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Kyocera 6-K 2007

Documents found in this filing:

  1. 6-K
  2. 6-K
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 December 2007

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/ SHOICHI AOKI

Shoichi Aoki
Executive Officer
General Manager of
Corporate Financial & Accounting Group

Date: December 12, 2007


Table of Contents

Information furnished on this form:

EXHIBITS

 

Exhibit
Number
    
1.    English summary and translation of Semiannual Report (“hanki-houkokusho”) for the six months ended
September 30, 2007 filed with the Japanese government pursuant to the Financial Instruments and Exchange Law of Japan


Table of Contents

Information on Kyocera Corporation and its Consolidated Subsidiaries

Item 1. Summary of Kyocera Corporation and its Consolidated Subsidiaries

1. Selected Financial Data

(1) Consolidated Financial Data

 

     (Yen in millions, except per share amounts and employees)  

Kyocera Corporation’s Terms

   52nd interim     53rd interim     54th interim     52nd     53rd  

Fiscal Periods

   Apr.1, 2005 -
Sep.30, 2005
    Apr.1, 2006 -
Sep.30, 2006
    Apr.1, 2007 -
Sep.30, 2007
    Apr.1, 2005 -
Mar.31, 2006
   

Apr.1, 2006 -

Mar.31, 2007

 

Net sales

   542,238     615,390     636,560     1,173,544     1,283,897  

Income from continuing operations before income taxes

   44,329     72,385     81,480     117,237     156,540  

Net income

   24,214     53,493     50,620     69,696     106,504  

Stockholders’ equity

   1,241,695     1,373,567     1,530,084     1,289,077     1,514,560  

Total assets

   1,862,928     1,951,702     2,107,097     1,931,522     2,130,464  

Stockholders’ equity per share

   6,623.25     7,306.02     8,077.76     6,865.75     8,028.45  

Earnings per share – Basic

   129.16     284.64     267.66     371.68     566.03  

Earnings per share – Diluted

   129.15     284.14     267.06     371.43     564.79  

Stockholders’ equity to total assets (%)

   66.6     70.4     72.6     66.7     71.1  

Cash flows from operating activities

   71,772     47,923     79,598     171,077     149,644  

Cash flows from investing activities

   (123,091 )   (74,084 )   (77,200 )   (165,467 )   (151,703 )

Cash flows from financing activities

   (9,657 )   (13,079 )   (8,481 )   (23,289 )   (20,645 )

Cash and cash equivalents at the end of period

   253,885     263,751     274,508     300,809     282,208  

Number of employees

   59,347     63,235     65,831     61,468     63,477  

(Notes)

1. The interim consolidated financial statements and the consolidated financial statements are in conformity with accounting principles generally accepted in the United States of America.

The interim consolidated financial statements and the consolidated financial statements are expressed rounding off to millions of yen.

2. Earnings per share amounts are computed based on Statement of Financial Accounting Standards No.128, “Earnings per Share.”
3. Consumption taxes and local consumption taxes are not included in net sales.

 

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Table of Contents

(2) Non-Consolidated Financial Data

 

     (Yen in millions, except per share amounts, and number of shares issued and employees)

Kyocera Corporation’s Terms

   52nd interim    53rd interim    54th interim    52nd    53rd

Fiscal Periods

  

Apr.1, 2005 -

Sep.30, 2005

  

Apr.1, 2006 -

Sep.30, 2006

  

Apr.1, 2007 -

Sep.30, 2007

  

Apr.1, 2005 -

Mar.31, 2006

  

Apr.1, 2006 -

Mar.31, 2007

Net sales

   220,901    259,738    264,117    477,379    531,557

Recurring profit

   26,903    32,844    39,374    68,182    73,729

Net income

   31,865    33,655    27,504    68,712    62,029

Common stock

   115,703    115,703    115,703    115,703    115,703

Number of shares issued

   191,309,290    191,309,290    191,309,290    191,309,290    191,309,290

Net assets

   1,100,768    1,191,940    1,278,089    1,132,261    1,286,361

Total assets

   1,343,060    1,471,385    1,563,909    1,389,396    1,611,891

Interim (Annual) dividends per share

   50.00    50.00    60.00    100.00    110.00

Net assets to total assets (%)

   82.0    81.0    81.7    81.5    79.8

Number of employees

   12,522    12,457    12,726    12,457    12,613

(Notes)

1. The interim non-consolidated financial statements and the non-consolidated financial statements are expressed rounding off to millions of yen.
2. Consumption taxes and local consumption taxes are not included in net sales.

2. Business Overview

There was no significant change in operating businesses of Kyocera Corporation and its consolidated subsidiaries (Kyocera) during the six months ended September 30, 2007 (the first half).

Starting from April 1, 2007, a classification of reporting segment has been changed. The detail of this change is stated in Item 5. Accounting Information 1.Consolidated Financial Statements Note 11.

3. Scope of Consolidation and Application of the Equity Method

On September 25, 2007, AVX Corporation (AVX), Kyocera’s consolidated subsidiary, acquired by merger all of the outstanding capital stock of AMERICAN TECHNICAL CERAMICS Corp. (ATC). As a result of this acquisition, Kyocera newly included ATC and the seven subsidiaries of ATC into its consolidated subsidiaries.

4. Employees

As of September 30, 2007, Kyocera had 65,831 employees, of whom 3,293 work in the Fine Ceramic Parts Group, 10,099 work in the Semiconductor Parts Group, 5,980 work in the Applied Ceramic Products Group, 23,635 work in the Electronic Device Group, 3,017 work in the Telecommunications Equipment Group, 13,240 work in the Information Equipment Group, 4,935 work in Others and 1,632 work in Corporate. Kyocera Corporation had 12,726 employees.

Kyocera Corporation’s labor union does not belong to labor unions organized by industry. The labor unions of several subsidiaries belong to labor unions organized by industry. There is no material item to be specifically addressed regarding relationship between labor and management.

 

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Item 2. Business Results and Financial Position

1. Summary of Financial Results

(1) Consolidated Financial Results

 

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

Increase

(Decrease)

%

 
   2006    2007   
   Amount   

% of

net sales

   Amount   

% of

net sales

  

Net sales

   615,390    100.0    636,560    100.0    3.4  

Profit from operations

   63,128    10.3    67,823    10.7    7.4  

Income from continuing operations before income taxes

   72,385    11.8    81,480    12.8    12.6  

Net income

   53,493    8.7    50,620    8.0    (5.4 )

Diluted earnings per share

   284.14    —      267.06    —      (6.0 )

Average exchange rates:

              

US$

   115    —      119    —      —    

Euro

   146    —      162    —      —    

Kyocera develops, produces and distributes various kinds of products mainly for the telecommunications and information processing and environmental protection markets. Kyocera Corporation was established in 1959 as a manufacturer of ceramic parts for electronic equipment such as telecommunication equipment and has been expanding and diversifying its business mainly through active mergers and acquisitions, as well as applying its fine ceramic technologies to the areas of semiconductor parts, electronic devices, telecommunication, metal processing, medical and dental implants and solar energy fields. Kyocera develops, produces and distributes devices for digital consumer equipment such as mobile phone handsets as well as printers and copying machines. Kyocera earns revenue and income and generates cash through sales of these products.

Despite a lack of vitality in personal consumption, the Japanese economy expanded moderately during the first half due to upward momentum in private capital investment amid growing exports and rising corporate earnings.

While the U.S. economy slowed down mildly due to the negative impact of issues related to housing loans for individuals with low creditworthiness, an increase in exports and brisk personal consumption led to growth in the European economy. The Chinese economy continued to expand on the back of increases in capital investment and exports.

The digital consumer equipment market, which is the principal market for Kyocera was solid on the whole as demand for components for such equipment expanded compared with the six months ended September 30, 2006 (the previous first half).Net sales for the first half increased compared with the previous first half, reflecting an increase in sales in the Information Equipment Group and sales growth in the Components Business.

Consolidated profit from operations increased and income from continuing operations before income taxes and minority interests increased as compared with the previous first half. The adequacy of the estimates, on which the depreciation method of property, plant and equipment are based, was reviewed, as a result of taking the business situation into consideration being triggered by the tax revision in Japan.

 

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Consequently, the depreciation method was changed and this led to increase in depreciation costs. Due mainly to the increase in depreciation costs, the Components Business recorded a decline in operating profit compared with the previous first half. The Equipment Business posted profit growth in the first half due to a substantial increase in operating profit in the Information Equipment Group.

Consolidated net income during the first half decreased compared with the previous first half. This decrease was due to the absence of tax refunds accompanying the voidance of a portion of a tax assessment relating to transfer pricing adjustment and temporary gains including a gain on sale of shares of Kyocera Leasing Co.,Ltd. , which took place in the previous first half.

Overseas sales during the first half increased by 4.3% compared with the previous first half. Since almost all overseas sales were denominated in U.S. dollars or Euro, and average exchange rates of yen were weaker against U.S. dollars and Euro by ¥4 and ¥16 respectively compared with the previous first half, the depreciation of the yen against these currencies during the first half of fiscal 2008 produced a positive impact of approximately ¥22.6 billion in net sales compared with the previous first half , after translation into yen.

[Reporting Segments]

 

     (Yen in millions)  
     Six months ended September 30,    

Increase

(Decrease)

%

 
   2006     2007    
   Amount    

% of

the total

    Amount    

% of

the total

   

Fine Ceramic Parts Group

   38,564     6.3     41,286     6.5     7.1  

Semiconductor Parts Group

   75,843     12.3     73,545     11.5     (3.0 )

Applied Ceramic Products Group

   64,132     10.4     69,743     11.0     8.7  

Electronic Device Group

   139,984     22.7     148,562     23.3     6.1  

Total Components Business

   318,523     51.7     333,136     52.3     4.6  

Telecommunications Equipment Group

   117,181     19.0     113,907     17.9     (2.8 )

Information Equipment Group

   124,619     20.3     136,909     21.5     9.9  

Total Equipment Business

   241,800     39.3     250,816     39.4     3.7  

Others

   66,660     10.9     65,277     10.3     (2.1 )

Adjustments and eliminations

   (11,593 )   (1.9 )   (12,669 )   (2.0 )   —    

Net sales

   615,390     100.0     636,560     100.0     3.4  

 

     (Yen in millions)  
     Six months ended September 30,   

Increase
(Decrease)

%

 
   2006    2007   
   Amount    

% of

net sales

   Amount    

% of

net sales

  

Fine Ceramic Parts Group

   7,373     19.1    6,195     15.0    (16.0 )

Semiconductor Parts Group

   11,887     15.7    8,367     11.4    (29.6 )

Applied Ceramic Products Group

   8,966     14.0    13,434     19.3    49.8  

Electronic Device Group

   21,573     15.4    20,945     14.1    (2.9 )

Total Components Business

   49,799     15.6    48,941     14.7    (1.7 )

Telecommunications Equipment Group

   (1,016 )   —      (103 )   —      —    

Information Equipment Group

   15,491     12.4    19,219     14.0    24.1  

Total Equipment Business

   14,475     6.0    19,116     7.6    32.1  

Others

   2,849     4.3    3,964     6.1    39.1  

Operating profit

   67,123     10.9    72,021     11.3    7.3  

Corporate

   5,152     —      5,893     —      14.4  

Equity in earnings of affiliates and unconsolidated subsidiaries

   259     —      3,617     —      —    

Adjustments and eliminations

   (149 )   —      (51 )   —      —    

Income from continuing operations before income taxes

   72,385     11.8    81,480     12.8    12.6  

 

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Note 1.    From April 1, 2007, the “Optical Equipment Group,” previously a separate reporting segment, has been reclassified into “Others.” Accordingly, sales and operating profit for the previous first half have been retroactively reclassified.
Note 2.    For the reasons set forth Note 1 above, net sales of “Others” in the previous first half increased by ¥5,810 million and “Adjustments and eliminations” decreased by ¥(80) million compared with those previously announced. Also, operating profit of “Others” in the previous first half decreased by ¥899 million compared with those previously announced.

Consolidated results by reporting segment are as follows.

1) Fine Ceramic Parts Group

Sales in this reporting segment during the first half, especially of dielectric ceramic parts for base stations and sapphire substrates for LEDs increased compared with the previous first half, reflecting growth in the mobile phone market. Sales of piezo stacks for automobiles also increased. Operating profit decreased as compared with the previous first half, due to an increase in expenses such as depreciation costs.

2) Semiconductor Parts Group

Despite a moderate increase in demand in the three months ended September 30, 2007 (the second quarter) for ceramic packages, a core product in this reporting segment, for use in mobile phone handsets as compared with the three months ended June 30, 2007 (the first quarter). Sales decreased in this reporting segment compared with the high levels of those recorded in the previous first half. Operating profit decreased along with sales decline and increase in expenses such as depreciation costs.

3) Applied Ceramic Products Group

Sales and operating profit in this reporting segment increased significantly in the first half compared with the previous first half due to higher sales and operating profit recorded in the solar energy business, which is a core business in this reporting segment.

 

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4) Electronic Device Group

Performance in this reporting segment during the first half was solid in the electronic components business. Besides an increase in sales at AVX Corporation, sales of ceramic capacitors for flat-panel TVs and game consoles and of timing devices for mobile phone handsets increased. As a result, overall sales in this reporting segment for the first half increased compared with the previous first half. Operating profit decreased due to an increase in depreciation costs, despite improved profitability spurred by the increase in productivity.

5) Telecommunications Equipment Group

Sales in this reporting segment for the first half decreased compared with the previous first half due to a decline in sales of mobile phone handsets in overseas markets. Operating loss was reduced compared with the previous first half due to a considerable improvement in profitability in the domestic mobile phone handset business and the PHS related business.

6) Information Equipment Group

Sales and operating profit increased substantially in this reporting segment for the first half compared with the previous first half due to strong sales of printers and color digital MFPs in Europe in particular, coupled with the positive effects of the weak yen against the Euro.

7) Others

Sales in this reporting segment for the first half decreased compared with the previous first half due to a decline in sales of optical related business. Operating profit increased substantially, however, due to improved profitability at Kyocera Communication Systems Co., Ltd. and reduced loss in the optical related business.

[Geographic Segments]

 

     (Yen in millions)  
     Six months ended September 30,   

Increase

(Decrease)

%

 
   2006    2007   
   Amount   

% of

the total

   Amount   

% of

the total

  

Japan

   236,735    38.5    241,811    38.0    2.1  

United States of America

   130,265    21.2    126,703    19.9    (2.7 )

Asia

   107,111    17.4    118,594    18.6    10.7  

Europe

   97,464    15.8    112,606    17.7    15.5  

Others

   43,815    7.1    36,846    5.8    (15.9 )

Net sales

   615,390    100.0    636,560    100.0    3.4  

1) Japan

Although sales in the Electronic Device Group decreased, sales in the Fine Ceramic Parts Group and the Semiconductor Parts Group increased. Therefore, sales in domestic market as a whole slightly increased as compared with the previous first half.

 

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2) United States of America

Due to decrease in sales in the Electronic Device Group and the Semiconductor Parts Group, revenue decreased compared with the previous first half.

3) Asia

Sales of products in the Electronic Device Group were favorable and the sales also increased in the Information Equipment Group.

Therefore, revenue increased compared with the previous first half.

4) Europe

Sales in the Information Equipment Group, the solar energy business in the Applied Ceramic Products Group and the Electronic Device Group increased. Hence, revenue increased compared with the previous first half.

5) Others

Mainly due to decrease in sales for Latin America in the Telecommunication Equipment Group, revenue in this area substantially decreased.

(2) Cash flow

Cash and cash equivalent at September 30, 2007 decreased by ¥7,700 million to ¥274,508 million compared with at March 31, 2007.

1) Cash flow from operating activities

Net cash provided by operating activities in the first half increased by ¥31,675 million to ¥79,598 million from ¥47,923 million in the previous first half. Although net income decreased, and payables and accrued income taxes that increased in the previous first half decreased in the first half, receivables and inventories that increased in the previous first half decreased in the first half. As a result, cash inflows in the operating activities in the first half increased, compared with the previous first half.

2) Cash flow from investing activities

Net cash used in investing activities in the first half increased by ¥3,116 million to ¥77,200 million from ¥74,084 million in the previous first half. This was due mainly to an increase in cash outflows by acquisitions of businesses and acquisition of negotiable certificate of deposits and time deposits that exceeded an increase in cash inflow provided by sales and redemptions of available-for-sale-securities.

3) Cash flow from financing activities

Net cash used in financing activities in the first half decreased by ¥4,598 million to ¥8,481 million from ¥13,079 million in the previous first half. This was due mainly to a decrease in cash outflow by payments of long-term debt and an increase in cash inflow by reissuance of treasury stock though in cash inflow by increase in short-term debt decreased.

 

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2. Production, Orders and Distribution

Business Results are disclosed related to each reporting segment in “1. Summary of Financial Results.”

 

     (Yen in millions)  

Production (Sales price)

   Six months ended September 30,   

Increase

(Decrease)

%

 
   2006    2007   
   Amount   

% of

the total

   Amount   

% of

the total

  

Fine Ceramic Parts Group

   38,959    6.1    42,082    6.6    8.0  

Semiconductor Parts Group

   77,929    12.2    74,253    11.7    (4.7 )

Applied Ceramic Products Group

   65,436    10.2    72,168    11.4    10.3  

Electronic Device Group

   144,236    22.5    149,054    23.6    3.3  

Total Components Business

   326,560    51.0    337,557    53.3    3.4  

Telecommunications Equipment Group

   126,414    19.7    108,651    17.2    (14.1 )

Information Equipment Group

   137,311    21.5    136,276    21.5    (0.8 )

Total Equipment Business

   263,725    41.2    244,927    38.7    (7.1 )

Others

   49,647    7.8    50,420    8.0    1.6  

Production

   639,932    100.0    632,904    100.0    (1.1 )

 

     (Yen in millions)  

Orders

   Six months ended September 30,    

Increase

(Decrease)

%

 
   2006     2007    
   Amount    

% of

the total

    Amount    

% of

the total

   

Fine Ceramic Parts Group

   39,785     6.2     42,582     6.6     7.0  

Semiconductor Parts Group

   76,861     12.0     74,599     11.6     (2.9 )

Applied Ceramic Products Group

   66,757     10.4     72,380     11.3     8.4  

Electronic Device Group

   147,734     23.1     151,647     23.7     2.6  

Total Components Business

   331,137     51.7     341,208     53.2     3.0  

Telecommunications Equipment Group

   129,231     20.2     108,498     16.9     (16.0 )

Information Equipment Group

   124,136     19.4     137,544     21.5     10.8  

Total Equipment Business

   253,367     39.6     246,042     38.4     (2.9 )

Others

   67,699     10.6     66,335     10.3     (2.0 )

Adjustments and eliminations

   (12,021 )   (1.9 )   (12,239 )   (1.9 )   —    

Orders

   640,182     100.0     641,346     100.0     0.2  

 

Note 1.

   From April 1, 2007, the “Optical Equipment Group,” previously a separate reporting segment, has been reclassified into “Others.” Accordingly, financial results for the previous first half have been retroactively reclassified.

Note 2.

   For the reasons set forth Note 1 above, production of “Others” in the previous first half increased by ¥5,923 million compared with those previously announced. Also, orders of “Others” in the previous first half increased by ¥5,954 million and “adjustments and elimination” decreased by ¥(4) million compared with those previously announced.

 

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3. Challenges

To be “a creative company that continues to grow,” Kyocera seeks to continuously expand sales and to attain high profitability in its Components and Equipment Businesses. To accomplish these goals, Kyocera continues to reinforce the “Amoeba Management System” (go back to the origin of “Amoeba Management”) and create new value in fiscal 2008.

Kyocera plans to strengthen “operational excellence,” which refers to vitality in the workplace, across all divisions: development, manufacturing, sales and back office. The goal is to boost “executional excellence,” which means the ability to achieve targets, and thus create a highly profitable company. In addition, Kyocera aims to further improve its quality, optimize manufacturing locations worldwide and expand production capacity in order to enhance management foundations in the mid-to long-term range. Kyocera will create new businesses and markets by pursuing group synergies. Efforts will also be made to strengthen strategic businesses and to improve efficiency in operation of assets.

4. Significant Patents and Licenses

New significant license agreements concluded in the first half are as follows.

Agreement concerning acquisition

AVX acquired by merger all of the outstanding capital stock of ATC in September 25, 2007. The detail of its change is stated in the Item 5.Accounting Information 1.Consolidated Financial Statements Note 4.

5. Research and Development Activities

Kyocera aims continuously at expanding sales and boosting profitability in its Components and Equipment Businesses. To achieve these objectives, Kyocera seeks to create new technologies, products and businesses by integrating group-wide management resources while advancing and focusing technological capabilities.

Kyocera will channel its energies into two high-growth-potential areas; namely, the markets for telecommunications and information processing and for environmental preservation. R&D activities are conducted in all of these markets in the realms of materials, components, devices and equipment.

Specific initiatives in each reporting segment are as follows.

1) Fine Ceramic Parts Group

By making effective use of fine ceramic materials technology, processing technology and design technology, Kyocera is seeking to strengthen the development of fine ceramic components for next generation semiconductor processing equipment and large-sized LCD manufacturing equipment and of high-quality, cost-competitive sapphire substrates for LEDs, whose applicability is expected to increase. In the growing automotive market, efforts are being undertaken to develop products that meet the need for advanced electronics and safety and growing concerns with the environment. Specific endeavors include the development of glow plugs with higher precision by fully utilizing the high temperature durability of ceramics and piezo stacks that enable precision control for the fuel injection of diesel engine cars, which are becoming more widespread in Europe.

 

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2) Semiconductor Parts Group

Kyocera is advancing the development of new ceramic packages and organic packages for digital consumer equipment, where demand is expected to expand. In the ceramic package business, efforts are being made to develop smaller, thinner and more highly sophisticated ceramic packages with a variety of built-in functions in order to meet rapid advancements in mobile phone handsets. Kyocera is also developing ceramic packages for various types of sensors for use in the automotive market. In the organic package business, Kyocera is developing new flip chip packages for next-generation high performance semiconductors and fine pitch flip-chip system in a package (SiP) substrates to realize even thinner.

3) Applied Ceramic Products Group

While striving to further increase the conversion efficiency of solar cells for the environmental preservation market, Kyocera is developing next-generation solar cells. Kyocera is also working toward the practical application of solid oxide fuel cells (SOFCs) for residential use, which are expected to be the next-generation distributed power generation system for small-scale power sources.

4) Electronic Device Group

Kyocera develops various electronic components for digital consumer equipment market and the high-growth-potential sensor related market. Particular areas of our development include small and high capacitance capacitors, low-pass filters for mobile phone handsets with One-Segment terrestrial digital broadcasting capability, small crystal units and timing devices for the sensors.

In thin-film devices, Kyocera is developing thermal printheads for high-resolution digital photo printers, and industrial LCDs equipped with an LED backlight to meet needs from an environmental perspective. Work is also being done towards the mass-producing of organic light emitting diode (OLED) displays that realize low power consumption and that have moving image quality seen as outstanding for mobile devices.

5) Telecommunications Equipment Group

By making effective use of component, device and software technologies within the group, Kyocera is seeking to develop high-value-added products for the mobile telecommunications equipment market, in which functions are becoming increasingly advanced. In the domestic PHS market, Kyocera is developing handsets compatible with high-performance PHS base stations to ensure faster data transmission rates and the provision of diverse services. Kyocera is also strengthening the development of equipment for wireless broadband systems such as *iBurstTM and VoIP (Voice over Internet Protocol) that enable stable, high-speed and high-data rate communication.

* iBurstTM is a trademark of ArrayComm, Inc.

6) Information Equipment Group

Kyocera is promoting the development of more color-based and solutions-oriented products based on the “ECOSYS” concept, which is realized through the incorporation of a long-lasting amorphous silicon photoreceptor drum. Apart from bolstering the lineup for both black and white and color ECOSYS printers, copying machines and multifunctional systems, Kyocera is advancing the development of document solutions products that can handle the integrated management of documents and digital information. Endeavors are also being done to strengthen security functions.

 

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Table of Contents

(7) Others

Kyocera Communications Systems Co., Ltd (KCCS) is promoting development in the area of fixed mobile convergence (FMC) and optimization by anticipating the needs for next-generation mobile phone handsets and other mobile communication equipment. In addition, KCCS continues to develop authentication and security technologies, which seek to meet need for fast changing next-generation networks.

Kyocera Chemical Corporation (KCC) is currently strengthening the development of semiconductor and crystal-related materials. Focused efforts include the development of photo-sensitive, heat-resistant resin as a protective coating for the surface of semiconductors and of photo spacers for LCDs.

 

     (Yen in millions)  

Research and development expenses

   Six months ended September 30,   

Increase

(Decrease)

%

 
   2006    2007   
   Amount    

% of

the total

   Amount    

% of

the total

  

Fine Ceramic Parts Group

   1,976     6.5    1,937     6.2    (2.0 )

Semiconductor Parts Group

   1,783     5.9    1,776     5.7    (0.4 )

Applied Ceramic Products Group

   2,014     6.7    2,349     7.6    16.6  

Electronic Device Group

   5,822     19.2    5,708     18.4    (2.0 )

Total Components Business

   11,595     38.3    11,770     37.9    1.5  

Telecommunications Equipment Group

   7,897     26.1    6,716     21.6    (15.0 )

Information Equipment Group

   8,584     28.4    9,824     31.6    14.4  

Total Equipment Business

   16,481     54.5    16,540     53.2    0.4  

Others

   2,181     7.2    2,750     8.9    26.1  

Research and development expenses

   30,257     100.0    31,060     100.0    2.7  

% of net sales

   (4.9 )%   —      (4.9 )%   —      —    

 

Note 1. From April 1, 2007, the “Optical Equipment Group,” previously a separate reporting segment, has been reclassified into “Others.” Accordingly, financial results for the previous first half have been retroactively reclassified.

 

Note 2. For the reasons set forth Note 1 above, research and development of “Others” in the previous first half increased by ¥344 million compared with those previously announced.

 

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Table of Contents

Item 3. Equipment and Facilities

1. Information on Equipment and Facilities

There was no material change in equipment and facilities in the first half.

2. Plan for new additions or disposal

(1) New Additions

Plans to construct or enhance facilities are not determined on a project –by-project basis. Accordingly , planned investment is shown on reporting segments basis.

 

    

(Yen in millions)

 

Reporting segment

  

Planned capital expenditures for

the year ending March 31, 2008

  

Details and objective

  

Investment

method

Fine Ceramic Parts

Group

   8,000    Install equipments to expand production of fine ceramic components and automotive components    Internal funding

Semiconductor Parts

Group

   10,000    Install equipments to expand production and to improve productivity of ceramic packages and organic packages    As above

Applied Ceramic

Products Group

   10,000    Install equipments to expand production and to focus on research and development of solar cells and modules    As above

Electronic Device

Group

   30,000   

Install equipments to expand production of ceramic

capacitors and timing devices

   As above

Telecommunications

Equipment Group

   3,000    Install equipments to produce new products    As above

Information

Equipment Group

   12,000    Construct a new facility and an engineering developments center to expand production of supplies    As above
Others    4,000    Install equipments to expand production in KCC and install equipments related to IT in KCCS    As above
Corporate    4,000    Construct a new facility in Kyocera International, Inc. and install equipments related to environment in Kyocera Corporation    As above
Total    81,000      

 

(Notes) 1. National and regional consumption taxes are not included in the above amounts.
             2. As a result of reviewing capital investment results for the six months ended September 30, 2007 and capital expenditures plan of the next six months ended March 31,2008, Kyocera changed its plan of capital expenditures and decreased its amounts from ¥86,000 million, which was originally announced at the beginning of the first half, to ¥81,000 million.

 

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Table of Contents

(2) Material Sale and Disposal of Equipment and Facilities

Kyocera does not plan to sell or dispose equipment or facilities that significantly affect its production capability, except for its sale and disposal of ordinary renewal of equipment and facilities.

 

Item 4. Information on Kyocera Corporation

 

1. Authorized Capital and Common Stock

(1) Number of Authorized Capital and Common Stock

<Authorized Capital>

The total number of common stock authorized for issuance by Kyocera Corporation    600,000,000 shares

<Number of Shares of Common Stock Issued>

As of September 30, 2007, and December 12, 2007, 191,309,290 shares of common stock were issued, registered on Tokyo Stock Exchange, Osaka Securities Exchange in Japan and New York Stock Exchange in the United States as follows:

 

   

            Title of Each Class            

     

Name of Each Exchange on Which Registered

   
 

Common Stock

Common Stock

American Depositary Share

   

Tokyo Stock Exchange

Osaka Securities Exchange

New York Stock Exchange

 

 

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Table of Contents

(2) Stock Acquisition Rights

The following table shows stock acquisition rights issued pursuant to Articles 280-20 and 280-21 of the former Commercial Code of Japan.

<Stock acquisition rights approved at the stockholders’ meeting held on June 25, 2003>

 

     As of September 30, 2007    As of November 30, 2007
         

Number of stock acquisition rights

   1,299    1,284

Class of shares issued for stock

acquisition rights

   Common Stock    Same as on the left

Number of shares issued for stock acquisition

rights

   129,900    128,400

Amount to be paid in upon exercise of

stock acquisition rights

   7,900    Same as on the left

Exercise period for stock acquisition rights

   From October 1, 2003 to September 30, 2008    Same as on the left

Issue price of the shares to be issued upon

exercise of stock acquisition rights

   7,900    Same as on the left

Amount out of issue price of new shares to be accounted as paid-in capital of

Kyocera Corporation

   3,950    Same as on the left

Conditions for exercise of stock

acquisition rights

  

(i)In order to exercise stock acquisition rights, the person who has been allocated such stock acquisition rights (the “Acquisition Rights Holder”) must be a Director, Corporate Auditor, Executive Officer or employee of Kyocera Corporation or a subsidiary thereof at the time of exercise.

(ii)In the event of the death of the Acquisition Rights Holder, the heir(s) thereof may exercise inherited stock acquisition rights for a period of 6 months (or until the date of expiration of the exercise period thereof, if such date comes earlier),up to the maximum number of stock acquisition rights the deceased could have exercised at the time of death.

(iii) Upon approval by the Bonus Committee of Kyocera Corporation, the exercise of stock acquisition rights may be permitted under conditions different from those described in (i) and (ii) above.

(iv)Other terms and conditions shall be provided for in an agreement between Kyocera Corporation and each Acquisition Rights Holder, pursuant to resolutions of this Ordinary General Meeting of Shareholders and the Board of Directors of Kyocera Corporation.

   Same as on the left

Restriction on transfer of the stock

acquisition rights

   Transfer and pawn are prohibited.    Same as on the left

 

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Table of Contents

<Stock acquisition rights approved at the stockholders’ meeting held on June 25, 2004>

 

     As of September 30, 2007    As of November 30, 2007
         

Number of stock acquisition rights

   3,989    3,905

Class of shares issued for stock acquisition

rights

   Common Stock    Same as on the left

Number of shares issued for stock acquisition

rights

   398,900    390,500

Amount to be paid in upon exercise of

stock acquisition rights

   8,725    Same as on the left

Exercise period for stock acquisition rights

   From October 1, 2004 to September 30, 2008    Same as on the left

Issue price of the shares to be issued upon

exercise of stock acquisition rights

   8,725    Same as on the left

Amount out of issue price of new shares to

be accounted as paid-in capital of

Kyocera Corporation

   4,363    Same as on the left

Conditions for exercise of stock

acquisition rights

  

(i)In order to exercise stock acquisition rights, the person who has been allocated such stock acquisition rights (the “Acquisition Rights Holder”) must be a Director, Corporate Auditor, Executive Officer or employee of Kyocera Corporation or a subsidiary thereof at the time of exercise.

(ii)In the event of the death of the Acquisition Rights Holder, the heir(s) thereof may exercise inherited stock acquisition rights for a period of 6 months (or until the date of expiration of the exercise period thereof, if such date comes earlier),up to the maximum number of stock acquisition rights the deceased could have exercised at the time of death.

(iii) Upon approval by the Bonus Committee of Kyocera Corporation, the exercise of stock acquisition rights may be permitted under conditions different from those described in (i) and (ii) above.

(iv)Other terms and conditions shall be provided for in an agreement between Kyocera Corporation and each Acquisition Rights Holder, pursuant to resolutions of this Ordinary General Meeting of Shareholders and the Board of Directors of Kyocera Corporation.

   Same as on the left

Restriction on transfer of the stock

acquisition rights

   Transfer and pawn are prohibited.    Same as on the left

 

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Table of Contents

<Stock acquisition rights approved at the stockholders’ meeting held on June 28, 2005>

 

     As of September 30, 2007    As of November 30, 2007
         

Number of stock acquisition rights

   7,868    7,723

Class of shares issued for stock

acquisition rights

   Common Stock    Same as on the left

Number of shares issued for stock acquisition

rights

   786,800    772,300

Amount to be paid in upon exercise of

stock acquisition rights

   8,619    Same as on the left

Exercise period for stock acquisition rights

  

From October 1, 2005 to

September 30, 2008

   Same as on the left

Issue price of the shares to be issued upon

exercise of stock acquisition rights

   8,619    Same as on the left

Amount out of issue price of new shares to be

accounted as paid-in capital of

Kyocera Corporation

   4,310    Same as on the left

Conditions for exercise of stock

acquisition rights

  

(i)In order to exercise stock acquisition rights, the person who has been allocated such stock acquisition rights (the “Acquisition Rights Holder”) must be a Director, Corporate Auditor, Executive Officer or employee of Kyocera Corporation or a subsidiary thereof at the time of exercise.

(ii)In the event of the death of the Acquisition Rights Holder, the heir(s) thereof may exercise inherited stock acquisition rights for a period of 6 months (or until the date of expiration of the exercise period thereof, if such date comes earlier),up to the maximum number of stock acquisition rights the deceased could have exercised at the time of death.

(iii) Upon approval by the Bonus Committee of Kyocera Corporation, the exercise of stock acquisition rights may be permitted under conditions different from those described in (i) and (ii) above.

(iv)Other terms and conditions shall be provided for in an agreement between Kyocera Corporation and each Acquisition Rights Holder, pursuant to resolutions of this Ordinary General Meeting of Shareholders and the Board of Directors of Kyocera Corporation.

   Same as on the left

Restriction on transfer of the stock

acquisition rights

   Transfer and pawn are prohibited.    Same as on the left

(3) Rights Plan

Not applicable.

 

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Table of Contents

(4) Status of Common Stock and Capital

 

     (Yen in millions, except number of shares)

Date

  

Increased

number of

shares issued

  

Number

of

shares issued

  

Increased
amount of

capital

   Total
amount of
capital
  

Increased amount of

additional

paid- in capital

  

Total amount of

additional

paid-in capital

Six months ended September 30, 2007

   —      191,309,290    —      115,703    —      192,555

(5) Major Shareholders

The following table shows the ten largest shareholders of record of Kyocera Corporation as of September 30, 2007.

 

Name

  

Shares owned

(in thousands)

   Ownership (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

   12,334    6.45

Japan Trustee Services Bank of Japan, Ltd. (Trust Account)

   11,092    5.80

State Street Bank and Trust Company (Standing proxy: The Mizuho Corporate Bank, Limited)

   8,630    4.51

The Bank of Kyoto, Ltd.

   7,218    3.77

Kazuo Inamori

   6,806    3.56

Bank of Tokyo-Mitsubishi UFJ, Ltd.

   5,076    2.65

The Inamori Foundation

   4,680    2.45

Keiai Kosan K.K.

   3,550    1.86

The Dai-ichi Mutual Life Insurance Company

   2,748    1.44

Japan Trustee Services Bank , Ltd. (Trust Account 4)

   2,705    1.41
         

Total

   64,838    33.89

(Note) 1. In accordance with the Securities and Exchange Law of Japan, the financial institutions below informed us that

they and their related partners became a holder of over 5% of the total issued voting shares of Kyocera Corporation. However, they were not included in the above major shareholders as a single major holder because not all partners of them were shareholders of record as of September 30, 2007.

 

Filing Date

  

Name

  

Shares owned

(in thousands)

November 15, 2006

   Mitsubishi UFJ Financial Group, Inc. and its related partners   

Holding 10,570

thousand shares

as of October 31,

2006

 

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Table of Contents

(6) Voting Rights

The following table shows voting rights of common stock of Kyocera Corporation as of September 30, 2007.

 

     Number of shares    Number of voting rights

Shares without voting rights

   —      —  

Shares with limited voting rights

   —      —  

Shares with full voting rights (treasury stock)

   1,889,900 shares of

common stock

   —  

Shares with full voting rights (other)

   188,977,400 shares of

common stock

   1,889,774

Shares constituting less than one unit

   441,990 shares of

common stock

   —  

Total number of shares issued

   191,309,290 shares of

common stock

   —  

Total voting rights of all shareholders

   —      1,889,774

Kyocera Corporation held treasury stocks of 1,889,900 shares, and its ownership to total number of shares issued was 0.99% as of September 30, 2007.

 

2. Price Range of Shares

The following table shows price range of shares of Kyocera Corporation for the six months ended September 30, 2007.

 

     Tokyo Stock Exchange
    

Price per share of

common stock

(yen)

     High    Low

April 2007

   11,860    10,970

May 2007

   11,980    11,470

June 2007

   13,180    11,850

July 2007

   13,390    11,310

August 2007

   11,740    9,930

September 2007

   11,140    10,250

 

3. Directors

There has been no change in a member of Directors since Kyocera Corporation filed its Annual Report (“Yuukashouken-houkokusho”) for the year ended March 31, 2007 with the Director of the Kanto Local Finance Bureau of the Ministry of Finance pursuant to the Securities and Exchange Law of Japan on June 28, 2007.

 

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Table of Contents

Item 5. Accounting Information

1. Interim Consolidated Financial Statements and Interim Non-consolidated Financial Statements

(1) Pursuant to the article 87 of “Regulations Concerning the Terminology, Forms and Preparation Methods of Interim Consolidated Financial Statements” (Ministry of Finance Ordinance No. 24, 1999), the interim consolidated financial statements are prepared in conformity with the accounting principles generally accepted in the United States of America (U.S. GAAP).

(2) Pursuant to “Regulations Concerning the Terminology, Forms and Preparation Methods of Interim Financial Statements” (Ministry of Finance Ordinance No. 38, 1977, “Regulation for Interim Financial Statements”), the interim non-consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Japan (Japanese GAAP).

The interim non-consolidated financial statements for the six months ended September 30, 2006 were prepared in conformity with the pre-amendment of Regulation for Interim Financial Statements. The interim non-consolidated financial statements for the six months ended September 30, 2007 were prepared in conformity with the amendment of Regulation for Interim Financial Statements.

 

2. Report of Independent Auditors

In accordance with the article 193-2 of the Securities Exchange Law, the interim consolidated financial statements and the interim non-consolidated financial statements for the six months ended September 30, 2006 were reviewed by Misuzu PricewaterhouseCoopers.

In accordance with the article 193-2-1 of the Financial Instruments and Exchange Law, the interim consolidated financial statements and the interim non-consolidated financial statements for the six months ended September 30, 2007 were reviewed by Kyoto Audit Corporation.

Kyocera changed independent auditing firm as follows.

 

For the six months ended September 30, 2006   Misuzu PricewaterhouseCoopers
For the six months ended September 30, 2007   Kyoto Audit Corporation

 

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Table of Contents

1. CONSOLIDATED FINANCIAL STATEMENTS

< CONSOLIDATED BALANCE SHEETS >

 

          Yen in millions
          September 30,    March 31,
          2006    2007    2007
          Amount     %    Amount     %    Amount     %

I        Current assets :

                 

Cash and cash equivalents

      ¥ 263,751        ¥ 274,508        ¥ 282,208    

Short-term investments

   Note 5      128,747          287,650          213,495    

Trade notes receivable

        25,181          21,567          25,033    

Trade accounts receivable

        228,198          232,381          236,380    
                                   
        253,379          253,948          261,413    

Less allowances for doubtful accounts and sales returns

        (7,384 )        (5,914 )        (5,960 )  
                                   
        245,995          248,034          255,453    

Inventories

        220,879          208,933          209,188    

Deferred income taxes

        45,609          41,141          45,390    

Other current assets

        46,151          51,940          40,757    
                                         

Total current assets

        951,132     48.7      1,112,206     52.8      1,046,491     49.1
                                         

II      Investments and advances :

                 

Investments in and advances to affiliates and unconsolidated subsidiaries

        7,499          14,606          10,093    

Securities and other investments

   Note 5      622,344          579,062          690,568    
                                         
        629,843     32.3      593,668     28.2      700,661     32.9

III     Property, plant and equipment, at cost :

   Note 6               

Land

        56,969          57,154          56,806    

Buildings

        253,643          264,325          261,998    

Machinery and equipment

        717,718          746,552          729,636    

Construction in progress

        11,817          12,800          7,362    
                                   
        1,040,147          1,080,831          1,055,802    

Less accumulated depreciation

        (752,878 )        (800,535 )        (774,896 )  
                                         
        287,269     14.7      280,296     13.3      280,906     13.2

IV    Goodwill

   Note 4      31,615     1.6      42,022     2.0      32,894     1.5

V      Intangible assets

        29,516     1.5      33,633     1.6      24,657     1.2

VI    Other assets

        22,327     1.2      45,272     2.1      44,855     2.1
                                         

Total assets

      ¥ 1,951,702     100.0    ¥ 2,107,097     100.0    ¥ 2,130,464     100.0
                                         

The accompanying notes are an integral part of these statements.

 

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Table of Contents
           Yen in millions  
          September 30,     March 31,  
          2006     2007     2007  
          Amount     %     Amount     %     Amount     %  

I        Current liabilities :

               

Short-term borrowings

      ¥ 12,929       ¥ 17,351       ¥ 15,250    

Current portion of long-term debt

   Note 6      6,643         3,268         5,853    

Trade notes and accounts payable

        111,059         94,232         100,295    

Other notes and accounts payable

        52,365         49,025         49,134    

Accrued payroll and bonus

        39,417         42,774         41,680    

Accrued income taxes

        31,343         24,822         36,475    

Other accrued liabilities

        36,230         34,405         33,391    

Other current liabilities

        24,217         24,629         24,110    
                                             

Total current liabilities

        314,203     16.1       290,506     13.8       306,188     14.4  
                                             

II      Non-current liabilities :

               

Long-term debt

   Note 6      9,243         6,269         7,283    

Accrued pension and severance liabilities

        23,541         16,115         16,297    

Deferred income taxes

        149,097         181,108         206,858    

Other non-current liabilities

        12,992         13,461         12,355    
                                             

Total non-current liabilities

        194,873     10.0       216,953     10.3       242,793     11.4  
                                             

Total liabilities

        509,076     26.1       507,459     24.1       548,981     25.8  
                                             

Minority interests in subsidiaries

        69,059     3.5       69,554     3.3       66,923     3.1  

Commitments and Contingencies

   Note 8             

Stockholders’ equity :

               

I        Common stock

        115,703     5.9       115,703     5.5       115,703     5.4  

II      Additional paid-in capital

        162,080     8.3       162,735     7.7       162,363     7.6  

II      Retained earnings

        1,011,682     51.9       1,098,562     52.1       1,055,293     49.6  

IV    Accumulated other comprehensive income

   Notes 7 and 9      111,211     5.7       168,652     8.0       203,056     9.5  

V      Treasury stock, at cost

        (27,109 )   (1.4 )     (15,568 )   (0.7 )     (21,855 )   (1.0 )
                                             

Total stockholders’ equity

        1,373,567     70.4       1,530,084     72.6       1,514,560     71.1  
                                             

Total liabilities, minority interests and stockholders’ equity

      ¥ 1,951,702     100.0     ¥ 2,107,097     100.0     ¥ 2,130,464     100.0  
                                             

The accompanying notes are an integral part of these statements.

 

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Table of Contents

< CONSOLIDATED STATEMENTS OF INCOME >

 

          Yen in millions, except per share amounts  
          Six months ended September 30,     Year ended March 31,  
          2006     2007     2007  
          Amount     %     Amount     %     Amount     %  

I        Net sales

      ¥ 615,390     100.0     ¥ 636,560     100.0     ¥ 1,283,897     100.0  

II      Cost of sales

        429,681     69.8       441,327     69.3       900,470     70.1  
                                             

Gross profit

        185,709     30.2       195,233     30.7       383,427     29.9  

III     Selling, general and administrative expenses

   Note 10      122,581     19.9       127,410     20.0       248,325     19.4  
                                             

Profit from operations

        63,128     10.3       67,823     10.7       135,102     10.5  

IV    Other income or expenses :

               

Interest and dividend income

        6,790         9,742         15,472    

Interest expense

        (782 )       (859 )       (1,647 )  

Foreign currency transaction gains (losses) , net

   Note 7      273         412         (65 )  

Equity in earnings of affiliates and unconsolidated subsidiaries

   Note 7      259         3,617         2,621    

Gains on sale of securities, net

        3,252         228         3,819    

Other, net

        (535 )       517         1,238    
                                             

Total other income

        9,257     1.5       13,657     2.1       21,438     1.7  
                                             

Income from continuing operations before income taxes and minority interests

        72,385     11.8       81,480     12.8       156,540     12.2  

Income taxes :

               

Current

   Note 8      25,790         28,173         53,765    

Deferred

        (4,836 )       (1,009 )       (4,878 )  
                                             
        20,954     3.4       27,164     4.3       48,887     3.8  
                                             

Income from continuing operations before minority interests

        51,431     8.4       54,316     8.5       107,653     8.4  

Minority interests

        (3,113 )   (0.5 )     (3,696 )   (0.5 )     (6,324 )   (0.5 )
                                             

Income from continuing operations

        48,318     7.9       50,620     8.0       101,329     7.9  

Income from discontinued operations

   Notes 3      5,175     0.8       —       —         5,175     0.4  
   and 7             
                                             

Net income

      ¥ 53,493     8.7     ¥ 50,620     8.0     ¥ 106,504     8.3  
                                             

Earnings per share :

   Note 12             

Income from continuing operations:

               

Basic

      ¥ 257.10       ¥ 267.66       ¥ 538.52    

Diluted

        256.65         267.06         537.35    

Income from discontinued operations:

               

Basic

        27.54         —           27.51    

Diluted

        27.49         —           27.44    

Net income:

               

Basic

        284.64         267.66         566.03    

Diluted

        284.14         267.06         564.79    

Cash dividends declared per share :

               

Per share of common stock

        50.00         60.00         110.00    

Weighted average number of shares of common stock outstanding (shares in thousands) :

               

Basic

        187,932         189,119         188,160    

Diluted

        188,266         189,548         188,573    

The accompanying notes are an integral part of these statements.

 

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<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 (Note 9)

    Treasury stock     Comprehensive
income
 

Balance, March 31, 2006 (187,755)

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

Net income for the year

          106,504         ¥ 106,504  

Other comprehensive income

            112,551         112,551  
                   

Total comprehensive income for the year

              ¥ 219,055  
                   

Adjustment for initially applying SFAS No.158, net of taxes

            17,558      

Cash dividends

          (18,787 )      

Purchase of treasury stock (24)

              (251 )  

Reissuance of treasury stock (918)

        127           7,539    

Stock option plan of subsidiaries

        242          
                                         

Balance, March 31, 2007 (188,649)

     115,703      162,363       1,055,293       203,056       (21,855 )  

Cummulative effect of applying FIN48 to opening balance (Note 2)

          3,968        

Net income for the period

          50,620         ¥ 50,620  

Other comprehensive income

            (34,404 )       (34,404 )
                   

Total comprehensive income for the period

              ¥ 16,216  
                   

Cash dividends

          (11,319 )      

Purchase of treasury stock (13)

              (156 )  

Reissuance of treasury stock (783)

        245           6,443    

Stock option plan of subsidiaries

        127          
                                         

Balance, September 30, 2007 (189,419)

   ¥ 115,703    ¥ 162,735     ¥ 1,098,562     ¥ 168,652     ¥ (15,568 )  
                                         
    

(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(Note 9)

    Treasury stock     Comprehensive
income
 

Balance, March 31, 2006 (187,755)

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

Net income for the period

          53,493         ¥ 53,493  

Other comprehensive income

            38,264         38,264  
                   

Total comprehensive income for the period

              ¥ 91,757  
                   

Cash dividends

          (9,387 )      

Purchase of treasury stock (11)

              (104 )  

Reissuance of treasury stock (261)

        (23 )         2,138    

Stock option plan of subsidiaries

        109          
                                         

Balance, September 30, 2006 (188,005)

   ¥ 115,703    ¥ 162,080     ¥ 1,011,682     ¥ 111,211     ¥ (27,109 )  
                                         

The accompanying notes are an integral part of these statements.

 

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< CONSOLIDATED STATEMENTS OF CASH FLOWS >

 

          Yen in millions  
          Six months ended
September 30,
    Year ended
March 31,
 
          2006     2007     2007  

Cash flows from operating activities:

         

Net income

      ¥ 53,493     ¥ 50,620     ¥ 106,504  

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

         

Depreciation and amortization

        38,836       42,936       82,182  

Provision for doubtful accounts

        667       15       (494 )

Write-down of inventories

        3,829       3,043       11,328  

Deferred income taxes

        (4,836 )     (1,009 )     (4,878 )

Minority interests

        3,113       3,696       6,324  

Gains on sales of securities, net

        (3,252 )     (228 )     (3,819 )

Equity in earnings of affiliates and unconsolidated subsidiaries

        (259 )     (3,617 )     (2,621 )

Gains on sales of investment in subsidiaries

   Note 3      (8,228 )     —         (8,252 )

Foreign currency adjustments

        (287 )     (59 )     160  

Change in assets and liabilities :

         

(Increase) decrease in receivables

        (31,595 )     10,188       (32,626 )

(Increase) decrease in inventories

        (31,174 )     1,185       (25,100 )

Increase in other current assets

        (4,894 )     (5,357 )     (1,901 )

Increase (decrease) in notes and accounts payable

        18,915       (13,681 )     6,015  

Increase (decrease) in accrued income taxes

        3,989       (11,386 )     9,066  

Increase in other current liabilities

        10,921       2,603       11,111  

Decrease in other non-current liabilities

        (3,166 )     (103 )     (7,062 )

Other, net

        1,851       752       3,707  
                           

Net cash provided by operating activities

        47,923       79,598       149,644  
                           

Cash flows from investing activities :

         

Payments for purchases of available-for-sale securities

        (22,396 )     (9,055 )     (44,582 )

Payments for purchases of held-to-maturity securities

        (9,125 )     (7,139 )     (26,867 )

Sales and maturities of available-for-sale securities

        14,744       81,345       99,230  

Maturities of held-to-maturity securities

        15,968       16,154       27,889  

Acquisition of businesses, net of cash acquired

   Note 4      (756 )     (26,771 )     (756 )

Proceeds from sales of investment in subsidiaries

   Note 3      24,553       —         24,602  

Payments for purchases of investment in an affiliate

        —         (1,416 )     (35 )

Payments for purchases of property, plant and equipment

        (31,023 )     (28,271 )     (64,751 )

Payments for purchases of intangible assets

        (4,486 )     (4,249 )     (8,215 )

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

        785       462       2,693  

Deposit of negotiable certificate of deposits and time deposits

        (147,457 )     (206,872 )     (356,169 )

Withdrawal of negotiable certificate of deposits and time deposits

        85,081       109,284       203,076  

Other, net

        28       (672 )     (7,818 )
                           

Net cash used in investing activities

        (74,084 )     (77,200 )     (151,703 )
                           

Cash flows from financing activities :

         

Increase in short-term debt

        7,316       1,983       9,369  

Proceeds from issuance of long-term debt

        1,928       1       1,928  

Payments of long-term debt

        (10,713 )     (4,299 )     (13,361 )

Dividends paid

        (10,385 )     (12,060 )     (20,632 )

Purchase of treasury stock

        (104 )     (156 )     (251 )

Reissuance of treasury stock

        2,115       6,688       7,666  

Other, net

        (3,236 )     (638 )     (5,364 )
                           

Net cash used in financing activities

        (13,079 )     (8,481 )     (20,645 )
                           

Effect of exchange rate changes on cash and cash equivalents

        2,182       (1,617 )     4,103  
                           

Net decrease in cash and cash equivalents

        (37,058 )     (7,700 )     (18,601 )

Cash and cash equivalents at beginning of period

        300,809       282,208       300,809  
                           

Cash and cash equivalents at end of period

      ¥ 263,751     ¥ 274,508     ¥ 282,208  
                           

The accompanying notes are an integral part of these statements.

 

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<Notes to the Interim Consolidated Financial Statements>

1. Accounting Principles, Procedures and Financial Statements’ Presentation

In December 1975, Kyocera Corporation filed a registration statement, Form S-1 and a registration form for American Depositary Receipt (ADR), in accordance with the Securities Exchange Act of 1933, with the United States Securities and Exchange Commission (SEC) and made a registration of its common stock and ADR there. In accordance with the mentioned act, Kyocera Corporation again filed Form S-1 and a registration form for ADR with SEC in February 1980, and listed its ADR on the New York Stock Exchange in May 1980.

Kyocera Corporation has filed Form 20-F as an annual report, which is prepared in accordance with U.S. GAAP with SEC once a year in order to conform to the section 13 of the Securities Exchange Act of 1934. Kyocera Corporation and its consolidated subsidiaries (Kyocera) have also prepared interim consolidated financial statements in accordance with U.S. GAAP. The followings are accounting principles and regulations with which Kyocera is required to comply: Regulations for filing and reporting to SEC (Regulation S-X, Accounting Series Releases, Staff Accounting Bulletins, and etc.), Statements of Financial Accounting Standards Board (SFAS), Accounting Principles Board (APB) Opinions and Accounting Research Bulletin (ARB), among others.

The following paragraphs describe the major differences between U.S. GAAP and Japanese GAAP, and where the significant differences exist, the amount of effect to income before income taxes pursuant to Japanese GAAP are also disclosed.

(1) Revenue Recognition

Kyocera adopts Staff Accounting Bulletin (SAB) No. 104 “Revenue Recognition in Financial Statements.”

(2) Foreign Currency Translation and Forward Exchange Contracts

Assets and liabilities denominated in foreign currencies and financial statements of foreign subsidiaries are translated based on SFAS No. 52 “Foreign Currency Translation.” Forward exchange contracts are accounted for by SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities”, as amended by SFAS No. 138 “Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of SFAS No. 133.”

(3) Benefit Plans

Accrued pension and severance costs are computed based on SFAS No. 87 “Employer’s Accounting for Pensions” and SFAS No.158 “Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans.” The differences between U.S. GAAP and Japanese GAAP for the six months ended September 30, 2006, 2007 and for the year ended March 31, 2007 amounted to ¥539 million, ¥225 million and ¥409 million, respectively.

(4) Minority Interests

Minority interests are presented as a separate category between liabilities and stockholders’ equity in the consolidated balance sheets.

(5) Comprehensive Income

Kyocera applies SFAS No. 130 “Reporting Comprehensive Income” and discloses comprehensive income in stockholders’ equity. According to this standard, comprehensive income is defined as the change in equity except for capital transaction and it consists of net income and other comprehensive income. Other comprehensive income includes foreign currency translation adjustments, pension adjustments, minimum pension liability adjustments, net unrealized gains (losses) on securities and net unrealized gains (losses) on derivative financial instruments.

 

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(6) Stock Issuance Costs

Stock issuance costs, net of tax are deducted from the additional paid-in capital.

(7) Business Combinations

Kyocera adopts SFAS No. 141 “Business Combinations.”

(8) Goodwill and Other Intangible Assets

Kyocera adopts SFAS No. 142 “Goodwill and Other Intangible Assets.”

(9) Derivative Financial Instruments

Kyocera adopts SFAS No. 133, as amended by SFAS No. 138.

2. Summary of Accounting Policies

The accounts of Kyocera Corporation and its Japanese subsidiaries are generally maintained to conform to Japanese accounting practices. Adjustments, including the applicable income tax effects, which are not recorded in Kyocera Corporation’s books of account, have been made to the accompanying interim consolidated financial statements in order to present them in conformity with accounting principles generally accepted in the United States of America.

(1) Basis of Consolidation and Accounting for Investments in Affiliated Companies

The interim consolidated financial statements include the accounts of Kyocera Corporation, its majority-owned subsidiaries and a variable interest entity for which Kyocera Corporation is a primarily beneficiary under the Financial Accounting Standard Board Interpretation No. 46 (revised 2003), “ Consolidation of Variable Interest Entities”. The consolidated variable interest entity for which Kyocera Corporation is the primary beneficiary does not have a material effect on Kyocera’s financial position and result of operations.

All significant inter-company transactions and accounts are eliminated. Investments in 20% to 50% owned companies and insignificant subsidiaries are accounted for by the equity method, whereby Kyocera includes in net income its equity in the earnings or losses of these companies.

 

    

(Number of companies)

  

(Major companies)

Consolidated subsidiaries:

   173    AVX CORPORATION
      KYOCERA WIRELESS CORP.
      KYOCERA MITA CORPORATION
      KYOCERA ELCO CORPORATION

Affiliates and unconsolidated subsidiaries:

   12    WILLCOM, INC.

(2) Revenue Recognition

Kyocera sells various types of products, including fine ceramic parts, semiconductor parts, and telecommunications equipment. Kyocera recognizes revenue upon completion of the earnings process, which occurs when products are shipped and delivered to the customer in accordance with the terms of an agreement of sale, there is a fixed or determinable selling price, title and risk of loss have been transferred, and collectibility is reasonably assured. These conditions are satisfied at the time of delivery to customers in domestic sales (FOB destination) and at the time of shipment (FOB shipping) for export sales.

 

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Sales returns

Kyocera records an estimated sales return allowance at the time of sales based on its historical returns experience.

Products warranty

For after-service costs to be paid during warranty periods, Kyocera accrues a product warranty liability for claims under warranties relating to the products that have been sold. Kyocera records an estimated product warranty based on its historical repair experience.

Revenue from services, rental and others

In addition to the tangible products as discussed above, Kyocera also provides certain services, primarily financial services provided by Kyocera Leasing Co., until August 2006. Revenue from direct financing leases was recognized over the term of the lease, and amortization of unearned lease income was recognized using the interest method. Interest income on installment loans was recognized on an accrual basis. Interest income was no longer accrued at the time the collection of the interest was past due a year or more, or the collection of the principal was past due six months or more. The interest received from cash payments on impaired loans was recorded as income, unless the collectibility of the remaining investments was doubtful, in which case the cash receipt was recorded as collection of the principal.

(3) Cash and Cash Equivalents

Cash and cash equivalents include time deposits and certificates of deposit with original maturities of three months or less.

(4) Translation of Foreign Currencies

Assets and liabilities of consolidated foreign subsidiaries and affiliates accounted for by the equity method are translated into Japanese yen at the exchange rates in effect on the respective balance sheet dates. Operating accounts are translated at the average rates of exchange for the respective years. Translation adjustments result from the process of translating foreign currency financial statements into Japanese yen. These translation adjustments, which are not included in the determination of net income, are reported in other comprehensive income.

Assets and liabilities denominated in foreign currencies are translated at the exchange rates in effect at the respective balance sheet dates, and resulting transaction gains or losses are included in the determination of net income.

(5) Allowances for Doubtful Accounts

Kyocera maintains allowances for doubtful accounts related to both trade and finance receivables for estimated losses resulting from customers’ inability to make timely payments. Kyocera’s estimates are based on various factors including the length of past due payments, historical experience and current business environments. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations, a specific allowance against these amounts is provided considering the fair value of assets pledged by the customer as collateral.

 

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(6) Inventories

Inventories are stated at the lower of cost or market. Cost is determined by the average method for approximately 61% , 65% and 62% of finished goods and work in process as well as approximately 23% , 20% and 21% of raw material and supplies at September 30, 2006, 2007 and March 31, 2007, respectively. The first-in, first-out method is applied to the other inventories. Kyocera recognizes estimated write-down of inventories for excess, slow-moving and obsolete inventories.

(7) Securities

Certain investments in debt and equity securities are accounted for under the Statement of Financial Standards (SFAS) No. 115 “Accounting for Certain Investments in Debt and Equity Securities.” Securities classified as available-for-sale securities are recorded at the fair value, with unrealized gains and losses excluded from income and reported in other comprehensive income, net of taxes. Securities classified as held-to-maturity securities are recorded at amortized cost.

Kyocera evaluates whether the declines in fair value of debt and equity securities with readily determinable fair values are other-than-temporary. Other-than-temporary declines in fair value are recorded as a realized loss with a new cost basis. This evaluation is based mainly on the duration and the extent to which the fair value is less than cost, and the anticipated recoverability in fair value.

(8) Property, Plant and Equipment and Depreciation

Property, Plant and Equipment are recorded at cost less accumulated depreciation. Kyocera provides for depreciation of buildings, machinery and equipment over their estimated useful lives primarily on the declining balance method. The principal estimated useful lives used for computing depreciation are as follows:

 

Buildings    2 to 50 years
Machinery and equipment    2 to 20 years

The cost of maintenance, repairs and minor renewals is charged to expense in the year incurred; major renewals and betterments are capitalized.

When assets are sold or otherwise disposed of, the profits or losses thereon, computed on the basis of the difference between depreciated costs and proceeds, are credited or charged to income in the year of disposal, and costs and accumulated depreciation are removed from accounts.

Effective April 1, 2007, Kyocera Corporation and its domestic subsidiaries, as a result of taking the business situation into consideration, has adopted” the 250 percent declining-balance depreciation method” for buildings, machinery and equipment. Estimated useful lives and estimated salvage values were also changed in conjunction with this change. Under the new provisions of SFAS No. 154 “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3,” a change in depreciation method is treated as a change in estimate. The effect of the change in depreciation method will be reflected on a prospective basis beginning April 1, 2007, and prior period results will not be restated.

Kyocera Corporation and its domestic subsidiaries believe that the change from the declining-balance depreciation method to the 250 percent declining-balance depreciation method will better reflect future business situation and will provide a better matching of costs and revenues over the assets’ estimated useful lives. The change in depreciation methods caused a decrease in net income by ¥4,706 million, basic earnings per share of net income and diluted earnings per share of net income by ¥24.88 and ¥24.83 for the six months ended September 30, 2007, respectively.

 

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(9) Goodwill and Other Intangible Assets

Kyocera has adopted SFAS No. 142. This requires that, rather than being amortized, goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually, and also following any events and changes in circumstances that might lead to impairment. Intangible assets with definite useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

The principal estimated amortizations for intangible assets are as follows:

 

Patent rights    2 to 8 years
Software    2 to 5 years
Customer relationships    5 to 18 years

(10) Impairment of long-lived assets

Kyocera has adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This requires Kyocera to review its long-lived assets and intangible assets with definite useful lives for impairment periodically. Long-lived assets and intangible assets with definite useful lives are considered to be impaired when the expected undiscounted cash flow from the asset group is less than its carrying value. A loss on impairment is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived assets and intangible assets with definite useful lives.

(11) Derivative Financial Instruments

Kyocera utilizes derivative financial instruments to manage its exposure resulting from fluctuations of foreign currencies and interest rates. These derivative financial instruments include foreign currency forward contracts and interest rate swaps. Kyocera does not hold or issue such derivative financial instruments for trading purposes.

Kyocera applies SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No.138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities an Amendment of Financial Accounting Standards Board (FASB) Statement No.133.” All derivatives are recorded as either assets or liabilities on the balance sheet and measured at fair value. Changes in the fair value of derivatives are charged in current earnings. However cash flow hedges which meet the criteria of SFAS No. 133 may qualify for hedge accounting treatment. Changes in the fair value of the effective portion of these hedge derivatives are deferred in other comprehensive income and charged to earnings when the underlying transaction being hedged occurs.

Kyocera designates certain foreign currency forward contracts and certain interest rate swaps as cash flow hedges under SFAS No. 133. Most of Kyocera’s foreign currency forward contracts are entered into as hedges of existing foreign currency denominated assets and liabilities and as such do not qualify for hedge accounting. Accordingly, Kyocera records changes in fair value of these foreign currency forward contracts currently in earnings. It is expected that such changes will be offset by corresponding gains or losses on the underlying assets and liabilities.

Kyocera formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes all derivatives designated as cash flow hedge are linked to specific assets and liabilities on the balance sheet or forecasted transactions. Kyocera also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, Kyocera discontinues hedge accounting prospectively. When hedge accounting is discontinued, the derivative will continue to be carried on the balance sheet at its fair value, with deferred unrealized gains or losses charged immediately in current earnings.

 

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(12) Stock-Based Compensation

Kyocera adopted SFAS No.123 (revised 2004) (SFAS No.123R), “Share-Based Payment” and recognized the cost resulting from share-based payment transactions in financial statements by adopting fair-value based measurement method in accordance with SFAS No.123R. Under the modified prospective method of adoption for SFAS No.123R, Kyocera recognized compensation cost which includes: (a) compensation cost for all stock options granted prior to, but not yet vested as of April1, 2006, and (b) compensation cost for all stock options granted or modified subsequent to April 1, 2006.

(13) Earnings and Cash Dividends per Share

Basic earnings per share is computed based on the weighted average number of shares outstanding during each period. Diluted earnings per share assumes the additional dilution that could occur if all stock options were exercised and resulted in the issuance of potential common stock.

Cash dividends per share are those declared with respect to the earnings for the respective periods for which dividends are proposed by the Board of Directors. Dividends are charged to retained earnings in the period in which they are paid.

(14) Research and Development Expenses and Advertising Expenses

Research and development expenses and advertising expenses are charged to operations as incurred.

(15) Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(16) Accounting Change

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB statement No.109” (“FIN 48”) which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 was effective for fiscal years beginning after December 15, 2006. Cumulative effect of applying FIN48, which was effective April 1, 2007, increased the opening balance of retained earnings by ¥3,968 million.

(17) Recently Issued Accounting Standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The purpose of SFAS No. 157 is to define fair value, establish a framework for measuring fair value and enhance disclosures about fair value measurements. The measurement and disclosure requirements are effective for the years beginning after November 15, 2007 and Kyocera will adopt SFAS No.157 effective April 1, 2008. Kyocera is currently evaluating the impact of adoption of SFAS No. 157 in its consolidated results of operations and financial position.

 

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In February 2007, the FASB issued SFAS No.159, “The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No.115.”SFAS No.159 provides companies with an option to report selected financial assets and liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings. SFAS No.159 is effective for the years beginning after November 15, 2007 and Kyocera will adopt SFAS No.159 effective April 1, 2008. Kyocera is currently evaluating the impact of adoption of SFAS No.159 in its consolidated results of operations and financial position.

(18) Reclassification

Certain reclassifications of previously reported amounts have been made to the consolidated statements of income, cash flows and corresponding footnote disclosures for the six months ended September 30, 2006 and for the year ended March 31, 2007 to conform to the current period presentation. Such reclassifications have no effect on net assets, net income and cash flows.

3. Discontinued Operations

On August 1, 2006, Kyocera sold 100% of the shares of Kyocera Leasing Co, Ltd. (KLC) (presently Diamond Asset Finance Company Limited) to Diamond Lease Company Limited (presently Mitsubishi UFJ Lease & Finance Company Limited) for ¥25,274 million, aimed to concentrate Kyocera’s management resources on its core businesses to enhance and improve its corporate value. Kyocera has accounted for the results of operations and the sale of KLC less income taxes, as discontinued operations in accordance with SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets” in its consolidated statements of income.

The results of operations of discontinued operations for the six months ended September 30, 2006 and for the year ended March 31, 2007 are summarized as follows:

 

     Yen in millions
    

Six months

ended

September 30,
2006

   Year ended
March 31,
2007

Net sales

   ¥ 1,779    ¥ 1,779

Income before income taxes

     862      862

Income taxes

     381      381

Net income

     481      481

Gain on sales of discontinued operations – net of taxes ¥3,534

     4,694      4,694

Income from discontinued operations

     5,175      5,175

4. Business Combination

On May 31, 2007, Kyocera Mita Corporation acquired by merger all of the outstanding capital stock of DOCUSOURCE BUSINESS SOLUTIONS L.L.C. This merger had no material impact on Kyocera’s consolidated results of operations and financial position.

 

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On September 25, 2007, AVX acquired by merger all of the outstanding capital stock of ATC in exchange for approximately ¥27,295 million in cash, plus related acquisition costs. ATC designs, develops, manufactures and markets electronic components, including ceramic multilayer capacitors and custom thin film circuits. ATC’s products are used in a broad range of commercial applications, including wireless infrastructure, fiber optics, medical electronics, semiconductor manufacturing equipment and satellite equipment. ATC has manufacturing facilities and sales offices in New York, manufacturing and research and development facilities in Florida, and sales offices in Sweden and China.

AVX has used the purchase method of accounting to record the acquisition in accordance with SFAS No.141, “Business Combinations”. In accordance with the purchase method, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. As of September 30, 2007, the allocation of the purchase price has been prepared based on preliminary estimates of fair values and is subject to additional adjustment upon completion of the analysis. The results of operations for ATC are included in the accompanying Consolidated Statement of Operations since the acquisition date. The results of ATC were not material. The related assets and liabilities were recorded based upon their estimated relative fair values at the date of acquisition with the excess being allocated to goodwill as follows:

 

     Yen in millions
     September 25,
2007

Current assets

   ¥ 6,753

Non-current assets

     16,050
      

Total assets

     22,803
      

Current liabilities

     1,278

Non-current liabilities

     3,370
      

Total liabilities

     4,648
      

Total identified assets and liabilities

     18,155
      

Purchase price

     27,295
      

Goodwill

   ¥ 9,140
      

 

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5. Investment in Debt and Equity Securities

Investments in debt and equity securities as of September 30, 2006, 2007 and March 31, 2007, included in short-term investments (current assets) and in securities and other investments (non-current assets) are summarized as follows:

 

     Yen in millions
     September 30, 2006    September 30, 2007
     Cost*   

Aggregate

fair

value

   Gross
unrealized
gains
   Gross
unrealized
losses
   Cost*   

Aggregate

fair

value

   Gross
unrealized
gains
   Gross
unrealized
losses

Available-for-sale securities:

                       

Corporate debt securities

   ¥ 3,008    ¥ 3,143    ¥ 150    ¥ 15    ¥ 3,470    ¥ 3,617    ¥ 168    ¥ 21

Other debt securities

     137,668      137,960      316      24      736      757      21      —  

Equity securities

     272,054      466,156      194,335      233      274,645      533,497      259,316      464
                                                       

Total available-for-sale securities

     412,730      607,259      194,801      272      278,851      537,871      259,505      485
                                                       

Held-to-maturity securities:

                       

Other debt securities

     27,726      27,574      —        152      24,038      24,055      17      —  
                                                       

Total held-to-maturity securities

     27,726      27,574      —        152      24,038      24,055      17      —  
                                                       

Total investments in debt and equity securities

   ¥ 440,456    ¥ 634,833    ¥ 194,801    ¥ 424    ¥ 302,889    ¥ 561,926    ¥ 259,522    ¥ 485
                                                       

 

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     Yen in millions
     March 31, 2007
     Cost*   

Aggregate

fair

value

   Gross
unrealized
gains
   Gross
unrealized
losses

Available-for-sale securities:

           

Corporate debt securities

   ¥ 3,842    ¥ 4,033    ¥ 194    ¥ 3

Other debt securities

     74,563      74,574      71      60

Equity securities

     272,653      585,274      312,724      103
                           

Total available-for-sale securities

     351,058      663,881      312,989      166
                           

Held-to-maturity securities:

           

Other debt securities

     33,512      33,447      —        65
                           

Total held-to-maturity securities

     33,512      33,447      —        65
                           

Total investments in debt and equity securities

   ¥ 384,570    ¥ 697,328    ¥ 312,989    ¥ 231
                           

 

* Cost represents amortized cost for held-to-maturity securities and acquisition cost for available-for-sales securities. The cost basis of the individual securities is written down to fair value as a new cost basis when other-than-temporary impairment is recognized.

6. Assets Pledged as Collateral and Liabilities with Assets Pledged

Kyocera’s assets pledged as collateral for long-term debt at September 30, 2006, 2007 and at March 31, 2007 amounted to ¥5,857 million, ¥5,697 million and ¥5,374 million of property and equipment, net of accumulated depreciation, respectively.

Kyocera’s current portion of long-term debt with assets pledged at September 30, 2006, 2007 and at March 31, 2007 amounted to ¥577 million, ¥640 million and ¥672 million, respectively. Kyocera’s long-term debt (excluding current portion) with assets pledged at September 30, 2006, 2007 and at March 31, 2007 amounted to ¥3,082 million, ¥2,507 million and ¥2,584 million, respectively.

 

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7. Derivative Financial Instruments and Hedging Activities

Kyocera’s activities are exposed it to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Approximately 60% of Kyocera’s revenues are generated from overseas customers, which exposes Kyocera to foreign currency exchange rates fluctuations. These financial exposures are monitored and managed by Kyocera as an integral part of its overall risk management program. Kyocera’s risk management program focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

Kyocera maintains a foreign currency risk management strategy that uses derivative financial instruments, such as foreign currency forward contracts, to minimize the volatility in its cash flows caused by changes in foreign currency exchange rates. Movements in foreign currency exchange rates pose a risk to Kyocera’s operations and competitive position, since exchange rates changes may affect the profitability, cash flows, and business and/or pricing strategies of non Japan-based competitors. These movements affect cross-border transactions that involve, but not limited to, direct export sales made in foreign currencies and raw material purchases incurred in foreign currencies.

Kyocera maintains an interest rate risk management strategy that may use derivative financial instruments, such as interest rate swaps, to minimize significant, unanticipated cash flow fluctuations caused by interest rate volatility.

By using derivative financial instruments to hedge exposures to changes in exchange rates and interest rates, Kyocera became exposed itself to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes Kyocera, which creates repayment risk for Kyocera. When the fair value of a derivative contract is negative, Kyocera owes the counterparty and, therefore, it does not possess repayment risk. Kyocera minimizes the credit (or repayment) risk in derivative financial instruments by (1) entering into transactions with creditworthy counterparties, (2) limiting the amount of exposure to each counterparty, and (3) monitoring the financial condition of its counterparties.

Cash Flow Hedges

Kyocera uses certain foreign currency forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in its forecasted transactions related to purchased and sales.

Kyocera charged deferred net losses of ¥8 million and net gains of ¥60 million and net losses of ¥8 million from accumulated other comprehensive income to foreign currency transaction gains (losses), net in the consolidated statements of income for the six months ended September 30, 2006 and 2007 and for the year ended March 31, 2007, as a result of the execution of the hedged transactions.

Also, Kyocera uses interest rate swaps mainly to convert a portion of its variable rate debt to fixed rates. Kyocera charged deferred net losses of ¥23 million from accumulated other comprehensive income to income from discontinued operations in the consolidated statements of income for the six months ended September 30, 2006 and for the year ended March 31, 2007. Kyocera charged deferred net losses of ¥3 million and ¥18 million from accumulated other comprehensive income to equity in earnings of affiliates in the consolidated statements of income for the six months ended September 30, 2007 and for the year ended March 31, 2007, respectively.

Kyocera recognized net losses of ¥58 million and net gains of ¥68 million and ¥63 million in accumulated other comprehensive income at September 30, 2006, 2007 and at March 31, 2007.

 

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Other Derivatives

Kyocera’s main direct foreign export sales and some import purchases are denominated in the customers’ and suppliers’ local currency, principally the U.S. dollar, Euro and STG. Kyocera purchases foreign currency forward contracts with terms normally lasting less than three months to protect against the adverse effects that exchange-rate fluctuations may have on foreign-currency-denominated trade receivables and payables. The gains and losses on both the derivatives and the foreign currency-denominated trade receivable and payables are recorded as foreign currency transaction gains (losses), net in the consolidated statements of income. Kyocera also utilizes indexed share options to decrease the adverse effects that price fluctuations of the holding securities may have on its consolidated results of operations.

Kyocera does not adopt hedge accounting for such derivatives.

The aggregate contract amounts of derivative financial instruments to which hedge accounting is not applied are as follows:

 

     Yen in millions
     September 30,    March 31,
2007
     2006    2007   

Foreign currency forward contracts to sell

   ¥ 152,866    ¥ 124,138    ¥ 135,227

Foreign currency forward contracts to purchase

     15,102      15,693      14,961

Indexed share options

     4,728      —        —  

8. Commitments and Contingencies

At September 30, 2007, Kyocera had contractual obligations for the acquisition or construction of property, plant and equipment aggregating ¥27,113 million principally due within one year.

Kyocera is lessee under long-term operating leases primarily for office space and equipment. Future minimum lease commitments under non-cancelable operating leases at September 30, 2007 are as follows:

 

     Yen in millions

Due within 1 year

   ¥ 5,820

Due after 1 year within 2 years

     4,345

Due after 2 years within 3 years

     3,087

Due after 3 years within 4 years

     2,341

Due after 4 years within 5 years

     1,913

Thereafter

     5,140
      
   ¥ 22,646

Kyocera has entered into material supply agreements for a significant portion of their anticipated material used in its operations. Under those agreements, during the six months ended September 30, 2007, Kyocera purchased ¥1,327 million and is obligated to purchase ¥183,119 million in total by the end of December 2019.

Kyocera guarantees the debt of employees, customers, an investee and an unconsolidated subsidiary. At September 30, 2007, the total amount of these guarantees was ¥603 million. The financial guarantees are made in the form of commitments and letters of awareness issued to financial institutions and generally obligate Kyocera to make payments in the event of default by the borrowers.

AVX has been named as a potentially responsible party (“PRP”) in state and federal administrative proceedings seeking contribution for costs associated with the correction and remediation of environmental conditions at various waste disposal and operating sites. To resolve AVX’s liability at each of the sites at which AVX has been named a PRP, AVX has entered into various administrative orders and consent decrees with federal and state regulatory agencies. AVX has paid, or reserved for, all estimated amounts required under the terms of these orders and decrees corresponding to AVX’s apportioned share of the liabilities.

In July 2007, AVX received a notification from the EPA indicating that remediation costs toward the environmental conditions at, New Bedford Harbor, Massachusetts through April 2007 (which remediation is ongoing) are approximately ¥34,730 million.

AVX has not yet undertaken discussions with the EPA and other parties who may bear responsibility for these costs regarding this matter and the monies spent. Accordingly, the potential impact of this matter on Kyocera’s financial position, results of operations and cash flows cannot be determined at this time.

Kyocera is subject to various lawsuits and claims, which arise, in the ordinary course of business. Kyocera consults with legal counsel and assesses the likelihood of adverse outcome of these contingencies. Kyocera records liabilities for these contingencies when the likelihood of an adverse outcome is probable and the amount is reasonably estimated. However, based on the information available, management believes that damages, if any, resulting from these actions will not have a significant effect on Kyocera’s consolidated results of operations and financial position.

 

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On March 28, 2005, Kyocera Corporation received a notice of tax assessment based on transfer pricing adjustments from the Osaka Regional Tax Bureau for the five years from the year ended March 31, 1999 through the year ended March 31, 2003. The notice indicated that income should be adjusted upwards by ¥24,394 million and that resultant additional tax, including local taxes, etc., amounted to ¥12,748 million, which Kyocera then recognized as current income taxes in its consolidated statement of income for the year ended March 31, 2005. On May 24, 2005, Kyocera Corporation filed a request for reinvestigation to the tax assessment based on transfer pricing adjustments with the Osaka Regional Tax Bureau.

On September 25, 2006, Kyocera Corporation received a decision letter from the Osaka Regional Tax Bureau that voided a portion of the original assessment. In accordance with this decision, ¥4,305 million of tax refunds, including local taxes, etc., was recognized as tax refunds in fiscal 2007.

Kyocera Corporation also filed a request for reconsideration with the Osaka National Tax Tribunal on October 23, 2006 and filed applications with the National Tax Agency for mutual agreement procedures for avoidance of double taxation with the United States, Singapore and Germany as of December 26, 2006, April 27, 2007 and August 10, 2007, respectively.

Kyocera Corporation received a notice on November 8, 2007 from the National Tax Agency to the effect that mutual agreements with the United States had been concluded and received a notice on November 30, 2007 from the Osaka Regional Tax Bureau to the effect that the amount of the revised tax had been reduced. As a result, resolution has been reached of the double taxation situations with respect to which Japan-US mutual agreements were concluded. The amount of refund to Kyocera Corporation from the Osaka Regional Tax Bureau is expected to be ¥2,442 million, including local taxes, etc.

In accordance with FIN48, such amount has been already recorded as the opening balance of retained earnings as of April 1, 2007. As a result, the impact of such refund on the consolidated statement of income will not be material

9. Accumulated Other Comprehensive Income

Kyocera’s accumulated other comprehensive income is as follows:

 

     Yen in millions
     September 30,    March 31,
2007
     2006     2007   

Foreign currency translation adjustments

   ¥ (1,482 )   ¥ 839    ¥ 2,904

Pension adjustments

     —         14,664      15,419

Minimum pension liability adjustments

     (2,057 )     —        —  

Net unrealized gains on securities

     114,808       153,081      184,670

Net unrealized (losses) gains on derivative financial instruments

     (58 )     68      63
                     

Total accumulated other comprehensive income

   ¥ 111,211     ¥ 168,652    ¥ 203,056
                     

 

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10. Supplemental Expense Information

Research and development expenses for the six months ended September 30, 2006, 2007 and for the year ended March 31, 2007 amounted to ¥30,257 million, ¥31,060 million and ¥61,100 million, respectively.

Advertising expenses for the six months ended September 30, 2006, 2007 and for the year ended March 31, 2007 amounted to ¥5,694 million, ¥4,767 million and ¥11,845 million, respectively.

Shipping and handling costs for the six months ended September 30, 2006, 2007 and for the year ended March 31, 2007 amounted to ¥7,527 million, ¥8,471 million and ¥15,945 million, respectively, and were included in selling, general and administrative expenses in the Consolidated Statements of Income.

11. Segment Reporting

Kyocera manufactures and sells a highly diversified range of products, including components involving fine ceramic technologies and applied ceramic products, telecommunications and information equipment and optical instruments, etc. Main products or businesses of each reporting segment are as follows.

(Fine Ceramic Parts Group)

Information & Telecommunication Components

Sapphire Substrates

Components for Semiconductor Processing Equipment

Components for LCD Fabrication Equipment

Automotive Components

ITS related Components

Ceramic Components for General Industrial Equipment

(Semiconductor Parts Group)

Surface Mount Device (SMD) Ceramic Packages

CCD/CMOS Sensor Ceramic Packages

LSI Ceramic Packages

Wireless Communication Device Packages

Optical Communication Device Packages and Components

Organic Multilayer Packages and Substrate

(Applied Ceramic Products Group)

Residential and Industrial Solar Power Generating Systems

Solar Cells and Modules

Cutting Tools

Printed Circuit Board Micro Drills

Jewelry

Applied Ceramic Related Products

Dental and Medical Implants

(Electronic Device Group)

Ceramic Capacitors

Tantalum Capacitors

Timing Devices (Temperature Compensated Crystal Oscillators (TCXO), Ceramic Resonators, Crystal Units)

RF Modules

Surface Acoustic Wave (SAW) Filters

Connectors

Thermal Printheads

LED Printheads

Amorphous Silicon Drums

Liquid Crystal Displays

(Telecommunications Equipment Group)

CDMA Mobile Handsets

Personal Handy Phone System (PHS) Related Products (PHS Mobile Phone Handsets, PHS Base Stations, High Speed Wireless Data Transmission Systems)

(Information Equipment Group)

ECOSYS Printers

Copying Machines

Multifunctional Systems

(Others)

Telecommunication Engineering Business

Information and Communication Technology Business

Management Consulting Business

Chemical Materials for Electronic Components

Electrical Insulators

Synthetic Resin Molded Parts

Optical Components

Hotel Business

Realty Development Business

Insurance Agent and Travel Agent Business

 

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The “Optical Equipment Group,” previously a separate reporting segment, has been reclassified into “Others.” Accordingly, sales and operating profit for the six months ended September 30, 2006 and for the year ended March 31, 2007 have been retroactively reclassified.

Inter-segment sales, operating revenue and transfers are made with reference to prevailing market prices. Transactions between reportable segments are immaterial and not shown separately. Operating profit for each reporting segment represents net sales, less related costs and operating expenses, excluding corporate revenue and expenses, equity in earnings, income taxes and minority interest.

 

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Information by reporting segments for the six months ended September 30, 2006, 2007 and for the year ended March 31, 2007 is summarized as follows:

Reporting Segments

 

      Yen in millions  
    

Six months ended

September 30,

    Year ended
March 31,
 
     2006     2007     2007  
     Amount     Amount     Amount  

Net sales:

      

Fine Ceramic Parts Group

   ¥ 38,564     ¥ 41,286     ¥ 81,326  

Semiconductor Parts Group

     75,843       73,545       152,292  

Applied Ceramic Products Group

     64,132       69,743       131,103  

Electronic Device Group

     139,984       148,562       286,156  

Telecommunications Equipment Group

     117,181       113,907       251,183  

Information Equipment Group

     124,619       136,909       268,781  

Others

     66,660       65,277       137,235  

Adjustments and eliminations

     (11,593 )     (12,669 )     (24,179 )
                        
   ¥ 615,390     ¥ 636,560     ¥ 1,283,897  
                        

Operating profit:

      

Fine Ceramic Parts Group

   ¥ 7,373     ¥ 6,195     ¥ 15,677  

Semiconductor Parts Group

     11,887       8,367       22,210  

Applied Ceramic Products Group

     8,966       13,434       22,334  

Electronic Device Group

     21,573       20,945       44,487  

Telecommunications Equipment Group

     (1,016 )     (103 )     291  

Information Equipment Group

     15,491       19,219       33,970  

Others

     2,849       3,964       6,881  
                        
     67,123       72,021       145,850  

Corporate

     5,152       5,893       8,569  

Equity in earnings of affiliates and unconsolidated subsidiaries

     259       3,617       2,621  

Adjustments and eliminations

     (149 )     (51 )     (500 )
                        

Income from continuing operations before income taxes and minority interests

   ¥ 72,385     ¥ 81,480     ¥ 156,540  
                        

Depreciation and amortization :

      

Fine Ceramic Parts Group

   ¥ 1,943     ¥ 3,627     ¥ 4,500  

Semiconductor Parts Group

     5,853       7,500       12,533  

Applied Ceramic Products Group

     3,791       4,530       8,097  

Electronic Device Group

     9,598       11,608       21,537  

Telecommunications Equipment Group

     3,201       4,432       9,075  

Information Equipment Group

     8,239       5,751       16,326  

Others

     4,584       3,528       7,419  

Corporate

     1,507       1,960       2,575  
                        
   ¥ 38,716     ¥ 42,936     ¥ 82,062  
                        

Capital expenditures:

      

Fine Ceramic Parts Group

   ¥ 2,900     ¥ 3,100     ¥ 7,447  

Semiconductor Parts Group

     5,721       3,978       11,432  

Applied Ceramic Products Group

     2,510       3,654       7,330  

Electronic Device Group

     10,893       11,246       19,812  

Telecommunications Equipment Group

     1,745       1,092       3,800  

Information Equipment Group

     8,061       5,467       11,962  

Others

     4,329       1,549       5,774  

Corporate

     1,080       2,506       2,339  
                        
   ¥ 37,239     ¥ 32,592     ¥ 69,896  
                        

 

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Geographic Segments (Sales by Region)

 

     Yen in millions
     Six months ended
September 30,
   Year ended
March 31,
     2006    2007    2007
     Amount    Amount    Amount

Japan

   ¥ 236,735    ¥ 241,811    ¥ 496,959

United States of America

     130,265      126,703      274,361

Asia

     107,111      118,594      216,663

Europe

     97,464      112,606      210,726

Others

     43,815      36,846      85,188
                    

Net sales

   ¥ 615,390    ¥ 636,560    ¥ 1,283,897
                    

There are no individual countries of which proportion of sales to Kyocera’s consolidated net sales is material in “Asia”, “Europe” and “Others”.

Geographic Segments (Sales and Operating Profit by Geographic area)

 

     Yen in millions  
     Six months ended
September 30,
    Year ended
March 31,
 
     2006     2007     2007  
     Amount     Amount     Amount  

Net sales:

      

Japan

   ¥ 250,962     ¥ 255,785     ¥ 523,869  

Intra-group sales and transfer between geographic areas

     199,385       194,451       388,879  
                        
     450,347       450,236       912,748  
                        

United States of America

     155,355       146,131       319,033  

Intra-group sales and transfer between geographic areas

     17,783       15,872       37,357  
                        
     173,138       162,003       356,390  
                        

Asia

     95,265       104,180       195,319  

Intra-group sales and transfer between geographic areas

     78,505       90,166       152,219  
                        
     173,770       194,346       347,538  
                        

Europe

     101,494       118,012       219,695  

Intra-group sales and transfer between geographic areas

     19,784       20,947       40,040  
                        
     121,278       138,959       259,735  
                        

Others

     12,314       12,452       25,981  

Intra-group sales and transfer between geographic areas

     5,534       8,050       11,432  
                        
     17,848       20,502       37,413  
                        

Adjustments and eliminations

     (320,991 )     (329,486 )     (629,927 )
                        
   ¥ 615,390     ¥ 636,560     ¥ 1,283,897  
                        

Operating profits:

      

Japan

   ¥ 49,773     ¥ 46,493     ¥ 96,804  

United States of America

     9,947       4,144       23,521  

Asia

     11,068       12,950       19,165  

Europe

     3,825       5,565       10,218  

Others

     852       1,777       1,086  
                        
     75,465       70,929       150,794  

Adjustments and eliminations

     (8,491 )     1,041       (5,444 )
                        
     66,974       71,970       145,350  

Corporate

     5,152       5,893       8,569  

Equity in earnings of affiliates and unconsolidated subsidiaries

     259       3,617       2,621  
                        

Income from continuing operations before income taxes and minority interests

   ¥ 72,385     ¥ 81,480     ¥ 156,540  
                        

 

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12. Earnings Per Share

A reconciliation of the numerators and the denominators of basic and diluted earnings per share computations is as follows:

 

     Yen in millions and shares in thousands,
except per share amounts
     Six months ended
September 30,
   Year ended
March 31,
     2006    2007    2007

Income from continuing operations

   ¥ 48,318    ¥ 50,620    ¥ 101,329

Income from discontinued operations

     5,175      —        5,175

Net income

     53,493      50,620      106,504
                    

Basic earnings per share:

        

Income from continuing operations

     257.10      267.66      538.52

Income from discontinued operations

     27.54      —        27.51

Net income

     284.64      267.66      566.03

Diluted earnings per share:

        

Income from continuing operations

     256.65      267.06      537.35

Income from discontinued operations

     27.49      —        27.44

Net income

     284.14      267.06      564.79
                    

Basic weighted average number of shares outstanding

     187,932      189,119      188,160

Dilutive effect of stock options

     334      429      413

Diluted weighted average number of shares outstanding

     188,266      189,548      188,573
                    

 

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13. Supplemental Cash Flow Information

Supplemental information related to the consolidated statements of cash flows is as follows:

 

     Yen in millions  
     Six months ended
September 30,
    Year ended
March 31,
 
     2006     2007     2007  

Cash paid during the period for:

      

Interest

   ¥ 979     ¥ 737     ¥ 1,603  

Income taxes

     30,045       37,788       52,847  

Acquisitions of business:

      

Fair value of assets acquired

   ¥ 1,151     ¥ 32,606     ¥ 1,151  

Fair value of liabilities assumed

     (333 )     (4,887 )     (333 )
      

Cash acquired

     (62 )     (948 )     (62 )
                        
   ¥ 756     ¥ 26,771     ¥ 756  
                        

 

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Table of Contents

BALANCE SHEETS

 

     Yen in millions
     September 30,    March 31,
     2006    2007    2007
     Amount     %    Amount     %    Amount     %

Current assets :

              

Cash and bank deposits

   ¥ 119,336        ¥ 210,986        ¥ 203,301    

Trade notes receivable

     46,376          33,016          41,423    

Trade accounts receivable

     96,306          109,184          108,685    

Marketable securities

     37,997          103,000          22,937    

Finished goods and merchandise

     17,818          18,469          17,204    

Raw materials

     16,546          13,685          16,560    

Work in process

     20,416          20,036          20,541    

Supplies

     745          903          706    

Deferred income taxes

     16,590          13,969          17,193    

Loans to subsidiaries

     14,372          8,817          16,880    

Other accounts receivable

     8,048          6,480          8,291    

Other current assets

     6,904          15,004          11,434    

Allowance for doubtful accounts

     (164 )        (1,015 )        (173 )  
                                      

Total current assets

     401,290     27.3      552,534     35.3      484,982     30.1
                                      

Non-current assets :

              

Tangible fixed assets :

              

Buildings

     35,770          30,993          34,921    

Structures

     2,197          1,785          2,091    

Machinery and equipment

     47,358          43,658          44,896    

Vehicles

     26          23          21    

Tools, furniture and fixtures

     7,679          7,971          8,139    

Land

     33,381          33,670          33,372    

Construction in progress

     947          2,153          900    
                                      

Total tangible fixed assets

     127,358     8.6      120,253     7.7      124,340     7.7
                                      

Intangible assets :

              

Patent rights and others

     13,365          7,091          10,431    
                                      

Total intangible assets

     13,365     0.9      7,091     0.5      10,431     0.6
                                      

Investments and other assets :

              

Investments in securities

     577,884          544,719          648,538    

Investments in subsidiaries and affiliates

     262,627          260,775          260,775    

Investments in subsidiaries and affiliates other than equity securities

     27,054          26,685          26,685    

Long-term loans

     22,659          19,577          20,633    

Long-term prepaid expenses

     3,051          2,240          2,458    

Long-term deposits

     34,000          28,000          31,000    

Security deposits

     1,880          1,808          1,823    

Other investments

     571          473          527    

Allowance for doubtful accounts

     (354 )        (246 )        (301 )  
                                      

Total investments and other assets

     929,372     63.2      884,031     56.5      992,138     61.6
                                      

Total non-current assets

     1,070,095     72.7      1,011,375     64.7      1,126,909     69.9
                                      

Total assets

   ¥ 1,471,385     100.0    ¥ 1,563,909     100.0    ¥ 1,611,891     100.0
                                      

 

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Table of Contents
     Yen in millions  
     September 30,     March 31,  
     2006     2007     2007  
     Amount     %     Amount     %     Amount     %  

Current liabilities :

            

Trade accounts payable

   ¥ 56,667       ¥ 49,667       ¥ 55,561    

Other payables

     20,763         21,718         21,774    

Accrued expenses

     8,014         8,364         8,356    

Income taxes payable

     13,052         9,280         12,550    

Deposits received

     2,738         2,046         1,916    

Accrued bonuses

     10,447         11,480         11,152    

Accrued bonuses for directors

     34         73         136    

Warranty reserves

     4,596         5,279         5,045    

Allowance for sales returns

     143         131         114    

Other current liabilities

     1,066         330         667    
                                          

Total current liabilities

     117,520     8.0       108,368     6.9       117,271     7.3  
                                          

Non-current liabilities :

            

Long-term accounts payable

     3,425         1,260         2,953    

Deferred income taxes

     142,667         164,405         191,441    

Accrued pension and severance costs