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Kyocera 6-K 2009
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 June 2009

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-


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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/ SHOICHI AOKI

    Shoichi Aoki
    Managing Executive Officer
    General Manager of
Corporate Financial & Accounting Group
Date: June 05, 2009    


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Information furnished on this form:

EXHIBITS

 

Exhibit
    Number    

   
1.   Notice of the 55th Ordinary General Meeting of Shareholders.
2.   Report for the year ended March 31, 2009 (Accompanying Materials for the 55th Ordinary General Meeting of Shareholders)


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LOGO

 

 

Notice of the 55th Ordinary General Meeting of Shareholders

to be held in Kyoto, Japan on June 25, 2009

Kyocera Corporation

6 Takeda Tobadono-cho, Fushimi-ku, Kyoto, Japan

 

Notice:

 

1. This is an English translation of the Japanese original of the Notice of the 55th Ordinary General Meeting of Shareholders 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.

 

2. The Notice of Resolution for the 55th Ordinary General Meeting of Shareholders will be available at the following website of Kyocera Corporation within 5 days after the Meeting.

http://global.kyocera.com/ir/s_info.html


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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.

 

1. Time and Date:

   10:00 a.m. on Thursday, June 25, 2009, Japan time

2. Place:

  

20th Floor Event Hall at the head office of the Company,

6 Takeda Tobadono-cho, Fushimi-ku, Kyoto, Japan

3. Purpose of the Meeting:

Matters to be reported:

 

  (1) Reporting of the substance of the business report, the consolidated financial statements and the result of audit of consolidated financial statements by the Accounting Auditor and the Board of Corporate Auditors for the year ended March 31, 2009; and

 

  (2) Reporting of the substance of the financial statements for the year ended March 31, 2009.

 

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Matters to be resolved:

 

Agendum No. 1:    Disposition of Surplus
Agendum No. 2:    Partial Amendments to the Articles of Incorporation
Agendum No. 3:    Election of twelve (12) Directors
Agendum No. 4:    Election of two (2) Corporate Auditors
Agendum No. 5:    Bonuses to Directors
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
Agendum No. 7:    Payment of Retirement Allowances to Retiring Directors and Payment of Settlement Funds to Directors and Corporate Auditor as a Result of Abolishment of the Retirement Allowance System

4. Matters relating to the Convocation:

[Treatment in case of multiple exercises of voting rights by a shareholder]

 

  (1) In the event that any shareholder exercises voting rights in written form (voting card) as well as electronically (through the Internet, etc.), the electronic exercise of voting rights shall supersede and be treated as the effective exercise of the voting rights.

 

  (2) In the event of multiple electronic exercises of voting rights (through the Internet, etc.) by a shareholder, the last electronic exercise of voting rights shall supersede and be treated as the effective exercise of the voting rights.

 

Very truly yours,
KYOCERA CORPORATION
Tetsuo Kuba
President and Representative Director

 

 

Notes:

 

1. If you attend the Meeting, please submit the enclosed form for exercising voting rights to the receptionist.

 

2. In the event that any change is necessary in the reference documents for the General Meeting of Shareholders, the business report, the consolidated financial statements or the financial statements, the Company shall give notice thereof to shareholders by posting it on the Company’s website (http://global.kyocera.com/ir/index.html), which can be accessed through the Internet.

 

3. Taking into consideration the recent economic situation, etc., a buffet-style gathering after the General Meeting of Shareholders that was held until last year will not take place. Your understanding is appreciated.

 

2


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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 Company’s financial status, performance through this fiscal year, and business conditions going forward.

The proposed disposition of surplus is as follows:

 

1.  

Mattersrelating to Year-end Dividend

 
  (1)    Type of assets distributed as dividend:             
            Cash    
  (2)    Matters relating to allocation to shareholders of assets distributed as dividend and aggregate amount thereof:
            60 yen per share of Common Stock of the Company.    
            The aggregate amount thereof shall be 11,011,682,040 yen.  
  (3)    Effective Date of distribution of surplus as dividend:    
            June 26, 2009    
2.   Matters relating to disposition of Other Retained Earnings  
  (1)    Item to be increased and amount thereof:           
            Profit surplus carried over:   8,000,000,000 yen.                                                                                    
  (2)    Items to be reduced and amounts thereof:  
            Reserve for research and development:   1,000,000,000 yen.  
            Reserve for dividends:   1,000,000,000 yen.  
            Reserve for retirement benefits:      300,000,000 yen.  
            Reserve for overseas investments:   1,000,000,000 yen.  
            General reserve:   4,700,000,000 yen.  

 

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Agendum No. 2:    Partial Amendments to the Articles of Incorporation

 

1. Reason for Amendments

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:

 

  (1) The amendments include deletion of provisions relating to share certificates, beneficial owners of shares and the register of beneficial owners, because these are no longer necessary under the paperless share system. In this connection, it should be noted, however, that Article 7 (Issuance of Share Certificates) has been deemed already abandoned on the effective date of the Settlement Streaming Law pursuant to Paragraph 1 of Article 6 of the Supplemental Provisions to the Settlement Streaming Law.

 

  (2) A Register of Lost Share Certificates is required to be prepared and maintained by the Company for a period of one year commencing immediately following the effective date of the Settlement Streaming Law, and necessary provisions are to be newly created in the supplemental provisions to the Articles of Incorporation in this connection.

 

  (3) In addition to the above, certain necessary amendments are to be made to adjust paragraph numbering and to alter wording.

 

2. Substance of Amendments

The contemplated amendments are as follows:

(The underlined portion indicates the proposed amendments.)    

 

Present Article   Proposed Amendment

Article 3.       Location of Principal Office

 

The principal office of the Company shall be located in Kyoto City.

 

Article 3.       Location of Principal Office

 

(Not amended in English translation)

Article 7.       Issuance of Share Certificates

 

The Company shall issue share certificates representing its shares.

  <Deleted>

 

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Present Article   Proposed Amendment

Article 8.       Acquisition of its Own Shares by the Company

 

(Omitted)

 

Article 7.       Acquisition of its Own Shares by the Company

 

(Not amended)

 

Article 9.      Number of Shares Constituting a Share Unit and Non-Issuance of the Share Certificates for Shares not Constituting a Full Share Unit

 

1. The number of shares constituting a single share unit of the Company shall be 100.

 

2. Regardless of the provision of Article 7, the Company shall not issue any share certificates representing the shares not constituting a full share unit, except for the cases provided for in the Share Handling Regulations of the Company.

 

 

Article 8.       Number of Shares Constituting a Share Unit

 

 

 

The number of shares constituting a single share unit of the Company shall be 100.

 

<Deleted>

 

Article 10.    Rights Relating to Shares not Constituting a Full Share Unit

 

Shareholders (which shall hereinafter include beneficial owners) of the Company cannot exercise their rights relating to shares not constituting a full share unit that they own except for the following:

 

 

Article 9.      Rights Relating to Shares not Constituting a Full Share Unit

 

Shareholders of the Company cannot exercise their rights relating to shares not constituting a full share unit that they own except for the following:

 

 

(1)    The right provided for in the provisions of Article 189, Paragraph 2, of the Corporation Act;

 

(1)

   LOGO    (Not amended)

(2)    The right to make a request provided for in the provisions of Article 166, Paragraph 1 of the Corporation Act;

 

(2)

     

(3)    The right to receive allocation of offered shares and offered stock acquisition rights pursuant to the number of shares that the shareholders own; and

 

(3)

     

(4)    The right to make a request provided for in the immediately following Article.

 

(4)

     

 

Article 11.    Request to Sell Shares by Shareholders Holding Shares not Constituting a Full Share Unit

 

(Omitted)

 

Article 10.    Request to Sell Shares by Shareholders Holding Shares not Constituting a Full Share Unit

 

(Not amended)

 

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Present Article    Proposed Amendment

Article 12.       Manager of Shareholders Register

 

1. The Company shall have a Manager of the Shareholders Register.

 

2. The Manager of the Shareholders Register and its management office shall be determined by a resolution of the Board of Directors and public notice thereof shall be given.

 

3. The preparation and keeping of the Shareholders Register (which shall hereinafter include the register of beneficial owners), the Register of Stock Acquisition Rights and the Register of Lost Share Certificates of the Company and other matters relating to the share handling of the Shareholders Register, the Register of Stock Acquisition Rights and the Register of Lost Share Certificates shall be entrusted to the Manager of the Shareholders Register, and the Company shall not handle them.

 

  

Article 11.       Manager of Shareholders Register

 

1. The Company shall have a Manager of the Shareholders Register.

 

2. The Manager of the Shareholders Register and its management office shall be determined by a resolution of the Board of Directors and public notice thereof shall be given.

 

3. The preparation and keeping of the Shareholders Register and the Register of Stock Acquisition Rights and other matters relating to the share handling of the Shareholders Register and the Register of Stock Acquisition Rights shall be entrusted to the Manager of the Shareholders Register, and the Company shall not handle them.

Article 13

 

        ò

 

Article 40

   LOGO   (Omitted)   

Article 12

 

        ò

 

Article 39

   LOGO   (Not amended)

<Newly added>

   SUPPLEMENTARY PROVISIONS

<Newly added>

  

Article 1

 

The preparation and keeping of the Register of Lost Share Certificates of the Company and other matters relating to the Register of Lost Share Certificates shall be entrusted to the Manager of the Shareholders Register, and the Company shall not handle them.

<Newly added>

  

Article 2

 

The immediately preceding Article and this Article shall be effective until January 5, 2010, and shall be deleted as of January 6, 2010.

 

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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:

 

No.   

Name

(date of birth)

 

Brief Personal History, Title, Status and

Representation of other Companies

   Shares of
the Company
Owned by
Candidate

1

  

Makoto Kawamura

(Aug. 13, 1949)

  Mar. 1973    Joined the Company    3,000
     Jun. 2001    Director of the Company   
     Jun. 2003    Retired from the office of Director of the Company   
        Managing Executive Officer of the Company   
     Jun. 2005    President and Representative Director and COO (Chief Operating Officer) of the Company   
     Apr. 2006    President and Representative Director, President and Executive Officer of the Company   
     May 2008    Representative Trustee of Japan Photovoltaic Energy Association [Present]   
       Apr. 2009    Chairman of the Board and Representative Director of the Company [Present]     

2

  

Yuzo Yamamura

(Dec. 4, 1941)

  Mar. 1965    Joined the Company    82,000
     Jun. 1987    Director of the Company   
     Dec. 1992    President and Representative Director of Kyocera ELCO Corporation   
     Jun. 1993    Retired from the office of Director of the Company   
     Jun. 1995    Senior Managing Director and Representative Director of the Company   
     Jun. 1999    Retired from the office of Director of the Company   
     Jun. 2003    Director of the Company   
     Apr. 2006    Vice Chairman of the Board and Representative Director of the Company [Present]   
     Aug. 2006    General Manager of Corporate Communication Equipment Group [Present]   
     Apr. 2009    Advisor and Director of Kyocera ELCO Corporation [Present]   

 

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No.   

Name

(date of birth)

  

Brief Personal History, Title, Status and

Representation of other Companies

   Shares of
the Company
Owned by
Candidate

3

  

Tetsuo Kuba

(Feb. 2, 1954)

   Jun. 1982    Joined the Company    2,000
      Jun. 2003    Executive Officer of the Company   
      Jun. 2005   

Managing Executive Officer of the Company

General Manager of Corporate Fine Ceramics Group and Corporate Semiconductor Components Group of the Company

  
      Apr. 2007    Senior Managing Executive Officer of the Company   
      Jun. 2008    Director and Senior Managing Executive Officer of the Company   
      Apr. 2009    President and Representative Director, President and Executive Officer of the Company [Present]   

4

  

Tatsumi Maeda

(Jan. 1, 1953)

   Mar. 1975    Joined the Company    1,140
      Jun. 2001    Director of the Company   
      Jun. 2003   

Retired from the office of Director of the Company

Managing Executive Officer of the Company

General Manager of Corporate Business Strategy Division of the Company

  
      Jun. 2005    Deputy General Manager of Corporate Solar Energy Group of the Company   
      Apr. 2007   

Senior Managing Executive Officer of the Company

General Manager of Corporate Solar Energy Group of the Company

  
      Jun. 2008    Director and Senior Managing Executive Officer of the Company   
      Jan. 2009    General Manager of Corporate Solar Energy Group and Corporate Electronic Components Group of the Company [Present]   
      Apr. 2009    Vice President and Representative Director, Vice President and Executive Officer of the Company [Present]   

 

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No.   

Name

(date of birth)

  

Brief Personal History, Title, Status and

Representation of other Companies

   Shares of
the Company
Owned by
Candidate

5

   Hisao Hisaki

(Jul. 2, 1946)

   Mar. 1969    Joined the Company    5,171
      Jun. 1991    Director of the Company [Present]   
      Jun. 2003    Managing Executive Officer of the Company   
      Jul. 2003    Vice President of Kyocera (Tianjin) Sales & Trading Corporation   
      Apr. 2005    President of Kyocera (Tianjin) Sales & Trading Corporation   
      May 2005    Retired from the office of Executive Officer of the Company   
      Mar. 2007    Chairman of the Board and President of Kyocera (Tianjin) Sales & Trading Corporation [Present]   
      Apr. 2009    Senior Managing Executive Officer of the Company [Present]   

6

   Rodney N. Lanthorne

(Feb. 5, 1945)

   Sep. 1979    Joined Kyocera International, Inc.    (3,628 ADR)
      Jan. 1987    President and Director of the above company [Present]   
      Jun. 1989    Director of the Company   
      Mar. 1990    Managing Director of the Company   
      Jun. 1999    Senior Managing Director and Representative Director of the Company   
      Jun. 2003    Director of the Company [Present]   

7

   John S. Gilbertson

(Dec. 4, 1943)

   Jan. 1981    Joined AVX Corporation    (18,867 ADR)
      May 1994    Chief Operating Officer of the above company   
      Jun. 1995    Director of the Company   
      Jun. 1997    Director and President and Chief Operating Officer of AVX Corporation   
      Jun. 1999    Managing Director of the Company   
      Jul. 2001    President and Director and Chief Executive Officer of AVX Corporation [Present]   
      Jun. 2003    Director of the Company [Present]   

 

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No.   

Name

(date of birth)

  

Brief Personal History, Title, Status and

Representation of other Companies

   Shares of
the Company
Owned by
Candidate

8

   Yasuyuki Yamamoto

(Apr. 2, 1951)

   May 1976    Joined the Company    259
      Aug. 2002    General Manager of Corporate Mobile Communication Equipment Division of the Company   
      Jun. 2003    Executive Officer of the Company   
      Jun. 2005    General Manager of Corporate Mobile Communication Equipment Group of the Company   
      Aug. 2006    General Manager of Corporate Mobile Communication Equipment Division of Corporate Communication Equipment Group of the Company   
      Apr. 2007    General Manager of Corporate Mobile Communication Equipment Division and Corporate Communication Systems Equipment Division of Corporate Communication Equipment Group of the Company   
      Apr. 2008   

Senior Executive Officer of the Company

Deputy General Manager of Corporate Communication Equipment Group of the Company [Present]

  
      Apr. 2009    Managing Executive Officer of the Company [Present]   

9

   Yoshihiro Kano

(Apr. 5, 1953)

   Aug. 1980    Joined Kyocera International, Inc.    199
      Jun. 1991    Transferred to the Company   
      Oct. 2001    General Manager of Corporate Support Division 2 of Corporate Development Group of the Company   
      Jun. 2005   

Executive Officer of the Company

Deputy General Manager of Corporate Development Group of the Company

  
      Apr. 2006    General Manager of Corporate Development Group of the Company [Present]   
      Apr. 2009    Managing Executive Officer of the Company [Present]   

 

10


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No.   

Name

(date of birth)

 

Brief Personal History, Title, Status and

Representation of other Companies

   Shares of
the Company
Owned by
Candidate

10

   Goro Yamaguchi

(Jan. 21, 1956)

  Mar. 1978    Joined the Company    7,178
     Aug. 2002    Deputy General Manager of Corporate Semiconductor Components Sales Division of the Company   
     Jun. 2003    Executive Officer of the Company   
     Jul. 2004    General Manager of Corporate Semiconductor Components Sales Division of the Company   
     Jun. 2005   

Senior Executive Officer of the Company

Deputy General Manager of Corporate Semiconductor Components Group of the Company

  
     Apr. 2009   

Managing Executive Officer of the Company [Present]

General Manager of Corporate Semiconductor Components Group of the Company [Present]

  

11

   Shoichi Aoki

(Sep. 19, 1959)

  Mar. 1983    Joined the Company    1,085
     Sep. 2003    General Manager of Accounting Division of Corporate Business Systems Administration Division of the Company   
     Jun. 2005   

Executive Officer of the Company

General Manager of Corporate Accounting Group of the Company

  
     May 2008    General Manager of Corporate Financial and Accounting Group of the Company [Present]   
     Apr. 2009    Managing Executive Officer of the Company [Present]   

12

   Katsumi Komaguchi

(Mar. 5, 1951)

  Mar. 1986    Joined the Company    1,923
     Nov. 1998    General Manager of Printer Division of the Company   
     Jun. 2001    Director (in charge of technology) of Kyocera Mita Corporation   
     Jun. 2002    Managing Director of Kyocera Mita Corporation   
     Jun. 2004    Director of Kyocera Mita Corporation   
     Jul. 2004    Director and Senior Managing Executive Officer of Kyocera Mita Corporation   
     Apr. 2006    Vice President and Representative Director, Vice President and Executive Officer of Kyocera Mita Corporation   
     Apr. 2007    President and Representative Director, President and Executive Officer of Kyocera Mita Corporation [Present]   
     Apr. 2008    Executive Officer of the Company   
     Apr. 2009    Managing Executive Officer of the Company [Present]   

 

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Notes:

 

1. Mr. Makoto Kawamura is the Chairman of the Board of Dongguan Shilong Kyocera Optics Co., Ltd., with which the Company engages in transactions relating to sale and purchase of cutting tools and thin film devices, etc.

 

2. Mr. Tatsumi Maeda is the Chairman of the Board of Kyocera (Tianjin) Solar Energy Co., Ltd., with which the Company engages in transactions relating to sale and purchase of solar energy related products, etc.

 

3. Mr. Hisao Hisaki is the Chairman of the Board and President of Kyocera (Tianjin) Sales & Trading Corporation, with which the Company engages in transactions relating to sale of cutting tools and electronic devices, etc.

 

4. Mr. John S. Gilbertson is the President and Director and Chief Executive Officer of AVX Corporation, with which the Company engages in transactions relating to sale and purchase of electronic devices, etc.

 

5. There are no special interests between the candidates and the Company other than those set forth above.

 

6. The number of shares of the Company owned by the candidates set forth above includes their ownership in the Stock Purchase Plan for Kyocera Group Executives.

 

7. Candidates who beneficially own Common Stock of the Company by way of American Depositary Receipts (ADRs) 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)

 

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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:

 

No.   

Name

(Date of birth)

  

Brief Personal History, Title, Status and

Representation of other Companies

   Shares of
the Company
Owned by
Candidate

1

  

Yoshihiko Nishikawa

(Sep. 11, 1945)

   Mar. 1970    Joined the Company    2,222
      Jun. 1995    Director of the Company   
      Jun. 2003   

Retired from the office of Director of the Company

Senior Executive Officer of the Company

General Manager of Corporate Legal and Intellectual Property Division of the Company

  
      Jul. 2004    General Manager of Corporate R&D Division for Components and Devices of the Company   
      Jun. 2005    Full-time Corporate Auditor of the Company [Present]   

2

  

Yoshinari Hara

(Apr. 3, 1943)

   Apr. 1967    Joined Daiwa Securities Co., Ltd. (“Daiwa Securities”)    0
      Jun. 1991    Director of Daiwa Securities   
      Sep. 1995    Managing Director of Daiwa Securities   
      Oct. 1997    President and Representative Director of Daiwa Securities   
      Apr. 1999   

President and Representative Director and CEO of Daiwa Securities Group Inc.

President and Representative Director of Daiwa Securities

  
      Jun. 2004    Chairman of the Board and Director of Daiwa Securities Group Inc.   
      Jun. 2008    Chief Corporate Adviser of Daiwa Securities Group Inc. [Present]   

Notes:

 

1. There are no special interests between the candidates and the Company.

 

2. The number of shares of the Company owned by the candidate set forth above includes his ownership in the Stock Purchase Plan for Kyocera Group Executives.

 

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3. Matters with respect to outside Corporate Auditors are as follows:

 

  (1) Mr. Yoshinari Hara is a candidate for outside Corporate Auditor.

 

  (2) Reason for nomination of Mr. Yoshinari Hara as a candidate for outside Corporate Auditor:

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.

 

  (3) Mr. Yoshinari Hara currently holds the office of an outside Director of NEC Corporation. NEC Corporation is required as an issuer of ADRs to file annual reports with the U.S. Securities and Exchange Commission (hereinafter referred to as the “SEC”) pursuant to the Securities and Exchange Act of 1934. However, it has been unable to file with the SEC its annual reports for the fiscal years ended March 31, 2006 and thereafter because it has not been able to complete further analysis to support its revenue recognition required in the course of the audit of its consolidated financial statements for the fiscal year ended March, 31 2006. Because of this, the ADRs of NEC Corporation were delisted by NASDAQ in October 2007. Mr. Yoshinari Hara has regularly expressed his opinions at meetings of the Board of Directors of NEC Corporation regarding ensuring proper financial reporting, strengthening NEC Corporation’s compliance system including disclosure and its risk management system, etc.; and upon receipt of reports of the abovementioned events, deliberated future preventive measures and disclosure policies, etc., and made varied proposals and remarks to strengthen further the internal control system of NEC Corporation.

 

  (4) The Company will enter into an agreement with Mr. Yoshinari Hara regarding limitation of his liability for damages due to negligence in the performance of his duties, in accordance with paragraph 1 of Article 427 of the Corporation Act and Article 36 (Article 35, if Agendum No. 2 is approved as proposed) of the Articles of Incorporation of the Company. The maximum amount of damages to be pursued against him, as set under such agreement, will be limited to the smallest amount permissible under applicable laws and regulations.

 

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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.

 

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1. Directors

 

  (1) Basic remuneration

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 Company’s 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.

 

  (2) Bonuses to Directors

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.

 

2. Corporate Auditors

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.

 

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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:

 

Name    Brief Personal History

Kensuke Itoh

   May 1975    Director of the Company
   Aug. 1979    Managing Director of the Company
   Jul. 1981    Senior Managing Director of the Company
   Jun. 1985    Vice President and Representative Director of the Company
   Jun. 1989    President and Representative Director of the Company
   Jun. 1999    Chairman of the Board and Representative Director of the Company
   Jun. 2005    Advisor and Director of the Company [Present]

Noboru Nakamura

   Jun. 1991    Director of the Company
   Jun. 1995    Managing Director of the Company
   Jun. 1997    Senior Managing Director and Representative Director of the Company
   Jun. 1999    Vice President and Representative Director of the Company
   Jun. 2003    Director of the Company
   Apr. 2006    Chairman of the Board and Representative Director of the Company
   Apr. 2009    Advisor and Director of the Company [Present]

Naoyuki Morita

   Jun. 2003    Director of the Company
   Apr. 2006    Vice Chairman of the Board and Representative Director of the Company
   Apr. 2009    Director of the Company [Present]

Michihisa Yamamoto

   Jun. 1987    Director of the Company
   Jun. 1989    Managing Director of the Company
   Jun. 1992    Senior Managing Director and Representative Director of the Company
   Jun. 1999    Vice President and Representative Director of the Company
   Jun. 2003    Representative Director of the Company
   Jun. 2005    Director of the Company [Present]

Isao Kishimoto

   Jun. 1993    Director of the Company
   Jun. 1997    Managing Director of the Company
   Jun. 2001    Senior Managing Director of the Company
   Jun. 2003    Director of the Company [Present]

 

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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:

 

Name    Brief Personal History

Makoto Kawamura

   Jun. 2005    President and Representative Director
   Apr. 2009    Chairman of the Board and Representative Director of the Company [Present]

Yuzo Yamamura

   Jun. 2003    Director of the Company
   Apr. 2006    Vice Chairman of the Board and Representative Director of the Company [Present]

Tetsuo Kuba

   Jun. 2008    Director of the Company
   Apr. 2009    President and Representative Director of the Company [Present]

Tatsumi Maeda

   Jun. 2008    Director of the Company
   Apr. 2009    Vice President and Representative Director of the Company [Present]

Hisao Hisaki

   Jun. 1991    Director of the Company [Present]

Rodney N. Lanthorne

   Jun. 1989    Director of the Company
   Mar. 1990    Managing Director of the Company
   Jun. 1999    Senior Managing Director and Representative Director of the Company
   Jun. 2003    Director of the Company [Present]

John S. Gilbertson

   Jun. 1995    Director of the Company
   Jun. 1999    Managing Director of the Company
   Jun. 2003    Director of the Company [Present]

Yoshihiko Nishikawa

   Jun. 2005    Full-time Corporate Auditor of the Company [Present]

- END -

 

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LOGO

 

 

Report for the year ended March 31, 2009

(Accompanying Materials for the 55th Ordinary General Meeting of Shareholders)

Kyocera Corporation

 

Notice:

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

Table of Contents

 

Kyocera Management Philosophy

  

Greetings

   1

(Accompanying Materials for the 55th Ordinary General Meeting of Shareholders)

  

Business Report

   2

1. Current Conditions of Kyocera Corporation and its Consolidated Subsidiaries

   2

2. Shares

   15

3. Directors and Corporate Auditors

   16

4. Accounting Auditor

   20

5. System and Policy

   21

Consolidated Balance Sheets

   25

Consolidated Statements of Income

   27

Consolidated Statement of Stockholders’ Equity

   28

Consolidated Cash Flows (For Reference Only)

   28

Notes to Consolidated Financial Statements

   29

Balance Sheets

   32

Statements of Income

   34

Statement of Changes in Net Assets

   35

Notes to Financial Statements

   38

Copy of Audit Report of Accounting Auditors on Consolidated Financial Statements

   44

Copy of Audit Report of Accounting Auditors

   45

Copy of Audit Report of Board of Corporate Auditors

   46


Table of Contents

Kyocera Management Philosophy

Corporate Motto

LOGO

“Respect the Divine and Love People”

Preserve the spirit to work fairly and honorably,

respecting people, our work, our company and our global community.

Management Rationale

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.

Management Philosophy

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 didn’t 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.

Kazuo Inamori

Chairman Emeritus


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Greetings

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.

Makoto Kawamura

Chairman of the Board and Representative Director

Tetsuo Kuba

President and Representative Director

 

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(Accompanying Materials for the 55th Ordinary General Meeting of Shareholders)

Business Report (From April 1, 2008 to March 31, 2009)

1. Current Conditions of Kyocera Corporation and its Consolidated Subsidiaries

(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.

 

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Highlights of Consolidated Results

 

LOGO    LOGO
LOGO    LOGO

Notes:

 

1. In fiscal 2007, Kyocera Corporation sold its shares of Kyocera Leasing Co., Ltd., a subsidiary engaged in financing services. As a result, business results and profit on sale of its shares of Kyocera Leasing Co., Ltd. for fiscal 2007 were recorded as income (or loss) from discontinued operations in accordance with accounting principles generally accepted in the United States As a result, figures for fiscal 2006 have been retrospectively reclassified.

 

2. In fiscal 2006 and 2007, income from continuing operations before income taxes and minority interests are presented in the income before income taxes section.

 

3. The amounts, numbers of shares and ratios (%) in this Report are rounded to the nearest unit.

 

4. Graphs in this Report are presented solely for the reference.

 

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Consolidated Results by Reporting Segment

Components Business:

 

Net sales:    ¥577,055 million, down 15.1% year on year
Operating profit:      ¥31,830 million, down 68.3% year on year

(1) Fine Ceramic Parts Group

 

Net sales:    ¥61,730 million, down 24.1% year on year
Operating profit:        -¥240 million, down ¥11,407 million year on year

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.

 

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(2) Semiconductor Parts Group

 

Net sales:    ¥135,137 million, down 12.6% year on year
Operating profit:        ¥8,671 million, down 56.7% year on year

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.

 

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(3) Applied Ceramic Products Group

 

Net sales:

   ¥148,917 million, down 0.7% year on year

Operating profit:

     ¥27,469 million, down 15.9% year on year

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.

 

LOGO    LOGO

(4) Electronic Device Group

 

Net sales:

   ¥231,271 million, down 21.4% year on year

Operating profit:

      -¥4,070 million, down ¥40,594 million year on year

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.

 

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Equipment Business:

 

Net sales:

   ¥448,055 million, down 10.0% year on year

Operating profit:

      -¥4,216 million, down ¥50,540 million year on year

(1) Telecommunications Equipment Group

 

Net sales:

   ¥218,758 million, down 0.9% year on year

Operating profit:

    -¥17,713 million, down ¥24,499 million year on year

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.

 

LOGO    LOGO

(2) Information Equipment Group

 

Net sales:

   ¥229,297 million, down 17.1% year on year

Operating profit:

     ¥13,497 million, down 65.9% year on year

Despite implementing various strategies to expand sales, such as continuous new product launches and extending sales networks, the impact of the yen’s 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.

 

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Others:

 

Net sales:    ¥126,043 million, down 9.0% year on year

Operating profit:

     ¥14,106 million, up 46.4% year on year

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.

 

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Principal Management Measures and Significant Decision implemented during fiscal 2009:

 

1. With the objective of further enhancing the Telecommunications Equipment Group, Kyocera completed acquisition of the mobile handset business of SANYO on April 1, 2008. Kyocera aims to improve profitability by pursuing synergies with the acquired business as well as by strengthening R&D, cost competitiveness and sales and marketing.

 

2. Kyocera Mita Corporation, a consolidated subsidiary of Kyocera Corporation, acquired shares of TA Triumph-Adler AG (“TAAG”), a distributor of information equipment in Germany, through the voluntary takeover offer, and made it a consolidated subsidiary of Kyocera Mita Corporation in January 2009. It aims to further expand businesses by improving sales and marketing division and fulfilling a customer basis through utilization of business foundation in both companies.

 

3. Kyocera Corporation acquired treasury stock in the amount of approximately 6.26 million shares by December 2008 in order to prepare for the expeditious execution of capital strategies, such as a stock swap, in the future.

(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.

 

(i)  Establish Highly Profitable Corporate Structure

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 Kyocera’s 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.

 

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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.

 

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(4) Four-Year Financial Summary

 

     (Yen in millions except per share amounts)
     For the years ended March 31,
     2006    2007    2008    2009

Net sales

   1,173,544    1,283,897    1,290,436    1,128,586

Income before income taxes

   117,237    156,540    174,842    55,982

Net income

   69,696    106,504    107,244    29,506

Basic earnings per share (yen)

   371.68    566.03    566.58    157.27

Total assets

   1,931,522    2,130,464    1,976,746    1,773,802

Net assets

   1,289,077    1,514,560    1,451,165    1,323,663

Net assets per share (yen)

   6,865.75    8,028.45    7,659.72    7,212.32

Notes:

 

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

 

2. Basic earnings per share is calculated using the average number of shares in issue during each respective fiscal period and net assets per share is calculated using the number of shares in issue at the end of each respective fiscal period.

 

3. In fiscal 2007, Kyocera Corporation sold its shares of Kyocera Leasing Co., Ltd., a subsidiary engaged in financing services. As a result, business results and profit on sale of its shares of Kyocera Leasing Co., Ltd. for fiscal 2007 were recorded as income or loss from discontinued operations in accordance with accounting principles generally accepted in the United States. Figures for 2006 have been retrospectively reclassified pursuant to the same standard.

 

4. In fiscal 2006 and 2007, income from continuing operations before income taxes and minority interests are presented in income before income taxes section.

 

5. In fiscal 2006, consolidated net sales remained at the same level as fiscal 2005 due to the decline in sales prices of components and the downsizing of camera business despite the steady increase in sales of the Applied Ceramic Products Group such as solar energy business. Consolidated net income increased as structural reforms came to fruition.

 

6. In fiscal 2007, amid a favorable market environment manifesting strong demand for digital consumer equipment, net sales in the Components Business and the Equipment Business increased compared with fiscal 2006. Also all reporting segments in the Components Business and the Equipment Business recorded increases in profits. Consolidated net income increased due to tax refunds pursuant to the voidance of a portion of the original assessment relating to transfer pricing adjustment.

 

7. Consolidated net sales for fiscal 2008 marked the highest. This result was attributed to an increase in net sales in the Components Business such as solar energy, which more than offset a decrease in net sales in the Equipment Business. Operating profit in the Equipment Business considerably increased due to the improvement of profitability, however, operating profit in the Components Business decreased due to the increase of depreciation. As a result, consolidated net income decreased due to the increase of depreciation. As a result, consolidated net income remained at the same level compared with fiscal 2007.

 

8. Performance for fiscal 2009 is as stated in “(1) Business Progress and Results” on previous pages.

 

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(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:

 

Reporting Segments

  

Principal Products

Fine Ceramic Parts Group   

Information & Telecommunication Components,

Sapphire Substrates,

Components for Semiconductor Processing Equipment,
Components for LCD Manufacturing Equipment,
Automotive Components,
General Industrial Ceramic Components

Semiconductor Parts Group   

Ceramic Packages for Crystal and SAW Devices,

CCD/CMOS Sensor Ceramic Packages,

LSI Ceramic Packages,
Wireless Communication Device Packages,

Optical Communication Device Packages and Components,
Organic Multilayer Packages and Substrates

Applied Ceramic Products Group   

Residential and Industrial Solar Power Generating Systems,
Solar Cells and Modules,

Cutting Tools, Micro Drills,
Medical and Dental Implants,
Jewelry and Application Products

Electronic Device Group   

Ceramic Capacitors, Tantalum Capacitors,

Timing Devices such as TCXOs, Crystal Units,
Clock Oscillators and Ceramic Resonators,

SAW Devices, RF Modules, EMI Filters,
Connectors,
Thermal Printheads, Inkjet Printheads,
Amorphous Silicon Photoreceptor Drums,

Liquid Crystal Displays

Telecommunications Equipment Group   

CDMA Mobile Phone Handsets,

Personal Handy Phone System (PHS) related Products such as PHS Mobile Phone Handsets and PHS Base Stations, Wireless Broadband Systems such as iBurst

Information Equipment Group    ECOSYS Printers, Copying Machines,
Multifunction Peripherals
Others   

Telecommunication Engineering Business,

Integration Business on Information Systems and Network Infrastructures,

Data Center Business,

Management Consulting Business,

Chemical Materials for Electronic Components,
Electrical Insulators, Molded Products,

Hotel Business

 

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(6) Significant Subsidiaries (as of March 31, 2009)

 

Name of Subsidiary

  Amount of Capital
(Yen in millions
and others
in thousands)
  Ownership by
Kyocera
Corporation
(%)
 

Principal Business

Kyocera Communication Systems Co., Ltd.

  ¥2,986   76.30   Information Technology Services

Kyocera ELCO Corporation

  ¥400   100.00   Manufacture and sale of electronic device related products

Kyocera Mita Corporation

  ¥12,000   100.00   Development, manufacture and sale of information equipment

Kyocera Chemical Corporation

  ¥10,172   100.00   Manufacture and sale of chemical materials for electronic components

Kyocera Kinseki Corporation

  ¥16,318   100.00   Manufacture of electronic device related products

Kyocera SLC Technologies Corporation

  ¥4,000   100.00   Manufacture and sale of organic multilayer printed circuit board

Japan Medical Materials Corporation

  ¥2,500   77.00   Development, manufacture and sale of medical materials and equipment

Kyocera International, Inc.

  US$34,850   100.00   Investment and management service as a holding company to subsidiaries in North America region

AVX Corporation

  US$1,763   69.06   Manufacture and sale of electronic device related products

Shanghai Kyocera Electronics Co., Ltd.

  ¥17,321   100.00   Manufacture and sale of ceramic related products and electronic device related products

Dongguan Shilong Kyocera Optics Co., Ltd.

 

HK$472,202

 

90.00

 

Manufacture and sale of cutting tools and thin film devices

Kyocera (Tianjin) Sales & Trading Corporation

 

US$10,000

 

90.00

 

Sale of fine ceramic related products, solar energy equipment, cutting tool and information equipment

Kyocera Asia Pacific Pte. Ltd.

  US$105   100.00   Sale of ceramic related products and electronic device related products

Kyocera Telecom Equipment (Malaysia) Sdn. Bhd.

 

MYR28,000

 

100.00

 

Manufacture of telecommunications equipment

Kyocera Fineceramics GmbH

  EURO1,687   100.00   Sale of ceramic related products, solar energy equipment and thin film devices

 

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(7) Principal Business Sites (as of March 31, 2009)

 

Headquarters:   6 Takeda Tobadono-cho, Fushimi-ku, Kyoto Japan

Japan:

 
Kyocera Corporation:   Kyocera SLC Technologies Corporation (Shiga)

Hokkaido Kitami Plant

  Kyocera Solar Corporation (Kyoto)

Fukushima Tanagura Plant

  Japan Medical Materials Corporation (Osaka)

Nagano Okaya Plant

  Kyocera Kinseki Corporation (Tokyo)

Mie Ise Plant

  Kyocera ELCO Corporation (Kanagawa)

Shiga Gamo Plant

  Kyocera Display Institute Co., Ltd. (Shiga)

Shiga Yokaichi Plant

  Kyocera Mita Corporation (Osaka)

Kagoshima Sendai Plant

  Kyocera Mita Japan Corporation (Tokyo)

Kagoshima Kokubu Plant

  Kyocera Optec Co., Ltd. (Tokyo)

Kagoshima Hayato Plant

  Kyocera Communication Systems Co., Ltd. (Kyoto)

R&D Center, Yokohama

  Kyocera Chemical Corporation (Saitama)

R&D Center, Keihanna (Kyoto)

  Kyocera Realty Development Co., Ltd. (Tokyo)

R&D Center, Kagoshima

  Hotel Kyocera Co., Ltd. (Kagoshima)
  Hotel Princess Kyoto Co., Ltd. (Kyoto)
  Kyocera International Co., Ltd. (Kyoto)

Overseas

 
Kyocera International, Inc. (U.S.A.)  
Kyocera Industrial Ceramics Corporation (U.S.A.)  
Kyocera America, Inc. (U.S.A.)  
Kyocera Asia Pacific Pte. Ltd. (Singapore)  
Shanghai Kyocera Electronics Co., Ltd. (China)  
Kyocera (Tianjin) Sales & Trading Corporation (China)
Kyocera Solar, Inc. (U.S.A.)  
Kyocera Mexicana, S.A. de C.V. (Mexico)  
Kyocera (Tianjin) Solar Energy Co., Ltd. (China)  
Kyocera Solar Europe S.R.O. (Czech Republic)  
Kyocera Fineceramics GmbH (Germany)  
Kyocera Tycom Corporation (U.S.A.)  
Kyocera Precision Tools Korea Co., Ltd. (Korea)  
Kyocera Korea Co., Ltd. (Korea)  
Dongguan Shilong Kyocera Optics Co., Ltd. (China)  
AVX Corporation (U.S.A.)  
Kyocera ELCO Korea Co., Ltd. (Korea)  
Kyocera Wireless Corp. (U.S.A.)  
Kyocera Wireless (India) Pvt. Ltd. (India)  
Kyocera Telecommunications Research Corporation (U.S.A.)
Kyocera Telecom Equipment (Malaysia) Sdn. Bhd. (Malaysia)
Kyocera Sanyo Telecom, Inc. (U.S.A.)  
Kyocera Mita America, Inc. (U.S.A.)  
Kyocera Mita Office Equipment (Dongguan) Co., Ltd. (China)
Kyocera Mita Europe B.V. (Netherland)  
Kyocera Mita Deutschland GmbH (Germany)  
TA Triumph-Adler Aktiengesellschaft (Germany)  

 

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(8) Employees (as of March 31, 2009)

Consolidated

 

Reporting Segments

   Number of Employees   

Change from the end of fiscal 2008

Fine Ceramic Parts Group

   3,213    Decrease of 313

Semiconductor Parts Group

   8,347    Decrease of 2,042

Applied Ceramic Products Group

   6,170    Decrease of 55

Electronic Device Group

   17,718    Decrease of 5,830

Telecommunications Equipment Group

   4,782    Increase of 1,800

Information Equipment Group

   12,775    Decrease of 443

Others

   4,879    Decrease of 34

Headquarters

   1,630    Decrease of 65
       

Total

   59,514    Decrease of 6,982
       

 

Note:    Number of employees represents the total number of regular employees who work full-time.

Non-consolidated

 

Number of employees

   13,973

Change from the end of fiscal 2008

   Increase of 845

Average age

   39.0

Average years of service

   15.1

 

Note:    Number of employees represents the total number of regular employees who work full-time.

 

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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)

 

Name

   Number of Shares Owned
(in thousands)
   Shareholding Ratio
(%)

State Street Bank and Trust Company

   13,587    7.40

Japan Trustee Services Bank, Ltd. (Trust Account)

   12,495    6.81

The Master Trust Bank of Japan, Ltd. (Trust Account)

   11,855    6.46

Japan Trustee Services Bank, Ltd. (Trust Account 4G)

   9,763    5.32

The Bank of Kyoto, Ltd.

   7,218    3.93

Kazuo Inamori

   6,806    3.71

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

   5,076    2.77

The Inamori Foundation

   4,680    2.55

Citibank as Depositary Bank for Depositary Receipt Holders

   3,839    2.09

KI Enterprise Co., Ltd.

   3,550    1.93

        Note:    Shareholding ratios are calculated after deduction of the treasury stock.

LOGO

 

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3. Directors and Corporate Auditors

(1) List of Directors and Corporate Auditors (as of March 31, 2009)

 

Position

  

Name

  

Duties, Principal Occupation and

Representation of other Companies

Advisor and Director    Kensuke Itoh   
Chairman of the Board and Representative Director    Noboru Nakamura   
Vice Chairman of the Board and Representative Director    Yuzo Yamamura   

General Manager of Corporate Communication Equipment Group

President and Representative Director of Kyocera ELCO Corporation

Vice Chairman of the Board and Representative Director    Naoyuki Morita    Chairman of the Board and Representative Director of Kyocera Communication Systems Co., Ltd.
President and Representative Director    Makoto Kawamura   

President and Executive Officer

Representative Trustee of Japan Photovoltaic Energy Association

Director    Michihisa Yamamoto    Deputy General Manager of Corporate Communication Equipment Group (in charge of manufacturing)
Director    Isao Kishimoto    President and Representative Director of Kyocera Kinseki Corporation
Director    Hisao Hisaki    Chairman of the Board and President of Kyocera (Tianjin) Sales & Trading Corporation
Director    Rodney N. Lanthorne    President and Director of Kyocera International, Inc.
Director    John S. Gilbertson    President and Director and Chief Executive Officer of AVX Corporation
Director    Tetsuo Kuba   

Senior Managing Executive Officer

General Manager of Corporate Fine Ceramics Group and Corporate Semiconductor Components Group

Director    Tatsumi Maeda   

Senior Managing Executive Officer

General Manager of Corporate Solar Energy Group and Corporate Electronic Components Group

Full-time Corporate Auditor    Yoshihiko Nishikawa   
Full-time Corporate Auditor    Kokichi Ishibitsu   
Corporate Auditor    Osamu Nishieda    Attorney at Law
Corporate Auditor    Shigekazu Tamura    Certified Public Accountant
Corporate Auditor    Kazuo Yoshida    Professor, Graduate School of Management at Kyoto University

 

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Notes:

 

  1. Other important jobs undertaken by Directors and Corporate Auditors in fiscal 2009.

 

  (1) Messrs. Kensuke Ito, Advisor and Director, Noboru Nakamura, Chairman of the Board and Representative Director, Yuzo Yamamura, Vice Chairman of the Board and Representative Director, Makoto Kawamura, President and Representative Director and Rodney N. Lanthorne, Director, serve as Directors of AVX Corporation.

 

  (2) Mr. Noboru Nakamura, Chairman of the Board and Representative Director, serves as an outside Director of KDDI Corporation.

 

  (3) Mr. Kazuo Yoshida serves as an outside Corporate Auditor of West Japan Railway Company.

 

  2. Messrs. Osamu Nishieda, Shigekazu Tamura and Kazuo Yoshida are outside Corporate Auditors.

 

  3. Mr. Shigekazu Tamura, Corporate Auditor, is a certified public accountant and a licensed tax accountant, and accordingly is an expert on finance and accounting.

 

  4. “Positions” and “Duties, Principal Occupation and Representation of other Companies” of seven Directors and one Corporate Auditor have been changed as of April 1, 2009, as follows:

 

Position

  

Name

  

Duties, Principal Occupation and

Representation of other Companies

Advisor and Director    Noboru Nakamura   
Chairman of the Board and Representative Director    Makoto Kawamura    Representative Trustee of Japan Photovoltaic Energy Association
Vice Chairman of the Board and Representative Director    Yuzo Yamamura   

General Manager of Corporate Communication Equipment Group

Advisor and Director of Kyocera ELCO Corporation

President and Representative Director    Tetsuo Kuba    President and Executive Officer
Vice President and Representative Director    Tatsumi Maeda   

Vice President and Executive Officer

General Manager of Corporate Solar Energy Group and Corporate Electronic Components Group

Director    Naoyuki Morita    Chairman of the Board and Representative Director of Kyocera Communication Systems Co., Ltd.
Director    Hisao Hisaki   

Senior Managing Executive Officer

Chairman of the Board and President of Kyocera (Tianjin) Sales & Trading Corporation

Corporate Auditor    Kazuo Yoshida    Professor, Graduate School of Economics at Kyoto University

 

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Table of Contents

(2) Directors and Corporate Auditors retired during fiscal 2009

One Director and two Corporate Auditors retired during fiscal 2009, as follows:

 

Position as of Retirement

  

Name

  

Duties, Principal Occupation and
Representation of other Companies
as of Retirement

  

Reason for
Retirement

  

Retired Date

Director    Koji Seki    Chairman of the Board and Representative Director of Kyocera Mita Corporation    Resignation    June 26, 2008
Full-time Corporate Auditor    Yasuo Akashi       Resignation    June 26, 2008
Corporate Auditor    Shinji Kurihara    Chairman of Takeda Hospital Management Institute, Medical Corporation Koseikai Takeda Hospital    Expiration of term of office    June 26, 2008

(3) Remuneration to Directors and Corporate Auditors for fiscal 2009

 

     Number of Directors and
Corporate Auditors
    Amount of
Remuneration
(Yen in millions)
 

Directors

   13     ¥ 273  

Corporate Auditors

   7     ¥ 49  

(Outside Corporate Auditors out of 7 Corporate Auditors above)

   (4 )     (¥14 )
              

Total

   20     ¥ 322  
              

Notes:

 

  1. Amount of remuneration to Directors does not include salaries for services as employees or Executive Officers for Directors who serve as such.

 

  2. As of the end of fiscal 2009, there were twelve Directors and five Corporate Auditors, with three of the latter being outside Corporate Auditors. The numbers set forth in “Number of Directors and Corporate Auditors” in the table above include one Director and two Corporate Auditors, with one of the latter being an outside Corporate Auditor, who retired from office at the close of the 54th Ordinary General Meeting of Shareholders held on June 26, 2008.

 

  3. Amount of remuneration includes aggregate bonuses to Directors in the amount of ¥24 million, which remains subject to approval of an agendum entitled “Bonuses to Directors” at the 55th Ordinary General Meeting of Shareholders to be held on June 25, 2009.

 

  4. Amount of remuneration includes ¥51 million, of which ¥47 million is for Directors and ¥4 million is for Corporate Auditors, which was recorded as reservation for retirement allowances for Directors and Corporate Auditors for fiscal 2009.

 

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  5. In addition to the above, retirement allowances paid to a retired Director who died on December 25, 2008 and to a retired Director and a Corporate Auditor who retired from office at the close of the 54th Ordinary General Meeting of Shareholders held on June 26, 2008 were as follows:

 

     — Two retired Directors                   ¥115 million

 

     — One retired Corporate Auditor     ¥12 million

 

     Each of the above amounts includes retirement allowance for such two Directors and a Corporate Auditor, with ¥17 million being for the two Directors and ¥5 million for the Corporate Auditor, which was included in “Remuneration to Directors and Corporate Auditors” in this report and the reports for the past fiscal year.

(4) Outside Corporate Auditors

(i) Activities of outside Corporate Auditors during fiscal 2009

 

  (a) Mr. Osamu Nishieda, Corporate Auditor, attended all of the 12 meetings of the Board of Directors and all of the 10 meetings of the Board of Corporate Auditors which were held during fiscal 2009 and expressed his views based on his abundant knowledge and experience as an attorney at law.

 

  (b) Mr. Shigekazu Tamura, Corporate Auditor, attended all of the 12 meetings of the Board of Directors and 9 of the 10 meetings of the Board of Corporate Auditors which were held during fiscal 2009 and expressed his views based on his abundant knowledge and experience as a certified public accountant.

 

  (c) Mr. Kazuo Yoshida, Corporate Auditor, attended 8 of the 10 meetings of the Board of Directors and all of the 6 meetings of the Board of Corporate Auditors which were held during fiscal 2009 following his assumption of the office of Corporate Auditor and expressed his views based on his abundant knowledge from and experience in the study of economics.

 

  (ii) Substance of agreements regarding limitation of liability

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.

 

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4. Accounting Auditor

 

(1) Name of Accounting Auditor:            Kyoto Audit Corporation

 

(2) Remuneration and Other Amounts Payable to Accounting Auditor

 

Remuneration and other amounts payable by Kyocera Corporation to the Accounting Auditor for services for fiscal 2009

   ¥ 294 million

Total amount of cash and other financial benefits payable by Kyocera Group to the Accounting Auditor for services for fiscal 2009

   ¥ 587 million

Notes:

 

  1. The overseas subsidiaries of Kyocera Corporation are audited by an auditing firm other than that used by Kyocera Corporation as its Accounting Auditor.

 

  2. In the audit agreement between Kyocera Corporation and the Accounting Auditor, remuneration is determined without separately indicating amounts payable for auditing under the Corporation Act and for auditing under the Financial Instruments and Exchange Law. Accordingly, ¥294 million represents the aggregate remuneration for both of these auditing services.

 

(3) Audit-related Service

Kyocera Corporation pays remuneration to Kyoto Audit Corporation for due diligence services concerning corporate combinations.

 

(4) Policy Regarding Decision to Terminate or Not to Reappoint Accounting Auditor

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.

 

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Table of Contents

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:

Kyocera Group

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).

 

  Note: The “Kyocera Philosophy” is a corporate philosophy and life philosophy created through integration of the thoughts of the founder of Kyocera Corporation regarding management and life. The “Kyocera Philosophy” incorporates a wide range of matters relating to basic thoughts on management and methods of undertaking day-to-day work, based on the core criterion of “what is the right thing to do as a human being.”

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.

 

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Table of Contents

(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:

 

  (i) Matters relating to employees to facilitate the tasks of Corporate Auditors (including matters relating to the independence of such employees from the Directors)

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.

 

  (ii) System for reporting to the Corporate Auditors by Directors and employees and other systems relating to reporting to 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.

 

  (iii) Other systems to ensure effective audit by the 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:

 

  a. Attendance at important meetings;

 

  b. Inspection of minutes of important meetings, important approval documents and important agreements, etc.; and

 

  c. Meetings with Representative Directors to exchange opinions regarding management of Kyocera Corporation in general.

(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.

 

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Table of Contents

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.

 

  (1) Management and maintenance of information relating to conduct of business by Directors

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.

 

  (2) Internal Rules and systems relating to management of risk of loss, and systems to ensure that conduct of business by employees is in compliance with applicable laws and regulations and the Articles of Incorporation.

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.

 

  (3) Systems to ensure efficient conduct of business by Directors

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.

 

  (4) System to ensure appropriate conduct of business at Kyocera Group

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.

 

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Table of Contents

The current status of systems established relating to internal control is as follows.

 

(1) “Kyocera Code of Conduct” was established in June 2000.

 

(2) Risk Management Division was established in September 2000 in order to create a thorough system to ensure compliance with laws and regulations and internal rules.

 

(3) Kyocera Management Committee was established in January 2001, and was renamed the “Kyocera Group Management Committee” as from August 2002.

 

(4) Kyocera Disclosure Committee was established in April 2003.

 

(5) Employee Consultation Corners were established in April 2003, and serve as a part of the internal complaint system.

 

(6) Executive Officer System was introduced in June 2003 to improve management efficiency.

 

(7) Global Audit Division was established in May 2005 to undertake internal audits, and it conducts audits of the businesses of Kyocera Group regularly, reporting the results of such audits to the Directors and Corporate Auditors of Kyocera Corporation. It also serves as a mechanism for meeting the requirements of Article 404 of the Sarbanes-Oxley Act of the United States of America.

 

(8) CSR Committee was established in November 2005.

 

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Table of Contents

Consolidated Balance Sheets

 

     (Yen in millions)  
     March 31,     Increase
(Decrease)
 
     2008     2009    
     Amount     Amount    

Current assets:

      

Cash and cash equivalents

   ¥ 447,586     ¥ 269,247     ¥ (178,339 )*1

Short-term investments

     147,503       202,143       54,640  *2

Trade notes receivables

     20,375       13,750       (6,625 )

Trade accounts receivables

     205,522       158,754       (46,768 )

Less allowances for doubtful accounts and sales returns

     (4,352 )     (4,669 )     (317 )

Inventories

     205,212       199,641       (5,571 )

Deferred income taxes

     41,244       35,187       (6,057 )

Other current assets

     55,135       78,263       23,128  
                        

Total current assets

     1,118,225       952,316       (165,909 )
                        

Non-current assets:

      

Investments and advances:

      

Investments in and advances to affiliates and unconsolidated subsidiaries

     16,753       19,376       2,623  

Securities and other investments

     437,369       351,849       (85,520 )*3
                        

Total investments and advances

     454,122       371,225       (82,897 )

Property, plant and equipment:

      

Land

     57,155       57,077       (78 )

Buildings

     274,206       288,460       14,254  

Machinery and equipment

     718,812       707,399       (11,413 )

Construction in progress

     17,920       6,397       (11,523 )

Less accumulated depreciation

     (782,194 )     (793,279 )     (11,085 )
                        

Total property, plant and equipment

     285,899       266,054       (19,845 )

Goodwill

     39,794       63,226       23,432  *4

Intangible assets

     29,829       60,077       30,248  *4

Other assets

     48,877       60,904       12,027  
                        

Total non-current assets

     858,521       821,486       (37,035 )
                        

Total assets

   ¥ 1,976,746     ¥ 1,773,802     ¥ (202,944 )
                        

Remarks:

 

*1 Cash and cash equivalents decreased due to payment in consideration of the business acquisition of SANYO, acquisition of treasury stock and transfer of the fund to short-term investments.

 

*2 Short-term investments increased due to an increase in deposits from cash and cash equivalents.

 

*3 Securities and other investments decreased due to a decrease in the market value of securities.

 

*4 Goodwill and intangible assets increased due to the acquisition of the mobile phone handset business of SANYO and TAAG.

 

Note:

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.

 

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Table of Contents
     (Yen in millions)  
     March 31,     Increase
(Decrease)
 
     2008     2009    
     Amount     Amount    

Current liabilities:

      

Short-term borrowings

   ¥ 7,279     ¥ 11,000     ¥ 3,721  

Current portion of long-term debt

     3,432       5,523       2,091  

Trade notes and accounts payable

     95,390       62,579       (32,811 )

Other notes and accounts payable

     66,757       43,452       (23,305 )

Accrued payroll and bonus

     43,207       41,756       (1,451 )

Accrued income taxes

     27,118       7,430       (19,688 )

Other accrued liabilities

     32,815       26,967       (5,848 )

Other current liabilities

     25,684       39,254       13,570  
                        

Total current liabilities

     301,682       237,961       (63,721 )
                        

Non-current liabilities:

      

Long-term debt

     8,298       7,189       (1,109 )

Lease obligations

     2,088       22,964       20,876  *1

Accrued pension and severance liabilities

     15,041       34,567       19,526  *1

Deferred income taxes

     118,016       71,539       (46,477 )*2

Other non-current liabilities

     15,454       16,494       1,040  
                        

Total non-current liabilities

     158,897       152,753       (6,144 )
                        

Total liabilities

     460,579       390,714       (69,865 )
                        

Minority interests in subsidiaries

     65,002       59,425       (5,577 )

Stockholders’ equity:

      

Common stock

     115,703       115,703        

Additional paid-in capital

     162,864       163,151       287  

Retained earnings

     1,143,821       1,150,050       6,229  

Accumulated other comprehensive income

     44,066       (54,673 )     (98,739 )*3

Treasury stock, at cost

     (15,289 )     (50,568 )     (35,279 )*4
                        

Total stockholders’ equity

     1,451,165       1,323,663       (127,502 )
                        

Total liabilities, minority interests and stockholders’ equity

   ¥ 1,976,746     ¥ 1,773,802     ¥ (202,944 )
                        

Remarks:

 

*1 Lease obligations and accrued pension and severance liabilities increased due to the acquisition of TAAG.

 

*2 Deferred income tax liabilities decreased due to a decrease in the market value of securities.

 

*3 Net unrealized gains on securities decreased due to a decrease in the market value of securities. Foreign currency translation adjustment also decreased due to the appreciation of the yen.

 

*4 In fiscal 2009, Kyocera Corporation acquired treasury stock in order to prepare for the expeditious execution of capital strategies in the future.

 

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Table of Contents

Consolidated Statements of Income

 

     (Yen in millions)  
     Years ended March 31,     Increase
(Decrease)
 
     2008     2009    
     Amount     Amount    

Net sales

   ¥ 1,290,436     ¥ 1,128,586     ¥ (161,850 )

Cost of sales

     883,763       836,638       (47,125 )
                        

Gross profit

     406,673       291,948       (114,725 )

Selling, general and administrative expenses

     254,253       248,529       (5,724 )*1
                        

Profit from operations

     152,420       43,419       (109,001 )

Other income (expenses):

      

Interest and dividend income

     18,444       15,441       (3,003 )*2

Interest expense

     (1,480 )     (1,206 )     274  

Foreign currency transaction losses, net

     (956 )     (91 )     865  

Equity in earnings of affiliates and unconsolidated subsidiaries

     6,091       6,460       369  

Losses on sale of securities, net

     (622 )     (2,840 )     (2,218 )

Losses on impairment of securities

     (248 )     (7,141 )     (6,893 )*3

Other, net

     1,193       1,940       747  
                        

Total other income

     22,422       12,563       (9,859 )
                        

Income before income taxes and minority interests

     174,842       55,982       (118,860 )

Income taxes

     60,235       22,779       (37,456 )
                        

Income before minority interests

     114,607       33,203       (81,404 )

Minority interests

     (7,363 )     (3,697 )     3,666  
                        

Net income

   ¥ 107,244     ¥ 29,506     ¥ (77,738 )
                        

Remarks:

 

*1 Selling, general and administrative expenses in fiscal 2009 includes gains from sales of real estate.

 

*2 Interest income of subsidiaries in the United States decreased due to lower interest rates in the United States.

 

*3 Losses on impairment of securities increased due to a decrease in the market value of securities.

 

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Table of Contents

Consolidated Statement of Stockholders’ Equity (From April 1, 2008 to March 31, 2009)

 

    (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, 2008 (189,454)

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

Adjustment for applying SFAS No. 158 to opening balance (Note)

        (522 )     (418 )    

Net income for the year

        29,506         ¥ 29,506  

Net unrealized losses on securities

          (53,178 )       (53,178 )

Net unrealized losses on derivative financial instruments

          (341 )       (341 )

Pension adjustments

          (12,394 )       (12,394 )

Foreign currency translation adjustments

          (32,408 )       (32,408 )
                 

Total comprehensive income for the year

            ¥ (68,815 )
                 

Cash dividends

        (22,755 )      

Purchase of treasury stock (6,283)

            (38,219 )  

Reissuance of treasury stock (357)

      106         2,940    

Stock option plan of subsidiaries

      181        
                                     

Balance, March 31, 2009 (183,528)

  ¥ 115,703   ¥ 163,151   ¥ 1,150,050     ¥ (54,673)     ¥ (50,568)    
                                     

 

Note: Statement of Financial Accounting Standards (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).”

Consolidated Cash Flows (For Reference Only)

 

     (Yen in millions)  
     Years ended March 31,  
           2008                 2009        

Cash flow from operating activities

   196,935     99,664  

Cash flow from investing activities

   14,894     (201,957 )

Cash flow from financing activities

   (28,071 )   (64,287 )

Effect of exchange rate changes on cash and cash equivalents

   (18,380 )   (11,759 )

Net increase (decrease) in cash and cash equivalents

   165,378     (178,339 )

Cash and cash equivalents at beginning of year

   282,208     447,586  

Cash and cash equivalents at end of year

   447,586     269,247  

 

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Table of Contents

Notes to Consolidated Financial Statements

1. Basis of preparation of Consolidated Financial Statements

 

(1) Scope of consolidation

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.

 

(2) Scope of application of the equity method

Number of non-consolidated subsidiaries and affiliates accounted for by the equity method: 12

Major affiliate accounted for by the equity method: Willcom, Inc.

 

(3) Changes in scope of consolidation

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

 

(4) Changes in scope of application of the equity method

Increase by acquisition, etc.: 2, Consulta Burotechnik Spol.S.R.O. and others

Decrease by liquidation, etc.: 2, TA Triumph-Adler Aktiengesellschaft and others

 

(5) Summary of significant accounting policies

 

  (i) Standards of preparation of consolidated financial statements

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.

 

  (ii) 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. Other inventories are mainly stated at the lower of cost or market, the cost being determined by the first-in, first-out method.

 

  (iii) Valuation of securities

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.

 

  (iv) Depreciation method for property, plant and equipment

Depreciation is computed based mainly on the declining-balance method.

 

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Table of Contents
  (v) Goodwill and other intangible assets

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.

 

  (vi) Accounting for allowance and accruals

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.

 

(6) Accounting change

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 Kyocera’s 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.

 

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Table of Contents

2. Notes to Consolidated Balance Sheets

 

     (Yen in millions)  

(1) Allowances for doubtful accounts -non-current

   ¥ 2,478  

(2) Accumulated other comprehensive income

  

Net unrealized gains on securities

   ¥ 11,621  

Net unrealized losses on derivative financial instruments

   ¥ (145 )

Pension adjustments

   ¥ 53  

Foreign currency translation adjustments

   ¥ (66,202 )

(3) Assets pledged as collateral

  

Tangible fixed assets

   ¥ 5,059  

Intangible fixed assets

   ¥ 1,950  

*  Tangible fixed assets and intangible fixed assets above are pledged against “current portion of long-term debts” and “long-term debts” in a total amount of ¥3,501 million.

  

(4) Guarantee obligation

  

Guarantees for debts

   ¥ 804  

3. Notes to Consolidated Statement of Stockholders’ Equity

(1) Total number of shares issued

 

      (Shares in thousands)

Class of shares

   March 31, 2008    Increase    Decrease    March 31, 2009

Common stock

   191,309          191,309

(2) Distribution of surplus

 

   (i) Dividends paid

 

Resolution

   Class of
shares
   Aggregate
amount
   Per share
amount
   Record date    Effective date

Ordinary General Meeting of Shareholders held on June 26, 2008

  

Common
stock

  

¥11,367
million

  

¥60

  

March 31,
2008

  

June 27,
2008

Board of Directors held on October 30, 2008

  

Common
stock

  

¥11,387
million

  

¥60

  

September 30,
2008

  

December 5,
2008

 

   (ii) Dividends of which record date falls in fiscal 2009 with an effective date in fiscal 2010

 

Resolution

   Class of
shares
   Source of
dividend
   Aggregate
amount
   Per share
amount
   Record
date
   Effective
date

Ordinary General Meeting of Shareholders to be held on June 25, 2009

  

Common
stock

  

Retained
earnings

  

¥11,012
million

  

¥60

  

March 31,
2009

  

June 26,
2009

4. Notes to per share information

 

(1)    Stockholders’ equity per share

      ¥ 7,212.32

(2)    Earnings per share

   Basic    ¥ 157.27
   Diluted    ¥ 157.23

 

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Table of Contents

Balance Sheets

 

     (Yen in millions)  
     March 31,  
     2008     2009  
     Amount     Amount  

Current assets :

    

Cash and bank deposits

   ¥ 123,465     ¥ 39,939  

Trade notes receivable

     18,658       4,147  

Trade accounts receivable

     113,025       99,853  

Marketable securities

     223,900       201,597  

Finished goods and merchandise

     21,246       20,535  

Work in process

     19,978       20,702  

Raw materials

     15,232        

Supplies

     1,527        

Raw materials and Supplies

           13,573  

Advance payments

     19,415       28,426  

Prepaid expenses

     87       387  

Deferred income taxes

     13,915       12,525  

Short-term loans to subsidiaries

     8,552       7,987  

Other accounts receivable

     12,498       6,281  

Refundable income tax

           10,178  

Other current assets

     2,500       1,735  

Allowances for doubtful accounts

     (1,022 )     (116 )
                

Total current assets

     592,976       467,749  
                

Non-current assets :

    

Tangible fixed assets :

    

Buildings

     38,108       39,800  

Structures

     1,967       2,113  

Machinery and equipment

     42,701       35,082  

Vehicles

     19       13  

Tools, furniture and fixtures

     7,823       8,040  

Land

     33,871       35,415  

Leased assets

           86  

Construction in progress

     1,432       2,613  
                

Total tangible fixed assets

     125,921       123,162  
                

Intangible assets :

    

Goodwill

           9,638  

Patent rights

     5,335       3,170  

Trademark

     104       1,864  

Software

     633       679  

Leased Assets

           60  

Other intangible assets

     14       7,114  
                

Total intangible assets

     6,086       22,525  
                

Investments and other assets :

    

Investments in securities

     400,838       315,615  

Investments in subsidiaries and affiliates

     260,833       268,877  

Investments in subsidiaries and affiliates other than equity securities

     27,623       30,412  

Long-term loans to subsidiaries

     23,181       27,594  

Impaired loans

     229       516  

Long-term prepaid expenses

     1,521       1,252  

Long-term deposits

     25,000       19,000  

Security deposits

     1,773       1,689  

Other investments

     242       243  

Allowances for doubtful accounts

     (263 )     (559 )
                

Total investments and other assets

     740,977       664,639  
                

Total non-current assets

     872,984       810,326  
                

Total assets

   ¥ 1,465,960     ¥ 1,278,075  
                

 

Note: The balance sheets and the statements of income of the previous fiscal year are presented solely for the reference.

 

32


Table of Contents
     (Yen in millions)  
     March 31,  
     2008     2009  
     Amount     Amount  

Current liabilities :

    

Trade accounts payable

   ¥ 53,146     ¥ 32,979  

Lease obligations

           43  

Other payables

     38,312       31,837  

Accrued expenses

     8,288       7,661  

Income taxes payables

     13,616       283  

Advance received

     604       267  

Deposits received

     2,378       2,433  

Unearned income

     15        

Accrued bonuses

     11,726       10,336  

Accrued bonuses for Directors and Corporate Auditors

     133       24  

Warranty reserves

     5,363       6,879  

Allowances for sales returns

     149       122  

Other current liabilities

           1,150  
                

Total current liabilities

     133,730       94,014  
                

Non-current liabilities :

    

Lease obligations

           114  

Long-term accounts payable

     703       96  

Deferred income taxes

     102,102       54,941  

Accrued pension and severance costs

     8,809       9,065  

Retirement allowances for Directors , Corporate Auditors and Executive Officers

     1,030       1,063  

Other non-current liabilities

     171       168  
                

Total non-current liabilities

     112,815       65,447  
                

Total liabilities

     246,545       159,461  
                

Net assets

    

Stockholders’ equity:

    

Common stock

     115,703       115,703  

Capital surplus:

    

Additional paid-in capital

     192,555       192,555  

Other capital surplus

     381       486  

Total capital surplus

     192,936       193,041  

Retained earnings:

    

Legal reserves

     17,207       17,207  

Other retained earnings:

     716,316       707,584  

Reserve for special depreciation

     555       396  

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

     643,837       688,837  

Unappropriated retained earnings

     68,624       15,051  
                

Total retained earnings

     733,523       724,791  

Treasury stock, at cost

     (15,289 )     (50,568 )

Total stockholders’ equity

     1,026,873       982,967  

Difference of appreciation and conversion

    

Net unrealized gains on other securities

     192,542       135,647  
                

Total net assets

     1,219,415       1,118,614  
                

Total liabilities and net assets

   ¥ 1,465,960     ¥ 1,278,075  
                

 

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Table of Contents

Statements of Income

 

     (Yen in millions)  
     Years ended March 31,  
     2008     2009  
     Amount     Amount  

Net sales

   ¥ 539,320     ¥ 521,993  

Cost of sales

     413,420       448,285  
                

Gross profit

     125,900       73,708  

Selling, general and administrative expenses

     77,349       82,244  
                

Profit (loss) from operations

     48,551       (8,536 )

Non-operating income :

    

Interest and dividend income

     35,839       33,754  

Foreign currency transaction gains, net

     1,200       2,068  

Other non-operating income

     7,860       3,493  
                

Total non-operating income

     44,899       39,315  

Non-operating expenses :

    

Interest expense

     20       23  

Other non-operating expenses

     3,219       1,764  
                

Total non-operating expenses

     3,239       1,787  
                

Recurring profit

     90,211       28,992  

Non-recurring gain :

    

Gain on sale of tangible fixed assets

     46       286  

Reversal of allowance for doubtful accounts

     7       2  

Repatriation of settlement with foreign tax authorities

     1,832       32  

Other non-recurring gain

     375       18  
                

Total non-recurring gain

     2,260       338  

Non-recurring loss :

    

Depreciation expense

     2,851        

Loss on sale and disposal of tangible fixed assets

     671       589  

Impairment losses

           2,309  

Loss on impairment of investment securities

           1,651  

Loss on impairment of investments in subsidiaries

           10,156  

Other non-recurring loss

     102       119  
                

Total non-recurring loss

     3,624       14,824  
                

Income before income taxes

     88,847       14,506  

Income taxes – current

     26,837       (1,077 )

Refund of income taxes – previous years

     (2,442 )     (578 )

Income taxes – deferred

     (3,407 )     2,138  
                

Net income

   ¥ 67,859     ¥ 14,023  
                

 

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Table of Contents

Statement of Changes in Net Assets

 

     (Yen in millions)  
     Years ended
March 31, 2009
 

Stockholders’ equity

  

Common stock

  

Balance, March 31, 2008

   ¥ 115,703  

Changes in net assets

  

Total changes in net assets

      
        

Balance, March 31, 2009

     115,703  
        

Capital surplus

  

Additional paid-in capital

  

Balance, March 31, 2008

     192,555  

Changes in net assets

  

Total changes in net assets

      
        

Balance, March 31, 2009

     192,555  
        

Other capital surplus

  

Balance, March 31, 2008

     381  

Changes in net assets

  

Reissuance of treasury stock

     105  
        

Total changes in net assets

     105  
        

Balance, March 31, 2009

     486  
        

Total capital surplus

  

Balance, March 31, 2008

     192,936  

Changes in net assets

  

Reissuance of treasury stock

     105  
        

Total changes in net assets

     105  
        

Balance, March 31, 2009

     193,041  
        

Retained earnings

  

Legal reserves

  

Balance, March 31, 2008

     17,207  

Changes in net assets

  

Total changes in net assets

      
        

Balance, March 31, 2009

     17,207  
        

Other retained earnings

  

Reserve for special depreciation

  

Balance, March 31, 2008

     555  

Changes in net assets

  

Appropriation to reserve for special depreciation

     98  

Reversal of reserve for special depreciation

     (257 )
        

Total changes in net assets

     (159 )
        

Balance, March 31, 2009

   ¥ 396  
        

 

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Table of Contents
     (Yen in millions)  
     Years ended
March 31, 2009
 

Reserve for research and development

  

Balance, March 31, 2008

   ¥ 1,000  

Changes in net assets

  

Total changes in net assets

      
        

Balance, March 31, 2009

     1,000  
        

Reserve for dividends

  

Balance, March 31, 2008

     1,000  

Changes in net assets

  

Total changes in net assets

      
        

Balance, March 31, 2009

     1,000  
        

Reserve for retirement benefits

  

Balance, March 31, 2008

     300  

Changes in net assets

  

Total changes in net assets

      
        

Balance, March 31, 2009

     300  
        

Reserve for overseas investments

  

Balance, March 31, 2008

     1,000  

Changes in net assets

  

Total changes in net assets

      
        

Balance, March 31, 2009

     1,000  
        

General reserve

  

Balance, March 31, 2008

     643,837  

Changes in net assets

  

Appropriation to general reserve

     45,000  
        

Total changes in net assets

     45,000  
        

Balance, March 31, 2009

     688,837  
        

Unappropriated retained earnings

  

Balance, March 31, 2008

     68,624  

Changes in net assets

  

Appropriation to reserve for special depreciation

     (98 )

Reversal of reserve for special depreciation

     257  

Appropriation to general reserve

     (45,000 )

Dividends

     (22,755 )

Net income

     14,023  
        

Total changes in net assets

     (53,573 )
        

Balance, March 31, 2009

     15,051  
        

Total retained earnings

  

Balance, March 31, 2008

     733,523  

Changes in net assets

  

Appriation to reserve for special depreciation

      

Reversal of reserve for special depreciation

      

Appropriation to general reserve

      

Dividends

     (22,755 )

Net income

     14,023  
        

Total changes in net assets

     (8,732 )
        

Balance, March 31, 2009

   ¥ 724,791  
        

 

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Table of Contents
     (Yen in millions)  
     Years ended
March 31, 2009
 

Treasury stock

  

Balance, March 31, 2008

   ¥ (15,289 )

Changes in net assets

  

Purchase of treasury stock

     (38,219 )

Reissuance of treasury stock

     2,940  
        

Total changes in net assets

     (35,279 )
        

Balance, March 31, 2009

     (50,568 )
        

Total stockholders’ equity

  

Balance, March 31, 2008

     1,026,873  

Changes in net assets

  

Dividends

     (22,755 )

Net income

     14,023  
        

Purchase of treasury stock

     (38,219 )

Reissuance of treasury stock

     3,045  
        

Total changes in net assets

     (43,906 )
        

Balance, March 31, 2009

     982,967  
        

Difference of appreciation and conversion

  

Net unrealized gains on other securities

  

Balance, March 31, 2008

     192,542  

Changes in net assets

  

Net change in items other than stockholders’ equity

     (56,895 )
        

Total changes in net assets

     (56,895 )
        

Balance, March 31, 2009

     135,647  
        

Total unrealized gain(loss) on appreciation and conversion

  

Balance, March 31, 2008

     192,542  

Changes in net assets

  

Net change in items other than stockholders’ equity

     (56,895 )
        

Total changes in net assets

     (56,895 )
        

Balance, March 31, 2009

     135,647  
        

Total net assets

  

Balance, March 31, 2008

     1,219,415  

Changes in net assets

  

Dividends

     (22,755 )

Net income

     14,023  

Purchase of treasury stock

     (38,219 )

Reissuance of treasury stock

     3,045  

Net change in items other than stockholders’ equity

     (56,895 )
        

Total changes in net assets

     (100,801 )
        

Balance, March 31, 2009

   ¥ 1,118,614  
        

 

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Table of Contents

Notes to Financial Statements

1. Summary of Significant Accounting Policies

(1) Standards and methods of valuation of assets

Held-to-maturity securities:    Amortized cost method (straight-line method)
Investments in subsidiaries and affiliates:    Cost determined by the moving average method
Other securities:   

Marketable:

   Based on market price as of the balance sheet date (unrealized gains and losses on those securities are reported in stockholders’ equity and cost is determined by the moving average method)

Non-marketable:

   Cost determined by the moving average method
Derivative financial instruments:    Mark-to-market method
Inventories:    Cost determined based on acquisition costs with adjustment by write-down taking into consideration decline of profitability
Finished goods, merchandise and work in process:    The cost of finished goods and work in process are mainly determined by the average cost method. The cost of merchandise is determined mainly by the last purchase method.
Raw materials and supplies:    Raw materials and supplies, except those for telecommunications equipment, are valued at cost, the cost being determined by the last purchase method. Raw materials for telecommunications equipment are valued at cost, the cost being determined by the first-in, first-out method.

(2) Depreciation of non-current assets:

Tangible fixed assets (except for lease asset):   

Depreciation is computed at rates based on the estimated useful lives of assets using the declining-balance method.

 

The principal estimated useful lives are as follows:

Buildings and structures:

    2 years - 33 years

Machinery and equipment, and Tools, furniture and fixtures:

    2 years - 10 years

Intangible fixed assets (except for lease asset):    Amortization is computed using the straight-line method based on, in case of some patents, the depreciation period set by Kyocera Corporation, and, in case of software for its own use, the useful life thereof in Kyocera Corporation (two years).
Lease asset:    Straight-line method, using the lease periods as the estimate useful lives of such assets.
Long-term prepaid expenses:    Amortization is computed using the straight-line method based on the estimated useful lives of assets.

 

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(3) Accounting for allowances and accruals

Allowances for doubtful accounts:

   In anticipation of uncollectible accounts receivable, Kyocera Corporation 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 bonuses for employees:

   In order to prepare for bonuses to employees, accrued bonuses are provided based on the amounts expected to be paid, which are determined based on actual payments made in the previous fiscal year.
Accrued bonuses for Directors and Corporate Auditors:    In order to prepare for bonuses to Directors and Corporate Auditors, accrued bonuses are provided based on the amounts expected to be paid.
Warranty reserves:    Warranty reserves are provided to prepare for the cost for after sales service for telecommunications equipment and applied ceramic products based upon the amounts expected to be paid, which are determined taking into account actual payments made in the past, etc.
Allowances for sales returns:    Allowances for sales returns are provided to prepare for losses from write off of products as a result product returns based on the past actual return ratio of unaccepted products multiplied by the amount of the uninspected products at the end of fiscal year.
Accrued pension and severance costs:    In order to prepare for provision of retirement benefits to employees, accrued pension and severance costs are recognized based on projected benefit obligations and plan assets as of the balance sheet date. Unrecognized prior year service cost is amortized over the estimated average remaining service period of employees using the straight-line method. Actuarial gains or losses are amortized over the estimated average remaining service period of employees using the straight-line method following the year in which they are incurred.
Retirement allowances for Directors, Corporate Auditors and Executive Officers:    In order to prepare for retirement benefits to Directors, Corporate Auditors and Executive Officers, retirement allowances for Directors, Corporate Auditors and Executive Officers are provided based on the amounts expected to be paid in accordance with the internal rules of Kyocera Corporation.

(4) Other significant policies

The consumption taxes:

   Consumption taxes withheld upon sale and consumption taxes paid for purchases of goods and services are not included in the amounts of the respective revenue and cost or expense items in the accompanying statements of income.

 

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Table of Contents
(5) Change of accounting policies

 

  (i) Change of accounting method of royalty income

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.

 

  (ii) Accounting Standard for Measurement of Inventories

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.

 

  (iii) Accounting Standard for Lease Transactions

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.

 

  (iv) Amendments to Accounting Standard for Retirement Benefits

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.

 

  (v) Balance sheet presentation

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.

 

  (vi) Balance sheet presentation

Commencing from fiscal 2009, refundable income tax, which had been recorded in “other accounts receivable,” is separately presented as “refundable income tax.”

 

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Table of Contents

2. Notes to Balance Sheets:

 

(1) Accumulated depreciation of tangible fixed assets:    ¥372,170 million
(2) Guarantees   

 

Principal Debtors

  Amount guaranteed  

Subject of Guarantee

Kyocera International Co., Ltd.

  ¥ 13 million   Debt from operational transactions

Kyoto Broadcasting System Company Limited

  ¥ 309 million   Loan from financial institutions
       

Total

  ¥ 322 million  
       

Keep-well letters and guidance for management:

 

Parties requesting issuance of keep-well letter

  Amount covered  

Subject of keep-well letter

Kyocera Realty Development Co., Ltd.

  ¥ 1,129 million   Guidance for repayment of loans from financial institutions

Kyoto Purple Sanga Co., Ltd.

  ¥ 400 million   Guidance for repayment of loans from financial institutions
       

Total

  ¥ 1,529 million  
       

 

(3) Current receivables from and short-term loans to affiliates:

   ¥ 70,396 million

  Long-term receivables from affiliates:

   ¥ 27,842 million

  Current payables to affiliates

   ¥ 12,859 million

  Long-term payables to affiliates

   ¥ 70 million

3. Notes to Statements of Income:

 

  

    Transactions with affiliates:

  

    Operational transactions:

  

    Net sales

   ¥ 251,370 million

    Purchases

   ¥ 119,659 million

    Selling, general and administrative expenses

   ¥ 7,020 million

    Non-operational transactions:

  

    Interest and dividend income

   ¥ 24,267 million

    Miscellaneous income

   ¥ 1,031 million

    Miscellaneous losses

   ¥ 952 million

    Repatriation of settlement with foreign tax authorities

   ¥ 32 million

    Non-recurring losses

   ¥ 111 million

    Purchased amount of assets

   ¥ 839 million

    Selling amount of assets

   ¥ 12 million

 

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Table of Contents

4. Notes to Statement of Changes in Net Assets

Number and class of treasury shares

 

     (Shares in thousands)
     March 31, 2008    Increase    Decrease    March 31, 2009

Common stock

   1,855    6,283    357    7,781
                   

Total

   1,855    6,283    357    7,781
                   

 

Increase:

  

Shareholders’ request for purchase of shares not constituting one unit:

   27 thousand shares

Market purchase based on the resolution at the Board of Directors:

   6,256 thousand shares

Decrease:

  

Exercise of Stock Acquisition Rights:

   344 thousand shares

Shareholders’ request for sale of shares not constituting one unit:

   13 thousand shares

5. Notes to Accounting for the Effects of Income Taxes

 

     (Yen in millions)  

(1) Current:

  

Deferred tax assets:

  

Accrued bonuses

   ¥ 4,238  

Loss on revaluation of inventory

     3,223  

Warranty reserves

     2,820  

Other accounts payable and accrued expense

     1,468  

Other

     913  
        

Total deferred tax assets

     12,662  

Deferred tax liabilities:

  

Reserve for special depreciation

     (137 )
        

Total deferred tax liabilities

     (137 )
        

Deferred tax assets, net

   ¥ 12,525  
        

(2) Non-current:

  

Deferred tax assets:

  

Depreciation of fixed assets

   ¥ 23,802  

Loss on revaluation of investment in securities

Differed tax asset included accelerated amortization

    

 

11,875

5,115

 

 

Reserve for retirement benefits

     3,716  

Undeduction of foreign tax credit

     484  

Others

     6,728  
        

Sub-total of deferred tax assets

     51,720  

Valuation allowances

     (12,260 )
        

Total deferred tax assets

     39,460  

Deferred tax liabilities:

  

Reserve for special depreciation

     (138 )

Net unrealized gain on other securities

     (94,263 )
        

Total deferred tax liabilities

     (94,401 )

Deferred tax liabilities, net

   ¥ (54,941 )
        

 

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Table of Contents

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

 

   

(Yen in millions)  

Relationship

 

Name of entity

 

Percentage of
voting rights
held

 

Relationship with

the entity

 

Substance of
transactions

  Amount of
transactions
 

Item

      Outstanding    
transaction
amounts as of
the end of

the fiscal year
Subsidiaries   Kyocera Mita Corporation   100%  

Sales of Kyocera Corporation’s products.

Interlocking officers.

  Extension of loan (Note 1)   ¥ 9,580   Long term loans   ¥ 13,000
  Shanghai Kyocera Electronics Co., Ltd.   100%  

Manufacture of Kyocera Corporation’s products.

Interlocking officers.

  Bearing depreciation costs (Note 2)   ¥ 738      
        Bearing write offs of machinery and equipment, etc. (Note 3)   ¥ 106      
Affiliate   Willcom, Inc.   30%  

Sales of Kyocera Corporation’s products.

Interlocking officers.

  Sales of products, etc. (Note 4)   ¥ 27,150   Accounts receivable   ¥ 17,824

Notes:

 

1. Conditions of the loans have been reasonably determined, taking into account market interest rates, etc.

 

2. Conditions for bearing depreciation costs have been determined based on agreement between the parties.

 

3. Conditions for bearing write offs of machinery and equipment have been determined based on the agreement between the parties.

 

4. Conditions of sales of products, etc. have been determined on the same basis as other general commercial trade, taking into consideration market prices, etc.

8. Notes to per share information

 

1. Net assets per share:

   ¥6,095.06

2. Earnings per share:

   ¥74.74

 

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Table of Contents

Copy of Audit Report of Accounting Auditors on Consolidated Financial Statements

Independent Auditors’ Report

(English Translation)

May 22, 2009

To the Board of Directors of

Kyocera Corporation

 

Kyoto Audit Corporation

Hirokaze Hanai, CPA

Engagement Partner

Keiichiro Kagi, CPA

Engagement Partner

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 Company’s 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.

 

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Table of Contents

Copy of Audit Report of Accounting Auditors

Independent Auditors’ Report

(English Translation)

May 22, 2009

To the Board of Directors of

Kyocera Corporation

 

Kyoto Audit Corporation

Hirokaze Hanai, CPA

Engagement Partner

Keiichiro Kagi, CPA

Engagement Partner

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 Company’s 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.

 

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Copy of Audit Report of Board of Corporate Auditors

Audit Report

(English Translation)

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 Company’s 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 Company’s Articles of Incorporation and that the Company’s 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).

 

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Table of Contents

2. Results of Audit

(1) Result of the audit of the business report, etc.

 

  (i) The business report and the supplementary schedules thereto fairly present the condition of the Company in accordance with Japanese laws and regulations and the Articles of Incorporation of the Company.

 

  (ii) There has been neither unfair conduct nor any material violation of Japanese law or regulation or the Articles of Incorporation of the Company in connection with the execution of duties of the Directors.

 

  (iii) The content of the resolution by the Board of Directors regarding internal control systems is due and proper. Furthermore, nothing has arisen that requires comment with respect to the Directors’ execution of internal control systems, including financial reporting.

(2) Result of the audit of financial statements and supplementary schedules thereto

 

   The methods and results of the audit by the Independent Auditors, Kyoto Audit Corporation, are due and proper.

(3) Result of the audit of consolidated financial statements

 

   The methods and results of the audit by the Independent Auditors, Kyoto Audit Corporation are due and proper.

May 27, 2009

Board of Corporate Auditors

Kyocera Corporation

Yoshihiko Nishikawa

Full-time Corporate Auditor

Kokichi Ishibitsu

Full-time Corporate Auditor

Osamu Nishieda

Corporate Auditor

Shigekazu Tamura

Corporate Auditor

Kazuo Yoshida

Corporate Auditor

Note:

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.

 

47

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