Kyocera 6-K 2014 Table of ContentsFORM 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 under the Securities Exchange Act of 1934 For the month of April 2014 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): ¨
Table of ContentsSIGNATURE 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 : April 28, 2014
Table of ContentsInformation furnished on this form: EXHIBITS
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Consolidated Financial Results of Kyocera Corporation and its Subsidiaries for the Year Ended March 31, 2014 The consolidated financial information is prepared in accordance with accounting principles generally accepted in the United States of America. 1. Consolidated Financial Results for the Year Ended March 31, 2014 (Fiscal 2014)
(Note) Comprehensive income: 301,582 million yen in the year ended March 31, 2014, 46.6% of change from previous year 205,727 million yen in the year ended March 31, 2013, 164.3% of change from previous year
(Reference) Equity in losses of affiliates and an unconsolidated subsidiary:
At the meeting of the Board of Directors of Kyocera Corporation held on August 28, 2013, a resolution was made to undertake a stock split and a stock split at the ratio of two for one of all common shares was undertaken on October 1, 2013. “Net income attributable to shareholders of Kyocera Corporation per share-Basic” and “Net income attributable to shareholders of Kyocera Corporation per share-Diluted” are computed under the assumption that the stock split had been undertaken at the beginning of the year ended March 31, 2013 in accordance with the standard related to earnings per share. (2) Consolidated financial condition
“Kyocera Corporation shareholders’ equity per share” is computed under the assumption that the stock split, which took effect on October 1, 2013, had been undertaken at the beginning of the year ended March 31, 2013. (3) Consolidated cash flows
2. Dividends
(Note) The above “Year-end” dividend per share of 40.00 yen for the year ended March 31, 2014 is the forecast based on the number of shares after the stock split which was undertaken on October 1, 2013. The forecast of “Annual” dividend for the year ended March 31, 2014 is essentially equal to the original forecast of 160.00 yen, which was previously announced on April 25, 2013, before the stock split. Dividends per share for the year ending March 31, 2015 are forecasted to be 80.00 yen on an annual basis.
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Table of Contents3. Consolidated Financial Forecast for the Year Ending March 31, 2015 (Fiscal 2015)
(Note) Forecast of earnings per share attributable to shareholders of Kyocera Corporation is computed based on the diluted average number of shares outstanding during the year ended March 31, 2014. The average number of shares outstanding is computed under the assumption that the stock split, which took effect on October 1, 2013, had been undertaken at the beginning of the year ended March 31, 2014. (Notes) (1) Increase or decrease in significant subsidiaries during the year ended March 31, 2014: None. (2) Changes in accounting policies: (i) Changes due to adoption of new accounting standards: Please refer to the accompanying “(5) Basis of Preparation of Consolidated Financial Statements” on page 20. (ii) Changes due to other than adoption of new accounting standards: None. (3) Number of shares (common stock): (i) Number of shares issued:
(ii) Number of treasury stock:
(iii) Average number of shares outstanding:
“Number of shares issued”, “Number of treasury stock” and “Average number of shares outstanding” are computed under the assumption that the stock split, which took effect on October 1, 2013, had been undertaken at the beginning of the year ended March 31, 2013. Kyocera Corporation adopted a resolution to retire treasury stock pursuant to Article 178 of the Companies Act of Japan at its meeting of the Board of Directors held on January 29, 2014, and Kyocera Corporation retired 5,000,000 shares of its treasury stock of which type is common stock on February 12, 2014.
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Table of Contents(Reference) Outline of Non-Consolidated Results for Kyocera Corporation The non-consolidated financial information is prepared in accordance with accounting principles generally accepted in Japan. 1. Non-consolidated Financial Results for the Year Ended March 31, 2014:
“Net income per share-Basic” and “Net income per share-Diluted” are computed under the assumption that the stock split, which took effect on October 1, 2013, had been undertaken at the beginning of the year ended March 31, 2013. (2) Non-consolidated financial condition
“Net assets per share” is computed under the assumption that the stock split, which took effect on October 1, 2013, had been undertaken at the beginning of the year ended March 31, 2013. Presentation of Situation of Audit Procedure The consolidated financial information included in this Form 6-K is out of scope of audit procedure under the Financial Instruments and Exchange Law of Japan. Audit procedure under the Financial Instruments and Exchange Law of Japan has not been completed at the date of submission of this Form 6-K. Instruction for Forecasts and Other Notes Cautionary Statement for Forecasts: With regard to forecasts set forth above, please refer to the accompanying “Forward-Looking Statements” on page 10.
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Table of ContentsAccompanying Information 1. ANALYSIS OF BUSINESS RESULTS AND FINANCIAL CONDITION (1) Analysis of Business Results [Business Results for the Year Ended March 31, 2014] Economic Situation and Business Environment The Japanese economy displayed a recovery trend in the year ended March 31, 2014 (“fiscal 2014”), supported by an increase in public investment and solid growth in personal consumption. Overseas, the U.S. economy expanded on the back of increases in personal consumption, private investment and exports. The Chinese economy also continued to grow steadily. On the other hand, the European economy remained weak despite signs of recovery. In the digital consumer equipment market, which is the principal market for Kyocera Corporation and its consolidated subsidiaries (“Kyocera Group” or “Kyocera”), shipment volume of conventional mobile phone handsets and PCs declined compared with the previous fiscal year ended March 31, 2013 (“fiscal 2013”). In contrast, shipment volume of smartphones and tablet PCs increased. In the automotive market, sales volume increased steadily, particularly in China and the United States, while the solar energy market in Japan expanded significantly compared with fiscal 2013 due to remarkable growth in demand in the public and commercial sectors. Consolidated Financial Results Sales and profit increased in fiscal 2014 compared with fiscal 2013 as Kyocera decisively took advantage of increased demand in key markets and worked to obtain orders and reduce costs by leveraging the collective strength of the Kyocera Group. Consolidated net sales for fiscal 2014 increased by 13.1%, or ¥167,315 million, to ¥1,447,369 million, compared with ¥1,280,054 million for fiscal 2013, on the back of increased sales in all reporting segments. This result was a new record high. Profit increased significantly compared with fiscal 2013 in both the Components Business and the Equipment Business due to the effect of higher sales and efforts to enhance productivity. In addition, in fiscal 2013 an environmental remediation charge was recorded at AVX Corporation, a U.S.-based consolidated subsidiary (please refer to “(10) Financial Settlement between AVX Corporation, the United States Environmental Protection Agency and Commonwealth of Massachusetts regarding the New Bedford Harbor Superfund Site” on page 24). As a result, profit from operations increased by 56.8%, or ¥43,656 million, to ¥120,582 million, compared with ¥76,926 million for fiscal 2013. Income before income taxes increased by 44.3%, or ¥44,905 million, to ¥146,268 million, compared with ¥101,363 million for fiscal 2013. Net income attributable to shareholders of Kyocera Corporation for fiscal 2014 increased by 33.5%, or ¥22,283 million, to ¥88,756 million, compared with ¥66,473 million for fiscal 2013.
Note: As Kyocera Corporation undertook a stock split at the ratio of two for one of all common shares on October 1, 2013, “Diluted earnings per share attributable to shareholders of Kyocera Corporation” is computed under the assumption that the stock split had been undertaken at the beginning of the year ended March 31, 2013 in accordance with standard related to earnings per share.
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Table of ContentsConsolidated Results by Reporting Segment 1) Fine Ceramic Parts Group Sales in this reporting segment increased compared with fiscal 2013 due to steady growth in demand in the industrial machinery market, including for components for semiconductor processing equipment, and in the automotive related market. Operating profit increased significantly due to an increase in sales of core products and the effect of cost reductions. 2) Semiconductor Parts Group Sales and operating profit increased in this reporting segment compared with fiscal 2013 due to an increase in demand for ceramic packages and organic packages for smartphones etc. despite a decline in demand for packages used in digital cameras. There was also a contribution to sales from Kyocera Circuit Solutions, Inc., which became a consolidated subsidiary of Kyocera in October 2013 with the aim of strengthening the organic substrate business. 3) Applied Ceramic Products Group Sales in the solar energy business increased considerably mainly in the public and commercial sectors in Japan. Additionally, sales in the cutting tool business increased mainly in the automotive market. As a result, sales and operating profit in this reporting segment increased significantly compared with fiscal 2013 while profitability improved to record a double-digit operating profit ratio. 4) Electronic Device Group Sales and operating profit in this reporting segment increased compared with fiscal 2013 due to the effect of increased sales of core products and reduced manufacturing costs despite a decline in sales and profit of certain products as a result of the execution of structural reforms. In particular, sales of capacitors and connectors for automobiles and smartphones increased. In addition, operating profit grew significantly owing to the absence of the environmental remediation charge at AVX Corporation recorded in fiscal 2013. 5) Telecommunications Equipment Group Sales and operating profit in this reporting segment increased compared with fiscal 2013 due to the vigorous introduction in Japan and overseas of new model smartphones and mobile phone handsets with Kyocera’s unique features, such as the Smart Sonic Receiver that transmits sound through vibration, and to an increase in sales volume in overseas markets through development of major customers. 6) Information Equipment Group Sales volume of hardware grew as an accompaniment to vigorous new product introductions and activities to expand sales. In addition, sales in China etc. expanded based on efforts to cultivate emerging markets. As a result, sales and operating profit increased significantly in this reporting segment compared with fiscal 2013. 7) Others Sales in this reporting segment increased compared with fiscal 2013 due primarily to an increase in sales at Kyocera Communication Systems Co., Ltd. Operating profit decreased compared with fiscal 2013, however, due to an increase in R&D expenses to develop new technologies and products.
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Table of ContentsNet Sales by Reporting Segment
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Table of ContentsNet Sales by Geographic Area i) Japan Sales in Japan increased compared with fiscal 2013 due to an increase in the solar energy business primarily in the public and commercial sectors, as well as to the newly contribution of Kyocera Circuit Solutions, Inc., which became a consolidated subsidiary of Kyocera. ii) Asia Sales in Asia increased compared with fiscal 2013 due to an increase in sales in the Information Equipment Group and in the Electronic Device Group such as connectors and capacitors, as well as to the effect of the yen’s depreciation. iii) Europe Sales in Europe increased compared with fiscal 2013 due to an increase in sales in the Information Equipment Group and in the Electric Device Group and to the effect of the yen’s depreciation. iv) United States of America Sales in the United States of America increased slightly compared with fiscal 2013 due mainly to sales growth in the Information Equipment Group despite a decline in sales of the Electric Device Group. v) Others Sales in Others increased compared with fiscal 2013 due to an increase in sales in the Information Equipment Group and the Telecommunications Equipment Group.
Implemented Management Measures and Significant Management Decisions made in the year ended March 31, 2014 In October 2013, Kyocera acquired all shares in NEC Toppan Circuit Solutions, Inc. (currently Kyocera Circuit Solutions, Inc.), a printed wiring board (PWB) manufacturing company, in order to further strengthen and expand Kyocera’s organic substrate business and made it a consolidated subsidiary. Kyocera circuit solutions, Inc. has high-end PWB technologies from low-profile PWBs to high-density multilayer PWBs and extensive business domains, and going forward, efforts will be made to create synergies with Kyocera on both technological and sales fronts, with the aim of strengthening new product development and further expansion of sales and profit in this business.
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Table of Contents[Consolidated Forecasts for the Year Ending March 31, 2015] In the year ending March 31, 2015 (“fiscal 2015”), the Japanese economy is expected to show continued moderate recovery due to growth in public investment despite concerns over the impact of an increase in the consumption tax rate. In overseas economies, the United States is expected to remain robust and the European economy is forecast to rebound as well. In the information and communications market, production activities for digital consumer equipment are forecast to remain brisk, particularly for smartphones and tablet PCs. In the environment and energy market, demand is expected to increase for solar energy systems in Japan. In automotive related markets, Kyocera projects production activities to expand, especially in Asia. Kyocera will exploit the collective strengths of the Kyocera Group to robustly seize business opportunities in these markets and expand sales. In addition, Kyocera will work to expand production, mainly of ceramic components, at sites in both Vietnam and India, where operations started in fiscal 2014, in order to meet buoyant demand. At the same time, Kyocera will promote cost reductions to increase profitability. Kyocera aims to achieve the following full-year financial forecasts for fiscal 2015 by executing these initiatives.
Notes:
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Table of ContentsNet sales and operating profit forecasts by reporting segment are as follows. Net Sales by Reporting Segment
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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:
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.
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Table of Contents(2) Analysis of Financial Condition Consolidated Cash Flows Cash and cash equivalents at March 31, 2014 increased by ¥29,720 million to ¥335,174 million from ¥305,454 million at March 31, 2013. i) Cash flows from operating activities Net cash provided by operating activities for fiscal 2014 increased by ¥39,652 million to ¥149,141 million from ¥109,489 million for fiscal 2013. This was due mainly that an increase in net income and cash flow adjustment related to receivables exceeded cash flow adjustments related to other current and non-current liabilities. ii) Cash flows from investing activities Net cash used in investing activities for fiscal 2014 increased by ¥34,999 million to ¥101,141 million from ¥66,142 million for fiscal 2013. This was due mainly that increases in cash used in purchases of held-to-maturity securities exceeded decreases in cash used in acquisitions of time deposits and certificate of deposits. iii) Cash flows from financing activities Net cash used in financing activities for fiscal 2014 increased by ¥1,374 million to ¥32,805 million from ¥31,431 million for fiscal 2013. This was due mainly to increases in dividend paid, which exceeded decreases in payments of short-term borrowings and increases in proceeds from issuance of long-term debt. Consolidated Cash Flows
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Table of Contents(3) Basic Profit Distribution Policy and Dividends for the Year Ended March 31, 2014 and for the Year Ending March 31, 2015 i) Basic profit distribution policy for the year ended March 31, 2014 Kyocera believes that the best way to increase corporate value and meet shareholders’ expectations is to improve future consolidated performance on an ongoing basis. Kyocera therefore has adopted a principal guideline that dividend amounts within a range based on net income attributable to shareholders of Kyocera Corporation on a consolidated basis, and has set its consolidated dividend policy to maintain a consolidated payout ratio of 30% or more of consolidated net income attributable to shareholders of Kyocera Corporation. In addition, Kyocera determines dividend amounts based on an overall assessment, taking into account various factors including the amount of capital expenditures necessary for medium-to-long-term corporate growth. Kyocera also has adopted policies to ensure a sound financial basis, and, for such purpose, it sets aside other general reserves in preparation for the creation of new businesses, cultivation of new markets, development of new technologies and acquisition of outside management resources necessary to achieve sustainable corporate growth. ii) Dividends for the year ended March 31, 2014 Kyocera Corporation undertook a stock split at the ratio of two for one of all common shares on October 1, 2013. Regarding the dividends for the year ended March 31, 2014, Kyocera distributed the interim dividend of 80 yen per share (before the stock split). Pursuant to the aforementioned policies and performance during the year ended March 31, 2014, Kyocera will distribute a year-end dividend for the year ended March 31, 2014 of 40 yen per share. As a result, an annual dividend March 31, 2014 is actually the same amount (160 yen) as we forecasted at the beginning of the year ended March 31, 2014. iii) Dividend forecast for the year ending March 31, 2015 Dividend amounts for the year ending March 31, 2015 will be decided pursuant to “i) Basic profit distribution policy for the year ended March 31, 2014” set forth above. At present, Kyocera forecasts a total annual dividend in the amount of 80 yen per share, based on its financial forecast for the year ending March 31, 2015.
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Table of Contents2. MANAGEMENT POLICIES (1) Basic Policy Kyocera aims to be respected by society as “The Company” from the perspective of corporate ethics, while maintaining continuous sales growth and high profitability. It has been pursuing this objective since the company’s earliest days through implementation of the “Kyocera Philosophy,” a corporate philosophy placing people’s hearts at its core, as well as the “Amoeba Management System,” a management system unique to Kyocera which has been developed to implement our corporate philosophy. Kyocera’s management policy is to be a “high-growth, highly profitable company.” To realize this policy, Kyocera aims to increase corporate value by further enhancing performance through “strengthening existing businesses,” “creating new businesses” and “thorough cost reduction.” (2) Management Target To be a high-growth, highly profitable company, Kyocera aims to achieve continuous sales growth and a consolidated pre-tax income ratio of double digits or higher. (3) Medium-term Management Strategy and Management Challenges Kyocera has a wide range of management resources within the Kyocera Group, from materials technologies such as ceramics to components, devices, equipment, systems and services. Kyocera will strive to enhance development by exploiting the collective strengths of the Kyocera Group, which includes bolstering ties between businesses, and by expanding applications for products and technologies accumulated over the years. Other efforts will be made to increase sales by making the best use of sales networks. By doing so, Kyocera aims to be a high-growth, highly profitable company. Specifically, Kyocera will focus on the following challenges. i) Expand sales in growth markets Kyocera views the information and communications market and the environment and energy market, as well as automotive related markets and the medical market, as future growth markets and will strive to further increase sales in these markets. Kyocera has established a dedicated sales division to strengthen marketing activities for these core markets and key customers, and is working to expand sales of a wide range of products within the Kyocera Group, from the Components Business to the Equipment Business. In the information and communications market, Kyocera will work to expand sales by introducing small, high-performance components for smartphones and tablet PCs, as well as new differentiated telecommunications and information equipment incorporating unique own technologies. In the environment and energy market, Kyocera will strive to increase sales through the integrated development of its solar energy systems business. In concrete terms, efforts will be made to boost integrated system sales, such as with the release of an energy management system that efficiently controls energy in conjunction with a solar module and an electricity storage unit. Furthermore, Kyocera will develop business in a variety of forms across the design, construction and maintenance of solar energy systems, as well as power generation business. In automotive related markets, Kyocera will seek to expand sales by strategically linking component and device businesses within the Kyocera Group and working to cultivate customers and develop new products to meet market trends, namely the increased use of electrical systems and equipment in automobiles, enhanced safety and environmental responsiveness. In the medical market, Kyocera will pursue synergies in technologies and products toward the development of products in new domains in addition to its existing medical materials business, and at the same time will work to create business opportunities by cultivating new markets. ii) Enhance management foundations Kyocera will work to expand production in Vietnam and India to overcome global competition and to strengthen service in the Asia region, which holds major production sites of customers. In Japan, Kyocera aims to expand production of high-value-added products and secure high profitability through the further enhancement of production technology in both the Components Business and Equipment Business. Kyocera will also continue seeking opportunities for the acquisition of external management resources in order to strengthen business foundations in existing businesses.
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Table of Contents3. CONSOLIDATED FINANCIAL STATEMENTS (1) Consolidated Balance Sheets
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Table of Contents(2) Consolidated Statements of Income
Notes:
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Table of ContentsConsolidated Statements of Comprehensive Income
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Table of Contents(3) Consolidated Statements of Equity
(Note) Numbers of common stock are computed under the assumption that the stock split, which took effect on October 1, 2013, had been undertaken at March 31, 2012.
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Table of Contents(4) Consolidated Statements of Cash Flows
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Table of Contents(5) Basis of Preparation of Consolidated Financial Statements i) Scope of consolidation:
ii) Changes in scope of consolidation and application of the equity method:
iii) Summary of significant accounting policies Kyocera’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. Recently Adopted Accounting Standards On April 1, 2013, Kyocera adopted the Financial Accounting Standards Board (FASB)’s Accounting Standards Update (ASU) No. 2011-10, “Derecognition of in Substance Real Estate—a Scope Clarification.” This accounting standard requires the reporting entity to apply the guidance in Accounting Standards Codification (ASC) 360-20, “Property, Plant, and Equipment—Real Estate Sales” to determine whether it should derecognize the in substance real estate when a parent ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. The adoption of this accounting standard did not have a material impact on Kyocera’s consolidated results of operations, financial condition and cash flows. On April 1, 2013, Kyocera adopted the FASB’s ASU No. 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment.” This accounting standard permits an entity to first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the impairment test. An entity is not required to calculate the fair value of the indefinite-lived intangible asset unless the entity determines that it is more likely than not that the indefinite-lived intangible asset is impaired. As this accounting standard did not actually change how the impairment would be calculated, the adoption of this accounting standard did not have a material impact on Kyocera’s consolidated results of operations, financial condition and cash flows. On July 17, 2013, Kyocera adopted the FASB’s ASU No. 2013-10, “Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes.” This accounting standard permits an entity to use the Fed Funds Effective Swap Rate (Overnight Index Swap Rate) as a U.S. benchmark interest rate for hedge accounting purposes under ASC 815, “Derivatives and Hedging,” in addition to the interest rates on direct Treasury obligations of the U.S. government and the London Interbank Offered Rate. The adoption of this accounting standard did not have a material impact on Kyocera’s consolidated results of operations, financial condition and cash flows.
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Table of Contents(6) Segment Information i) Reporting segment:
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Note: With regard to Reporting segment information of Net sales and Income before income taxes, please refer to the accompanying “1. ANALYSIS OF BUSINESS RESULTS AND FINANCIAL CONDITION (1) Analysis of Business Results Consolidated Results by Reporting Segment” on page 5.
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Table of Contentsii) Geographic segments (Net sales and Income before income taxes by geographic area):
iii) Geographic segments (Net sales by region): With regard to Information of Geographic segments, please refer to the accompanying “1. ANALYSIS OF BUSINESS RESULTS AND FINANCIAL CONDITION (1) Analysis of Business Results Net Sales by Geographic Area” on page 7.
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Table of Contents(7) Earnings per Share With regard to earnings per share, please refer to “Consolidated Financial Results of Kyocera Corporation and its Subsidiaries for the Year Ended March 31, 2014” on page 1 and “3. CONSOLIDATED FINANCIAL STATEMENTS (2) Consolidated Statements of Income” on page 16. (8) Material Subsequent Event None. (9) Cautionary Statement for Premise of a Going Concern None. (10) Financial Settlement between AVX Corporation, the United States Environmental Protection Agency and Commonwealth of Massachusetts regarding the New Bedford Harbor Superfund Site On October 10, 2012, AVX Corporation (“AVX”), a consolidated subsidiary of Kyocera Corporation in the United States, and the United States Environmental Protection Agency and the Commonwealth of Massachusetts (the “Governments”) announced that they had reached a settlement with respect to the Governments’ ongoing clean-up of the New Bedford Harbor Superfund site in New Bedford, Massachusetts. AVX’s involvement in this site arose from the operations of an alleged legal predecessor, Aerovox Corporation, which produced liquid filled capacitors adjacent to the harbor from the late 1930s through the early 1970s. Subsequent owners of the facility are dissolved or in bankruptcy. AVX itself never produced this type of capacitor, nor does it do so today. Following legal action brought in 1983, AVX reached a settlement with the Governments with respect to their claims relating to harbor clean-up and alleged natural resource damages in 1992. That settlement was contained in a Consent Decree whereby AVX paid $72 million, including interest, toward the harbor clean-up and natural resource damages. That Consent Decree included reopener provisions allowing the Governments to institute new proceedings against AVX, including the right to seek to have AVX perform or pay for additional clean-up under certain circumstances. On April 18, 2012, the United States Environmental Protection Agency issued to AVX a Unilateral Administrative Order directing AVX to perform the remainder of the harbor clean-up, pursuant to the reopener provisions referred to the above. After settlement negotiations, including mediation, between the parties, on October 10, 2012, the settlement with the Governments was reached whereby AVX was obligated to pay $366.25 million, plus interest computed from August 1, 2012, in three installments over a two-year period for use by the Governments to complete the clean-up of the harbor. The agreement is set forth in a Supplemental Consent Decree that modifies certain provisions of the 1992 Consent Decree, including elimination of the Governments’ right to invoke any clean-up reopener provisions in the future. In addition, the United States Environmental Protection Agency was obligated to withdraw the Unilateral Administrative Order. On September 19, 2013, The United States District Court approved the settlement. According to the settlement, AVX paid the initial settlement installment of $133.35 million, plus interest, on October 18, 2013, and on November 26, 2013, the Unilateral Administrative Order was withdrawn by the United States Environmental Protection Agency. In accordance with the Supplemental Consent Decree, AVX has the option to prepay any portion of the remaining settlement balance at any time prior to the due dates of the remaining installments. On March 26, 2014, AVX prepaid $110.82 million, plus interest on the entire remaining settlement balance, and is obligated to pay the remaining settlement balance of $122.08 million, plus interest, on or before September 21, 2015. AVX and Kyocera recorded a charge with respect to this matter of ¥7,900 million ($100 million) for the year ended March 31, 2012, and ¥21,300 million ($266.25 million) for the year ended March 31, 2013, which were included in selling general and administrative expenses in the consolidated statements of income.
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