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Kyocera 6-K 2006

Documents found in this filing:

  1. 6-K
  2. Graphic
  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 July 2006

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/ Akihiko Toyotani

Akihiko Toyotani
General Manager of Finance Division

Date: July 27, 2006


Table of Contents

Information furnished on this form :

EXHIBITS

 

Exhibit
Number
   
1.  

Consolidated Financial Results for the Three Months Ended June 30, 2006

2.   Transfer of Shares of Kyocera Leasing Co., Ltd.


Table of Contents

Consolidated Results of Kyocera Corporation and its Subsidiaries

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 :

 

     Consolidation    Equity method

Increase

   2    0

Decrease

   1    0

2. Consolidated financial information for the three months ended June 30, 2006 :

(1) Consolidated results of operations :

 

     Japanese Yen  
     Three months ended June 30,     Year ended March 31,  
     2006     2005     2006  

Net sales

   ¥ 292,696 million     ¥265,073 million     ¥1,181,489 million  

% change from the previous period

     10.4 %   (9.6 )%   0.1 %

Profit from operations

     30,642 million     14,283million     103,207 million  

% change from the previous period

     114.5 %   (58.9 )%   2.2 %

Income before income taxes

     36,927 million     17,215 million     121,388 million  

% change from the previous period

     114.5 %   (54.8 )%   12.9 %

Net income

     20,072 million     8,603 million     69,696 million  

% change from the previous period

     133.3 %   (60.9 )%   51.8 %

Earnings per share :

      

Basic

     ¥106.82     ¥45.89     ¥371.68  

Diluted

     106.61     45.88     371.43  

(2) Consolidated financial condition :

 

     Japanese Yen  
     June 30,     March 31,  
     2006     2005     2006  

Total assets

   ¥1,973,816 million     ¥1,741,948 million     ¥1,931,522 million  

Stockholders’ equity

   1,319,510 million     1,171,769 million     1,289,077 million  

Stockholders’ equity to total assets

   66.9 %   67.3 %   66.7 %

Stockholders’ equity per share

   ¥7,021.14     ¥6,250.08     ¥6,865.75  

 

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(3) Consolidated cash flows :

 

     Japanese Yen
     Three months ended June 30,    Year ended March 31,
     2006    2005    2006

Cash flows from operating activities

   ¥ 27,604 million    ¥ 44,507 million    ¥ 171,077 million

Cash flows from investing activities

     (61,083) million      (51,894) million      (165,467) million

Cash flows from financing activities

     240 million      (11,025) million      (23,289) million

Cash and cash equivalents at end of period

     266,624 million      293,679 million      300,809 million

3. Consolidated financial forecast for the year ending March 31, 2007 :

 

     Japanese Yen          
     Year ending March 31, 2007          

Net sales

   ¥ 1,230,000 million      

Income before income taxes

   ¥ 138,000 million      

Net income

   ¥ 83,000 million      

Note 1:

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.

Note 2:

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.

 

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LOGO   July 27, 2006
  KYOCERA CORPORATION

Consolidated Financial Highlights (Unaudited)

Results for the Three Months Ended June 30, 2006

 

     (Yen in millions, except per share amounts and exchange rates)  
     Three months ended June 30,    Increase
(Decrease) %
 
     2006    2005   

Net sales

   292,696    265,073    10.4  

Profit from operations

   30,642    14,283    114.5  

Income before income taxes

   36,927    17,215    114.5  

Net income

   20,072    8,603    133.3  

Average exchange rates :

        

US$

   115    108    —    

Euro

   144    136    —    

Earnings per share :

        

Net income :

        

Basic

   106.82    45.89    132.8  

Diluted

   106.61    45.88    132.4  

Capital expenditures

   16,730    27,036    (38.1 )

Depreciation

   14,444    13,149    9.8  

R&D expenses

   15,632    14,456    8.1  

Total assets

   1,973,816    1,741,948    13.3  

Stockholders’ equity

   1,319,510    1,171,769    12.6  

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

   33.9    30.5    —    

 

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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 corporate’s 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.

 

     (Yen in millions, except per share amounts and exchange rates)
     Three months ended June 30,   

Increase

(Decrease) %

     2006    2005   

Net sales

   292,696    265,073    10.4

Profit from operations

   30,642    14,283    114.5

Income before income taxes

   36,927    17,215    114.5

Net income

   20,072    8,603    133.3

Diluted earnings per share

   106.61    45.88    132.4

Average US$ exchange rate

   115    108    —  

Average Euro exchange rate

   144    136    —  

 

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(3) Consolidated Sales and Operating Profits by Reporting Segments

 

     (Yen in millions)  
     Three months ended June 30,    

Increase
(Decrease)

%

 
     2006     2005    

Fine Ceramic Parts Group

   18,617     15,905     17.1  

Semiconductor Parts Group

   36,013     29,715     21.2  

Applied Ceramic Products Group

   31,258     26,983     15.8  

Electronic Device Group

   68,307     60,811     12.3  
                  

Total components business

   154,195     133,414     15.6  

Telecommunications Equipment Group

   50,577     45,780     10.5  

Information Equipment Group

   60,266     57,908     4.1  

Optical Equipment Group

   2,832     4,373     (35.2 )
                  

Total equipment business

   113,675     108,061     5.2  

Others

   30,438     28,390     7.2  

Adjustments and eliminations

   (5,612 )   (4,792 )   —    
                  

  Net sales

   292,696     265,073     10.4  
                  

 

     (Yen in millions)
     Three months ended June 30,    Increase
(Decrease)
%
     2006    2005   
     Amount     Ratio to
sales (%)
   Amount     Ratio to
sales (%)
  

Fine Ceramic Parts Group

   3,431     18.4    1,890     11.9    81.5

Semiconductor Parts Group

   5,511     15.3    3,350     11.3    64.5

Applied Ceramic Products Group

   6,389     20.4    4,891     18.1    30.6

Electronic Device Group

   10,269     15.0    4,496     7.4    128.4
                          

Total components business

   25,600     16.6    14,627     11.0    75.0

Telecommunications Equipment Group

   (2,843 )   —      (6,441 )   —      —  

Information Equipment Group

   8,651     14.4    7,661     13.2    12.9

Optical Equipment Group

   (468 )   —      (1,768 )   —      —  
                          

Total equipment business

   5,340     4.7    (548 )   —      —  

Others

   2,040     6.7    1,382     4.9    47.6
                          

  Operating profit

   32,980     11.3    15,461     5.8    113.3

Corporate

   4,342     —      1,220     —      255.9

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

   (343 )   —      452     —      —  

Adjustments and eliminations

   (52 )   —      82     —      —  
                          

  Income before income taxes

   36,927     12.6    17,215     6.5    114.5
                          

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.

 

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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 Kyocera’s 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 yen’s 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.

 

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(4) Consolidated Orders and Production by Reporting Segment

 

     (Yen in millions)  
     Three months ended June 30,    

Increase

(Decrease) %

 
     2006     2005    

Fine Ceramic Parts Group

   19,629     16,601     18.2  

Semiconductor Parts Group

   37,542     33,436     12.3  

Applied Ceramic Products Group

   32,985     28,537     15.6  

Electronic Device Group

   73,354     64,418     13.9  
                  

Total components business

   163,510     142,992     14.3  

Telecommunications Equipment Group

   58,714     50,276     16.8  

Information Equipment Group

   60,072     57,767     4.0  

Optical Equipment Group

   3,092     4,014     (23.0 )
                  

Total equipment business

   121,878     112,057     8.8  

Others

   32,182     30,239     6.4  

Adjustments and eliminations

   (5,593 )   (4,828 )   —    
                  

  Orders

   311,977     280,460     11.2  
                  
     (Yen in millions)  
     Three months ended June 30,    

Increase

(Decrease) %

 
     2006     2005    

Fine Ceramic Parts Group

   18,659     15,817     18.0  

Semiconductor Parts Group

   37,473     30,869     21.4  

Applied Ceramic Products Group

   31,501     27,117     16.2  

Electronic Device Group

   69,283     61,011     13.6  
                  

Total components business

   156,916     134,814     16.4  

Telecommunications Equipment Group

   52,358     45,927     14.0  

Information Equipment Group

   65,830     60,272     9.2  

Optical Equipment Group

   2,769     3,986     (30.5 )
                  

Total equipment business

   120,957     110,185     9.8  

Others

   19,817     19,089     3.8  
                  

  Production

   297,690     264,088     12.7  
                  

 

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(5) Geographic Segments (Sales by region)

 

     (Yen in millions)
     Three months ended June 30,   

Increase

(Decrease) %

     2006    2005   

Japan

   113,823    107,064    6.3

United States of America

   61,703    54,910    12.4

Asia

   51,128    43,755    16.9

Europe

   46,468    42,796    8.6

Others

   19,574    16,548    18.3
              

Net sales

   292,696    265,073    10.4
              

1) Japan

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.

3) Asia

Sales increased compared with the previous first quarter, particularly in the Electronic Device Group and the Semiconductor Parts Group.

4) Europe

Increased demand for solar energy products as well as electronic devices and semiconductor parts resulted in sales growth compared with the previous first quarter.

5) Others

Sales of the Information Equipment Group and the Semiconductor Parts Group increased compared with the previous first quarter.

 

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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.

 

     (Yen in millions)  
     Three months ended June 30,  
     2006     2005  

Cash flows from operating activities

   27,604     44,507  

Cash flows from investing activities

   (61,083 )   (51,894 )

Cash flows from financing activities

   240     (11,025 )

Effect of exchange rate changes on cash and cash equivalents

   (946 )   1,499  

Net decrease in cash and cash equivalents

   (34,185 )   (16,913 )

Cash and cash equivalents at beginning of period

   300,809     310,592  

Cash and cash equivalents at end of period

   266,624     293,679  

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.

 

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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.

 

     (Yen in millions, except per share amounts and exchange rates)
     Forecast for Fiscal 2007 Announced on    Result for
Fiscal 2006
   Increase (Decrease) to the
Result for Fiscal 2006 %
     July 27, 2006    April 27, 2006      

Net sales

   1,230,000    1,230,000    1,181,489      4.1

Profit from operations

   123,000    123,000    103,207    19.2

Income before income taxes

   138,000    138,000    121,388    13.7

Net income

   83,000    83,000    69,696    19.1

Diluted earnings per share

   440.83    442.34    371.43    18.7

Average US$ exchange rate

   109    108    113    —  

Average Euro exchange rate

   140    134    138    —  

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.

 

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CONSOLIDATED BALANCE SHEETS

 

     Yen in millions
     (Unaudited)               (Unaudited)
     June 30, 2006    March 31, 2006    June 30, 2005
     Amount     %    Amount     %    Amount     %

Current assets :

              

Cash and cash equivalents

   ¥ 266,624        ¥ 300,809        ¥ 293,679    

Short-term investments

     129,941          87,942          68,384    

Trade notes receivable

     24,981          24,597          27,518    

Trade accounts receivable

     199,679          210,393          185,648    

Short-term finance receivables

     43,600          39,505          32,336    

Less allowances for doubtful accounts and sales returns

     (7,055 )        (7,425 )        (8,190 )  

Inventories

     203,030          190,564          207,495    

Deferred income taxes

     40,911          40,411          40,153    

Other current assets

     31,996          33,872          29,263    
                                      

Total current assets

     933,707     47.3      920,668     47.7      876,286     50.3
                                      

Non-current assets :

              

Investments in and advances to affiliates and unconsolidated subsidiaries

     7,017          7,355          30,712    

Securities and other investments

     582,216          553,377          422,299    
                                      

Total investments and advances

     589,233     29.9      560,732     29.0      453,011     26.0

Long-term finance receivables

     83,052     4.2      80,970     4.2      76,251     4.4

Property, plant and equipment, at cost :

              

Land

     58,375          58,286          56,160    

Buildings

     251,710          249,506          234,496    

Machinery and equipment

     705,111          697,383          663,117    

Construction in progress

     8,232          13,473          18,185    

Less accumulated depreciation

     (737,524 )        (733,302 )        (700,948 )  
                                      
     285,904     14.5      285,346     14.8      271,010     15.6

Goodwill

     31,166     1.6      31,351     1.6      28,612     1.6

Intangible assets

     30,041     1.5      31,227     1.6      16,349     0.9

Other assets

     20,713     1.0      21,228     1.1      20,429     1.2
                                      

Total non-current assets

     1,040,109     52.7      1,010,854     52.3      865,662     49.7
                                      

Total assets

   ¥ 1,973,816     100.0    ¥ 1,931,522     100.0    ¥ 1,741,948     100.0
                                      

 

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Table of Contents
     Yen in millions
     (Unaudited)               (Unaudited)
     June 30, 2006    March 31, 2006    June 30, 2005
     Amount     %    Amount     %    Amount     %

Current liabilities :

              

Short-term borrowings

   ¥ 99,062        ¥ 90,865        ¥ 63,813    

Current portion of long-term debt

     17,728          16,347          46,266    

Trade notes and accounts payable

     103,863          103,503          87,933    

Other notes and accounts payable

     44,631          51,997          46,081    

Accrued payroll and bonus

     45,889          37,998          43,592    

Accrued income taxes

     17,756          27,658          11,840    

Other accrued expenses

     31,778          31,414          28,312    

Other current liabilities

     19,701          18,841          19,981    
                                      

Total current liabilities

     380,408     19.3      378,623     19.6      347,818     20.0
                                      

Non-current liabilities :

              

Long-term debt

     31,848          33,360          33,099    

Accrued pension and severance costs

     24,844          27,092          27,955    

Deferred income taxes

     140,975          125,686          93,391    

Other non-current liabilities

     10,735          12,742          6,810    
                                      

Total non-current liabilities

     208,402     10.5      198,880     10.3      161,255     9.2
                                      

Total liabilities

     588,810     29.8      577,503     29.9      509,073     29.2
                                      

Minority interests in subsidiaries

     65,496     3.3      64,942     3.4      61,106     3.5

Stockholders’ equity :

              

Common stock

     115,703          115,703          115,703    

Additional paid-in capital

     161,960          161,994          162,059    

Retained earnings

     978,261          967,576          915,857    

Accumulated other comprehensive income

     91,269          72,947          9,533    

Treasury stock, at cost

     (27,683 )        (29,143 )        (31,383 )  
                                      

Total stockholders’ equity

     1,319,510     66.9      1,289,077     66.7      1,171,769     67.3
                                      

Total liabilities, minority interests and stockholders’ equity

   ¥ 1,973,816     100.0    ¥ 1,931,522     100.0    ¥ 1,741,948     100.0
                                      

Note: Accumulated other comprehensive income is as follows :

 

       Yen in millions  
       June 30, 2006      March 31, 2006      June 30, 2005  

Net unrealized gains on securities

     ¥ 104,270      ¥ 82,649      ¥ 37,022  

Net unrealized losses on derivative financial instruments

     ¥ (134 )    ¥ (75 )    ¥ (37 )

Minimum pension liability adjustments

     ¥ (2,057 )    ¥ (2,057 )    ¥ (1,629 )

Foreign currency translation adjustments

     ¥ (10,810 )    ¥ (7,570 )    ¥ (25,823 )

 

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Table of Contents

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

     Yen in millions and shares in thousands, except per share amounts
     Three months ended June 30,     Increase
     2006     2005     (Decrease)
     Amount     %     Amount     %     Amount     %

Net sales

   ¥ 292,696     100.0     ¥ 265,073     100.0     ¥ 27,623     10.4

Cost of sales

     200,598     68.5       191,687     72.3       8,911     4.6
                                        

Gross profit

     92,098     31.5       73,386     27.7       18,712     25.5

Selling, general and administrative expenses

     61,456     21.0       59,103     22.3       2,353     4.0
                                        

Profit from operations

     30,642     10.5       14,283     5.4       16,359     114.5

Other income (expenses):

            

Interest and dividend income

     4,580     1.5       3,167     1.2       1,413     44.6

Interest expense

     (219 )   (0.1 )     (257 )   (0.1 )     38     —  

Foreign currency transaction losses, net

     (55 )   (0.0 )     (492 )   (0.2 )     437     —  

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

     (343 )   (0.1 )     452     0.2       (795 )   —  

Gains on sales of investment securities, net

     1,810     0.6       2     0.0       1,808     —  

Other, net

     512     0.2       60     0.0       452     753.3
                                        

Total other income (expenses)

     6,285     2.1       2,932     1.1       3,353     114.4
                                        

Income before income taxes and minority interests

     36,927     12.6       17,215     6.5       19,712     114.5

Income taxes

     15,461     5.3       8,035     3.0       7,426     92.4
                                        

Income before minority interests

     21,466     7.3       9,180     3.5       12,286     133.8

Minority interests

     (1,394 )   (0.4 )     (577 )   (0.3 )     (817 )   —  
                                        

Net income

   ¥ 20,072     6.9     ¥ 8,603     3.2     ¥ 11,469     133.3
                                        

Earnings per share :

            

Net income :

            

Basic

   ¥ 106.82       ¥ 45.89        

Diluted

   ¥ 106.61       ¥ 45.88        

Weighted average number of shares of common stock outstanding :

            

Basic

     187,901         187,480        

Diluted

     188,283         187,499        

Notes:

 

1. Kyocera applies the Statement of Financial Accounting Standards Board (SFAS) No.130 “Financial Reporting of Comprehensive Income.” Based on this standard, comprehensive income for the three months ended June 30, 2006 and 2005 was an increase of ¥38,394 million and an increase of ¥6,297 million, 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 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 at March 31, 2005 (187,481)

   ¥ 115,703    ¥ 162,061     ¥ 916,628     ¥ 11,839     ¥ (31,380 )  

Net income for the year

          69,696         ¥ 69,696  

Other comprehensive income

            61,108         61,108  
                   

Total comprehensive income for the year

              ¥ 130,804  
                   

Cash dividends

          (18,748 )      

Purchase of treasury stock (20)

              (170 )  

Reissuance of treasury stock (294)

        (67 )         2,407    
                                         

Balance at March 31, 2006 (187,755)

     115,703      161,994       967,576       72,947       (29,143 )  

(Unaudited)

             

Net income for the period

          20,072         ¥ 20,072  

Other comprehensive income

            18,322         18,322  
                   

Total comprehensive income for the period

              ¥ 38,394  
                   

Cash dividends

          (9,387 )      

Purchase of treasury stock (4)

              (43 )  

Reissuance of treasury stock (183)

        (34 )         1,503    
                                         

Balance at June 30, 2006 (187,934)

   ¥ 115,703    ¥ 161,960     ¥ 978,261     ¥ 91,269     ¥ (27,683 )  
                                         
     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 at March 31, 2005 (187,481)

   ¥ 115,703    ¥ 162,061     ¥ 916,628     ¥ 11,839     ¥ (31,380 )  

(Unaudited)

             

Net income for the period

          8,603         ¥ 8,603  

Other comprehensive income

            (2,306 )       (2,306 )
                   

Total comprehensive income for the period

              ¥ 6,297  
                   

Cash dividends

          (9,374 )      

Purchase of treasury stock (4)

              (30 )  

Reissuance of treasury stock (4)

        (2 )         27    
                                         

Balance at June 30, 2005 (187,481)

   ¥ 115,703    ¥ 162,059     ¥ 915,857     ¥ 9,533     ¥ (31,383 )  
                                         

 

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Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

     Yen in millions  
     Three months ended June 30,  
     2006     2005  

Cash flows from operating activities :

    

Net income

   ¥ 20,072     ¥ 8,603  

Adjustments to reconcile net income to net cash provided by operating activities :

    

Depreciation and amortization

     16,699       14,773  

Write-down of inventories

     1,640       2,313  

Gains on sales of investment securities, net

     (1,810 )     (2 )

Minority interests

     1,394       577  

Decrease in receivables

     4,002       21,114  

(Increase) decrease in inventories

     (15,355 )     3,731  

Increase in notes and accounts payable

     3,109       3,012  

Decrease in accrued income taxes

     (10,138 )     (20,085 )

Increase in other current liabilities

     9,583       10,273  

Other, net

     (1,592 )     198  
                

Net cash provided by operating activities

     27,604       44,507  
                

Cash flows from investing activities :

    

Payments for purchases of securities

     (19,516 )     (14,788 )

Payments for purchases of investments and advances

     (77 )     (76 )

Sales and maturities of securities

     16,009       2,278  

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

     (18,219 )     (19,049 )

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

     309       1,809  

Deposit of negotiable certificate of deposits and time deposits

     (85,924 )     (39,221 )

Withdrawal of negotiable certificate of deposits and time deposits

     46,249       17,480  

Other, net

     86       (327 )
                

Net cash used in investing activities

     (61,083 )     (51,894 )
                

Cash flows from financing activities :

    

Increase (decrease) in short-term debt

     8,324       (2,759 )

Proceeds from issuance of long-term debt

     1,451       2,522  

Payments of long-term debt

     (1,326 )     (843 )

Dividends paid

     (9,508 )     (9,452 )

Reissuance (purchase) of treasury stock, net

     1,426       (4 )

Other, net

     (127 )     (489 )
                

Net cash provided by (used in) financing activities

     240       (11,025 )
                

Effect of exchange rate changes on cash and cash equivalents

     (946 )     1,499  
                

Net decrease in cash and cash equivalents

     (34,185 )     (16,913 )

Cash and cash equivalents at beginning of period

     300,809       310,592  
                

Cash and cash equivalents at end of period

   ¥ 266,624     ¥ 293,679  
                

 

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Table of Contents

SEGMENT INFORMATION (Unaudited)

1. Reporting segments :

 

     Yen in millions  
     Three months ended June 30,        
     2006     2005     Increase (Decrease)  
     Amount     Amount     Amount     %  

Net sales :

        

Fine Ceramic Parts Group

   ¥ 18,617     ¥ 15,905     ¥ 2,712     17.1  

Semiconductor Parts Group

     36,013       29,715       6,298     21.2  

Applied Ceramic Products Group

     31,258       26,983       4,275     15.8  

Electronic Device Group

     68,307       60,811       7,496     12.3  

Telecommunications Equipment Group

     50,577       45,780       4,797     10.5  

Information Equipment Group

     60,266       57,908       2,358     4.1  

Optical Equipment Group

     2,832       4,373       (1,541 )   (35.2 )

Others

     30,438       28,390       2,048     7.2  

Adjustments and eliminations

     (5,612 )     (4,792 )     (820 )   —    
                              

Net sales

   ¥ 292,696     ¥ 265,073     ¥ 27,623     10.4  
                              

Operating profit :

        

Fine Ceramic Parts Group

   ¥ 3,431     ¥ 1,890     ¥ 1,541     81.5  

Semiconductor Parts Group

     5,511       3,350       2,161     64.5  

Applied Ceramic Products Group

     6,389       4,891       1,498     30.6  

Electronic Device Group

     10,269       4,496       5,773     128.4  

Telecommunications Equipment Group

     (2,843 )     (6,441 )     3,598     —    

Information Equipment Group

     8,651       7,661       990     12.9  

Optical Equipment Group

     (468 )     (1,768 )     1,300     —    

Others

     2,040       1,382       658     47.6  
                              

Operating profit

     32,980       15,461       17,519     113.3  

Corporate

     4,342       1,220       3,122     255.9  

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

     (343 )     452       (795 )   —    

Adjustments and eliminations

     (52 )     82       (134 )   —    
                              

Income before income taxes

   ¥ 36,927     ¥ 17,215     ¥ 19,712     114.5  
                              

Depreciation and amortization :

        

Fine Ceramic Parts Group

   ¥ 905     ¥ 920     ¥ (15 )   (1.6 )

Semiconductor Parts Group

     2,770       1,856       914     49.2  

Applied Ceramic Products Group

     1,811       1,284       527     41.0  

Electronic Device Group

     4,430       4,997       (567 )   (11.3 )

Telecommunications Equipment Group

     1,547       1,297       250     19.3  

Information Equipment Group

     3,252       2,322       930     40.1  

Optical Equipment Group

     167       464       (297 )   (64.0 )

Others

     1,180       970       210     21.6  

Corporate

     637       663       (26 )   (3.9 )
                              

Total

   ¥ 16,699     ¥ 14,773     ¥ 1,926     13.0  
                              

Capital expenditures :

        

Fine Ceramic Parts Group

   ¥ 990     ¥ 1,490     ¥ (500 )   (33.6 )

Semiconductor Parts Group

     3,310       9,297       (5,987 )   (64.4 )

Applied Ceramic Products Group

     845       5,557       (4,712 )   (84.8 )

Electronic Device Group

     5,404       4,145       1,259     30.4  

Telecommunications Equipment Group

     943       517       426     82.4  

Information Equipment Group

     3,915       3,444       471     13.7  

Optical Equipment Group

     58       73       (15 )   (20.5 )

Others

     690       2,020       (1,330 )   (65.8 )

Corporate

     575       493       82     16.6  
                              

Total

   ¥ 16,730     ¥ 27,036     ¥ (10,306 )   (38.1 )
                              

 

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Table of Contents

2. Geographic segments (Sales and operating profit by geographic area) :

 

     Yen in millions
     Three months ended June 30,            
     2006     2005     Increase (Decrease)
     Amount     Amount     Amount     %

Net sales:

        

Japan

   ¥ 120,977     ¥ 114,347     ¥ 6,630     5.8

Intra-group sales and transfer between geographic areas

     91,654       77,668       13,986     18.0
                            
     212,631       192,015       20,616     10.7
                            

United States of America

     71,539       62,413       9,126     14.6

Intra-group sales and transfer between geographic areas

     8,941       4,584       4,357     95.0
                            
     80,480       66,997       13,483     20.1
                            

Asia

     45,263       38,419       6,844     17.8

Intra-group sales and transfer between geographic areas

     36,880       28,242       8,638     30.6
                            
     82,143       66,661       15,482     23.2
                            

Europe

     48,824       44,055       4,769     10.8

Intra-group sales and transfer between geographic areas

     10,064       8,189       1,875     22.9
                            
     58,888       52,244       6,644     12.7
                            

Others

     6,093       5,839       254     4.4

Intra-group sales and transfer between geographic areas

     2,595       1,778       817     46.0
                            
     8,688       7,617       1,071     14.1
                            

Adjustments and eliminations

     (150,134 )     (120,461 )     (29,673 )   —  
                            

Net sales

   ¥ 292,696     ¥ 265,073     ¥ 27,623     10.4
                            

Operating profit:

        

Japan

   ¥ 24,024     ¥ 15,345     ¥ 8,679     56.6

United States of America

     2,449       (1,984 )     4,433     —  

Asia

     5,212       3,249       1,963     60.4

Europe

     1,755       (92 )     1,847     —  

Others

     1,578       (8 )     1,586     —  
                            
     35,018       16,510       18,508     112.1

Adjustments and eliminations

     (2,090 )     (967 )     (1,123 )   —  
                            
     32,928       15,543       17,385     111.9

Corporate

     4,342       1,220       3,122     255.9

Equity in (losses) earnings of affiliates and unconsolidated subsidiaries

     (343 )     452       (795 )   —  
                            

Income before income taxes

   ¥ 36,927     ¥ 17,215     ¥ 19,712     114.5
                            

 

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Table of Contents

3. Geographic segments (Sales by region) :

 

     Yen in millions
     Three months ended June 30,          
     2006    2005    Increase (Decrease)
     Amount     %    Amount     %    Amount    %

Japan

   ¥ 113,823     38.9    ¥ 107,064     40.4    ¥ 6,759    6.3

United States of America

     61,703     21.1      54,910     20.7      6,793    12.4

Asia

     51,128     17.4      43,755     16.5      7,373    16.9

Europe

     46,468     15.9      42,796     16.2      3,672    8.6

Others

     19,574     6.7      16,548     6.2      3,026    18.3
                                     

Net sales

   ¥ 292,696     100.0    ¥ 265,073     100.0    ¥ 27,623    10.4
                                     

Sales outside Japan

   ¥ 178,873        ¥ 158,009        ¥ 20,864    13.2

Sales outside Japan ratio to net sales

     61.1 %        59.6 %        

 

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Table of Contents

(Translation)

 

To All Persons Concerned      July 27, 2006
Name of Company Listed:      Kyocera Corporation
Name of Representative:      Makoto Kawamura, 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:     

Akihiko Toyotani

General Manager of Finance Division

(Tel: 075-604-3500)

     Transfer of Shares of Kyocera Leasing Co., Ltd.

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.

 

1. Reasons for Transfer of Shares

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, Kyocera’s 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.

 

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Table of Contents
2. Outline of Subsidiary Subject to Changes

 

(1) Name:    Kyocera Leasing Co., Ltd.
(2) Representative:    Tsutomu Takahashi
(3) Location of Headquarters:    2-3-14 Yaesu, Chuo-ku, Tokyo
(4) Date of Establishment:    June 1, 1987
(5) Principal Business:    Financing business and lease business
(6) Fiscal Year End:    March
(7) Number of Employees:    74
(8) Principal Offices:    Tokyo, Osaka, Sapporo, Sendai, Nagoya, Hiroshima and Fukuoka
(9) Amount of Capital:    8,575 million yen

(10) Number of Shares Issued and Outstanding:

   331,000 shares

(11) Principal Shareholders and Shareholding Ratio:

   Kyocera Corporation 100%
(12) Performance Trends in Recent Fiscal Years

 

     (Yen in millions)
     Fiscal year ended
March 31, 2006
   Fiscal year ended
March 31, 2005

Revenues

   9,898    12,415

Gross profit

   3,942    4,268

Profit from operations

   2,421    2,894

Recurring profit

   2,442    2,923

Net income

   2,248    2,727

Total assets

   133,635    119,963

Stockholders’ equity

   16,015    13,771

 

3. Transferee of Shares

 

(1) Name:    Diamond Lease Company Limited
(2) Representative:    Naotaka Obata
(3) Location of Headquarters:    3-3-1 Marunouchi, Chiyoda-ku, Tokyo
(4) Principal Business:    Lease Business
(5) Relationship with Kyocera:    None

 

4. Number of Shares to be Transferred and Shareholding Before and After Transfer

 

(1) Number of Shares Owned Before Transfer:

  

331,000 shares (Shareholding Ratio 100%)

(2) Number of Shares to be Transferred:

  

331,000 shares

(3) Number of Shares Owned After Transfer:

  

0 shares (Shareholding Ratio 0%)

 

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Table of Contents
5. Schedule Hereafter

Effective Date of Transfer: August 2006

 

6. Impact on Businesses

The impact from the relevant share transfer on the performance of Kyocera’s 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)

 

     (Yen in millions)
     Forecast for fiscal 2007    Result for fiscal 2006

Net sales

   1,230,000    1,181,489

Profit from operations

   123,000    103,207

Income before income taxes

   138,000    121,388

Net income

   83,000    69,696

Non-Consolidated forecast of Kyocera Corporation for fiscal 2007

 

     (Yen in millions)
     Forecast for fiscal 2007    Result for fiscal 2006

Net sales

   510,000    477,379

Profit from operations

   44,000    39,937

Recurring profit

   74,000    68,182

Net income

   53,000    68,712

 

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