Kyocera 6-K 2011
Documents found in this filing:
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of June 2011
Commission File Number: 1-07952
6 Takeda Tobadono-cho, Fushimi-ku,
Kyoto 612-8501, Japan
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F x Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(7):
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.
Date: June 7, 2011
to be held in Kyoto, Japan on June 28, 2011
6 Takeda Tobadono-cho, Fushimi-ku, Kyoto, Japan
Security Code 6971
June 7, 2011
To our shareholders:
Notice of the 57th Ordinary General Meeting of Shareholders
We extend our heartfelt sympathy to the people affected by the Great East Japan Earthquake and offer our sincere wishes for their swift recovery.
This is to inform you that Kyocera Corporation (the Company) will hold its 57th Ordinary General Meeting of Shareholders, as described below, which you are cordially invited to attend.
If you are unable to attend the Meeting, please exercise your voting rights in written form (voting card) or electronically (through the Internet, etc.), after examining the attached reference documents for the General Meeting of Shareholders, no later than 5:30 p.m. Monday, June 27, 2011, Japan time.
3. Purpose of the Meeting:
Matters to be reported:
Matters to be resolved:
4. Matters relating to exercises of voting rights:
(1) Method of exercising voting rights in written form (voting card)
Please mark for or against as to the agenda on the voting card enclosed herewith and return it by the above deadline in order to exercise voting rights.
(2) Method of exercising voting rights electronically (through the Internet, etc.)
Please access the Internet website for exercise of voting rights (http://daiko-sb.gcan.jp) through a personal computer or mobile phone. Using the code and password written on the voting card enclosed herewith and following the instructions set forth on the website, please mark for or against as to the agenda by the above deadline in order to exercise voting rights.
[Treatment in case of multiple exercises of voting rights by a shareholder]
Reference Documents for General Meeting of Shareholders
Agenda and References are as follows:
Agendum No. 1: Disposition of Surplus
The Company believes that the best way to meet shareholders expectations is to improve the consolidated performance of the Company on an ongoing basis.
The Company has adopted the principal guideline that dividend amounts should be within a range based on net income attributable to shareholders of the Company on a consolidated basis, and has set its consolidated dividend policy to maintain a consolidated dividend ratio at a level of approximately 20% to 25% of consolidated net income. In addition, the Company determines dividend amounts based on an overall assessment, taking into account various factors including the amount of capital expenditures necessary for the medium to long-term growth of the Company.
Pursuant to this policy and based on full year performance through the year ended March 31, 2011, the Company proposes a year-end dividend for the year ended March 31, 2011 in the amount of 70 yen per share, a 10 yen increase as compared with the year ended March 31, 2010. When aggregated with the interim dividend in the amount of 60 yen per share, the total annual dividend will be 130 yen per share.
The Company also proposes that funds shall be set aside as general reserve, in order to take into account the necessary reserve amounts for creation of new businesses, development of new markets and new technologies and acquisition of outside management resources needed to achieve stable and sustainable growth of the Company.
The proposed disposition of surplus is as follows:
Agendum No. 2: Election of twelve (12) Directors
The terms of office of all twelve (12) Directors will expire at the close of this Meeting. Accordingly, the Company proposes that twelve (12) Directors be elected.
The candidates for Director are as follows:
Mr. Rodney N. Lanthorne: 752 shares of Common Stock of the Company (752 ADRs)
Mr. John S. Gilbertson: 12,927 shares of Common Stock of the Company (12,927 ADRs)
Agendum No. 3: Election of one (1) Corporate Auditor
Mr. Kokichi Ishibitsu will resign from the office of Corporate Auditor at the close of this Meeting. Accordingly, the Company proposes that one (1) Corporate Auditor be elected.
With respect to this Agendum, consent from the Board of Corporate Auditors has been obtained.
The candidate for Corporate Auditor is as follows:
- END -
(Accompanying documents for the 57th Ordinary General Meeting of Shareholders)
This is an English translation of the Japanese original of the Report for the year ended March 31, 2011 of Kyocera Corporation distributed to shareholders in Japan. The translation is prepared solely for the reference and convenience of foreign shareholders. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail.
Table of Contents
Kyocera Management Philosophy
Respect the Divine and Love People
Preserve the spirit to work fairly and honorably,
respecting people, our work, our company and our global community.
To provide opportunities for the material and intellectual growth of all our
employees, and through our joint efforts, contribute to the advancement of
society and humankind.
To coexist harmoniously with nature and society.
Harmonious coexistence is the underlying foundation of all our business
activities as we work to create a world of abundance and peace.
Kyocera was built upon a unique foundation: the human spirit
When I founded Kyocera, I didnt have sufficient funding, let alone decent facilities or equipment. However, I was fortunate enough to have associates with whom I felt a spiritual bond. We shared every joy and pain, just like a family. I therefore decided to run this company with faith in the human spirit. The human spirit is said to be easily changed. Yet, when a deep sense of trust exists, I have found that there is nothing stronger or more reliable than our spiritual ties. Today, this faith in the human spirit forms the very heart of Kyocera.
We are pleased to present to you our Report for the year ended March 31, 2011 (hereinafter, fiscal 2011 refers to the fiscal year ended March 31, 2011, and other fiscal years are referred to in a corresponding manner).
First, we at Kyocera extend our heartfelt sympathy to the people affected by the Great East Japan Earthquake that struck on March 11, 2011 and offer our sincere wishes for their swift recovery.
Production activities in fiscal 2011 expanded in every market in which the Kyocera Group engages, including the digital consumer equipment market, as the global economy showed signs of upward momentum. Business results for fiscal 2011 surpassed those for fiscal 2010 in every one of the Kyocera Groups reporting segments thanks to our efforts to expand business activities and to continue strengthening management foundations in each business. As a result, we realized significant increases in consolidated net sales and profit for fiscal 2011 relative to fiscal 2010.
In order to reflect these enhanced financial results and to comply with our dividend policy, as well as to respond to our shareholders continued support, we propose a year-end dividend for fiscal 2011 of 70 yen per share, an increase of 10 yen per share. When aggregated with the interim dividend paid in the amount of 60 yen per share, the total annual dividend for fiscal 2011 will be 130 yen per share.
The operating environment for the Kyocera Group for fiscal 2012 is expected to stagnate in the first half due to the impact of the Great East Japan Earthquake. Nonetheless, we forecast an increase in demand in the digital consumer equipment market, automotive related markets and others, particularly in emerging nations, in addition to further growth in the environment and energy market, notably solar power generation. The Kyocera Group will work to seize opportunities for growth in these business areas with the aim of increasing sales and further enhancing profitability.
We would very much appreciate your continued support of the Kyocera Group as we forge ahead.
Chairman of the Board and Representative Director
President and Representative Director
(1) Business Progress and Results
In fiscal 2011, the Japanese economy showed signs of recovery compared with fiscal 2010 due to increases in exports, mainly to Asia, and capital investment. With respect to the overseas economy, personal consumption and capital investment continued to rebound in the U.S., while the European economy recovered solidly owing to an increase in exports supported by depreciation of the Euro, despite fears of an economic slowdown due to heightened financial insecurity triggered by financial crises in Greece and Ireland. The Asian economy led by China continued to expand strongly, driven by growth in exports and personal consumption.
In the information and communications market, which is the principal market for Kyocera Corporation and its consolidated subsidiaries (Kyocera Group or Kyocera), production activities for various digital consumer equipment, such as mobile phone handsets including smartphones, expanded as a whole compared with fiscal 2010.
The yens average exchange rates for fiscal 2011 were ¥86 to the U.S. dollar and ¥113 to the Euro, representing an appreciation of ¥7 (approximately 8%) and ¥18 (approximately 14%), respectively, compared with fiscal 2010. As a result, net sales and income before income taxes for fiscal 2011 were down approximately ¥68 billion and ¥28 billion, respectively, compared with fiscal 2010.
In spite of the impact on sales and profit from the yens appreciation, sales and profit in all reporting segments exceeded levels recorded in fiscal 2010 due to an expansion of the information and communications market and efforts to improve profitability by reducing costs and enhancing productivity in each business.
Net sales for fiscal 2011 increased by ¥193,119 million, or 18.0%, to ¥1,266,924 million, compared with ¥1,073,805 million for fiscal 2010. Profit from operations for fiscal 2011 increased by ¥92,064 million, or 144.2%, to ¥155,924 million, compared with ¥63,860 million in fiscal 2010. Income before income taxes increased by ¥111,534 million, or 183.5%, to ¥172,332 million, compared with ¥60,798 million in fiscal 2010. Net income attributable to shareholders of Kyocera Corporation for fiscal 2011 increased by ¥82,353 million, or 205.4%, to ¥122,448 million, compared with ¥40,095 million for fiscal 2010. Profit from operations and income before income taxes for fiscal 2010 were reduced by ¥8,961 million and ¥28,948 million, respectively, due to recognition of a loss related to an investment in WILLCOM, Inc.
Although production activities were temporarily stopped at Kyoceras production sites in the Tohoku and Kanto regions due to electric power outages and transportation disturbances caused by the Great East Japan Earthquake, this did not have a significant impact on business results for fiscal 2011.
Highlights of Consolidated Results
Consolidated Results by Reporting Segment
Fine Ceramic Parts Group
Demand for industrial machinery parts, such as semiconductor fabrication equipment parts, and for automotive parts increased significantly due to expanded production in various industrial machinery and automotive markets. Demand for components for digital consumer equipment also grew. As a result, overall sales in this reporting segment for fiscal 2011 increased significantly compared with fiscal 2010. Operating profit improved substantially from an operating loss for fiscal 2010 due to an increase in production volume and an improvement in productivity.
Semiconductor Parts Group
In addition to increasing demand for mobile phone handsets and digital cameras, etc., popularity grew for advanced products, such as smartphones, that are fitted with an even higher number of components. Supported by this favorable background, Kyocera increased production capacity for ceramic packages for crystal and SAW devices and CMOS/CCD image sensors to increase sales. Furthermore, demand for organic packages, primarily for servers, also grew steadily. As a result, overall sales in this reporting segment for fiscal 2011 increased compared with fiscal 2010. Operating profit increased substantially compared with fiscal 2010 due to sales growth and enhanced productivity.
Applied Ceramic Products Group
In the solar energy business, sales increased compared with fiscal 2010 due to efforts to expand production capacity and to enhance Kyoceras sales networks in Japan and overseas to meet rising global demand for solar cells and modules. In addition, sales in the cutting tool business increased substantially compared with fiscal 2010 mainly due to rising demand in Japan and Asia, reflecting expanded production in automotive related markets. As a result, both sales and operating profit in this reporting segment for fiscal 2011 increased compared with fiscal 2010.
Electronic Device Group
As a result of expanding production of digital consumer equipment such as mobile phone handsets, as well as expansion of various industrial markets, demand for electronic components such as capacitors and timing devices also expanded. In addition, sales of thin film components increased significantly compared with fiscal 2010 due in part to Kyoceras acquisition from Sony Mobile Display Corporation of the thin film transistor (TFT) liquid crystal display (LCD) business located at its Yasu facility in June 2010. As a result, overall sales in this reporting segment for fiscal 2011 increased compared with fiscal 2010. Operating profit increased substantially compared with fiscal 2010 due to sales growth and enhanced productivity.
Telecommunications Equipment Group
Sales in this reporting segment for fiscal 2011 increased compared with fiscal 2010 as a result of aggressive measures to expand sales, which included launches of new products in overseas markets, coupled with growth in sales of mobile phone handsets and personal handy phone system (PHS) handsets in Japan. Due to an increase in sales and positive effects from structural reforms executed in fiscal 2010, operating profit improved substantially from an operating loss in fiscal 2010. A bad debt loss on accounts receivable of ¥8,961 million related to WILLCOM Inc. was recorded in fiscal 2010.
Information Equipment Group
Kyocera worked to increase sales by aggressively launching new products amid a moderate recovery in information technology investment by customers both in Japan and overseas, which led to an increase in sales volume, particularly for multifunction peripherals. As a result, sales in this reporting segment for fiscal 2011 increased compared with fiscal 2010. Operating profit increased compared with fiscal 2010 due to an improvement in productivity and sales growth for high-value-added products such as color multifunction peripherals.
Sales at Kyocera Communication Systems Co., Ltd. increased compared with fiscal 2010 due to a moderate recovery in information technology investment in the corporate sector. In addition, sales at Kyocera Chemical Corporation also increased compared with fiscal 2010 due to an increase in demand for semiconductor encapsulation, etc. As a result, both sales and operating profit in this reporting segment for fiscal 2011 increased compared with fiscal 2010.
(2) Capital Expenditures
During fiscal 2011, due to the recovery of the general business environment, Kyocera made aggressive capital expenditures to expand production capacity, mainly in the Semiconductor Parts Group and solar energy business. As a result, capital expenditures for fiscal 2011 totaled ¥70,680 million, an increase of ¥32,811 million, or 86.6% compared with fiscal 2010.
Required funds for fiscal 2011 were mainly financed from internal resources.
(3) Management Challenges
Kyocera aims to realize continuous growth in any business environment. To achieve this goal, Kyocera believes in the importance of expanding business globally in growing business domains. However, Kyocera also recognizes the need to respond to various challenges, such as fluctuating exchange rates, legal and regulatory compliance in various countries, trends in emerging markets such as China, and intensifying competition due to the rise of Asian manufacturers. In order to respond to this ever-changing business environment and win out in the global competition to be a high-growth, highly profitable company, Kyocera will strive to meet the challenges outlined below.
i) Expand business in growing markets
Kyocera will work to expand business in areas with future growth potential, namely, the information and communications market, the environment and energy market, and emerging markets. In the information and communications market, Kyocera anticipates higher speed networks and the proliferation of smaller, more advanced products such as smartphones. In the environment and energy market, Kyocera recognizes enhanced efforts around the world to prevent global warming, conserve energy and preserve the environment. In emerging markets, Kyocera forecasts an increase in infrastructure investment and in demand for various types of consumer equipment. Kyocera will work to develop products and technologies that meet these needs and grasp opportunities for business growth in these markets as a means to expand sales and profit.
In addition, Kyocera will pursue further synergies among businesses to expand business in these growing markets. Kyocera aims to quickly capture future technology trends and customer needs by taking advantage of possessing both components and equipment businesses, and to promote joint development and integration of technologies by sharing information between them in order to strengthen new product development.
ii) Strengthen management foundations
Kyocera will take measures to strengthen management foundations in order to win out in global competition going forward. In particular, in light of the recent Great East Japan Earthquake, Kyocera will bolster efforts to avoid the risks associated with such disasters and enable the continuity of business activities in times of emergency.
With the aim of avoiding risks arising from over concentration of production in a single region, Kyocera has for some time been conducting production activities at multiple sites in Japan and overseas. In addition to continuing to expand production at each existing site, Kyocera will create new production sites with a view toward further expanding its business and avoiding this type of risk.
Other efforts will focus on strengthening systems to facilitate continuity of business even in times of emergency to make sure that production activities are not interrupted. This will include promoting the use of multiple suppliers for raw materials and components.
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 list.
Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial condition to be materially different from any future results, performance, achievements or financial condition expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.
(4) Four-Year Financial Summary
(5) Principal Businesses (as of March 31, 2011)
Kyocera manufactures and sells a highly diversified range of products, including components involving fine ceramic technologies and applied ceramic products, telecommunications and information equipment, etc. The principal products and businesses are as follows:
(6) Significant Subsidiaries (as of March 31, 2011)
(7) Principal Business Sites (as of March 31, 2011)
(8) Employees (as of March 31, 2011)
Note: Number of employees represents the total number of regular employees who work full-time.
Note: Number of employees represents the total number of regular employees who work full-time.
2. Shares (as of March 31, 2011)
(1) Total number of shares authorized to be issued: 600,000,000
(2) Total number of shares issued: 191,309,290
(7,796,321 treasury shares are included in the total number of shares issued set forth above.)
(3) Number of shareholders: 66,315
(4) Major shareholders (Top 10)
3. Directors and Corporate Auditors
(1) List of Directors and Corporate Auditors (as of March 31, 2011)
(2) Remuneration to Directors and Corporate Auditors for fiscal 2011
(3) Outside Corporate Auditors
(i) Activities of outside Corporate Auditors during fiscal 2011
(ii) Substance of agreements regarding limitation of liability
Kyocera Corporation has entered into agreements with outside Corporate Auditors regarding the limitation of their liability for damages due to negligence in the performance of their tasks, in accordance with paragraph 1 of Article 427 of the Corporation Act and Article 35 of the Articles of Incorporation of Kyocera Corporation. The amounts of damages that may be pursued against them, as set under such agreements, are the smallest amounts permissible under applicable laws and regulations.
4. Accounting Auditor
Kyocera Corporation also retains Kyoto Audit Corporation as an advisor in connection with its adoption of International Financial Reporting Standard.
In the event that the Board of Corporate Auditors determines that the Accounting Auditor is subject to any of the events provided in Paragraph 1 of Article 340 of the Corporation Act, the Board of Corporate Auditors is authorized to terminate the office of such Accounting Auditor or to request the Board of Directors to consider proposing to the General Meeting of Shareholders the termination or non-reappointment of such Accounting Auditor. Should anything occur to negatively impact the qualifications or independence of the Accounting Auditor, making it unlikely that such Accounting Auditor will be able to properly perform an audit, the Board of Directors, subject to prior consent of the Board of Corporate Auditors, shall propose to the General Meeting of Shareholders a resolution to terminate or not to reappoint such Accounting Auditor.
5. System and Policy
Kyocera Corporation has adopted through its Board of Directors the Kyocera Group Basic Policy for Corporate Governance and Internal Control as follows:
Basic Policy for Corporate Governance and Internal Control
Kyocera Group has made Respect the Divine and Love People its corporate motto and To provide opportunities for the material and intellectual growth of all our employees, and through our joint effort, contribute to the advancement of society and humankind its management rationale.
Kyocera Group always strives to maintain equity and fairness, and faces all situations with courage and conscience, and it intends to realize transparent systems for corporate governance and internal control.
Under such corporate motto and management rationale, the Board of Directors is implementing a basic policy for corporate governance and internal control as described below.
This statement of basic policy sets forth such basic policy in accordance with Paragraph 5 and item 6 of Paragraph 4 of Article 362 of the Corporation Act, and Paragraphs 1 and 3 of Article 100 of the Execution Rules of the Corporation Act, which require establishment of a system to ensure that conduct of business by the Directors will be in compliance with all applicable laws and regulations and the Articles of Incorporation and to ensure proper conduct of business by Kyocera Corporation (the Company) and Kyocera Group, as a whole.
I. Corporate Governance
1. Basic Policy for Corporate Governance
The Board of Directors of Kyocera Corporation defines the corporate governance of Kyocera Group to mean structures to ensure that Directors conducting the business manage the corporations in a fair and correct manner.
The purpose of corporate governance is to maintain soundness and transparency of management and to achieve fair and efficient corporate management, through which the management rationale of Kyocera Group can be realized.
The Board of Directors shall inculcate the Kyocera Philosophy, which is the basis of the management policy of Kyocera Group, into all Directors and employees working in Kyocera Group, and establish a sound corporate culture. The Board of Directors shall establish proper corporate governance through exercise of the Kyocera Philosophy (Note).
2. System for Corporate Governance
The Board of Directors of Kyocera Corporation determines, pursuant to the basic policy described in 1 above, the below-outlined system for corporate governance of Kyocera Corporation, which is the core company within Kyocera Group, to ensure that the conduct of business by the Directors is in compliance with all applicable laws and regulations and the Articles of Incorporation. The Board of Directors will constantly seek the ideal system for corporate governance and always evolve and develop its existing corporate governance system.
(1) Organs of Corporate Governance
The Board of Directors shall establish a corporate structure in which the Corporate Auditors and the Board of Corporate Auditors will serve as organs of corporate governance pursuant to the provisions of the Articles of Incorporation, as approved by the General Meeting of Shareholders of Kyocera Corporation. Directors of Kyocera Corporation shall strictly observe the following, to ensure effective audit by the Corporate Auditors and the Board of Corporate Auditors:
Representative Directors shall establish offices for the Corporate Auditors upon their request, and shall cause certain employees, nominated through prior discussion with the Corporate Auditors, to work in such offices to assist in the tasks of the Corporate Auditors and the Board of Corporate Auditors. Such employees, while still subject to the work rules of Kyocera Corporation, shall be under the instruction and supervision of each of the Corporate Auditors, and transfer, treatment (including evaluation) and disciplinary action relating to them shall be made only following discussion with the Corporate Auditors.
In the event that any Director becomes aware of any matter that breaches or may breach any law or regulation or the Articles of Incorporation, or in the event that any Director becomes aware of any matter that may cause substantial damage to Kyocera Group, he or she shall immediately report thereon to the Board of Corporate Auditors. In addition, in the event that any Corporate Auditor or the Board of Corporate Auditors requests a report from any Director pursuant to the Regulations of the Board of Corporate Auditors, such Director shall comply with such request.
Representative Directors shall cause the internal audit department to report regularly the status of the internal audit to the Corporate Auditors. In addition, upon request from the Corporate Auditors, Representative Directors shall cause any specified department(s) to report the status of their conduct of business directly to the Corporate Auditors. Representative Directors shall also maintain a system for reporting of internal complaints to the Board of Corporate Auditors, established by the Board of Corporate Auditors, under which employees, suppliers and customers of Kyocera Corporation may submit complaints directly to the Board of Corporate Auditors.
In the event that Representative Directors are requested by any Corporate Auditor to effectuate any of the following matters, as necessary to establish a system to ensure effective audit by the Corporate Auditors, Representative Directors shall comply with such request:
(2) Kyocera Philosophy Education
Representative Directors of Kyocera Corporation shall undertake Kyocera Philosophy Education from time to time in order to inculcate the Kyocera Philosophy into the Directors (including themselves) and employees of Kyocera Group.
II. Internal Controls
1. Basic Policy for Internal Controls
The Board of Directors of Kyocera Corporation defines the internal controls of Kyocera Group to mean systems to be established within the corporate organization to achieve management policy and master plans in a fair manner, in order for the Directors undertaking management of Kyocera Corporation to effectuate management policy. The Board of Directors of Kyocera Corporation will establish internal controls through implementation of the Kyocera Philosophy.
2. System for Internal Controls
Under the policy as described in 1 above, the Board of Directors shall cause Representative Directors to establish the systems described below. In addition, the Board of Directors shall constantly evolve and develop such systems, seeking an ideal system of internal controls.
Representative Directors shall establish the Kyocera Disclosure Committee as a system for making timely and appropriate disclosure of information and for properly maintaining information relating to the conduct of business by the Directors in accordance with applicable laws and regulations and the internal rules of Kyocera Corporation.
Representative Directors shall create a risk management department in order to establish a risk management system for Kyocera Group. Representative Directors shall also establish systems to undertake necessary actions from time to time.
Representative Directors shall establish employee consultation corners as an internal complaint reporting system within Kyocera Group, so that employees who become aware of any matter that breaches or may breach laws or regulations or the Articles of Incorporation or other internal rules can report thereon. The employee consultation corners will take appropriate action in respect of reports received thereby, which shall be treated in accordance with the Law for Protection of Reporters in the Public Interest.
Representative Directors shall clearly delegate authority and related responsibility by establishing an Executive Officer system to achieve efficient and effective conduct of business. Representative Directors shall cause the Executive Officers to report the status of their conduct of business, and, accordingly, a system shall be maintained under which Representative Directors can verify whether business is conducted efficiently.
In addition to the matters described in (1) through (3) above, as a system to ensure the appropriate conduct of business at Kyocera Group, Representative Directors shall establish the Kyocera Group Management Committee. Such Committee shall discuss important matters relating to Kyocera Group and receive reports relating thereto. Representative Directors shall also establish an internal audit department in order to conduct audits regularly to evaluate the appropriateness of conduct of business at Kyocera Group.
The current status of systems established relating to internal control is as follows:
Consolidated Balance Sheets
The consolidated balance sheets and the consolidated statements of income for the previous fiscal year, indications of increase (decrease) of amounts and remarks are presented solely for reference.
Consolidated Statements of Income
Consolidated Statement of Equity (From April 1, 2010 to March 31, 2011)
Consolidated Cash Flows (For reference only)
1. Basis of preparation of Consolidated Financial Statements
Number of consolidated subsidiaries: 197
Major consolidated subsidiaries: Kyocera Mita Corporation, AVX Corporation and Kyocera International, Inc.
Major non-consolidated subsidiary: Kyoto Purple Sanga Co., Ltd.
This subsidiary is excluded from the scope of consolidation because its total assets, net sales, net income attributable to shareholders of Kyocera Corporation and retained earnings, etc. are immaterial to a reasonable judgment of the consolidated financial condition and business results of Kyocera.
Number of non-consolidated subsidiaries and affiliates accounted for by the equity method: 10
Major affiliate accounted for by the equity method: Miyaki Electric Mfg. Co., Ltd.
Number of increase: 5, Kyocera Mita Asia Limited and others
Number of decrease: 8, Kyocera Wireless Corp. and others
Number of increase: 1, Accuver Apac Ltd.
Number of decrease: 3, Tycom Ltd. and others
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States pursuant to paragraph 1 of Article 3 of the supplementary provisions (Act of Justice Ministry No. 46 issued and effective in 2009) of the Corporate Calculation Rules of Japan. Certain disclosure and footnotes required under principles generally accepted in the United States are omitted pursuant to the same provision.
Finished goods and work in process are mainly stated at the lower of cost or market, with cost being determined by the average method. Other inventories are mainly stated at the lower of cost or market, with cost being determined by the first-in, first-out method.
Kyocera has adopted the Financial Accounting Standards Board (FASB)s Accounting Standards Codification (ASC) 320, Debt and Equity Securities. Held-to-maturity securities are recorded at amortized cost. Available-for-sale securities are recorded at fair value, with unrealized gains and losses excluded from income and recorded in accumulated other comprehensive income, net of tax. Non-marketable equity securities are recorded using the cost method.
Depreciation is computed based mainly on the declining-balance method.
Kyocera has adopted ASC 350, Intangibles Goodwill and Other. Goodwill and intangible assets with indefinite useful lives, rather than being amortized, are tested for impairment at least annually, and also following any events and changes in circumstances that might lead to impairment. Intangible assets with definite useful lives are amortized over their respective estimated useful lives.
Allowance for doubtful accounts:
In anticipation of uncollectible accounts receivable, Kyocera provides allowance for doubtful accounts, for general accounts receivable, based on the past actual ratio of losses on bad debts; and, for certain specific doubtful accounts receivable, based on estimates of uncollectible amounts pursuant to analysis of individual receivables.
Allowances for sales returns:
Kyocera records an estimated sales return allowance at the time of sales based on historical return experience.
Accrued pension and severance liabilities:
Kyocera has adopted ASC 715, Compensation Retirement Benefits. Kyocera recognizes the overfunded or underfunded status of its defined benefit postretirement plans as an asset or liability, as the case may be, in the consolidated balance sheet and recognizes changes in funded status during the year as changes in comprehensive income for such year. Prior service cost is amortized by the straight-line method over the average remaining service period of employees. Actuarial gain or loss is recognized by amortizing a portion in excess of 10% of the greater of the projected benefit obligations or the market-related value of plan assets by the straight-line method over the average remaining service period of employees.
Kyocera adopted the FASBs Accounting Standards Update (ASU) No. 2009-16, Accounting for Transfers of Financial Assets on April 1, 2010. This accounting standard codified former Statement of Financial Accounting Standards (SFAS) No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140 issued in June 2009 in ASC 860, Transfers and Servicing. This accounting standard removes the concept of a qualifying special purpose entity from former SFAS No. 140 and removes the exception from applying former FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to qualifying special purpose entities and establishes specific conditions for reporting a transfer of a portion of a financial asset as a sale. The adoption of this accounting standard did not have a material impact on Kyocera's consolidated results of operations and financial position.
Kyocera adopted ASU No. 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities on April 1, 2010. This accounting standard codified former SFAS No. 167, Amendments to FASB Interpretation No. 46(R) issued in June 2009 in ASC 810, Consolidation. This accounting standard requires an enterprise to perform an analysis to identify the primary beneficiary of a variable interest entity and also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity. The adoption of this accounting standard did not have a material impact on Kyoceras consolidated results of operations and financial position.
2. Notes to Consolidated Balance Sheets
3. Notes to Consolidated Statement of Equity
(1) Total number of shares issued
(2) Distribution of surplus
4. Notes to Financial Instruments
(1) Notes to Financial Instruments
Kyocera refrains from making any speculative transactions and always maintains a high level of capital liquidity to ensure the utmost stability in its fund management. Operating receivables such as notes receivable and accounts receivable are exposed to customer credit risk. Kyocera seeks to reduce this risk in accordance with its credit management policies. Kyocera is exposed to market risk, including changes in foreign currency exchange rates, interest rates and equity prices. In order to hedge against these risks, Kyocera uses derivative financial instruments. Kyocera does not hold or issue derivative financial instruments for trading purposes. Kyocera enters into foreign currency forward contracts, interest rate swaps and currency swaps. Kyocera regularly assesses these market risks based on policies and procedures established to protect against the adverse effects of these risks and other potential exposures, primarily by reference to the market value of financial instruments.
Kyocera has marketable equity securities, debt securities and non-marketable equity securities. Kyocera is currently a major shareholder of KDDI Corporation. At March 31, 2011, the unrealized gain on the shares of KDDI Corporation was ¥45,893 million.
(2) Fair Value of Financial Instruments
The fair values of financial instruments at March 31, 2011 and methods and assumption used to estimate such fair values were as follows:
Cash and cash equivalents, other short-term investments, trade notes receivable, trade accounts receivable, short-term borrowings, and trade notes and accounts payable, and other notes and accounts payable approximate fair value because of the short maturity of these instruments.
5. Notes to per share information
Statements of Income
Statement of Changes in Net Assets
1. Summary of Significant Accounting Policies
(1) Standards and methods of valuation of assets
(2) Depreciation of non-current assets:
(3) Accounting for allowances and accruals
(4) Other significant policies
2. Notes to Balance Sheets:
(1) Accumulated depreciation of tangible fixed assets and accumulated impairment losses: ¥408,465 million
Keep-well letters and guidance for management:
(3) Receivables from affiliates and payables to affiliates (Except amounts separately presented)
3. Notes to Statements of Income:
4. Notes to Statement of Changes in Net Assets
Number and class of treasury shares
5. Notes to Accounting for Effects of Income Taxes
6. Notes to fixed assets used under finance leases
Some fixed assets used under finance leases consisting principally of manufacturing equipment and computers are off balance sheet.
7. Notes to per share information
Independent Auditors Report
May 23, 2011
To the Board of Directors of
We have audited, pursuant to paragraph 4 of Article 444 of the Corporation Act of Japan, the consolidated financial statements, which consist of the consolidated balance sheet, the consolidated statement of income, the consolidated statement of equity and the notes to the consolidated financial statements of Kyocera Corporation (hereinafter referred to as the Company) for the fiscal year from April 1, 2010 to March 31, 2011. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Kyocera Corporation and its consolidated subsidiaries as of March 31, 2011 and the consolidated result of their operations for the year then ended in conformity with accounting principles generally accepted in the United States of America pursuant to the provision of paragraph 1 of Article 3 of supplementary provision (Act of Justice Ministry No. 46 issued and effective in 2009) of the Corporate Calculation Rules of Japan. (Refer to Note 1 Basis of preparation of Consolidated Financial Statements to the consolidated financial statements.)
We have no interest in or relationship with the Company which is required to be disclosed pursuant to the provisions of the Certified Public Accountant Law of Japan.
Independent Auditors Report
May 23, 2011
To the Board of Directors of
We have audited, pursuant to paragraph 2 1 of Article 436 of the Corporation Act of Japan, the financial statements, which consist of the balance sheet, the statement of income, the statement of changes in net assets, the notes to the financial statements and the supplementary schedules thereto of Kyocera Corporation (hereinafter referred to as the Company) for the 57th fiscal year from April 1, 2010 to March 31, 2011. These financial statements and supplementary schedules thereto are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and supplementary schedules thereto based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we obtain reasonable assurance about whether the financial statements and supplementary schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and supplementary schedules thereto. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and supplementary schedules thereto referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2011 and the result of its operation for the year then ended in conformity with accounting principles generally accepted in Japan.
We have no interest in or relationship with the Company which is required to be disclosed pursuant to the provisions of the Certified Public Accountant Law of Japan.
The Board of Corporate Auditors, based on audit reports prepared by each Corporate Auditor related to the execution of duties of Directors during the 57th fiscal year from April 1, 2010 to March 31, 2011, hereby reports its results of audit after deliberations, as the unanimous opinion of all Corporate Auditors, as follows:
1. Audit Methods by individual Corporate Auditors and by the Board of Corporate Auditors
The Board of Corporate Auditors established auditing policies, auditing plans and role sharing for the fiscal year and received audit reports from each Corporate Auditor on the execution of his auditing activities and the result thereof. In addition, it received reports on the execution of duties from Directors, etc. and from the Accounting Auditors, and, when necessary, requested their explanations regarding such reports.
In accordance with the auditing standards for Corporate Auditors set by the Board of Corporate Auditors, each Corporate Auditor communicated with Directors, the Corporate Global Audit Division of the internal audit department which includes the Risk Management Division and the Compliance Audit Section, etc., and employees of Kyocera Corporation (hereinafter referred to as the Company) and endeavored to gather information and create an improved environment for auditing, according to the auditing policies, auditing plans and role sharing for the fiscal year. Corporate Auditors also attended the meetings of the Board of Directors and other important meetings, received reports from Directors, the Corporate Global Audit Division and employees of the Company on business execution, and, when necessary, requested their explanations regarding those reports. Corporate Auditors also inspected documents related to important decisions and examined operations and assets at the Companys head office, plants, major operational establishments and sales offices. In addition, Corporate Auditors had regular meetings with the Chairman of the Board and Representative Director and the President and Representative Director of the Company and exchanged opinions and information on issues, etc. with respect to auditing. Corporate Auditors also received reports on the status of maintenance and operations from Directors, the Corporate Global Audit Division and employees of the Company, and, when necessary, requested their explanations and expressed opinions regarding the content of the resolution of the Board of Directors with respect to the development and maintenance of a system to ensure that the execution of duties by Directors as described in the business report shall be in compliance with laws and regulations and with the Companys Articles of Incorporation and other systems required by Paragraph 1 and 3 of Article 100 of the Execution Rules of the Corporation Act as being necessary for ensuring the appropriateness of the Companys operations, and the systems (internal control systems) established under such resolution.
With respect to the internal control systems regarding financial reporting, Corporate Auditors received reports on the evaluation of such internal control systems and the auditing condition from Directors, etc. and from Kyoto Audit Corporation, and, when necessary, requested their explanations regarding those reports.
With respect to subsidiaries, Corporate Auditors received reports on auditing condition of subsidiaries from their Corporate Auditors, etc. at the regular meetings with them and facilitated communications with Directors of them too, and, when necessary, attended important meetings, received reports on business, requested explanations and expressed opinions. Based on the foregoing methods, Corporate Auditors reviewed the business report for the fiscal year and the supplementary schedules.
In addition, Corporate Auditors monitored and examined whether the Accounting Auditors maintained their independence and performed their audits in an appropriate manner, and received reports from the Accounting Auditors on the execution of their duties and, when necessary, requested their explanations regarding those reports. Corporate Auditors also received notification from the Accounting Auditors that they have taken steps to improve the system for ensuring appropriate execution of their duties (as enumerated in Article 131 of the Corporate Calculation Rules of Japan) in compliance with the Quality Control Standards Relating to Auditing (adopted by the Business Accounting Deliberation Council on October 28, 2005), etc. and, when necessary, requested their explanations regarding such notification. Based on the foregoing methods, Corporate Auditors reviewed the financial statements (balance sheet, statement of income, statement of changes in net assets and notes to financial statements) for the fiscal year and supplementary schedules thereto as well as consolidated financial statements (consolidated balance sheet, consolidated statement of income, consolidated statement of equity and notes to consolidated financial statements).
2. Results of Audit
(1) Result of the audit of the business report, etc.
(2) Result of the audit of financial statements and supplementary schedules thereto
(3) Result of the audit of consolidated financial statements
May 26, 2011
Board of Corporate Auditors
Full-time Corporate Auditor
Full-time Corporate Auditor
Messrs. Osamu Nishieda, Kazuo Yoshida and Yoshinari Hara are outside Corporate Auditors as required under Item 16 of Article 2 and Paragraph 3 of Article 335 of the Corporation Act.