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Kyocera 6-K 2005

Documents found in this filing:

  1. 6-K
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  3. Graphic
Form 6-K
Table of Contents

FORM 6-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the month of January 2005

 

Commission File Number: 1-07952

 

KYOCERA CORPORATION

 

6 Takeda Tobadono-cho, Fushimi-ku,

Kyoto 612-8501, Japan

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F   X     Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(1):      

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(7):      

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes          No   X 

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b); 82-


Table of Contents

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

KYOCERA CORPORATION

/s/ Hideki Ishida


Hideki Ishida

Managing Executive Officer
General Manager of
Corporate Finance Division

 

Date: January 27, 2005


Table of Contents

Information furnished on this form:

 

EXHIBITS

 

Exhibit

Number


   
1.   Consolidated Financial Results for the Nine Months Ended December 31, 2004
2.   Notice relating to Transfer of Domestic Sales Business of Solar Energy Products of Kyocera Group


Table of Contents

LOGO

 

January 27, 2005

 

KYOCERA CORPORATION

 

Consolidated Financial Highlights (Unaudited)

Results for the Nine Months Ended December 31, 2004

 

(Yen in millions, except per share amounts and exchange rates)

 

     Nine months ended December 31,

   Increase
(Decrease)
(%)


 
     2004

   2003

  

Net sales

   892,642    815,832    9.4  

Profit from operations

   81,399    48,478    67.9  

Income before income taxes

   88,965    53,698    65.7  

Net income

   57,163    33,254    71.9  

Average exchange rates :

                

US$

   109    115    —    

Euro

   135    132    —    

Earnings per share :

                

Net income

                

Basic

   304.88    178.44    —    

Diluted

   304.80    178.44    —    

Capital expenditures

   46,202    40,584    13.8  

Depreciation

   42,782    44,410    (3.7 )

R&D expenses

   41,364    34,972    18.3  

Sales of products manufactured outside Japan to net sales (%)

   33.2    34.1    —    

 

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Table of Contents

Consolidated Results of Kyocera Corporation and its Subsidiaries

for the Nine Months Ended December 31, 2004

 

1. The basic items on preparation for consolidated results for the nine months ended December 31, 2004 :

 

(1) The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.

 

(2) Change in accounting policies : None

 

(3) Changes in scope of consolidation and application of the equity method :

 

     Consolidation

   Equity method

Increase

   5    2

Decrease

   2    1

 

2. Consolidated financial information for the nine months ended December 31, 2004 :

 

(1) Consolidated results of operations :

 

     Nine months ended December 31,

    Year ended March 31,

 
     2004

    2003

    2004

 

Net sales

   ¥ 892,642 million     ¥ 815,832 million     ¥ 1,140,814 million  

% change from the previous period

     9.4 %     2.2 %     6.6 %

Profit from operations

     81,399 million       48,478 million       108,962 million  

% change from the previous period

     67.9 %     (14.0 )%     30.7 %

Income before income taxes

     88,965 million       53,698 million       115,040 million  

% change from the previous period

     65.7 %     2.2 %     51.3 %

Net income

     57,163 million       33,254 million       68,086 million  

% change from the previous period

     71.9 %     15.6 %     65.4 %

Earnings per share :

                        

Basic

   ¥ 304.88     ¥ 178.44     ¥ 364.79  

Diluted

     304.80       178.44       364.78  

 

(2) Consolidated financial conditions :

 

     As of December 31,

    As of March 31,

 
     2004

    2003

    2004

 

Total assets

   ¥ 1,770,575 million     ¥ 1,776,179 million     ¥ 1,794,758 million  

Stockholders’ equity

     1,190,144 million       1,117,548 million       1,153,746 million  

Stockholders’ equity to total assets

     67.2 %     62.9 %     64.3 %

Stockholders’ equity per share

   ¥ 6,347.93     ¥ 5,960.76     ¥ 6,153.83  

 

 

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Table of Contents

(3) Consolidated cash flows :

 

     Nine months ended December 31,

   Year ended March 31,

     2004

   2003

   2004

Cash flows from operating activities

   ¥ 101,564 million    ¥ (3,048) million    ¥ 62,575 million

Cash flows from investing activities

     (144,795) million      29,555 million      29,581 million

Cash flows from financing activities

     (58,019) million      (12,893) million      (20,422) million

Cash and cash equivalents at end of period

     261,220 million      304,184 million      361,132 million

 

3. Consolidated financial forecast for the year ending March 31, 2005 :

 

     Year ending March 31, 2005

Net sales

   ¥ 1,150,000 million

Income before income taxes

   ¥ 100,000 million

Net income

   ¥ 59,000 million

 

Note:

Forecast of earnings per share :                    314.59

 

Net income per share amounts is computed based on Statement of Financial Accounting Standards (SFAS) No.128.

Forecast of earnings per share is computed based on the diluted average number of shares outstanding during the nine months ended December 31, 2004.

 

With regard to forecasts set forth above, please refer to the accompanying “Forward-Looking Statements” on page 13.

 

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Table of Contents

Business Results, Financial Condition and Prospects

 

1.Business Results for the Nine Months Ended December 31, 2004

 

(1) Economic Situation and Business Environment

 

    During the nine months ended December 31, 2004 (the nine months), the Japanese economy showed a downtrend due to that a stable production activities in the manufacturing sector during the six months ended September 30, 2004 (the first half) turned into a weakness in the six months ending March 31, 2005 (the second half), and also due to a negative impact of continued appreciation of the yen against the U.S. dollar on corporate earnings. Despite a slowdown in the European economy, the U.S. economy expanded steadily led by solid personal consumption and capital expenditures, while the Asian economy continued to manifest healthy growth, particularly in China.

 

    The electronics industry, a key market for Kyocera Corporation and its consolidated subsidiaries (Kyocera), has stagnated globally since summer 2004 and now faces a difficult business environment due to production adjustments in the second half for mobile phone handsets, computer equipment and digital consumer products, which had shown steady growth.

 

(2) Consolidated Financial Results

 

(Yen in millions, except per share amounts and exchange rates)

     Nine months ended December 31,

  

Increase (Decrease)

%


     2004

   2003

  

Net sales

   892,642    815,832    9.4

Profit from operations

   81,399    48,478    67.9

Income before income taxes

   88,965    53,698    65.7

Net income

   57,163    33,254    71.9

Diluted earnings per share

   304.80    178.44    —  

Average US$ exchange rate

   109    115    —  

Average Euro exchange rate

   135    132    —  

 

1) Sales

 

    Net sales for the nine months increased in all operating segments compared with the nine months ended December 31, 2003 (the previous nine months).

 

    Demand for Kyocera’s components from Fine Ceramics Group and Electronic Device Group expanded, especially for mobile phone handsets and digital consumer products in the first half. The market environment deteriorated upon entering the second half, however, as component demand lessened and component prices dropped. Nevertheless, component sales for the nine months increased significantly compared with the previous nine months.

 

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    Net sales of Equipment Group increased as compared with the previous nine months due to higher sales of color printers and digital multifunction products (MFPs) and the contribution of camera modules for mobile phone handsets.

 

    As a result, consolidated net sales for the nine months amounted to ¥892.6 billion, an increase of 9.4% compared with the previous nine months.

 

2) Profits

 

    Despite the implementation of structural reforms in the optical instruments business to strengthen the business and improve profitability led to a one-off expense, the positive effects of an increase in sales, especially in the components business, and of group-wide structural reforms to boost profitability, began to emerge amid a favorable market environment in the first half. Consequently, profit from operations for the nine months increased by 67.9% from the previous nine months to ¥81.4 billion. Income before income taxes for the nine months increased by 65.7% to ¥89.0 billion, while net income increased by 71.9% to ¥57.2 billion.

 

3) Effect of Exchange Rate Fluctuations

 

    The average yen rate appreciated 6 yen against the U.S. dollar and depreciated 3 yen against the Euro compared with the previous nine months. Consequently, net sales and income before income taxes after translation into yen were negatively affected by approximately 20.0 billion and 2.0 billion yen, respectively, compared with the previous nine months.

 

(3) Operating Highlights

 

1) Kinseki, Ltd., a wholly-owned subsidiary, and Kyocera Corporation re-organized the operations related to crystal components on April 1, 2004. The marketing division of Kinseki Ltd. was merged into the marketing division of the electronic component of Kyocera Corporation and the manufacturing division of crystal related components of Kyocera Corporation was transferred to Kinseki Ltd. At the same time, Kinseki Ltd. changed its name to Kyocera Kinseki Corporation (Kyocera Kinseki).

 

2) On April 1, 2004, Kyocera integrated the organic material components business into Kyocera SLC Technologies Corporation (KST), a wholly owned subsidiary. Management resources relating to the organic material components business were concentrated in KST to enhance the synergistic effects within Kyocera and to expand the business base.

 

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3) On May 18, 2004, Kyocera announced that a new factory would be built in the City of Ayabe, Kyoto Prefecture. Operations are expected to commence in June 2005. At the factory, KST plans to produce organic semiconductor packages and laminated high-density printed circuit boards used in micro processors and chipsets for digital consumer products. Planned investment in the factory totals approximately ¥17.0 billion.

 

4) On June 21, 2004, the Carlyle Group (Carlyle), Kyocera, KDDI Corporation (KDDI) and DDI Pocket, Inc. (DDI Pocket) reached an agreement that a consortium of Kyocera and Carlyle would acquire the business of DDI Pocket, a subsidiary of KDDI. Under the agreement, the company that succeeds DDI Pocket’s business (“New Co”) was invested 30% by Kyocera. In cooperation with New Co, Kyocera will endeavor to expand sales in its PHS related business by carving out new markets in Japan as well as overseas.

 

5) Kyocera and Kobe Steel, Ltd. established “Japan Medical Materials Corporation (JMM)” on September 1, 2004 by merging the medical materials businesses of both companies and commenced operation on the same day. JMM will benefit from the integration of the specialized expertise of both companies in material and processing technologies, while maximizing synergies by integrating development, production and marketing divisions. JMM will also seek to expand its business worldwide as a dedicated manufacturer of medical materials.

 

6) On December 17, 2004, Kyocera announced to transfer its domestic sales division for solar energy products (which handles sales of solar power generation systems for use by domestic public sector industries) by means of a corporate split to Kyocera Solar Corporation (KSC), a consolidated subsidiary of Kyocera, in April 2005. The aim of this move is to expand sales of solar-related products to domestic public sector industries.

 

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Table of Contents

(4) Consolidated Operating Segments

 

(Yen in millions)

     Nine months ended December 31,

    Increase (Decrease)
%


 
     2004

    2003

   

Net sales

   892,642     815,832     9.4  

Fine Ceramics Group

   224,767     186,519     20.5  

Electronic Device Group

   202,253     188,151     7.5  

Equipment Group

   399,850     384,026     4.1  

Others

   84,082     69,796     20.5  

Adjustments and eliminations

   (18,310 )   (12,660 )   —    

Operating profit

   78,427     44,099     77.8  

Fine Ceramics Group

   34,789     19,606     77.4  

Electronic Device Group

   29,053     (1,187 )   —    

Equipment Group

   5,842     18,382     (68.2 )

Others

   8,743     7,298     19.8  
                    

Corporate

   10,651     7,267     46.6  

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

   (213 )   1,848     —    

Adjustments and eliminations

   100     484     (79.3 )

Income before income taxes

   88,965     53,698     65.7  

 

Commencing in the three months ended December 31, 2003, net sales and operating profit of the Precision Machine Division of Kyocera Corporation, previously included within “Others,” have been charged to “Corporate.” Accordingly, we have restated previously published net sales and operating profit of this operating segment for the previous first half.

 

1) Fine Ceramics Group

 

Demand for fine ceramic parts was strong, particularly for semiconductor and LCD fabrication equipment and sapphire substrates for LEDs. In semiconductor parts, sales of ceramic packages and organic packages increased considerably, especially those used in mobile phone handsets and digital consumer products. Sales of solar systems and cutting tools also increased markedly as global markets for these products continued to expand.

 

Operating profit in this segment increased compared with the previous nine months due mainly to the effect of increased sales and of improved productivity in all business divisions, especially semiconductor parts, solar systems and cutting tools.

 

2) Electronic Device Group

 

Sales of ceramic capacitors and crystal-related components grew significantly due to strong components demand, particularly in the first half. Additionally, Kyocera Kinseki, which became a wholly-owned subsidiary in the year ended March 31, 2004, has contributed to sales since the start of the year ending March 31, 2005. Sales of thermal printheads and LCDs also increased steadily.

 

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Operating profit in this segment improved appreciably compared with the previous nine months. This was due primarily to strong sales of key products and improved productivity, while the absence of restructuring charges at a U.S. subsidiary that were recorded in the previous nine months also had a positive effect.

 

3) Equipment Group

 

Sales of telecommunications equipment weakened due to intensifying price competition for mobile phone handsets in Japan and overseas, and the negative impact of inventory adjustments for PHS-related products in China. Sales of information equipment, however, increased dramatically through capture of major new users and an expanded product lineup of color printers and digital MFPs. Sales of optical instruments also increased due to new contributions from optical camera modules for mobile phone handsets. As a result, sales of this segment increased markedly compared with the previous nine months.

 

Nevertheless, operating profit in this segment decreased compared with the previous nine months. Although profit from information equipment grew strongly due to higher sales, profit from telecommunications equipment decreased due to lower sales of mobile phone handsets for the domestic market and PHS-related products for the Chinese market. Meanwhile, optical instruments recorded restructuring charges associated with concentrating management resources into the optical components business. As a result, profit from operations in this segment decreased compared with the previous nine months.

 

4) Others

 

Net sales and operating profit in this segment increased due mainly to strong growth of Kyocera Chemical Corporation, especially in its business relating to flexible printed circuit boards and semiconductor epoxy molding compounds, and favorable growth of Kyocera Communications Systems Co., Ltd. (KCCS), especially in its data center, network optimizing and telecommunications engineering businesses.

 

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(5) Orders and Production (Consolidated)

 

(Yen in millions)

     Nine months ended December 31,

   

Increase (Decrease)

%


 
     2004

    2003

   

Orders

   887,272     859,114     3.3  

Fine Ceramics Group

   226,720     194,056     16.8  

Electronic Device Group

   205,813     197,574     4.2  

Equipment Group

   384,565     405,704     (5.2 )

Others

   88,503     74,072     19.5  

Adjustments and eliminations

   (18,329 )   (12,292 )   —    

Production

   907,912     814,233     11.5  

Fine Ceramics Group

   229,261     186,098     23.2  

Electronic Device Group

   209,290     185,117     13.1  

Equipment Group

   412,492     394,266     4.6  

Others

   56,869     48,752     16.6  

 

(6) Geographic Segments (Sales by region)

 

(Yen in millions)

     Nine months ended December 31,

  

Increase (Decrease)

%


     2004

   2003

  

Sales

   892,642    815,832    9.4

Japan

   346,163    325,931    6.2

United States of America

   192,153    178,622    7.6

Asia

   159,994    142,132    12.6

Europe

   129,256    112,429    15.0

Others

   65,076    56,718    14.7

 

1) Japan

 

Net sales increased compared with the previous nine months due to a rise in sales of solar energy products and components for mobile handsets, digital consumer products, etc. and also due to favorable performance of communication engineering business of KCCS.

 

2) United States of America

 

Net sales increased compared with the previous nine months due to a rise in sales of components as well as mobile handsets and information equipment.

 

3) Asia (excluding Japan)

 

Net sales increased over the previous nine months due to increased sales in solar energy products and components for mobile handsets, digital consumer products and computer related equipment in addition to favorable sales in information equipment.

 

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4) Europe

 

Net sales increased over the previous nine months due mainly to growth in sales of information equipment and also to a rise in sales of solar energy products and electronic devices.

 

5) Others

 

Net sales increased compared with the previous nine months due to increased sales of telecommunication equipment and information equipment.

 

2. Cash Flows

 

Cash and cash equivalents at December 31, 2004 decreased by ¥99.9 billion to ¥261.2 billion compared with at March 31, 2004.

 

(Yen in millions)

     Nine months ended December 31,

 
     2004

    2003

 

Cash flows from operating activities

   101,564     (3,048 )

Cash flows from investing activities

   (144,795 )   29,555  

Cash flows from financing activities

   (58,019 )   (12,893 )

Effect of exchange rate changes on cash and cash equivalents

   1,338     (7,740 )

Net (decrease) increase in cash and cash equivalents

   (99,912 )   5,874  

Cash and cash equivalents at beginning of period

   361,132     298,310  

Cash and cash equivalents at end of period

   261,220     304,184  

 

1) Cash Flows from Operating Activities

 

Net cash provided by operating activities for the nine months increased by ¥104.6 billion to ¥101.6 billion compared with net cash used in the previous nine months of ¥3.0 billion. This was due to an increase in net income and a significant decrease in receivables by collection, including the short-term finance receivables.

 

2) Cash Flows from Investing Activities

 

Net cash used in investing activities for the nine months increased by ¥174.4 billion to ¥144.8 billion from net cash provided by the previous nine months of ¥29.6 billion. This was due mainly to increases in purchases of the government bonds and negotiable certificate of deposits in consideration of current and future financial position according to our investment policy.

 

3) Cash Flows from Financing Activities

 

Net cash used in financing activities for the nine months increased by ¥45.1 billion to ¥58.0 billion from the previous nine months of ¥12.9 billion. This was due mainly to payments of long-term debt.

 

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3. Business Outlook and Future Strategies

 

1) Consolidated Financial Forecast for the Year Ending March 31, 2005 (Announced January 27, 2005)

 

(Yen in millions, except per share amounts and exchange rates)

     Forcast for the year ending
March 31, 2005 announced on


   Result for the
year ended
March 31,
2004


   Increase
(Decrease) to the
result for the
year ended
March 31, 2004
%


 
     January 27, 2005

   October 28, 2004

     

Net sales

   1,150,000    1,260,000    1,140,814    0.8  

Profit from operations

   95,000    135,000    108,962    (12.8 )

Income before income taxes

   100,000    140,000    115,040    (13.1 )

Net income

   59,000    85,000    68,086    (13.3 )

Diluted earnings per share

   314.59    455.40    364.78    —    

Average US$ exchange rate

   107    106    113    —    

Average Euro exchange rate

   135    129    133    —    

 

In the fourth quarter (from January 1, 2005 to March 31, 2005), there are concerns that a slowdown in economic growth in Japan and overseas coupled with rapid appreciation of the yen against the U.S. dollar will have a broad negative impact on corporate earnings and the economy.

 

Sales in the solar energy business and cutting tools business are expected to continue growing steadily. In the electronics industry, however, due to a slump in production activities for mobile phones, computer related equipment and digital consumer products since last summer, Kyocera does not expect any genuine recovery in component demand for these products before the end of the current fiscal year. Sales in Kyocera’s components business, namely Electronic Device Group and Fine Ceramics Group, are therefore expected to fall short of previously announced forecasts. Additionally, as a consequence of intensifying price competition for mobile phones and PHS related products, particularly in overseas markets, a decline in sales of telecommunications equipment is projected. As a result, consolidated net sales are expected to fall short of previously announced forecasts by ¥110.0 billion.

 

Despite promoting initiatives aimed at boosting productivity across Kyocera, this is not expected to cover the negative impact on profits of the declines in sales, and accordingly, profits are projected to dip below previously announced forecasts. Furthermore, Kyocera will record restructuring charges associated with the swift completion of reforms in the telecommunications equipment business and optical instruments business to strengthen market competitiveness and raise profitability. As a result, income before income taxes and net income are expected to fall short of previously announced forecasts by ¥40.0 billion and ¥26.0 billion, respectively.

 

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In light of these circumstances, net sales and operating profit forecasts for each operating segment have been adjusted as follows.

 

(Yen in millions)

     Forcast for the year ending
March 31, 2005 announced on


    Result for the
year ended
March 31,
2004


    Increase
(Decrease) to the
result for the
year ended
March 31, 2004


 
     January 27, 2005

    October 28, 2004

     

Sales

   1,150,000     1,260,000     1,140,814     0.8  

Fine Ceramics Group

   287,000     302,500     255,805     12.2  

Electronic Device Group

   261,000     278,500     256,906     1.6  

Equipment Group

   518,000     585,000     545,811     (5.1 )

Others

   114,000     118,500     100,505     13.4  

Adjustments and eliminations

   (30,000 )   (24,500 )   (18,213 )   —    

Operating profit

   89,500     129,700     77,126     16.0  

Fine Ceramics Group

   42,600     47,300     31,139     36.8  

Electronic Device Group

   33,300     42,800     5,047     559.8  

Equipment Group

   1,000     25,700     31,257     (96.8 )

Others

   12,600     13,900     9,683     30.1  

Corporate

   10,500     10,300     37,914     (72.3 )

Income before income taxes

   100,000     140,000     115,040     (13.1 )

 

2) Business Outlook

 

Although the yen is expected to continue appreciating in the next fiscal year, particularly against the U.S. dollar, Kyocera expects a full-scale recovery in production activities for electronic equipment from the second half of the next fiscal year.

 

Kyocera aims to increase profitability in this business environment by promoting its group-wide management policy of “high-value-added diversification.” In order to strengthen each business and make it into a highly profitable “value-added business,” Kyocera will boost productivity, primarily by expanding production in China, and invest aggressively in areas with high growth potential, including the solar energy and fuel cell businesses, organic materials components business, components for semiconductor and LCD fabrication equipment, LCDs and organic EL displays. In addition to this investment, Kyocera intends to push forward with initiatives aimed at raising productivity and streamlining production. In the optical instruments and mobile phone businesses, Kyocera seeks to swiftly strengthen market competitiveness and boost profitability.

 

By promoting such business developments, Kyocera intends to create “value-added businesses” that will drive its growth for the next fiscal year and beyond.

 

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4. Non-Consolidated Financial Forecast for the Year Ending March 31, 2005

 

Due to the deteriorating market environment, sales of telecommunications equipment and in the components business are expected to fall short of previously announced forecasts. As a result, non-consolidated net sales are projected to fall below previously announced forecasts by ¥82.0 billion. Furthermore, the decline in net sales is expected to result in non-consolidated recurring profit and net income that are ¥19.0 billion and ¥8.0 billion, respectively, below previously announced forecasts.

 

(Yen in millions)

     Forcast for the year ending
March 31, 2005 announced on


   Result for the
year ended
March 31,
2004


  

Increase
(Decrease) to the
result for the
year ended
March 31, 2004

%


 
     January 27, 2005

   October 28, 2004

     

Net sales

   480,000    562,000    494,035    (2.8 )

Profit from operations

   27,000    50,000    41,222    (34.5 )

Recurring profit

   57,000    76,000    61,788    (7.7 )

Net income

   40,000    48,000    60,663    (34.1 )

 

Note: Forward-Looking Statements

 

Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to: general economic conditions in our markets, which are primarily Japan, North America, Europe, and Asia, including in particular China; changes in exchange rates, particularly between the yen and the U.S. dollar and Euro, respectively, in which we make significant sales; our ability to launch innovative products and otherwise meet the advancing technical requirements of our customers, particularly in the highly competitive markets for ceramics, semiconductor parts and electronic components; the extent and pace of future growth or contraction in information technology-related markets around the world, including those for communications and personal computers; and events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of diseases such as SARS. Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.

 

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CONSOLIDATED BALANCE SHEETS

 

     Yen in millions

 
     (Unaudited)
December 31, 2004


   March 31, 2004

   Increase
(Decrease)


 
     Amount

    %

   Amount

    %

  

Current assets :

                                  

Cash and cash equivalents

   ¥ 261,220          ¥ 361,132          ¥ (99,912 )

Short-term investments

     49,789            3,855            45,934  

Trade notes receivable

     33,360            33,801            (441 )

Trade accounts receivable

     206,239            207,583            (1,344 )

Short-term finance receivables

     39,952            70,553            (30,601 )

Less allowances for doubtful accounts and sales returns

     (7,917 )          (8,468 )          551  

Inventories

     234,650            197,194            37,456  

Deferred income taxes

     40,262            34,957            5,305  

Other current assets

     42,574            33,089            9,485  
    


 
  


 
  


Total current assets

     900,129     50.8      933,696     52.0      (33,567 )
    


 
  


 
  


Non-current assets :

                                  

Investments and advances :

                                  

Investments in and advances to affiliates and unconsolidated subsidiaries

     32,219            24,054            8,165  

Securities and other investments

     443,818            430,096            13,722  
    


 
  


 
  


Total investments and advances

     476,037     26.9      454,150     25.3      21,887  

Long-term finance receivables

     69,724     3.9      88,512     5.0      (18,788 )

Property, plant and equipment, at cost :

                                  

Land

     54,702            54,867            (165 )

Buildings

     223,734            217,216            6,518  

Machinery and equipment

     646,393            622,721            23,672  

Construction in progress

     12,004            10,384            1,620  

Less accumulated depreciation

     (679,852 )          (650,668 )          (29,184 )
    


 
  


 
  


       256,981     14.5      254,520     14.2      2,461  

Goodwill

     27,738     1.6      25,254     1.4      2,484  

Intangible assets

     16,739     1.0      16,645     0.9      94  

Other assets

     23,227     1.3      21,981     1.2      1,246  
    


 
  


 
  


Total non-current assets

     870,446     49.2      861,062     48.0      9,384  
    


 
  


 
  


Total assets

   ¥ 1,770,575     100.0    ¥ 1,794,758     100.0    ¥ (24,183 )
    


 
  


 
  


 

- 14 -


Table of Contents
     Yen in millions

 
     (Unaudited)
December 31, 2004


   March 31, 2004

   Increase
(Decrease)


 
     Amount

    %

   Amount

    %

  

Current liabilities :

                                  

Short-term borrowings

   ¥ 78,773          ¥ 84,815          ¥ (6,042 )

Current portion of long-term debt

     3,943            44,522            (40,579 )

Trade notes and accounts payable

     101,354            110,759            (9,405 )

Other notes and accounts payable

     35,867            38,115            (2,248 )

Accrued payroll and bonus

     26,726            34,161            (7,435 )

Accrued income taxes

     21,220            19,054            2,166  

Other accrued liabilities

     30,199            28,665            1,534  

Other current liabilities

     22,813            16,548            6,265  
    


 
  


 
  


Total current liabilities

     320,895     18.1      376,639     21.0      (55,744 )
    


 
  


 
  


Non-current liabilities :

                                  

Long-term debt

     70,497            70,608            (111 )

Accrued pension and severance costs

     33,662            38,620            (4,958 )

Deferred income taxes

     91,972            95,498            (3,526 )

Other non-current liabilities

     4,928            6,409            (1,481 )
    


 
  


 
  


Total non-current liabilities

     201,059     11.4      211,135     11.7      (10,076 )
    


 
  


 
  


Total liabilities

     521,954     29.5      587,774     32.7      (65,820 )
    


 
  


 
  


Minority interests in subsidiaries

     58,477     3.3      53,238     3.0      5,239  

Stockholders’ equity :

                                  

Common stock

     115,703            115,703            —    

Additional paid-in capital

     162,086            162,091            (5 )

Retained earnings

     931,176            885,262            45,914  

Accumulated other comprehensive income

     12,525            22,046            (9,521 )

Treasury stock, at cost

     (31,346 )          (31,356 )          10  
    


 
  


 
  


Total stockholders’ equity

     1,190,144     67.2      1,153,746     64.3      36,398  
    


 
  


 
  


Total liabilities, minority interests and stockholders’ equity

   ¥ 1,770,575     100.0    ¥ 1,794,758     100.0    ¥ (24,183 )
    


 
  


 
  


 

Note : Accumulated other comprehensive income is as follows:

 

                                  
     Yen in millions

      
     December 31, 2004

   March 31, 2004

      

Net unrealized gains on securities

     ¥48,517      ¥59,241         

Net unrealized gains and losses on derivative financial instruments

     ¥27      ¥(48)         

Minimum pension liability adjustments

     ¥(1,477)      ¥(1,477)         

Foreign currency translation adjustments

     ¥(34,542)      ¥(35,670)         

 

- 15 -


Table of Contents

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

     Yen in millions and shares in thousands, except per share amounts

     Nine months ended December 31,

     
     2004

    2003

    Increase (Decrease)

     Amount

    %

    Amount

    %

    Amount

    %

Net sales

   ¥ 892,642     100.0     ¥ 815,832     100.0     ¥ 76,810     9.4

Cost of sales

     643,445     72.1       616,580     75.6       26,865     4.4
    


 

 


 

 


 

Gross profit

     249,197     27.9       199,252     24.4       49,945     25.1

Selling, general and administrative expenses

     167,798     18.8       150,774     18.5       17,024     11.3
    


 

 


 

 


 

Profit from operations

     81,399     9.1       48,478     5.9       32,921     67.9

Other income (expenses) :

                                        

Interest and dividend income

     5,430     0.6       4,229     0.5       1,201     28.4

Interest expense

     (927 )   (0.1 )     (938 )   (0.1 )     11     —  

Foreign currency transaction gains (losses), net

     1,933     0.2       (1,155 )   (0.1 )     3,088     —  

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

     (213 )   (0.0 )     1,848     0.2       (2,061 )   —  

Other, net

     1,343     0.2       1,236     0.2       107     8.7
    


 

 


 

 


 

Total other income (expenses)

     7,566     0.9       5,220     0.7       2,346     44.9
    


 

 


 

 


 

Income before income taxes, minority interests

     88,965     10.0       53,698     6.6       35,267     65.7

Income taxes

     29,843     3.4       23,732     2.9       6,111     25.8
    


 

 


 

 


 

Income before minority interests

     59,122     6.6       29,966     3.7       29,156     97.3

Minority interests

     (1,959 )   (0.2 )     3,288     0.4       (5,247 )   —  
    


 

 


 

 


 

Net income

   ¥ 57,163     6.4     ¥ 33,254     4.1     ¥ 23,909     71.9
    


 

 


 

 


 

Earnings per share :

                                        

Basic

   ¥ 304.88           ¥ 178.44                    

Diluted

   ¥ 304.80           ¥ 178.44                    

Weighted average number of shares of common stock outstanding :

                                        

Basic

     187,491             186,362                    

Diluted

     187,544             186,362                    

 

- 16 -


Table of Contents

Notes:

 

1. Kyocera applies SFAS No. 130, “Financial Reporting of Comprehensive Income.” Based on this standard, comprehensive income for the nine months ended December 31, 2004 and 2003 were an increase of 47,642 million yen and an increase of 110,148 million yen, respectively.

 

2. Earnings per share amounts were computed based on SFAS No. 128, “Earnings per Share.” Under SFAS No. 128, basic earnings per share was computed based on the average number of shares of common stock outstanding during each period and diluted earnings per share assumed the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock.

 

- 17 -


Table of Contents

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

 

                              ( Yen in millions and shares in thousands)  

(Number of shares of common stock)


  

Common

stock


   Additional
paid-in capital


    Retained
earnings


    Accumulated other
comprehensive income


    Treasury stock,
at cost


    Comprehensive
income


 

Balance, March 31, 2003 (184,964)

   ¥ 115,703    ¥ 167,675     ¥ 828,350     ¥ (56,194 )   ¥ (52,034 )        
    

  


 


 


 


       

Net income for the year

                    68,086                     ¥ 68,086  

Other comprehensive income for the year

                            78,240               78,240  
                                           


Total comprehensive income for the year

                                          ¥ 146,326  
                                           


Cash dividends

                    (11,174 )                        

Purchase of treasury stock (14)

                                    (105 )        

Reissuance of treasury stock (5)

            4                       44          

Allocation of treasury stock for share
exchange (2,529)

            (5,607 )                     20,739          

Stock option plan of a subsidiary

            19                                  
    

  


 


 


 


       

Balance, March 31, 2004 (187,484)

     115,703      162,091       885,262       22,046       (31,356 )        
    

  


 


 


 


       

(Unaudited)

                                               

Net income for the period

                    57,163                     ¥ 57,163  

Other comprehensive income for the period

                            (9,521 )             (9,521 )
                                           


Total comprehensive income for the period

                                          ¥ 47,642  
                                           


Cash dividends

                    (11,249 )                        

Purchase of treasury stock (16)

                                    (134 )        

Reissuance of treasury stock (17)

            (5 )                     144          
    

  


 


 


 


       

Balance, December 31, 2004 (187,485)

   ¥ 115,703    ¥ 162,086     ¥ 931,176     ¥ 12,525     ¥ (31,346 )        
    

  


 


 


 


       
                              (Yen in millions and shares in thousands)  

(Number of shares of common stock)


   Common stock

   Additional
paid-in capital


    Retained
earnings


    Accumulated other
comprehensive income


    Treasury stock,
at cost


    Comprehensive
income


 

Balance, March 31, 2003 (184,964)

   ¥ 115,703    ¥ 167,675     ¥ 828,350     ¥ (56,194 )   ¥ (52,034 )        
    

  


 


 


 


       

(Unaudited)

                                               

Net income for the period

                    33,254                     ¥ 33,254  

Other comprehensive income for the period

                            76,894               76,894  
                                           


Total comprehensive income for the period

                                          ¥ 110,148  
                                           


Cash dividends

                    (11,174 )                        

Purchase of treasury stock (10)

                                    (72 )        

Reissuance of treasury stock (1)

            5                       9          

Allocation of treasury stock for share
exchange (2,529)

            (5,607 )                     20,739          
    

  


 


 


 


       

Balance, December 31, 2003 (187,484)

   ¥ 115,703    ¥ 162,073     ¥ 850,430     ¥ 20,700     ¥ (31,358 )        
    

  


 


 


 


       

 

 

- 18 -


Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

     Yen in millions

 
     Nine months ended December 31,

 
     2004

    2003

 

Cash flows from operating activities:

                

Net income

   ¥ 57,163     ¥ 33,254  

Adjustments to reconcile net income to net cash provided by (used in) operating activities :

                

Depreciation and amortization

     48,503       51,523  

Losses of inventories

     10,397       8,936  

Foreign currency adjustments

     (2,053 )     700  

Decrease (increase) in receivables

     54,834       (39,983 )

Increase in inventories

     (47,635 )     (25,684 )

Increase in other current assets

     (745 )     (3,904 )

(Decrease) increase in notes and accounts payable

     (11,896 )     13,417  

Settlement regarding LaPine Case

     —         (35,454 )

Other, net

     (7,004 )     (5,853 )
    


 


Net cash provided by (used in) operating activities

     101,564       (3,048 )
    


 


Cash flows from investing activities :

                

Payments for purchases of securities

     (67,230 )     (29,195 )

Payments for purchases of investments and advances

     (19,524 )     (7,410 )

Sales and maturities of securities

     23,794       54,009  

Payments for purchases of property, plant and equipment, and intangible assets

     (48,384 )     (42,362 )

Proceeds from sales of property, plant and equipment, and intangible assets

     3,398       1,665  

Acquisitions of businesses, net of cash acquired

     (2,794 )     5,135  

Deposit of negotiable certificate of deposits and time deposits

     (110,777 )     —    

Withdrawal of negotiable certificate of deposits and time deposits

     76,387       79  

Deposit of restricted cash

     —         (1,994 )

Withdrawal of restricted cash

     —         52,983  

Other, net

     335       (3,355 )
    


 


Net cash (used in) provided by investing activities

     (144,795 )     29,555  
    


 


Cash flows from financing activities :

                

(Decrease) increase in short-term debt

     (6,265 )     16,720  

Proceeds from issuance of long-term debt

     8,959       1,265  

Payments of long-term debt

     (49,635 )     (19,134 )

Dividends paid

     (12,333 )     (11,910 )

Other, net

     1,255       166  
    


 


Net cash used in financing activities

     (58,019 )     (12,893 )
    


 


Effect of exchange rate changes on cash and cash equivalents

     1,338       (7,740 )
    


 


Net (decrease) increase in cash and cash equivalents

     (99,912 )     5,874  

Cash and cash equivalents at beginning of period

     361,132       298,310  
    


 


Cash and cash equivalents at end of period

   ¥ 261,220     ¥ 304,184  
    


 


 

 

- 19 -


Table of Contents

SEGMENT INFORMATION (Unaudited)

 

1. Operating segments :

     Yen in millions

 
     Nine months ended December 31,

             
     2004

    2003

    Increase (Decrease)

 
     Amount

    Amount

    Amount

    %

 

Net sales :

                              

Fine Ceramics Group

   ¥ 224,767     ¥ 186,519     ¥ 38,248     20.5  

Electronic Device Group

     202,253       188,151       14,102     7.5  

Equipment Group

     399,850       384,026       15,824     4.1  

Others

     84,082       69,796       14,286     20.5  

Adjustments and eliminations

     (18,310 )     (12,660 )     (5,650 )   —    
    


 


 


 

     ¥ 892,642     ¥ 815,832     ¥ 76,810     9.4  
    


 


 


 

Operating profit :

                              

Fine Ceramics Group

   ¥ 34,789     ¥ 19,606     ¥ 15,183     77.4  

Electronic Device Group

     29,053       (1,187 )     30,240     —    

Equipment Group

     5,842       18,382       (12,540 )   (68.2 )

Others

     8,743       7,298       1,445     19.8  
    


 


 


 

       78,427       44,099       34,328     77.8  

Corporate

     10,651       7,267       3,384     46.6  

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

     (213 )     1,848       (2,061 )   —    

Adjustments and eliminations

     100       484       (384 )   (79.3 )
    


 


 


 

Income before income taxes

   ¥ 88,965     ¥ 53,698     ¥ 35,267     65.7  
    


 


 


 

Depreciation and amortization :

                              

Fine Ceramics Group

   ¥ 12,337     ¥ 12,077     ¥ 260     2.2  

Electronic Device Group

     15,910       17,264       (1,354 )   (7.8 )

Equipment Group

     14,765       16,775       (2,010 )   (12.0 )

Others

     3,585       3,443       142     4.1  

Corporate

     1,906       1,964       (58 )   (3.0 )
    


 


 


 

     ¥ 48,503     ¥ 51,523     ¥ (3,020 )   (5.9 )
    


 


 


 

Capital expenditures :

                              

Fine Ceramics Group

   ¥ 15,091     ¥ 9,128     ¥ 5,963     65.3  

Electronic Device Group

     14,757       13,302       1,455     10.9  

Equipment Group

     12,875       14,234       (1,359 )   (9.5 )

Others

     1,729       709       1,020     143.9  

Corporate

     1,750       3,211       (1,461 )   (45.5 )
    


 


 


 

     ¥ 46,202     ¥ 40,584     ¥ 5,618     13.8  
    


 


 


 

 

 

- 20 -


Table of Contents

2. Geographic segments (Sales and Operating profits by geographic area) :

 

     Yen in millions

 
     Nine months ended December 31,

       
     2004

    2003

    Increase (Decrease)

 
     Amount

    Amount

    Amount

    %

 

Net sales:

                              

Japan

   ¥ 389,127     ¥ 370,449     ¥ 18,678     5.0  

Intra-group sales and transfer between geographic areas

     241,985       204,908       37,077     18.1  
    


 


 


 

       631,112       575,357       55,755     9.7  
    


 


 


 

United States of America

     243,200       221,515       21,685     9.8  

Intra-group sales and transfer between geographic areas

     20,071       16,516       3,555     21.5  
    


 


 


 

       263,271       238,031       25,240     10.6  
    


 


 


 

Asia

     112,940       95,042       17,898     18.8  

Intra-group sales and transfer between geographic areas

     91,049       75,035       16,014     21.3  
    


 


 


 

       203,989       170,077       33,912     19.9  
    


 


 


 

Europe

     132,956       115,038       17,918     15.6  

Intra-group sales and transfer between geographic areas

     22,790       24,184       (1,394 )   (5.8 )
    


 


 


 

       155,746       139,222       16,524     11.9  
    


 


 


 

Others

     14,419       13,788       631     4.6  

Intra-group sales and transfer between geographic areas

     5,805       5,562       243     4.4  
    


 


 


 

       20,224       19,350       874     4.5  
    


 


 


 

Adjustments and eliminations

     (381,700 )     (326,205 )     (55,495 )   —    
    


 


 


 

     ¥ 892,642     ¥ 815,832     ¥ 76,810     9.4  
    


 


 


 

Operating Profits :

                              

Japan

   ¥ 70,459     ¥ 58,084     ¥ 12,375     21.3  

United States of America

     5,482       (1,461 )     6,943     —    

Asia

     11,152       6,686       4,466     66.8  

Europe

     (798 )     (14,943 )     14,145     —    

Others

     1,017       751       266     35.4  
    


 


 


 

       87,312       49,117       38,195     77.8  

Adjustments and eliminations

     (8,785 )     (4,534 )     (4,251 )   —    
    


 


 


 

       78,527       44,583       33,944     76.1  

Corporate

     10,651       7,267       3,384     46.6  

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

     (213 )     1,848       (2,061 )   —    
    


 


 


 

Income before income taxes

   ¥ 88,965     ¥ 53,698     ¥ 35,267     65.7  
    


 


 


 

 

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Table of Contents

3. Geographic segments (Sales by region) :

 

     Yen in millions

     Nine months ended December 31,

    
     2004

   2003

   Increase (Decrease)

     Amount

    %

   Amount

    %

   Amount

   %

Japan

   ¥ 346,163     38.8    ¥ 325,931     40.0    ¥ 20,232    6.2

United States of America

     192,153     21.5      178,622     21.9      13,531    7.6

Asia

     159,994     17.9      142,132     17.4      17,862    12.6

Europe

     129,256     14.5      112,429     13.8      16,827    15.0

Others

     65,076     7.3      56,718     6.9      8,358    14.7
    


 
  


 
  

  

Net sales

   ¥ 892,642     100.0    ¥ 815,832     100.0    ¥ 76,810    9.4
    


 
  


 
  

  

Sales outside Japan

   ¥ 546,479          ¥ 489,901          ¥ 56,578    11.5

Sales outside Japan to net sales

     61.2 %          60.0 %                

 

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Table of Contents

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

     Yen in millions

 
     December 31, 2004

   September 30, 2004

  

Increase

(Decrease)


 
     Amount

    %

   Amount

    %

  

Current assets :

                                  

Cash and cash equivalents

   ¥ 261,220          ¥ 256,965          ¥ 4,255  

Short-term investments

     49,789            74,262            (24,473 )

Trade notes receivable

     33,360            33,549            (189 )

Trade accounts receivable

     206,239            211,504            (5,265 )

Short-term finance receivables

     39,952            42,820            (2,868 )

Less allowances for doubtful accounts and sales returns

     (7,917 )          (7,569 )          (348 )

Inventories

     234,650            239,612            (4,962 )

Deferred income taxes

     40,262            39,408            854  

Other current assets

     42,574            31,207            11,367  
    


 
  


 
  


Total current assets

     900,129     50.8      921,758     51.6      (21,629 )
    


 
  


 
  


Non-current assets :

                                  

Investments and advances :

                                  

Investments in and advances to affiliates and unconsolidated subsidiaries

     32,219            24,240            7,979  

Securities and other investments

     443,818            440,844            2,974  
    


 
  


 
  


Total investments and advances

     476,037     26.9      465,084     26.0      10,953  

Long-term finance receivables

     69,724     3.9      73,477     4.1      (3,753 )

Property, plant and equipment, at cost :

                                  

Land

     54,702            55,021            (319 )

Buildings

     223,734            223,956            (222 )

Machinery and equipment

     646,393            642,657            3,736  

Construction in progress

     12,004            9,815            2,189  

Less accumulated depreciation

     (679,852 )          (675,190 )          (4,662 )
    


 
  


 
  


       256,981     14.5      256,259     14.4      722  

Goodwill

     27,738     1.6      28,589     1.6      (851 )

Intangible assets

     16,739     1.0      17,495     1.0      (756 )

Other assets

     23,227     1.3      22,843     1.3      384  
    


 
  


 
  


Total non-current assets

     870,446     49.2      863,747     48.4      6,699  
    


 
  


 
  


     ¥ 1,770,575     100.0    ¥ 1,785,505     100.0    ¥ (14,930 )
    


 
  


 
  


 

- 23 -


Table of Contents
     Yen in millions

 
     December 31, 2004

   September 30, 2004

   Increase
(Decrease)


 
     Amount

    %

   Amount

    %

  

Current liabilities :

                                  

Short-term borrowings

   ¥ 78,773          ¥ 78,044          ¥ 729  

Current portion of long-term debt

     3,943            4,406            (463 )

Trade notes and accounts payable

     101,354            120,646            (19,292 )

Other notes and accounts payable

     35,867            36,232            (365 )

Accrued payroll and bonus

     26,726            35,725            (8,999 )

Accrued income taxes

     21,220            23,641            (2,421 )

Other accrued liabilities

     30,199            30,029            170  

Other current liabilities

     22,813            17,223            5,590  
    


 
  


 
  


Total current liabilities

     320,895     18.1      345,946     19.4      (25,051 )
    


 
  


 
  


Non-current liabilities :

                                  

Long-term debt

     70,497            70,743            (246 )

Accrued pension and severance costs

     33,662            36,929            (3,267 )

Deferred income taxes

     91,972            86,387            5,585  

Other non-current liabilities

     4,928            5,386            (458 )
    


 
  


 
  


Total non-current liabilities

     201,059     11.4      199,445     11.2      1,614  
    


 
  


 
  


Total liabilities

     521,954     29.5      545,391     30.6      (23,437 )
    


 
  


 
  


Minority interests in subsidiaries

     58,477     3.3      59,173     3.3      (696 )

Stockholders’ equity :

                                  

Common stock

     115,703            115,703            —    

Additional paid-in capital

     162,086            162,087            (1 )

Retained earnings

     931,176            922,187            8,989  

Accumulated other comprehensive income

     12,525            12,262            263  

Treasury stock, at cost

     (31,346 )          (31,298 )          (48 )
    


 
  


 
  


Total stockholders’ equity

     1,190,144     67.2      1,180,941     66.1      9,203  
    


 
  


 
  


Total liabilities, minority interests and stockholders’ equity

   ¥ 1,770,575     100.0    ¥ 1,785,505     100.0    ¥ (14,930 )
    


 
  


 
  


 

Note: Accumulated other comprehensive income is as follows:

 

                                  
     Yen in millions

      
     December 31, 2004

   September 30, 2004

      

Net unrealized gains on securities

     ¥48,517      ¥39,996         

Net unrealized gains (losses) on derivative financial instruments

     ¥27      ¥(22)         

Minimum pension liability adjustments

     ¥(1,477)      ¥(1,477)         

Foreign currency translation adjustments

     ¥(34,542)      ¥(26,235)         

 

- 24 -


Table of Contents

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

     Yen in millions and shares in thousands, except per share
amounts


 
     Three months ended December 31,

    Increase  
     2004

    2003

    (Decrease)

 
     Amount

    %

    Amount

    %

    Amount

    %

 

Net sales

   ¥ 292,080     100.0     ¥ 297,454     100.0     ¥ (5,374 )   (1.8 )

Cost of sales

     213,802     73.2       218,926     73.6       (5,124 )   (2.3 )
    


 

 


 

 


 

Gross profit

     78,278     26.8       78,528     26.4       (250 )   (0.3 )

Selling, general and administrative expenses

     58,971     20.2       52,604     17.7       6,367     12.1  
    


 

 


 

 


 

Profit from operations

     19,307     6.6       25,924     8.7       (6,617 )   (25.5 )

Other income (expenses) :

                                          

Interest and dividend income

     2,702     0.9       1,810     0.6       892     49.3  

Interest expense

     (314 )   (0.1 )     (237 )   (0.1 )     (77 )   —    

Foreign currency transaction (losses) gains, net

     (163 )   (0.0 )     466     0.2       (629 )   —    

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

     (795 )   (0.3 )     119     0.0       (914 )   —    

Other, net

     975     0.3       489     0.2       486     99.4  
    


 

 


 

 


 

Total other income (expenses)

     2,405     0.8       2,647     0.9       (242 )   (9.1 )
    


 

 


 

 


 

Income before income taxes, minority interests

     21,712     7.4       28,571     9.6       (6,859 )   (24.0 )

Income taxes

     7,095     2.4       10,983     3.7       (3,888 )   (35.4 )
    


 

 


 

 


 

Income before minority interests

     14,617     5.0       17,588     5.9       (2,971 )   (16.9 )

Minority interests

     (3 )   (0.0 )     (88 )   (0.0 )     85     —    
    


 

 


 

 


 

Net income

   ¥ 14,614     5.0     ¥ 17,500     5.9     ¥ (2,886 )   (16.5 )
    


 

 


 

 


 

Earnings per share :

                                          

Basic

   ¥ 77.94           ¥ 93.34                      

Diluted

   ¥ 77.94           ¥ 93.34                      

Weighted average number of shares of common stock outstanding :

                                          

Basic

     187,488             187,482                      

Diluted

     187,492             187,482                      

 

- 25 -


Table of Contents

Notes:

 

1. Kyocera applies SFAS No.130, “Financial Reporting of Comprehensive Income.” Based on this standard, comprehensive income for the three months ended December 31, 2004 and 2003 were an increase of 14,877 million yen and an increase of 30,757 million yen, respectively.

 

2. Earnings per share amounts were computed based on SFAS No.128, “Earnings per Share.” Under SFAS No.128, basic earnings per share was computed based on the average number of shares of common stock outstanding during each period and diluted earnings per share assumed the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock.

 

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Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

     Yen in millions

 
     Three months ended December 31,

 
     2004

    2003

 

Cash flows from operating activities:

                

Net income

   ¥ 14,614     ¥ 17,500  

Adjustments to reconcile net income to net cash provided by (used in) operating activities :

                

Depreciation and amortization

     17,414       17,856  

Losses of inventories

     2,904       (402 )

Foreign currency adjustments

     (204 )     (608 )

Decrease (increase) in receivables

     4,562       (42,279 )

Increase in inventories

     (3,311 )     (3,625 )

(Increase) decrease in other current assets

     (356 )     911  

(Decrease) increase in notes and accounts payable

     (15,118 )     7,791  

Settlement regarding LaPine Case

     —         (35,454 )

Other, net

     (7,832 )     6,752  
    


 


Net cash provided by (used in) operating activities

     12,673       (31,558 )
    


 


Cash flows from investing activities :

                

Payments for purchases of securities

     (6,890 )     (6,563 )

Payments for purchases of investments and advances

     (19,072 )     (6,804 )

Sales and maturities of securities

     3,865       11,651  

Payments for purchases of property, plant and equipment, and intangible assets

     (17,810 )     (13,234 )

Proceeds from sales of property, plant and equipment, and intangible assets

     1,416       542  

Deposit of negotiable certificate of deposits and time deposits

     (38,177 )     —    

Withdrawal of negotiable certificate of deposits and time deposits

     75,871       —    

Withdrawal of restricted cash

     —         52,983  

Other, net

     179       (3,857 )
    


 


Net cash (used in) provided by investing activities

     (618 )     34,718  
    


 


Cash flows from financing activities :

                

Increase in short-term debt

     782       10,019  

Proceeds from issuance of long-term debt

     297       97  

Payments of long-term debt

     (788 )     (773 )

Dividends paid

     (5,924 )     (5,796 )

Other, net

     1,196       (328 )
    


 


Net cash (used in) provided by financing activities

     (4,437 )     3,219  
    


 


Effect of exchange rate changes on cash and cash equivalents

     (3,363 )     (1,355 )
    


 


Net increase in cash and cash equivalents

     4,255       5,024  

Cash and cash equivalents at beginning of period

     256,965       299,160  
    


 


Cash and cash equivalents at end of period

   ¥ 261,220     ¥ 304,184  
    


 


 

- 27 -


Table of Contents

SEGMENT INFORMATION (Unaudited)

 

1. Operating segments :

 

     Yen in millions

 
     Three months ended December 31,

             
     2004

    2003

    Increase (Decrease)

 
     Amount

    Amount

    Amount

    %

 

Net sales :

                              

Fine Ceramics Group

   ¥ 72,781     ¥ 67,120     ¥ 5,661     8.4  

Electronic Device Group

     62,463       68,364       (5,901 )   (8.6 )

Equipment Group

     134,253       142,654       (8,401 )   (5.9 )

Others

     27,889       24,061       3,828     15.9  

Adjustments and eliminations

     (5,306 )     (4,745 )     (561 )   —    
    


 


 


 

     ¥ 292,080     ¥ 297,454     ¥ (5,374 )   (1.8 )
    


 


 


 

Operating profit :

                              

Fine Ceramics Group

   ¥ 10,390     ¥ 8,284     ¥ 2,106     25.4  

Electronic Device Group

     6,812       5,205       1,607     30.9  

Equipment Group

     (1,294 )     8,108       (9,402 )   —    

Others

     2,583       2,543       40     1.6  
    


 


 


 

       18,491       24,140       (5,649 )   (23.4 )

Corporate

     3,968       4,257       (289 )   (6.8 )

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

     (795 )     119       (914 )   —    

Adjustments and eliminations

     48       55       (7 )   (12.7 )
    


 


 


 

Income before income taxes

   ¥ 21,712     ¥ 28,571     ¥ (6,859 )   (24.0 )
    


 


 


 

Depreciation and amortization :

                              

Fine Ceramics Group

   ¥ 4,454     ¥ 4,302     ¥ 152     3.5  

Electronic Device Group

     5,776       5,971       (195 )   (3.3 )

Equipment Group

     5,305       5,796       (491 )   (8.5 )

Others

     1,222       1,167       55     4.7  

Corporate

     657       620       37     6.0  
    


 


 


 

     ¥ 17,414     ¥ 17,856     ¥ (442 )   (2.5 )
    


 


 


 

Capital expenditures :

                              

Fine Ceramics Group

   ¥ 7,762     ¥ 3,301     ¥ 4,461     135.1  

Electronic Device Group

     4,437       4,191       246     5.9  

Equipment Group

     3,917       5,230       (1,313 )   (25.1 )

Others

     815       188       627     333.5  

Corporate

     640       216       424     196.3  
    


 


 


 

     ¥ 17,571     ¥ 13,126     ¥ 4,445     33.9  
    


 


 


 

 

- 28 -


Table of Contents

2. Geographic segments (Sales and Operating profits by geographic area) :

 

     Yen in millions

 
     Three months ended December 31,

       
     2004

    2003

    Increase (Decrease)

 
     Amount

    Amount

    Amount

    %

 

Net sales:

                              

Japan

   ¥ 129,527     ¥ 130,398     ¥ (871 )   (0.7 )

Intra-group sales and transfer between geographic areas

     77,765       70,570       7,195     10.2  
    


 


 


 

       207,292       200,968       6,324     3.1  
    


 


 


 

United States of America

     76,373       85,975       (9,602 )   (11.2 )

Intra-group sales and transfer between geographic areas

     6,360       4,926       1,434     29.1  
    


 


 


 

       82,733       90,901       (8,168 )   (9.0 )
    


 


 


 

Asia

     34,266       36,057       (1,791 )   (5.0 )

Intra-group sales and transfer between geographic areas

     31,407       28,551       2,856     10.0  
    


 


 


 

       65,673       64,608       1,065     1.6  
    


 


 


 

Europe

     46,668       40,076       6,592     16.4  

Intra-group sales and transfer between geographic areas

     7,477       8,316       (839 )   (10.1 )
    


 


 


 

       54,145       48,392       5,753     11.9  
    


 


 


 

Others

     5,246       4,948       298     6.0  

Intra-group sales and transfer between geographic areas

     1,884       2,068       (184 )   (8.9 )
    


 


 


 

       7,130       7,016       114     1.6  
    


 


 


 

Adjustments and eliminations

     (124,893 )     (114,431 )     (10,462 )   —    
    


 


 


 

     ¥ 292,080     ¥ 297,454     ¥ (5,374 )   (1.8 )
    


 


 


 

Operating Profits :

                              

Japan

   ¥ 15,975     ¥ 18,710     ¥ (2,735 )   (14.6 )

United States of America

     (311 )     3,233       (3,544 )   —    

Asia

     2,516       3,592       (1,076 )   (30.0 )

Europe

     (100 )     (647 )     547     —    

Others

     277       335       (58 )   (17.3 )
    


 


 


 

       18,357       25,223       (6,866 )   (27.2 )

Adjustments and eliminations

     182       (1,028 )     1,210     —    
    


 


 


 

       18,539       24,195       (5,656 )   (23.4 )

Corporate

     3,968       4,257       (289 )   (6.8 )

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

     (795 )     119       (914 )   —    
    


 


 


 

Income before income taxes

   ¥ 21,712     ¥ 28,571     ¥ (6,859 )   (24.0 )
    


 


 


 

 

- 29 -


Table of Contents

3. Geographic segments (Sales by region) :

 

     Yen in millions

 
     Three months ended December 31,

      
     2004

   2003

   Increase (Decrease)

 
     Amount

    %

   Amount

    %

   Amount

    %

 

Japan

   ¥ 118,391     40.5    ¥ 114,655     38.5    ¥ 3,736     3.3  

United States of America

     61,648     21.1      64,287     21.6      (2,639 )   (4.1 )

Asia

     43,637     15.0      52,010     17.5      (8,373 )   (16.1 )

Europe

     45,350     15.5      38,957     13.1      6,393     16.4  

Others

     23,054     7.9      27,545     9.3      (4,491 )   (16.3 )
    


 
  


 
  


 

Net sales

   ¥ 292,080     100.0    ¥ 297,454     100.0    ¥ (5,374 )   (1.8 )
    


 
  


 
  


 

Sales outside Japan

   ¥ 173,689          ¥ 182,799          ¥ (9,110 )   (5.0 )

Sales outside Japan to net sales

     59.5 %          61.5 %                   

 

- 30 -


Table of Contents

January 27, 2005

 

To whom it may concern:

   

Name of Company listed:

 

Kyocera Corporation

Name of Representative:

 

Yasuo Nishiguchi

   

President and Director

   

(Code number: 6971,

   

The First Section of the Tokyo Stock Exchange,

   

The First Section of the Osaka Securities Exchange)

   

Person for Inquiry: Hideki Ishida

   

Managing Executive Officer

   

General Manager of Corporate Finance Division

   

(Tel. No.: 075-604-3500)

 

Notice relating to Transfer of

Domestic Sales Business of Solar Energy Products of Kyocera Group

 

Kyocera Corporation (the “Company”) will transfer its domestic sales business of solar energy products by means of corporate splits to Kyocera Solar Corporation (“KSC”), as announced on December 17, 2004. This is to advise you that the agreement for corporate split was approved at the Company’s Board of Directors Meeting on January 27, 2005, as descried below.

 

1. Objective of Corporate Split

 

Domestic sales of Kyocera Group solar energy products is undertaken by the Company, handling sales of solar power generation systems for use by domestic public sector industries, and by KSC, a wholly owned subsidiary of the Company, handling solar power generation systems for residential use. To enhance its business in the expanding market for domestic solar power generation systems, the Company will transfer its domestic sales division for solar energy products to KSC. In addition, in order to improve materials procurement efficiency, the Company will integrate a part of its solar energy products manufacturing division, which procures peripheral components incorporated into solar power generation systems, into KSC.

 


Table of Contents
2. Outline of Corporate Split

 

(1) Schedule of Corporate Split

 

Meeting of Board of Directors to approve agreement for corporate split:   January 27, 2005
Execution of agreement for corporate split:   January 27, 2005
General Shareholders Meeting to approve agreement for corporate sprit:   Both the Company and KSC will undertake the corporate split without approval of their respective General Shareholders Meetings in accordance with Articles 374-22 and 374-23 (Easy Method for Corporate Split), respectively.
Effective date of corporate split:   April 1, 2005 (scheduled)
Register of corporate split in Commercial Register:   April 1, 2005 (scheduled)

 

(2) Method of Corporate Split

 

  (i) Method of Corporate Split

 

“Dividing and succeeding corporate split,” in which the Company will be the divided company and KSC, a wholly-owned subsidiary of the Company, will be the succeeding company.

 

  (ii) Reason for Choosing Method

 

It has been decided that a “dividing and succeeding corporate split,” in which shares issued by KSC shall be allocated to the Company, is the most suitable option for transfer of the Company’s domestic sales division for solar energy products and a part of the manufacturing division relating to solar energy products to KSC, a wholly-owned subsidiary of the Company.

 

(3) Allocation of Shares

 

  (i) Allocation Ratio of Shares

 

One share to be issued by KSC in the corporate split shall be allocated to the Company.

 

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  (ii) The Basis of Calculation of Allocation Ratio

 

KSC is a wholly-owned subsidiary of the Company and, as a result, all shares to be issued in the corporate split (using the dividing and succeeding corporate split method) will be allocated to the Company. Accordingly, KSC will succeed to all assets and liabilities of the Company at their book value. As a result of the corporate split, there will be no change in the Company’s net asset value regardless of the number of shares to be allocated by KSC to the Company because the amount of the difference between assets and liabilities of KSC to which the Company will succeed will be equivalent to the amount of increase in the amount of Company’s investments in subsidiaries. In the light of the above, the Company and KSC have agreed that the one share of KSC shall be issued and allocated to the Company.

 

(4) Cash to be Delivered

 

No cash shall be delivered in the corporate split.

 

(5) Rights and Obligations to be Succeeded to by the Succeeding Company (KSC)

 

KSC will succeed to assets and liabilities and rights and obligations belonging to the Company’s domestic sales division for solar energy products and a part of the manufacturing division of solar energy products pursuant to agreements as of the effective date of the corporate split. More detailed content thereof shall be decided by the time of execution of the agreement for the corporate split.

 

(6) Expectations with Respect to Performance of Debts

 

  (i) Divided Company (the Company)

 

Taking into consideration the amounts of assets, liabilities and net asset value of the Company, it is judged that there will be no problem with respect to the certainty of performance by the Company of its debts.

 

  (ii) Succeeding Company (KSC)

 

Taking into consideration the amounts of the assets, liabilities and net asset value of KSC and the amounts of assets, liabilities and net asset value, etc. to which KSC will succeed, it is judged that there will be no problem with respect to the certainty of performance by KSC of its debts.

 

(7) New Directors or Corporate Auditors of the Succeeding Company (KSC)

 

Not yet decided.

 

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3. Content of Business to be Divided

 

(1) Content of the domestic sales division for solar energy products and a part of the manufacturing division of solar energy products:

 

Sale of solar power generation systems, procurement of peripheral components other than solar batteries, etc., which are incorporated into solar power generation systems. Quality guarantee relating thereto.

 

(2) Performance of the Domestic Sales Division for Solar Energy Products of the Company for the fiscal year ended March 31, 2004:

 

Net sales of the Company derived from its domestic sales division for solar energy products for the fiscal year ended March 31, 2004 were 4,391 million yen, representing 0.9% of the total net sales of the Company in the amount of 494,035 million yen for the same period.

 

(3) Assets and Liabilities to be Transferred and Amounts thereof (as of December 31, 2004):

 

(Millions of Yen)

 

Assets


  

Liabilities


Item


   Book Value

  

Item


   Book Value

Current Assets

   448   

Current Liabilities

   103

Fixed Assets

   93   

Fixed Liabilities

   0

Total

   541   

Total

   103

 

* As of December 31, 2004, the amount of assets to be succeeded (541 million yen) represented 0.04% of the total assets of the Company (1,247,415 million yen) as of the same date.

 

4. Outlines of Parties to the Corporate Split (as of December 31, 2004)

 

(1)    Name

 

Kyocera Corporation

 

Kyocera Solar Corporation

(2)    Principal Businesses

 

- Fine ceramics group

- Electronic device group

- Equipment group

- Others

 

Sales, servicing and construction of solar

power generating systems.

(3)    Date of Incorporation

 

April, 1959

 

September, 1996

(4)    Location of Headquarters

 

Fushimi-ku, Kyoto

 

Fushimi-ku, Kyoto

(5)    Representatives

 

Yasuo Nishiguchi

President and Director

 

Isao Yukawa

President and Director

(6)    Capital Amount

 

115,703 million yen

 

300 million yen

(7)    Number of Shares

         Issued and Outstanding

 

191,309,290 shares

(out of which 3,823,896 shares are

  treasury stock)

 

6,000 shares

(there is no treasury stock)

(8)    Shareholders’ Equity

 

1,042,354 million yen

 

1,818 million yen

(9)    Total Assets

 

1,247,415 million yen

 

6,396 million yen

 

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(10) Fiscal Year End

  

March 31

       

March 31

(11) Number of Employees

  

12,585

       

222

(12) Principal Suppliers and Customers

  

Suppliers:

       

Suppliers:

    

Matsushita Electric Industrial Co., Ltd.

Mitsui & Co., Ltd.

       

Kyocera Corporation

    

Sony Corp.

         
    

Customers:

       

Customers:

    

Fujitsu Ltd.

Hitachi, Ltd.

NEC Corp.

       

PanaHome Corporation

Daiwa House Industry Co., Ltd.

(13) Principal Shareholders and Their Shareholding Ratios

  

Japan Trustee Services Bank, Ltd.

(Trust Account)

  

7.19%

  

Kyocera Corporation            100.00%

    

The Master Trust Bank of Japan, Ltd.

(Trust Account)