Annual Reports

 
8-K

 
Other

  • 6-K (Nov 13, 2017)
  • 6-K (Oct 30, 2017)
  • 6-K (Aug 10, 2017)
  • 6-K (Jul 28, 2017)
  • 11-K (Jun 29, 2017)
  • 6-K (Jun 27, 2017)
Kyocera 6-K 2008

Documents found in this filing:

  1. 6-K
  2. Graphic
  3. 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 April 2008

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: April 25, 2008  


Table of Contents

Information furnished on this form :

EXHIBITS

 

Exhibit
    Number    

   
1.   Consolidated and Non-consolidated Financial Results for the Year Ended March 31, 2008


Table of Contents

Consolidated Results of Kyocera Corporation and its Subsidiaries

for the Year Ended March 31, 2008

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

1. Consolidated selected financial information for the year ended March 31, 2008 :

(1) Consolidated results of operations :

 

     Japanese yen  
     Years ended March 31,  
     2007     2008  

Net sales

   ¥ 1,283,897 million     ¥ 1,290,436 million  

% change from the previous year

     9.4 %     0.5 %

Profit from operations

     135,102 million       152,420 million  

% change from the previous year

     35.5 %     12.8 %

Income from continuing operations before income taxes

     156,540 million       174,842 million  

% change from the previous year

     33.5 %     11.7 %

Net income

     106,504 million       107,244 million  

% change from the previous year

     52.8 %     0.7 %

Earnings per share :

    

Basic

     ¥566.03       ¥566.58  

Diluted

     564.79       565.80  

Return on equity

     7.6 %     7.2 %

Income from continuing operations before income taxes to total assets

     7.7 %     8.5 %

Profit from operations to net sales

     10.5 %     11.8 %

Note :

1. Equity in earnings of affiliates and unconsolidated subsidiaries :

 

Year ended March 31, 2008 :

   ¥ 6,091 million   

Year ended March 31, 2007 :

   ¥ 2,621 million   

(2) Consolidated financial position :

 

     Japanese yen  
     March 31,  
     2007     2008  

Total assets

   ¥ 2,130,464 million     ¥ 1,976,746 million  

Stockholders’ equity

     1,514,560 million       1,451,165 million  

Stockholders’ equity to total assets

     71.1 %     73.4 %

Stockholders’ equity per share

     ¥8,028.45       ¥7,659.72  

(3) Consolidated cash flows :

 

     Japanese yen
     Years ended March 31,
     2007    2008

Cash flows from operating activities

   ¥ 149,644 million    ¥ 196,935 million

Cash flows from investing activities

     (151,703) million      14,894 million

Cash flows from financing activities

     (20,645) million      (28,071) million

Cash and cash equivalents at end of year

     282,208 million      447,586 million

 

1


Table of Contents

2. Dividends :

 

     Japanese yen  
     Years ended March 31,     Year ending March 31,  
                 2007                             2008                 2009  

Interim dividends per share

   ¥50     ¥60      

Year-end dividends per share

   60     60      

Annual dividends per share

   110     120     ¥120  

Annual aggregate amount of dividends paid

   20,719     22,732      

Dividends to net income

   19.4 %   21.2 %   22.3 %

Dividends to stockholders’ equity

   1.5 %   1.5 %    

Note :

Dividends per share for the year ending March 31, 2009 are forecasted to be 120 yen on annual basis.

3. Consolidated financial forecast for the year ending March 31, 2009 :

 

     Japanese yen  
     Year ending March 31, 2009  

Net sales

   ¥1,476,000 million  

    % change from the previous year

      14.4 %

Profit from operations

   145,000 million  

    % change from the previous year

      (4.9 )%

Income from continuing operations before income taxes

   165,000 million  

    % change from the previous year

      (5.6 )%

Net income

   102,000 million  

    % change from the previous year

      (4.9 )%

Note :

Forecast of earnings per share :                             ¥538.13

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, 2008.

 

2


Table of Contents

4. Others

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

 

     Consolidation    Equity method

Increase

   14    0

Decrease

   7    0

Please refer to the accompanying “BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS” on page 25.

(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 26.

(3) Number of shares (common stock) :

 

     March 31,
     2007    2008

Number of shares issued

   191,309,290    191,309,290

Number of shares in treasury

   2,660,201    1,855,119

Number of shares outstanding (average)

   188,160,482    189,283,237

 

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

1. Results for the year ended March 31, 2008 :

(1) Results of operations :

 

     Japanese yen  
     Years ended March 31,  
     2007     2008  

Net sales

   ¥ 531,557 million     ¥ 539,320 million  

    % change from the previous year

     11.3 %     1.5 %

Profit from operations

     49,432 million       48,551 million  

    % change from the previous year

     23.8 %     (1.8 )%

Recurring profit

     73,729 million       90,211 million  

    % change from the previous year

     8.1 %     22.4 %

Net income

     62,029 million       67,859 million  

    % change from the previous year

     (9.7 )%     9.4 %
                

Earnings per share :

    

Basic

     ¥329.66       ¥358.51  

Diluted

     ¥328.94       ¥358.01  
                

(2) Financial Position :

 

     Japanese yen  
     March 31,  
     2007     2008  

Total assets

   ¥ 1,611,891 million     ¥ 1,465,960 million  

Net assets

     1,286,361 million       1,219,415 million  

Net assets to total assets

     79.8 %     83.2 %

Net assets per share

     6,818.80       6,436.46  

With regard to forecasts set forth above, please refer to the accompanying “Forward Looking Statements” on page 13.

 

3


Table of Contents

Business Results

1. Analysis of Business Results

[Business Results for the Year Ended March 31, 2008]

 

(1)  Economic Situation and Business Environment

The Japanese economy during the year ended March 31, 2008 (fiscal 2008) was characterized by steadily increasing exports and a high level of corporate earnings, while individual consumption was also stable. Slumping housing investment and rising energy and raw material prices, however, resulted in only moderate economic expansion overall. In the United States, credit uneasiness worsened, triggered by issues related to housing loans for individuals with low creditworthiness and culminating in heightened fears of a business slowdown beginning in the summer of 2007. Combined with this, a drop-off in individual consumption and restrained capital investment became obvious and resulted in economic deceleration. The European economy expanded moderately, supported by an increase in exports. Individual consumption in Europe has tapered off since the start of calendar year 2008, however, and the economic outlook has become increasingly uncertain. The Chinese economy continued to expand on account of increases in capital investment and exports, together with robust individual consumption.

In the digital consumer equipment market, which is the principal market for Kyocera Corporation and its consolidated subsidiaries (“Kyocera Group” or “Kyocera”), demands for mobile phone handsets, flat panel TV sets and other equipment expanded steadily, particularly in the first half of fiscal 2008. There have been inventory adjustments for mobile phone handsets in certain Asian markets, however, since the start of calendar year 2008. In addition, the yen appreciated against the U.S. dollar, with the exchange rate at one time dropping below 100 yen to the dollar.

 

(2)  Consolidated  Financial Results

During fiscal 2008, Kyocera Group worked aggressively to introduce new products and improve productivity in order to achieve continuous sales expansion and high profitability.

Consolidated net sales for fiscal 2008 amounted to ¥1,290,436 million, an increase of only 0.5% compared with the year ended March 31, 2007 (fiscal 2007) but still marked the highest. This result can be attributed to an increase in sales in the Components Business, which more than offset a decrease in sales in the Equipment Business.

Profit from operations increased by 12.8% to ¥152,420 million due to a significant increase in profit in the Equipment Business, which was partly offset by a decrease in profit in the Components Business. Depreciation increased by ¥5,475 million resulting from a comprehensive review of the value of fixed assets, triggered by the tax revision in Japan.

Income from continuing operations before income taxes increased by 11.7% to ¥174,842 million due to increases in equity in earnings of affiliates and unconsolidated subsidiaries and interest and dividend income. Net income increased by 0.7% to ¥107,244 million.

 

     (Yen in millions, except per share amounts and exchange rate)
     Years ended March 31,     
     2007    2008    Increase
(Decrease)
(%)
     Amount    % of
net sales
   Amount    % of
net sales
  

Net sales

   1,283,897    100.0    1,290,436    100.0    0.5

Profit from operations

   135,102    10.5    152,420    11.8    12.8

Income from continuing operations before income taxes

   156,540    12.2    174,842    13.5    11.7

Net income

   106,504    8.3    107,244    8.3    0.7

Diluted earnings per share

   564.79       565.80       0.2

Average US$ exchange rate

   117       114      

Average Euro exchange rate

   150       162      

 

4


Table of Contents

(3) Implemented Management Measures and Significant Management Decisions made in Fiscal 2008

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

2) With the objective of further enhancing the Telecommunications Equipment Group, Kyocera concluded a basic agreement with SANYO Electric Co., Ltd. (SANYO) in October 2007 regarding acquisition by Kyocera of the mobile phone business of SANYO, and it concluded a final agreement relating thereto in January 2008. Through this acquisition, Kyocera seeks to expand sales and boost profitability in the Telecommunications Equipment Group by expanding its sales channels in North America and by integrating the excellent product development and design technologies of SANYO with the management resources of Kyocera. This acquisition was completed on April 1, 2008.

(4) Consolidated Financial Results by Business Segment

Sales in the Components Business increased by 4.5% compared with fiscal 2007 to ¥679,990 million, while operating profit decreased by 4.1% to ¥100,373 million. The operating profit ratio was 14.8%.

In particular, the Applied Ceramic Products Group posted a considerable increase in sales compared with fiscal 2007 driven by the solar energy business in overseas markets, which led to the overall increase in sales in the Components Business compared with fiscal 2007. Despite an increase in profit in the Applied Ceramic Products Group, operating profit in the Components Business decreased overall compared to fiscal 2007 due to a decline in profit in the Fine Ceramic Parts Group, the Semiconductor Parts Group and the Electronic Device Group.

Sales in the Equipment Business decreased by 4.3% compared with fiscal 2007 to ¥497,563 million, while operating profit increased significantly by 35.2% to ¥46,324million. The operating profit ratio was 9.3%.

Overall sales in the Equipment Business were down from fiscal 2007, despite an increase in sales in the Information Equipment Group, on account of a decrease in sales in the Telecommunications Equipment Group. Operating profit in the Equipment Business increased significantly overall, however, owing to an increase in profit in both reporting segments.

 

5


Table of Contents

Consolidated results by reporting segment are as follows.

Components Business:

1) Fine Ceramic Parts Group

This reporting segment includes fine ceramic components and automotive components.

Sales of parts for diesel engines for automobiles, sapphire substrates for LEDs and dielectric parts for mobile phone base stations all increased. However, there was a decrease in demand for parts for semiconductor fabrication equipment, one of the core products in this reporting segment, due to a decrease in capital investment in the semiconductor industry. As a result, sales in this reporting segment remained level with fiscal 2007. Operating profit decreased compared with fiscal 2007 due primarily to an increase in depreciation.

2) Semiconductor Parts Group

This reporting segment includes ceramic packages and organic packages.

Sales of Surface Mount Device (SMD) ceramic packages for electronic components, ceramic packages for image sensors and organic packages increased steadily. Sales of parts for optical telecommunications devices decreased, however, leading to only a slight increase in overall sales in this reporting segment compared with fiscal 2007. Although losses shrank substantially in the organic package business, overall operating profit in this segment decreased due to an increase in depreciation cost coupled with a decline in selling prices.

 

6


Table of Contents

3) Applied Ceramic Products Group

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

Both sales and operating profit increased significantly in this reporting segment compared with fiscal 2007 due to considerable growth in sales in the solar energy business in overseas markets, notably Europe, and to an increase in sales in the cutting tool business.

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.

Demands for capacitors and crystal related products have decreased since the start of calendar year 2008. Production of digital consumer equipment was solid throughout fiscal 2008, however, resulting in increased overall sales in this reporting segment compared with fiscal 2007. Operating profit decreased substantially, however, due to a decline in selling prices, etc.

Equipment Business:

1) Telecommunications Equipment Group

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

Despite strong sales in the mobile phone handset business in Japan, a slow sales overseas culminated in a decline in overall sales in this reporting segment compared with fiscal 2007. Operating profit increased significantly compared with fiscal 2007, however, due to a reduction in product development and production costs in the domestic mobile phone handset business, and improved profitability in the PHS related business as a result of concentrating management resources in Japan.

2) Information Equipment Group

This reporting segment includes ECOSYS brand printers and digital MFPs.

Sales in this reporting segment increased due to sales growth in printers, particularly in Europe, spurred by aggressive new product introductions and enhanced sales activities. Operating profit increased significantly compared with fiscal 2007 on account of new product introductions and increased sales of consumables in addition to the positive effect of yen depreciation against the Euro.

 

7


Table of Contents

Others:

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

Sales in this reporting segment increased slightly compared with fiscal 2007 to ¥138,494 million. Operating profit increased substantially by 40.0% to ¥9,635 million due to improved profitability at Kyocera Communication Systems Co., Ltd. and in the optical related business.

Consolidated Sales by Reporting Segment

 

     (Yen in millions)  
     Years ended March 31,     Increase
(Decrease)
%
 
     2007     2008    
     Amount     % of
net sales
    Amount     % of
net sales
   
          

Fine Ceramic Parts Group

   81,326     6.3     81,309     6.3     (0.0 )

Semiconductor Parts Group

   152,292     11.9     154,538     12.0     1.5  

Applied Ceramic Products Group

   131,103     10.2     149,942     11.6     14.4  

Electronic Device Group

   286,156     22.3     294,201     22.8     2.8  
                              

Total Components Business

   650,877     50.7     679,990     52.7     4.5  

Telecommunications Equipment Group

   251,183     19.6     220,817     17.1     (12.1 )

Information Equipment Group

   268,781     20.9     276,746     21.5     3.0  
                              

Total Equipment Business

   519,964     40.5     497,563     38.6     (4.3 )

Others

   137,235     10.7     138,494     10.7     0.9  

Adjustments and eliminations

   (24,179 )   (1.9 )   (25,611 )   (2.0 )    
                              

Net sales

   1,283,897     100.0     1,290,436     100.0     0.5  
                              

 

8


Table of Contents

Consolidated Operating Profit by Reporting Segment

 

     (Yen in millions)  
     Years ended March 31,    Increase
(Decrease)
%
 
     2007    2008   
     Amount     % of
segment
sales
   Amount     % of
segment
sales
  

Fine Ceramic Parts Group

   15,677     19.3    11,167     13.7    (28.8 )

Semiconductor Parts Group

   22,210     14.6    20,027     13.0    (9.8 )

Applied Ceramic Products Group

   22,334     17.0    32,655     21.8    46.2  

Electronic Device Group

   44,487     15.5    36,524     12.4    (17.9 )
                            

Total Components Business

   104,708     16.1    100,373     14.8    (4.1 )

Telecommunications Equipment Group

   291     0.1    6,786     3.1     

Information Equipment Group

   33,970     12.6    39,538     14.3    16.4  
                            

Total Equipment Business

   34,261     6.6    46,324     9.3    35.2  

Others

   6,881     5.0    9,635     7.0    40.0  
                            

Operating profit

   145,850     11.4    156,332     12.1    7.2  
                            

Corporate

   8,569        12,497        45.8  

Equity in earnings of affiliates and unconsolidated subsidiaries

   2,621        6,091        132.4  

Adjustments and eliminations

   (500 )      (78 )       
                            

Income from continuing operations before income taxes

   156,540     12.2    174,842     13.5    11.7  
                            

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 fiscal 2007 have been retroactively reclassified.

Note 2. For the reasons set forth in Note 1 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. Also, operating profit of “Others” in fiscal 2007 decreased by ¥1,895 million compared with those previously announced.

 

9


Table of Contents

(5) Consolidated Sales by Geographic Area

 

     (Yen in millions)  
     Years ended March 31,    Increase
(Decrease)
(%)
 
     2007    2008   
     Amount    % of
net sales
   Amount    % of
net sales
  

Japan

   496,959    38.7    507,837    39.4    2.2  

United States of America

   274,361    21.4    248,760    19.3    (9.3 )

Asia

   216,663    16.9    232,425    18.0    7.3  

Europe

   210,726    16.4    224,066    17.3    6.3  

Others

   85,188    6.6    77,348    6.0    (9.2 )
                          

Net sales

   1,283,897    100.0    1,290,436    100.0    0.5  
                          

1) Japan

Sales increased compared with fiscal 2007 due mainly to increase in sales in the Semiconductor Parts Group and Kyocera Communication Systems, Co., Ltd.

2) United Sates of America

Sales decreased compared with fiscal 2007 due mainly to a decline in sales in the Telecommunications Equipment Group.

3) Asia

Sales increased compared with fiscal 2007 due to sales growth in the Electronic Device Group.

4) Europe

Sales increased in the Information Equipment Group and the solar energy business in the Applied Ceramic Products Group. As a result, sales in this region increased compared with fiscal 2007.

5) Others

Although sales in the Information Equipment Group in Latin America and Middle East increased, sales in the Telecommunication Equipment Group in Latin America and Oceania declined. As a result, overall sales in this region decreased compared with fiscal 2007.

 

10


Table of Contents

(6) Capital Expenditures and Depreciation

 

     (Yen in millions)
     Years ended March 31,    Increase
(Decrease)
(%)
     2007    2008   
     Amount    % of
net sales
   Amount    % of
net sales
  

Capital expenditures

   69,896    5.4    85,101    6.6    21.8

Depreciation

   70,155    5.5    75,630    5.9    7.8

During fiscal 2008, Kyocera made capital expenditures particularly to increase production capacity in the Electronic Device Group and the solar energy business in response to burgeoning demand. Overall capital expenditures in fiscal 2008 increased compared with fiscal 2007. Furthermore, depreciation increased compared with fiscal 2007 due to the increase in capital expenditures in fiscal 2007 and to a review of depreciation method, triggered by the tax revision in Japan.

[Fiscal 2009 Forecast]

Consolidated Forecasts for the Year Ending March 31, 2009 (fiscal 2009)

 

     (Yen in millions, except per share amounts and exchange rates)  
     Fiscal 2008 Results    Fiscal 2009 Forecasts    Increase
(Decrease)
(%)
 
     Amount    % of
net sales
   Amount    % of
net sales
  

Net sales

   1,290,436    100.0    1,476,000    100.0    14.4  

Profit from operations

   152,420    11.8    145,000    9.8    (4.9 )

Income from continuing operations before income taxes

   174,842    13.5    165,000    11.2    (5.6 )

Net income

   107,244    8.3    102,000    6.9    (4.9 )

Diluted earnings per share

   565.80       538.13       (4.9 )

Average US$ exchange rate

   114       100        

Average Euro exchange rate

   162       152        
                          

Capital expenditures

   85,101    6.6    84,000    5.7    (1.3 )

Depreciation

   75,630    5.9    90,000    6.1    19.0  

The global economic downturn is expected to intensify in fiscal 2009, fuelling fear of a negative impact on demand for digital consumer equipment, and therefore also uncertainty in the outlook for component demand.

Based on this market outlook, Kyocera believes that sales in the Components Business will be sluggish in fiscal 2009. However, Kyocera forecasts increase of sales compared with fiscal 2008 owing to a sales increase as a result of the acquisition of the mobile phone business of SANYO in the Telecommunications Equipment Group, and to an increase in sales from the Applied Ceramic Products Group, particularly relating to the solar energy business. On the other hand, operating profit is expected to decrease compared with fiscal 2008 due mainly to costs associated with infrastructure development in line with business integration in the Telecommunications Equipment Group, coupled with selling price erosion in the Components Business and the impact of the appreciation of the yen.

Nonetheless, Kyocera aims at a minimum to achieve its aforementioned financial forecasts. To improve business performance, Kyocera will work aggressively to introduce new products, reduce costs, enhance productivity and cultivate new markets.

 

11


Table of Contents

Consolidated sales and operating profit forecasts by reporting segment are as follows.

Consolidated Sales by Reporting Segment

 

     (Yen in millions)  
     Fiscal 2008 Results     Fiscal 2009 Forecasts     Increase
(Decrease)
(%)
 
     Amount     % of
net sales
    Amount     % of
net sales
   

Fine Ceramic Parts Group

   81,309     6.3     81,500     5.5     0.2  

Semiconductor Parts Group

   154,538     12.0     155,000     10.5     0.3  

Applied Ceramic Products Group

   149,942     11.6     179,000     12.1     19.4  

Electronic Device Group

   294,201     22.8     281,000     19.1     (4.5 )
                              

Total Components Business

   679,990     52.7     696,500     47.2     2.4  

Telecommunications Equipment Group

   220,817     17.1     366,000     24.8     65.7  

Information Equipment Group

   276,746     21.5     290,000     19.6     4.8  
                              

Total Equipment Business

   497,563     38.6     656,000     44.4     31.8  

Others

   138,494     10.7     146,000     9.9     5.4  

Adjustments and eliminations

   (25,611 )   (2.0 )   (22,500 )   (1.5 )    
                              

Net sales

   1,290,436     100.0     1,476,000     100.0     14.4  
                              

Consolidated Operating Profit by Reporting Segment

 

     (Yen in millions)  
     Fiscal 2008 Results    Fiscal 2009 Forecasts    Increase
(Decrease)
(%)
 
     Amount    % of
segment
sales
   Amount    % of
segment
sales
  

Fine Ceramic Parts Group

   11,167    13.7    10,000    12.3    (10.5 )

Semiconductor Parts Group

   20,027    13.0    20,500    13.2    2.4  

Applied Ceramic Products Group

   32,655    21.8    33,000    18.4    1.1  

Electronic Device Group

   36,524    12.4    31,000    11.0    (15.1 )
                          

Total Components Business

   100,373    14.8    94,500    13.6    (5.9 )

Telecommunications Equipment Group

   6,786    3.1    5,000    1.4    (26.3 )

Information Equipment Group

   39,538    14.3    35,000    12.1    (11.5 )
                          

Total Equipment Business

   46,324    9.3    40,000    6.1    (13.7 )

Others

   9,635    7.0    14,500    9.9    50.5  
                          

Operating profit

   156,332    12.1    149,000    10.1    (4.7 )

Corporate and others

   18,510       16,000       (13.6 )
                          

Income from continuing operations before income taxes

   174,842    13.5    165,000    11.2    (5.6 )
                          

 

12


Table of Contents

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; future initiatives and in-process research and development may not produce the desired results; 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.

 

13


Table of Contents

2. Analysis of Financial Position

1. Cash Flow

Cash and cash equivalents at March 31, 2008 increased by ¥165,378 million to ¥447,586 million compared with those at March 31, 2007.

 

     (Yen in millions)  
     Years Ended March 31,     Increase
(Decrease)
 
     2007     2008    

Cash flow from operating activities

   149,644     196,935     47,291  

Cash flow from investing activities

   (151,703 )   14,894     166,597  

Cash flow from financing activities

   (20,645 )   (28,071 )   (7,426 )

Effect of exchange rate changes on cash and cash equivalents

   4,103     (18,380 )   (22,483 )

Net increase (decrease) in cash and cash equivalents

   (18,601 )   165,378     183,979  

Cash and cash equivalents at beginning of year

   300,809     282,208     (18,601 )

Cash and cash equivalents at end of year

   282,208     447,586     165,378  

(1) Cash flow from operating activities

Net cash provided by operating activities in fiscal 2008 increased by ¥47,291 million to ¥196,935 million from ¥149,644 million in fiscal 2007. This was due mainly to a decrease in receivables that increased in fiscal 2007.

(2) Cash flow from investing activities

Cash flow from investing activities turned from ¥151,703 million of cash outflows in fiscal 2007 to ¥14,894 million of cash inflows in fiscal 2008. This was due mainly to a large increase in withdrawal of time deposits, which exceeded increases in purchases of property, plant and equipment, and intangible assets, and acquisitions of businesses.

(3) Cash flow from financing activities

Net cash used in financing activities in fiscal 2008 increased by ¥7,426 million to ¥28,071 million from ¥20,645 million in fiscal 2007. This was due mainly to an increase in dividends paid.

2. Cash Flows Indexes (Consolidated)

 

     Years Ended March 31,  
     2004     2005     2006     2007     2008  

Stockholders’ equity to total assets

   64.1 %   67.3 %   66.7 %   71.1 %   73.4 %

Market capitalization to total assets

   91.3 %   82.2 %   101.3 %   98.4 %   80.2 %

Interest bearing debts per operating cash flows (years)

   3.2     1.0     0.8     0.2     0.1  

Operating cash flows per interest paid (ratio)

   20.6     62.4     88.5     93.4     161.8  

All indexes are computed on a consolidated basis.

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

3. Basic Profit Distribution Policy and Dividends for Fiscal 2008 and Fiscal 2009

(1) Basic Profit Distribution Policy

Kyocera believes that the best way to increase corporate value and meet shareholders’ expectations is to improve future consolidated performance. 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 reserves 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 for Fiscal 2008

Based on performance during fiscal 2008 and pursuant to the aforementioned policy, Kyocera will distribute a year-end dividend in the amount of 60 yen per share. When aggregated with the interim dividend in the amount of 60 yen per share, the total annual dividend will be 120 yen per share, an increase of 10 yen compared with fiscal 2007.

(3) Dividend Forecast for Fiscal 2009

Dividend amounts for fiscal 2009 will be decided pursuant to “(1) Basic Profit Distribution Policy” set forth above. At present, Kyocera forecasts a total annual dividend in the amount of 120 yen per share based on financial forecast for fiscal 2009.

 

14


Table of Contents

KYOCERA GROUP

Kyocera group consists of Kyocera Corporation, 176 subsidiaries and 10 affiliates.

(Chart of the group companies)

LOGO

 

15


Table of Contents

Management Policies

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, Kyocera’s management policy is to further drive business expansion to be “a creative company that continues to grow.” In order to implement this policy, Kyocera aims to increase corporate value by expanding businesses; namely by promoting efficient use of management resources and further strengthening consolidated group management.

2. Target of Pre-tax Income Ratio

To be “a creative company that continues to grow,” Kyocera aims to 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 people’s hearts at its core, the “Amoeba Management” system, which is unique to Kyocera and has been a driving force for growth since Kyocera Corporation’s 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 headquarters 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 Kyocera’s business creation strategy lies in the markets for telecommunications and information processing and for environmental protection.

 

16


Table of Contents

4. Challenges

Kyocera faces the following challenges from fiscal 2009 onward, in light of the aforementioned medium to long-term management strategy.

 

(1)  Improve  profitability in the Telecommunications Equipment Group

Kyocera acquired the mobile phone business of SANYO on April 1, 2008. As a result, the Telecommunications Equipment Group now generates the largest amount of sales among all of Kyocera’s reporting segments. Going forward, Kyocera seeks to achieve the following three goals as a means to swiftly improve profitability in such business: 1) expand sales and improve profitability in the mobile phone market in North America; 2) further expand market share and establish strong business foundations in the Japanese mobile phone market; and 3) expand the wireless telecommunication systems business.

 

(2)  Strengthen  new product development and create new businesses

Kyocera promotes the development of small ceramics and organic packages in the Semiconductor Parts Group and electronic devices befitting sophisticated digital consumer equipment for the telecommunications and information processing market. Kyocera is also striving to increase the conversion efficiency of photovoltaic generating systems for the environmental preservation market. In addition, Kyocera seeks to create new businesses in key markets by leveraging its cutting-edge materials and components technologies amassed across departments within Kyocera. Specifically, Kyocera is pushing ahead with development aimed at quick commercialization of solid oxide fuel cells (SOFC) for household use by exploiting materials technology employed in fine ceramic parts.

 

17


Table of Contents

CONSOLIDATED BALANCE SHEETS

 

     Yen in millions  
     March 31,    Increase
(Decrease)
 
     2007    2008   
     Amount     %    Amount     %   

Current assets :

            

Cash and cash equivalents

   ¥ 282,208        ¥ 447,586        ¥ 165,378  

Short-term investments

     213,495          147,503          (65,992 )

Trade notes receivables

     25,033          20,375          (4,658 )

Trade accounts receivables

     236,380          205,522          (30,858 )

Less allowances for doubtful accounts and sales returns

     (5,960 )        (4,352 )        1,608  

Inventories

     209,188          205,212          (3,976 )

Deferred income taxes

     45,390          41,244          (4,146 )

Other current assets

     40,757          55,135          14,378  
                                  

Total current assets

     1,046,491     49.1      1,118,225     56.6      71,734  
                                  

Non-current assets :

            

Investments and advances :

            

Investments in and advances to affiliates and unconsolidated subsidiaries

     10,093          16,753          6,660  

Securities and other investments

     690,568          437,369          (253,199 )
                                  

Total investments and advances

     700,661     32.9      454,122     23.0      (246,539 )

Property, plant and equipment, at cost :

            

Land

     56,806          57,155          349  

Buildings

     261,998          274,206          12,208  

Machinery and equipment

     729,636          718,812          (10,824 )

Construction in progress

     7,362          17,920          10,558  

Less accumulated depreciation

     (774,896 )        (782,194 )        (7,298 )
                                  

Total property, plant and equipment, at cost

     280,906     13.2      285,899     14.4      4,993  

Goodwill

     32,894     1.5      39,794     2.0      6,900  

Intangible assets

     24,657     1.2      29,829     1.5      5,172  

Other assets

     44,855     2.1      48,877     2.5      4,022  
                                  

Total non-current assets

     1,083,973     50.9      858,521     43.4      (225,452 )
                                  

Total assets

   ¥ 2,130,464     100.0    ¥ 1,976,746     100.0    ¥ (153,718 )
                                  

 

18


Table of Contents
     Yen in millions  
     March 31,       
     2007    2008    Increase
(Decrease)
 
     Amount     %    Amount     %   

Current liabilities :

            

Short-term borrowings

   ¥ 15,250        ¥ 7,279        ¥ (7,971 )

Current portion of long-term debt

     5,853          3,432          (2,421 )

Trade notes and accounts payable

     100,295          95,390          (4,905 )

Other notes and accounts payable

     49,134          66,757          17,623  

Accrued payroll and bonus

     41,680          43,207          1,527  

Accrued income taxes

     36,475          27,118          (9,357 )

Other accrued liabilities

     33,391          32,815          (576 )

Other current liabilities

     24,110          25,684          1,574  
                                  

Total current liabilities

     306,188     14.4      301,682     15.3      (4,506 )
                                  

Non-current liabilities :

            

Long-term debt

     7,283          8,298          1,015  

Accrued pension and severance liabilities

     16,297          15,041          (1,256 )

Deferred income taxes

     206,858          118,016          (88,842 )

Other non-current liabilities

     12,355          17,542          5,187  
                                  

Total non-current liabilities

     242,793     11.4      158,897     8.0      (83,896 )
                                  

Total liabilities

     548,981     25.8      460,579     23.3      (88,402 )
                                  

Minority interests in subsidiaries

     66,923     3.1      65,002     3.3      (1,921 )

Stockholders’ equity :

            

Common stock

     115,703          115,703           

Additional paid-in capital

     162,363          162,864          501  

Retained earnings

     1,055,293          1,143,821          88,528  

Accumulated other comprehensive income

     203,056          44,066          (158,990 )

Treasury stock, at cost

     (21,855 )        (15,289 )        6,566  
                                  

Total stockholders’ equity

     1,514,560     71.1      1,451,165     73.4      (63,395 )
                                  

Total liabilities, minority interests and stockholders’ equity

   ¥ 2,130,464     100.0    ¥ 1,976,746     100.0    ¥ (153,718 )
                                  
Note: Accumulated other comprehensive income is as follows:             
     Yen in millions             
     March 31,             
     2007          2008             

Net unrealized gains on securities

   ¥ 184,670        ¥ 64,799       

Net unrealized gains on derivative financial instruments

   ¥ 63        ¥ 196       

Pension adjustments

   ¥ 15,419        ¥ 12,865       

Foreign currency translation adjustments

   ¥ 2,904        ¥ (33,794 )     

 

19


Table of Contents

CONSOLIDATED STATEMENTS OF INCOME

 

     Yen in millions and shares in thousands, except per share amounts  
     Years ended March 31,     Increase
(Decrease)
 
     2007     2008    
     Amount     %     Amount     %     Amount     %  

Net sales

   ¥ 1,283,897     100.0     ¥ 1,290,436     100.0     ¥ 6,539     0.5  

Cost of sales

     900,470     70.1       883,763     68.5       (16,707 )   (1.9 )
                                          

Gross profit

     383,427     29.9       406,673     31.5       23,246     6.1  

Selling, general and administrative expenses

     248,325     19.4       254,253     19.7       5,928     2.4  
                                          

Profit from operations

     135,102     10.5       152,420     11.8       17,318     12.8  

Other income (expenses) :

            

Interest and dividend income

     15,472     1.2       18,444     1.4       2,972     19.2  

Interest expense

     (1,647 )   (0.1 )     (1,480 )   (0.1 )     167      

Foreign currency transaction losses, net

     (65 )   (0.0 )     (956 )   (0.1 )     (891 )    

Equity in earnings of affiliates and unconsolidated subsidiaries

     2,621     0.2       6,091     0.5       3,470     132.4  

Gain (loss) on sales of securities, net

     3,819     0.3       (622 )   (0.1 )     (4,441 )    

Other, net

     1,238     0.1       945     0.1       (293 )   (23.7 )
                                          

Total other income

     21,438     1.7       22,422     1.7       984     4.6  
                                          

Income from continuing operations before income taxes and minority interests

     156,540     12.2       174,842     13.5       18,302     11.7  

Income taxes

     48,887     3.8       60,235     4.6       11,348     23.2  
                                          

Income from continuing operations before minority interests

     107,653     8.4       114,607     8.9       6,954     6.5  

Minority interests

     (6,324 )   (0.5 )     (7,363 )   (0.6 )     (1,039 )    
                                          

Income from continuing operations

     101,329     7.9       107,244     8.3       5,915     5.8  

Income from discontinued operations

     5,175     0.4                 (5,175 )    
                                          

Net income

   ¥ 106,504     8.3     ¥ 107,244     8.3     ¥ 740     0.7  
                                          

Earnings per share :

            

Income from continuing operations :

            

Basic

   ¥ 538.52       ¥ 566.58        

Diluted

   ¥ 537.35       ¥ 565.80        

Income from discontinued operations :

            

Basic

   ¥ 27.51                

Diluted

   ¥ 27.44                

Net income :

            

Basic

   ¥ 566.03       ¥ 566.58        

Diluted

   ¥ 564.79       ¥ 565.80        

Weighted average number of shares of common stock outstanding :

            

Basic

     188,160         189,283        

Diluted

     188,573         189,544        

 

20


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 years ended March 31, 2007 and 2008 were an increase of ¥219,055 million and a decrease of ¥51,746 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. In March 2005, Kyocera received a Correction Notice from the Osaka Regional Taxation Bureau regarding transfer pricing. In May 2005, Kyocera filed the Request for Reinvestigation. As a consequence of Kyocera filing the Request for Reinvestigation, the Osaka Regional Taxation Bureau approved a refund for ¥4,035 million which was recorded in income taxes for the year ended March 31, 2007.
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 Kyocera Leasing Co., Ltd. for the year ended March 31, 2007 have been recorded as income from discontinued operations in conformity with SFAS No.144, “Accounting for the Impairment of Disposal of Long-Lived Assets.”

 

21


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 tax

             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 year

           107,244         ¥ 107,244  

Other comprehensive income

             (158,990 )       (158,990 )
                    

Total comprehensive income for the year

               ¥ (51,746 )
                    

Cash dividends

           (22,684 )      

Purchase of treasury stock (18)

               (211 )  

Reissuance of treasury stock (823)

        254          6,777    

Stock option plan of subsidiaries

        247         
                                        

Balance, March 31, 2008 (189,454)

   ¥ 115,703    ¥ 162,864    ¥ 1,143,821     ¥ 44,066     ¥ (15,289 )  
                                        

Note:

FIN 48 - Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109” Please refer to page 26 “(6) Accounting changes.”

 

22


Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Yen in millions  
     Years ended March 31,  
     2007     2008  

Cash flows from operating activities :

    

Net income

   ¥ 106,504     ¥ 107,244  

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

    

Depreciation and amortization

     82,182       87,045  

Write-down of inventories

     11,328       5,141  

Minority interests

     6,324       7,363  

Equity in earnings of affiliates and unconsolidated subsidiaries

     (2,621 )     (6,091 )

(Gains) losses on sales of securities, net

     (3,819 )     622  

Gains on sales of investment in subsidiaries

     (8,252 )      

(Increase) decerase in receivables

     (32,626 )     13,732  

Increase in inventories

     (25,100 )     (9,766 )

Increase in notes and accounts payable

     6,015       5,177  

Increase (decrease) in accrued income taxes

     9,066       (8,817 )

Increase in other current liabilities

     11,111       6,010  

Other, net

     (10,468 )     (10,725 )
                

Net cash provided by operating activities

     149,644       196,935  
                

Cash flows from investing activities :

    

Payments for purchases of securities

     (71,449 )     (38,744 )

Sales and maturities of securities

     127,119       124,813  

Acquisitions of businesses, net of cash acquired

     (756 )     (26,483 )

Proceeds from sales of investment in subsidiaries

     24,602        

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

     (72,966 )     (78,269 )

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

     2,693       877  

Deposit of negotiable certificate of deposits and time deposits

     (356,169 )     (372,798 )

Withdrawal of negotiable certificate of deposits and time deposits

     203,076       423,845  

Other, net

     (7,853 )     (18,347 )
                

Net cash provided by (used in) investing activities

     (151,703 )     14,894  
                

Cash flows from financing activities :

    

Increase (decrease) in short-term debt

     9,369       (7,202 )

Proceeds from issuance of long-term debt

     1,928       5,000  

Payments of long-term debt

     (13,361 )     (6,647 )

Dividends paid

     (20,632 )     (24,566 )

Purchases of treasury stock

     (251 )     (211 )

Reissuance of treasury stock

     7,666       7,031  

Other, net

     (5,364 )     (1,476 )
                

Net cash used in financing activities

     (20,645 )     (28,071 )
                

Effect of exchange rate changes on cash and cash equivalents

     4,103       (18,380 )
                

Net increase (decrease) in cash and cash equivalents

     (18,601 )     165,378  

Cash and cash equivalents at beginning of year

     300,809       282,208  
                

Cash and cash equivalents at end of year

   ¥ 282,208     ¥ 447,586  
                

 

23


Table of Contents

SUPPLEMENTAL CASH FLOW INFORMATION

 

     Yen in millions  
     Years ended March 31,  
     2007     2008  

Cash paid during the year for :

    

Interest

   ¥ 1,603     ¥ 1,217  

Income taxes

     52,847       66,989  

Acquisitions of businesses :

    

Fair value of assets acquired

   ¥ 1,151     ¥ 32,959  

Fair value of liabilities assumed

     (333 )     (5,537 )

Cash acquired

     (62 )     (939 )
                
   ¥ 756     ¥ 26,483  
                

 

24


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)

   14    AMERICAN TECHNICAL CERAMICS CORP. and others

(Decrease)

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

(2) Valuation of securities

Kyocera adopts SFAS No.115, “Accounting for Certain Investments in Debt and Equity Securities.” Held-to-maturity securities are recorded at amortized cost. Available-for-sale 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 the declining balance method over their estimated useful lives. Effective April 1, 2007, Kyocera Corporation and its domestic subsidiaries, as a result of taking the business situation into consideration, has adopted “the 250 percent declining-balance depreciation method” for buildings, machinery and equipment. Estimated useful lives and estimated salvage values were also changed in conjunction with this change. Under the provisions of SFAS No. 154 “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3,” a change in depreciation method is treated as a change in estimate. The effect of the change in depreciation method will be reflected on a prospective basis beginning April 1, 2007, and prior period results will not be restated. Kyocera Corporation and its domestic subsidiaries believe that the change from the declining-balance depreciation method to the 250 percent declining-balance depreciation method will better reflect future business situation and will provide a better matching of costs and revenues over the assets’ estimated useful lives.

(4) Goodwill and other intangible assets

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

 

25


Table of Contents

(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 SFAS No. 87, “Employers’ Accounting for Pensions” and SFAS 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 ”(FIN48) which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN48 also provides guidance on derecognition, classification, interest and penalties, disclosure and transitional measures. Cumulative effect of applying FIN48, which was effective April 1, 2007, increased the opening balance of retained earnings by ¥3,968 million.

 

26


Table of Contents

SEGMENT INFORMATION

1. Reporting segments :

 

      Yen in millions  
     Years ended March 31,     Increase
(Decrease)
 
     2007     2008    
     Amount     Amount     Amount     %  

Net sales :

        

Fine Ceramic Parts Group

   ¥ 81,326     ¥ 81,309     ¥ (17 )   (0.0 )

Semiconductor Parts Group

     152,292       154,538       2,246     1.5  

Applied Ceramic Products Group

     131,103       149,942       18,839     14.4  

Electronic Device Group

     286,156       294,201       8,045     2.8  

Telecommunications Equipment Group

     251,183       220,817       (30,366 )   (12.1 )

Information Equipment Group

     268,781       276,746       7,965     3.0  

Others

     137,235       138,494       1,259     0.9  

Adjustments and eliminations

     (24,179 )     (25,611 )     (1,432 )   —    
                              
   ¥ 1,283,897     ¥ 1,290,436     ¥ 6,539     0.5  
                              

Operating profit :

        

Fine Ceramic Parts Group

   ¥ 15,677     ¥ 11,167     ¥ (4,510 )   (28.8 )

Semiconductor Parts Group

     22,210       20,027       (2,183 )   (9.8 )

Applied Ceramic Products Group

     22,334       32,655       10,321     46.2  

Electronic Device Group

     44,487       36,524       (7,963 )   (17.9 )

Telecommunications Equipment Group

     291       6,786       6,495     —    

Information Equipment Group

     33,970       39,538       5,568     16.4  

Others

     6,881       9,635       2,754     40.0  
                              
     145,850       156,332       10,482     7.2  

Corporate

     8,569       12,497       3,928     45.8  

Equity in earnings of affiliates and unconsolidated subsidiaries

     2,621       6,091       3,470     132.4  

Adjustments and eliminations

     (500 )     (78 )     422     —    
                              

Income from continuing operations before income taxes and minority interests

   ¥ 156,540     ¥ 174,842     ¥ 18,302     11.7  
                              

Segment assets :

        

Fine Ceramic Parts Group

   ¥ 54,860     ¥ 53,713     ¥ (1,147 )   (2.1 )

Semiconductor Parts Group

     106,359       100,041       (6,318 )   (5.9 )

Applied Ceramic Products Group

     125,266       149,870       24,604     19.6  

Electronic Device Group

     412,979       400,851       (12,128 )   (2.9 )

Telecommunications Equipment Group

     92,584       66,191       (26,393 )   (28.5 )

Information Equipment Group

     207,862       203,248       (4,614 )   (2.2 )

Others

     133,072       131,946       (1,126 )   (0.8 )
                              
     1,132,982       1,105,860       (27,122 )   (2.4 )

Corporate

     1,056,646       906,159       (150,487 )   (14.2 )

Investments in and advances to affiliates and unconsolidated subsidiaries

     10,093       16,753       6,660     66.0  

Adjustments and eliminations

     (69,257 )     (52,026 )     17,231     —    
                              

Total assets

   ¥ 2,130,464     ¥ 1,976,746     ¥ (153,718 )   (7.2 )
                              

Depreciation and amortization :

        

Fine Ceramic Parts Group

   ¥ 4,500     ¥ 7,511     ¥ 3,011     66.9  

Semiconductor Parts Group

     12,533       14,647       2,114     16.9  

Applied Ceramic Products Group

     8,097       9,685       1,588     19.6  

Electronic Device Group

     21,537       24,627       3,090     14.3  

Telecommunications Equipment Group

     9,075       8,753       (322 )   (3.5 )

Information Equipment Group

     16,326       12,024       (4,302 )   (26.4 )

Others

     7,419       6,922       (497 )   (6.7 )

Corporate

     2,575       2,876       301     11.7  
                              

Total

   ¥ 82,062     ¥ 87,045     ¥ 4,983     6.1  
                              

Capital expenditures :

        

Fine Ceramic Parts Group

   ¥ 7,447     ¥ 9,253     ¥ 1,806     24.3  

Semiconductor Parts Group

     11,432       8,752       (2,680 )   (23.4 )

Applied Ceramic Products Group

     7,330       10,714       3,384     46.2  

Electronic Device Group

     19,812       25,855       6,043     30.5  

Telecommunications Equipment Group

     3,800       2,317       (1,483 )   (39.0 )

Information Equipment Group

     11,962       15,475       3,513     29.4  

Others

     5,774       6,056       282     4.9  

Corporate

     2,339       6,679       4,340     185.5  
                              

Total

   ¥ 69,896     ¥ 85,101     ¥ 15,205     21.8  
                              

 

27


Table of Contents

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

 

     Yen in millions  
     Years ended March 31,              
     2007     2008     Increase (Decrease)  
     Amount     Amount     Amount     %  

Net sales:

        

Japan

   ¥ 523,869     ¥ 538,729     ¥ 14,860     2.8  

Intra-group sales and transfer between geographic areas

     388,879       387,196       (1,683 )   (0.4 )
                              
     912,748       925,925       13,177     1.4  
                              

United States of America

     319,033       282,677       (36,356 )   (11.4 )

Intra-group sales and transfer between geographic areas

     37,357       30,542       (6,815 )   (18.2 )
                              
     356,390       313,219       (43,171 )   (12.1 )
                              

Asia

     195,319       200,675       5,356     2.7  

Intra-group sales and transfer between geographic areas

     152,219       178,184       25,965     17.1  
                              
     347,538       378,859       31,321     9.0  
                              

Europe

     219,695       243,406       23,711     10.8  

Intra-group sales and transfer between geographic areas

     40,040       39,172       (868 )   (2.2 )
                              
     259,735       282,578       22,843     8.8  
                              

Others

     25,981       24,949       (1,032 )   (4.0 )

Intra-group sales and transfer between geographic areas

     11,432       15,076       3,644     31.9  
                              
     37,413       40,025       2,612     7.0  
                              

Adjustments and eliminations

     (629,927 )     (650,170 )     (20,243 )   —    
                              
   ¥ 1,283,897     ¥ 1,290,436     ¥ 6,539     0.5  
                              

Operating Profits :

        

Japan

   ¥ 96,804     ¥ 101,176     ¥ 4,372     4.5  

United States of America

     23,521       11,694       (11,827 )   (50.3 )

Asia

     19,165       24,108       4,943     25.8  

Europe

     10,218       12,399       2,181     21.3  

Others

     1,086       2,922       1,836     169.1  
                              
     150,794       152,299       1,505     1.0  

Adjustments and eliminations

     (5,444 )     3,955       9,399     —    
                              
     145,350       156,254       10,904     7.5  

Corporate

     8,569       12,497       3,928     45.8  

Equity in earnings of affiliates and unconsolidated subsidiaries

     2,621       6,091       3,470     132.4  
                              

Income from continuing operations before income taxes and minority interests

   ¥ 156,540     ¥ 174,842     ¥ 18,302     11.7  
                              

 

28


Table of Contents

3. Geographic segments (Sales by region) :

 

     Yen in millions  
     Years ended March 31,       
     2007    2008    Increase (Decrease)  
     Amount     %    Amount     %    Amount     %  

Japan

   ¥ 496,959     38.7    ¥ 507,837     39.4    ¥ 10,878     2.2  

United States of America

     274,361     21.4      248,760     19.3      (25,601 )   (9.3 )

Asia

     216,663     16.9      232,425     18.0      15,762     7.3  

Europe

     210,726     16.4      224,066     17.3      13,340     6.3  

Others

     85,188     6.6      77,348     6.0      (7,840 )   (9.2 )
                                        

Net sales

   ¥ 1,283,897     100.0    ¥ 1,290,436     100.0    ¥ 6,539     0.5  
                                        

Sales outside Japan

   ¥ 786,938        ¥ 782,599        ¥ (4,339 )   (0.6 )

Sales outside Japan to net sales

     61.3 %        60.6 %       

 

29


Table of Contents

INVESTMENTS IN DEBT AND EQUITY SECURITIES

Investments in debt and equity securities at March 31, 2007 and 2008, included in short-term investments (current assets) and

securities and other investments (non-current assets) are summarized as follows :

 

     Yen in millions
     March 31,
     2007    2008
     Cost    Aggregate
fair values
   Gross
unrealized
gains
   Gross
unrealized
losses
   Cost    Aggregate
fair values
   Gross
unrealized
gains
   Gross
unrealized
losses

Available-for-sale securities :

                       

Corporate debt securities

   ¥ 3,842    ¥ 4,033    ¥ 194    ¥ 3    ¥ 9,111    ¥ 8,877    ¥ 46    ¥ 280

Other debt securities

     74,563      74,574      71      60      5,632      5,471      2      163

Equity securities

     272,653      585,274      312,724      103      275,984      386,162      113,327      3,149
                                                       

Total available-for-sale securities

     351,058      663,881      312,989      166      290,727      400,510      113,375      3,592
                                                       

Held-to-maturity securities :

                       

Other debt securities

     33,512      33,447           65      15,904      15,989      85     
                                                       

Total held-to-maturity securities

     33,512      33,447           65      15,904      15,989      85     
                                                       

Total investments in debt and equity securities

   ¥ 384,570    ¥ 697,328    ¥ 312,989    ¥ 231    ¥ 306,631    ¥ 416,499    ¥ 113,460    ¥ 3,592
                                                       

Note:

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

 

30


Table of Contents

EARNINGS PER SHARE

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

 

     Japanese yen
     Years ended March 31,
     2007    2008

Stockholders’ equity per share

   ¥ 8,028.45    ¥ 7,659.72

Basic earnings per share

     566.03      566.58

Diluted earnings per share

     564.79      565.80

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
     Years ended March 31,
     2007    2008

Income from continuing operations

   ¥101,329    ¥107,244

Income from discontinued operations

   5,175    —  

Net income

   106,504    107,244

Basic earnings per share

     

Income from continuing operations

   538.52    566.58

Income from discontinued operations

   27.51    —  

Net income

   566.03    566.58

Diluted earnings per share

     

Income from continuing operations

   537.35    565.80

Income from discontinued operations

   27.44    —  

Net income

   564.79    565.80

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

   188,160    189,283

Dilutive effect of stock options (shares in thousands)

   413    261

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

   188,573    189,544

 

31


Table of Contents

SUBSEQUENT EVENTS

[Acquisition of Mobile Phone Related Business of SANYO Electric Co., Ltd.]

Kyocera Corporation has agreed to acquire the spun-off mobile phone related business, including related assets and liabilities from SANYO Electric Co., Ltd. (SANYO) on April 1, 2008.

 

(1) Name of acquired company and, reason for the acquisition, description of the acquired business, name of the selling party, effective dates, legal structure of corporate consolidation, name of the company after consolidation and ratio of voting rights acquired:

 

  (i) Reason for corporate acquisition:

Kyocera views the communication equipment related business, including mobile phones, PHS and wireless communication systems, as one of its core businesses which will aim to establish a highly profitable Company. Through this acquisition,

Kyocera seeks to acquire the customer base of SANYO in Japan and North America, and expand the size of its businesses as well as integrate SANYO’s development capabilities and design technologies with Kyocera’s management resources in order to succeed over the competition in a very competitive industry.

 

  (ii) Name of the selling party: SANYO Electric Co., Ltd.

 

  (iii) Substance of business acquisition: Development, manufacture and sale of mobile phones, PHS and wireless communication systems, etc.

 

  (iv) Effective Date of corporate acquisition: April 1, 2008

 

  (v) Legal structure of corporate acquisition: The acquisition will be completed principally by means of a corporate split, being Kyocera Corporation, the acquiring corporation.

 

(2) Purchase price consideration related to the acquired corporation or acquired business and related breakdown. In case shares are issued for the acquisition as a part of the purchase consideration, exchange ratio by type, if applicable, related calculation method, number of exchanged shares and related value. Description as to whether or not the acquisition cost is calculated based on the share prices as at the exchange date.

 

  (i) Acquisition costs and breakdown thereof: Not yet determined, as the purchase price allocation calculations and the valuation of the identifiable assets and liabilities are under review.

 

  (ii) Distribution of shares: There was not exchange of shares on this acquisition.

 

(3) Amount of positive or negative goodwill taking place, cause therefor, method of depreciation and depreciation period

Not yet determined, as the purchase price allocation calculations and the valuation of the identifiable assets and liabilities are under review.

 

32


Table of Contents
(4) Breakdown and amounts of assets acquired and liabilities assumed at the acquisition date

Not yet determined, as the purchase price allocation calculations and the valuation of the identifiable assets and liabilities are under review.

 

(5) Purchase price consideration subject to conditions contemplated in the business combination agreement and related accounting policy

 

  (i) Purchase price considerations subject to conditions:

The agreed acquisition cost was based on the amount after subtracting expected cash and deposits of the acquired business from ¥50 billion, and subject to further adjustments, at the acquisition (spin off) date, such other as cash and bank deposits, interest bearing debt, accounts receivable from and payable to Kyocera and some other agreed adjustments.

 

  (ii) Policy of accounting method to be applied subsequently:

Increase or decrease in the paid amount shall be reflected in the acquisition costs as an adjustment to goodwill.

 

(6) Account description and amount of acquisition cost allocated to research and development cost which are expensed

Not yet determined, as the purchase price allocation calculations and the valuation of the identifiable assets and liabilities are under review.

 

(7) In the case that most of the acquisition cost are allocated to intangible assets, breakdown, amount and type of those intangible assets other than goodwill; weighted average amortization period for those intangible assets, or amortization period of major intangible assets.

Not yet determined, as the purchase price allocation calculations and the valuation of the identifiable assets and liabilities are under review.

 

33


Table of Contents

BALANCE SHEETS

 

     Yen in millions  
     March 31,    Increase
(Decrease)
 
     2007    2008   
     Amount     %    Amount     %   

Current assets :

            

Cash and bank deposits

   ¥ 203,301        ¥ 123,465        ¥ (79,836 )

Trade notes receivable

     41,423          18,658          (22,765 )

Trade accounts receivable

     108,685          113,025          4,340  

Marketable securities

     22,937          223,900          200,963  

Finished goods and merchandise

     17,204          21,246          4,042  

Raw materials

     16,560          15,232          (1,328 )

Work in process

     20,541          19,978          (563 )

Supplies

     706          1,527          821  

Advance payments

     10,100          19,415          9,315  

Prepaid expenses

     443          87          (356 )

Deferred income taxes

     17,193          13,915          (3,278 )

Short-term loans to subsidiaries

     16,880          8,552          (8,328 )

Other accounts receivable

     8,291          12,498          4,207  

Other current assets

     891          2,500          1,609  

Allowances for doubtful accounts

     (173 )        (1,022 )        (849 )
                                  

Total current assets

     484,982     30.1      592,976     40.4      107,994  
                                  

Non-current assets :

            

Tangible fixed assets :

            

Buildings

     34,921          38,108          3,187  

Structures

     2,091          1,967          (124 )

Machinery and equipment

     44,896          42,701          (2,195 )

Vehicles

     21          19          (2 )

Tools, furniture and fixtures

     8,139          7,823          (316 )

Land

     33,372          33,871          499  

Construction in progress

     900          1,432          532  
                                  

Total tangible fixed assets

     124,340     7.7      125,921     8.6      1,581  
                                  

Intangible assets :

            

Patent rights

     9,518          5,335          (4,183 )

Trademark

     124          104          (20 )

Software

     776          633          (143 )

Other intangible assets

     13          14          1  
                                  

Total intangible assets

     10,431     0.6      6,086     0.4      (4,345 )
                                  

Investments and other assets :

            

Investments in securities

     648,538          400,838          (247,700 )

Investments in subsidiaries and affiliates

     260,775          260,833          58  

Investments in subsidiaries and affiliates other than equity securities

     26,685          27,623          938  

Long-term loans to subsidiaries

     20,633          23,181          2,548  

Impaired loans

     238          229          (9 )

Long-term prepaid expenses

     2,458          1,521          (937 )

Long-term deposits

     31,000          25,000          (6,000 )

Security deposits

     1,823          1,773          (50 )

Other investments

     289          242          (47 )

Allowances for doubtful accounts

     (301 )        (263 )        38  
                                  

Total investments and other assets

     992,138     61.6      740,977     50.6      (251,161 )
                                  

Total non-current assets

     1,126,909     69.9      872,984     59.6      (253,925 )
                                  

Total assets

   ¥ 1,611,891     100.0    ¥ 1,465,960     100.0    ¥ (145,931 )
                                  

 

34


Table of Contents
     Yen in millions  
     March 31,        
     2007     2008     Increase
(Decrease)
 
     Amount     %     Amount     %    

Current liabilities :

          

Trade accounts payable

   ¥ 55,561       ¥ 53,146       ¥ (2,415 )

Other payables

     21,774         38,312         16,538  

Accrued expenses

     8,356         8,288         (68 )

Income taxes payables

     12,550         13,616         1,066  

Advance received

     532         604         72  

Deposits received

     1,916         2,378         462  

Unearned income

     10         15         5  

Accrued bonuses

     11,152         11,726         574  

Accrued bonuses for directors

     136         133         (3 )

Warranty reserves

     5,045         5,363         318  

Allowances for sales returns

     114         149         35  

Other current liabilities

     125                 (125 )
                                    

Total current liabilities

     117,271     7.3       133,730     9.1       16,459  
                                    

Non-current liabilities :

          

Long-term accounts payable

     2,953         703         (2,250 )

Deferred income taxes

     191,441         102,102         (89,339 )

Accrued pension and severance costs

     12,705         8,809         (3,896 )

Retirement allowances for directors and executive officers

     1,022         1,030         8  

Other non-current liabilities

     138         171         33  
                                    

Total non-current liabilities

     208,259     12.9       112,815     7.7       (95,444 )
                                    

Total liabilities

     325,530     20.2       246,545     16.8       (78,985 )
                                    

Net assets

          

Stockholders’ equity :

          

Common stock

     115,703     7.2       115,703     7.9        

Capital surplus :

          

Additional paid-in capital

     192,555         192,555          

Other capital surplus

     127         381         254  

Total capital surplus

     192,682     12.0       192,936     13.2       254  

Retained earnings :

          

Legal reserves

     17,207         17,207          

Other retained earnings :

     671,140         716,316         45,176  

Reserve for special depreciation

     991         555         (436 )

Reserve for research and development

     1,000         1,000          

Reserve for dividends

     1,000         1,000          

Reserve for retirement benefits

     300         300          

Reserve for overseas investments

     1,000         1,000          

General reserve

     603,837         643,837         40,000  

Unappropriated retained earnings

     63,012         68,624         5,612  
                                    

Total retained earnings

     688,347     42.7       733,523     50.0       45,176  

Treasury stock, at cost

     (21,855 )   (1.4 )     (15,289 )   (1.0 )     6,566  

Total stockholders’ equity

     974,877     60.5       1,026,873     70.1       51,996  

Difference of appreciation and conversion

          

Net unrealized gains on other securities

     311,484     19.3       192,542     13.1       (118,942 )
                                    

Total net assets

     1,286,361     79.8       1,219,415     83.2       (66,946 )
                                    

Total liabilities and net assets

   ¥ 1,611,891     100.0     ¥ 1,465,960     100.0     ¥ (145,931 )
                                    

 

35


Table of Contents

STATEMENTS OF INCOME

 

     Yen in millions  
     Years ended March 31,     Increase
(Decrease)
 
     2007     2008    
     Amount     %     Amount     %     Amount     %  

Net sales

   ¥ 531,557     100.0     ¥ 539,320     100.0     ¥ 7,763     1.5  

Cost of sales

     407,121     76.6       413,420     76.7       6,299     1.5  
                                          

Gross profit

     124,436     23.4       125,900     23.3       1,464     1.2  

Selling, general and administrative expenses

     75,004     14.1       77,349     14.3       2,345     3.1  
                                          

Profit from operations

     49,432     9.3       48,551     9.0       (881 )   (1.8 )

Non-operating income :

            

Interest and dividend income

     25,090     4.7       35,839     6.6       10,749     42.8  

Foreign currency transaction gains, net

     1,021     0.2       1,200     0.2       179     17.6  

Other non-operating income

     6,730     1.3       7,860     1.5       1,130     16.8  
                                          

Total non-operating income

     32,841     6.2       44,899     8.3       12,058     36.7  

Non-operating expenses :

            

Interest expense

     14     0.0       20     0.0       6     45.3  

Loss on disposal of inventories

     7,235     1.4       1,508     0.3       (5,727 )   (79.1 )

Loss on sale of securities

               471     0.1       471      

Loss on reduction of fixed assets

               636     0.1       636      

Other non-operating expenses

     1,295     0.2       604     0.1       (691 )   (53.4 )
                                          

Total non-operating expenses

     8,544     1.6       3,239     0.6       (5,305 )   (62.1 )
                                          

Recurring profit

     73,729     13.9       90,211     16.7       16,482     22.4  

Non-recurring gain :

            

Gain on sale of tangible fixed assets

     327     0.0       46     0.0       (281 )   (85.8 )

Reversal of allowance for doubtful accounts

     7     0.0       7     0.0       0     2.6  

Repatriation of settlement with foreign tax authorities

               1,832     0.3       1,832      

Gain on sale of investments in a subsidiary and an affiliate

     9,084     1.7                 (9,084 )    

Other non-recurring gain

     1,987     0.4       375     0.1       (1,612 )   (81.1 )
                                          

Total non-recurring gain

     11,405     2.1       2,260     0.4       (9,145 )   (80.2 )

Non-recurring loss :

            

Depreciation expense

               2,851     0.5       2,851      

Loss on sale and disposal of tangible fixed assets

     951     0.2       671     0.1       (280 )   (29.5 )

Loss on impairment of investments in subsidiaries and affiliates

     3,166     0.6                 (3,166 )    

Other non-recurring loss

     344     0.0       102     0.0       (242 )   (70.4 )
                                          

Total non-recurring loss

     4,461     0.8       3,624     0.6       (837 )   (18.8 )
                                          

Income before income taxes

     80,673     15.2       88,847     16.5       8,174     10.1  

Income taxes current

     23,814     4.5       26,837     5.0       3,023     12.7  

Refund of income taxes previous years

     (4,305 )   (0.8 )     (2,442 )   (0.5 )     1,863      

Income taxes deferred

     (865 )   (0.2 )     (3,407 )   (0.6 )     (2,542 )    
                                          

Net income

   ¥ 62,029     11.7     ¥ 67,859     12.6     ¥ 5,830     9.4  
                                          

 

36


Table of Contents

STATEMENT OF CHANGES IN NET ASSETS

 

    Yen in millions  
    Year ended March 31, 2007  
    Stockholders’ equity     Difference of
appreciation and
conversion
     
        Capital surplus   Retained earnings                            
                        Other retained earnings                                  
    Common
stock
  Additional
paid-in
capital
  Other
capital
surplus
  Total
capital
surplus
  Legal
reserve
  Reserve
for
special
depre-

ciation
    Reserve
for
research
and
develop-

ment
  Reserve
for
dividends
  Reserve
for
retire-
ment
benefits
  Reserve
for
overseas
invest-

ments
  General
reserve
  Unappro-
priated
retained
earnings
    Total
retained
earnings
    Treasury
stock,
at cost
    Total
stock-

holders’
equity
    Net
unrealized
gains

on
other
securities
  Total
unrealized
gain (loss)

on
appreciation
and
conversion
  Total
net assets
 

Balance, March 31, 2006

  ¥ 115,703   ¥ 192,555     —     ¥ 192,555   ¥ 17,207   ¥ 1,584     ¥ 1,000   ¥ 1,000   ¥ 300   ¥ 1,000   ¥ 553,837   ¥ 69,245     ¥ 645,173     ¥ (29,143 )   ¥ 924,288     ¥ 207,973   ¥ 207,973   ¥ 1,132,261  

Changes in net assets