Kyocera 6-K 2006
Documents found in this filing:
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 June 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:
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-
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: June 1, 2006
Information furnished on this form:
NOTICE OF THE 52ND ORDINARY GENERAL
MEETING OF SHAREHOLDERS
TO BE HELD IN KYOTO, JAPAN ON JUNE 23, 2006
(Translation of the Japanese notice circulated to shareholders in Japan)
6 Takeda Tobadono-cho, Fushimi-ku, Kyoto, Japan
June 1, 2006
To Our Shareholders:
Notice of the 52nd Ordinary General Meeting of Shareholders
This is to inform you that Kyocera Corporation (the Company) will hold its 52nd Ordinary General Meeting of Shareholders, as described below, which you are cordially invited to attend.
If you are unable to attend the meeting, you may exercise your voting rights in writing. If you wish to do so, after examining the attached reference materials, please indicate your votes by filling out and signing the enclosed form for exercising voting rights, and return the form to us no later than Thursday, June 22, 2006, Japan time.
3. Purpose of the Meeting:
Matters to be reported upon:
Matters to be resolved:
(Note) If you attend the Meeting, please submit the enclosed form for exercising voting rights to the receptionist.
FOR THE EXERCISE OF VOTING RIGHTS
The Company considers that the best way to respond to shareholders expectations is to improve the consolidated performance of the Company into the future.
Therefore, the dividend policy of the Company is to determine dividend amounts based on an overall assessment, taking into consideration various factors, such as enhancement of the linkage between dividend amounts and the consolidated performance of the Company and the amount of capital expenditures necessary for the medium to long-term growth of the Company.
Pursuant to this policy, the Company proposes that the year-end dividend for the year ended March 31, 2006 shall be 50 yen per share, the same amount as in the year ended March 31, 2005. When aggregated with the interim dividend, the total annual dividend amount will be 100 yen per share, a 20 yen per share increase from the year ended March 31, 2005. The Company also proposes that other general reserve shall be 50,000 million yen, taking into account the necessary reserve amounts for creation of new businesses, development of new markets and new technologies and acquisition of outside management resources in order to achieve stable and sustainable corporate growth of the Company. The Company also proposes bonuses to the 13 Directors and 5 Corporate Auditors in office as of March 31, 2006 in an aggregate amount of 68 million yen, which represents an 8 million yen increase from the year ended March 31, 2005, out of which 6.3 million yen, which represents a 1.8 million yen increase from the year ended March 31, 2005, shall be bonuses to Corporate Auditors.
The proposed appropriation of retained earnings is as follows:
PROPOSED APPROPRIATION OF RETAINED EARNINGS
(The underlined portion indicates the proposed amendments.)
TABLE OF CONTENTS
Kyocera Management Philosophy
Respect the Divine and Love People
Preserve the spirit to work fairly and honorably, respecting people, our work, our company and our global community.
To provide opportunities for the material and intellectual growth of all our employees, and through our joint effort, contribute to the advancement of society and humankind.
To coexist harmoniously with nature and society.
Harmonious coexistence is the underlying foundation of all our business activities as we work to create a world of abundance and peace.
Kyocera was built upon a unique foundation: the human spirit
When I founded Kyocera, I didnt have sufficient funding, let alone decent facilities or equipment. However, I was fortunate enough to have associates with whom I felt a spiritual bond. We shared every joy and pain, just like a family. I therefore decided to run this company with faith in the human spirit. The human spirit is said to be easily changed. Yet, when a deep sense of trust exists, I have found that there is nothing stronger or more reliable than our spiritual ties.
Today, this faith in the human spirit forms the very heart of Kyocera.
We hope this message finds all of our shareholders well.
We would like to take this opportunity to extend our greetings to you before providing you with the Financial Report for the year ended March 31, 2006.
Kyocera Corporation and its consolidated subsidiaries (Kyocera) aim to be The Company respected by society from the perspective of corporate ethics while maintaining continuous sales growth and high profitability. To achieve this, Kyoceras management policy is to further drive business expansion to be a creative company that continues to grow in the 21st century. Kyocera intends to make each business group highly profitable and to pursue group synergies within Kyocera in order to realize continuous growth even in a rapidly changing business environment.
In the year ended March 31, 2006, Kyocera undertook structural reforms in its businesses in order to improve profitability and made aggressive investments in the businesses that it expects to become driving forces for the future growth of Kyocera.
As from April 1, 2006, Kyocera introduced a new management system. It will further execute the amoeba management system that has been a driving force for the growth of Kyocera since its incorporation and enhance the ability to achieve objectives by invigorating the capabilities of its development, manufacturing and marketing divisions. Kyocera shifted to a new system under which the President and Representative Director and Executive Officer has total responsibility for executing group management while the Chairman and Representative Director and the Vice Chairman and Representative Director fully support such execution of management. Under the new system, Kyocera aims to improve its business performance into the future by promoting rapid decision-making and accurate management judgment.
We will very much appreciate the ongoing support of our shareholders for the efforts of Kyocera.
Accompanying Materials for the 52nd Ordinary General Meeting of Shareholders
1. BUSINESS OUTLINE
The Japanese economy continued to expand steadily during the year ended March 31, 2006 (fiscal 2006) on the back of improved corporate earnings, increased capital investment and robust personal consumption. As to the world economy, the U.S. economy continued to grow through healthy expansion in personal consumption while in Europe an increase in exports and production activities helped the economy towards a moderate recovery track. The Chinese economy maintained high growth as exports increased due to expanded production of electronic equipment and strong capital investment in the private sector. Other economies in Asia also expanded steadily on the whole.
In the first quarter of fiscal 2006, the business environment was severe in the electronics industry, which is a key market for Kyocera. Recovery in demand was moderate while components prices declined significantly. Nonetheless, the environment made an about-turn since last summer. Not only has production of core digital consumer products such as mobile phone handsets, PCs and digital home appliances expanded remarkably, but demand for related electronic components also maintained an upward trend until the end of the fourth quarter of fiscal 2006.
Consolidated net sales for fiscal 2006 amounted to ¥1,181,489 million, roughly the same as fiscal 2005. In the components business, sales of the Fine Ceramic Parts Group and the Electronic Device Group decreased compared with fiscal 2005 due to the stagnant demand until the first quarter of fiscal 2006 and the price erosion of components. However, sales of the Applied Ceramic Products Group increased considerably due to significant growth of solar energy and cutting tool businesses. As a result, sales of the components business increased compared with fiscal 2005.
Sales of the equipment business declined compared with fiscal 2005 due to the decreased sales of the Telecommunications Equipment Group and the Optical Equipment Group through the implementation of structural reforms at Kyocera Wireless Corp. (KWC), a U.S. mobile handset subsidiary and large downsizing of the camera equipment business.
Profit from operations for fiscal 2006 increased by 2.2% to ¥103,207 million due to the positive effects of structural reforms which brought a significant increase in the profit of the equipment business.
Kyocera recognized a gain of ¥6,931 million in September 2005 through the sale of entire shares of Taito Corporation, an affiliate accounted for by equity method, which was recorded in income before income taxes.
Besides, due to the merger of Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., in October 2005, Kyoceras holding of shares of UFJ Holdings, Inc. were exchanged for shares of the new company, Mitsubishi UFJ Financial Group, Inc. As a result of this share exchange, Kyocera recognized a gain in the amount of ¥5,281 million. Furthermore, a subsidiary of Kyocera recognized loss on devaluation of investment in an affiliate of ¥3,492 million in the fourth quarter of fiscal 2006.
As a result, income before income taxes of fiscal 2006 increased by 12.9% compared with fiscal 2005 to ¥121,388 million.
In fiscal 2005, income taxes included an additional tax of ¥12.7 billion to reflect Kyoceras receipt of a notice of tax assessment based on transfer pricing on trade in products in past years between Kyocera and its overseas subsidiaries. Due to the absence of such event, net income for fiscal 2006 increased by 51.8% to ¥69,696 million compared with fiscal 2005.
Note: Photographs and graphs in the Business Report are for reference only.
[Performance by Reporting Segments]
Kyocera previously classified its operations into four reporting segments: Fine Ceramics Group, Electronic Device Group, Equipment Group and Others. Kyocera changed its segmentation to clarify the nature of each of its operations and to rationalize its management structure more efficiently. Kyocera currently has the following eight reporting segments: Fine Ceramic Parts Group, Semiconductor Parts Group, Applied Ceramic Products Group, Electronic Device Group, Telecommunications Equipment Group, Information Equipment Group, Optical Equipment Group and Others. Consolidated results for fiscal 2003, 2004 and 2005 have been retroactively reclassified accordingly.
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products Group
Electronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
Capital expenditures for fiscal 2006 totaled ¥90,271 million, an increase of ¥27,095 million, or 42.9% compared with fiscal 2005. The main focus was on the construction of the new plants to increase production, the construction of production lines for new products and the streamlining of production processes to improve productivity in the Semiconductor Parts Group, Applied Ceramic Products Group and Electric Device Group.
Required funds for fiscal 2006 were mainly financed from internal funds. Kyocera Corporation did not undertake any financing through issuance of bonds or notes.
The Japanese economy is expected to expand continuously in fiscal 2007 due to continued improvement in corporate earnings. As for overseas economy, although the U.S., Asian and European economies are forecasted to grow steadily, there are concerns over the impact of crude oil price trends on material prices and world economies.
In the electronics industry, Kyocera projects an increase in demand for digital TVs, and for mobile phone handsets in the BRICs (Brazil, Russia, India, China) markets, and therefore an increase in demand for components of these digital consumer products. In the semiconductor industry, Kyocera expects an increase in capital investment from equipment manufacturers and a generally favorable business environment in the electronics market in fiscal 2007.
Kyocera aims to be a creative company that continues to grow in the 21st century. To achieve such management policy, Kyocera seeks to improve the profitability of its components and equipment businesses, and is working to rapidly attain a pre-tax income ratio of 15% or more on a group-wide basis. Toward this goal, Kyocera will strive to achieve its financial forecasts set for fiscal 2007 and to further strengthen its business foundation.
The following outlines specific measures being undertaken to accomplish these goals.
Kyoceras amoeba management system offers a unique competitive advantage over rival companies, and Kyocera aims to further strengthen such management system. Since Kyocera Corporation was founded, this system has been a driving force for the growth of Kyocera. Kyocera will further seek to thoroughly implement such management system and invigorate competencies in its development, manufacturing, sales and marketing divisions, which in turn will boost the ability to achieve objectives. In particular, Kyocera is working to strengthen its capabilities in manufacturing, which is the profit center of Kyocera.
Kyocera aims to ensure that strategic investments during fiscal 2006 will translate into improved performance in fiscal 2007 and beyond. Concrete initiatives include launching new businesses and improving profitability in the components business, especially in the Fine Ceramic Parts Group (ceramic parts for LCD fabrication equipment), the Semiconductor Parts Group (ceramic packages and organic packages) and the Applied Ceramic Products Group (solar energy products and cutting tools).
Kyocera also expects structural reforms implemented in fiscal 2006 to lead to increased sales and profits.
Kyocera will promote the commercialization of new businesses that will be key growth drivers for Kyocera in the medium term. In addition to pursuing business expansion in prospective markets including ceramic parts for diesel engines, Kyocera aims to realize practical application of next-generation solar cells and solid oxide fuel cells (SOFCs), and to make these businesses contribute to our business performance as quickly as possible.
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.
Trend of performance and assets of Kyocera Corporation and its consolidated subsidiaries
Trend of performance and assets of Kyocera Corporation (Non-consolidated)
2. COMPANY OVERVIEW
Kyocera manufactures and sells a highly diversified range of products including components involving fine ceramic technologies and applied ceramic products, telecommunications equipment, information equipment and optical equipment, etc. The principal products are listed below:
(2) Business Combination
1. Significant Subsidiaries (as of March 31, 2006)
Note: * shows ownership by wholly owned subsidiaries of Kyocera Corporation.
2. Developments and Results of Business Combination
Kyocera includes 168 consolidated subsidiaries and 14 companies accounted for by the equity method. With respect to developments and results of business combination in fiscal 2006, please refer to the description in 1. Business Outline (1) Business Developments and Results of Kyocera Corporation and its Consolidated Subsidiaries.
(3) Shares (as of March 31, 2006)
The stock acquisition rights were issued without consideration to Directors, Corporate Auditors, Executive Officers and employees of Kyocera Corporation and its subsidiaries.
Employees of Kyocera Corporation and its Consolidated Subsidiaries
Employees of Kyocera Corporation (Non-consolidated)
Note: The number of employees represents the total number of regular employees who work full-time.
(5) Principal Offices and Plants, etc. (as of March 31, 2006)
Head office: 6 Takeda Tobadono-cho, Fushimi-ku, Kyoto Japan
(6) Directors and Corporate Auditors of Kyocera Corporation (as of March 31, 2006)
(7) Remuneration of Accounting Auditor
There have not been any significant events since the end of fiscal 2006.
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows (For Reference Only)
Basis of preparation of consolidated financial statements
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America pursuant to the provision of paragraph 1 of Article 179 of the Enforcement Regulations for the Japanese Commercial Code. Certain disclosures required under principles generally accepted in the United States of America are omitted pursuant to the same provision.
Finished goods and work in process are mainly stated at the lower cost or market, the cost being determined by the average method. All other inventories are mainly stated at the lower cost or market, the cost being determined by the first-in, first-out method.
Kyocera adopts Statement of Financial Accounting Standards No.115, Accounting for Certain Investments in Debt and Equity Securities.
Held-to-maturity securities are recorded at amortized cost.
Available-for-sales securities are recorded at fair value, with unrealized gains and losses excluded from income and recorded in other comprehensive income, net of tax.
Depreciation is computed at rates based on the estimated useful lives of assets mainly using the declining balance method.
Kyocera adopts Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. Goodwill and intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually. Intangible assets with definite useful lives are amortized over their respective estimate useful lives.
Non-Consolidated Balance Sheets
Non-Consolidated Statements of Income
Summary of Significant Accounting Policies
5. The consumption taxes withheld upon sale and the consumption taxes paid for purchases of goods and services are not included in the amounts of respective revenue and cost or expense items in the accompanying statements of income.
New Accounting Standard
Accounting policy for the impairment of fixed assets
The accounting standard for an impairment of tangible and intangible fixed assets was effective for the years beginning on or after April 1, 2005. As a result of adopting the new accounting standard, there was no impact on the non-consolidated results of operation and financial condition.
Notes to Balance Sheet:
Proposed Appropriation of Retained Earnings
Report of Independent Auditors
May 8, 2006
To the Board of Directors
We have audited, pursuant to Article 2-1 of the Former Special Law of the Commercial Code Concerning the Audit, etc. of Stock Corporations (Kabushiki-Kaisha) of Japan, the balance sheet, statement of income, business report (limited to the accounting figures included therein), proposal for appropriation of retained earnings (hereinafter referred to as the financial statements) and supplementary schedules (limited to the accounting figures included therein) of Kyocera Corporation (hereinafter referred to as the Company) for the 52nd fiscal year from April 1, 2005 to March 31, 2006. The portion of the business report and supplementary schedules subject to our audit are those derived from the accounting books and records of the Company. These financial statements and supplementary schedules are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and supplementary schedules.
Except as explained in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and supplementary schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and supplementary schedules. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and supplementary schedules. We believe that our audits provide a reasonable basis for our opinion.
We have not completed our audit procedures regarding consolidated accounting figures included in (1) Business Developments and Results of Kyocera Corporation and its Consolidated Subsidiaries, (2) Capital Expenditures by Kyocera Corporation and its Consolidated Subsidiaries and (5) Trend of Performance and Assets of Kyocera Corporation and its Consolidated Subsidiaries of Section 1 Business outline in the business report. However, as of the date of our audit report, we performed limited procedures including analytical procedures to the consolidated trial balance and financial information of subsidiaries and affiliates accounted for by equity method in accordance with Statement of Japanese Institution of Certified Public Accountants No. 40.
As a result of our audit, it is our opinion that:
We have no interest in or relationship with the Company which is required to be disclosed pursuant to the provisions of the Certified Public Accountant Law of Japan.
Notice to Readers: The original financial statements and supplementary schedules are written in Japanese.
The Board of Corporate Auditors, having received a report from each Corporate Auditor on the method and results of his audit of the performance of duties of Directors during the 52nd fiscal period from April 1, 2005 to March 31, 2006, hereby reports its results of audit, after examination and discussion, as follows:
1. Outline of Audit Methods by the Corporate Auditors
In accordance with the audit standards, audit policy, audit plan, etc. established by the Board of Corporate Auditors, each Corporate Auditor has attended the meetings of the Board of Directors and other important meetings of the Company, received reports on the operations of the Company from Directors and the Companys internal audit department, etc., reviewed important documents including those approved by executives, examined the condition of business and assets at the head office and other major business offices, received reports of condition from subsidiaries and examined the condition of business and assets of important subsidiaries when deemed necessary. Each Corporate Auditor has also monitored accounting auditors independence, received reports and explanations from them, and conducted examinations of financial statements and supplementary schedules.
With respect to the Directors engagement in competitive transactions, transactions involving conflict of interest between the Company and the Directors, profit-sharing by the Company without compensation, unusual transactions between the Company and its subsidiaries or shareholders, acquisition and disposition by the Company of its own shares, etc., each Corporate Auditor has requested Directors and others reports when deemed necessary and conducted examinations in detail, in addition to the audit methods mentioned above.
2. Results of Audit
May 15, 2006