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 April 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
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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.
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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.
Information furnished on this form :
for the Year Ended March 31, 2007
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.
1. Consolidated financial information for the year ended March 31, 2007 :
1. Equity in earnings (losses) of affiliates and unconsolidated subsidiaries :
2. In accordance with Statement of Financial Accounting Standards No.144, Accounting for the Impairment of Disposal of Long-Lived Assets, the consolidated statements of income for the year ended March 31, 2006 have been retrospectively reclassified as for the discontinued operations.
Dividends per share for the year ending March 31, 2008 are forecasted to be 110 yen on annual basis.
Forecast of earnings per share : ¥546.21
Earnings per share amount is computed based on Statement of Financial Accounting Standards No.128.
Forecast of earnings per share is computed based on the diluted average number of shares outstanding during the year ended March 31, 2007.
(1) Changes in scope of consolidation and application of the equity method :
Please refer to the accompanying BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS on page 30.
(2) Change in accounting policies :
There were changes in accounting policies due to new accounting standards.
Please refer to the accompanying BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS on page 30.
(3) Number of shares (common stock) :
(Reference) Outline of Non-Consolidated Results for Kyocera Corporation
1. Results for the year ended March 31, 2007 :
With regard to forecasts set forth above, please refer to the accompanying Forward Looking Statements on page 13.
1. Business Results for the Year Ended March 31, 2007
Despite slow growth in individual consumption, the Japanese economy expanded moderately during the year ended March 31, 2007 (fiscal 2007) due to increasing capital expenditures on the back of rising corporate earnings supported by strong exports. The U.S. economy continued to expand steadily on account of growth in private capital investment, although signs of a decrease in housing investment began to appear in the second half of fiscal 2007. Increasing capital expenditures and exports drove ongoing growth in the European economy. The Chinese economy remained buoyant due to persistent growth in corporate production activities and exports.
In the digital consumer equipment market, which is the principal market for Kyocera Corporation and its consolidated subsidiaries (Kyocera Group or Kyocera), a significant year-on-year increase in production of mobile phone handsets and digital TVs coupled with expanded production of new game consoles led to strong demand for components for these electronic devices.
During fiscal 2007, efforts were made to strengthen Kyoceras Amoeba Management System, which is the unique management control system of Kyocera, in order to revitalize all business segments (operational excellence) within Kyocera Group and to boost ability to achieve goals (executional excellence) across Kyocera Group. Amid a favorable market environment manifesting strong demand for digital consumer equipment throughout fiscal 2007, Kyocera Group worked aggressively to launch new products and to improve productivity with the goal of achieving continuous sales expansion and high profitability. As a result, sales and profits increased in both the Components and the Equipment Businesses compared with the year ended March 31, 2006 (fiscal 2006).
Consolidated net sales for fiscal 2007 amounted to ¥1,283,897 million, an increase of 9.4% compared with fiscal 2006. Sales in each of the four reporting segments in the Components Business increased over 10% as compared with fiscal 2006. Sales also increased in the Equipment Business due to higher sales in the Telecommunications Equipment Group and the Information Equipment Group.
All reporting segments in the Components and the Equipment Businesses recorded increases in profits. Profit from operations increased by 35.5% to ¥135,102 million, and income from continuing operations before income taxes and minority interests increased by 33.5% to ¥156,540 million. Net income increased by 52.8% to ¥106,504 million compared to fiscal 2006 due to tax refunds of ¥4,305 million pursuant to the voidance of a portion of the tax assessment relating to transfer pricing adjustment.
Note 1. Kyocera sold its shares in Kyocera Leasing Co., Ltd., a subsidiary engaged in financing services; as a result, business results and profit on sales for Kyocera Leasing Co., Ltd. for fiscal 2007 have been recorded as income from discontinued operations in conformity with accounting principles generally accepted in the U.S. Figures for fiscal 2006 have been retrospectively reclassified. As a result, reclassified consolidated net sales for fiscal 2006 decreased by ¥7,945 million compared with the result previously announced, reclassified operating profit decreased by ¥3,512 million and income from continuing operations before income taxes for fiscal 2006 decreased by ¥4,151 million, respectively.
1) Effective April 1, 2006, Kyocera shifted to a new management system. The executive officer system undertaken by the officers with the titles of Chief Executive Officer, Chief Financial Officer and Chief Operating Officer was abandoned, and a new system was introduced in which the President, Representative Director and Executive Officers have total responsibility for formulation and execution of group management strategies.
2) In July 2006, Kyocera Kinseki Corporation acquired Hertz Technology Inc. as a wholly-owned subsidiary in order to further enhance its crystal products business. Through this move, the Kyocera Group will gain new technology for tuning-fork crystal units, demand for which is expected to grow for mobile phones and mobile music players, in particular, and thus expand its business as a total crystal device manufacturer. A wide range of products will be developed in the crystal products business going forward. Hertz Technology Inc. was renamed Kyocera Kinseki Hertz Corporation on October 1, 2006.
3) As part of its policy of business selection and concentration, Kyocera transferred its shares of Kyocera Leasing Co., Ltd., a subsidiary engaged in financing, to Diamond Lease Company Limited in August 2006. In line with this, ¥5,175 million was recorded as income from discontinued operations.
4) In the fiscal year ended March 31, 2005, Kyocera Corporation recorded ¥12,748 million as additional taxes accompanying the receipt of a tax assessment notice based on transfer pricing adjustments from the Osaka Regional Taxation Bureau. On May 24, 2005, Kyocera filed a notice of complaint in respect of such assessment with the Bureau. On September 25, 2006, Kyocera Corporation received decision letter from the Bureau that voided a portion of the original assessment. In accordance with this decision, ¥4,305 million of tax refunds, including local taxes, was recognized as tax refunds in fiscal 2007. Kyocera Corporation remains in disagreement with the decision concerning the portion of the original assessment that was not voided, and therefore, on October 23, 2006, Kyocera submitted a written claim for examination with the Osaka Board of Tax Appeals. Furthermore, with the objective of avoiding duplicate taxation within Kyocera Group, a notice stating mutual agreement with the United States was submitted to the National Tax Agency on December 26, 2006.
Sales in the Components Business increased by 11.9% compared with fiscal 2006 due to rising demand for digital consumer equipment such as mobile phone handsets, digital TVs and new game consoles. Operating profit in the Components Business increased by 34.6% as a result of improved profitability achieved through the effects of sales growth and reinforcement of the Amoeba Management System.
Consolidated results by reporting segment in the Components Business are as follows.
1) Fine Ceramic Parts Group
Sales and operating profit in this reporting segment increased compared with fiscal 2006 due primarily to increased demand for ceramic parts for semiconductor fabrication equipment, spurred by strong production activities in the semiconductor industry.
2) Semiconductor Parts Group
Sales and operating profit in this reporting segment increased compared with fiscal 2006 due to rising demand for ceramic packages used in mobile phone handsets and digital cameras.
3) Applied Ceramic Products Group
Sales and operating profit in this reporting segment increased compared with fiscal 2006 due to sales growth of solar energy products, particularly in the European market, combined with increasing sales of medical materials and cutting tools.
4) Electronic Device Group
Both sales and operating profit increased substantially in this reporting segment compared with fiscal 2006. Sales of capacitors, crystal-related components and connectors, etc., expanded due to strong production activity for digital consumer equipment. In addition, AVX Corporation, a U.S. subsidiary, improved its performance.
Sales in the Equipment Business increased by 7.8% compared with fiscal 2006 due to increased sales in the Telecommunications Equipment Group and the Information Equipment Group. Through the positive effect of increased sales in the Information Equipment Group, combined with improved profitability in the Telecommunications Equipment Group and the Optical Equipment Group, operating profit for the Equipment Business increased by 71.0% compared with fiscal 2006.
Consolidated results by reporting segment in the Equipment Business are as follows.
1) Telecommunications Equipment Group
Sales in this reporting segment increased compared with fiscal 2006 due to higher sales of new mobile phone handsets in Japan and overseas. Operating profit improved due to the positive effect of increased sales in the domestic mobile phone handset business and a reduction in loss at Kyocera Wireless Corp., a U.S. subsidiary.
2) Information Equipment Group
Sales in this reporting segment increased compared with fiscal 2006 due to expanded sales of digital multifunctional products and printers overseas resulting from aggressive introduction of new products and enhanced marketing activities. The positive effect of sales growth, as well as the yens depreciation against the Euro and the U.S. dollar, led to an increase in operating profit.
3) Optical Equipment Group
Sales in this reporting segment decreased compared with fiscal 2006 due mainly to the downsizing of the camera business, while operating loss was reduced through decreased expenses for structural reforms.
Sales in this reporting segment increased compared with fiscal 2006 due mainly to growth in the telecommunications engineering business at Kyocera Communication Systems Co., Ltd. Although profit grew at Kyocera Chemical Corporation, operating profit in this reporting segment slightly declined as a result of impairment of goodwill at a Japanese subsidiary.
Consolidated Sales by Reporting Segment
Consolidated Operating Profit by Reporting Segment
Note 2. Commencing in fiscal 2007, net sales and operating profit of the Precision Machine Division of Kyocera Corporation, formerly included within Corporate, have been reclassified into Others. Accordingly, previously reported net sales and operating profit of these reporting segments for fiscal 2006 have been retrospectively reclassified.
Note 3. For the reasons set forth in Note 1 on page 5 and Note 2 above, net sales of Others in fiscal 2006 decreased by ¥7,565 million and Adjustments and eliminations increased by ¥(380) million compared with those previously announced. Also, operating profit of Others in fiscal 2006 decreased by ¥3,577 million, Corporate decreased by ¥573 million and Adjustments and eliminations increased by ¥(1) million compared with those previously announced.
Note 4. For the reasons set forth in Note 1 on page 5, consolidated sales in Japan in fiscal 2006 decreased by ¥7,945 million, compared with those previously announced.
Sales increased compared with fiscal 2006 due to large growth for mobile phone handsets and products in the Fine Ceramic Parts Group.
2) United States of America
Sales increased compared with fiscal 2006 due to growth in mobile phone handsets and products in the Semiconductor Parts Group and the Information Equipment Group.
Sales increased compared with fiscal 2006 due to growth for products in the Electronic Device Group and the Semiconductor Parts Group.
Sales increased largely compared with fiscal 2006 due to growth for the Information Equipment Group coupled with growth in the Electronic Device Group and solar energy products.
Sales increased significantly compared with fiscal 2006 due mainly to growth for mobile phone handsets.
Note 5. For the reasons set forth in Note 1 on page 5, capital expenditures in fiscal 2006 decreased by ¥1,411 million and the depreciation decreased by ¥76 million, compared with those previously announced.
During fiscal 2007, Kyocera made capital expenditures particularly to increase production capacity in the Electronic Device Group. However, overall capital expenditures in fiscal 2007 decreased compared with fiscal 2006, which included large-scale capital expenditures such as the establishment of new production bases in the organic package business and the solar energy business. On the other hand, depreciation increased compared with fiscal 2006 because of the considerable amount of capital expenditures conducted in fiscal 2006.
2. Fiscal 2008 Forecast
Consolidated Forecasts for the Year Ending March 31, 2008 (fiscal 2008)
In fiscal 2008, Kyocera expects production of digital consumer equipment such as mobile phone handsets, PCs, new game consoles and digital TVs to remain at a high level. As a result, continued strong component demand for these equipments is forecast. In this market environment, Kyocera will continue to enhance business performance by launching new products, expanding sales of high-value-added products and cultivating new markets in the Components Business while maximizing all opportunities for business growth. With respect to the Equipment Business, Kyocera aims to increase sales and enhance profitability by expanding its product line with new mobile phone handsets as well as new printers and digital multifunction products, especially color models, to meet market needs. To achieve mid- to long-term growth, Kyocera will make capital expenditures to expand production capacity in the Components Business.
Kyocera aims to continuously reinforce the Amoeba Management System, create new businesses and cultivate new markets through the pursuit of group synergies, and bolster strategic businesses. Through those activities, Kyocera aims to achieve continuous sales expansion and a high profit ratio.
Consolidated sales and operating profit forecasts by reporting segment are as follows.
Consolidated Sales by Reporting Segment
Consolidated Operating Profit by Reporting Segment
Note 6. Commencing in fiscal 2008, the Optical Equipment Group, previously a separate reporting segment, will be reclassified into Others.
Note: Forward-Looking Statements
Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to: general economic conditions in our markets, which are primarily Japan, North America, Europe, and Asia, 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.
3. Financial Position
Cash and cash equivalents at the end of fiscal 2007 decreased by ¥18,601 million to ¥282,208 million compared with the end of fiscal 2006.
Net cash provided by operating activities in fiscal 2007 decreased by ¥21,433 million to ¥149,644 million from the fiscal 2006 of ¥171,077 million. This was due mainly to decreases in cash inflows related to inventories and receivables, although net income increased by ¥36,808 million compared with fiscal 2006.
Net cash used in investing activities in fiscal 2007 decreased by ¥13,764 million to ¥151,703 million from the fiscal 2006 of ¥165,467 million. This reflected that although deposit of time deposits significantly increased, there were decreases in payments for property, plant, equipment and intangible assets and purchase of securities as well as increases in sales or redemption of securities and withdrawal of time deposits.
Net cash used in financing activities in fiscal 2007 decreased by ¥2,644 million to ¥20,645 million from the fiscal 2006 of ¥23,289 million. This was due to an increase in sales of treasury stock and a decrease in payments of long-term debt, which exceeded decreases in proceeds from short-term borrowings and long-term debt.
<Cash Flows Indexes (Consolidated)>
All indexes are computed on a consolidated basis.
Interest bearing debts represent all debts with interest expense included in consolidated balance sheets.
4. Basic Profit Distribution Policy
Kyocera considers that the best way to respond to shareholders expectations is to improve the consolidated performance into the future. Kyocera takes strongly into consideration the linkage between dividend amounts and the 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 consideration various factors including the amount of capital expenditures necessary for the medium to long-term growth.
Pursuant to this policy and based on performance through fiscal 2007, Kyocera will propose a year-end dividend for fiscal 2007 of 60 yen per share, an increase of 10 yen compared to fiscal 2006. When aggregated with the interim dividend in the amount of 50 yen, the total annual dividend amount will be 110 yen per share.
Kyocera will also propose that other general reserve shall be set aside, in order to take into account the necessary reserve amounts for creation of new businesses, development of new markets and new technologies and acquisition of outside management resources needed to achieve sustainable corporate growth.
Kyocera group consists of Kyocera Corporation, 169 subsidiaries and 10 affiliates.
(Chart of the group companies)
1. Basic Policy
Kyocera aims to be respected by society as The Company from the perspective of corporate ethics, while maintaining continuous sales growth and high profitability. To achieve this management vision, Kyoceras management policy is to further drive business expansion to be a creative company that continues to grow. Kyocera promotes efficient resource management, emphasizes consolidated group management and intends to increase corporate value through improvement in business performance.
2. Target of Pre-tax Income Ratio
To be a creative company that continues to grow, Kyocera aims to quickly achieve its target of a pre-tax income ratio of 15% or higher.
3. Medium Term Management Strategy
Kyocera promotes high-value-added diversification as its management strategy to realize such management policy. This involves ensuring that each business is highly profitable and pursuing synergies within Kyocera with the objective of driving sustainable growth even in an ever-changing business environment.
Specifically, Kyocera aims to: (1) exploit competitive advantages; (2) strengthen existing businesses; and (3) create new businesses.
(1) Exploit competitive advantages
The Kyocera Philosophy, which places peoples hearts at its core, the Amoeba Management system, which is unique to Kyocera and has been a driving force for growth since Kyocera Corporations earliest days, and a strong financial structure, are sources of competitive advantage for Kyocera over other companies in implementing its diversification strategy. With these foundations firmly in place, Kyocera endeavors to strengthen competitiveness in technological development, sales and marketing in the high-growth potential markets for telecommunications and information processing and for environmental protection, and to translate its diversification strategy into improved business performance.
(2) Strengthen existing businesses
Kyocera strives to continuously improve profitability in all existing businesses within Kyocera Group. Elsewhere, by strengthening ties and maximizing synergies between Kyocera Corporation and Kyocera Group companies, Kyocera seeks to improve profitability in each business segment on a consolidated basis. In promoting a global strategy in each business, Kyocera has created development, manufacturing and sales systems in optimal locations, while the integration of Group-wide resources helps boost the competitiveness of existing businesses. Kyocera regularly reviews those businesses that have lost market competitiveness and that show little promise of expansion going forward.
(3) Create new businesses
Kyocera endeavors to create businesses that will become its core going forward in order to improve consolidated performance over the medium term. To achieve this goal, Kyocera integrates Group-wide management resources to develop new technologies and products and create new markets. The focus of Kyoceras business creation strategy lies in the markets for telecommunications and information processing and for environmental protection.
To be a creative company that continues to grow, Kyocera seeks to continuously expand sales and to attain high profitability in its Components and Equipment Businesses. To accomplish these goals, Kyocera continues to reinforce the Amoeba Management System (go back to the origin of Amoeba Management) and create new value in fiscal 2008.
Kyocera plans to strengthen executional excellence, which refers to vitality in the workplace, across development, manufacturing, sales and back office divisions. The goal is to boost operational excellence, which means the ability to achieve targets, and thus create a highly profitable company.
In addition, Kyocera aims to improve its quality, optimize manufacturing locations worldwide and expand production capacity in order to enhance management foundations in the mid-to long-term range. Kyocera will create new businesses and markets by pursuing group synergies. Efforts will also be made to strengthen strategic businesses and to improve efficiency in operation of assets.
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SUPPLEMENTAL CASH FLOW INFORMATION
1. Reporting segments :
2. Geographic segments (Sales and Operating profits by geographic area):
3. Geographic segments (Sales by region):
INVESTMENTS IN DEBT AND EQUITY SECURITIES
Investments in debt and equity securities at March 31, 2006 and 2007, included in short-term investments (current assets) and securities and other investments (non-current assets) are summarized as follows :
BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
1. Scope of consolidation and application of the equity method :
Major consolidated subsidiaries :
KYOCERA WIRELESS CORP.
KYOCERA MITA CORPORATION
KYOCERA ELCO CORPORATION
Major affiliates accounted for by the equity method :
2. Changes in scope of consolidation and application of the equity method :
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 tax.
(3) Depreciation method of Property, Plant and Equipment
Depreciation is computed based mainly on a declining balance 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 :
We provided 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, 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.
STATEMENTS OF INCOME