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Kyocera 6-K 2009

Documents found in this filing:

  1. 6-K
  2. 6-K
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 January 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-                      


Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

KYOCERA CORPORATION

/s/ Shoichi Aoki

Shoichi Aoki
Executive Officer

General Manager of

Corporate Financial & Accounting Group

Date: January 29, 2009


Table of Contents

Information furnished on this form :

EXHIBITS

 

Exhibit
    Number    

    
1.    Consolidated Financial Results of Kyocera Corporation and its Subsidiaries for the Nine Months Ended December 31, 2008


Table of Contents

Consolidated Financial Results of Kyocera Corporation and its Subsidiaries

for the Nine Months Ended December 31, 2008

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

1. Consolidated financial information for the nine months ended December 31, 2008 :

(1) Consolidated results of operations :

 

     (Japanese yen)  
     Nine months ended December 31,  
     2007     2008  

Net sales

   ¥  966,218 million     ¥  902,577 million  

% change from the previous period

     1.1 %     (6.6 ) %

Profit from operations

     110,131 million       67,257 million  

% change from the previous period

     8.6 %     (38.9 ) %

Income before income taxes

     131,971 million       82,409 million  

% change from the previous period

     13.6 %     (37.6 ) %

Net income

     83,516 million       56,768 million  

% change from the previous period

     5.3 %     (32.0 ) %

Earnings per share :

    

Basic

   ¥ 441.36     ¥ 300.39  

Diluted

     440.56       300.30  

(2) Consolidated financial position :

 

     (Japanese yen)  
     March 31, 2008     December 31, 2008  

Total assets

   ¥ 1,976,746 million     ¥ 1,866,203 million  

Stockholders’ equity

     1,451,165 million       1,400,600 million  

Stockholders’ equity to total assets

     73.4 %     75.1 %

Stockholders’ equity per share

   ¥ 7,659.72     ¥ 7,631.43  

 

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2. Dividends :

 

     (Japanese yen)  
     Year ended
March 31, 2008
   Year ending
March 31, 2009
 

Interim dividends per share

   ¥ 60    ¥ 60   

Year-end dividends per share

     60      60  (forecast)
               

Annual dividends per share

   ¥ 120    ¥ 120  (forecast)

Note :

There was no revision on the above forecasts of dividend from those previously announced.

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

 

     (Japanese yen)  
     Year ending March 31, 2009  

Net sales

   ¥ 1,120,000 million  

% change from the year ended March 31, 2008

     (13.2 )%

Profit from operations

     25,000 million  

% change from the year ended March 31, 2008

     (83.6 )%

Income before income taxes

     40,000 million  

% change from the year ended March 31, 2008

     (77.1 )%

Net income

     20,000 million  

% change from the year ended March 31, 2008

     (81.4 )%

Forecast of earnings per share :

   ¥ 105.80  

Note :

The above consolidated financial forecasts were revised from those previously announced in October 2008.
Please refer to the accompanying “3. Consolidated Financial Forecasts for the Year Ending March 31, 2009” on page 11.

Earnings per share amount is computed based on Statement of Financial Accounting Standards No.128. Forecast of earnings per share is computed based on the diluted average number of shares outstanding during the nine months ended December 31, 2008.

 

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4. Others :

(1) Increase or decrease in significant subsidiaries during this period :

None.

(2) Adoption of concise quarterly accounting method or procedure :

Not applicable.

(3) Changes in accounting principles, procedures and financial statements’ presentation :

Changes due to adoption of new accounting standards :

Please refer to the accompanying “4. Other Information” on page 14.

Changes due to other than adoption of new accounting standards :

None.

(4) Number of shares (common stock) :

 

     March 31, 2008    December 31, 2008

Number of shares issued

   191,309,290    191,309,290

Number of shares in treasury

   1,855,119    7,778,734
     Nine months ended December 31,
     2007    2008

Number of shares outstanding (average)

   189,226,133    188,981,494

Instruction for forecasts and other notes:

With regard to the premise of the forecasts set forth elsewhere in this Form 6-K, please refer to the accompanying “Forward-Looking Statements” on page 13.

 

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Business Results, Financial Conditions and Prospects

1. Business Results for the Nine Months Ended December 31, 2008

(1) Economic Situation and Business Environment

In the nine months from April 1, 2008 to December 31, 2008 (“this nine months”), and particularly since fall in the year 2008, the impact of the financial crisis sparked by the sub-prime loan problem has affected the real economy, resulting in rapid global economic deterioration. In the Japanese economy, corporate production activity slowed down due to sharp decrease of exports. Further, appreciation of the yen against the U.S. dollar, Euro and other currencies significantly affected corporate performance, while private capital investment decreased and consumer spending weakened. As a result, the Japanese economic downturn is becoming increasingly pronounced.

Amid this deterioration in the global economy, 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 high-end mobile phone handsets and personal computers (“PCs”), as well as in sales of flat panel TV sets due in part to stagnant consumer spending. In addition, the business environment has changed dramatically, particularly on account of the sharp decline in information technology investment, and as a result, demand for component decreased significantly compared with the nine months ended December 31, 2007 (“the previous nine months”). Despite the harsh environment as a whole, however, the solar energy market continued to expand worldwide due in part to subsidies from national governments.

(2) Consolidated Financial Results

Sales and profits for this nine months decreased compared with the previous nine months due to the significant impact of the deteriorating business environment, notably a slowdown in demand and the yen’s appreciation. Consolidated net sales for this nine months amounted to ¥902,577 million, a decrease of 6.6% compared with the previous nine months.

Profit from operations for this nine months decreased by 38.9% compared with the previous nine months to ¥67,257 million due mainly to a decrease in demand as well as product selling price erosion. Income before income taxes for this nine months decreased by 37.6% compared with the previous nine months to ¥82,409 million. Net income for this nine months decreased by 32.0% compared with the previous nine months to ¥56,768 million.

 

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Average exchange rates for this nine months were ¥103 to the U.S. dollar and ¥151 to the Euro, marking appreciation of ¥14 and ¥12, respectively, compared with the previous nine months. As a result, net sales and income before income taxes after translation into the yen for this nine months were, for calculation purposes, pushed down by approximately ¥68.0 billion and ¥16.5 billion, respectively.

 

     (Yen in millions, except per share amounts and exchange rates)  
     Nine months ended December 31,       
     2007    2008    Increase
(Decrease)
(%)
 
     Amount    %    Amount    %   

Net sales

   ¥ 966,218    100.0    ¥ 902,577    100.0    (6.6 )

Profit from operations

     110,131    11.4      67,257    7.5    (38.9 )

Income before income taxes

     131,971    13.7      82,409    9.1    (37.6 )

Net income

   ¥ 83,516    8.6    ¥ 56,768    6.3    (32.0 )

Diluted earnings per share

   ¥ 440.56    —      ¥ 300.30    —      (31.8 )

Average US$ exchange rate

   ¥ 117    —      ¥ 103    —      —    

Average Euro exchange rate

   ¥ 163    —      ¥ 151    —      —    

 

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(3) Consolidated Financial Results by Reporting Segment

(i) Components Business:

Sales and operating profit decreased in the components business except for the Applied Ceramic Products Group for this nine months. Consequently, sales in the components business for this nine months decreased by 6.2% to ¥478,535 million, and operating profit decreased by 38.3% to ¥47,505 million.

 

1) Fine Ceramic Parts Group

This reporting segment includes fine ceramic components and automotive components.

As a result of a general 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 the previous nine months.

 

2) Semiconductor Parts Group

This reporting segment includes ceramic packages and organic packages.

As a result of a rapid deterioration of demand for ceramic packages and organic packages mainly used for digital consumer equipment and servers from the latter half of the three months ended September 30, 2008, sales remains flat compared with the previous nine months. Operating profit decreased due to a negative impact of price erosions for components compared with the previous nine months.

 

3) Applied Ceramic Products Group

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

For the solar energy business, despite the adverse impact of the yen’s appreciation, in response to strong demand particularly in Europe and the United States, Kyocera expanded its production volume globally. As a result, both sales and operating profit in this reporting segment increased compared with the previous nine months.

 

4) Electronic Device Group

This reporting segment includes electronic components such as various types of capacitors, crystal related products, connectors, and thin-film products such as thermal printheads and liquid crystal displays.

A slowdown in demand for digital consumer equipment such as high-end mobile phone handsets and PCs, coupled with a decline in selling prices for electronic components as well as the yen’s appreciation resulted in decreases in sales and operating profit compared with the previous nine months.

 

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(ii) Equipment Business:

Sales in the equipment business for this nine months decreased by 8.0% to ¥345,165 million, and operating profit decreased by 87.5% to ¥3,943 million compared with the previous nine months.

 

1) Telecommunications Equipment Group

This reporting segment includes mobile phone handsets as well as PHS handsets, base stations for PHS/EVDO, and iBurstTM related equipment.

Although the mobile phone handset related business newly acquired from SANYO Electric Co., Ltd. (“SANYO”) contributed to sales, replacement demand for mobile phone handsets in the Japanese market weakened due to the introduction of a new retail method, and sales in overseas markets also decreased. As a result, sales remains at the same level as the previous nine months. Moreover, this reporting segment recorded an operating loss in this nine months due to a decrease in sales of highly profitable handsets in the Japanese market and due to price erosions in overseas market.

 

2) Information Equipment Group

This reporting segment includes ECOSYS brand printers and digital MFPs.

The yen’s appreciation and significant worldwide decreases in investment in information equipment in the corporate sector caused by the financial crisis and the economic downturn had a large negative impact on sales of digital MFPs and printers. As a result, sales and operating profit in this reporting segment decreased compared with the previous nine months.

(iii) Others :

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

Sales in this reporting segment for this nine months decreased by 2.9% compared with the previous nine months to ¥96,973 million due primarily to a decrease in sales of materials for electronic components. Operating profit increased by 126.4% compared with the previous nine months to ¥15,241 million due to gains on sales of certain real estates in Japan and overseas in the second quarter.

 

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Consolidated Sales by Reporting Segment

 

     (Yen in millions)  
     Nine months ended December 31,     Increase
(Decrease)
(%)
 
     2007     2008    
     Amount     %     Amount     %    

Fine Ceramic Parts Group

   ¥ 61,820     6.4     ¥ 52,122     5.8     (15.7 )

Semiconductor Parts Group

     113,928     11.8       113,459     12.6     (0.4 )

Applied Ceramic Products Group

     108,736     11.3       122,431     13.5     12.6  

Electronic Device Group

     225,557     23.3       190,523     21.1     (15.5 )
                                  

Total Components Business

     510,041     52.8       478,535     53.0     (6.2 )

Telecommunications Equipment Group

     168,596     17.4       169,785     18.8     0.7  

Information Equipment Group

     206,555     21.4       175,380     19.4     (15.1 )
                                  

Total Equipment Business

     375,151     38.8       345,165     38.2     (8.0 )

Others

     99,875     10.3       96,973     10.8     (2.9 )

Adjustments and eliminations

     (18,849 )   (1.9 )     (18,096 )   (2.0 )   —    
                                  

Net sales

   ¥ 966,218     100.0     ¥ 902,577     100.0     (6.6 )
                                  
Consolidated Operating Profit by Reporting Segment           
     (Yen in millions)  
     Nine months ended December 31,     Increase
(Decrease)
(%)
 
     2007     2008    
     Amount     %*     Amount     %*    

Fine Ceramic Parts Group

   ¥ 8,990     14.5     ¥ 2,492     4.8     (72.3 )

Semiconductor Parts Group

     14,736     12.9       11,883     10.5     (19.4 )

Applied Ceramic Products Group

     22,820     21.0       27,994     22.9     22.7  

Electronic Device Group

     30,459     13.5       5,136     2.7     (83.1 )
                                  

Total Components Business

     77,005     15.1       47,505     9.9     (38.3 )

Telecommunications Equipment Group

     3,129     1.9       (10,651 )   —       —    

Information Equipment Group

     28,374     13.7       14,594     8.3     (48.6 )
                                  

Total Equipment Business

     31,503     8.4       3,943     1.1     (87.5 )

Others

     6,731     6.7       15,241     15.7     126.4  
                                  

Operating profit

     115,239     11.9       66,689     7.4     (42.1 )

Corporate

     10,904     —         10,795     —       (1.0 )

Equity in earnings of affiliates and unconsolidated subsidiaries

     5,841     —         4,905     —       (16.0 )

Adjustments and eliminations

     (13 )   —         20     —       —    
                                  

Income before income taxes

   ¥ 131,971     13.7     ¥ 82,409     9.1     (37.6 )
                                  

 

* % to net sales of each corresponding segment

 

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Table of Contents

(4) Consolidated Sales by Geographic Area

 

     (Yen in millions)  
     Nine months ended December 31,    Increase
(Decrease)
(%)
 
     2007    2008   
     Amount    %    Amount    %   

Japan

   ¥ 369,960    38.3    ¥ 370,829    41.1    0.2  

United States of America

     189,117    19.6      162,057    18.0    (14.3 )

Europe

     171,425    17.7      161,074    17.8    (6.0 )

Asia

     179,066    18.5      152,202    16.9    (15.0 )

Others

     56,650    5.9      56,415    6.2    (0.4 )
                              

Net sales

   ¥ 966,218    100.0    ¥ 902,577    100.0    (6.6 )
                              

 

1) Japan

Despite the addition of the mobile phone handset related business from SANYO, sales remained at the same level as the previous nine months because sales of the components business and equipment business as a whole decreased on the back of a sharp decline in demand.

 

2) United States of America

Sales decreased compared with the previous nine months due to a decline in sales in the Telecommunication Equipment Group and in the Information Equipment Group affected by the economic downturn.

 

3) Europe

Sales of the solar energy business in the Applied Ceramic Products Group increased, however, sales decreased compared with the previous nine months due mainly to a decline in sales of printers and digital MFPs in the Information Equipment Group, as well as in sales in the Electronic Devices Group affected by the economic deterioration and the yen’s appreciation.

 

4) Asia

Sales decreased compared with the previous nine months due mainly to a decline in sales in the Electronic Device Group caused by the yen’s appreciation and a slowdown in demand for components on the back of the adjustments of production of digital consumer equipment.

 

5) Others

Despite the addition of the mobile phone handset related business from SANYO, sales remained at the same level as the previous nine months due to decline in sales in the Information Equipment Group.

 

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2. Consolidated Financial Position

Cash Flow

Cash and cash equivalents at December 31, 2008 decreased by ¥202,578 million to ¥245,008 million compared with those at March 31, 2008.

 

     (Yen in millions)  
     Nine months ended
December 31,
 
     2007     2008  

Cash flows from operating activities

   ¥ 110,957     ¥ 69,701  

Cash flows from investing activities

     (119,915 )     (191,859 )

Cash flows from financing activities

     (20,494 )     (57,718 )

Effect of exchange rate changes on cash and cash equivalents

     (686 )     (22,702 )

Net decrease in cash and cash equivalents

     (30,138 )     (202,578 )

Cash and cash equivalents at beginning of period

     282,208       447,586  

Cash and cash equivalents at end of period

   ¥ 252,070     ¥ 245,008  

(1) Cash flow from operating activities

Net cash provided by operating activities in this nine months decreased by ¥41,256 million to ¥69,701 million from ¥110,957 million in the previous nine months. This reflected that a decrease in net income and an increase in cash outflows with payable exceeded an increase in cash inflows with receivables.

(2) Cash flow from investing activities

Net cash used in investing activities in this nine months increased by ¥71,944 million to ¥191,859 million from ¥119,915 million in the previous nine months. This was due mainly to a decrease in proceeds from sales and maturities of securities.

(3) Cash flow from financing activities

Net cash used in financing activities in this nine months increased by ¥37,224 million to ¥57,718 million from ¥20,494 million in the previous nine months. This was due mainly to Kyocera’s acquisition of its own shares in the market as its treasury stock during November 28, 2008 to December 22, 2008.

 

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3. Consolidated Financial Forecasts for the Year Ending March 31, 2009

Based on the performance for this nine months as well as the outlook for the global economy and business environment for the three months ending March 31, 2009 (“the fourth quarter”), the following revisions have been made to Kyocera’s consolidated financial forecasts for the year ending March 31, 2009 (“fiscal 2009”) previously announced in October 2008.

Consolidated Forecasts for Fiscal 2009

 

     (Yen in millions, except per share amounts and exchange rates)  
          Fiscal 2009 Forecasts Announced on       
     Fiscal 2008 Results    October 30, 2008
(Previous forecast)
   January 29, 2009
(Revised forecast)
   Increase
(Decrease)
to Fiscal
2008 Results
(%)
 
     Amount    Amount    Amount   

Net sales

   ¥ 1,290,436    ¥ 1,240,000    ¥ 1,120,000    (13.2 )

Profit from operations

     152,420      74,000      25,000    (83.6 )

Income before income taxes

     174,842      94,000      40,000    (77.1 )

Net income

     107,244      56,000      20,000    (81.4 )

Diluted earnings per share

   ¥ 565.80    ¥ 295.19    ¥ 105.80    (81.3 )

Average US$ exchange rate

   ¥ 114    ¥ 101    ¥ 100    —    

Average Euro exchange rate

   ¥ 162    ¥ 141    ¥ 143    —    

Note : Diluted earnings per share, as set forth in the previous forecast, have been revised for the figure as of October 30, 2008 as set forth above using a number of shares calculated using the weighted average method for the six months ended September 30, 2008.

The global economy and the market for digital consumer equipment are currently worse than those expected when the previous forecast was announced in October 2008, and will be deteriorated even further in the fourth quarter. In addition, Kyocera may record one-off costs in the fourth quarter associated with certain assets required to be measured by fair value or market value. Accordingly, net sales and profits are forecasted to be lower than the previous forecast announced in October 2008.

In light of the extremely severe business environment, Kyocera will strive to secure orders by reinforcing its marketing activities, particularly exploring customer needs, and to reduce costs thoroughly, which includes downsizing the plans of capital investment. Kyocera also aims to establish highly profitable business basis by strengthening the development of new products and future technologies throughout Kyocera Group, and by strategically promoting further enhancements in quality. Kyocera Group will work cooperatively to implement these measures in order to steadily improve performance when demand recovers.

 

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Table of Contents

Consolidated Sales by Reporting Segment

 

     (Yen in millions)  
     Fiscal 2008
Results
    Fiscal 2009 Forecasts Announced on     Increase
(Decrease) to
Fiscal 2008
Results (%)
 
     October 30, 2008
(Previous forecast)
    January 29, 2009
(Revised forecast)
   
     Amount     Amount     Amount    

Fine Ceramic Parts Group

   ¥ 81,309     ¥ 70,000     ¥ 62,000     (23.7 )

Semiconductor Parts Group

     154,538       144,000       133,000     (13.9 )

Applied Ceramic Products Group

     149,942       174,000       150,000     0.0  

Electronic Device Group

     294,201       250,000       229,000     (22.2 )
                              

Total Components Business

     679,990       638,000       574,000     (15.6 )

Telecommunications Equipment Group

     220,817       250,000       215,000     (2.6 )

Information Equipment Group

     276,746       239,000       226,000     (18.3 )
                              

Total Equipment Business

     497,563       489,000       441,000     (11.4 )

Others

     138,494       138,000       128,000     (7.6 )

Adjustments and eliminations

     (25,611 )     (25,000 )     (23,000 )   —    
                              

Net sales

   ¥ 1,290,436     ¥ 1,240,000     ¥ 1,120,000     (13.2 )
                              

 

Consolidated Operating Profit by Reporting Segment

 

        
     (Yen in millions)  
     Fiscal 2008
Results
    Fiscal 2009 Forecasts Announced on     Increase
(Decrease) to
Fiscal 2008
Results (%)
 
       October 30, 2008
(Previous forecast)
    January 29, 2009
(Revised forecast)
   
     Amount     Amount     Amount    

Fine Ceramic Parts Group

   ¥ 11,167     ¥ 3,800     ¥ (2,500 )   —    

Semiconductor Parts Group

     20,027       16,000       5,000     (75.0 )

Applied Ceramic Products Group

     32,655       34,200       26,000     (20.4 )

Electronic Device Group

     36,524       9,000       (5,000 )   —    
                              

Total Components Business

     100,373       63,000       23,500     (76.6 )

Telecommunications Equipment Group

     6,786       (17,300 )     (20,000 )   —    

Information Equipment Group

     39,538       19,000       15,000     (62.1 )
                              

Total Equipment Business

     46,324       1,700       (5,000 )   —    

Others

     9,635       15,500       13,000     34.9  
                              

Operating profit

     156,332       80,200       31,500     (79.9 )

Corporate and others

     18,510       13,800       8,500     (54.1 )
                              

Income before income taxes

   ¥ 174,842     ¥ 94,000     ¥ 40,000     (77.1 )
                              

 

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Table of Contents

Note : Forward-Looking Statements

Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to the following lists.

 

(1) General economic conditions in our markets, which are primarily Japan, North America, Europe and Asia, particularly China

 

(2) Unexpected changes in economic, political and legal conditions in China

 

(3) 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

 

(4) Manufacturing delays or defects resulting from outsourcing or internal manufacturing processes which may adversely affect our production yields and operating results

 

(5) 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

 

(6) Changes in exchange rates, particularly between the yen and the U.S. dollar and Euro, respectively, in which we make significant sales

 

(7) Inability to secure skilled employees, particularly engineering and technical personnel

 

(8) Insufficient protection of our trade secrets and patents

 

(9) Our continuing to hold licenses to manufacture and sell certain of our products

 

(10) The possibility that future initiatives and in-process research and development may not produce the desired results

 

(11) 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

 

(12) Events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of disease

 

(13) The occurrence of natural disasters, such as earthquakes, in locations where our manufacturing and other key business facilities are located

 

(14) The possibility of future tightening of environmental laws and regulations in Japan and other countries which may increase our environmental liability and compliance obligations

 

(15) Fluctuations in the value of, and impairment losses on, securities and other assets held by us

 

(16) Changes in accounting principles

Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.

 

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4. Other Information

Change in accounting principles, procedures and financial statements’ presentation:

Recently adopted Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“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 are effective April 1, 2008. The adoption of SFAS No. 157 for financial assets and financial liabilities has no material impact on Kyocera’s consolidated results of operations and financial position.

In September 2006, the 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 ending after December 15, 2008. Kyocera adopts this measurement date provision in the year ending March 31, 2009 and starts to measure 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 period decreased by ¥522 million and ¥418 million, respectively.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115.” SFAS No.159 provides companies with an option to report selected financial assets and liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings. SFAS No.159 is effective beginning after April 1, 2008. The adoption of SFAS No. 159 has no significant impact on Kyocera’s consolidated results of operations or financial position.

 

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5. Supplemental Information

 

     (Yen in millions)
     Nine months ended December 31,    Increase
(Decrease)
%
     2007    2008   
     Amount    % of net
sales
   Amount    % of net
sales
  

Capital expenditures

   ¥  53,690    5.6    ¥  55,242    6.1    2.9

Depreciation

   ¥ 55,777    5.8    ¥ 61,857    6.9    10.9

R&D expenses

   ¥ 46,623    4.8    ¥ 51,442    5.7    10.3

 

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6. Consolidated Financial Statements

(1) CONSOLIDATED BALANCE SHEETS

 

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

Current assets :

            

Cash and cash equivalents

   ¥ 245,008        ¥ 447,586        ¥ (202,578 )

Short-term investments

     215,635          147,503          68,132  

Trade notes receivables

     18,060          20,375          (2,315 )

Trade accounts receivables

     176,170          205,522          (29,352 )

Less allowances for doubtful accounts and sales returns

     (3,831 )        (4,352 )        521  

Inventories

     207,858          205,212          2,646  

Deferred income taxes

     37,412          41,244          (3,832 )

Other current assets

     76,399          55,135          21,264  
                                  

Total current assets

     972,711     52.1      1,118,225     56.6      (145,514 )
                                  

Non-current assets:

            

Investments and advances:

            

Investments in and advances to affiliates and unconsolidated subsidiaries

     26,806          16,753          10,053  

Securities and other investments

     443,674          437,369          6,305  
                                  

Total investments and advances

     470,480     25.2      454,122     23.0      16,358  

Property, plant and equipment:

            

Land

     58,422          57,155          1,267  

Buildings

     284,388          274,206          10,182  

Machinery and equipment

     703,534          718,812          (15,278 )

Construction in progress

     7,325          17,920          (10,595 )

Less accumulated depreciation

     (775,846 )        (782,194 )        6,348  
                                  

Total property, plant and equipment

     277,823     14.9      285,899     14.4      (8,076 )

Goodwill

     57,757     3.1      39,794     2.0      17,963  

Intangible assets

     40,961     2.2      29,829     1.5      11,132  

Other assets

     46,471     2.5      48,877     2.5      (2,406 )
                                  

Total non-current assets

     893,492     47.9      858,521     43.4      34,971  
                                  

Total assets

   ¥ 1,866,203     100.0    ¥ 1,976,746     100.0    ¥ (110,543 )
                                  

 

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

Current liabilities :

            

Short-term borrowings

   ¥ 13,432        ¥ 7,279        ¥ 6,153  

Current portion of long-term debt

     3,078          3,432          (354 )

Trade notes and accounts payable

     75,849          95,390          (19,541 )

Other notes and accounts payable

     60,009          66,757          (6,748 )

Accrued payroll and bonus

     34,082          43,207          (9,125 )

Accrued income taxes

     8,254          27,118          (18,864 )

Other accrued liabilities

     30,815          32,815          (2,000 )

Other current liabilities

     29,677          25,684          3,993  
                                  

Total current liabilities

     255,196     13.7      301,682     15.3      (46,486 )
                                  

Non-current liabilities :

            

Long-term debt

     5,120          8,298          (3,178 )

Accrued pension and severance liabilities

     14,032          15,041          (1,009 )

Deferred income taxes

     117,709          118,016          (307 )

Other non-current liabilities

     16,885          17,542          (657 )
                                  

Total non-current liabilities

     153,746     8.2      158,897     8.0      (5,151 )
                                  

Total liabilities

     408,942     21.9      460,579     23.3      (51,637 )
                                  

Minority interests in subsidiaries

     56,661     3.0      65,002     3.3      (8,341 )

Stockholders’ equity :

            

Common stock

     115,703          115,703          —    

Additional paid-in capital

     163,109          162,864          245  

Retained earnings

     1,177,313          1,143,821          33,492  

Accumulated other comprehensive income

     (4,971 )        44,066          (49,037 )

Treasury stock, at cost

     (50,554 )        (15,289 )        (35,265 )
                                  

Total stockholders’ equity

     1,400,600     75.1      1,451,165     73.4      (50,565 )
                                  

Total liabilities, minority interests and stockholders’ equity

   ¥ 1,866,203     100.0    ¥ 1,976,746     100.0    ¥ (110,543 )
                                  

Note: Accumulated other comprehensive income is as follows :

 

     (Yen in millions)  
     December 31, 2008     March 31, 2008  

Net unrealized gains on securities

   ¥ 67,501     ¥ 64,799  

Net unrealized (losses) gains on derivative financial instruments

   ¥ (32 )   ¥ 196  

Pension adjustments

   ¥ 11,179     ¥ 12,865  

Foreign currency translation adjustments

   ¥ (83,619 )   ¥ (33,794 )

 

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(2) CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

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

Net sales

   ¥ 966,218     100.0     ¥ 902,577     100.0     ¥ (63,641 )   (6.6 )

Cost of sales

     665,128     68.8       652,416     72.3       (12,712 )   (1.9 )
                                          

Gross profit

     301,090     31.2       250,161     27.7       (50,929 )   (16.9 )

Selling, general and administrative expenses

     190,959     19.8       182,904     20.2       (8,055 )   (4.2 )
                                          

Profit from operations

     110,131     11.4       67,257     7.5       (42,874 )   (38.9 )

Other income (expenses) :

            

Interest and dividend income

     15,728     1.6       13,552     1.5       (2,176 )   (13.8 )

Interest expense

     (1,212 )   (0.0 )     (544 )   (0.1 )     668     —    

Foreign currency transaction gains (losses), net

     273     0.0       (521 )   (0.1 )     (794 )   —    

Equity in earnings of affiliates and unconsolidated subsidiaries

     5,841     0.6       4,905     0.5       (936 )   (16.0 )

Gains (losses) on sale of securities, net

     156     0.0       (2,245 )   (0.2 )     (2,401 )   —    

Losses on impairment of securities

     (186 )   (0.0 )     (1,488 )   (0.2 )     (1,302 )   —    

Other, net

     1,240     0.1       1,493     0.2       253     20.4  
                                          

Total other income

     21,840     2.3       15,152     1.6       (6,688 )   (30.6 )
                                          

Income before income taxes and minority interests

     131,971     13.7       82,409     9.1       (49,562 )   (37.6 )

Income taxes

     43,112     4.5       22,045     2.4       (21,067 )   (48.9 )
                                          

Income before minority interests

     88,859     9.2       60,364     6.7       (28,495 )   (32.1 )

Minority interests

     (5,343 )   (0.6 )     (3,596 )   (0.4 )     1,747     —    
                                          

Net income

   ¥ 83,516     8.6     ¥ 56,768     6.3     ¥ (26,748 )   (32.0 )
                                          

Earnings per share :

            

Net income :

            

Basic

   ¥ 441.36       ¥ 300.39        

Diluted

   ¥ 440.56       ¥ 300.30        

Weighted average number of shares of common stock outstanding :

            

Basic

     189,226         188,981        

Diluted

     189,570         189,038        

Notes:

1. Kyocera applies the SFAS No. 130, “Financial Reporting of Comprehensive Income.” Based on this standard, comprehensive income for the nine months ended December 31, 2007 and 2008 were an increase of ¥42,580 million and an increase of ¥8,149 million, respectively.
2. Earnings per share amounts were computed based on SFAS No. 128, “Earnings per Share.” Under SFAS No. 128, basic earnings per share was computed based on the weighted average number of shares of common stock outstanding during each period, and diluted earnings per share was computed based on the diluted weighted average number of shares of stock outstanding during each period.

 

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(3) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

     (Yen in millions)  
     Nine months ended
December 31,
 
     2007     2008  

Cash flows from operating activities :

    

Net income

   ¥ 83,516     ¥ 56,768  

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

    

Depreciation and amortization

     64,351       72,747  

Write-down of inventories

     3,630       4,465  

Minority interests

     5,343       3,596  

Equity in earnings of affiliates and unconsolidated subsidiaries

     (5,841 )     (4,905 )

Losses (gains) on sales of property, plant and equipment, and intangible assets, net

     816       (10,274 )

Gains (losses) on sale of securities, net

     (156 )     2,245  

Losses on impairment of securities

     186       1,488  

Decrease in receivables

     4,514       41,675  

Increase in inventories

     (2,945 )     (17,239 )

Decrease in notes and accounts payable

     (11,841 )     (38,426 )

Decrease in accrued income taxes

     (20,111 )     (19,059 )

Decrease in other current liabilities

     (141 )     (11,940 )

Other, net

     (10,364 )     (11,440 )
                

Net cash provided by operating activities

     110,957       69,701  
                

Cash flows from investing activities :

    

Payments for purchases of securities

     (25,740 )     (49,019 )

Proceeds from sales and maturities of securities

     113,019       45,024  

Acquisitions of businesses, net of cash acquired

     (26,801 )     (42,717 )

Payment for an additional investment in an affiliate

     (1,474 )     (4,803 )

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

     (50,762 )     (68,286 )

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

     711       12,180  

Acquisition of certificate deposits and time deposits

     (343,950 )     (219,113 )

Withdrawal of certificate deposits and time deposits

     227,134       136,758  

Other, net

     (12,052 )     (1,883 )
                

Net cash used in investing activities

     (119,915 )     (191,859 )
                

Cash flows from financing activities :

    

Increase (decrease) in short-term debt

     (2,049 )     6,317  

Payments of long-term debt

     (5,268 )     (3,335 )

Dividends paid

     (23,934 )     (24,017 )

Purchase of treasury stock

     (193 )     (38,195 )

Reissuance of treasury stock

     6,972       3,036  

Other, net

     3,978       (1,524 )
                

Net cash used in financing activities

     (20,494 )     (57,718 )
                

Effect of exchange rate changes on cash and cash equivalents

     (686 )     (22,702 )
                

Net decrease in cash and cash equivalents

     (30,138 )     (202,578 )

Cash and cash equivalents at beginning of period

     282,208       447,586  
                

Cash and cash equivalents at end of period

   ¥ 252,070     ¥ 245,008  
                

 

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(4) SEGMENT INFORMATION (Unaudited)

Reporting segments :

 

     (Yen in millions)  
     Nine months ended December 31,     Increase (Decrease)  
     2007     2008    
     Amount     Amount     Amount     %  

Net sales :

        

Fine Ceramic Parts Group

   ¥ 61,820     ¥ 52,122     ¥ (9,698 )   (15.7 )

Semiconductor Parts Group

     113,928       113,459       (469 )   (0.4 )

Applied Ceramic Products Group

     108,736       122,431       13,695     12.6  

Electronic Device Group

     225,557       190,523       (35,034 )   (15.5 )

Telecommunications Equipment Group

     168,596       169,785       1,189     0.7  

Information Equipment Group

     206,555       175,380       (31,175 )   (15.1 )

Others

     99,875       96,973       (2,902 )   (2.9 )

Adjustments and eliminations

     (18,849 )     (18,096 )     753     —    
                              
   ¥ 966,218     ¥ 902,577     ¥ (63,641 )   (6.6 )
                              

Operating profit :

        

Fine Ceramic Parts Group

   ¥ 8,990     ¥ 2,492     ¥ (6,498 )   (72.3 )

Semiconductor Parts Group

     14,736       11,883       (2,853 )   (19.4 )

Applied Ceramic Products Group

     22,820       27,994       5,174     22.7  

Electronic Device Group

     30,459       5,136       (25,323 )   (83.1 )

Telecommunications Equipment Group

     3,129       (10,651 )     (13,780 )   —    

Information Equipment Group

     28,374       14,594       (13,780 )   (48.6 )

Others

     6,731       15,241       8,510     126.4  
                              
     115,239       66,689       (48,550 )   (42.1 )

Corporate

     10,904       10,795       (109 )   (1.0 )

Equity in earnings of affiliates and unconsolidated subsidiaries

     5,841       4,905       (936 )   (16.0 )

Adjustments and eliminations

     (13 )     20       33     —    
                              

Income before income taxes and minority interests

   ¥ 131,971     ¥ 82,409     ¥ (49,562 )   (37.6 )
                              

 

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Table of Contents

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

 

     (Yen in millions)  
     Nine months ended December 31,     Increase
(Decrease)
 
     2007     2008    
     Amount     Amount     Amount     %  

Net sales :

        

Japan

   ¥ 390,591     ¥ 390,851     ¥ 260     0.1  

Intra-group sales and transfer between geographic areas

     291,348       299,508       8,160     2.8  
                              
     681,939       690,359       8,420     1.2  
                              

United States of America

     218,188       197,562       (20,626 )   (9.5 )

Intra-group sales and transfer between geographic areas

     23,523       17,899       (5,624 )   (23.9 )
                              
     241,711       215,461       (26,250 )   (10.9 )
                              

Europe

     179,859       167,158       (12,701 )   (7.1 )

Intra-group sales and transfer between geographic areas

     30,661       22,684       (7,977 )   (26.0 )
                              
     210,520       189,842       (20,678 )   (9.8 )
                              

Asia

     158,691       130,500       (28,191 )   (17.8 )

Intra-group sales and transfer between geographic areas

     134,676       162,468       27,792     20.6  
                              
     293,367       292,968       (399 )   (0.1 )
                              

Others

     18,889       16,506       (2,383 )   (12.6 )

Intra-group sales and transfer between geographic areas

     11,794       10,055       (1,739 )   (14.7 )
                              
     30,683       26,561       (4,122 )   (13.4 )

Adjustments and eliminations

     (492,002 )     (512,614 )     (20,612 )   —    
                              
   ¥ 966,218     ¥ 902,577     ¥ (63,641 )   (6.6 )
                              

Operating Profit :

        

Japan

   ¥ 74,182     ¥ 34,647     ¥ (39,535 )   (53.3 )

United States of America

     8,595       817       (7,778 )   (90.5 )

Europe

     7,374       5,347       (2,027 )   (27.5 )

Asia

     19,328       21,654       2,326     12.0  

Others

     2,594       567       (2,027 )   (78.1 )
                              
     112,073       63,032       (49,041 )   (43.8 )

Adjustments and eliminations

     3,153       3,677       524     16.6  
                              
     115,226       66,709       (48,517 )   (42.1 )

Corporate

     10,904       10,795       (109 )   (1.0 )

Equity in earnings of affiliates and unconsolidated subsidiaries

     5,841       4,905       (936 )   (16.0 )
                              

Income before income taxes and minority interests

   ¥ 131,971     ¥ 82,409     ¥ (49,562 )   (37.6 )
                              

 

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Table of Contents

Geographic segments (Sales by region) :

 

     (Yen in millions)  
     Nine months ended December 31,    Increase (Decrease)  
     2007    2008   
     Amount     %    Amount     %    Amount     %  

Japan

   ¥ 369,960     38.3    ¥ 370,829     41.1    ¥ 869     0.2  

United States of America

     189,117     19.6      162,057     18.0      (27,060 )   (14.3 )

Europe

     171,425     17.7      161,074     17.8      (10,351 )   (6.0 )

Asia

     179,066     18.5      152,202     16.9      (26,864 )   (15.0 )

Others

     56,650     5.9      56,415     6.2      (235 )   (0.4 )
                                        

Net sales

   ¥ 966,218     100.0    ¥ 902,577     100.0    ¥ (63,641 )   (6.6 )
                                        

Sales outside Japan

   ¥ 596,258        ¥ 531,748        ¥ (64,510 )   (10.8 )

Sales outside Japan to net sales

     61.7 %        58.9 %       

(5) Cautionary statement for premise of a going concern

Not applicable.

(6) Cautionary statement for significant changes in shareholders’ equity

Based on the resolution at the meeting of the Board of Directors held on November 27, 2008, Kyocera acquired its own shares in the market as its treasury stock from November 28, 2008 to December 22, 2008. The total number of shares acquired and the total acquisition price were 6,256,000 shares and ¥38,000 million, respectively. Due mainly to this acquisition, the balance of treasury stock at December 31, 2008 increased by ¥35,265 million, to ¥50,554 million, compared to that at March 31, 2008.

 

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