Kyocera 6-K 2016
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 2016
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 : April 27, 2016
Information furnished on this form:
Consolidated Financial Results of Kyocera Corporation and its Subsidiaries
for the Year Ended March 31, 2016
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, 2016 (Fiscal 2016)
(Note) Comprehensive income:
109,969 million yen in the year ended March 31, 2016, (68.8)% of change from previous year
352,446 million yen in the year ended March 31, 2015, 16.9% of change from previous year
(Reference) Equity in earnings (losses) of affiliates and an unconsolidated subsidiary:
(2) Consolidated financial condition
(3) Consolidated cash flows
(Note) Dividends per share for the year ending March 31, 2017 are forecasted to be 100.00 yen on an annual basis.
3. Consolidated Financial Forecast for the Year Ending March 31, 2017 (Fiscal 2017)
(Note) Forecast of earnings per share attributable to shareholders of Kyocera Corporation is calculated based on the diluted average number of shares outstanding during the year ended March 31, 2016.
(1) Increase or decrease in significant subsidiaries during the year ended March 31, 2016: None.
(2) Changes in accounting policies:
(i) Changes due to adoption of new accounting standards: Yes
(ii) Changes due to other than adoption of new accounting standards: Yes
For detailed information, please refer to the accompanying (5) Basis of Preparation of Consolidated Financial Statements on page 21.
(3) Number of shares (common stock):
(i) Number of shares issued:
(ii) Number of treasury stock:
(iii) Average number of shares outstanding:
(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, 2016:
(2) Non-consolidated financial condition
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.
1. ANALYSIS OF BUSINESS RESULTS AND FINANCIAL CONDITION
(1) Analysis of Business Results
[Business Results for the Year Ended March 31, 2016]
Economic Situation and Business Environment
During the year ended March 31, 2016 (fiscal 2016), the Japanese economy recorded low growth due mainly to a decline in personal consumption, despite improved corporate earnings and an increase in private capital investment. The U.S. economy expanded primarily on the back of improvement in the employment situation and growth in personal consumption, while the European economy continued to show a low level of growth and the slowdown in the Chinese economy became clearer.
With regard to the principal markets for Kyocera Corporation and its subsidiaries (Kyocera Group or Kyocera), shipment volume of smartphones grew in the digital consumer equipment market and sales volume increased in automotive markets in China and the United States.
Consolidated Financial Results
During fiscal 2016, sales in the Fine Ceramic Parts Group and Electronic Device Group increased, particularly in the automotive-related and smartphone markets. However, sales declined in the Telecommunications Equipment Group and the Applied Ceramic Products Group, including the solar energy business. As a result, consolidated net sales for fiscal 2016 amounted to ¥1,479,627 million, down ¥46,909 million, or 3.1%, compared with the year ended March 31, 2015 (fiscal 2015).
Profit from operations amounted to ¥92,656 million on par with fiscal 2015 due primarily to improvement in profitability in the Applied Ceramic Products Group on the back of cost reductions, despite the recording of losses in the amount of approximately ¥23 billion, including an impairment of goodwill in the Electronic Device Group. Income before income taxes increased by ¥23,721 million, or 19.5%, to ¥145,583 million, compared with ¥121,862 million for fiscal 2015, due primarily to the recording of gain on the sale of an asset in the amount of approximately ¥20 billion.
On the other hand, net income attributable to shareholders of Kyocera Corporation decreased by ¥6,828 million, or 5.9%, to ¥109,047 million, due to the decrease as compared with fiscal 2015 in the amount of income derived from revaluation of deferred tax assets and liabilities in line with a revision of the tax system in Japan.
Average foreign currency exchange rates for the fiscal 2016 were ¥120 to the U.S. dollar, marking depreciation of ¥10 (approximately 9%), and ¥133 to the Euro, marking appreciation of ¥6 (approximately 4%) in comparison with fiscal 2015.
Consolidated Results by Reporting Segment
1) Fine Ceramic Parts Group
Sales in this reporting segment increased compared with fiscal 2015 due primarily to increased sales of components for industrial machinery such as semiconductor processing equipment and of automotive components such as camera modules. Operating profit remained roughly on the same level as in fiscal 2015 due mainly to the effect of a change in product mix.
2) Semiconductor Parts Group
Sales in this reporting segment remained roughly on par with those for fiscal 2015 while operating profit decreased due primarily to a decline in sales of packages for digital consumer equipment and the impact of a decline in product prices, despite an increase in sales of packages for the communications infrastructure market and packages for LEDs for the automotive market.
3) Applied Ceramic Products Group
Sales in the cutting tool business increased primarily for automotive-related markets. Conversely, sales decreased in the solar energy business due to a decline in sales in Japan, Kyoceras principal market, despite an increase in sales in the U. S. As a result, sales in this reporting segment decreased compared with fiscal 2015. Operating profit, however, increased due mainly to cost reduction efforts.
4) Electronic Device Group
Sales in this reporting segment increased compared with fiscal 2015 due primarily to growth in sales of capacitors for smartphones and printing devices for industrial equipment as well as to the contribution of sales from Nihon Inter Electronics Corporation, which joined Kyocera Group in September 2015. Operating profit, however, decreased due mainly to the recording of losses, including an impairment of goodwill.
5) Telecommunications Equipment Group
Sales of mobile phone handsets with exceptional damage and water resistance grew steadily. However, sales in this reporting segment decreased compared with fiscal 2015 due to a decline in sales of PHS-related products and low end handsets. Despite the impact of the decline in sales, operating loss was reduced compared with fiscal 2015, during which a loss from impairment of goodwill was recorded.
6) Information Equipment Group
Sales in this reporting segment increased compared with fiscal 2015 due to growth in sales volume of multifunctional peripherals and printers as result of active efforts to expand sales. On the other hand, operating profit decreased due to increased cost ratio of raw materials reflecting the effect of foreign currency exchange rate fluctuations.
Sales in this reporting segment decreased compared with fiscal 2015 due primarily to a decline in sales of Kyocera Chemical Corporation. On the other hand, operating profit increased due mainly to gain on sales of assets.
Net Sales by Reporting Segment
Net Sales by Geographic Area
Sales in Japan decreased compared with fiscal 2015 due mainly to a decline in sales in the solar energy business.
Sales in Asia increased compared with fiscal 2015 due primarily to an increase in sales in the Semiconductor Parts Group and to the effect of the yens depreciation.
Sales in Europe decreased compared with fiscal 2015 due to a decline in sales in the Information Equipment Group and to the effect of the yens appreciation against the Euro.
iv) United States of America
Sales in the United States of America increased compared with fiscal 2015 due to an increase in sales in the solar energy business and the Information Equipment Group as well as to the effect of the yens depreciation against the U.S. dollar.
Sales in Others decreased compared with fiscal 2015 due mainly to a decrease in sales in the solar energy business and the Information Equipment Group.
[Consolidated Forecasts for the Year Ending March 31, 2017]
In the year ending March 31, 2017 (fiscal 2017), the Japanese economy is expected to continue growing at a low rate. Overseas, the U.S. economy is forecast to continue expanding, while persistent low growth is forecast in the European economy and the growth rate in the Chinese economy is projected to decline. With regard to principal markets for Kyocera, despite expectations of steady expansion in the automotive market, stagnant demand in the mobile phone handset market and contraction in the solar energy market in Japan are forecast.
In light of these forecasts, Kyocera projects financial results for fiscal 2017 as shown in the table below.
Kyocera will strive to increase orders in key markets and at the same time work to cultivate new markets and new customers by grasping new business opportunities and promote thorough cost reductions as means to achieve full-year consolidated financial forecasts.
Kyocera expects the yen to continue appreciating in fiscal 2017 in year-on-year terms. Assumed exchange rates for fiscal 2017 are ¥110 to the U.S. dollar, marking appreciation of ¥10 (approximately 8%) compared with ¥120 for fiscal 2016, and ¥120 to the euro, marking appreciation of ¥13 (approximately 10%) compared with ¥133 for fiscal 2016.
Net sales and operating profit forecasts by reporting segment are as follows.
Net Sales by Reporting Segment
(Note) On April 1, 2016, Kyocera Corporation implemented an absorption-type merger with Kyocera Chemical Corporation, once a domestic subsidiary, and determined to conduct business with reporting segment transferred from formerly Others to Semiconductor Parts Group since the date. The result for the year ended March 31, 2016 and the forecast for the year ending March 31, 2017 shown in the above table were both set forth by the reporting segment after the transfer.
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.
(2) Analysis of Financial Condition
Consolidated Cash Flows
Cash and cash equivalents at March 31, 2016 increased by ¥22,657 million to ¥374,020 million from ¥351,363 million at March 31, 2015.
i) Cash flows from operating activities
Net cash provided by operating activities for fiscal 2016 increased by ¥63,273 million to ¥194,040 million from ¥130,767 million for fiscal 2015. This was mainly because receivables and inventories, which increased for fiscal 2015, decreased for fiscal 2016 although net income decreased.
ii) Cash flows from investing activities
Net cash used in investing activities for fiscal 2016 increased by ¥13,201 million to ¥106,809 million from ¥93,608 million for fiscal 2015. This mainly reflected that a decrease in proceeds from maturities of held-to-maturity securities exceeded a decrease in payments for purchases of held-to-maturity securities.
iii) Cash flows from financing activities
Net cash used in financing activities for fiscal 2016 increased by ¥10,616 million to ¥50,608 million from ¥39,992 million for fiscal 2015. This was due mainly to increases in dividends paid.
Consolidated Cash Flows
(3) Basic Profit Distribution Policy and Dividends for the Year Ended March 31, 2016 and for the Year Ending March 31, 2017
i) Basic profit distribution policy
Kyocera Corporation believes that the best way to increase corporate value and meet shareholders expectations is to improve future consolidated performance on an ongoing basis. Kyocera Corporation therefore has adopted a principal guideline that dividend amounts be within a range based on net income attributable to shareholders of Kyocera Corporation on a consolidated basis, and has set its dividend policy to maintain a payout ratio of 30% or more of consolidated net income attributable to shareholders of Kyocera Corporation. In addition, Kyocera Corporation 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 Corporation 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, as necessary, of outside management resources to achieve sustainable corporate growth.
ii) Dividends for the year ended March 31, 2016
Pursuant to i) Basic profit distribution policy set forth above and based on full-year performance for the year ended March 31, 2016, Kyocera Corporation will distribute a year-end dividend for the year ended March 31, 2016 in the amount of 50 yen per share. When aggregated with the interim dividend in the amount of 50 yen per share, the total annual dividend will be 100 yen per share, the same amount as in the year ended March 31, 2015.
iii) Basic profit distribution policy for the year ending March 31, 2017 (Revision of consolidated dividend ratio)
Since the year ended March 31, 2005, Kyocera Corporation has implemented a dividend policy based on payout ratio in order to clarify its shareholder-oriented stance and establish a greater linkage between the amount of dividends and its performance. In order to further enhance the return of profit to shareholders and expand its shareholder base, Kyocera Corporation will revise this policy to aim for a consolidated dividend payout ratio of around 40% commencing in the year ending March 31, 2017, replacing the current dividend payout ratio of 30% or more. Other basic policies with respect to profit distribution are not amended.
iv) Dividend forecast for the year ending March 31, 2017
Dividend amounts for the year ending March 31, 2017 will be decided pursuant to iii) Basic profit distribution policy for the year ending March 31, 2017 (Revision of consolidated dividend ratio) set forth above. At present, Kyocera Corporation forecasts a total annual dividend in the amount of 100 yen per share, based on its financial forecast for the year ending March 31, 2017.
2. MANAGEMENT POLICIES
(1) Basic Policy
Kyoceras management rationale is 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, and to realize this, we are striving to put into practice Amoeba Management, our unique business management system, and to achieve further sales expansion and high profitability. In addition, Kyocera aims to be respected as The Company from the perspective of corporate ethics.
Kyoceras 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 10 % 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 increase the sophistication of technologies, enhance new product development, expand sales by making the best use of sales networks, promote cost reductions and further reinforce management foundations by exploiting the collective capabilities of the Kyocera Group, which includes bolstering ties between businesses and Group companies. By doing so, Kyocera aims to be a high-growth, highly profitable company. Kyocera will focus on the following challenges:
i) Expand Business in key markets
Kyocera views the information and communications market, automotive-related market, the environment and energy market and the medical and healthcare market as key markets and will strive to increase sales and profit by expanding existing businesses and creating new businesses in these markets. In addition, we will work to strengthen various technologies and product development with the aim of bolstering the proliferation of IoT and strive to secure new business opportunities.
In the information and communications market, Kyocera will work to develop and expand sales of high-value-added products that meet trends of more advanced performance and multiple functions in digital consumer equipment, which includes smartphones, as well as an increase in demand primarily for high capacity and high-speed transmission in each industrial market. In addition, efforts will be made to release new products and to cultivate new markets for telecommunications and information equipment that incorporate unique technologies and differentiate from the competition.
In automotive-related markets, we will strive to strengthen our framework by creating an organization that straddles the Kyocera Group so that we can take advantage of various business opportunities associated with increased electrification and environmental responsiveness of automobiles and proliferation of automated driving. We will take steps to increase share by expanding application of existing products and cultivating new customers as well as accelerate new product development by strengthening technology development and collaborating with customers.
In the environment and energy market, Kyocera will push ahead with broad business development, from energy creating business through solar power generating systems to energy storage business through the supply of electricity storage units and energy saving business that seeks to enhance efficiency of power consumption through an energy management system. In response to the rise in self-consumption of power created, we will seek to improve the conversion efficiency of solar modules, introduce a high-efficiency fuel cell system to market and expand sales of large storage batteries. At the same time, we will strive to expand business by strengthening the development of a system that contributes to the stable supply of power and power savings.
In the medical and healthcare market, Kyocera will expand the medical materials business, which includes artificial joints. Additionally, we will take advantage of business opportunities by pursuing synergies in technologies from materials to components and systems, and by linking up with external organizations. We will also work to reinforce new product development and expand business domain in healthcare-related markets.
ii) Enhance management foundations
Kyocera will strive to optimize its production system and expand production capacity with the aim of further boosting competitiveness. Overseas, we will pursue expansion of production items and production volume in Vietnam as well as thoroughly reduce production costs. In Japan, we will work to expand high-value-added products by leveraging sophisticated production technology capabilities. In addition, we will actively invest in business to drive future growth, which will include utilizing external management resources through M&A with the objective of bolstering existing businesses and creating new businesses.
3. BASIC RATIONALE FOR SELECTION OF ACCOUNTING STANDARD
Kyocera has disclosed its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for long periods since it registered its common stock and American Depositary Share with the U.S. Securities and Exchange Commission in 1975. Kyocera continues to adopt U.S. GAAP as it considers being consistent with the past consolidated financial statements will contribute to benefits for the users of Kyoceras consolidated financial statements.
4. CONSOLIDATED FINANCIAL STATEMENTS
(1) Consolidated Balance Sheets
(2) Consolidated Statements of Income
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 is computed based on the diluted average number of shares of stock outstanding during each period.
Consolidated Statements of Comprehensive Income
(3) Consolidated Statements of Equity
(4) Consolidated Statements of Cash Flows
(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
Kyoceras 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, 2015, Kyocera adopted Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This accounting standard changes the requirements for reporting discontinued operations in ASC 205-20, Presentation of Financial StatementsDiscontinued Operations. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entitys operations and financial results. This accounting standard also requires an entity to provide disclosures about a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. The adoption of this accounting standard did not have a material impact on Kyoceras consolidated results of operations, financial condition and cash flows.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. This accounting standard requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. On December 31, 2015, Kyocera early adopted this accounting standard. The adoption of this accounting standard did not have a material impact on Kyoceras consolidated results of operations, financial condition and cash flows.
In December 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. To simplify the presentation of deferred income taxes, this accounting standard changes require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. On December 31, 2015, Kyocera early adopted this accounting standard. For the adoption of this accounting standard, Kyocera did not adjust prior periods financial statement retrospectively.
(6) Segment Information
i) Reporting segment:
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 6.
ii) 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.
(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, 2016 on page 1 and 4. CONSOLIDATED FINANCIAL STATEMENTS (2) Consolidated Statements of Income on page 17.
(8) Material Subsequent Event
(9) Cautionary Statement for Premise of a Going Concern