Kyocera 6-K 2007
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
6 Takeda Tobadono-cho, Fushimi-ku,
Kyoto 612-8501, Japan
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(7):
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b); 82-
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
Date: October 30, 2007
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 :
Equity in earnings of affiliates and unconsolidated subsidiaries :
(2) Consolidated financial position :
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(3) Consolidated cash flows :
2. Dividends :
3. Consolidated financial forecast for the year ending March 31, 2008 :
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 :
(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) :
(Reference) Outline of Non-Consolidated Results for Kyocera Corporation
1. Results for the six months ended September 30, 2007
(1) Results of operations :
(2) Financial position :
With regard to forecasts set forth above, please refer to the accompanying Forward Looking Statements on page 15.
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<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.
(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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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
Consolidated Operating Profit by Reporting Segment
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
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.
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.
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.
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
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)
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)
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
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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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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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 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>
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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<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.
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.
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:
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Kyocera group consists of Kyocera Corporation, 174 subsidiaries and 10 affiliates.
(Chart of the group companies)
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(1) Basic management policy
(2) Target ratio of income before income taxes
(3) Medium term management strategy
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.
Tokyo Stock Exchange homepage (listed company information search page):
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CONSOLIDATED BALANCE SHEETS
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CONSOLIDATED STATEMENTS OF INCOME
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
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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CONSOLIDATED STATEMENTS OF CASH FLOWS
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SUPPLEMENTAL CASH FLOW INFORMATION
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1. Reporting segments :
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2. Geographic segments (Sales and Operating profit by geographic area) :
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3. Geographic segments (Sales by region) :
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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 :
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EARNINGS PER SHARE
1. Stockholders equity per share, basic and diluted earnings per share are as follows:
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BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
Major consolidated subsidiaries :
KYOCERA WIRELESS CORP.
KYOCERA MITA CORPORATION
KYOCERA ELCO CORPORATION
Major affiliates accounted for by the equity method :
Kyoceras consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.
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.
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.
Depreciation is computed based mainly on a declining balance method over their estimated useful lives.
Kyocera adopts Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.
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.
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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STATEMENTS OF INCOME