Kyocera 6-K 2006
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 July 2006
Commission File Number: 1-07952
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:
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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.
Date: July 27, 2006
Information furnished on this form :
for the Three Months Ended June 30, 2006
1. The basic items on preparation for consolidated results for the three months ended June 30, 2006 :
(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 :
2. Consolidated financial information for the three months ended June 30, 2006 :
(1) Consolidated results of operations :
(2) Consolidated financial condition :
(3) Consolidated cash flows :
There are no changes in the above forecast for the year ending March 31, 2007 from the original forecast, which was shown in the Form 6-K submitted on April 27, 2006.
Forecast of earnings per share : ¥440.83
Net income per share amount is computed based on Statement of Financial Accounting Standards No.128. Forecast of earnings per share is computed based on the diluted average number of shares outstanding during the three months ended June 30, 2006.
With regard to forecasts set forth above, please refer to the accompanying Forward Looking Statements on page 10.
Consolidated Financial Highlights (Unaudited)
Results for the Three Months Ended June 30, 2006
Business Results, Financial Condition and Prospects
1. Business Results for the Three Months Ended June 30, 2006
(1) Economic Situation and Business Environment
The Japanese economy expanded steadily in the three months ended June 30, 2006 (the first quarter) on the back of continued aggressive capital expenditures in the private sector amid a high level of corporate earnings and increased personal consumption. The U.S. economy continued to grow, while the European economy moved further along a moderate growth track due primarily to increasing exports. The Chinese economy maintained its high growth due to persistent expansion in corporates production activities.
In the electronics industry, which is the principal market for Kyocera Corporation and its consolidated subsidiaries (Kyocera), despite certain production adjustments for mobile phone handsets, expanded production of digital consumer equipment including digital home appliances led to high demand on the whole for components for these products.
(2) Consolidated Financial Results and Management Initiatives
Consolidated net sales for the first quarter amounted to ¥292,696 million, or increased by 10.4% compared with the three months ended June 30, 2005 (the previous first quarter), reflecting an increase in sales at both the components business and the equipment business. Profit from operations increased by 114.5% to ¥30,642 million, income before income taxes by 114.5% to ¥36,927 million and net income increased by 133.3% to ¥20,072 million compared with the previous first quarter due to increased sales and improved productivity mainly in the components business.
Effective April 1, 2006, Kyocera shifted to a new management system to speed up group decision making. The executive officer system undertaken by the officers with the titles of Chief Executive Officer, Chief Financial Officer and Chief Operating Officer was abandoned, and a new system was introduced in which the President, Representative Director and Executive Officer has total responsibility for formulation and execution of group management strategies.
(3) Consolidated Sales and Operating Profits by Reporting Segments
Note: Commencing in the first quarter, net sales and operating profit of Precision Machine Division of Kyocera Corporation, previously included within Corporate, have been charged to Others. Accordingly, previously reported net sales and operating profit of reporting segment for the previous first quarter have been retroactively reclassified.
As components demand for digital consumer equipment expanded, both sales and operating profit in the Fine Ceramic Parts Group, the Semiconductor Parts Group and the Electronic Device Group increased compared with the previous first quarter. Sales and operating profit in the Applied Ceramic Products Group also grew, particularly solar energy business. As a result, all reporting segments in the components business recorded increased sales and operating profit compared with the previous first quarter. The operating profit ratio in the components business became 16.6% and surpassed Kyoceras objective of 15% as a group.
The consolidated results by reporting segment are as follows.
1) Fine Ceramic Parts Group
Sales and operating profit in this reporting segment increased compared with the previous first quarter. A recovery in the semiconductor industry led to a significant increase in demand for ceramic parts for use in semiconductor fabrication equipment. In addition, demand for sapphire substrates for LEDs expanded steadily.
2) Semiconductor Parts Group
Sales and operating profit in this reporting segment increased compared with the previous first quarter on the back of active demand for ceramic packages used in digital consumer equipment.
3) Applied Ceramic Products Group
Sales growth was recorded in the solar energy business amid an expanding global market spurred by rising environmental awareness. Sales of cutting tools for the automobile industry also grew. As a result, sales and operating profit in this reporting segment increased compared with the previous first quarter.
4) Electronic Device Group
Both sales and operating profit increased in this reporting segment compared with the previous first quarter. The primary causal factors were expanded sales of new products and rising demand for capacitors, crystal-related components and connectors etc. due to strong production activity for digital consumer equipment.
Sales in the equipment business increased compared with the previous first quarter due primarily to healthly domestic sales in the Telecommunications Equipment Group and in the Information Equipment Group, including digital multifunction products and printers overseas. Operating profit in the equipment business improved by ¥5.9 billion compared with the previous first quarter due to the positive effect of increased sales of the equipment business combined with reduced loss in the Telecommunications Equipment Group and in the Optical Equipment Group.
The consolidated results by reporting segment are as follows.
5) Telecommunications Equipment Group
Sales in this reporting segment increased compared with the previous first quarter due to favorable sales of new models of mobile phone handsets and PHS handsets in the domestic market. Operating loss was substantially reduced due to a positive effect from domestic mobile phone handset business and to decreased loss at Kyocera Wireless Corp., a U.S. subsidiary.
6) Information Equipment Group
Sales in this reporting segment increased compared with the previous first quarter due to the aggressive marketing activity. Operating profit increased on account of higher sales and improved productivity coupled with the positive effect of the yens depreciation against Euro and the U.S. dollars. As a result, the operating profit ratio improved to 14.4%.
7) Optical Equipment Group
Sales of camera equipment decreased in line with the execution of structural reforms. Operating loss in this reporting segment, however, decreased considerably compared with the previous first quarter.
Sales in Others increased compared with the previous first quarter due to sales growth in the telecommunications servicing business of Kyocera Communication Systems Co., Ltd. Operating profit also increased due primarily to an increase in profits in the electronic device materials business at Kyocera Chemical Corporation.
(4) Consolidated Orders and Production by Reporting Segment
(5) Geographic Segments (Sales by region)
Sales of the Telecommunications Equipment Group including mobile phone handsets and PHS handsets increased compared with the previous first quarter. Sales of the components business such as the Semiconductor Parts Group also grew due to increased demand.
2) United States of America
Sales of the Electronic Device Group and the Semiconductor Parts Group increased due to expanded demand for digital consumer products. Sale of the Information Equipment Group also grew compared with the previous first quarter.
Sales increased compared with the previous first quarter, particularly in the Electronic Device Group and the Semiconductor Parts Group.
Increased demand for solar energy products as well as electronic devices and semiconductor parts resulted in sales growth compared with the previous first quarter.
Sales of the Information Equipment Group and the Semiconductor Parts Group increased compared with the previous first quarter.
2. Cash Flows
Cash and cash equivalents at June 30, 2006 decreased by ¥34,185 million to ¥266,624 million compared with those at March 31, 2006.
1) Cash Flows from Operating Activities
Net cash provided by operating activities in the first quarter decreased by ¥16,903 million to ¥27,604 million from the previous first quarter of ¥44,507 million. Although net income increased by ¥11,469 million, cash and cash equivalent in connection with receivables and inventories decreased compared with the previous first quarter.
2) Cash Flows from Investing Activities
Net cash used in investing activities in the first quarter increased by ¥9,189 million to ¥61,083 million from the previous first quarter of ¥51,894 million. Net cash provided by sales of securities and withdrawal of time deposits increased, on the other hand, net cash used in deposit of negotiable certificate increased compared with the previous first quarter.
3) Cash Flows from Financing Activities
Cash flows from financing activities changed from ¥11,025 million of net cash used in financing activities in the previous first quarter to ¥240 million of net cash provided by financing activities in the first quarter. This was due mainly to an increase in short-term debt.
3. Consolidated Financial Forecast for the Year Ending March 31, 2007
Although Kyocera changed its forecast of average exchange rates for the year ending March 31, 2007 (fiscal 2007), it has not changed its forecast of sales and profits for fiscal 2007 released on April 27, 2006 because an impact of change in the forecast of average exchange rates is not considered to be material.
Financial results in the first quarter progressed steadily towards the full-year forecast. Kyocera projects high components demand on the whole in the second quarter and onward. In this favourable market environment, Kyocera will maximize group synergies aimed at assuring business expansion. In addition, Kyocera will cultivate new markets such as organic packages. In the equipment business, Kyocera will strive to increase sales and profits through the continued timely market release of new products by the Telecommunications Equipment Group and the Information Equipment Group.
Forecasts for fiscal 2007 are as follows.
Forecast of diluted earnings per share announced on July 27, 2006 is computed based on the diluted average number of shares outstanding during the first quarter.
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; and the extent and pace of future growth or contraction in information technology-related markets around the world, including those for communications and personal computers; fluctuations in the value of securities and other assets held by us and changes in accounting principles; business performance of other companies with which we maintain business alliances; laws and regulations relating to the taxation, and to manufacturing and trade; events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of diseases; and the occurrence of natural disasters, such as earthquakes, in locations where our manufacturing and other key business facilities are located. 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.
CONSOLIDATED BALANCE SHEETS
Note: Accumulated other comprehensive income is as follows :
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
SEGMENT INFORMATION (Unaudited)
1. Reporting segments :
2. Geographic segments (Sales and operating profit by geographic area) :
3. Geographic segments (Sales by region) :
This is to advise you that Kyocera Corporation (Kyocera) and Diamond Lease Company Limited (Diamond Lease) have reached an agreement for the transfer of 100% of the shares of Kyocera Leasing Co., Ltd. (Kyocera Leasing) from Kyocera to Diamond Lease as of today.
Kyocera Leasing, a 100% subsidiary of Kyocera, is a non-bank credit institution, which recently has been putting its business emphasis on real estate-related financing, in which it expects improved profitability and loan collection ratio, including without limitation, the extension of short-term loans for residential real estate projects and loans to apartment owners, in addition to its traditional business of leasing office equipment.
In recent years, within the financing industry, active reorganization has been ongoing. Amid such circumstances, Kyocera has been considering improved methods to enable Kyocera Leasing to continue to grow and further develop its businesses.
Diamond Lease is a leading financing company, with strong fund procurement capability and a strong business foundation, and, in addition, it has strong know-how in various types of financing products, such as securitization and factoring. Kyocera Leasing will be able to further expand and grow its businesses by joining the group companies of Diamond Lease and by taking advantage of the business network of such group companies and receiving support from them for its own financing and management skills.
On the other hand, Kyoceras action will enable Kyocera Group to concentrate management resources on its businesses requiring enhancement, and accordingly execution of the share purchase agreement will be the most appropriate method of improving its corporate value.
Effective Date of Transfer: August 2006
The impact from the relevant share transfer on the performance of Kyoceras business for the fiscal year ending March 31, 2007 will be insignificant and there is no change in the forecast announced on April 27, 2006.
Consolidated forecast of Kyocera Group for the year ending March 31, 2007 (fiscal 2007)
Non-Consolidated forecast of Kyocera Corporation for fiscal 2007