd.)
(Oct 8, 1939)
Jun 1989
Director of Mitsubishi Bank, Ltd.
May 1993
Managing Director of Mitsubishi Bank, Ltd.
Apr 1996
Managing Director of Bank of Tokyo Mitsubishi,
Ltd. (following merger of Mitsubishi Bank,
Ltd. and Bank of Tokyo Ltd.)
Jun 1998
Director and President of Diamong Business
Consulting
Kabushiki Kaisha
(currently
Mitsubishi UFJ Research & Consulting Co.,
Ltd.)
Jan 1999
Statutory Auditor of Tokyo-Mitsubishi
Securities
Kabushiki Kaisha
(currently
Mitsubishi UFJ Securities Co., Ltd.)
Jun 2001
Full time Statutory Auditor of Bank of
Tokyo-Mitsubishi, Ltd. (currently Bank of
Tokyo- Mitsubishi UFJ, Ltd.)
Jan 2006
Full-time Statutory Auditor of Bank of
Tokyo-Mitsubishi UFJ, Ltd. (following merger
of Bank of Tokyo-Mitsubishi, Ltd. and UFJ
Bank
Jun 2006 – 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 of Wacoal Corp. (presently
Wacoal Holdings Corp.)
*
This position was transferred to our new wholly owned subsidiary Wacoal Corp. at the time of
our transition to a holding company structure.
The terms of all of our directors expire in June 2007. The term as corporate auditor for
Mr. Unabara expires in June 2007, the terms as corporate auditor for Messrs. Kato and Kotake expire
in June 2008, the term as corporate auditor for Ms. Takemura expires in June 2009, and the term as
corporate auditor for Mr. Hasegawa expires in June 2010.
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B. Compensation.
Aggregate compensation, including bonuses, paid by Wacoal Holdings in fiscal year 2006 to our
directors and corporate auditors was ¥268 million.
A provision in the amount of ¥11 million was made during fiscal year 2006 to provide
retirement allowance for directors and corporate auditors of Wacoal Holdings. The balance of our
liability for termination benefits for directors and corporate auditors was ¥72 million and ¥615
million at March 31, 2006 and 2005, respectively.
We do not have a stock option plan for directors, corporate auditors or any other employees.
C. Board Practices.
Wacoal Holdings' Articles of Incorporation provide for a board of directors of not more than
seven 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.
The board of directors may elect one chairman, one president and one or more vice chairman,
executive vice presidents, senior managing directors and managing directors. The board of
directors elects, pursuant to its resolutions, one or more representative directors. Each
representative director represents Wacoal Holdings generally in the conduct of its affairs. The
board of directors has the ultimate responsibility for the administration of Wacoal Holdings'
affairs. None of Wacoal Holdings' directors is party to a service contract with Wacoal Holdings or
any of its subsidiaries that provides for benefits upon termination of employment.
Under Company Law of Japan (the "Company Law"), Wacoal Holdings 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 during the past. The 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, these corporate auditors form a
board of corporate auditors. The corporate auditors have the duty to examine the financial
statements and business reports which are submitted by the board of directors to the general
shareholders' meeting. The corporate auditors also supervise the administration of Wacoal
Holdings' affairs by the directors. Corporate auditors are not required to be, and Wacoal
Holdings' corporate auditors are not, certified public accountants. They are required to
participate in meetings of the board of directors but are not entitled to vote.
Under the Company Law and Wacoal Holdings' Articles of Incorporation, Wacoal Holdings may
enter into a liability limitation agreement with each outside director or corporate auditor which
limits the maximum amount of their liabilities owed to Wacoal Holdings arising in connection with
their failure to execute their duties to an amount equal to the minimum liability limit amount
prescribed in the laws and regulations.
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We do not have a remuneration committee.
Exemption from Certain Corporate Governance Requirements of NASDAQ.
Pursuant to home country practice exemptions granted by NASDAQ, we are permitted to follow
certain corporate governance practices complying with Japanese laws, regulations and stock exchange
rules in lieu of NASDAQ's corporate governance listing requirements. These exemptions and the
practices that we follow are described below:
•
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
unconsolidated financial statements prepared in accordance with Japanese GAAP in
Japanese. Concurrently with such distribution, we distribute Japanese GAAP audited
unconsolidated 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. The English version contains a statement that, upon request by an
interested party, we will provide the party with a copy of our annual report on Form
20-F. 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.
•
Independent directors.
We are exempt from NASDAQ's requirement that there be
independent directors on our board of directors. Currently, for a foreign issuer,
NASDAQ requires that there be two independent directors on its board of directors. For
large Japanese companies, including us, which employ a corporate governance system
based on a board of corporate auditors, the Company Law 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 Company Law. 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.
•
Audit committee.
We are exempt from NASDAQ's requirements with respect to the audit
committee of the board of directors. 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
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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. 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.
•
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 Company Law, however, under our Articles of Incorporation no
quorum is required for the adoption of resolutions at a general meeting of
shareholders, except for (i) the election of directors and corporate auditors for which
the quorum shall not be less than one-third of the total voting rights and (ii)
resolutions for other specified issues required by the Company Law (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 into two or more corporations 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 a "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. 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 the Company
solicit proxies, provide proxy statements for all meetings of shareholders and provide
copies of such proxy solicitation to NASDAQ. The Company Law requires the Company to
send ballots to all shareholders with voting rights, together with the notice of
shareholders' meeting. Although the Company may choose to solicit proxies from all
shareholders with voting rights instead of voting by ballot, the Company, in
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common
with the majority of public companies in Japan, provides its shareholders with the
opportunity to vote directly by ballot.
•
Review of related party transactions.
We are exempt from NASDAQ's requirement that
the Company conduct an appropriate review of all related party transactions for
potential conflict of interests and that all such transactions be approved by the
Company's audit committee or other independent body of the board of directors. The
Company Law provides that approval of the board of directors is required for any
transaction between the Company and any of its directors or any transaction between the
Company and any third party where such transaction involves a conflict of interest
situation between the Company and a director. No director can engage in any business
which competes with the business of the Company unless he is permitted to do so by the
board of directors. All related party transactions between the Company, its
subsidiaries directors and major shareholders must be disclosed in the Company's
securities report filed annually with the Minister of Finance of Japan.
D. Employees.
The following table lists the number of our full-time employees as of March 31, 2006, 2005 and
2004:
Asia (other
Total
Japan
U.S.
1
than Japan)
Others
March 31, 2006
Textile Products
and Related
Products
12,422
7,118
1,558
3,715
31
Other
450
443
—
7
—
Corporate
148
148
—
—
—
Total
13,020
7,709
1,558
3,722
31
March 31, 2005
Textile Products
and Related
Products
11,924
7,239
1,409
3,240
36
Other
479
472
—
7
—
Corporate
162
162
—
—
—
Total
12,565
7,873
1,409
3,247
36
March 31, 2004
Textile Products
and Related
Products
10,647
7,032
1,149
2,428
38
Other
454
452
—
2
—
Corporate
166
166
—
—
—
Total
11,267
7,650
1,149
2,430
38
1.
Includes employees in the Caribbean.
During fiscal year 2006, we had an average of 1,616 temporary employees.
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Except for Nanasai and our seven manufacturing subsidiaries in Japan, the employees of Wacoal
Holdings and our Japanese subsidiaries are organized into one union. Each of Nanasai and our seven
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 the various unions are satisfactory.
E. Share Ownership.
The following table lists the number of shares owned by Wacoal Holdings' directors and
corporate auditors as of June 30, 2006. As of such date, our directors and corporate auditors
collectively held a total of 1,386,136 shares of our common stock as set forth below, and this
number of shares constituted 0.96% of all outstanding shares of our common stock.
Name
No. of Shares
% of Common Stock
Yoshikata Tsukamoto
1,335,136
*
Shoichi Suezawa
9,000
*
Yuzo Ito
14,000
*
Tatsuya Kondo
6,000
*
Tadashi Yamamoto
2,000
*
Michihiko Kato
7,000
*
Hajime Kotake
5,000
*
Noboru Unabara
5,000
*
Yoko Takemura
3,000
*
*
Less than 1% of our total outstanding common shares.
We have not issued any options or other securities to purchase shares of our capital
stock to any director or corporate auditor.
There are no arrangements that involve the issue or grant of options, shares or securities of
Wacoal Holdings to our employees.
ITEM 7. Major Shareholders and Related Party Transactions.
A. Major Shareholders.
As of March 31, 2006, 144,016,685 shares of our common stock were issued and outstanding,
including 100,752 shares of treasury stock, which are held by Wacoal Holdings. Beneficial
ownership of Wacoal Holdings' common stock in the table below was prepared from publicly available
records of the filings made by Wacoal Holdings' shareholders regarding their ownership of Wacoal
Holdings' common stock under the Securities and Exchange Law of Japan.
Under the Securities and Exchange Law of Japan, any person who becomes, beneficially and
solely or jointly, a holder, including but not limited to a deemed holder who manages shares for
another holder pursuant to a discretionary investment agreement, of more than 5% of the shares with
voting rights of a company listed on a Japanese stock exchange (including ADSs representing such
shares) must file a report concerning the shareholding with the director of the relevant local
finance bureau. A similar report must be filed, with certain exceptions, if the percentage of
shares
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held by a holder, solely or jointly, of more than 5% of the total issued shares of a company
increases or decreases by 1% or more, or if any change to a material matter set forth in any
previously filed reports occurs.
Based on publicly available information, the following table sets forth the beneficial
ownership of holders of more than 5% of Wacoal Holdings' common stock as of the dates indicated in
the reports described below.
Percentage of
Name of Shareholder
Number of Shares
Shares Outstanding
NWQ Investment Management Co., LLC
18,820,106
13.07
%
Mitsubishi UFJ Financial Group, Inc. and its joint holders
12,587,173
8.74
The number of shares owned by NWQ Investment Management Co, LLC is based on a report
filed under the Securities and Exchange Law of Japan stating that NWQ Investment Management Co, LLC
held or was deemed to beneficially hold 18,820,106 shares of Wacoal Holdings' common stock as of
April 11, 2006.
The number of shares owned by Mitsubishi UFJ Financial Group, Inc. and its joint holders is
based on a report filed under the Securities and Exchange Law of Japan stating that Mitsubishi UFJ
Financial Group, Inc. and its joint holders held or were deemed to beneficially hold12,587,173
shares of Wacoal Holdings' common stock as of April 30, 2006.
Based on information made publicly available on or after April 1, 2003, the following table
describes transactions resulting in a 1% or greater change in the percentage ownership held by
major beneficial owners of Wacoal Holdings' common stock.
Shares
Shares
Percentage
Owned
Percentage
Number of
Owned
of
Date of
Prior to
of Shares
Shares
After the
Shares
Name of Shareholder
Transaction
Transaction
Issued
Changed
Transaction
Issued
Mitsubishi Tokyo Financial Group
and its joint holders
Jul 31, 2003
10,955,225
7.35
%
(1,788,381
)
9,166,844
6.25
%
NWQ Investment Management Co.,
LLC
Feb 2, 2005
—
—
15,523,021
15,523,021
10.78
Mitsubishi UFJ Financial Group,
Inc. and its joint holders
Oct 31, 2005
9,514,837
6.61
3,143,097
12,657,934
8.79
NWQ Investment Management Co.,
LLC
Dec 14, 2005
15,523,021
10.78
1,602,060
13,916,681
9.66
NWQ Investment Management Co.,
LLC
Feb 7, 2006
13,916,681
9.66
1,602,060
15,518,741
10.78
NWQ Investment Management Co.,
LLC
Feb 28, 2006
15,518,741
10.78
1,624,010
17,142,751
11.90
NWQ Investment Management Co.,
LLC
Apr 11, 2006
17,142,751
11.90
1,677,355
18,820,106
13.07
As of March 31, 2006, approximately 8,135,561 shares, or 5.6% of the outstanding shares
of our common stock other than in the form of American Depositary Shares, were held of record by 55
residents of the United States.
The 16,045,880 shares of our common stock held of record by The Bank of New York on March 31,
2006 underlay the 3,209,176 American Depositary Shares of Wacoal Holdings held of record by 9
persons.
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To the extent known to Wacoal Holdings, Wacoal Holdings is 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 Wacoal Holdings Corp.
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 ¥1,811 million
($15,415 thousand) in fiscal year ended March 31, 2006.
Wacoal also sells supplies, materials and products to certain affiliates. Aggregate sales to
affiliates were ¥1,494 million ($12,717 thousand) in fiscal years ended March 31, 2006.
The Company does not consider the amounts involved in such transactions to be material to its
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 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 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, there has been no significant
change in our financial position since March 31, 2006, the date of our consolidated financial
statements included in this annual report.
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Table of Contents
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 SmallCap Market
in the U.S. The depositary of the ADSs is The Bank of New York. 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
SmallCap Market. The last reported sale price of our common shares on the Tokyo Stock Exchange on
July 5, 2006 was 1,613, and the last reported sale price of our ADSs on the Nasdaq SmallCap Market
on July 5, 2006 was 68.81.
Tokyo Stock Exchange
Nasdaq SmallCap Market
Price Per Share
Price Per ADS
High
Low
High
Low
Fiscal year ended March 31,
2002
1,335
922
53.25
34.50
2003
1,068
846
44.65
34.80
2004
1,080
833
53.00
35.51
2005
1,500
1,033
69.99
46.62
2006
1,690
1,300
75.70
58.77
Fiscal quarter ended/ending
March 31, 2004
1,080
887
53.00
41.29
June 30, 2004
1,180
1,040
54.99
46.62
September 30, 2004
1,167
1,033
53.75
47.43
December 31, 2004
1,229
1,050
61.25
47.43
March 31, 2005
1,500
1,110
69.99
53.95
June 30, 2005
1,502
1,300
68.92
62.01
September 30, 2005
1,680
1,329
75.70
58.77
December 31, 2005
1,690
1,410
70.58
61.37
March 31, 2006
1,667
1,565
72.17
66.01
June 30, 2006
1,821
1,508
80.99
64.42
Month ended/to
March 31, 2006
1,650
1,567
69.11
66.01
April 30, 2006
1,630
1,530
68.09
66.01
May 31, 2006
1,821
1,536
80.99
65.51
June 30, 2006
1,730
1,508
76.53
64.42
July 5, 2006
1,617
1,603
69.87
68.45
B. Plan of Distribution.
Not applicable.
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C. Markets.
See "Item 9.A. Offering 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.
A copy of Wacoal Holdings' Articles of Incorporation, amended as of June 29, 2005, is being
filed as an exhibit to this annual report on Form 20-F. See "Item 10.H. Documents on Display".
The following summarizes certain provisions of Wacoal Holdings' organizational documents and
applicable Japanese law. This summary is qualified in its entirety by reference to the Company Law
and Wacoal Holdings' Articles of Incorporation, the Share Handling Regulations and the Regulations
of the Board of Directors, each 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 under
the Company Law. 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 the Articles of Incorporation of Wacoal Holdings 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;
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(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)
nonlife 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;
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(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 Company Law, 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
the Board of Directors, has the corporate authority to represent our company in all respects.
Under both the Company Law and the Regulations of the Board of Directors of Wacoal Holdings, our
directors must refrain from engaging in any business which competes
with that of our company, unless
approved by the Board of Directors. Any director who has a material interest in the subject matter
of a resolution to be taken by the Board of Directors cannot vote on such resolution.
The
Company Law and our Articles of Incorporation provide that the remuneration of
directors and corporate auditors shall be determined at a general meeting of shareholders. Except
as stated below, neither the Company Law 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 (or a director who is
given the power by a representative director to exercise such powers), the retirement age of any
director or corporate auditor or any requirement to hold any shares
of our capital stock.
The
Company Law 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 the Board of Directors is also specifically required for the establishment
of a control system to ensure the adequacy of Wacoal Holdings' affairs, such as a control system to
ensure the exercise of our directors' duty to comply with laws and regulations and the Articles of
Incorporation of Wacoal Holdings. The Regulations of the Board of Directors of our company require
a resolution of the Board of Directors for the long-term
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borrowing or lending 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 the 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 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 the Board of Directors by the general
meeting of shareholders in accordance with the Company Law.
Capital stock
Authorized Capital
Article 6 of the Articles of Incorporation of Wacoal Holdings provides that the total number
of shares it is authorized to issue is 500,000,000 shares.
Distributions of Surplus
General
Under the Company Law, 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, Wacoal Holdings 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 the 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 shareholders, but may also be made pursuant to a
resolution of the Board of Directors if all the requirements described in (a) through (c) are met:
(a) Wacoal Holdings' 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 Wacoal Holdings' directors is not longer than one
year; and
(c) Wacoal Holdings' 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.
In the case of Wacoal Holdings, at present, the requirements in (a) and (b) above are met.
Wacoal
Holdings is 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 shareholders or the 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
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date of
the distribution. If a distribution of Surplus is to be made in-kind, Wacoal
Holdings may, pursuant to a resolution of a general meeting of shareholders or
the Board of Directors, as the case may be, grant a right to its shareholders to require Wacoal Holdings 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
shareholders (see "Voting rights" 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 Wacoal Holdings makes a distribution of Surplus, it must set aside in its
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 its additional
paid-in capital and legal reserve reaches one-quarter of its 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 Wacoal Holdings' non-consolidated balance sheet as
of the end of the last fiscal year
"B"
=
(if Wacoal Holdings has disposed of its treasury stock after the end of the
last fiscal year) the amount of the consideration for such treasury stock received by
Wacoal Holdings less the book value thereof
"C"
=
(if Wacoal Holdings has reduced its 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 Wacoal Holdings has reduced its 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 Wacoal Holdings has cancelled its treasury stock after the end of the
last fiscal year) the book value of such treasury stock
"F"
=
(if Wacoal Holdings has distributed Surplus to its 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 Wacoal Holdings has reduced Surplus and increased its stated
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capital,
additional paid-in capital or legal reserve after the end of the last fiscal year) the
amount of such reduction and (if Wacoal Holdings has distributed Surplus to its
shareholders after the end of the last fiscal year) the amount set aside in its
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 Wacoal Holdings 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 shall be equal to the amount of Surplus
less the aggregate of (a) the book value of its treasury stock, (b) the amount of consideration for
any of its treasury stock disposed of by it after the end of the last fiscal year and (c) 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 Wacoal Holdings' 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 Wacoal Holdings has
become, at its 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
), it will be required to further deduct from the amount
of Surplus a certain amount which is calculated based on its 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 Wacoal Holdings has prepared interim financial statements as described below, and if such
interim financial statements have been approved by the Board of Directors or (if so required by the
Company Law) by a general meeting of 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 its
treasury stock disposed of by it, during the period in respect of which such interim financial
statements have been prepared. Wacoal Holdings 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 Wacoal Holdings must be
audited by its corporate auditors and independent certified public accountants, as required by
ordinances of the Ministry of Justice.
General Meeting of Shareholders
Pursuant to the Articles of Incorporation of Wacoal Holdings, an ordinary general meeting of
shareholders of Wacoal Holdings shall be convened in June of each year. In addition, Wacoal
Holdings may hold an extraordinary general meeting of 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 Company Law, such notice may be given to shareholders by electronic
means, subject to the consent of the relevant shareholders.
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Any shareholder or group of shareholders holding at least 300 voting rights (see "Unit Share
System" below) or one percent of the total number of voting rights for six months or more may
propose a matter to be considered at a general meeting of shareholders and may propose to describe
such matter together with a summary of the proposal to be submitted by shareholder in the notice to
shareholders attending such general meeting, by submitting a written 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. However, in general, neither Wacoal Holdings
nor any corporate shareholder or certain other entity one-quarter or more of the total voting
rights of which are directly or indirectly held by Wacoal Holdings, has voting rights in respect of
the shares held by Wacoal Holdings or such entity.
Except as otherwise provided by law or by the Articles of Incorporation of Wacoal Holdings, a
resolution can be adopted at a general meeting of shareholders by a majority of the total number of
voting rights represented at the meeting. Under the Company Law and Wacoal Holdings' Articles of
Incorporation, however, the quorum for the election of directors and corporate auditors is
one-third of the total number of voting rights. Wacoal Holdings' 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. Wacoal
Holdings' shareholders also may cast their votes in writing. Holders of shares who do not attend a
general meeting of shareholders may also exercise their voting rights by electronic means if the
Board of Directors approves such method of exercising voting rights.
The Company Law provides that certain important matters shall be approved by a "special
resolution" of a general meeting of shareholders. Under Wacoal Holdings' 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:
(i) purchase of shares by Wacoal Holdings from a specific shareholder other than Wacoal
Holdings' subsidiary;
(ii) consolidation of shares;
(iii) issuance or transfer of new shares or existing shares held by Wacoal Holdings as
treasury stock to persons other than shareholders at a "specially favorable" price;
(iv) issuance of stock acquisition rights (including those incorporated in bonds with
stock acquisition rights) to persons other than shareholders under "specially favorable"
conditions;
(v) removal of Wacoal Holdings' corporate auditor;
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(vi)
partial exemption from liability of Wacoal Holdings' directors, corporate
auditors or independent auditors;
(vii) reduction of stated capital (subject to certain exceptions);
(viii)
distribution of Surplus in kind with respect to which shareholders are not
granted the right to require Wacoal Holdings to make a cash
distribution instead of an in-kind
distribution;
(ix) any amendment to Wacoal Holdings' Articles of Incorporation (except for such
amendments that may be made without approval by shareholders under the Company Law);
(x) transfer of all or a substantial portion of Wacoal Holdings' business;
(xi) acquisition of the business of another company requiring
approval of the shareholders;
(xii) dissolution, merger or consolidation requiring approval of the shareholders;
(xiii) corporate split requiring approval of the shareholders; and
(xiv) 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 Wacoal Holdings' shares of capital stock have no pre-emptive rights under its
Articles of Incorporation. Authorized but unissued shares may be issued at such times and upon
such terms as the Board of Directors determines, subject to limitations as to the offering of
new shares at a "specifically favorable" price mentioned under "Voting Rights" above. The Board of
Directors may, however, determine that shareholders of a particular class of stock shall be given
subscription rights regarding a particular issuance of new shares of that class, in which case such
rights must be given on uniform terms to all shareholders of that class of stock 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, Wacoal
Holdings may allot stock acquisition rights to shareholders without consideration and such stock
acquisition rights are transferable. See "Stock Acquisition Rights" below.
Stock Acquisition Rights
Wacoal Holdings may issue stock acquisition rights (
shinkabu yoyakuken
). Holders of stock
acquisition rights are entitled to acquire shares from Wacoal Holdings upon payment of the
applicable exercise price and subject to other terms and conditions thereof. Wacoal Holdings may
also issue bonds with stock acquisition rights (
shinkabu yoyakuken-tsuki shasai
). The issuance of
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stock acquisition rights and bonds with stock acquisition rights may be authorized by the
Board of Directors unless it is made under "specially favorable" conditions, as described in
"Voting Rights" above.
Liquidation Rights
In the event of a liquidation of Wacoal Holdings, 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 shareholders entitled to receive Wacoal
Holdings' year-end dividends and to vote at the ordinary general meeting of shareholders with
respect to the fiscal year ending on such date. In addition, Wacoal Holdings may set a record
date for determining the shareholders and/or beneficial shareholders entitled to other rights and
for other purposes by giving at least two weeks' prior public notice.
Acquisition by Wacoal Holdings of its Capital Stock
Wacoal
Holdings may acquire its shares of capital stock (i) by soliciting all of its 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, shall be set by an ordinary
resolution of a general meeting of shareholders in advance, and such acquisition shall be effected
pursuant to a resolution of the Board of Directors), (ii) from a specific shareholder other than
any of Wacoal Holdings' subsidiaries (pursuant to a special resolution of a general meeting of
shareholders), (iii) from any of Wacoal Holdings' subsidiaries (pursuant to a resolution of the
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 shareholders or a resolution of the Board of Directors). In the case of (ii)
above, any other shareholder may make a request to Wacoal Holding's 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 the shares may not exceed the Distributable Amount, as
described in "Distributions of Surplus — Restriction on distributions of Surplus."
The Company Law permits Wacoal Holdings to hold shares acquired by it as treasury stock.
Treasury stock may be held by Wacoal Holdings for any time period and may be cancelled by
resolution of its Board of Directors. Wacoal Holdings may also transfer shares held
by it as treasury stock to any person, subject to a resolution of its Board of Directors and subject also to
other requirements similar to those applicable to the issuance of new shares. Wacoal Holdings may
also utilize its 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.
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No specific approval by the 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 the Board of Directors or shareholders at Wacoal Holdings' shareholders'
meeting, as the case may be.
Unit Share System
Under Wacoal Holdings' Articles of Incorporation, 1,000 shares constitute one "unit." The
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 Wacoal Holdings' Articles of Incorporation
without approval by the shareholders. The number of shares constituting one unit may not exceed 1,000.
Wacoal Holdings' Articles of Incorporation and Share Handling Regulations provide that, in general, no
stock certificates shall be issued with respect to any shares constituting less than
one unit. Consequently, no certificates for shares other than a full unit or an integral multiple
thereof will be issued (except for the purpose of protection of the holders of shares constituting
less than one unit). As the transfer of shares normally requires delivery of the relevant stock
certificates, any fraction of a unit for which no stock certificates are issued will not be
transferable.
Under the unit share system, a shareholder has one vote for each unit of shares held by it.
Shares not constituting a full unit will carry no voting rights and will be excluded for the purposes of
calculating the quorum for voting purposes. Moreover, under Wacoal Holdings' Articles of
Incorporation, holders of shares constituting less than one unit will not have other shareholder
rights, except that such holders may not be deprived of certain rights specified in the Company Law
or an ordinance of the Ministry of Justice, including the right to receive distribution of Surplus.
A holder of shares constituting less than one unit may require Wacoal Holdings to purchase
such shares at their market value. The request of such purchase may not be withdrawn without
Wacoal Holdings' consent.
A holder who owns ADRs evidencing less than 200 ADSs will indirectly own less than a whole
unit. Although, as discussed above, under the unit share system holders of less than a unit have
the right to require Wacoal Holdings to purchase their shares, holders of ADRs evidencing ADSs that
represent other than integral multiples of whole units are unable to withdraw the underlying shares
of capital stock representing less than a unit and, therefore, are unable, as a practical matter,
to exercise the rights to require Wacoal Holdings to purchase such underlying shares. As a result,
access to the Japanese markets by holders of ADRs through the withdrawal mechanism will not be
available for dispositions of shares in lots of less than a unit. The unit share system does not
affect the transferability of ADSs, which may be transferred in lots of any size.
Reporting of Substantial Shareholdings
Pursuant to the Securities and Exchange Law of Japan and regulations thereunder, a person or
group of persons beneficially holding more than 5% of the total shares with voting rights (for this
purpose shares issuable upon exercise of stock acquisition rights held by the person or persons are
counted in the calculation of the holding and the total shares in issue) 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
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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.
Miscellaneous
Wacoal Holdings' Articles of Incorporation has authorized the adoption of a basic policy for
measures against the acquisition of a substantial shareholding (i.e., defensive measures
against takeovers) (the "Basic Policy") for the purposes of securing or enhancing corporate value
and the common interests of shareholders. The Board of Directors of Wacoal Holdings has adopted
certain measures (the "Plan") under the Basic Policy in accordance with the Articles of
Incorporation.
The outline of the Plan is as follows:
(a) Formulation of Procedures for Implementation of the Plan
Under the Plan, Wacoal Holdings will demand that any third party (a "Purchaser") who
launches or proposes a purchase or any similar act (a "Purchase") provide information in
advance concerning such Purchase, and after Wacoal Holdings ensures sufficient time to
obtain such information and consider such Purchase, Wacoal Holdings will present a plan of the management
of Wacoal Holdings to its shareholders or otherwise negotiate with the Purchaser.
(b) Gratis Allocation of Share Acquisition Rights and Independent Committee
If the Purchaser fails to comply with the procedures as prescribed by the Plan and
conducts a Purchase, or in the event of any Purchase by a Purchaser that threatens the
corporate value of Wacoal Holdings and the common interests of its shareholders, Wacoal
Holdings will conduct a gratis allocation of acquisition rights for the subscription of new
shares with terms that prohibit the Purchaser from exercising such rights and with call
rights for the acquisition of new shares from Wacoal Holdings by shareholders other
than the Purchaser (the "Share Acquisition Rights") at such time and in the manner
prescribed in Article 277 et al. of the Company Law.
The Company shall comply with the Regulations of the Independent Committee in order to
prevent the Board of Directors from making an arbitrary decision concerning the trigger or
non-trigger of the gratis allocation of the Share Acquisition Rights or other matters
concerning the acquisition. In addition, Wacoal Holdings shall ensure transparency by
seeking the judgment of an Independent Committee, which will be comprised of members
appointed from (i) outside directors of Wacoal Holdings, (ii) outside corporate auditors of
Wacoal Holdings or (iii) independent experts (experienced company managers, persons with a
governmental background, legal counsel, certified public accountants, academic experts,
etc.) who shall be independent from the executive officers of Wacoal Holdings as well as
through timely disclosure of relative information to its shareholders.
There are no sinking fund provisions relating to Wacoal Holdings.
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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.
E. Taxation.
The discussion below is not intended to constitute a complete analysis of all tax consequences
relating to the acquisition, ownership and disposition of the ADSs. Prospective purchasers of the
ADSs should consult their own tax advisors concerning the tax consequences of their particular
situations.
The following is a general summary of the material U.S. federal and Japanese tax consequences
of the acquisition, ownership and disposition of shares of our common stock or ADSs by an investor
that holds those shares or ADSs as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"). This summary does not purport to address
all the material tax consequences that may be relevant to holders of our common stock or ADSs and
does not take into account the specific circumstances of any particular investors, some of which
(such as tax-exempt entities, banks and financial institutions, insurance companies,
broker-dealers, traders in securities that elect to use a mark-to-market method of accounting for
their securities holdings, investors liable for alternative minimum tax, investors that own or are
treated as owning 10% or more of our voting stock, investors that hold shares of our common stock
or ADSs as part of a straddle, hedge, conversion transaction or other integrated transaction and
investors whose functional currency is not the U.S. dollar) may be subject to special tax rules.
This summary is based on the tax laws of the United States and Japan, judicial decisions, published
rulings, administrative pronouncements and United States Treasury regulations, as in effect on the
date hereof, as well as on the current income tax convention between the United States and Japan,
all of which are subject to change (possibly with retroactive effect), and to differing
interpretations.
U.S. Holders (as defined below) should note that the Income Tax Treaty between United States
and Japan (the "Treaty") may apply to income and gain derived from the shares of our common stock
or ADSs. Where relevant, U.S. Holders are urged to confirm with their tax advisors whether they
are entitled to the benefits provided under the Treaty.
For purposes of this discussion, a "U.S. Holder" is any beneficial owner of shares of our
common stock or ADSs that, for U.S. federal income tax purposes, is:
(1)
an individual citizen or resident of the United States,
(2)
a corporation or other entity taxable as a corporation for U.S. federal income
tax purposes organized in or under the laws of the United States or any political
subdivision thereof,
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(3)
an estate the income of which is subject to U.S. federal income tax without
regard to its source, or
(4)
a trust, if such trust validly elects to be treated as a U.S. person for U.S.
federal income tax purposes, or if (a) a court within the U.S. can exercise primary
supervision over its administration and (b) one or more U.S. persons have the authority
to control all of the substantial decisions of such trust.
If a partnership (including for this purpose any entity treated as a partnership for U.S. tax
purposes) is a beneficial owner of shares of our common stock or ADSs, the U.S. tax treatment of a
partner in the partnership will generally depend on the status of the partner and the activities of
the partnership. A holder of shares of our common stock or ADSs that is a partnership and partners
in such partnership should consult their individual tax advisors about the U.S. federal income tax
consequences of holding and disposing of shares of our common stock or ADSs.
An "Eligible U.S. Holder" is a U.S. Holder that:
(1) is a resident of the United States for purposes of the Treaty, as applicable from time to
time;
(2) 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
(3) 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.
A "Non-U.S. Holder" is any beneficial owner of shares of common stock or ADSs that is not a
U.S. Holder.
This summary does not address any aspects of U.S. federal tax law other than income taxation
and 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 U.S. federal, state
and local and Japanese and other tax consequences of acquiring, owning and disposing of shares 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.
In general, taking into account the earlier assumptions, for purposes of the Treaty and for
U.S. federal income and Japanese tax purposes, owners of ADSs will be treated as the owners of the
shares of common stock represented by those ADSs, and exchanges of shares of common stock for ADSs,
and exchanges of ADSs for shares of common stock, will not be subject to U.S. federal income or
Japanese tax.
Japanese Taxation
The following is a summary of the principal Japanese tax consequences (limited to national
taxes) to holders of shares of common stock and of ADSs who are either individuals who are not
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residents of Japan or non-Japanese corporations without a permanent establishment in Japan
("non-resident 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% 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 March 31, 2008 and (ii) 15% for dividends due and payable
thereafter.
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 depositary 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
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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 shares 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 U.S. and Japan.
U.S. Federal Income Taxation
U.S. Holders
Taxation of Distributions
Subject to the discussion in "Passive Foreign Investment Companies" below, the gross amount of
any distribution made by us in respect of our shares of common stock or ADSs (without reduction for
Japanese withholding taxes) will constitute a taxable dividend to the extent paid out of our
current or accumulated earnings and profits, as determined for U.S. federal income tax purposes.
If you are a non-corporate U.S. Holder, dividends paid to you in taxable years beginning before
January 1, 2011, that constitute qualified dividend income will be taxable to you at a maximum tax
rate of 15% provided that you hold our ADSs or common stock for more than 60 days during the
120-day period beginning 60 days before the ex-dividend date and meet other holding period
requirements. A dividend generally will be included in the gross income of a U.S. Holder when the
dividend is actually or constructively received by the U.S. Holder, in the case of shares of common
stock, or by the depositary, in the case of ADSs. The dividend will not be eligible for the
dividends-received deduction generally allowed to U.S. corporations under the Code. A dividend
paid in Japanese yen will be included in gross income in a U.S. dollar amount based on the Japanese
yen/U.S. dollar exchange rate in effect on the date that dividend is included in the income of the
U.S. Holder, regardless of whether the payment is in fact converted into U.S. dollars. Generally,
any gain or loss resulting from currency exchange fluctuations during the period from the date the
dividend payment is included in the gross income of a U.S. Holder through the date that payment is
converted into U.S. dollars (or otherwise disposed of) will be treated as U.S. source ordinary
income or loss and will not be eligible for the special tax rate applicable to qualified dividend
income.
To the extent, if any, that the amount of any distribution received by a U.S. Holder in
respect of shares of our common stock or ADSs exceeds our current and accumulated earnings and
profits, as determined for U.S. federal income tax purposes, the distribution first will be treated
as a tax-free return of the U.S. Holder's adjusted tax basis in those shares or ADSs, and any
balance in excess of that adjusted tax basis will be treated as capital gain.
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Distributions of additional shares of common stock that are made to U.S. Holders with respect
to their shares of common stock or ADSs and that are part of a pro rata distribution to all of our
shareholders generally will not be subject to U.S. federal income tax. The basis of the new shares
of common stock so received will be determined by allocating the U.S. Holder's basis in the old
shares of common stock or ADSs between the old shares of common stock or ADSs and the new shares of
common stock received, based on their relative fair market values on the date of distribution.
However, the basis of the new shares will be zero if the fair market value of the new shares is
less than 15% of the fair market value of the old shares of common stock or ADSs at the time of
distribution and the U.S. Holder does not make an election to determine the basis of the new shares
by allocation as described above. A U.S. Holder's holding period in the new shares will generally
include the holding period of the old shares of common stock or ADSs on which the distribution was
made.
For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in
respect of shares of our common stock or ADSs will constitute income from sources outside the
United States, and generally will be treated separately, together with other items of "passive
income" (or, in the case of some U.S. holders, "financial services income") in computing foreign
tax credit limitations. For taxable years beginning after December 31, 2006, the foreign tax
credit limitation categories will consist of only "passive income" and "general category income".
"Financial services income" may be treated as "generally category income" if the U.S. Holder meets
certain requirements. Special foreign tax credit rules apply to qualified dividend income received
by individuals. Subject to generally applicable limitations under U.S. federal income tax law and
the Treaty, any Japanese withholding tax imposed in respect of the dividend may be claimed as a
credit against the U.S. federal income tax liability of a U.S. Holder (or as a deduction from that
U.S. Holder's taxable income, if that U.S. Holder elects). To the extent a refund of the Japanese
withholding tax is available to a U.S. Holder, the amount of tax withheld that is refundable may
not be claimed as a credit. U.S. Holder that (i) has held shares of our common stock or ADSs for
less than a specified minimum period during which it is not protected from risk of loss, (ii) is
obligated to make payments related to the dividends, or (iii) holds the shares of common stock or
ADSs in an arrangement in which the holder's expected economic profit, after non-U.S. taxes, is
insubstantial, will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid
on our shares of common stock or ADSs.
Investors are urged to consult their tax advisors regarding the availability of the foreign
tax credit under their particular circumstances. The Internal Revenue Service (the "IRS") has
expressed concern that parties to whom ADSs are released may be taking actions that are
inconsistent with the claiming of foreign tax credits by U.S. Holders of ADSs. Accordingly,
investors should be aware that the discussion above regarding the creditability of Japanese
withholding tax on dividends could be affected by future actions that may be taken by the IRS.
Taxation of Capital Gains
Subject to the discussion in "Passive Foreign Investment Companies" below, a U.S. Holder's tax
basis in an ADS generally will equal the U.S. Holder's cost of that ADS in U.S. dollars. In
general, upon a sale or other disposition of shares of our common stock or ADSs, a U.S. Holder will
recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference
between the U.S. dollar value of the amount realized and the U.S. Holder's tax basis, also
determined in U.S. dollars, in those shares or ADSs. That gain or loss generally will be capital
65
Table of Contents
gain or loss and, if the U.S. Holder's holding period for those shares or ADSs exceeds one
year, will be long-term capital gain or loss. Some U.S. Holders, including individuals, are
eligible for preferential rates (generally 15%) in respect of long-term capital gain recognized in
taxable years beginning before January 1, 2011. A U.S. Holder may deduct any loss resulting from
the sale or exchange of shares or ADSs only against other capital gains. For a U.S. Holder who is
an individual, up to $3,000 of capital loss in excess of capital gains may be deducted against
ordinary income. Excess losses may be carried forward. Any gain or loss recognized by a U.S.
Holder in respect of the sale or other disposition of shares of our common stock or ADSs generally
will be treated as U.S. source income or loss for foreign tax credit purposes, except that a loss
will be treated as foreign source loss to the extent a U.S. Holder received dividends that were
includible in the "financial services income" basket during the 24-month period prior to the sale
or other disposition.
Passive Foreign Investment Companies
It is possible that we may be classified as a passive foreign investment company (a "PFIC")
for U.S. federal income tax purposes for the taxable year ended March 31, 2006, or for the current
or future taxable years. If we are classified as a PFIC, U.S. Holders who own our stock or ADSs
during the taxable year in which we become or are a PFIC generally will be subject to increased
U.S. tax liabilities and reporting requirements for that taxable year and all succeeding years,
regardless of whether we continue to meet the income or asset test for PFIC status, although
shareholder elections may apply in certain circumstances. U.S. Holders should consult their own
tax advisors regarding our status as a PFIC and the consequences of an investment in a PFIC.
A company is considered a PFIC for any taxable year if either
(1) at least 75% of its gross income is passive income, or
(2) at least 50% of the value of its assets (based on an average of the quarterly values of
the assets during a taxable year) is attributable to assets that produce or are held for the
production of passive income.
We will be treated as owning our proportionate share of the assets and earning our
proportionate share of the income of any other corporation in which we own, directly or indirectly,
more than 25% (by value) of the stock.
We must make a separate determination each year as to whether we are a PFIC. As a result, our
PFIC status may change. The determination of whether or not we are a PFIC depends on the
composition of our income and assets, including goodwill, from time to time. The composition of
our assets will be affected by the extent to which we increase or reduce our active business assets
and/or our cash, investment securities and other passive assets. In addition, if our actual
acquisitions and capital expenditures do not match our projections, the likelihood that we are or
will be classified as a PFIC may also increase. We cannot assure you that we were not a PFIC for
prior taxable years and cannot predict whether we will be treated as a PFIC or for the current or
any future taxable year.
If we are a PFIC for any taxable year during which you hold stock or ADSs, you will be subject
to special tax rules with respect to any "excess distribution" that you receive and any gain you
realize from a sale or other disposition (including a pledge) of the stock or ADSs, unless you
66
Table of Contents
make a "mark-to-market" election as discussed below. Distributions you receive in a taxable
year that are greater than 125% of the average annual distributions you received during the shorter
of the three preceding taxable years or your holding period for the stock or ADSs will be treated
as an excess distribution. Under these special tax rules:
(1) the excess distribution or gain will be allocated ratably over your holding period for the
stock or ADSs,
(2) the amount allocated to the current taxable year, and any taxable year prior to the first
taxable year in which we were a PFIC, will be treated as ordinary income, and
(3) the amount allocated to each other year will be subject to tax at the highest tax rate in
effect for that year and the interest charge generally applicable to underpayments of tax will be
imposed on the resulting tax attributable to each such year.
The tax liability for amounts allocated to years prior to the year of disposition or "excess
distribution" cannot be offset by any net operating losses, and gains (but not losses) realized on
the sale of the stock or ADSs cannot be treated as capital, even if you hold the stock or ADSs as
capital assets.
If we are a PFIC, you may avoid taxation under the rules described above by making a
"qualified electing fund" election to include your share of our income on a current basis, or a
"deemed sale" election once we no longer qualify as a PFIC. However, you may make a qualified
electing fund election only if we agree to furnish you annually with certain tax information, and
we do not presently intend to prepare or provide such information.
Alternatively, a U.S. Holder of "marketable stock" in a PFIC may make a mark-to-market
election for stock of a PFIC to elect out of the tax treatment discussed three paragraphs above.
If you make a mark-to-market election for the stock or ADSs, you will include in income each year
an amount equal to the excess, if any, of the fair market value of the stock or ADSs as of the
close of your taxable year over your adjusted basis in such stock or ADSs. You are allowed a
deduction for the excess, if any, of the adjusted basis of the stock or ADSs over their fair market
value as of the close of the taxable year. However, deductions are allowable only to the extent of
any net mark-to-market gains on the stock included in your income for prior taxable years. Amounts
included in your income under a mark-to-market election, as well as gain on the actual sale or
other disposition of the stock or ADSs, are treated as ordinary income. Ordinary loss treatment
also applies to the deductible portion of any mark-to-market loss on the stock or ADSs, as well as
to any loss realized on the actual sale or disposition of the stock or ADSs, to the extent that the
amount of such loss does not exceed the net mark-to-market gains previously included for such stock
or ADSs. Your basis in the stock or ADSs will be adjusted to reflect any such income or loss
amounts. The tax rules that apply to distributions by corporations which are not passive foreign
investment companies would apply to distributions by us.
The mark-to-market election is available only for stock which is regularly traded on a
national securities exchange that is registered with the Securities and Exchange Commission or on
Nasdaq, or an exchange or market that the U.S. Secretary of the Treasury determines has rules
sufficient to ensure that the market price represents a legitimate and sound fair market value.
The ADSs are listed on the Nasdaq SmallCap Market. Accordingly, the mark-to-market election would
be available to you if we were to become a PFIC.
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Dividends paid by a PFIC are not "qualified dividend income" for purposes of the preferential
tax rate on qualified dividends discussed above.
If you hold stock or ADSs in any year in which we are a PFIC, you would be required to file
Internal Revenue Service Form 8621 regarding distributions received on the stock or ADSs and any
gain realized on the disposition of the stock or ADSs even if we cease to be a PFIC. U.S. Holders
are urged to consult their tax advisors including the advisability of making "protective" qualified
electing fund election or an election to mark the shares to market on an annual basis.
Non-U.S. Holders
A Non-U.S. Holder generally will not be subject to any U.S. federal income or withholding tax
in respect of distributions on shares of our common stock or ADSs unless the Non-U.S. Holder
conducts a trade or business within the United States and the distributions are effectively
connected with that trade or business.
A Non-U.S. Holder generally will not be subject to U.S. federal income tax in respect of gain
recognized on a sale or other disposition of our shares of common stock or ADSs, unless (i) the
gain is effectively connected with a trade or business conducted by the Non-U.S. Holder within the
United States, or (ii) the Non-U.S. Holder is an individual who was present in the United States
for 183 or more days in the taxable year of the disposition and other conditions exist.
Dividends and gains that are effectively connected with a Non-U.S. Holder's conduct of a trade
or business in the United States generally will be subject to tax in the same manner as they would
be for U.S. Holder. Effectively connected dividends and gains received by a corporate Non-U.S.
Holder may also be subject to an additional branch profits tax at a 30% rate or a lower tax treaty
rate.
Special rules may apply a Non-U.S. Holder resident of a country with a treaty with the United
States requiring the dividend income or gains to be attributable to U.S. permanent establishment in
order to be subject to U.S. federal income tax.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to dividends in respect of our
shares of common stock or the ADSs or the proceeds received on the sale, exchange or redemption of
shares 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, and a backup withholding
tax may apply (at a 28% rate through 2010) to such amounts if the U.S. Holder fails to provide an
accurate taxpayer identification number or to report interest and dividends required to be shown on
its U.S. federal income tax returns. The amount of any backup withholding from a payment to a U.S.
Holder will be allowed as credit against the U.S. Holder's U.S. federal income tax liability
provided that the appropriate returns are filed.
A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup
withholding by providing certification of its foreign status to the payor, under penalties of
perjury, on IRS Form W-8BEN.
68
Table of Contents
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 20-F 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.
Market Risk Exposures
We are exposed to market risk, including changes in foreign exchange rates, interest rates and
prices of marketable securities and marketable investments. 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
We hold marketable securities for short-term investment. In general, highly-liquid and
low-risk instruments are preferred in the portfolio. Marketable investments included in other
assets are held as longer-term investments. Our investments in equity securities consist mainly of
stocks of financial institutions. We do not hold marketable securities and marketable investments
for trading purposes.
Maturities and fair values of such marketable securities and marketable investments were as
follows:
69
Table of Contents
Due
Due
Due
Due
Year
after
from
from
from
Due
ended
one to
two to
three to
four to
after
March 31,
Debt
Due within
two
three
four
five
five
Equity
2006
securities
one year
years
years
years
years
years
securities
Cost
31,249
18,035
2,600
2,609
1,302
3,900
2,803
25,492
Fair Value
31,246
18,028
2,593
2,583
1,399
3,806
2,837
51,842
Foreign Exchange Risk
Our international operations expose us to the risk of changes in foreign currency exchange
rates. To manage this exposure, we may utilize foreign exchange forward contracts. At March 31,
2006, we had no open forward currency contracts.
Interest Rate Risk
Our exposure to the market risk of changes in interest rates relates primarily to our debt
obligations. We have long-term debt with both fixed rates and floating rates. Our interest rate
risks are not material due to the amounts of short-term borrowings (¥6,392 million) and long-term
debt (¥66 million).
The following tables provide information about our financial obligations that are sensitive to
changes in interest rates.
Long-term debt (including due within one year)
Wacoal Holdings and subsidiaries
Year ended
Expected maturity date
Estimated
March 31, 2006
Total
(Yen in millions and percent)
fair value
2007
2008
2009
2010
2011
Thereafter
Lease Obligations
66
34
32
—
—
—
—
66
ITEM 12. Description of Securities Other than Equity Securities.
Not applicable.
70
Table of Contents
PART II
ITEM 13. Defaults, Dividend Arrearages and Delinquencies.
None.
ITEM 14. Material Modifications to Rights of Security Holders and Use of Proceeds.
None.
ITEM 15. 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.
ITEM 16A. Audit Committee Financial Expert.
The board of corporate auditors of Wacoal Holdings has determined that Wacoal Holdings does
not have an "audit committee financial expert" as defined in Item 16A of Form 20-F serving on the
board of corporate auditors.
Wacoal Holdings believes that the combined knowledge, skills and experience of the board of
corporate auditors, and their authority to engage outside experts as they deem appropriate to
provide them with advice on matters related to their responsibilities, enable them, as a group, to
act effectively in the fulfillment of their tasks and responsibilities required under the
Sarbanes-Oxley Act of 2002.
ITEM 16B. Code of Ethics.
Wacoal Holdings has adopted a code of ethics that applies to its principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing
similar functions. A copy of Wacoal Holdings' code of ethics is attached as an exhibit to this
annual report on Form 20-F.
71
Table of Contents
ITEM 16C. Principal Accountant Fees and Services.
Fees and Services of Deloitte Touche Tohmatsu.
Deloitte Touche Tohmatsu (DTT) has served as Wacoal Holdings' principal accountant for the
three years ended March 31, 2006. The following table presents fees for audit and other services
rendered by DTT for the years ended March 31, 2005 and March 31, 2006.
DTT Fees for Audit and Other Services
(Yen in millions)
Years ended March 31,
2005
2006
Audit Fees
¥
99
¥
107
Audit Related Fees
4
3
Tax Fees
39
22
Other Fees
44
48
Total
¥
186
¥
180
Audit Fees
include fees billed for professional services rendered for audits of Wacoal
Holdings' annual consolidated financial statements, reviews of consolidated quarterly statements
and statutory audits of the Company and its subsidiaries.
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,
employee benefit plan audits, internal control reviews and consultations concerning financial
accounting and reporting standards.
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, tax services for employee benefit plans and assistance with respect to
requests for rulings from tax authorities.
Other Fees
include fees billed for services related to consultation on matters such as
compliance with the Sarbanes-Oxley Act of 2002.
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 its annual audit plan, including its 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.
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.
72
Table of Contents
ITEM 16D. Exemptions from the Listing Standards for Audit Committees.
Not applicable.
ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Not applicable.
73
Table of Contents
PART III
ITEM 17. Financial Statements.
The information required by this item is set forth beginning on page F-2 of this annual
report.
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.
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
Specimen common stock certificate of the Registrant (English Translation)
2.2
Form of Deposit Agreement dated as of January 15, 1977, as amended and restated as of
October 1, 1982, among Wacoal Corp., ChaseMellon Shareholder Services, as Depositary,
and all Holders from time to time of American Depositary Receipts issued thereunder
(Previously filed)
8.1
Subsidiaries of the Registrant
11.1
Code of Ethics for Directors, Corporate Officers and Employees of Wacoal Corporation
(incorporated by reference to the annual report on Form 20-F filed on July 8, 2005)
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
74
Table of Contents
Wacoal Holdings Corp. and Subsidiaries
Index
Page
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
F-2
FINANCIAL STATEMENTS:
Consolidated
Balance Sheets, March 31, 2006 and 2005
F-3
Consolidated
Statements of Income, Years Ended March 31, 2006, 2005 and
2004
F-4
Consolidated Statements of Comprehensive Income, Years Ended March 31, 2006,
2005 and 2004
F-5
Consolidated Statements of Shareholders' Equity, Years Ended March 31, 2006,
2005 and 2004
F-6
Consolidated
Statements of Cash Flows, Years Ended March 31, 2006, 2005 and
2004
F-7
Notes
to Consolidated Financial Statements
F-9
SCHEDULES:
Schedules are omitted because they are not applicable, not required, or because the required
information is included in the consolidated financial statements or notes thereto.
Financial statements and summarized financial information of 50%-or-less-owned persons are not
presented because they are in the aggregate not significant.
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders 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, 2006 and 2005, and the related consolidated
statements of income, comprehensive income, shareholders' equity and cash flows for each of the
three years in the period ended March 31, 2006, 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. The
Companies are not required to have, nor were we engaged to perform, an audit of their internal
control over financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Companies' internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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.
Certain information required by Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information" has not been presented in the accompanying
financial statements. In our opinion, presentation of segment information concerning the Company's
operations is required for a complete presentation of the Company's consolidated financial
statements.
In our opinion, except for the omission of segment information, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of
Wacoal Holdings Corp. and Subsidiaries as of March 31, 2006 and 2005, and the results of their
operations and their cash flows for each of the three years in the period ended March 31, 2006 in
conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 15 to the consolidated financial statements, on June 2, 2006, Wacoal Holdings
Corp. acquired 49% of the shares of Peach John Co., Ltd.
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.
June 16, 2006
F-2
Table of Contents
Wacoal Holdings Corp. and Subsidiaries
Consolidated Balance Sheets
March 31, 2006 and 2005
Thousands of
U.S. Dollars
Millions of Yen
(Note 2)
2006
2005
2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents:
Cash
¥
11,635
¥
7,173
$
99,038
Time deposits and certificates of deposit
8,258
17,022
70,293
Total
19,893
24,195
169,331
Marketable securities (Note 3)
32,699
43,396
278,337
Notes and accounts receivable:
Trade notes
458
677
3,899
Trade accounts
23,192
20,879
197,412
Allowance for returns and doubtful receivables (Note 4)
(2,778
)
(2,214
)
(23,647
)
Inventories (Note 5)
27,135
26,785
230,975
Deferred income taxes (Note 11)
7,442
4,811
63,347
Other current assets
2,692
1,771
22,915
Total current assets
110,733
120,300
942,569
PROPERTY, PLANT AND EQUIPMENT:
Land
20,978
21,382
178,567
Buildings and building improvements
59,328
56,719
505,005
Machinery and equipment
13,789
12,918
117,373
Construction in progress
22
634
187
Total
94,117
91,653
801,132
Accumulated depreciation
(40,616
)
(39,827
)
(345,727
)
Net property, plant and equipment
53,501
51,826
455,405
OTHER ASSETS:
Investments in affiliates
16,033
13,543
136,474
Investments (Note 3)
52,716
31,479
448,723
Deferred income taxes (Note 11)
992
649
8,444
Lease deposits and other
8,321
8,399
70,830
Total other assets
78,062
54,070
664,471
TOTAL
¥
242,296
¥
226,196
$
2,062,445
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank loans (Note 6)
¥
6,392
¥
6,752
$
54,409
Notes and accounts payable:
Trade notes
1,610
2,657
13,704
Trade accounts
10,608
10,299
90,296
Other payables
6,289
6,384
53,533
Accrued payroll and bonuses
6,790
6,580
57,797
Income taxes payable
1,806
370
15,373
Current portion of long-term debt (Notes 6 and 14)
34
60
290
Other current liabilities
1,996
1,868
16,990
Total current liabilities
35,525
34,970
302,392
LONG-TERM LIABILITIES:
Long-term debt (Notes 6 and 14)
32
99
272
Liability for termination and retirement benefits (Note 8)
4,622
7,083
39,343
Deferred income taxes (Note 11)
12,842
6,213
109,312
Other long-term liabilities
397
3,380
Total long-term liabilities
17,893
13,395
152,307
MINORITY INTERESTS
2,403
2,085
20,455
COMMITMENTS AND CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY (Note 9):
Common stock, no par value -
authorized, 500,000,000 and 229,900,000 shares in 2006 and 2005;
issued 144,016,685 shares in 2006 and 2005
13,260
13,260
112,870
Additional paid-in capital
25,242
25,242
214,862
Retained earnings (Note 15)
134,515
134,572
1,145,003
Accumulated other comprehensive income (loss) (Note 10):
Foreign currency translation adjustments
(736
)
(3,820
)
(6,264
)
Unrealized gain on securities
14,311
6,565
121,816
Total accumulated other comprehensive income
13,575
2,745
115,552
Less treasury stock at cost - 100,752 and 72,245 shares in 2006
and 2005
(117
)
(73
)
(996
)
Total shareholders' equity
186,475
175,746
1,587,291
TOTAL
¥
242,296
¥
226,196
$
2,062,445
See notes to consolidated financial statements.
F-3
Table of Contents
Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2006, 2005 and 2004
Thousands of
U.S. Dollars
Millions of Yen
(Note 2)
2006
2005
2004
2006
NET SALES
¥
164,122
¥
160,968
¥
163,155
$
1,397,021
OPERATING COSTS AND EXPENSES (INCOME):
Cost of sales
84,322
84,041
84,638
717,756
Selling, general and administrative
69,720
72,128
72,472
593,463
Impairment charges on long-lived assets
614
2,574
5,226
Loss on sale or disposal of property, plant and equipment
612
133
455
5,209
Government subsidy (Note 8)
(7,100
)
Special retirement related expenses
7,521
64,020
Total operating costs and expenses
162,789
149,202
160,139
1,385,674
OPERATING INCOME
1,333
11,766
3,016
11,347
OTHER INCOME (EXPENSES):
Interest income
213
186
225
1,813
Interest expense
(56
)
(79
)
(113
)
(477
)
Dividend income
493
271
256
4,196
Gain on sale or exchange of investments (Note 3)
1,656
571
932
14,096
Impairment charges on investments
(65
)
(618
)
(142
)
(553
)
Other — net
(108
)
(18
)
358
(919
)
Total other income (expenses), net
2,133
313
1,516
18,156
INCOME BEFORE INCOME TAXES, EQUITY IN NET INCOME OF AFFILIATED COMPANIES, AND MINORITY INTERESTS
3,466
12,079
4,532
29,503
INCOME TAXES (Note 11):
Current
3,268
3,041
5,774
27,817
Deferred
(1,809
)
2,759
(3,254
)
(15,398
)
Total income taxes
1,459
5,800
2,520
12,419
INCOME BEFORE EQUITY IN NET INCOME OF AFFILIATED COMPANIES, AND MINORITY INTERESTS
2,007
6,279
2,012
17,084
EQUITY IN NET INCOME OF AFFILIATED COMPANIES
1,122
871
1,032
9,551
MINORITY INTERESTS
(308
)
(360
)
(142
)
(2,622
)
NET INCOME
¥
2,821
¥
6,790
¥
2,902
$
24,013
Yen
U.S. Dollars
2006
2005
2004
2006
EARNINGS PER SHARE (Note 13)
¥
20
¥
47
¥
20
$
0.17
EARNINGS PER AMERICAN DEPOSITARY RECEIPT (5 shares of common stock) (Note 13)
¥
98
¥
236
¥
99
$
0.83
See notes to consolidated financial statements.
F-4
Table of Contents
Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended March 31, 2006, 2005 and 2004
Thousands of
U.S. Dollars
Millions of Yen
(Note 2)
2006
2005
2004
2006
NET INCOME
¥
2,821
¥
6,790
¥
2,902
$
24,013
OTHER COMPREHENSIVE INCOME (LOSS), NET OF
TAX (Note 10):
Foreign currency translation adjustments
3,084
(308
)
(1,565
)
26,251
Unrealized gains (losses) on securities
7,746
(266
)
7,677
65,935
Minimum pension liability
954
5,339
OTHER COMPREHENSIVE INCOME
10,830
380
11,451
92,186
COMPREHENSIVE INCOME
¥
13,651
¥
7,170
¥
14,353
$
116,199
See notes to consolidated financial statements.
F-5
Table of Contents
Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Shareholders' Equity
Years Ended March 31, 2006, 2005 and 2004
Millions of Yen
Shares of
Outstanding
Additional
Accumulated Other
Common Stock
Common
Paid-in
Retained
Comprehensive
Treasury
(Thousands)
Stock
Capital
Earnings
Income (Loss)
Stock
BALANCE, APRIL 1, 2003
146,570
¥
13,260
¥
25,242
¥
131,466
¥
(9,086
)
¥
(43
)
Net income
2,902
Other comprehensive income
11,451
Cash dividends paid, ¥68 per 5 shares of common stock
(1,978
)
Repurchase of treasury stock for retirement
(2,600
)
(2,449
)
Repurchase of treasury stock — other
(6
)
(7
)
BALANCE, MARCH 31, 2004
143,964
13,260
25,242
129,941
2,365
(50
)
Net income
6,790
Other comprehensive income
380
Cash dividends paid, ¥75 per 5 shares of common stock
(2,159
)
Repurchase of treasury stock — other
(20
)
(23
)
BALANCE, MARCH 31, 2005
143,944
13,260
25,242
134,572
2,745
(73
)
Net income
2,821
Other comprehensive income
10,830
Cash dividends paid, ¥100 per 5 shares of common stock
(2,878
)
Repurchase of treasury stock — other
(28
)
(44
)
BALANCE, MARCH 31, 2006
143,916
¥
13,260
¥
25,242
¥
134,515
¥
13,575
¥
(117
)
Thousands of U.S. Dollars (Note 2)
Accumulated
Additional
Other
Common
Paid-in
Retained
Comprehensive
Treasury
Stock
Capital
Earnings
Income (Loss)
Stock
BALANCE, MARCH 31, 2005
$
112,870
$
214,862
$
1,145,489
$
23,366
$
(621
)
Net income
24,013
Other comprehensive income
92,186
Cash dividends paid, $0.85 per 5 shares of common stock
(24,499
)
Repurchase of treasury stock — other
(375
)
BALANCE, MARCH 31, 2006
$
112,870
$
214,862
$
1,145,003
$
115,552
$
(996
)
See notes to consolidated financial statements.
F-6
Table of Contents
Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2006, 2005 and 2004
Thousands of
U.S. Dollars
Millions of Yen
(Note 2)
2006
2005
2004
2006
OPERATING ACTIVITIES:
Net income
¥
2,821
¥
6,790
¥
2,902
$
24,013
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
3,433
3,312
3,081
29,222
Deferred income taxes
(1,809
)
2,759
(3,254
)
(15,398
)
Loss on sale or disposal of property, plant and equipment
612
133
455
5,209
Impairment charges on long-lived assets
614
2,574
5,226
Government subsidy
(7,100
)
Gain on sale or exchange of investments
(1,656
)
(571
)
(932
)
(14,096
)
Impairment charges on investments
65
618
142
553
Undistributed earnings of affiliates, less dividends
(674
)
(448
)
(726
)
(5,737
)
Changes in assets and liabilities:
(Increase) in notes and accounts receivable
(1,296
)
(1,350
)
(46
)
(11,032
)
Decrease (increase) in inventories
274
(878
)
(2,124
)
2,332
Increase in other current assets
(958
)
(1,046
)
(346
)
(8,155
)
(Decrease) increase in notes and accounts payable
(252
)
1,198
1,020
(2,145
)
(Decrease) increase in liability for termination and retirement benefits
(2,068
)
1,193
3,212
(17,603
)
Increase (decrease) in accrued expenses, income taxes and other current liabilities
1,667
(2,655
)
(657
)
14,190
Other
(54
)
90
(100
)
(459
)
Net cash provided by operating activities
719
2,045
5,201
6,120
INVESTING ACTIVITIES:
Proceeds from sales and redemption of marketable securities
32,161
51,990
59,977
273,757
Payments to acquire marketable securities
(21,525
)
(51,111
)
(56,019
)
(183,223
)
Proceeds from sales of property, plant and equipment
513
340
369
4,367
Proceeds from sales of investments
1,231
926
2,130
10,478
Capital expenditures
(6,456
)
(5,418
)
(2,338
)
(54,954
)
Payments to acquire investments
(7,905
)
(2,985
)
(776
)
(67,288
)
Payments to acquire investments in affiliated companies
(16
)
(1,690
)
(Increase) decrease in other assets
(88
)
746
(325
)
(749
)
Net cash provided by (used in) investing activities
(2,069
)
(5,528
)
1,328
(17,612
)
FINANCING ACTIVITIES:
Increase (decrease) in short-term bank loans
(409
)
2,813
(1,595
)
(3,481
)
Proceeds from issuance of long-term debt
19
45
49
162
Repayments of long-term debt
(116
)
(380
)
(158
)
(987
)
Repurchase of treasury stock
(44
)
(23
)
(2,456
)
(375
)
Dividends paid on common stock
(2,878
)
(2,159
)
(1,978
)
(24,498
)
Net cash provided by (used in) financing activities
(3,428
)
296
(6,138
)
(29,179
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
476
(61
)
(194
)
4,052
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS — (Forward)
¥
(4,302
)
¥
(3,248
)
¥
197
$
(36,619
)
(Continued)
F-7
Table of Contents
Wacoal Holdings Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2006, 2005 and 2004
Thousands of
U.S. Dollars
Millions of Yen
(Note 2)
2006
2005
2004
2006
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS — (Forward)
¥
(4,302
)
¥
(3,248
)
¥
197
$
(36,619
)
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR
24,195
27,443
27,246
205,950
CASH AND CASH EQUIVALENTS, END OF YEAR
¥
19,893
¥
24,195
¥
27,443
$
169,331
ADDITIONAL CASH FLOW INFORMATION:
Cash paid for:
Interest
¥
56
¥
85
¥
114
$
477
Income taxes
1,832
5,395
5,846
15,594
NONCASH INVESTING ACTIVITIES:
Fair value of marketable
securities received in exchange
for certain other marketable
securities with a recorded
amount of ¥172 million ($1,464
thousand) in 2006
1,321
11,244
See notes to consolidated financial statements.
F-8
Table of Contents
Wacoal Holdings Corp. and Subsidiaries
Notes to Consolidated Financial Statements
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statements
- On October 1, 2005, Wacoal Holdings Corp. (the "Company") that
was formerly known as "Wacoal Corp." spun off all of the Company's business into a new wholly
owned subsidiary and changed over to a holding company structure. The Company's 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
except for the omission of segment information as required by Statement of Financial
Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of an Enterprise and
Related Information".
Consolidation
- The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiaries (collectively, the "Companies"). All significant intercompany
transactions and balances are eliminated.
Certain foreign subsidiaries of the Company have a fiscal year ending December 31. The
accounts of those subsidiaries are included in the Company's consolidated financial statements
based on the subsidiaries' fiscal year.
Investments in affiliated companies where the Company's ownership is 20% to 50% are accounted
for using the equity method.
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, which can be withdrawn at face value at any time without diminution of
principal.
Foreign Currency Translation
- Assets and liabilities of international subsidiaries have been
translated to Japanese yen at period-end exchange rates and income and expenses have been
translated using weighted average exchange rates for the period. Translation adjustments are
included in other comprehensive income (loss), a separate component of shareholders' 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 the
consolidated statements of income.
Marketable Securities and Investments
- The Companies classify their marketable debt and
equity securities as available-for-sale and carry them at fair value with a corresponding
recognition of unrealized holding gains or losses (net of tax) in other comprehensive income
(loss), a separate component of shareholders' 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.
F-9
Table of Contents
If decline in the fair value of marketable securities is determined to be other than
temporary, an impairment charge is recorded in the consolidated statements of income. The
Companies 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.
The Companies may also consider other factors, including their ability and intent to hold the
applicable investment securities until maturity, and the severity of the decline in fair
value.
Inventories
- Inventories are stated at the lower of cost or market, cost being substantially
determined on the first-in, first-out method for raw materials and the average cost method for
work in process and finished products.
Property, Plant and Equipment
- Property, plant and equipment is stated at cost less
accumulated depreciation. 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:
5 - 20 years
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 Companies recorded ¥614 million ($5,226 thousand) and ¥2,574 million in impairment charges
on long-lived assets for the years ended March 31, 2006 and 2004, respectively, which resulted
from the impairment of primarily a building related to the Companies' branch office in Nagoya
in 2006 and land and buildings related to a warehouse in 2004. No impairment charges were
recorded in the year ended March 31, 2005. In 2004, as a result of changes in business plans
in which the Companies reconsidered the intended use of the land and warehouse, the Companies
evaluated the recoverability of the assets and recognized an impairment. The fair values of
the land and warehouse were determined by an independent appraisal. In 2006, the Company
determined to close its Nagoya office and to demolish the building. The office was closed on
March 31, 2006 and the Companies recognized an impairment of the asset to be abandoned.
Derivatives
- Derivative instruments, including certain derivative instruments embedded in
other contracts are accounted for in accordance with SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities an Amendment of FASB Statement No. 133," and SFAS
No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities."
Changes in the fair value of a derivative are recorded in other comprehensive income (loss) or
in earnings, depending on its intended use. Changes in fair value of foreign currency forward
exchange contracts designated as fair value hedges of recognized assets and liabilities and
firm commitments are recognized in income. Changes in fair value of forward exchange
contracts designated and qualifying as cash flow hedges of recognized assets and liabilities
and firm commitments are reported in accumulated other comprehensive income. These amounts
are reclassified into income in the same period as the hedged items affect income.
F-10
Table of Contents
Asset Retirement Obligations —
The Companies have leased facilities obligations from
contractual commitments to remove leasehold improvements and return the property to a
specified condition when the lease terminates. The Companies did not recognize any asset
retirement obligations associated with leased facilities. Lease contracts have automatic
renewal articles and the Companies currently intend to operate these facilities indefinitely
and are therefore unable to reasonably estimate the fair value of any legal obligations the
Companies may have because of indeterminate closure dates.
Termination and Retirement Plans
- Termination and retirement benefits are accounted for in
accordance with SFAS No. 87, "Employers' Accounting for Pensions". Provisions for termination
and retirement benefits include those for directors and corporate auditors of the Companies.
As allowed under SFAS No. 88 "Employers' Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits", the Companies do not recognize
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.
Advertising Expenses —
Advertising costs are expensed as incurred. Advertising expenses for
the years ended March 31, 2006, 2005 and 2004 were ¥11,888 million ($101,192 thousand),
¥13,241 million and ¥12,878 million, respectively.
Revenue Recognition —
The Companies recognize revenue on sales to retailers 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)
collectibility is reasonably assured. Retail sales are recognized at the point of sale. The
Companies establish allowances for estimated returns based on historical experience. As for
consignment sales, the Companies recognize revenue when the products are sold to the ultimate
customer.
Shipping and Handling Costs —
Shipping and handling costs are included in selling, general,
and administrative expenses.
Income Taxes —
The provision for income taxes is determined under the liability method
pursuant to SFAS No. 109, "Accounting for Income Taxes". Under this method, deferred tax
assets and liabilities are determined for temporary differences between the financial
statements and tax bases of assets and liabilities 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.
Provisions are made for taxes on undistributed earnings and cumulative translation adjustments
of foreign subsidiaries whose earnings are not deemed to be permanently invested.
Reclassifications —
Certain reclassifications have been made to the prior years' financial
statements to conform with the current year's presentation.
Recent Accounting Pronouncements:
Inventory Costs, an Amendment of ARB No. 43, Chapter 4
-
In November 2004, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 151, "Inventory Costs, an amendment of ARB
No. 43, Chapter 4". This statement clarifies the accounting for abnormal amounts of idle
facility expense, freight, handling costs and wasted material. Additionally, SFAS No. 151
requires that allocation of fixed production overhead to inventory be based on the normal
capacity of the production facilities. The provisions of SFAS No. 151 are applicable to
inventory costs incurred during fiscal years beginning after June 15, 2005. The Companies do
not expect the adoption of SFAS No. 151 to have a material effect on the consolidated
financial statements.
F-11
Table of Contents
Exchanges of Nonmonetary Assets, an Amendment to Accounting Principle Board ("APB") Opinion
No. 29 —
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets, an
Amendment to APB Opinion No. 29". SFAS No. 153 eliminates the exception to measure exchanges
at fair value for exchanges of similar productive assets and replaces it with a general
exception for exchange transactions that do not have commercial substance. SFAS No. 153 is
effective for nonmonetary exchanges in fiscal periods beginning after June 15, 2005. The
Companies do not expect the adoption of SFAS No. 153 to have a material effect on the
consolidated financial statements.
Accounting Changes and Error Corrections
- In May 2005, the FASB issued SFAS No. 154,
"Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB
Statement No. 3" ("SFAS 154"). SFAS 154 replaces APB Opinion No. 20, "Accounting Changes" and
SFAS No. 3 "Reporting Accounting Changes in Interim Financial Statements," and provides
guidance on the accounting for and reporting of accounting changes and error corrections.
SFAS 154 establishes retrospective application, or the latest practicable date, as the
required method for reporting a change in accounting principle and the reporting of a
correction of an error. SFAS 154 is effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005. The Companies do not expect
the adoption of SFAS No. 154 to have a material effect on the consolidated financial
statements.
The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments
- In
November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1, "The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments" ("FSP 115-1").
FSP 115-1 provides guidance on determining when investments in certain debt and equity
securities are considered impaired and whether that impairment is other-than-temporary and on
measuring such impairment loss. FSP 115-1 also includes accounting considerations subsequent
to the recognition of an other-than-temporary impairment and requires certain disclosures
about unrealized losses that have not been recognized as other-than-temporary impairments.
FSP 115-1 is required to be applied to reporting periods beginning after December 15, 2005.
The companies do not expect the adoption of FSP 115-1 to have a material effect on the
consolidated financial statements.
2.
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 ¥117.48 to $1, the buying rate for yen in New York City at March 31, 2006.
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-12
Table of Contents
3
MARKETABLE SECURITIES AND INVESTMENTS
The fair value of marketable debt and equity securities is based on quoted market prices at
March 31, 2006 and 2005. The fair values of the marketable debt and equity securities were as
follows:
Millions of Yen
Gross
Gross
Unrealized
Unrealized
2006
Cost
Gain
Loss
Fair Value
Current:
Corporate debt securities
¥
13,539
¥
132
¥
80
¥
13,591
Bank debt securities
7,702
1
13
7,690
Mutual fund
5,431
167
68
5,530
National debt securities
5,914
1
27
5,888
Total
¥
32,586
¥
301
¥
188
¥
32,699
Noncurrent:
Equity securities
¥
25,492
¥
26,479
¥
129
¥
51,842
Millions of Yen
Gross
Gross
Unrealized
Unrealized
2005
Cost
Gain
Loss
Fair Value
Current:
Corporate debt securities
¥
19,920
¥
21
¥
15
¥
19,926
Bank debt securities
13,412
88
3
13,497
Mutual fund
4,404
43
11
4,436
National debt securities
5,521
16
5,537
Total
¥
43,257
¥
168
¥
29
¥
43,396
Noncurrent:
Equity securities
¥
17,294
¥
13,398
¥
18
¥
30,674
Thousands of U.S. Dollars
Gross
Gross
Unrealized
Unrealized
2006
Cost
Gain
Loss
Fair Value
Current:
Corporate debt securities
$
115,245
$
1,124
$
681
$
115,688
Bank debt securities
65,560
8
110
65,458
Mutual fund
46,229
1,422
579
47,072
National debt securities
50,341
8
230
50,119
Total
$
277,375
$
2,562
$
1,600
$
278,337
Noncurrent:
Equity securities
$
216,990
$
225,392
$
1,098
$
441,284
F-13
Table of Contents
Gross unrealized holding losses and fair values of marketable debt and equity securities which
had been in a continuous unrealized loss position for less than 12 months at March 31, 2006
and 2005 were as follows:
Millions of Yen
Thousands of U.S. Dollars
Gross
Gross
Unrealized
Unrealized
2006
Fair Value
Loss
Fair Value
Loss
Current:
Corporate debt securities
¥
5,027
¥
80
$
42,790
$
681
Bank debt securities
5,488
13
46,714
111
Mutual fund
3,746
68
31,887
579
National debt securities
3,686
27
31,375
229
Total
¥
17,947
¥
188
$
152,766
$
1,600
Noncurrent:
Equity securities
¥
2,264
¥
129
$
19,271
$
1,098
Millions of Yen
Gross
Unrealized
2005
Fair Value
Loss
Current:
Corporate debt securities
¥
2,885
¥
15
Bank debt securities
4,897
3
Mutual fund
2,582
11
Total
¥
10,364
¥
29
Noncurrent:
Equity securities
¥
547
¥
18
There were no securities which had been in a continuous unrealized loss position over 12
months at March 31, 2006 and 2005.
Future maturities of debt securities classified as available-for-sale at March 31, 2006 were
as follows:
Thousands of
Millions of Yen
U.S. Dollars
Fair
Fair
Cost
Value
Cost
Value
Due within one year
¥
18,035
¥
18,028
$
153,516
$
153,456
Due after one year through five years
10,411
10,381
88,619
88,364
Due after five years through ten years
2,803
2,837
23,859
24,149
Total
¥
31,249
¥
31,246
$
265,994
$
265,969
F-14
Table of Contents
Proceeds from sales of available-for-sale securities were ¥2,903 million ($24,711 thousand),
¥2,697 million and ¥2,631 million for the years ended March 31, 2006, 2005 and 2004,
respectively. The gross realized gains on the sales of available-for-sale securities for the
years ended March 31, 2006, 2005 and 2004 were ¥510 million ($4,341 thousand), ¥572 million
and ¥932 million, respectively. The gross realized losses on the sales of available-for-sale
securities for the years ended March 31, 2005 and 2004 were ¥9 million and ¥4 million,
respectively.
During the year ended March 31, 2006, the Companies exchanged certain equity securities for
other securities. The Companies recorded the newly received securities at fair value and
recognized a gain of ¥1,149 million ($9,780 thousand) in the year ended March 31, 2006. No
such exchanges were made in the years ended March 31, 2005 and 2004.
The Companies recognized impairment charges on investments of ¥65 million ($553 thousand),
¥618 million and ¥142 million in the years ended March 31, 2006, 2005 and 2004, respectively.
Investments in non-marketable equity securities for which there is no readily determinable
fair value were accounted for using the cost method and aggregated ¥874 million ($7,440
thousand) and ¥805 million at March 31, 2006 and 2005, respectively. Each investment in
non-marketable equity securities is reviewed annually for impairment or upon the occurrence of
an event or change in circumstances that may have a significant adverse effect on the carrying
value of the investment.
4.
VALUATION AND QUALIFYING ACCOUNTS
Information related to the Companies' allowance for doubtful receivables was as follows:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2004
2006
Balance at beginning of year
¥
72
¥
149
¥
222
$
613
Charged to costs and expenses
29
13
247
Balances written-off/reversed
(9
)
(77
)
(86
)
(77
)
Balance at end of year
¥
92
¥
72
¥
149
$
783
Information related to the Companies' allowance for returns was as follows:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2004
2006
Balance at beginning of year
¥
2,142
¥
1,991
¥
2,066
$
18,233
Charged to costs and expenses
2,686
2,142
1,991
22,864
Balances utilized
(2,142
)
(1,991
)
(2,066
)
(18,233
)
Balance at end of year
¥
2,686
¥
2,142
¥
1,991
$
22,864
F-15
Table of Contents
5.
INVENTORIES
Inventories at March 31, 2006 and 2005 were as follows:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2006
Finished products
¥
22,507
¥
22,296
$
191,581
Work in process
3,295
2,918
28,047
Raw materials
1,333
1,571
11,347
Total
¥
27,135
¥
26,785
$
230,975
6.
SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2006 and 2005 consisted of the following:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2006
Unsecured bank loans
¥
6,392
¥
4,537
$
54,409
Collateralized bank loans
2,215
Total
¥
6,392
¥
6,752
$
54,409
The weighted average annual interest rates on short-term bank loans as of March 31, 2006 and
2005 were 0.5% and 1.1%, respectively.
Long-term debt at March 31, 2006 and 2005 consisted of the following:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2006
Unsecured loans principally from banks and an
insurance company
¥
50
Lease obligation
¥
66
109
$
562
Total
66
159
562
Less current portion
34
60
290
Long-term debt, less current portion
¥
32
¥
99
$
272
The annual maturities of long-term debt at March 31, 2006 were as follows:
Millions
Thousands of
Year Ending March 31
of Yen
U.S. Dollars
2007
¥
34
$
290
2008
32
272
Total
¥
66
$
562
F-16
Table of Contents
In 2005, assets pledged as collateral for short-term bank loans and long-term debt were
property, plant and equipment with a net book value of ¥224 million. In 2006, no assets were
pledged as collateral.
As is customary in Japan, the Companies maintain deposit balances with banks and certain
financial institutions with which they have short- or long-term borrowings. Such deposit
balances are not legally or contractually restricted as to withdrawal.
In addition, collateral must be given if requested by a lending bank and such bank has the
right to offset cash deposited with it against any long- or short-term debt or obligation that
becomes due and, in case of default and certain other specified events, against all other debt
payable to the bank. The Companies have never received such requests for additional
collateral.
7.
LEASES
The Companies lease most of store premises, some of distribution centers, and certain
equipments. These operating leases expire at various dates through 2013. Most leases have
automatic renewal articles and allow the Companies to extend the lease term beyond the initial
base period, subject to terms agreed to at lease inception. Future minimum rental commitments
on non-cancelable operating leases are presented below:
Thousands of
Year Ending March 31
Millions of Yen
U.S. Dollars
2007
¥
676
$
5,754
2008
645
5,490
2009
530
4,511
2010
534
4,546
2011
512
4,358
Thereafter
2,063
17,561
Total
¥
4,960
$
42,220
Rental expenses were ¥3,844 million ($32,720 thousand), ¥3,703 million and ¥3,174 million for
the years ended March 31, 2006, 2005 and 2004, respectively.
8.
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 in the Companies 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 retirement plan, several partially funded plans administered
by independent trustees and several unfunded termination plans administered by the Companies.
Benefits are usually paid in a lump sum at the earlier of termination or retirement, although
periodic payments are available under certain conditions.
The retirement plans provide 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.
F-17
Table of Contents
The Companies use a March 31 measurement date for the majority of its plans. The
weighted-average assumptions used as of March 31, in computing the benefit obligation
liabilities shown above were as follows:
2006
2005
Discount rate
2.5
%
2.5
%
Rate of increase in future compensation
0.5
%
0.5
%
The weighted-average assumptions used as of March 31, in computing the net periodic benefit
cost shown above were as follows:
2006
2005
2004
Discount rate
2.5
%
2.5
%
2.5
%
Expected long-term rate of return on plan assets
2.5
%
2.5
%
2.5
%
Rate of increase in future compensation
0.5
%
0.4
%
0.4
%
Our 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 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. 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 50.0%, and
other investments of 17.0%, which was changed in 2006. Asset allocation at March 31, 2005 was
equity securities of 60.0%, debt securities of 22.0% and other investments of 18.0%.
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. This asset allocation differed from the existing
asset allocation at March 31, 2006 as disclosed below due to a rapid increase in the fair
market value of equity securities.
The asset allocation at March 31, 2006 and 2005 was as follows:
2006
2005
Equity securities
57.3
%
60.6
%
Debt securities
35.1
%
25.6
%
Life insurance company general accounts
6.7
%
11.3
%
Cash and cash equivalents
0.9
%
2.5
%
The Company applied for an exemption from the obligation to pay benefits for future employee
services related to the substitutional portion in accordance with the Defined Benefit Pension
Plan Law enacted in April 2002 and received approval from the government in January 2003. In
January 2004, the Company received approval for exemption of the benefit obligation for past
service related to the substitutional portion. In September 2004, the substitutional portion
of the benefit obligation and related plan assets were transferred to the government.
F-18
Table of Contents
In accordance with the Emerging Issue Task Force ("EITF") Issue 03-2, "Accounting for the
Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund
Liabilities" ("EITF 03-2"), the Company accounted for the entire separation process upon
completion of the transfer to the government of the substitutional portion of the benefit
obligation and related plan assets as the culmination of a series of steps in a single
settlement transaction. The transfer resulted in the Company recording a subsidy from the
government of ¥7,100 million representing the difference between the substitutional portion of
the accumulated benefit obligation and the related plan assets. In addition, the Company
recorded a gain from derecognition of previously accrued salary progression of ¥1,716 million,
and a settlement loss from recognition of actuarial losses of ¥2,644 million in the year ended
March 31, 2005.
The following provides a reconciliation of benefit obligations, plan assets and funded status
of the plans:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2006
Change in benefit obligation:
Benefit obligation at beginning of year
¥
36,481
¥
54,618
$
310,529
Service cost
1,228
1,811
10,453
Interest cost
722
1,063
6,146
Participants' contributions
92
114
783
Actuarial gain (loss)
2,926
(1,113
)
24,906
Prior service liabilities incurred due to plan amendment
(5,833
)
(49,650
)
Benefits paid from plan assets
(281
)
(218
)
(2,392
)
Settlement paid from plan assets
(2,361
)
(1,846
)
(20,097
)
Settlement paid by the Companies
(287
)
(354
)
(2,443
)
Return of substitutional portion of employee pension
fund
(17,594
)
Benefit obligation at end of year
32,687
36,481
278,235
Change in plan assets:
Fair value of plan assets at beginning of year
28,376
35,513
241,539
Actual return on plan assets
7,352
922
62,581
Employer contributions
2,682
2,668
22,829
Participants' contributions
92
114
783
Benefit payments
(281
)
(218
)
(2,392
)
Settlement payments
(2,361
)
(1,846
)
(20,097
)
Return of substitutional portion of employee pension
fund
(8,777
)
Fair value of plan assets at end of year
35,860
28,376
305,243
Funded status:
Funded status at end of year
(3,173
)
8,105
(27,008
)
Unrecognized net actuarial gain (loss)
769
(3,327
)
6,546
Unrecognized prior service benefit
6,954
1,690
59,192
Net amount recognized in long-term liabilities
¥
4,550
¥
6,468
$
38,730
F-19
Table of Contents
Net periodic benefit costs for the Companies' plans consisted of the following for the year
ended March 31:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2004
2006
Service cost
¥
1,228
¥
1,811
¥
1,589
$
10,453
Interest cost on projected benefit obligation
722
1,063
1,302
6,146
Expected return on plan assets
(608
)
(629
)
(642
)
(5,176
)
Net amortization
12
1,110
3,153
102
Derecognition of previously accrued salary
progression
(1,716
)
Settlement (gain) loss
(256
)
2,644
(2,179
)
¥
1,098
¥
4,283
¥
5,402
$
9,346
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.
In July 2005, the Company amended its retirement plan to change the interest rate used to
determine periodic pension payments. Before the amendment, the interest rate was fixed at
4.3%. Under the amended plan, the interest rate is floating and determined based on the
interest rate of the Japanese government bond within the range of 2.0% to 5.0%. The resulting
prior service benefit is being amortized using the straight-line method over 12 years.
The accumulated benefit obligation for all domestic defined benefit plans was ¥30,691 million
($261,244 thousand) and ¥33,615 million at March 31, 2006 and 2005, respectively.
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2006
Amounts recognized in the consolidated
balance sheets consist of — Accrued
benefit cost
¥
4,550
¥
6,468
$
38,730
The aggregate projected benefit obligation, accumulated benefit obligation and aggregate fair
value of plan assets for the plans with accumulated benefit obligation in excess of plan
assets at March 31, 2005 were ¥33,454 million, ¥30,610 million and ¥27,824 million,
respectively. There were no material plans with accumulated benefit obligation in excess of
plan assets at March 31, 2006.
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
¥2,360 million ($20,089 thousand) to their plans in the year ending March 31, 2007.
F-20
Table of Contents
The following benefit payments, which reflect expected future service, as appropriate, are
expected to be paid as follows:
Thousands of
Year Ending March 31
Millions of Yen
U.S. Dollars
2007
¥
1,357
$
11,551
2008
1,382
11,764
2009
1,408
11,985
2010
1,434
12,206
2011
1,488
12,666
2012 - 2016
8,413
71,612
The Companies also provide additional benefits to employees that elect to participate in the
Companies' early retirement program. Retirement benefits of ¥364 million ($3,098 thousand),
¥718 million and ¥167 million were paid in addition to normal benefits and charged to
"selling, general and administrative" for the years ended March 31, 2006, 2005 and 2004,
respectively.
In November 2005, the Company announced a special voluntary retirement plan to eliminate
approximately 300 positions to improve the labor structure at March 31, 2006. Employees who
would be more than 50 years-old at March 31, 2006 could apply to this program. As of March
31, 2006, the Company had eliminated 362 positions and paid the special benefit of ¥6,931
million ($58,998 thousand). In March 2006, Fukushima Wacoal Sewing Corp., a subsidiary of the
Companies, terminated its operation and paid a special termination benefit of ¥590 million
($5,022 thousand) to its employees. Those payments were also charged to special retirement
related expenses. In addition to those charges, a gain on settlement of ¥256 million ($2,179
thousand) was credited to selling, general and administrative.
Termination Plan for Directors and Corporate Auditors
- The Company and certain subsidiaries
had 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 shareholders'
meeting. The amount of benefit were fixed by individuals as of June 29, 2005 and will be
frozen until the retirement of directors and corporate auditors. The outstanding liability at
March 31, 2006 was ¥397 million ($3,380 thousand) and was recorded in other long-term
liabilities. Subsidiaries still maintain plans for their directors and corporate auditors.
In accordance with EITF 88-1, the subsidiaries record 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 liability for termination
benefits for directors and corporate auditors at March 31, 2006 and 2005 was ¥72 million ($613
thousand) and ¥615 million, respectively.
9.
SHAREHOLDERS' EQUITY
Through May 1, 2006, Japanese companies are subject to the Commercial Code of Japan (the
"Code").
The Code requires that all shares of common stock be issued with no par value and at least 50%
of the issue price of new shares is required to be recorded as common stock and the remaining
net proceeds are required to be presented as additional paid-in capital, which is included in
capital surplus. The Code permits Japanese companies, upon approval of the Board of
Directors, to issue shares to existing shareholders without consideration by way of a stock
split. Such issuance of shares generally does not give rise to changes within the
shareholders' accounts.
F-21
Table of Contents
The Code also provides that an amount of 10% or more of the aggregate amount of cash dividends
and certain other appropriations of retained earnings associated with cash outlays applicable
to each period (such as bonuses to directors) shall be appropriated as a legal reserve (a
component of retained earnings) until the total of such reserve and additional paid-in capital
equals 25% of common stock. The amount of total legal reserve and additional paid-in capital
that exceeds 25% of the common stock may be available for dividends by resolution of the
shareholders after transferring such excess in accordance with the Code. In addition, the
Code permits the transfer of a portion of additional paid-in capital and legal reserve to the
common stock by resolution of the Board of Directors. The Company's legal reserve amount,
which is included in retained earnings, totals ¥4,252 million ($36,193 thousand) and ¥4,209
million as of March 31, 2006 and 2005, respectively.
The Code allows Japanese companies to purchase treasury stock and dispose of such treasury
stock upon resolution of the Board of Directors. The aggregate purchased amount of treasury
stock cannot exceed the amount available for future dividends plus the amount of common stock,
additional paid-in capital or legal reserve that could be transferred to retained earnings or
other capital surplus other than additional paid-in capital upon approval of such transfer at
the annual general meeting of shareholders.
In addition to the provision that requires an appropriation for a legal reserve in connection
with the cash outlays, the Code also imposes certain limitations on the amount of capital
surplus and retained earnings available for dividends. The amount of capital surplus and
retained earnings available for dividends under the Code was ¥110,061 million ($936,849
thousand) as of March 31, 2006, based on the amount recorded in the Company's general books of
account.
Dividends are approved by the shareholders at a meeting held subsequent to the end of the
fiscal year to which the dividends are applicable. Semiannual interim dividends may also be
paid upon resolution of the Board of Directors, subject to certain limitations imposed by the
Code.
On May 1, 2006, a new corporate law (the "Corporate Law") became effective, which reformed and
replaced the Code with various revisions that would, for the most part, be applicable to
events or transactions which occur on or after May 1, 2006 and for the fiscal years ending on
or after May 1, 2006. The significant changes in the Corporate Law that affect financial and
accounting matters are summarized below;
(a) Dividends
Under the Corporate Law, 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 such as; (1) having the Board of Directors, (2) having independent
auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the
directors is prescribed as one year rather than two years of normal term by its articles of
incorporation, the Board of Directors may declare dividends (except for dividends in kind) if
the company has prescribed so in its articles of incorporation. 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 above criteria under the Corporate Law, even though such companies have an audit
committee instead of the Board of Corporate Auditors.
The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to
shareholders subject to a certain limitation and additional requirements.
F-22
Table of Contents
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. Under the Code,
certain limitations were imposed on the amount of capital surplus and retained earnings
available for dividends. The Corporate Law also 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.
(b) Increases/decreases and transfer of common stock, reserve and surplus
The Corporate Law 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 Code, the aggregate amount of additional paid-in capital and
legal reserve that exceeds 25% of the common stock may be made available for dividends by
resolution of the shareholders. Under the Corporate Law, the total amount of additional
paid-in capital and legal reserve may be reversed without limitation of such threshold. The
Corporate Law 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 and treasury stock acquisition rights
The Corporate Law 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.
The Corporate Law also provides that companies can purchase both treasury stock acquisition
rights and treasury stock.
F-23
Table of Contents
10.
OTHER COMPREHENSIVE INCOME (LOSS)
The changes in the components of accumulated other comprehensive income (loss) were reported net
of income taxes as follows:
Millions of Yen
2006
2005
2004
Tax
Tax
Tax
Pre-Tax
(Expense)
Net
Pre-Tax
(Expense)
Net
Pre-Tax
(Expense)
Net
Amount
Credit
Amount
Amount
Credit
Amount
Amount
Credit
Amount
Foreign currency translation adjustments
¥
3,345
¥
(261
)
¥
3,084
¥
(325
)
¥
17
¥
(308
)
¥
(1,686
)
¥
121
¥
(1,565
)
Unrealized gain (loss) on securities:
Unrealized holding gain (loss)
13,761
(5,531
)
8,230
(334
)
113
(221
)
12,369
(4,781
)
7,588
Reclassification adjustments
(816
)
332
(484
)
(76
)
31
(45
)
152
(63
)
89
Net unrealized gain (loss)
12,945
(5,199
)
7,746
(410
)
144
(266
)
12,521
(4,844
)
7,677
Minimum pension liability
1,620
(666
)
954
9,064
(3,725
)
5,339
Other comprehensive income (loss)
¥
16,290
¥
(5,460
)
¥
10,830
¥
885
¥
(505
)
¥
380
¥
19,899
¥
(8,448
)
¥
11,451
Thousands of U.S. Dollars
2006
Tax
Pre-Tax
(Expense)
Net
Amount
Credit
Amount
Foreign currency translation adjustments
$
28,473
$
(2,222
)
$
26,251
Unrealized gain (loss) on securities:
Unrealized holding gain (loss)
117,135
(47,080
)
70,054
Reclassification adjustments
(6,946
)
2,826
(4,119
)
Net unrealized gain (loss)
110,189
(44,254
)
65,935
Other comprehensive income (loss)
$
138,662
$
(46,476
)
$
92,186
11.
INCOME TAXES
Income before income taxes, equity in net income of affiliated companies, and minority interests
is summarized as follows:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2004
2006
Japan
¥
4,695
¥
12,789
¥
4,791
$
39,964
Foreign
(1,229
)
(710
)
(259
)
(10,461
)
Total
¥
3,466
¥
12,079
¥
4,532
$
29,503
F-24
Table of Contents
Income taxes are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2004
2006
Current:
Japan
¥
2,669
¥
2,437
¥
5,011
$
22,719
Foreign
599
604
763
5,098
¥
3,268
¥
3,041
¥
5,774
$
27,817
Deferred:
Japan
¥
(1,845
)
¥
2,890
¥
(3,196
)
$
(15,705
)
Foreign
36
(131
)
(58
)
307
¥
(1,809
)
¥
2,759
¥
(3,254
)
$
(15,398
)
Total income taxes
¥
1,459
¥
5,800
¥
2,520
$
12,419
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, 2006, 2005 and 2004:
2006
2005
2004
Normal Japanese statutory rates
40.7
%
40.7
%
42.1
%
Increase in taxes resulting from:
Permanently non-deductible expenses
9.9
3.7
9.8
Change in valuation allowance
0.0
3.8
(0.3
)
Undistributed earnings of foreign subsidiaries
2.9
0.5
(2.7
)
Additional tax charges
16.8
Differences in subsidiaries' tax rate
(4.7
)
(1.9
)
(3.1
)
Tax exemption
(3.2
)
(0.9
)
(5.1
)
Tax loss on investment in subsidiaries
(4.9
)
(0.2
)
Other — net
1.4
2.3
(1.9
)
Effective tax rates
42.1
%
48.0
%
55.6
%
In the year ended March 31, 2004, the Companies were assessed with additional income taxes
plus interest of ¥760 million as a result of an income tax audit for the fiscal years ended
March 31, 1998 through 2003 conducted by the Japanese tax authorities.
F-25
Table of Contents
The approximate effect of temporary differences and tax loss carryforwards that gave rise to
deferred tax balances at March 31, 2006 and 2005 were as follows:
Thousands of
Millions of Yen
U.S. Dollars
2006
2005
2006
Deferred
Deferred
Deferred
Deferred
Deferred
Deferred
Tax
Tax
Tax
Tax
Tax
Tax
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Sales returns
¥
1,037
¥
812
$
8,827
Allowance for doubtful receivables
115
979
Inventory valuation
1,211
1,269
10,308
Accrued bonuses
1,474
1,360
12,547
Intercompany profits
153
187
1,302
Valuation loss on investments
615
624
5,235
Gain on sales of property, plant and equipment
¥
1,753
¥
1,819
$
14,922
Undistributed earnings of foreign subsidiaries
2,363
2,002
20,114
Net unrealized gain on securities
10,726
5,502
91,301
Net realized gain on exchange of equity securities
2,415
1,996
20,557
Capitalized supplies
343
365
2,920
Enterprise taxes
195
62
1,660
Accrued vacation
788
909
6,708
Pension expense
2,271
2,455
19,331
Tax loss carryforwards
3,965
1,717
33,750
Fixed assets
1,600
1,657
13,619
Other temporary differences
769
36
799
5
6,545
305
Total
14,536
17,293
12,216
11,324
123,731
147,199
Valuation allowance
(1,651
)
(1,645
)
(14,053
)
Total
¥
12,885
¥
17,293
¥
10,571
¥
11,324
$
109,678
$
147,199
A valuation allowance was recorded against the deferred tax assets, primarily related to loss
carryforwards, of certain domestic and foreign subsidiaries. The valuation allowance increased
by ¥6 million ($51 thousand) and ¥460 million for the years ended March 31, 2006 and 2005,
respectively, and decreased by ¥14 million for the year ended March 31, 2004.
At March 31, 2006, certain subsidiaries had loss carryforwards which are available to offset
future taxable income of such subsidiaries expiring as follows:
Millions
Thousands of
Year Carryforward Expires
of Yen
U.S. Dollars
2007
¥
115
$
979
2008
115
979
2009
296
2,520
2010
838
7,133
2011
869
7,397
2012
679
5,780
2013
6,734
57,320
Indefinitely until utilized
254
2,162
Total
¥
9,900
$
84,270
The portion of the undistributed earnings of foreign subsidiaries which are deemed to be
permanently invested amounted to ¥5,758 million ($49,013 thousand) at March 31, 2006. It is not
practicable to determine the unrecognized deferred tax liability on these earnings.
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Table of Contents
12.
RELATED PARTY TRANSACTIONS
The Companies purchase merchandise from numerous suppliers throughout the world, including
certain affiliates of the Companies. The Companies purchased merchandise from affiliates in
the amount of ¥1,811 million ($15,415 thousand), ¥1,805 million, and ¥2,437 million in the
fiscal years ended March 31, 2006, 2005 and 2004. The accounts payable to affiliates were ¥26
million ($221 thousand) and ¥2 million at March 31, 2006 and 2005, respectively.
The Companies also sell supplies, materials and products to certain affiliates. Aggregate
sales to affiliates were ¥1,494 million ($12,717 thousand), ¥1,679 million, and ¥1,259 million
in fiscal years ended March 31, 2006, 2005 and 2004. The accounts receivable from affiliates
were ¥176 million ($1,498 thousand) and ¥286 million at March 31, 2006 and 2005, respectively.
13.
EARNINGS PER SHARE AND AMERICAN DEPOSITARY RECEIPT
The Company accounts for its earnings per share in accordance with SFAS No. 128, "Earnings per
Share." Basic net income per share has been computed by dividing net income available to
common shareholders by the weighted-average number of common shares outstanding during each
year. Fully diluted income per share is not computed as there are no common stock
equivalents.
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 average number of common shares outstanding used in the computations was 143,933,607
shares for 2006, 143,956,284 shares for 2005 and 146,226,674 shares for 2004.
14.
FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
Fair Value of Financial Instruments —
The carrying amount of cash and cash equivalents and
short term bank loans approximates fair value because of the short maturities of these
instruments. The fair values of current and noncurrent marketable securities, as presented in
Note 3, are primarily estimated based on quoted market prices for these securities.
The fair value of long-term debt including current portion at March 31, 2006 and 2005 was ¥66
million ($562 thousand) and ¥160 million, respectively. These fair values are based on
comparisons of instruments with similar terms and maturities.
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.
Forward Currency Exchange Contracts
- The Company occasionally uses forward currency exchange
contracts to manage its exposure to foreign currency fluctuation on the transactions dominated
in foreign currencies. At March 31, 2005, the notional amount of its open forward currency
contract was for the purchase of $3,000 thousand U.S. dollars. The Company recorded the
changes in the fair value of the derivative contract of ¥10 million in other income since it
was not designated as a hedge in the year ended March 31, 2005. No derivative contact was
outstanding as of March 31, 2006.
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. The Company's management believes that no
concentration of credit risk existed at March 31, 2006.
F-27
Table of Contents
15.
SUBSEQUENT EVENT
On June 2, 2006, the Company entered into an agreement to purchase 49% of the shares of Peach
John Co., Ltd. Peach John Co., Ltd. is engaged in the mail-order sales of women's apparel and
various other apparel products. The purchase price is ¥14,994 million ($127,630 thousand).
Results for recent fiscal years were as follows;
Millions of Yen
2005
2004
Net sales
¥
16,095
14,471
Net income
1,873
1,096
Total assets
7,411
4,162
The Board of Directors of the Company intends to propose for approval at the shareholders'
meeting to be held on June 29, 2006, payment of a cash dividend of 100 ($0.85) per 5 shares of
common stock to holders of record as of March 31, 2006 for the year then ended (aggregate
amount of 2,878 million ($24,498 thousand)).
* * * * * *
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SIGNATURES
Wacoal Holdings hereby certifies that it meets all of the requirements for filing on Form 20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its
behalf.
WACOAL HOLDINGS
(Registrant)
By
/s/ Ikuko Otani
Ikuo Otani
General Manager, Corporate Planning
Date: July 7, 2006
Table of Contents
INDEX OF EXHIBITS
Exhibit
Number
Description
1.1
Articles of Incorporation of the Registrant (English Translation)
1.2
Share Handling Regulations of the Registrant (English Translation)
1.3
Regulations of the Board of Directors of the Registrant (English Translation)
1.4
Regulations of the Board of Corporate Auditors of the Registrant (English Translation)
2.1
Specimen common stock certificate of the Registrant (English Translation)
2.2
Form of Deposit Agreement dated as of January 15, 1977, as amended and restated as of
October 1, 1982, among Wacoal Corp., ChaseMellon Shareholder Services, as Depositary,
and all Holders from time to time of American Depositary Receipts issued thereunder
(Previously filed)
8.1
Subsidiaries of the Registrant
11.1
Code of Ethics for Directors, Corporate Officers and Employees of Wacoal Corporation
(incorporated by reference to the annual report on Form 20-F filed on July 8, 2005)
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