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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

UNITED STATES

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 October 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
Director,
Managing Executive Officer and General Manager of Corporate Financial & Accounting Group

Date : October 30, 2009


Table of Contents

Information furnished on this form:

EXHIBITS

 

Exhibit
    Number    

   
1.   Consolidated Financial Results of Kyocera Corporation and its Subsidiaries for the Six Months Ended September 30, 2009


Table of Contents

Consolidated Financial Results of Kyocera Corporation and its Subsidiaries

for the Six Months Ended September 30, 2009

The consolidated financial information is prepared using accounting principles generally accepted in the United States of America.

1. Consolidated Financial Information for the Six Months Ended September 30, 2009:

(1) Consolidated results of operations:

 

     (Japanese yen)  
     Six months ended September 30,  
     2008     2009  

Net sales

   ¥ 658,717 million      ¥ 483,903 million   

% change from the previous period

     3.5     (26.5 )% 

Profit from operations

     62,229 million        8,858 million   

% change from the previous period

     (8.2 )%      (85.8 )% 

Income before income taxes

     74,008 million        17,148 million   

% change from the previous period

     (9.2 )%      (76.8 )% 

Net income attributable to shareholders of Kyocera Corporation

     45,249 million        8,728 million   

% change from the previous period

     (10.6 )%      (80.7 )% 

Earnings per share:

    

Net income attributable to shareholders of Kyocera Corporation

    

Basic

   ¥ 238.63      ¥ 47.56   

Diluted

     238.52        47.56   
Net income attributable to shareholders of Kyocera Corporation is computed in the same manner as net income for the year ended March 31, 2009.    

(2) Consolidated financial position:

  

     (Japanese yen)  
     March 31, 2009     September 30, 2009  

Total assets

   ¥ 1,773,802 million      ¥ 1,792,604 million   

Kyocera Corporation shareholders’ equity

     1,323,663 million        1,322,574 million   

Kyocera Corporation shareholders’ equity to total assets

     74.6     73.8

Kyocera Corporation shareholders’ equity per share

   ¥ 7,212.32      ¥ 7,206.51   

 

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2. Dividends:

 

     (Japanese yen)  
     Year ended
March 31, 2009
   Year ending
March 31, 2010
 

Interim dividends per share

   ¥ 60    ¥ 60    

Year-end dividends per share

     60      60  (forecast) 

Annual dividends per share

   ¥ 120    ¥ 120  (forecast) 

3. Consolidated Financial Forecast for the Year Ending March 31, 2010:

 

     (Japanese yen)  
     Year ending March 31, 2010  

Net sales

   ¥ 1,040,000 million   

% change from the previous year

     (7.8 )% 

Profit from operations

     44,000 million   

% change from the previous year

     1.3

Income before income taxes

     57,000 million   

% change from the previous year

     1.8

Net income attributable to shareholders of Kyocera Corporation

     34,000 million   

% change from the previous year

     15.2

Note :

  

 

Forecast of earnings per share attributable to shareholders of Kyocera Corporation:

   ¥ 185.26   

Net income attributable to shareholders of Kyocera Corporation is computed in the same manner as net income for the year ended March 31, 2009.

Forecast of earnings per share attributable to shareholders of Kyocera Corporation is computed based on the diluted average number of shares outstanding during the six months ended September 30, 2009.

 

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4. Others:

(1) Increase or decrease in significant subsidiaries during the six months ended September 30, 2009:

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, 2009    September 30, 2009

Number of shares issued

   191,309,290    191,309,290

Number of shares in treasury

   7,781,256    7,784,368
     Six months ended September 30,
     2008    2009

Average number of shares outstanding

   189,620,883    183,526,234

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 Six Months Ended September 30, 2009

(1) Economic Situation and Business Environment

In the six months ended September 30, 2009 (the “first half”), overseas economies registered indications of recovery as corporate production activities expanded, driven by economic stimulus packages and financial measures in various countries. In the Japanese economy, inventory adjustments in the manufacturing industry ended and exports increased, while personal consumption showed signs of improvement, supported by an economic stimulus package. However, private capital investment remained at a low level, resulting in only moderate economic recovery.

Amid this economic environment, in the digital consumer equipment market, which is a principal market for Kyocera Corporation and its consolidated subsidiaries (“Kyocera Group” or “Kyocera”), production activities hit bottom in the three months ended March 31, 2009 and have picked up since the beginning of the year started from April 1, 2009, notably for mobile phone handsets and personal computers (PCs). Demand for components used in such equipment has increased as a result, although stopping short of genuine recovery and remaining at a low level compared with the six months ended September 30, 2008 (the “previous first half”), which reflects a continuation of the harsh business environment.

(2) Consolidated Financial Results

Demand for components fell compared with the previous first half, while sales of mobile phone handsets were down in Japan and overseas, and sales of information equipment decreased due primarily to curtailed information technology investment. In addition, the yen appreciated against the Euro and U.S. dollar. As a result, consolidated net sales in the first half decreased by 26.5% compared with the previous first half to ¥483,903 million.

In this harsh business environment featuring significantly reduced sales, Kyocera promoted comprehensive cost-cutting measures that included reducing production costs and worked to improve productivity throughout the Kyocera Group. Despite these efforts, profit from operations for the first half was down 85.8% compared with the previous first half to ¥8,858 million. Income before income taxes for the first half decreased by 76.8% compared with the previous first half to ¥17,148 million, and net income attributable to shareholders of Kyocera Corporation for the first half amounted to ¥8,728 million, a decrease of 80.7% compared with the previous first half.

Average exchange rates for the first half were ¥95 to the U.S. dollar and ¥133 to the Euro, marking appreciation by ¥11 (approximately 10%) and ¥30 (approximately 18%), respectively, compared with those of the previous first half. As a result of the yen’s appreciation, net sales and income before income taxes for the first half were down by approximately ¥45.0 billion and ¥13.5 billion, respectively, compared with the previous first half.

 

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     (Yen in millions, except per share amounts and exchange rates)  
     Six months ended September 30,    Increase
(Decrease)
%
 
     2008    2009   
     Amount    %    Amount    %   

Net sales

   ¥ 658,717    100.0    ¥ 483,903    100.0    (26.5

Profit from operations

   ¥ 62,229    9.4    ¥ 8,858    1.8    (85.8

Income before income taxes

   ¥ 74,008    11.2    ¥ 17,148    3.5    (76.8

Net income attributable to shareholders of Kyocera Corporation

   ¥ 45,249    6.9    ¥ 8,728    1.8    (80.7

Diluted earnings per share attributable to shareholders of Kyocera Corporation

   ¥ 238.52    —      ¥ 47.56    —      —     

Average US$ exchange rate

   ¥ 106    —      ¥ 95    —      —     

Average Euro exchange rate

   ¥ 163    —      ¥ 133    —      —     

Note:

Net income attributable to shareholders of Kyocera Corporation is computed in the same manner as net income for the six months ended September 30, 2008.

(3) Consolidated results by reporting segment

(i) Components Business:

For the first half, sales in the components business decreased by 28.7% to ¥245,081 million, and operating profit decreased by 86.2% to ¥5,579 million compared with the previous first half.

1) Fine Ceramic Parts Group

This reporting segment includes fine ceramic parts and automotive components.

Although demand for digital consumer equipment parts, such as sapphire substrates for LEDs, showed a trend toward recovery in the first half, it was nonetheless down compared with the previous first half. In addition, demand remained low in semiconductor fabrication equipment components and automotive components compared with the previous first half, despite signs of recovery primarily due to the end of inventory adjustment by customers. As a result, sales and operating profit both decreased for the first half compared with the previous first half.

2) Semiconductor Parts Group

This reporting segment includes ceramic packages and organic packages, etc.

Demand for ceramic packages, mainly for crystal and SAW devices and for CCD/CMOS image sensors, showed a trend toward recovery in line with resurgence in production, particularly for mobile phone handsets and digital cameras. However, sales and operating profit in this reporting segment for the first half decreased, falling short of the level recorded in the previous first half, when demand was strong.

 

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3) Applied Ceramic Products Group

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

For the solar energy business, solid sales in the Japanese market were recorded due to rapid expansion of demand on the back of governmental subsidy policies, while overall sales in this business in the first half decreased compared with the previous first half due to sluggish demand in European and U.S. markets coupled with price declines and the yen’s appreciation. In addition, production activities in automotive related industries were at a low level, driving a decrease in demand for cutting tools. As a result, overall sales and operating profit in this reporting segment both decreased for the first half when compared with the previous first half.

4) Electronic Device Group

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

Although demand for ceramic capacitors, crystal-related components and connectors for the first half increased due to recovery in digital consumer equipment production activity due to the end of inventory adjustments by customers, it fell short of levels recorded in the previous first half. Adding in the impact of appreciation of the yen, sales and operating profit for the first half both decreased in this reporting segment compared with the previous first half.

(ii) Equipment Business:

Sales in the equipment business for the first half decreased by 26.9% to ¥190,900 million compared with the previous first half, and operating profit decreased by 91.3% to ¥857 million compared with the previous first half.

1) Telecommunications Equipment Group

This reporting segment includes mobile phone handsets and PHS related products, etc.

Sales in this reporting segment for the first half decreased substantially compared with the previous first half due to weakened replacement demand for mobile phone handsets in the Japanese market, while sales of mobile phone handsets also decreased in the U.S. market due to declining personal consumption and to a cyclical low for Kyocera’s new handset model introductions. Operating loss even expanded for the first half compared with the previous first half due to the decline in sales despite efforts to streamline operations, including reorganization of development and sales systems, and comprehensive cost reductions aimed at boosting profitability going forward.

 

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2) Information Equipment Group

This reporting segment includes ECOSYS brand printers and digital MFPs, etc.

In July 2009, Kyocera newly made two Korean distributors of document equipment consolidated subsidiaries through acquisitions of their common stock in order to expand sales in the Asian market. Nonetheless, stagnant global demand caused by a severe curtailment of information technology investment coupled with a decline in selling prices and appreciation of the yen for the first half led to a decrease in sales compared with the previous first half. Operating profit for the first half was down from the previous first half despite the recording of gains from sales of real estates overseas.

(iii) Others

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

Sales in the Information and Communication Technologies (ICT) business and telecommunications engineering business decreased due to a curtailment of investment for telecommunications infrastructure. Demand for materials for electronic components also decreased due to stagnation in production for various electronic devices. As a result, sales in this reporting segment for the first half decreased by 12.8% compared with the previous first half to ¥57,825 million. Operating profit for the first half decreased by 87.0% compared with the previous first half to ¥1,798 million due to a decline in sales and the absence of a gain on sale of real estates recorded in the previous first half in the amount of approximately ¥10.6 billion.

 

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Consolidated Sales by Reporting Segment

 

     (Yen in millions)  
     Six months ended September 30,     Increase
(Decrease)
%
 
     2008     2009    
     Amount     %     Amount     %    

Fine Ceramic Parts Group

   ¥ 37,345      5.6      ¥ 21,521      4.4      (42.4

Semiconductor Parts Group

     82,272      12.5        62,216      12.9      (24.4

Applied Ceramic Products Group

     86,253      13.1        66,883      13.8      (22.5

Electronic Device Group

     138,018      21.0        94,461      19.5      (31.6
                                  

Total Components Business

     343,888      52.2        245,081      50.6      (28.7

Telecommunications Equipment Group

     135,418      20.5        79,749      16.5      (41.1

Information Equipment Group

     125,737      19.1        111,151      23.0      (11.6
                                  

Total Equipment Business

     261,155      39.6        190,900      39.5      (26.9

Others

     66,306      10.1        57,825      11.9      (12.8

Adjustments and eliminations

     (12,632   (1.9     (9,903   (2.0   —     
                                  

Net sales

   ¥ 658,717      100.0      ¥ 483,903      100.0      (26.5
                                  
Consolidated Operating Profit (loss) by Reporting Segment   
     (Yen in millions)  
     Six months ended September 30,     Increase
(Decrease)
%
 
     2008     2009    
     Amount     %*     Amount     %*    

Fine Ceramic Parts Group

   ¥ 2,886      7.7      ¥ (3,583   —        —     

Semiconductor Parts Group

     10,725      13.0        4,470      7.2      (58.3

Applied Ceramic Products Group

     20,728      24.0        4,364      6.5      (78.9

Electronic Device Group

     6,033      4.4        328      0.3      (94.6
                                  

Total Components Business

     40,372      11.7        5,579      2.3      (86.2

Telecommunications Equipment Group

     (2,373   —          (7,503   —        —     

Information Equipment Group

     12,199      9.7        8,360      7.5      (31.5
                                  

Total Equipment Business

     9,826      3.8        857      0.4      (91.3

Others

     13,869      20.9        1,798      3.1      (87.0
                                  

Operating profit

     64,067      9.7        8,234      1.7      (87.1
                                  

Corporate

     6,235      —          7,312      —        17.3   

Equity in earnings of affiliates and unconsolidated subsidiaries

     3,558      —          1,497      —        (57.9

Adjustments and eliminations

     148      —          105      —        (29.1
                                  

Income before income taxes

   ¥ 74,008          11.2      ¥ 17,148            3.5      (76.8
                                  

 

* % to net sales of each corresponding segment

 

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(4) Consolidated Sales by Geographic Area

 

     (Yen in millions)  
     Six months ended September 30,    Increase
(Decrease)
%
 
     2008    2009   
     Amount    %    Amount    %   

Japan

   ¥ 269,168    40.9    ¥ 199,716    41.3    (25.8

Europe

     118,078    17.9      93,750    19.4    (20.6

United States of America

     117,174    17.8      84,750    17.5    (27.7

Asia

     111,834    17.0      82,156    17.0    (26.5

Others

     42,463    6.4      23,531    4.8    (44.6
                              

Net sales

   ¥ 658,717    100.0    ¥ 483,903    100.0    (26.5
                              

Sales decreased in all geographic areas due to harsh business situation caused by sluggish global economies.

1) Japan

Sales decreased compared with the previous first half due to a decline in sales in the Telecommunications Equipment Group, especially mobile phone handsets, and to a decline in components demand as a whole, although sales increased in the solar energy business in the Applied Ceramic Products Group.

2) Europe

Sales decreased compared with the previous first half due mainly to a decline in demand of the Electronic Device Group, the Applied Ceramic Products Group and the Information Equipment Group, coupled with the impact of appreciation of the yen.

3) United States of America

Sales decreased compared with the previous first half due mainly to a decline in sales in mobile phone handsets in the Telecommunications Equipment Group and the Electronic Device Group.

4) Asia

Sales decreased compared with the previous first half due mainly to a decline in sales in the components business due to stagnant production of digital consumer equipment such as mobile phone handsets and PCs.

5) Others

Sales decreased compared with the previous first half due to a decline in sales in mobile phone handsets in the Telecommunications Equipment Group and the Information Equipment Group.

 

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2. Consolidated Financial Position

Consolidated Cash Flows

Cash and cash equivalents at September 30, 2009 increased by ¥30,381 million to ¥299,628 million compared with those at March 31, 2009.

 

     (Yen in millions)  
     Six months ended September 30,  
     2008     2009  

Cash flows from operating activities

   ¥ 67,480      ¥ 67,806   

Cash flows from investing activities

     (166,912     (5,004

Cash flows from financing activities

     (14,191     (23,133

Effect of exchange rate changes on cash and cash equivalents

     1,863        (9,288

Net increase (decrease) in cash and cash equivalents

     (111,760     30,381   

Cash and cash equivalents at beginning of period

     447,586        269,247   

Cash and cash equivalents at end of period

   ¥ 335,826      ¥ 299,628   

(1) Cash flow from operating activities

Net cash provided by operating activities in the first half increased by ¥326 million to ¥67,806 million from ¥67,480 million in the previous first half. This was primarily related to an increase in accounts payable, which significantly decreased in the previous first half, and a decrease in net income.

(2) Cash flow from investing activities

Net cash used in investing activities in the first half decreased by ¥161,908 million to ¥5,004 million from ¥166,912 million in the previous first half. This was due mainly to decreases in payments for property, plant and equipment and intangible assets, and acquisitions of businesses as well as an increase in withdrawal of certificate deposits and time deposits.

(3) Cash flow from financing activities

Net cash used in financing activities in the first half increased by ¥8,942 million to ¥23,133 million from ¥14,191 million in the previous first half. This was due mainly to increases in payments of short-term borrowings and long-term debt.

 

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3. Consolidated Financial Forecasts for the Year Ending March 31, 2010

In the first half, solar energy product prices continued to face conditions that were tougher than expected overseas, while production activity for digital consumer equipment recovered strongly and beyond initial projections, and demand for components mainly in the Semiconductor Parts Group expanded steadily. In terms of demand for components used in digital consumer equipment from the three months ended December 31, 2009 (the “third quarter”) onward, demand trends remain unclear for the period following the Christmas selling season overseas, and accordingly Kyocera has made no changes to sales and profit forecasts for the year ending March 31, 2010 (“fiscal 2010”) announced in April 2009.

Consolidated Forecasts for the year ending March 31, 2010

 

     (Yen in millions, except per share amounts and exchange rates)  
     Fiscal 2009
Results
   Fiscal 2010 Forecasts Announced on    Increase
(Decrease)
to Fiscal
2009 Results

%
 
      April 27, 2009    October 30, 2009   

Net sales

   ¥ 1,128,586    ¥ 1,040,000    ¥ 1,040,000    (7.8

Profit from operations

   ¥ 43,419    ¥ 44,000    ¥ 44,000    1.3   

Income before income taxes

   ¥ 55,982    ¥ 57,000    ¥ 57,000    1.8   

Net income attributable to shareholders of Kyocera Corporation

   ¥ 29,506    ¥ 34,000    ¥ 34,000    15.2   

Diluted earnings per share attributable to shareholders of Kyocera Corporation

   ¥ 157.23    ¥ 185.26    ¥ 185.26    17.8   

Average US$ exchange rate

   ¥ 101    ¥ 92    ¥ 92    —     

Average Euro exchange rate

   ¥ 143    ¥ 123    ¥ 129    —     
                           

Notes:

1. Net income attributable to shareholders of Kyocera Corporation is computed in the same manner as net income for the six months ended September 30, 2008.
2. Forecast of diluted earnings per share attributable to shareholders of Kyocera Corporation announced on October 30, 2009 is computed based on the diluted average number of shares outstanding during the six months ended September 30, 2009.
3. The forecast of diluted earnings per share announced previously was computed based on the diluted average number of shares outstanding during the three months ended June 30, 2009.

Although there is continued cause for uncertainty in the business environment from the third quarter onward, particularly trends in the world economy and exchange rates, Kyocera will strive vigorously to secure orders for products where demand is forecast to continue growing, as well as to enhance profitability by further cutting costs and improving productivity, as means to achieve full-year financial forecasts.

As shown on the following page, Kyocera has made certain changes to forecasts in each reporting segment in light of the first half results and the projected business environment from the third quarter onward.

 

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Consolidated Sales by Reporting Segment

 

     (Yen in millions)  
     Fiscal 2009
Results
    Fiscal 2010 Forecasts Announced on     Increase
(Decrease)
to Fiscal
2009 Results
%
 
     April 27, 2009     October 30, 2009    
     Amount     %     Amount     %     Amount     %    

Fine Ceramic Parts Group

   ¥ 61,730      5.4      ¥ 50,000      4.8      ¥ 48,000      4.6      (22.2

Semiconductor Parts Group

     135,137      12.0        110,000      10.6        127,000      12.2      (6.0

Applied Ceramic Products Group

     148,917      13.2        158,000      15.2        148,000      14.2      (0.6

Electronic Device Group

     231,271      20.5        185,000      17.8        190,000      18.3      (17.8
                                                

Total Components Business

     577,055      51.1        503,000      48.4        513,000      49.3      (11.1

Telecommunications Equipment Group

     218,758      19.4        200,000      19.2        196,000      18.9      (10.4

Information Equipment Group

     229,297      20.3        234,000      22.5        229,000      22.0      (0.1
                                                

Total Equipment Business

     448,055      39.7        434,000      41.7        425,000      40.9      (5.1

Others

     126,043      11.2        123,000      11.8        122,000      11.7      (3.2

Adjustments and eliminations

     (22,567   (2.0     (20,000   (1.9     (20,000   (1.9   —     
                                                

Net sales

   ¥ 1,128,586      100.0      ¥ 1,040,000      100.0      ¥ 1,040,000      100.0      (7.8
                                                
Consolidated Operating Profit by Reporting Segment   
     (Yen in millions)  
     Fiscal 2009
Results
    Fiscal 2010 Forecasts Announced on     Increase
(Decrease)
to Fiscal
2009 Results
%
 
       April 27, 2009     October 30, 2009    
     Amount     %*     Amount     %*     Amount     %*    

Fine Ceramic Parts Group

   ¥ (240   —        ¥ 0      0.0      ¥ 0      0.0      —     

Semiconductor Parts Group

     8,671      6.4        4,000      3.6        10,500      8.3      21.1   

Applied Ceramic Products Group

     27,469      18.4        18,000      11.4        11,500      7.8      (58.1

Electronic Device Group

     (4,070   —          2,000      1.1        5,500      2.9      —     
                                                

Total Components Business

     31,830      5.5        24,000      4.8        27,500      5.4      (13.6

Telecommunications Equipment Group

     (17,713   —          (6,000   —          (6,000   —        —     

Information Equipment Group

     13,497      5.9        11,000      4.7        15,000      6.6      11.1   
                                                

Total Equipment Business

     (4,216   —          5,000      1.2        9,000      2.1      —     

Others

     14,106      11.2        4,000      3.3        3,800      3.1      (73.1
                                                

Operating profit

     41,720      3.7        33,000      3.2        40,300      3.9      (3.4

Corporate and others

     14,262      —          24,000      —          16,700      —        17.1   
                                                

Income before income taxes

   ¥ 55,982      5.0      ¥ 57,000      5.5      ¥ 57,000      5.5      1.8   
                                                

 

* % to net sales of each corresponding segment

 

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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) Exposure to credit risk on trade receivables due to customers’ worsening financial condition

 

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

 

(9) Insufficient protection of our trade secrets and patents

 

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

 

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

 

(12) The possibility that companies or assets acquired by us may not produce the returns or benefits, or bring in business opportunities, which we expect, and may require more cost than expected for integration or impairment losses on goodwill and intangible assets related to the acquisition

 

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

 

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

 

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

 

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

 

(17) 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

Kyocera adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 105, “Generally Accepted Accounting Principles” (former Statement of Financial Accounting Standards (SFAS) No. 168, “The FASB Accounting Standards Codification and Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162”) in the three months ended September 30, 2009. This accounting standard compiles all generally accepted accounting principles in the U.S. and establishes “Accounting Standard Codification” as the single official source of authoritative generally accepted accounting standards. The adoption of this accounting standard had no impact on Kyocera’s consolidated results of operations, financial position and cash flows.

Kyocera adopted FASB ASC 805, “Business Combination” (former SFAS No. 141 (revised 2007), “Business Combinations”) in this first half, which requires assets, liabilities and noncontrolling interests be measured at fair value. Under this accounting standard, transaction and restructuring costs are required to be generally expensed, as well as contingent consideration and in-process research and development be recorded at fair value on acquisition date as a part of fair value of acquired business. Any tax adjustment made after the measurement period impacts income tax expenses. This accounting standard also requires companies to recognize an asset acquired or a liability assumed in a business combination that arises from a contingency at fair value, at the acquisition date, if the acquisition-date fair value of that asset or liability can be determined during the measurement period. The adoption of this accounting standard had no material impact on Kyocera’s consolidated results of operations, financial position and cash flows.

Kyocera adopted FASB ASC 810, “Consolidation” (former SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an Amendment of Accounting Research Bulletin No. 51”) in this first half. This accounting standard requires that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements, and requires that changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary shall be accounted for as equity transactions. Upon the adoption of this accounting standard, noncontrolling interests, which were previously referred to as minority interests and classified between total liabilities and shareholders’ equity on the consolidated balance sheets, are now included as a separate component of total equity. The presentation of consolidated statements of income and cash flows has also been changed. In addition, in accordance with a requirement of this accounting standard, certain reclassification of previously reported amounts have been made to the consolidated balance sheet at March 31, 2009, the consolidated statement of income for the six months ended September 30, 2008 and the consolidated statement of cash flow for the six months ended September 30, 2008.

 

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5. Supplemental Information

 

     (Yen in millions)  
     Six months ended September 30,    Increase
(Decrease)
%
 
     2008    2009   
     Amount    % to net
sales
   Amount    % to net
sales
  

Capital expenditures

   ¥ 36,980    5.6    ¥ 13,562    2.8    (63.3

Depreciation

   ¥ 40,413    6.1    ¥ 29,839    6.2    (26.2

R&D expenses

   ¥ 35,362    5.4    ¥ 26,015    5.4    (26.4

 

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6. Consolidated Financial Statements

(1) CONSOLIDATED BALANCE SHEETS (Unaudited)

 

     (Yen in millions)  
     September 30, 2009    March 31, 2009    Increase
(Decrease)
 
     Amount     %    Amount     %   

Current assets:

            

Cash and cash equivalents

   ¥ 299,628         ¥ 269,247         ¥ 30,381   

Short-term investments

     195,473           202,143           (6,670

Trade notes receivables

     11,515           13,750           (2,235

Trade accounts receivables

     173,420           158,754           14,666   

Less allowances for doubtful accounts and sales returns

     (3,820        (4,669        849   

Inventories

     184,315           199,641           (15,326

Deferred income taxes

     37,033           35,187           1,846   

Other current assets

     70,988           78,263           (7,275
                                  

Total current assets

     968,552      54.0      952,316      53.7      16,236   
                                  

Non-current assets:

            

Investments and advances:

            

Investments in and advances to affiliates and unconsolidated subsidiaries

     21,563           19,376           2,187   

Securities and other investments

     369,624           351,849           17,775   
                                  

Total investments and advances

     391,187      21.8      371,225      20.9      19,962   

Property, plant and equipment:

            

Land

     56,892           57,077           (185

Buildings

     284,667           288,460           (3,793

Machinery and equipment

     688,751           707,399           (18,648

Construction in progress

     8,162           6,397           1,765   

Less accumulated depreciation

     (792,977        (793,279        302   
                                  

Total property, plant and equipment

     245,495      13.7      266,054      15.0      (20,559

Goodwill

     66,908      3.8      63,226      3.6      3,682   

Intangible assets

     53,799      3.0      60,077      3.4      (6,278

Other assets

     66,663      3.7      60,904      3.4      5,759   
                                  

Total non-current assets

     824,052      46.0      821,486      46.3      2,566   
                                  

Total assets

   ¥ 1,792,604      100.0    ¥ 1,773,802      100.0    ¥ 18,802   
                                  

 

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Table of Contents
     (Yen in millions)  
     September 30, 2009    March 31, 2009    Increase  
     Amount     %    Amount     %    (Decrease)  

Current liabilities:

            

Short-term borrowings

   ¥ 4,553         ¥ 11,000         ¥ (6,447

Current portion of long-term debt

     13,613           13,865           (252

Trade notes and accounts payable

     76,353           62,579           13,774   

Other notes and accounts payable

     42,257           43,452           (1,195

Accrued payroll and bonus

     44,126           41,756           2,370   

Accrued income taxes

     9,084           7,430           1,654   

Other accrued liabilities

     26,810           26,967           (157

Other current liabilities

     27,370           30,912           (3,542
                                  

Total current liabilities

     244,166      13.6      237,961      13.4      6,205   
                                  

Non-current liabilities:

            

Long-term debt

     32,525           28,538           3,987   

Accrued pension and severance liabilities

     32,271           34,567           (2,296

Deferred income taxes

     84,178           71,539           12,639   

Other non-current liabilities

     18,213           18,109           104   
                                  

Total non-current liabilities

     167,187      9.3      152,753      8.6      14,434   
                                  

Total liabilities

     411,353      22.9      390,714      22.0      20,639   
                                  

Kyocera Corporation shareholders’ equity:

            

Common stock

     115,703           115,703           —     

Additional paid-in capital

     163,040           163,151           (111

Retained earnings

     1,147,766           1,150,050           (2,284

Accumulated other comprehensive income

     (53,344        (54,673        1,329   

Treasury stock, at cost

     (50,591        (50,568        (23
                                  

Total Kyocera Corporation shareholders’ equity

     1,322,574      73.8      1,323,663      74.6      (1,089
                                  

Noncontrolling interests

     58,677      3.3      59,425      3.4      (748
                                  

Total equity

     1,381,251      77.1      1,383,088      78.0      (1,837
                                  

Total liabilities and equity

   ¥ 1,792,604      100.0    ¥ 1,773,802      100.0    ¥ 18,802   
                                  

 

Note: Accumulated other comprehensive income is as follows:

 

            
     (Yen in millions)  
                           Increase  
     September 30, 2009          March 31, 2009          (Decrease)  

Net unrealized gains on securities

   ¥ 28,900         ¥ 11,621         ¥ 17,279   

Net unrealized losses on derivative financial instruments

   ¥ (190      ¥ (145      ¥ (45

Pension adjustments

   ¥ (381      ¥ 53         ¥ (434

Foreign currency translation adjustments

   ¥ (81,673      ¥ (66,202      ¥ (15,471

 

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(2) CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

     (Yen in millions and shares in thousands, except per share amounts)  
     Six months ended September 30,     Increase  
     2008     2009     (Decrease)  
     Amount     %     Amount     %     Amount     %  

Net sales

   ¥ 658,717      100.0      ¥ 483,903      100.0      ¥ (174,814   (26.5

Cost of sales

     473,285      71.8        369,646      76.4        (103,639   (21.9
                                          

Gross profit

     185,432      28.2        114,257      23.6        (71,175   (38.4

Selling, general and administrative expenses

     123,203      18.8        105,399      21.8        (17,804   (14.5
                                          

Profit from operations

     62,229      9.4        8,858      1.8        (53,371   (85.8

Other income (expenses):

            

Interest and dividend income

     8,271      1.3        6,540      1.3        (1,731   (20.9

Interest expense

     (406   (0.1     (1,500   (0.3     (1,094   —     

Foreign currency transaction (losses) gains, net

     (125   (0.0     852      0.2        977      —     

Equity in earnings of affiliates and unconsolidated subsidiaries

     3,558      0.5        1,497      0.3        (2,061   (57.9

Other, net

     481      0.1        901      0.2        420      87.3   
                                          

Total other income

     11,779      1.8        8,290      1.7        (3,489   (29.6
                                          

Income before income taxes

     74,008      11.2        17,148      3.5        (56,860   (76.8

Income taxes

     26,141      3.9        6,273      1.3        (19,868   (76.0
                                          

Net income

     47,867      7.3        10,875      2.2        (36,992   (77.3

Net income attributable to noncontrolling interests

     (2,618   (0.4     (2,147   (0.4     471      —     
                                          

Net income attributable to shareholders of Kyocera Corporation

   ¥ 45,249      6.9      ¥ 8,728      1.8      ¥ (36,521   (80.7
                                          

Earnings per share:

            

Net income attributable to shareholders of Kyocera Corporation:

            

Basic

   ¥ 238.63        ¥ 47.56         

Diluted

   ¥ 238.52        ¥ 47.56         

Average number of shares of common stock outstanding :

            

Basic

     189,621          183,526         

Diluted

     189,706          183,526         

Note:

Basic earnings per share attributable to shareholders of Kyocera Corporation was computed based on the average number of shares of common stock outstanding during each period, and diluted earnings per share attributable to shareholders of Kyocera Corporation was computed based on the diluted average number of shares of stock outstanding during each period.

 

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(3) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

     (Yen in millions)  
     Six months ended September 30,  
     2008     2009  

Cash flows from operating activities:

    

Net income

   ¥ 47,867      ¥ 10,875   

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

    

Depreciation and amortization

     47,934        35,894   

Write-down of inventories

     2,772        7,023   

Equity in earnings of affiliates and unconsolidated subsidiaries

     (3,558     (1,497

Gains on sales of property, plant and equipment, and intangible assets, net

     (10,219     (1,288

(Increase) decrease in receivables

     41,035        (6,950

(Increase) decrease in inventories

     (5,628     5,488   

Increase (decrease) in notes and accounts payable

     (41,605     19,635   

Increase (decrease) in accrued income taxes

     (8,021     1,748   

Other, net

     (3,097     (3,122
                

Net cash provided by operating activities

     67,480        67,806   
                

Cash flows from investing activities:

    

Payments for purchases of securities

     (25,534     (41,461

Proceeds from sales and maturities of securities

     25,255        31,395   

Acquisitions of businesses, net of cash acquired

     (38,693     (3,667

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

     (51,080     (17,272

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

     11,555        770   

Acquisition of certificate deposits and time deposits

     (187,304     (171,395

Withdrawal of certificate deposits and time deposits

     99,359        196,854   

Other, net

     (470     (228
                

Net cash used in investing activities

     (166,912     (5,004
                

Cash flows from financing activities:

    

Decrease in short-term debt

     (1,176     (5,897

Issuance of long-term debt

     —          7,879   

Payments of long-term debt

     (2,212     (11,860

Dividends paid

     (12,194     (11,871

Purchase of treasury stock

     (155     (25

Reissuance of treasury stock

     2,995        3   

Other, net

     (1,449     (1,362
                

Net cash used in financing activities

     (14,191     (23,133
                

Effect of exchange rate changes on cash and cash equivalents

     1,863        (9,288
                

Net increase (decrease) in cash and cash equivalents

     (111,760     30,381   

Cash and cash equivalents at beginning of period

     447,586        269,247   
                

Cash and cash equivalents at end of period

   ¥ 335,826      ¥ 299,628   
                

 

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(4) SEGMENT INFORMATION (Unaudited)

1. Reporting segments:

 

     (Yen in millions)  
     Six months ended September 30,     Increase  
     2008     2009     (Decrease)  
   Amount     Amount     Amount     %  

Net sales:

        

Fine Ceramic Parts Group

   ¥ 37,345      ¥ 21,521      ¥ (15,824   (42.4

Semiconductor Parts Group

     82,272        62,216        (20,056   (24.4

Applied Ceramic Products Group

     86,253        66,883        (19,370   (22.5

Electronic Device Group

     138,018        94,461        (43,557   (31.6

Telecommunications Equipment Group

     135,418        79,749        (55,669   (41.1

Information Equipment Group

     125,737        111,151        (14,586   (11.6

Others

     66,306        57,825        (8,481   (12.8

Adjustments and eliminations

     (12,632     (9,903     2,729      —     
                              
   ¥ 658,717      ¥ 483,903      ¥ (174,814   (26.5
                              

Operating profit (loss):

        

Fine Ceramic Parts Group

   ¥ 2,886      ¥ (3,583   ¥ (6,469   —     

Semiconductor Parts Group

     10,725        4,470        (6,255   (58.3

Applied Ceramic Products Group

     20,728        4,364        (16,364   (78.9

Electronic Device Group

     6,033        328        (5,705   (94.6

Telecommunications Equipment Group

     (2,373     (7,503     (5,130   —     

Information Equipment Group

     12,199        8,360        (3,839   (31.5

Others

     13,869        1,798        (12,071   (87.0
                              
     64,067        8,234        (55,833   (87.1

Corporate

     6,235        7,312        1,077      17.3   

Equity in earnings of affiliates and unconsolidated subsidiaries

     3,558        1,497        (2,061   (57.9

Adjustments and eliminations

     148        105        (43   (29.1
                              

Income before income taxes

   ¥ 74,008      ¥ 17,148      ¥ (56,860   (76.8
                              

 

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2. Geographic segments (Net sales and Operating profit (loss) by geographic area) :

 

     (Yen in millions)  
     Six months ended September 30,     Increase
(Decrease)
 
     2008     2009    
     Amount     Amount     Amount     %  

Net sales:

        

Japan

   ¥ 283,589      ¥ 207,292      ¥ (76,297   (26.9

Intra-group sales and transfer between geographic areas

     218,708        143,142        (75,566   (34.6
                              
     502,297        350,434        (151,863   (30.2
                              

Europe

     122,509        97,000        (25,509   (20.8

Intra-group sales and transfer between geographic areas

     16,348        12,751        (3,597   (22.0
                              
     138,857        109,751        (29,106   (21.0
                              

United States of America

     141,660        100,509        (41,151   (29.0

Intra-group sales and transfer between geographic areas

     14,826        11,452        (3,374   (22.8
                              
     156,486        111,961        (44,525   (28.5
                              

Asia

     98,032        70,160        (27,872   (28.4

Intra-group sales and transfer between geographic areas

     119,132        66,548        (52,584   (44.1
                              
     217,164        136,708        (80,456   (37.0
                              

Others

     12,927        8,942        (3,985   (30.8

Intra-group sales and transfer between geographic areas

     7,149        6,254        (895   (12.5
                              
     20,076        15,196        (4,880   (24.3

Adjustments and eliminations

     (376,163     (240,147     136,016        
                              
   ¥ 658,717      ¥ 483,903      ¥ (174,814   (26.5
                              

Operating profit (loss):

        

Japan

   ¥ 39,292      ¥ (1,279   ¥ (40,571     

Europe

     4,373        (1,042     (5,415     

United States of America

     2,362        2,154        (208   (8.8

Asia

     18,700        6,167        (12,533   (67.0

Others

     635        1,275        640      100.8   
                              
     65,362        7,275        (58,087   (88.9

Corporate

     6,235        7,312        1,077      17.3   

Equity in earnings of affiliates and unconsolidated subsidiaries

     3,558        1,497        (2,061   (57.9

Adjustments and eliminations

     (1,147     1,064        2,211        
                              

Income before income taxes

   ¥ 74,008      ¥ 17,148      ¥ (56,860   (76.8
                              

 

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3. Geographic segments (Net sales by region):

 

     (Yen in millions)  
     Six months ended September 30,    Increase  
     2008    2009    (Decrease)  
     Amount     %    Amount     %    Amount     %  

Japan

   ¥ 269,168      40.9    ¥ 199,716      41.3    ¥ (69,452   (25.8

Europe

     118,078      17.9      93,750      19.4      (24,328   (20.6

United States of America

     117,174      17.8      84,750      17.5      (32,424   (27.7

Asia

     111,834      17.0      82,156      17.0      (29,678   (26.5

Others

     42,463      6.4      23,531      4.8      (18,932   (44.6
                                        

Net sales

   ¥ 658,717      100.0    ¥ 483,903      100.0    ¥ (174,814   (26.5
                                        

Sales outside Japan

   ¥ 389,549         ¥ 284,187         ¥ (105,362   (27.0

Sales outside Japan to net sales

     59.1        58.7       

(5) CAUTIONARY STATEMENT FOR PREMISE OF A GOING CONCERN

Not applicable.

(6) CAUTIONARY STATEMENT FOR SIGNIFICANT CHANGES IN EQUITY

Not applicable.

 

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