Kyocera 6-K 2009
Documents found in this filing:
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 June 2009
Commission File Number: 1-07952
6 Takeda Tobadono-cho, Fushimi-ku,
Kyoto 612-8501, Japan
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(7):
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b); 82-
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
Notice of the 55th Ordinary General Meeting of Shareholders
to be held in Kyoto, Japan on June 25, 2009
6 Takeda Tobadono-cho, Fushimi-ku, Kyoto, Japan
Security Code 6971
June 5, 2009
To Our Shareholders:
Notice of the 55th Ordinary General Meeting of Shareholders
This is to inform you that Kyocera Corporation (the Company) will hold its 55th Ordinary General Meeting of Shareholders, as described below, which you are cordially invited to attend.
If you are unable to attend the Meeting, please exercise your voting rights in written form or electronically, after examining the attached reference documents for the General Meeting of Shareholders, no later than 5:30 p.m. Wednesday, June 24, 2009, Japan time.
[Method of exercising voting rights in written form (voting card)]
Please mark for or against as to the agenda on the voting card enclosed herewith and return it by the above deadline for exercising voting rights.
[Method of exercising voting rights electronically (through the Internet, etc.)]
Please access the Internet website for exercise of voting rights (http://daiko-sb.gcan.jp) through a personal computer or mobile phone. Using the code and password written on the voting card enclosed herewith and following the guidelines set forth on the website, please mark for or against as to the agenda by the above deadline for exercising voting rights.
3. Purpose of the Meeting:
Matters to be reported:
Matters to be resolved:
4. Matters relating to the Convocation:
[Treatment in case of multiple exercises of voting rights by a shareholder]
Reference Documents for General Meeting of Shareholders
Agenda and References are as follows:
Agendum No. 1: Disposition of Surplus
The Company believes that the best way to meet shareholders expectations is to improve the consolidated performance of the Company on an ongoing basis.
The Company has adopted the principle that dividend amounts should be within a range of net income of the Company on a consolidated basis, and has set its consolidated dividend policy to maintain a consolidated dividend ratio at a level of approximately 20% to 25% of consolidated net income. In addition, the Company determines dividend amounts based on an overall assessment, taking into account various factors including the amount of capital expenditures necessary for the medium to long-term growth of the Company.
Pursuant to this policy and based on full year performance through the year ended March 31, 2009 (hereinafter referred to as this fiscal year), the Company proposes a year-end dividend for this fiscal year in the amount of 60 yen per share, the same amount as in the year ended March 31, 2008 (hereinafter referred to as the previous fiscal year). When aggregated with the interim dividend in the amount of 60 yen per share, the total annual dividend will be 120 yen per share, the same amount as in the previous fiscal year.
The Company also proposes to effectuate a reverse of its reserve for research and development, reserve for dividends, reserve for retirement benefits, reserve for overseas investments, and general reserve, taking into account the Companys financial status, performance through this fiscal year, and business conditions going forward.
The proposed disposition of surplus is as follows:
Agendum No. 2: Partial Amendments to the Articles of Incorporation
The Law for Partial Amendments to the Law concerning Book-entry Transfer of Corporate Bonds and Other Securities for the Purpose of Streamlining the Settlement for Trades of Stocks and Other Securities (Law No. 88, 2004) (hereinafter referred to as the Settlement Streaming Law) has become effective as from January 5, 2009, and the share transfer system for all shares of listed companies in Japan has been converted to a book-entry share transfer system (a so called paperless share system).
The Company is amending its Articles of Incorporation, concomitantly with such change in the system, as follows:
The contemplated amendments are as follows:
(The underlined portion indicates the proposed amendments.)
Agendum No. 3: Election of twelve (12) Directors
The terms of office of all twelve (12) Directors will expire at the close of this General Meeting of Shareholders. Accordingly, the Company proposes that twelve (12) Directors be elected.
The candidates for Director are as follows:
Mr. Rodney N. Lanthorne: 3,628 shares of Common Stock of the Company (3,628 ADRs)
Mr. John S. Gilbertson: 18,867 shares of Common Stock of the Company (18,867 ADRs)
Agendum No. 4: Election of two (2) Corporate Auditors
The term of office of two (2) Corporate Auditors, Messrs. Yoshihiko Nishikawa and Shigekazu Tamura will expire at the close of this Meeting. Accordingly, the Company proposes that two (2) Corporate Auditors be elected.
With respect to this Agendum, consent from the Board of Corporate Auditors has been obtained.
The candidates for Corporate Auditor are as follows:
The reason for nomination of Mr. Yoshinari Hara as a candidate for outside Corporate Auditor is that he is capable of conducting a general audit of corporate activities as a whole as an outside Corporate Auditor based on his abundant experience and knowledge of the management of a securities firm.
Agendum No. 5: Bonuses to Directors
The Company proposes to pay bonuses to the twelve (12) Directors in office as of March 31, 2009 in an aggregate amount of 23.7 million yen taking into consideration the performance of the Company during this fiscal year.
Agendum No. 6: Revision of Amount of Remuneration of Directors and Corporate Auditors in line with Reform of the Remuneration System for Directors and Corporate Auditors
It was resolved at the 51st Ordinary General Meeting of Shareholders of the Company, held on June 28, 2005, that the aggregate remuneration payable to the Directors shall amount to not more than 30 million yen per month. It was also resolved at the 37th Ordinary General Meeting of Shareholders of the Company held on June 27, 1991, that the aggregate remuneration payable to the Corporate Auditors shall amount to not more than 8 million yen per month.
The Company proposes that the remuneration system for Directors and Corporate Auditors be reformed; so that from among the three categories of remuneration to Directors and Corporate Auditors, namely, monthly remuneration, bonuses and retirement allowances, retirement allowances be abolished; and that thereafter, remuneration to Directors shall consist of basic remuneration and bonuses to Directors only. In line with such reform the aggregate remuneration payable to Directors and Corporate Auditors shall be revised as set forth below.
Currently, the number of Directors in office is twelve (12) and the number of Corporate Auditors in office is five (5), and if Agenda 3 and 4 relating to the election of Directors and Corporate Auditors, respectively, are approved as originally proposed by the Company, there will be no change in such numbers.
Basic remuneration constitutes of remuneration to be paid in compensation for the exercise of responsibility by each Director, and the aggregate remuneration payable to all Directors shall be no more than 400 million yen per year, taking into consideration the currently existing maximum imposed upon the aggregate amount of retirement allowances payable to Directors. As has been the Companys past practice, such amount does not include the amount of any salaries for service as employees to be paid to Directors who are also serving as employees of the Company.
Traditionally, bonuses to Directors have constituted remuneration linked with the performance of the Company for each fiscal year. However, to clarify the criteria therefor, in line with the reform of the remuneration system for Directors and Corporate Auditors, it is proposed that the aggregate amount payable to all Directors shall not exceed 0.2% of the consolidated net income of the Company for the relevant fiscal year, provided that such amount shall in no case exceed 300 million yen annually, and such aggregate amount shall be distributed among the Directors in accordance with their respective levels of contribution to the performance of the Company.
In order to maintain the impartiality of audit, payment of bonuses to Corporate Auditors shall cease and only basic remuneration, which is not linked with the performance of the Company, shall be paid. The aggregate amount payable to all Corporate Auditors shall be no more than 100 million yen annually.
Agendum No. 7: Payment of Retirement Allowances to Retiring Director and Payment of Settlement Funds to Directors and Corporate Auditor as a Result of Abolishment of the Retirement Allowance System
The Company proposes to pay retirement allowances in amounts which are reasonable and in accordance with the standards prescribed by the Company to Messrs. Kensuke Itoh, Noboru Nakamura, Naoyuki Morita, Michihisa Yamamoto and Isao Kishimoto, who will resign from the office of Director at the close of this Meeting due to expiration of their terms, for services rendered during their terms of office.
It is also proposed that the particular amounts, timing and method of payment of such allowances to the retiring Directors be determined at a meeting of the Board of Directors.
Brief personal histories of the retiring Directors are as follows:
In addition, the Company is abolishing the retirement allowance system for Directors and Corporate Auditors in line with the reformation of the system for remuneration of Directors and Corporate Auditors. Concomitantly with this, the Company proposes to pay to Messrs. Makoto Kawamura, Yuzo Yamamura, Tetsuo Kuba, Tatsumi Maeda, Hisao Hisaki, Rodney N. Lanthorne and John S. Gilbertson, who will be reelected as Directors upon approval of Agendum No. 3 as proposed by the Company, and to Mr. Yoshihiko Nishikawa, who will be reelected as Corporate Auditor upon approval of Agendum No. 4 as proposed by the Company, settlement funds in respect of retirement allowances for services rendered during their terms in office up to the close of this Meeting, in amounts which are reasonable and in accordance with the standards prescribed by the Company.
It is also proposed that the timing of the payment of such settlement fund be when the relevant Directors and Corporate Auditor retire from their respective offices, and that the particular amounts, timing and method of payment thereof to the abovementioned Directors be determined at a meeting of the Board of Directors and to the abovementioned Corporate Auditor be determined through discussion among the Corporate Auditors.
Brief personal histories of the Directors and Corporate Auditor who are proposed to receive the settlement funds are as follows:
- END -
Report for the year ended March 31, 2009
(Accompanying Materials for the 55th Ordinary General Meeting of Shareholders)
This is an English translation of the Japanese original of the Report for the year ended March 31, 2009 of Kyocera Corporation distributed to shareholders in Japan. The translation is prepared solely for the reference and convenience of foreign shareholders. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail.
Table of Contents
Respect the Divine and Love People
Preserve the spirit to work fairly and honorably,
respecting people, our work, our company and our global community.
To provide opportunities for the material and intellectual growth of all our
employees, and through our joint effort, contribute to the advancement of
society and humankind.
To coexist harmoniously with nature and society.
Harmonious coexistence is the underlying foundation of all our business
activities as we work to create a world of abundance and peace.
Kyocera was built upon a unique foundation: the human spirit
When I founded Kyocera, I didnt have sufficient funding, let alone decent facilities or equipment. However, I was fortunate enough to have associates with whom I felt a spiritual bond. We shared every joy and pain, just like a family. I therefore decided to run this company with faith in the human spirit. The human spirit is said to be easily changed. Yet, when a deep sense of trust exists, I have found that there is nothing stronger or more reliable than our spiritual ties. Today, this faith in the human spirit forms the very heart of Kyocera.
We are pleased to present to you our Report for the year ended March 31, 2009 (fiscal 2009).
The business environment was extremely tough in the fiscal period as the financial crisis sparked in the United States dragged the world economy into a major downturn while the yen continued to appreciate against major currencies. As a result, sales and profits fell below levels recorded in the previous fiscal year.
Amid this operating environment, Kyocera Group initiated a new management structure in April this year. Also amid this environment, we will return to our origins and strengthen the practice of our corporate philosophy, known as the Kyocera Philosophy and our management system, known as the Amoeba Management System, which have been driving forces behind the development of Kyocera Group since our earliest days. All employees will pool their collective capabilities to overcome the challenges facing us in these tough times, with our aim being swift improvement in business performance. Additionally, we will vigorously develop businesses for information and communication markets and for environment and energy markets, which are core markets with significant future growth potential for Kyocera Group, as we push forward confidently with efforts to be a creative company that continues to grow.
Kyocera Corporation celebrated 50 years in business in April this year. Established in April 1959, we started out as a components manufacturer specializing in fine ceramics. Since then, we have been dedicated to developing our business to provide assistance to our customers through ongoing enhancements in products and services in the hope of making a valuable contribution to society. At this key milestone in our history, we would like to express our sincerest gratitude to all shareholders for your unyielding support over the years.
We would very much appreciate your continued support of Kyocera Group in the coming years as well, as we forge ahead towards our goals.
Chairman of the Board and Representative Director
President and Representative Director
(1) Business Progress and Results
In the year ended March 31, 2009 (hereinafter, fiscal 2009 refers to the fiscal year ended March 31, 2009 and other fiscal years are referred to in a corresponding manner), the impact of the financial crisis triggered in the United States affected the real economy, resulting in rapid deceleration in the global economy commencing the second half of fiscal 2009. In the Japanese economy, exports decreased significantly due to the slowdown in overseas economies and appreciation of the yen against the U.S. dollar and Euro, while there was a significant decline in corporate production activity. As a result, the recession in the Japanese economy has become evident rapidly.
Due to the impact of the slumping global consumer spending, the digital consumer equipment market, which is a principal market for Kyocera Corporation and its consolidated subsidiaries (Kyocera Group or Kyocera), posted sluggish growth in sales of mobile phone handsets, personal computers (PCs), flat panel TV sets and digital cameras. In addition, the business environment has changed dramatically commencing the second half of fiscal 2009 due to the sharp decline in corporate information technology investment. As a result, sales for both components business and equipment business decreased compared with fiscal 2008. The solar energy market expanded worldwide, due in part to subsidies from national governments despite harsh environment.
Consolidated Financial Results:
Consolidated net sales for fiscal 2009 amounted to ¥1,128,586 million, a decrease of 12.5% compared with fiscal 2008, due primarily to the impact of a decrease in demand affected by deteriorating business environment and to appreciation of the yen.
Amid such a harsh business environment, Kyocera Group continued to pursue synergies by effectively utilizing management resources and to aggressively release new products, while also promoting comprehensive Group-wide cost reductions. Nonetheless, profit from operations for fiscal 2009 decreased by 71.5% compared with fiscal 2008 to ¥43,419 million due mainly to a decrease in demand and product selling price erosion. Income before income taxes decreased by 68.0% to ¥55,982 million due to the decrease in profit from operations. Net income decreased by 72.5% to ¥29,506 million.
Average exchange rates for fiscal 2009 were ¥101 to the U.S dollar and ¥143 to the Euro, marking appreciation of ¥13 and ¥19, respectively, compared with fiscal 2008. As a result, net sales and income before income taxes after translation into the yen for fiscal 2009 were, for calculation purposes, pushed down by approximately ¥91.0 billion and ¥23.0 billion, respectively.
Highlights of Consolidated Results
Consolidated Results by Reporting Segment
(1) Fine Ceramic Parts Group
As a result of a substantial slump in component demand led by sharp decline in production activity in numerous industries, namely the semiconductor and automotive industries, overall sales and operating profit in this reporting segment decreased compared with fiscal 2008.
(2) Semiconductor Parts Group
As a result of rapid deterioration in demand for ceramic packages used mainly in digital consumer equipment and organic packages used mainly in servers from the latter half of the second quarter of fiscal 2009, sales and operating profit in this reporting segment both decreased compared with fiscal 2008.
(3) Applied Ceramic Products Group
Demand continued to show strong expansion until the third quarter, particularly in Europe and the United States, resulting in sales growth in the solar energy business compared with fiscal 2008. However, a significant decline in production activity in the automotive industry from the second half led to a decrease in demand for cutting tools. As a result, sales in this reporting segment decreased slightly compared with fiscal 2008. Operating profit was down due to one-off charge relating to an impairment of goodwill at a subsidiary as well as decreased sales for cutting tools.
(4) Electronic Device Group
Demand for digital consumer equipment declined due to the global economic downturn, forcing a rapid decline in production of digital consumer equipment and inventory adjustments for components thereof from the second half. Further, the impact of a decline in component prices and yen appreciation coupled with an impairment loss of certain fixed assets led to decreases in sales and operating profit in this reporting segment compared with fiscal 2008.
(1) Telecommunications Equipment Group
Although the mobile phone handset related business newly acquired from SANYO Electric Co., Ltd. (SANYO) contributed to sales from fiscal 2009, replacement demand for mobile phone handsets in the Japanese market weakened sharply while sales in overseas markets also decreased. As a result, sales in this reporting segment decreased only slightly compared with fiscal 2008. This reporting segment recorded an operating loss in fiscal 2009 due to the impact of a decrease in sales combined with decline in product price and the execution of structural reform at an overseas subsidiary.
(2) Information Equipment Group
Despite implementing various strategies to expand sales, such as continuous new product launches and extending sales networks, the impact of the yens appreciation against the Euro and U.S. dollar coupled with significant restrictions on information technology investment in the corporate sector resulted in a decrease in sales of printers and digital MFPs. As a result, both sales and operating profit in this reporting segment decreased compared with fiscal 2008.
Sales in this reporting segment for fiscal 2009 decreased by 9.0% compared with fiscal 2008 to ¥126,043 million due primarily to a decrease in sales of materials for electronic components. Despite an impairment of goodwill at a subsidiary, operating profit increased by 46.4% compared with fiscal 2008 to ¥14,106 million due to one-time gains from sales of real estate.
Principal Management Measures and Significant Decision implemented during fiscal 2009:
(2) Capital Expenditures
During fiscal 2009, Kyocera made capital expenditures to increase production volume in the solar energy business. In the fourth quarter of fiscal 2009, Kyocera substantially slowed down capital expenditures in other business in reaction to deteriorating business environment. As a result, capital expenditures for fiscal 2009 totaled ¥63,055 million, a decrease by ¥22,046 million (25.9%) compared with fiscal 2008.
Required funds for fiscal 2009 were mainly financed from internal funds.
(3) Management Challenges
In order for Kyocera Group as a whole to overcome the current difficult circumstances and improve its performance, Kyocera has substantially changed its management structure by promoting young members of the management team as officers and directors of the Company and the group companies. Kyocera faces the following challenges in fiscal 2010 and beyond.
In fiscal 2010, it is expected that harsh business environment will continue, where expansion of sales is difficult. However, Kyocera will endeavor to enhance its corporate structure and to secure profitability even in the face of the current sluggish business environment. Particularly, Kyocera will manage its business by thoroughly implementing the Kyocera Philosophy, our corporate philosophy and the Amoeba Management System, our unique management system that is operated by small unit to achieve maximum sales and minimum costs by all employees effort. In order to improve profitability as quickly as possible, all divisions will engage in all-out cost cutting, including the reduction of manufacturing costs and review of capital expenditures plans.
In addition, Kyocera will improve the profitability of existing businesses and develop competitive new products and technologies to establish a highly profitable structure by efficiently utilizing Kyoceras management resources to pursue synergetic effects.
(ii) Business Expansion in Important Markets
Kyocera will expand its businesses in the information and communication market and the environment and energy market. In the information and communication market, it is ensuring the linkage of new business opportunities with its business expansion, such as commencement of provision of new generation high speed wireless communication service in the domestic market. It also aims to expand its component business and equipment business by releasing products meeting the need for advanced digital consumer equipment in a timely fashion.
In the environment and energy market, further growth is expected due to raising awareness of environmental issues. Kyocera will continue to implement strategic investments to expand production capacity for solar cells and modules. It will also make efforts to reduce manufacturing costs and to improve conversion efficiency and expand solar energy business as a core business of Kyocera Group. In addition, it will make further efforts to expand its business in the environment and energy market by creating new products and expanding product items such as solid oxide fuel cell (SOFC) based power generating units for home use, utilizing its fine ceramic materials technologies.
Note: Forward-Looking Statements
Certain of the statements made in this Report 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 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 technological 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; our continuing to hold licenses to manufacture and sell certain of our products; the possibility that future initiatives and in-process research and development may not produce the desired results; the possibility that companies or assets acquired by us may require more cost than expected for integration, and may not produce the returns or benefits, or bring in business opportunities, which we expect; events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of disease; the occurrence of natural disasters, such as earthquakes, in locations where our manufacturing and other key business facilities are located; the possibility of future tightening of environmental laws and regulations in Japan and other countries which may increase our environmental liability and compliance obligations; 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 Report.
(4) Four-Year Financial Summary
(5) Principal Business (as of March 31, 2009)
Kyocera manufactures and sells a highly diversified range of products, including components involving fine ceramic technologies and applied ceramic products, telecommunications and information equipment, etc. The principal products are as follows:
(6) Significant Subsidiaries (as of March 31, 2009)
(7) Principal Business Sites (as of March 31, 2009)
(8) Employees (as of March 31, 2009)
2. Shares (as of March 31, 2009)
(1) Total number of shares authorized to be issued: 600,000,000
(2) Total number of shares issued: 191,309,290
(7,781,256 shares of treasury stock are included in the total number of shares issued set forth above.)
(3) Number of shareholders: 65,582
(4) Major shareholders (Top 10)
Note: Shareholding ratios are calculated after deduction of the treasury stock.
(1) List of Directors and Corporate Auditors (as of March 31, 2009)
(2) Directors and Corporate Auditors retired during fiscal 2009
One Director and two Corporate Auditors retired during fiscal 2009, as follows:
(3) Remuneration to Directors and Corporate Auditors for fiscal 2009
(4) Outside Corporate Auditors
(i) Activities of outside Corporate Auditors during fiscal 2009
Kyocera Corporation has entered into agreements with outside Corporate Auditors regarding the limitation of their liability for damages due to negligence in the performance of their tasks, in accordance with paragraph 1 of Article 427 of the Corporation Act and Article 36 of the Articles of Incorporation of Kyocera Corporation. The amounts of damages that may be pursued against them, as set under such agreements, are the smallest amounts permissible under applicable laws and regulations.
4. Accounting Auditor
Kyocera Corporation pays remuneration to Kyoto Audit Corporation for due diligence services concerning corporate combinations.
In the event that the Board of Corporate Auditors determines that the Accounting Auditor is subject to any of the events as provided by Paragraph 1 of Article 340 of the Corporation Act, the Board of Corporate Auditors is authorized to terminate the office of such Accounting Auditor or to request the Board of Directors to consider proposing to the General Shareholders Meeting the termination or non-reappointment of such Accounting Auditor. Should anything occur to negatively impact the qualifications or independence of the Accounting Auditor, making it unlikely that such Accounting Auditor will be able to properly perform an audit, the Board of Directors, subject to prior consent of, or request from, the Board of Corporate Auditors, shall propose to the General Shareholders Meeting a resolution to terminate or not to reappoint such Accounting Auditor.
5. System and Policy
Kyocera Corporation has adopted through its Board of Directors the Kyocera Group Basic Policy for Corporate Governance and Internal Control as follows:
Basic Policy for Corporate Governance and Internal Control
Kyocera Group has made Respect the Divine and Love People its corporate motto and to provide opportunities for the material and intellectual growth of all our employees, and through our joint effort, contribute to the advancement of society and humankind. its management rationale.
Kyocera Group always strives to maintain equity and fairness, and faces all situations with courage and conscience, and it intends to realize transparent systems for corporate governance and internal control.
Under such corporate motto and management rationale, the Board of Directors is implementing a basic policy for corporate governance and internal control as described below.
This statement of basic policy sets forth such basic policy in accordance with Paragraph 5 and item 6 of Paragraph 4 of Article 362 of the Corporation Act, and Paragraphs 1 and 3 of Article 100 of the Execution Rules of the Corporation Act, which require establishment of a system to ensure that conduct of business by the Directors will be in compliance with all applicable laws and regulations and the Articles of Incorporation and to ensure proper conduct of business by Kyocera Corporation (the Company) and Kyocera Group, as a whole.
I. Corporate Governance
1. Basic Policy for Corporate Governance
The Board of Directors of Kyocera Corporation defines the corporate governance of Kyocera Group to mean structures to ensure that Directors conducting the business manage the corporations in a fair and correct manner.
The purpose of corporate governance is to maintain soundness and transparency of management and to achieve fair and efficient corporate management, through which the management rationale of Kyocera Group can be realized.
The Board of Directors shall inculcate the Kyocera Philosophy, which is the basis of the management policy of Kyocera Group, into all Directors and employees working in Kyocera Group, and establish a sound corporate culture. The Board of Directors shall establish proper corporate governance through exercise of the Kyocera Philosophy (Note).
2. System for Corporate Governance
The Board of Directors of Kyocera Corporation determines, pursuant to the basic policy described in 1 above, the below-outlined system for corporate governance of Kyocera Corporation, which is the core company within Kyocera Group, to ensure that the conduct of business by the Directors is in compliance with all applicable laws and regulations and the Articles of Incorporation. The Board of Directors will constantly seek the ideal system for corporate governance and always evolve and develop its existing corporate governance system.
(1) Organs of Corporate Governance
The Board of Directors shall establish a corporate structure in which the Corporate Auditors and the Board of Corporate Auditors will serve as organs of corporate governance pursuant to the provisions of the Articles of Incorporation, as approved by the General Meeting of Shareholders of Kyocera Corporation. Directors of Kyocera Corporation shall strictly observe the following, to ensure effective audit by the Corporate Auditors and the Board of Corporate Auditors:
Representative Directors shall establish offices for the Corporate Auditors upon their request, and shall cause certain employees, nominated through prior discussion with the Corporate Auditors, to work in such offices to assist in the tasks of the Corporate Auditors and the Board of Corporate Auditors. Such employees, while still subject to the work rules of Kyocera Corporation, shall be under the instruction and supervision of each of the Corporate Auditors, and transfer, treatment (including evaluation) and disciplinary action relating to them shall be made only following discussion with the Corporate Auditors.
In the event that any Director becomes aware of any matter that breaches or may breach any law or regulation or the Articles of Incorporation, or in the event that any Director becomes aware of any matter that may cause substantial damage to Kyocera Group, he or she shall immediately report thereon to the Board of Corporate Auditors. In addition, in the event that any Corporate Auditor or the Board of Corporate Auditors requests a report from any Director pursuant to the Regulations of the Board of Corporate Auditors, such Director shall comply with such request.
Representative Directors shall cause the internal audit department to report regularly the status of the internal audit to the Corporate Auditors. In addition, upon request from the Corporate Auditors, Representative Directors shall cause any specified department(s) to report the status of their conduct of business directly to the Corporate Auditors. Representative Directors shall also maintain a system for internal complaint reporting to the Board of Corporate Auditors, established by the Board of Corporate Auditors, under which employees, suppliers and customers of Kyocera Corporation may submit complaints directly to the Board of Corporate Auditors.
In the event that Representative Directors are requested by any Corporate Auditor to effectuate any of the following matters, as necessary to establish a system to ensure effective audit by the Corporate Auditors, Representative Directors shall comply with such request:
(2) Kyocera Philosophy Education
Representative Directors of Kyocera Corporation shall undertake Kyocera Philosophy Education from time to time in order to inculcate the Kyocera Philosophy into the Directors (including themselves) and employees of Kyocera Group.
II. Internal Controls
1. Basic Policy for Internal Controls
The Board of Directors of Kyocera Corporation defines the internal controls of Kyocera Group to mean systems to be established within the corporate organization to achieve management policy and master plans in a fair manner, in order for the Directors undertaking management of Kyocera Corporation to effectuate management policy. The Board of Directors of Kyocera Corporation will establish internal controls through implementation of the Kyocera Philosophy.
2. System for Internal Controls
Under the policy as described in 1 above, the Board of Directors shall cause Representative Directors to establish the systems described below. In addition, the Board of Directors shall constantly evolve and develop such systems, seeking an ideal system of internal controls.
Representative Directors shall establish the Kyocera Disclosure Committee as a system for making timely and appropriate disclosure of information and for properly maintaining information relating to the conduct of business by the Directors in accordance with applicable laws and regulations and the internal rules of Kyocera Corporation.
Representative Directors shall create a risk management department in order to establish a risk management system for Kyocera Group. Representative Directors shall also establish systems to undertake necessary actions from time to time.
Representative Directors shall establish employee consultation corners as an internal complaint reporting system within Kyocera Group, so that employees who become aware of any matter that breaches or may breach laws or regulations or the Articles of Incorporation or other internal rules can report thereon. The employee consultation corners will take appropriate action in respect of reports received thereby, which shall be treated in accordance with the Law for Protection of Reporters in the Public Interest.
Representative Directors shall clearly delegate authority and related responsibility by establishing an Executive Officer system to achieve efficient and effective conduct of business. Representative Directors shall cause the Executive Officers to report the status of their conduct of business, and, accordingly, a system shall be maintained under which Representative Directors can verify whether business is conducted efficiently.
In addition to the matters described in (1) through (3) above, as a system to ensure the appropriate conduct of business at Kyocera Group, Representative Directors shall establish the Kyocera Group Management Committee. Such Committee shall discuss important matters relating to Kyocera Group and receive reports relating thereto. Representative Directors shall also establish an internal audit department in order to conduct audits regularly to evaluate the appropriateness of conduct of business at Kyocera Group.
The current status of systems established relating to internal control is as follows.
Consolidated Balance Sheets
The consolidated balance sheets and the consolidated statements of income of the previous fiscal year, indications of increase (decrease) of amounts and remarks are presented solely for the reference.
Consolidated Statements of Income
Consolidated Statement of Stockholders Equity (From April 1, 2008 to March 31, 2009)
Consolidated Cash Flows (For Reference Only)
1. Basis of preparation of Consolidated Financial Statements
Number of consolidated subsidiaries: 209
Major consolidated subsidiaries: Kyocera Mita Corporation, AVX Corporation and Kyocera International, Inc.
Major non-consolidated subsidiary: Kyoto Purple Sanga Co., Ltd.
This subsidiary is excluded from the scope of consolidation because its total assets, net sales, net income and retained earnings are immaterial to a reasonable judgment of the consolidated financial condition and business results of Kyocera.
Number of non-consolidated subsidiaries and affiliates accounted for by the equity method: 12
Major affiliate accounted for by the equity method: Willcom, Inc.
Increase by acquisition, etc.: 41, Kyocera Telecom Equipment (Malaysia) Sdn. Bhd.
TA Triumph-Adler Aktiengesellschaft and others
Decrease by liquidation, etc.: 6, Kyocera Zhenhua Communication Equipment Co., Ltd. and others
Increase by acquisition, etc.: 2, Consulta Burotechnik Spol.S.R.O. and others
Decrease by liquidation, etc.: 2, TA Triumph-Adler Aktiengesellschaft and others
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States pursuant to the provision of paragraph 1 of Article 120 of the Corporate Calculation Rules of Japan. Certain disclosures and footnotes required under principles generally accepted in the United States are omitted pursuant to the same provision.
Finished goods and work in process are mainly stated at the lower of cost or market, the cost being determined by the average method. Other inventories are mainly stated at the lower of cost or market, the cost being determined by the first-in, first-out method.
Kyocera has adopted SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities for certain 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 accumulated other comprehensive income, net of tax.
Depreciation is computed based mainly on the declining-balance method.
Kyocera has adopted SFAS No. 142, Goodwill and Other Intangible Assets. Goodwill and intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually. Intangible assets with definite useful lives are amortized over their respective estimate useful lives.
Allowance for doubtful accounts:
In anticipation of uncollectible accounts receivable, Kyocera provides allowance for doubtful accounts, for general accounts receivable, based on the past actual ratio of losses on bad debts; and, for certain specific doubtful accounts receivable, based on estimates of uncollectible amounts pursuant to analysis of individual receivables.
Accrued pension and severance liabilities:
Kyocera adopts SFAS No. 87, Employers Accounting for Pensions and SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans. Kyocera recognizes the overfunded or underfunded status of its defined benefit postretirement plans as an asset or liability in the consolidated balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. Prior service cost is amortized by the straight-line method over the average remaining service period of employees. Actuarial gain or loss is recognized by amortizing a portion in excess of 10% of the greater of the projected benefit obligations or the market-related value of plan assets by the straight-line method over the average remaining service period of employees.
In September 2006, Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements. The purpose of SFAS No. 157 is to define fair value, establish a framework for measuring fair value and enhance disclosures about fair value measurements. The measurement and disclosure requirements related to financial assets and financial liabilities were effective April 1, 2008. The adoption of SFAS No. 157 for financial assets and financial liabilities had no material impact on Kyoceras consolidated results of operations and financial position.
In September 2006, FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No.87, 88, 106, and 132 (R). SFAS No. 158 requires an employer to measure the funded status of a benefit plan as of the date of its fiscal year-end statement of financial position for the years ended after December 15, 2008. Kyocera adopted this measurement date provision in fiscal 2009 and measured the funded status of its benefit plans at the date of its fiscal year-end statement of financial position. As a result of applying the transition method of this provision, retained earnings and other comprehensive income at the beginning of the year decreased by ¥522 million and ¥418 million, respectively.
2. Notes to Consolidated Balance Sheets
3. Notes to Consolidated Statement of Stockholders Equity
(1) Total number of shares issued
(2) Distribution of surplus
4. Notes to per share information
Statements of Income
Statement of Changes in Net Assets
1. Summary of Significant Accounting Policies
(1) Standards and methods of valuation of assets
(2) Depreciation of non-current assets:
(3) Accounting for allowances and accruals
(4) Other significant policies
Commencing from fiscal 2009, royalty income, which had been recorded in non-operating profit, is presented as net sales. Kyocera Corporation believes this change will show actual conditions more properly, because, based on sales plans in the solar energy group, royalty income is expected to increase, and royalty income is the main income from operating activities. As a consequence, net sales increased by ¥1,971 million and operating loss decreased by ¥1,971 million, however, this change did not affect recurring profit or income before income taxes.
Commencing from fiscal 2009, Accounting Standard for Measurement of Inventories (Accounting Standard Board of Japan Statement No. 9 dated July 5, 2006) has been adopted. As a result, inventories are valued on a cost basis (with adjustment by write-down taking into consideration decline of profitability). In addition, ¥1,171 million of loss on disposal of inventories, which had been recorded in non-operating expenses, is presented as cost of sales, and inventories were valued in accordance with such Statement. The effect of applying this standard increased loss from operations by ¥1,501 million, while decreasing recurring profit and income before income taxes by ¥330 million.
Since fiscal 2009, Accounting Standard for Lease Transactions (Accounting Standard Board of Japan Statement No. 13 dated June 17, 1993) (First Section of the Business Accounting Council) as amended as of March 30, 2007) and the guidance on accounting standard for lease transactions (Guideline on Accounting Standard No. 16 dated January 18, 1994) (Accounting Practice Committee, Japanese Institute of Certified Public Accountants), as amended as of March 30, 2007, have been applied. There was no material impact from this adoption.
Commencing from fiscal 2009, the amendments to accounting standard for retirement benefits (Part 3) (Accounting Standard Board of Japan Statement No. 19) (dated July 31, 2008) have become applicable to financial statements for fiscal years commencing prior to March 31, 2009. There was no impact from this adoption, because actuarial gains or losses arising in fiscal 2009 are amortized as from fiscal 2010. In addition, there is no difference in the projected benefit obligation arising from this adoption.
Commencing from fiscal 2009, raw materials and supplies, which had been stated separately, are presented as raw materials and supplies due to the issuance of Partial amendments to the Cabinet Office Ordinance for Regulations Concerning the Terminology, Forms and Preparation Methods (the Cabinet Ordinance No. 50 dated August 7, 2008). The amounts of raw materials and supplies are ¥12,862 million and ¥711 million, respectively.
Commencing from fiscal 2009, refundable income tax, which had been recorded in other accounts receivable, is separately presented as refundable income tax.
2. Notes to Balance Sheets:
Keep-well letters and guidance for management:
4. Notes to Statement of Changes in Net Assets
Number and class of treasury shares
5. Notes to Accounting for the Effects of Income Taxes
6. Notes to fixed assets used by finance lease
Some of fixed assets used by finance lease are off balance, which consist mainly of manufacturing equipment and computer.
7. Notes concerning Related Party Transactions
8. Notes to per share information
Independent Auditors Report
May 22, 2009
To the Board of Directors of
We have audited, pursuant to Article 444, paragraph 4 of the Corporation Act of Japan, the consolidated financial statements, which consist of the consolidated balance sheet, the consolidated statement of income, the consolidated statement of stockholders equity and the notes to the consolidated financial statements of Kyocera Corporation (hereinafter referred to as the Company) for the fiscal year from April 1, 2008 to March 31, 2009. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Kyocera Corporation and its consolidated subsidiaries as of March 31, 2009 and the consolidated result of their operations for the year then ended in conformity with accounting principles generally accepted in the United States of America pursuant to the provision of paragraph 1 of Article 120 of the Corporation Act of Japan. (Refer to Note 1 Basis of preparation of Consolidated Financial Statements to the consolidated financial statements.)
We have no interest in or relationship with the Company which is required to be disclosed pursuant to the provisions of the Certified Public Accountant Law of Japan.
Independent Auditors Report
May 22, 2009
To the Board of Directors of
We have audited, pursuant to Article 436, paragraph 2 - 1, of the Corporation Act of Japan, the financial statements, which consist of the balance sheet, the statement of income, the statement of changes in net assets, the notes to the financial statements and the supplementary schedules thereof of Kyocera Corporation (hereinafter referred to as the Company) for the 55th fiscal year from April 1, 2008 to March 31, 2009. These financial statements and supplementary schedules thereof are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and supplementary schedules thereof based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we obtain reasonable assurance about whether the financial statements and supplementary schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and supplementary schedules thereof. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and supplementary schedules thereof referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2009 and the result of its operation for the year then ended in conformity with accounting principles generally accepted in Japan.
We have no interest in or relationship with the Company which is required to be disclosed pursuant to the provisions of the Certified Public Accountant Law of Japan.
The Board of Corporate Auditors, based on audit reports prepared by each Corporate Auditor related to the execution of duties of Directors during the 55th fiscal year from April 1, 2008 to March 31, 2009, hereby reports its results of audit after deliberations, as the unanimous opinion of all Corporate Auditors, as follows:
1. Audit Methods by individual Corporate Auditors and by the Board of Corporate Auditors
The Board of Corporate Auditors established auditing policies, auditing plans and role sharing for the fiscal year and received audit reports from each Corporate Auditor on the execution of his auditing activities and the result thereof. In addition, it received reports on the execution of duties from Directors, etc. and from the Independent Auditors, and, when necessary, requested their explanations regarding such reports.
In accordance with the auditing standards for Corporate Auditors set by the Board of Corporate Auditors, each Corporate Auditor communicated with Directors, internal audit division such as Risk Management Division and employees of Kyocera Corporation (hereinafter referred to as the Company) and endeavored to gather information and create an improved environment for auditing, according to the auditing policies, auditing plans and role sharing for the fiscal year. Corporate Auditors also attended the meetings of the Board of Directors and other important meetings, received reports from Directors, internal audit division and employees of the Company on business execution, and, when necessary, requested their explanations regarding those reports. Corporate Auditors also inspected documents related to important decisions and examined operations and assets at the Companys head office, plants and major operational establishments. In addition, Corporate Auditors had regular meetings with Chairman of the Board and Representative Director and President and Representative Director of the Company and exchanged opinions and information on issues, etc. with respect to auditing. Corporate Auditors also monitored and examined the resolution of the Board of Directors regarding the systems required by Paragraph 1 and 3 of Article 100 of the Execution Rules of the Corporation Act as being necessary for ensuring that the execution of duties by Directors shall be in compliance with laws and regulations and with the Companys Articles of Incorporation and that the Companys operations shall be conducted appropriately, and the status of the systems (internal control systems) established under such resolution.
With respect to the internal control systems regarding financial reporting, Corporate Auditors received reports on the evaluation of such internal control systems and the auditing condition from Directors, etc. and from Kyoto Audit Corporation, and, when necessary, requested their explanations regarding those reports.
With respect to subsidiaries, Corporate Auditors had regular meetings with Corporate Auditors, etc. of subsidiaries and facilitated communications with Directors of them too, and, when necessary, attended the important meetings, received reports on business, requested their explanations and expressed opinions. Based on the foregoing methods, Corporate Auditors reviewed the business report of the fiscal year and the supplementary schedules.
In addition, Corporate Auditors monitored and examined whether the Independent Auditors maintain their independence and performed their audits in an appropriate manner, and received reports from the Independent Auditors on the execution of their duties and, when necessary, requested their explanations regarding those reports. Corporate Auditors also received notification from the Independent Auditors that they have taken steps to improve the system for ensuring appropriate execution of their duties (as enumerated in Article 131 of the Corporate Calculation Rules of Japan) in compliance with the Quality Control Standards Relating to Auditing (adopted by the Business Accounting Deliberation Council on October 28, 2005) and, when necessary, requested their explanations regarding such notification. Based on the foregoing methods, Corporate Auditors reviewed the financial statements (balance sheet, statement of income, statement of changes in net assets and notes to financial statements) for the fiscal year and supplementary schedules thereto as well as consolidated financial statements (consolidated balance sheet, consolidated statement of income, consolidated statement of stockholders equity and notes to consolidated financial statements).
2. Results of Audit
(1) Result of the audit of the business report, etc.
(2) Result of the audit of financial statements and supplementary schedules thereto
(3) Result of the audit of consolidated financial statements
May 27, 2009
Board of Corporate Auditors
Full-time Corporate Auditor
Full-time Corporate Auditor
Osamu Nishieda, Shigekazu Tamura and Kazuo Yoshida are outside Corporate Auditors as required under Item 16 of Article 2 and Paragraph 3 of Article 335 of the Corporation Act.