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Kyocera 6-K 2007

Documents found in this filing:

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

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Report of Foreign Private Issuer

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

the Securities Exchange Act of 1934

For the month of October 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/ AKIHIKO TOYOTANI

Akihiko Toyotani
General Manager of
Finance Division

Date: October 30, 2007


Table of Contents

Information furnished on this form :

EXHIBITS

 

Exhibit

Number

    
1.    Consolidated and Non-Consolidated Financial Results for the Six Months Ended September 30, 2007
2.    Notice regarding Revision of Amounts of Interim Dividend and Annual Total Dividend for the Fiscal Period Ending March 31, 2008 (54th Fiscal Period)


Table of Contents

Consolidated Results of Kyocera Corporation and its Subsidiaries

for the Six Months Ended September 30, 2007

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

Scheduled submission date for the Semiannual Report : December 12, 2007

Payment date of interim dividends : December 5, 2007

1. Results for the six months ended September 30, 2007 :

(1) Consolidated results of operations :

 

     Japanese yen
     Six months ended September 30,     Year ended March 31,
     2006     2007     2007

Net sales

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

% change from the previous period

     13.5 %     3.4 %     —  

Profit from operations

     63,128 million       67,823 million       135,102 million

% change from the previous period

     87.0 %     7.4 %     —  

Income from continuing operations before income taxes and minority interests

     72,385 million       81,480 million       156,540 million

% change from the previous period

     63.3 %     12.6 %     —  

Net income

     53,493 million       50,620 million       106,504 million

% change from the previous period

     120.9 %     (5.4 )%     —  

Earnings per share :

      

Basic

     ¥284.64       ¥267.66       ¥ 566.03

Diluted

     284.14       267.06       564.79

Note :

Equity in earnings of affiliates and unconsolidated subsidiaries :

        Six months ended September 30, 2007

   ¥ 3,617 million

        Six months ended September 30, 2006

   ¥ 259 million

        Year ended March 31, 2007

   ¥ 2,621 million

(2) Consolidated financial position :

 

     Japanese yen  
     September 30,     March 31,  
     2006     2007     2007  

Total assets

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

Stockholders’ equity

     1,373,567 million       1,530,084 million       1,514,560 million  

Stockholders’ equity to total assets

     70.4 %     72.6 %     71.1 %

Stockholders’ equity per share

     ¥7,306.02       ¥8,077.76       ¥8,028.45  

 

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(3) Consolidated cash flows :

 

     Japanese yen
     Six months ended September 30,    Year ended March 31,
     2006    2007    2007

Cash flows from operating activities

   ¥ 47,923 million    ¥ 79,598 million    ¥ 149,644 million

Cash flows from investing activities

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

Cash flows from financing activities

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

Cash and cash equivalents at end of period

     263,751 million      274,508 million      282,208 million

2. Dividends :

 

     Japanese yen  
    

Year ended March 31,

2007

   Year ending March 31,  
        2008  

Interim dividends per share

   ¥ 50    ¥ 60  

Year-end dividends per share

     60      60 (forecasted)
               

Annual dividends per share

   ¥ 110    ¥ 120 (forecasted)

3. Consolidated financial forecast for the year ending March 31, 2008 :

 

     Japanese yen  
     Year ending March 31, 2008  

Net sales

   ¥ 1,330,000 million  

% change from the previous year

     3.6 %

Profit from operations

   ¥ 151,000 million  

% change from the previous year

     11.8 %

Income from continuing operations before income taxes

   ¥ 166,000 million  

% change from the previous year

     6.0 %

Net income

   ¥ 103,000 million  

% change from the previous year

     (3.3 )%

Note :

Forecast of earnings per share : ¥543.40

Earnings per share amounts is computed based on Statement of Financial Accounting Standards No.128.

Forecast of earnings per share is computed based on the diluted weighted average number of shares outstanding during the six months ended September 30, 2007.

 

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4. Others :

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

 

     Consolidation    Equity method

Increase

   10    0

Decrease

   5    0

(2) Change in accounting policies :

There was a change in the accounting policy due to a new accounting standard.

Please refer to the accompanying “BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS” on page 32.

(3) Number of shares (common stock) :

 

     Six months ended September 30,    Year ending March 31,
     2006    2007    2007

Number of shares issued

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

Number of shares in treasury

   3,304,510    1,889,935    2,660,201

(Reference) Outline of Non-Consolidated Results for Kyocera Corporation

1. Results for the six months ended September 30, 2007

(1) Results of operations :

 

     Japanese yen
     Six months ended September 30,     Year ended March 31,
     2006     2007     2007

Net sales

   ¥ 259,738 million     ¥ 264,117 million     ¥ 531,557 million

% change from the previous period

     17.6 %     1.7 %     —  

Profit from operations

   ¥ 21,284 million     ¥ 20,396 million     ¥ 49,432 million

% change from the previous period

     71.9 %     (4.2 )%     —  

Recurring profit

   ¥ 32,844 million     ¥ 39,374 million     ¥ 73,729 million

% change from the previous period

     22.1 %     19.9 %     —  

Net income

   ¥ 33,655 million     ¥ 27,504 million     ¥ 62,029 million

% change from the previous period

     5.6 %     (18.3 )%     —  

Earnings per share :

      

Basic

     ¥179.08       ¥145.43       ¥329.66

(2) Financial position :

 

     Japanese yen  
     September 30,     March 31,  
     2006     2007     2007  

Total assets

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

Net assets

     1,191,940 million       1,278,089 million       1,286,361 million  

Net assets to total assets

     81.0 %     81.7 %     79.8 %

Net assets per share

     6,339.95       6,747.40       6,818.80  

Stockholders’ equity (Reference)

     1,191,940 million       1,278,089 million       1,286,361 million  

With regard to forecasts set forth above, please refer to the accompanying “Forward Looking Statements” on page 15.

 

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Business Results

<Business Results for the Six Months Ended September 30, 2007>

(1) Economic Situation and Business Environment

Despite a lack of vitality in personal consumption, the Japanese economy expanded moderately during the six months ended September 30, 2007 (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 Corporation and its consolidated subsidiaries (Kyocera Group or 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).

(2) Consolidated Financial Results

Consolidated net sales for the first half amounted to ¥636,560 million, an increase of 3.4% compared with the previous first half, reflecting an increase in revenue in the Information Equipment Group and sales growth in the Components Business.

Consolidated profit from operations increased by 7.4% to ¥67,823 million and income from continuing operations before income taxes and minority interests increased by 12.6% to ¥81,480 million 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, being triggered by the tax revision in Japan. 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.

 

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Consolidated net income during the first half decreased by 5.4% to ¥50,620 million 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.

 

     (Yen in millions, except for per share amounts and exchange rate)  
     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 and minority interests

   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 US$ exchange rate

   115    —      119    —      —    

Average Euro exchange rate

   146    —      162    —      —    

(3) Implemented Management Measures and Significant Decisions during the First Half

In September 2007, AVX Corporation (AVX), a U.S. subsidiary, acquired American Technical Ceramics Corp., a U.S.-based manufacturer of electronic components, as a wholly-owned subsidiary, with the goal of strengthening its business in the area of advanced components business such as high frequency ceramic capacitors. This acquisition will enable AVX to expand its product line-up and its sales networks for high-value-added products.

 

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(4) Consolidated Financial Results by Reporting Segment

Components Business :

Sales in the Components Business increased by 4.6% compared with the previous first half to ¥333,136 million, while operating profit decreased by 1.7% to ¥48,941 million. The operating profit ratio was 14.7%.

Consolidated results by reporting segment in the Components Business are as follows.

1) Fine Ceramic Parts Group

This reporting segment includes fine ceramic components and automotive components.

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, however, due to an increase in expenses such as depreciation costs.

2) Semiconductor Parts Group

This reporting segment includes ceramic packages and organic packages.

Despite a moderate increase in demand in the three months ended September 30, 2007 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

This reporting segment includes solar power generating systems for residential and industrial use, cutting tools, dental and medical implants, and jewelry and applied ceramic related products.

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

This reporting segment includes electronic components such as various types of capacitors, crystal related products and connectors, and thin-film products such as thermal printheads and liquid crystal displays.

Performance in this reporting segment during the first half was solid in the electronic components business. Besides an increase in sales at AVX, 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.

Equipment Business :

Sales in the Equipment Business for the first half increased by 3.7% to ¥250,816 million, and operating profit increased by 32.1% to ¥19,116 million compared with the previous first half. The operating profit ratio was 7.6%.

Consolidated results by reporting segment in the Equipment Business are as follows.

1) Telecommunications Equipment Group

This reporting segment includes mobile phone handsets as well as PHS base stations and handsets.

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.

2) Information Equipment Group

This reporting segment includes ECOSYS brand printers, copiers and digital MFPs.

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.

 

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Others :

This reporting segment includes various information and communications technology services, materials for electronic components and optical components.

Sales in this reporting segment for the first half decreased by 2.1% to ¥65,277 million compared with the previous first half due to a decline in sales of optical related business. Operating profit increased substantially by 39.1% to ¥3,964 million, however, due to improved profitability at Kyocera Communication Systems Co., Ltd. and reduced loss in the optical related business. The operating profit ratio was 6.1%.

 

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Consolidated Sales by Reporting Segment

 

     (Yen in millions)  
     Six months ended September 30,    

Increase
(Decrease)
%

 
     2006     2007    
     Amount     % of
net sales
    Amount     % of
net sales
   

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  
                              

Consolidated Operating Profit by Reporting Segment

 

     (Yen in millions)  
     Six months ended September 30,    Increae
(Decrease)
%
 
     2006    2007   
     Amount     % of
segment
sales
   Amount     % of
segment
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 and minority interests

   72,385     11.8    81,480     12.8    12.6  
                            

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 presented. Also, operating profit of “Others” in the previous first half decreased by ¥899 million compared with those previously announced.

 

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(5) Consolidated Sales by Geographic Area

 

     (Yen in millions)  
     Six months ended September 30,   

Increase

(Decrease)
(%)

 
     2006    2007   
     Amount    % of
net sales
   Amount    % of
net sales
  

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.

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.

 

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(6) Capital Expenditures and Depreciation

 

     (Yen in millions)  
     Six months ended September 30,   

Increase
(Decrease)

(%)

 
     2006    2007   
     Amount   

% of

net sales

   Amount   

% of

net sales

  

Capital expenditures

   37,239    6.1    32,592    5.1    (12.5 )

Depreciation

   33,682    5.5    37,291    5.9    10.7  

During the first half, Kyocera made capital expenditures particularly to increase production capacity in the solar energy business in the Applied Ceramic Products Group and the Electronic Device Group in response to burgeoning demand. Capital expenditures were made for constructing new logistics center in the Information Equipment Group and the Semiconductor Parts Group and so on. Also, capital expenditures were made to enhance production capacity in the previous first half. As a result, overall capital expenditures during the first half decreased compared with the previous first half. Depreciation costs increased due to a change in accounting estimates for depreciation method.

 

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<Forecast for the year ending March 31, 2008>

With regard to the economy and market environment for the six months ending March 31, 2008 (the second half), despite stagnation in the U.S. economy due to the negative impact on the issues related to housing loans for consumers with low creditworthiness is concerned, the digital consumer equipment market is expected to be remained healthy. Kyocera therefore projects steady demand for these equipment and components used in these products. Amid such a market environment, Kyocera will strive to continue its first half efforts to expand profitability and achieve the financial forecasts for the year ending March 31, 2008 (fiscal 2008) through vigorous product introductions in the second half.

There is no change in the overall consolidated financial forecast for fiscal 2008, which were announced on April 26, 2007.

Consolidated Forecasts for fiscal 2008 (Announced on April 26, 2007)

 

     (Yen in millions, except for per share amounts and exchange rates)  
     Fiscal 2007 Results    Fiscal 2008 Forecasts   

Increase
(Decrease)

(%)

 
     Amount   

% of

net sales

   Amount   

% of

net sales

  

Net sales

   1,283,897    100.0    1,330,000    100.0    3.6  

Profit from operations

   135,102    10.5    151,000    11.4    11.8  

Income from continuing operations before income taxes and minority interests

   156,540    12.2    166,000    12.5    6.0  

Net income

   106,504    8.3    103,000    7.7    (3.3 )

Diluted earnings per share

   564.79    —      543.40    —      (3.8 )

Average US$ exchange rate

   117    —      110    —      —    

Average Euro exchange rate

   150    —      150    —      —    

In the meantime, there is a change in a forecast of capital expenditure for fiscal 2008. The forecast of capital expenditures is revised to ¥81,000 million from the previous forecast (Announced on April 26, 2007) of ¥86,000 million.

 

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The following revisions have been made to financial forecasts by reporting segment for fiscal 2008 in light of factors such as results in each business through the end of the first half, the projected market environment and the impact of depreciation costs in the second half.

Consolidated Sales by Reporting Segment (Announced on October 30, 2007)

 

     (Yen in millions)  
           Forecasts for Fiscal 2008 announced on    

Increase
(Decrease)
to the
Fiscal 2007
Results

(%)

 
     Fiscal 2007 Results     April 26, 2007     October 30, 2007    
     Amount    

% of

net sales

    Amount    

% of

net sales

    Amount    

% of

net sales

   

Fine Ceramic Parts Group

   81,326     6.3     85,000     6.4     85,000     6.4     4.5  

Semiconductor Parts Group

   152,292     11.9     157,000     11.8     154,000     11.6     1.1  

Applied Ceramic Products Group

   131,103     10.2     144,000     10.8     152,000     11.4     15.9  

Electronic Device Group

   286,156     22.3     290,000     21.8     304,000     22.9     6.2  
                                          

Total Components Business

   650,877     50.7     676,000     50.8     695,000     52.3     6.8  

Telecommunications Equipment Group

   251,183     19.6     265,000     19.9     228,000     17.1     (9.2 )

Information Equipment Group

   268,781     20.9     274,000     20.6     284,000     21.4     5.7  
                                          

Total Equipment Business

   519,964     40.5     539,000     40.5     512,000     38.5     (1.5 )

Others

   137,235     10.7     140,000     10.5     142,000     10.7     3.5  

Adjustments and eliminations

   (24,179 )   (1.9 )   (25,000 )   (1.8 )   (19,000 )   (1.5 )   —    
                                          

Net sales

   1,283,897     100.0     1,330,000     100.0     1,330,000     100.0     3.6  
                                          

Note 3. From April 1, 2007, the “Optical Equipment Group,” previously a separate reporting segment, has been reclassified into “Others.” Accordingly, net sales for the year ended March 31, 2007 (fiscal 2007) have been retroactively reclassified.

Note 4. For the reasons Note 3. above, net sales of “Others” in fiscal 2007 increased by ¥11,579 million and “Adjustments and eliminations” decreased by ¥(125) million compared with those previously announced.

 

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Consolidated Operating Profit by Reporting Segment

 

     (Yen in millions)  
          Forecast for Fiscal 2008 Forecasts announced on   

Increase
(Decrease)
to the
Fiscal 2007
Results

(%)

 
     Fiscal 2007 Results    April 26, 2007    October 30, 2007   
     Amount   

% of

segment

sales

   Amount   

% of

segment

sales

   Amount   

% of

segment

sales

  

Fine Ceramic Parts Group

   15,677    19.3    16,000    18.8    13,500    15.9    (13.9 )

Semiconductor Parts Group

   22,210    14.6    24,000    15.3    21,000    13.6    (5.4 )

Applied Ceramic Products Group

   22,334    17.0    27,000    18.8    29,000    19.1    29.8  

Electronic Device Group

   44,487    15.5    46,000    15.9    44,500    14.6    0.0  
                                    

Total Components Business

   104,708    16.1    113,000    16.7    108,000    15.5    3.1  

Telecommunications Equipment Group

   291    0.1    6,000    2.3    2,000    0.9    587.3  

Information Equipment Group

   33,970    12.6    35,000    12.8    39,000    13.7    14.8  
                                    

Total Equipment Business

   34,261    6.6    41,000    7.6    41,000    8.0    19.7  

Others

   6,881    5.0    7,000    5.0    6,000    4.2    (12.8 )
                                    

Operating profit

   145,850    11.4    161,000    12.1    155,000    11.7    6.3  

Corporate and others

   10,690    —      5,000    —      11,000    —      2.9  
                                    

Income from continuing operations before income taxes and minority interests

   156,540    12.2    166,000    12.5    166,000    12.5    6.0  
                                    

Note 5. For the reasons set forth Note 3. on the previous page, operating profit of “Others” in fiscal 2007 decreased by ¥1,895 million compared with those previously announced.

Note 6. The average U.S. dollar and Euro exchange rates set forth above are the forecast average from October 1, 2007 to March 31, 2008.

Note 7. Forecast of diluted earnings per share for fiscal 2008 set forth above is computed based on the diluted weighted average number of shares outstanding during the first half.

 

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Table of Contents

Note 8. Forward-Looking Statements

Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to: general economic conditions in our markets, which are primarily Japan, North America, Europe, and Asia, particularly including China; unexpected changes in economic, political and legal conditions in China; our ability to develop, launch and produce innovative products, including meeting quality and delivery standards, and our ability to otherwise meet the advancing technical requirements of our customers, particularly in the highly competitive markets for ceramics, semiconductor parts and electronic components; manufacturing delays or defects resulting from outsourcing or internal manufacturing processes which may adversely affect our production yields and operating results; factors that may affect our exports, including a strong yen, political and economic instability, difficulties in collection of accounts receivable, decrease in cost competitiveness of our products, increases in shipping and handling costs, difficulty in staffing and managing international operations, and inadequate protection of our intellectual property; changes in exchange rates, particularly between the yen and the U.S. dollar and euro, respectively, in which we make significant sales; inability to secure skilled employees, particularly engineering and technical personnel; insufficient protection of our trade secrets and patents; holding licenses to continue to manufacture and sell certain of its products, the expense of which may adversely affects its results of operations; laws and regulations relating to the taxation, and to manufacturing and trade; events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of diseases; the occurrence of natural disasters, such as earthquakes, in locations where our manufacturing and other key business facilities are located; and fluctuations in the value of, and impairment losses on, securities and other assets held by us, and changes in accounting principles. Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.

 

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Table of Contents

<Cash flows>

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

 

     (Yen in millions)  
     Six Months Ended September 30,  
     2006     2007  

Cash flow from operating activities

   47,923     79,598  

Cash flow from investing activities

   (74,084 )   (77,200 )

Cash flow from financing activities

   (13,079 )   (8,481 )

Effect of exchange rate changes on cash and cash equivalent

   2,182     (1,617 )

Net decrease in cash and cash equivalent

   (37,058 )   (7,700 )

Cash and cash equivalent at beginning of period

   300,809     282,208  

Cash and cash equivalent at end of period

   263,751     274,508  

(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 increases in cash outflows by acquisitions of business and acquisitions of time deposits that exceeded an increase in cash inflow provided by sales and maturities of 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.

<Cash Flow Indexes>

 

     Years ended March 31,    

Six months

ended

September 30,

2007

 
   2004     2005     2006     2007    

Stockholders’ equity to total assets

   64.1 %   67.3 %   66.7 %   71.1 %   72.6 %

Market capitalization to total assets

   91.3 %   82.2 %   101.3 %   98.4 %   96.8 %

Interest bearing debts per operating cash flows (years)

   3.2     1.0     0.8     0.2     0.2  

Operating cash flows per interest paid (ratio)

   20.6     62.4     88.5     93.4     108.0  

All indexes are computed on a consolidated basis.

Interest bearing debts represent all debts with interest expense included in consolidated balance sheets.

 

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Table of Contents

<Basic Profit Distribution Policy and Dividends for fiscal 2008>

(1) Basic Profit Distribution Policy

Kyocera believes that the best way to increase corporate value and meet shareholders’ expectations is to improve consolidated performance into the future. Kyocera therefore strongly takes into consideration the linkage between dividend amounts and consolidated performance and has implemented a dividend policy aiming for a consolidated dividend ratio of approximately 20% to 25%.

In addition, Kyocera determines dividend amounts based on an overall assessment, taking into account various factors that include the amount of capital expenditures necessary for medium to long-term growth.

In order to ensure a sound financial basis, Kyocera also sets aside other general reserve in preparation for the creation of new businesses, cultivation of new markets, development of new technologies and acquisition of outside management resources needed to achieve sustainable corporate growth.

(2) Dividends

Based on performance in the first half and pursuant to the aforementioned policy, Kyocera will distribute an interim dividend of 60 yen per share, an increase of 10 yen compared with the previous first half. Kyocera plans to distribute a total annual dividend of 120 yen per share, an increase of 10 yen over the initial projection of 110 yen per share, announced on April 26, 2007.

<Business Risks>

There have been no significant changes in the information relating to business risk disclosed in the Form 20-F for the year ended March 31, 2007, and accordingly details thereof have been omitted here.

The Form 20-F is available at the URLs below:

http://www.kyocera.co.jp/ir/pdf/fy07.pdf

 

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Table of Contents

KYOCERA GROUP

Kyocera group consists of Kyocera Corporation, 174 subsidiaries and 10 affiliates.

(Chart of the group companies)

LOGO

 

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Table of Contents

Management Policies

(1) Basic management policy

(2) Target ratio of income before income taxes

(3) Medium term management strategy

(4) Challenges

There have been no significant changes in the information relating to key management items disclosed in the financial results for fiscal 2007 (announced on April 26, 2007), and accordingly details thereof have been omitted here.

The financial results are available at the URLs below.

Kyocera homepage:

http://global.kyocera.com/ir/pdf/tanshin070426e.pdf

Tokyo Stock Exchange homepage (listed company information search page):

http://www.tse.or.jp/tseHpFront/HPLCDS0101E.do?method=init&callJorEFlg=1

 

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Table of Contents

CONSOLIDATED BALANCE SHEETS

 

     Yen in millions
     September 30,    March31,
     2006    2007    2007
     Amount     %    Amount     %    Amount     %

Current assets :

              

Cash and cash equivalents

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

Short-term investments

     128,747          287,650          213,495    

Trade notes receivable

     25,181          21,567          25,033    

Trade accounts receivable

     228,198          232,381          236,380    

Less allowances for doubtful accounts and sales returns

     (7,384 )        (5,914 )        (5,960 )  

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
                                      

Non-current assets :

              

Investments and advances :

              

Investments in and advances to affiliates and unconsolidated subsidiaries

     7,499          14,606          10,093    

Securities and other investments

     622,344          579,062          690,568    
                                      

Total investments and advances

     629,843     32.3      593,668     28.2      700,661     32.9

Property, plant and equipment, at cost :

              

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    

Less accumulated depreciation

     (752,878 )        (800,535 )        (774,896 )  
                                      

Total property, plant and equipment, at cost

     287,269     14.7      280,296     13.3      280,906     13.2

Goodwill

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

Intangible assets

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

Other assets

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

Total non-current assets

     1,000,570     51.3      994,891     47.2      1,083,973     50.9
                                      

Total assets

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

 

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Table of Contents
     Yen in millions
     September 30,   

March 31,

     2006    2007    2007
     Amount     %    Amount     %    Amount     %

Current liabilities :

              

Short-term borrowings

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

Current portion of long-term debt

     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
                                      

Non-current liabilities :

              

Long-term debt

     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 consolidated subsidiaries

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

Stockholders’ equity :

              

Common stock

     115,703          115,703          115,703    

Additional paid-in capital

     162,080          162,735          162,363    

Retained earnings

     1,011,682          1,098,562          1,055,293    

Accumulated other comprehensive income

     111,211          168,652          203,056    

Treasury stock, at cost

     (27,109 )        (15,568 )        (21,855 )  
                                      

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
                                      

 

Note : Accumulated other comprehensive income is as follows.

 

     Yen in millions
     September 30,   

March 31,

2007

     2006    2007   

Net unrealized gains on securities

   ¥ 114,808        ¥ 153,081        ¥ 184,670    

Net unrealized (losses) gains on derivative financial instruments

   ¥ (58 )      ¥ 68        ¥ 63    

Minimum pension liability adjustments

   ¥ (2,057 )        —            —      

Pension liability adjustments

     —          ¥ 14,664        ¥ 15,419    

Foreign currency translation adjustments

   ¥ (1,482 )      ¥ 839        ¥ 2,904    

 

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Table of Contents

CONSOLIDATED STATEMENTS OF INCOME

 

    Yen in millions, except for per share amounts  
    Six months ended September 30,    

Increase

(Decrease)

%

   

Year ended March 31,

 
    2006     2007       2007  
    Amount     %     Amount     %       Amount     %  

Net sales

  ¥ 615,390     100.0     ¥ 636,560     100.0     3.4     ¥ 1,283,897     100.0  

Cost of sales

    429,681     69.8       441,327     69.3     2.7       900,470     70.1  
                                               

Gross profit

    185,709     30.2       195,233     30.7     5.1       383,427     29.9  

Selling, general and administrative expenses

    122,581     19.9       127,410     20.0     3.9       248,325     19.4  
                                               

Profit from operations

    63,128     10.3       67,823     10.7     7.4       135,102     10.5  

Other income (expenses) :

             

Interest and dividend income

    6,790     1.1       9,742     1.5     43.5       15,472     1.2  

Interest expense

    (782 )   (0.1 )     (859 )   (0.1 )   —         (1,647 )   (0.1 )

Foreign currency transaction gains (losses), net

    273     0.1       412     0.0     50.9       (65 )   (0.0 )

Equity in earnings of affiliates and unconsolidated subsidiaries

    259     0.0       3,617     0.6     —         2,621     0.2  

Gains on sale of securities, net

    3,252     0.5       228     0.0     (93.0 )     3,819     0.3  

Other, net

    (535 )   (0.1 )     517     0.1     —         1,238     0.1  
                                               

Total other income

    9,257     1.5       13,657     2.1     47.5       21,438     1.7  
                                               

Income from continuing operations before income taxes and minority interests

    72,385     11.8       81,480     12.8     12.6       156,540     12.2  

Income taxes

    20,954     3.4       27,164     4.3     29.6       48,887     3.8  
                                               

Income from continuing operations before minority interests

    51,431     8.4       54,316     8.5     5.6       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     4.8       101,329     7.9  

Income from discontinued operations

    5,175     0.8       —       —       —         5,175     0.4  
                                               

Net income

  ¥ 53,493     8.7     ¥ 50,620     8.0     (5.4 )   ¥ 106,504     8.3  
                                               

Earnings per share:

             

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    

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    

 

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Table of Contents

Notes :

 

1.       Kyocera applies the Statement of Financial Accounting Standards Board (SFAS) No.130, ”Financial Reporting of Comprehensive Income.” Based on this standard, comprehensive income for the six months ended September 30, 2006 and 2007 were an increase of ¥91,757 million and an increase of ¥16,216 million, respectively.
2.   Earnings per share amounts were computed based on SFAS No.128, “Earnings per Share.” Under SFAS No.128, basic earnings per share was computed based on the weighted average number of shares of common stock outstanding during each period and diluted earnings per share assumed the dilution that could occur if securities or other contracts to issue common stock were converted into common stock, exercised or resulted in the issuance of common stock.
3.   Against the Correction Disposition with regard to transfer pricing taxation, which was rendered by the Osaka Regional Taxation Bureau in March 2005, Kyocera filed the Request for Reinvestigation in May 2005. Kyocera then received the Decision on the Request for Reinvestigation in September 2006. Based on the Decision, ¥(4,356) million is included in income taxes shown above, as refunds for the previous years.
4.   Kyocera sold its entire shares in Kyocera Leasing Co., Ltd., a subsidiary engaged in financial services, as a result, business results and profit on sales, ¥5,175 million, for the six months ended September 30, 2006 and the year ended March 31, 2007, have been recorded as income from discontinued operations in conformity with Statement of Financial Accounting Standard (SFAS) No.144, “Accounting for the impairment or disposal of Long-Lived Assets.”

 

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Table of Contents

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

 

     Yen in millions and shares in thousands  

(Number of shares of common stock)

   Common
stock
  

Additional
paid-in

capital

    Retained
earnings
   

Accumulated

other
comprehensive
income

    Treasury
stock
    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 SAFS 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 )  

Cumulative effect of applying FIN 48 to opening balance (Note)

          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
    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 )  
                                         

Note:

FIN 48 : Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109”

Please refer to page 32 “(6) Accounting change.”

 

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Table of Contents

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  

Write-down of inventories

     3,829       3,043       11,328  

Gains on sales of securities, net

     (3,252 )     (228 )     (3,819 )

Minority interests

     3,113       3,696       6,324  

Gains on sales of investment in subsidiaries

     (8,228 )     —         (8,252 )

(Increase) decrease in receivables

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

(Increase) decrease in inventories

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

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  

Other, net

     (10,924 )     (9,378 )     (13,089 )
                        

Net cash provided by operating activities

     47,923       79,598       149,644  
                        

Cash flows from investing activities :

      

Payments for purchases of securities

     (31,521 )     (16,194 )     (71,449 )

Sales and maturities of securities

     30,712       97,499       127,119  

Acquisitions of business, net of cash acquired

     (756 )     (26,771 )     (756 )

Proceeds from sales of investment in subsidiaries

     24,553       —         24,602  

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

     (35,509 )     (32,520 )     (72,966 )

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       (2,088 )     (7,853 )
                        

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  
                        

 

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Table of Contents

SUPPLEMENTAL CASH FLOW INFORMATION

 

     Yen in millions  
     Six months ended
September 30,
   

Year ended
March 31,

2007

 
     2006     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  
                        

Note:

 

AVX recorded the fair values of the assets and liabilities of American Technical Ceramics Corp. as of the date of the acquisition under the purchase method of accounting, however, because of the proximity of this acquisition to period end, the fair values are based on preliminary valuations and are subject to adjustment as additional information is obtained.

 

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Table of Contents

SEGMENT INFORMATION

1. Reporting segments :

 

     Yen in millions  
     Six months ended September 30,    

Increase

(Dearease)

   

Year ended March 31,

2007

 
     2006     2007      
     Amount     Amount     %     Amount  

Net sales :

        

Fine Ceramic Parts Group

   ¥ 38,564     ¥ 41,286     7.1     ¥ 81,326  

Semiconductor Parts Group

     75,843       73,545     (3.0 )     152,292  

Applied Ceramic Products Group

     64,132       69,743     8.7       131,103  

Electronic Device Group

     139,984       148,562     6.1       286,156  

Telecommunications Equipment Group

     117,181       113,907     (2.8 )     251,183  

Information Equipment Group

     124,619       136,909     9.9       268,781  

Others

     66,660       65,277     (2.1 )     137,235  

Adjustments and eliminations

     (11,593 )     (12,669 )   —         (24,179 )
                              
   ¥ 615,390     ¥ 636,560     3.4     ¥ 1,283,897  
                              

Operating profit :

        

Fine Ceramic Parts Group

   ¥ 7,373     ¥ 6,195     (16.0 )   ¥ 15,677  

Semiconductor Parts Group

     11,887       8,367     (29.6 )     22,210  

Applied Ceramic Products Group

     8,966       13,434     49.8       22,334  

Electronic Device Group

     21,573       20,945     (2.9 )     44,487  

Telecommunications Equipment Group

     (1,016 )     (103 )   —         291  

Information Equipment Group

     15,491       19,219     24.1       33,970  

Others

     2,849       3,964     39.1       6,881  
                              
     67,123       72,021     7.3       145,850  

Corporate

     5,152       5,893     14.4       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     12.6     ¥ 156,540  
                              

Depreciation and amortization :

        

Fine Ceramic Parts Group

   ¥ 1,943     ¥ 3,627     86.7     ¥ 4,500  

Semiconductor Parts Group

     5,853       7,500     28.1       12,533  

Applied Ceramic Products Group

     3,791       4,530     19.5       8,097  

Electronic Device Group

     9,598       11,608     20.9       21,537  

Telecommunications Equipment Group

     3,201       4,432     38.5       9,075  

Information Equipment Group

     8,239       5,751     (30.2 )     16,326  

Others

     4,584       3,528     (23.0 )     7,419  

Corporate

     1,507       1,960     30.1       2,575  
                              

Total

   ¥ 38,716     ¥ 42,936     10.9     ¥ 82,062  
                              

Capital expenditures :

        

Fine Ceramic Parts Group

   ¥ 2,900     ¥ 3,100     6.9     ¥ 7,447  

Semiconductor Parts Group

     5,721       3,978     (30.5 )     11,432  

Applied Ceramic Products Group

     2,510       3,654     45.6       7,330  

Electronic Device Group

     10,893       11,246     3.2       19,812  

Telecommunications Equipment Group

     1,745       1,092     (37.4 )     3,800  

Information Equipment Group

     8,061       5,467     (32.2 )     11,962  

Others

     4,329       1,549     (64.2 )     5,774  

Corporate

     1,080       2,506     132.0       2,339  
                              

Total

   ¥ 37,239     ¥ 32,592     (12.5 )   ¥ 69,896  
                              

 

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Table of Contents

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

 

     Yen in millions  
     Six months ended September 30,    

Increase

(Decrease)

   

Year ended March 31,

2007

 
     2006     2007      
     Amount     Amount     %     Amount  

Net sales :

        

Japan

   ¥ 250,962     ¥ 255,785     1.9     ¥ 523,869  

Intra-group sales and transfer between geographic areas

     199,385       194,451     (2.5 )     388,879  
                              
     450,347       450,236     (0.0 )     912,748  
                              

United States of America

     155,355       146,131     (5.9 )     319,033  

Intra-group sales and transfer between geographic areas

     17,783       15,872     (10.7 )     37,357  
                              
     173,138       162,003     (6.4 )     356,390  
                              

Asia

     95,265       104,180     9.4       195,319  

Intra-group sales and transfer between geographic areas

     78,505       90,166     14.9       152,219  
                              
     173,770       194,346     11.8       347,538  
                              

Europe

     101,494       118,012     16.3       219,695  

Intra-group sales and transfer between geographic areas

     19,784       20,947     5.9       40,040  
                              
     121,278       138,959     14.6       259,735  
                              

Others

     12,314       12,452     1.1       25,981  

Intra-group sales and transfer between geographic areas

     5,534       8,050     45.5       11,432  
                              
     17,848       20,502     14.9       37,413  
                              

Adjustments and eliminations

     (320,991 )     (329,486 )   —         (629,927 )
                              
   ¥ 615,390     ¥ 636,560     3.4     ¥ 1,283,897  
                              

Operating Profit :

        

Japan

   ¥ 49,773     ¥ 46,493     (6.6 )   ¥ 96,804  

United States of America

     9,947       4,144     (58.3 )     23,521  

Asia

     11,068       12,950     17.0       19,165  

Europe

     3,825       5,565     45.5       10,218  

Others

     852       1,777     108.6       1,086  
                              
     75,465       70,929     (6.0 )     150,794  

Adjustments and eliminations

     (8,491 )     1,041     —         (5,444 )
                              
     66,974       71,970     7.5       145,350  

Corporate

     5,152       5,893     14.4       8,569  

Equity in earnings of affiliates and unconsolidated subsidiaries

     259       3,617     —         2,621  
                              

Income from continuing operations before income taxes and minority interest

   ¥ 72,385     ¥ 81,480     12.6     ¥ 156,540  
                              

 

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Table of Contents

3. Geographic segments (Sales by region) :

 

    

Yen in millions

     Six months ended September 30,   

Increase

(Decrease)

    Year ended March 31,
     2006    2007      2007
     Amount     %    Amount     %    Amount     %     Amount     %

Japan

   ¥ 236,735     38.5    ¥ 241,811     38.0    ¥ 5,076     2.1     ¥ 496,959     38.7

United States of America

     130,265     21.2      126,703     19.9      (3,562 )   (2.7 )     274,361     21.4

Asia

     107,111     17.4      118,594     18.6      11,483     10.7       216,663     16.9

Europe

     97,464     15.8      112,606     17.7      15,142     15.5       210,726     16.4

Others

     43,815     7.1      36,846     5.8      (6,969 )   (15.9 )     85,188     6.6
                                                    

Net sales

   ¥ 615,390     100.0    ¥ 636,560     100.0    ¥ 21,170     3.4     ¥ 1,283,897     100.0
                                                    

Sales outside Japan

   ¥ 378,655        ¥ 394,749        ¥ 16,094     4.3     ¥ 786,938    

Sales outside Japan to net sales

     61.5 %        62.0 %            61.3 %  

 

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Table of Contents

INVESTMENTS IN DEBT AND EQUITY SECURITIES

Investments in debt and equity securities as of September 30, 2007, March 31, 2007 and September 30, 2006, 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, 2007    March 31, 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

   ¥ 3,470    ¥ 3,617    ¥ 168    ¥ 21    ¥ 3,842    ¥ 4,033    ¥ 194    ¥ 3

Other debt securities

     736      757      21      —        74,563      74,574      71      60

Equity securities

     274,645      533,497      259,316      464      272,653      585,274      312,724      103
                                                       

Total available-for-sale securities

     278,851      537,871      259,505      485      351,058      663,881      312,989      166
                                                       

Held-to-maturity securities :

                       

Other debt securities

     24,038      24,055      17      —        33,512      33,447      —        65
                                                       

Total held-to-maturity securities

     24,038      24,055      17      —        33,512      33,447      —        65
                                                       

Total investments in debt and equity securities

   ¥ 302,889    ¥ 561,926    ¥ 259,522    ¥ 485    ¥ 384,570    ¥ 697,328    ¥ 312,989    ¥ 231
                                                       

 

     September 30, 2006
     Cost*    Aggregate
Fair Value
   Gross
Unrealized
Gains
   Gross
Unrealized
Losses

Available-for-sale securities :

           

Corporate debt securities

   ¥ 3,008    ¥ 3,143    ¥ 150    ¥ 15

Other debt securities

     137,668      137,960      316      24

Equity securities

     272,054      466,156      194,335      233
                           

Total available-for-sale securities

     412,730      607,259      194,801      272
                           

Held-to-maturity securities :

           

Other debt securities

     27,726      27,574      —        152
                           

Total held-to-maturity securities

     27,726      27,574      —        152
                           

Total investments in debt and equity securities

   ¥ 440,456    ¥ 634,833    ¥ 194,801    ¥ 424
                           

 

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

 

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Table of Contents

EARNINGS PER SHARE

1. Stockholders’ equity per share, basic and diluted earnings per share are as follows:

 

     Japanese yen
     Six months ended September 30,   

Year ended March 31,

     2006    2007    2007

Stockholders’ equity per share

   7,306.02    8,077.76    8,028.45

Basic earnings per share

   284.64    267.66    566.03

Diluted earnings per share

   284.14    267.06    564.79

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

     Yen in millions, 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 (shares in thousands)

   187,932    189,119    188,160

Dilutive effect of stock options (shares in thousands)

   334    429    413

Diluted weighted average number of shares outstanding (shares in thousands)

   188,266    189,548    188,573

 

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Table of Contents

BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

 

1. Scope of consolidation and application of the equity method :

Major consolidated subsidiaries :

AVX CORPORATION

KYOCERA WIRELESS CORP.

KYOCERA MITA CORPORATION

KYOCERA ELCO CORPORATION

Major affiliates accounted for by the equity method :

WILLCOM, INC.

 

2. Changes in scope of consolidation and application of the equity method :

 

    Consolidation      

          (Increase)

   10   

            AMERICAN TECHNICAL CERAMICS CORP. and others

          (Decrease)    5   

            KYOCERA MITA (SCHWEIZ) AG and others

    Equity method      
          (Increase)    None   
          (Decrease)    None   

 

3. Summary of significant accounting policies

Kyocera’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.

 

  (1) Valuation of inventories

Finished goods and work in process are mainly stated at the lower or cost of market, the cost being determined by the average method. All other inventories are mainly stated at the lower or cost of market, the cost being determined by the first-in, first-out method.

 

  (2) Valuation of securities

Kyocera adopts Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities.”

Held-to-maturity securities are recorded at amortized cost.

Available-for-sales securities are recorded at fair value, with unrealized gains and losses excluded from income

and recorded in other comprehensive income, net of taxes.

 

  (3) Depreciation method of property, plant and equipment

Depreciation is computed based mainly on a declining balance method over their estimated useful lives.

 

  (4) Goodwill and other intangible assets

Kyocera adopts Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

 

  (5) Accounting for allowances and accruals

Allowance for doubtful accounts :

Kyocera provides allowance for doubtful accounts based on the past actual ratio of losses on bad debt in addition to the estimation of uncollectible amount based on the analysis of certain individual receivables.

Accrued pension and severance cost :

Kyocera adopts Statement of Financial Accounting Standards No. 87, “Employers’ Accounting for Pensions” and Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB No. 87, 88, 106 and 132(R),” and pension and severance cost is accrued based on the projected benefit obligations and the fair value of plan assets at the balance sheet date. Prior service cost is amortized by the straight-line method over the average remaining service period of employees. Actuarial loss is recognized by amortizing a portion in excess of 10% of the greater of the projected benefit obligations or the market-related value of plan assets by the straight-line method over the average remaining service period of employees.

 

  (6) Accounting change

In June 2006, the Financial Accounting Standard 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 SFAS No. 109, “Accounting for Income Taxes.” FIN 48 also provides guidance on derecognition, classification, interest and penalties, disclosure and transitional measures. Cumulative effect of applying FIN 48, which was effective April 1, 2007, increased the opening balance of retained earnings by ¥3,968 million.

 

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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        ¥ 313,986        ¥ 203,301    

Trade notes receivable

     46,376          33,016          41,423    

Trade accounts receivable

     96,306          109,184          108,685    

Marketable securities

     37,997          —            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

     14,585         10,696         12,705    

Retirement allowances for directors and executive officers

     968         956         1,022    

Other non-current liabilities

     280         135         138    
                                          

Total non-current liabilities

     161,925     11.0       177,452     11.4       208,259     12.9  
                                          

Total liabilities

     279,445     19.0       285,820     18.3       325,530     20.2  
                                          

Net assets

            

Stockholders’ equity :

            

Common stock

     115,703     7.9       115,703     7.4       115,703     7.2  

Capital surplus:

            

Additional paid-in capital

     192,555         192,555         192,555    

Other capital surplus

     —           372         127    

Total capital surplus

     192,555     13.1       192,927     12.3       192,682     12.0  

Retained earnings:

            

Legal reserves

     17,207         17,207         17,207    

Other retained earnings :

            

Reserve for special depreciation

     1,612         751         991    

Reserve for research and development

     1,000         1,000         1,000    

Reserve for dividends

     1,000         1,000         1,000    

Reserve for retirement benefits

     300         300         300    

Reserve for overseas investments

     1,000         1,000         1,000    

General reserve

     603,837         643,837         603,837    

Unappropriated retained earnings

     43,394         39,438         63,012    
                                          

Total retained earnings

     669,350     45.5       704,533     45.1       688,347     42.7  

Treasury stock, at cost

     (27,109 )   (1.9 )     (15,568 )   (1.0 )     (21,855 )   (1.4 )

Total stockholders’ equity

     950,499     64.6       997,595     63.8       974,877     60.5  

Difference of appreciation and conversion

            

Net unrealized gains on other securities

     241,441     16.4       280,494     17.9       311,484     19.3  
                                          

Total net assets

     1,191,940     81.0       1,278,089     81.7       1,286,361     79.8  
                                          

Total liabilities and net assets

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

 

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Table of Contents

STATEMENTS OF INCOME

 

     Yen in millions  
     Six months ended September 30,    

Increase

(Decrease)

%

   

Year ended March 31,

 
     2006     2007       2007  
     Amount     %     Amount     %       Amount     %  

Net sales

   ¥ 259,738     100.0     ¥ 264,117     100.0     1.7     ¥ 531,557     100.0  

Cost of sales

     201,260     77.5       204,420     77.4     1.6       407,121     76.6  
                                                

Gross profit

     58,478     22.5       59,697     22.6     2.1       124,436     23.4  

Selling, general and administrative expenses

     37,194     14.3       39,301     14.9     5.7       75,004     14.1  
                                                

Profit from operations

     21,284     8.2       20,396     7.7     (4.2 )     49,432     9.3  

Non-operating income :

              

Interest and dividend income

     9,955     3.8       15,755     6.0     58.3       25,090     4.7  

Foreign currency transaction gains, net

     622     0.2       617     0.2     (0.8 )     1,021     0.2  

Other non-operating income

     3,003     1.2       4,241     1.6     41.2       6,730     1.3  
                                                

Total non-operating income

     13,580     5.2       20,613     7.8     51.8       32,841     6.2  

Non-operating expenses :

              

Interest expense

     2     0.0       2     0.0