Annual Reports

 
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  • 6-K (Nov 13, 2017)
  • 6-K (Oct 30, 2017)
  • 6-K (Aug 10, 2017)
  • 6-K (Jul 28, 2017)
  • 11-K (Jun 29, 2017)
  • 6-K (Jun 27, 2017)
Kyocera 6-K 2017

Documents found in this filing:

  1. 6-K
  2. 6-K
Form 6-K
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 under

the Securities Exchange Act of 1934

For the month of February 2017

Commission File Number: 1-07952

KYOCERA CORPORATION

(Translation of registrant’s name into English)

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  ☒        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 Contents

SIGNATURE

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

 

KYOCERA CORPORATION

/s/ SHOICHI AOKI

Shoichi Aoki

Director,

Managing Executive Officer and

General Manager of

Corporate Financial and Accounting Group

Date: February 14, 2017


Table of Contents

Information furnished on this form:

EXHIBITS

 

Exhibit

    Number    

   

1.

  English translation of consolidated financial statements included in the Quarterly Report (“shihanki-houkokusho”) for the three months and nine months ended December 31, 2016 submitted to the Director of the Kanto Local Finance Bureau of the Ministry of Finance pursuant to the Financial Instruments and Exchange Law of Japan


Table of Contents

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

     March 31, 2016     December 31, 2016  
     (Yen in millions)  

Current assets:

    

Cash and cash equivalents

   ¥ 374,020      ¥ 330,726   

Short-term investments in debt securities (Notes 4 and 5)

     101,566        81,867   

Other short-term investments (Note 4)

     213,613        240,702   

Trade receivables

                                                

Notes

     22,832        27,265   

Accounts

     266,462        272,583   

Less allowances for doubtful accounts and sales returns

     (5,278     (6,129
  

 

 

   

 

 

 
     284,016        293,719   

Inventories (Note 6)

     327,875        356,547   

Other current assets (Notes 5, 7 and 10)

     133,671        120,815   
  

 

 

   

 

 

 

Total current assets

     1,434,761        1,424,376   

Investments and advances:

    

Long-term investments in debt and equity securities (Notes 4 and 5)

     1,131,403        1,124,154   

Other long-term investments (Notes 4, 5 and 10)

     20,130        23,364   
  

 

 

   

 

 

 

Total investments and advances

     1,151,533        1,147,518   

Property, plant and equipment (Note 5):

    

Land

     59,914        60,094   

Buildings

     344,087        347,626   

Machinery and equipment

     841,895        857,789   

Construction in progress

     18,314        15,912   

Less accumulated depreciation

     (999,723     (1,012,337
  

 

 

   

 

 

 

Total property, plant and equipment

     264,487        269,084   

Goodwill (Notes 3, 5 and 9)

     102,599        116,583   

Intangible assets (Notes 3 and 5)

     59,106        56,126   

Other assets

     82,563        79,262   
  

 

 

   

 

 

 

Total assets

   ¥ 3,095,049      ¥ 3,092,949   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

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CONSOLIDATED BALANCE SHEETS (Unaudited)—(Continued)

 

     March 31, 2016     December 31, 2016  
     (Yen in millions)  

Current liabilities:

    

Short-term borrowings

   ¥ 5,119      ¥ 207   

Current portion of long-term debt (Note 5)

     9,516        8,507   

Trade notes and accounts payable

     115,644        122,843   

Other notes and accounts payable (Note 10)

     82,758        56,108   

Accrued payroll and bonus

     59,959        51,302   

Accrued income taxes

     22,847        11,507   

Other accrued liabilities (Note 10)

     43,525        49,982   

Other current liabilities (Notes 5 and 7)

     28,464        50,805   
  

 

 

   

 

 

 

Total current liabilities

     367,832        351,261   

Non-current liabilities:

                                                

Long-term debt (Note 5)

     18,115        16,656   

Accrued pension and severance liabilities (Note 8)

     46,101        43,488   

Deferred income taxes

     271,220        261,921   

Other non-current liabilities

     18,019        19,065   
  

 

 

   

 

 

 

Total non-current liabilities

     353,455        341,130   
  

 

 

   

 

 

 

Total liabilities

     721,287        692,391   

Commitments and contingencies (Note 10)

    

Kyocera Corporation shareholders’ equity:

    

Common stock

     115,703        115,703   

Additional paid-in capital

     162,844        165,210   

Retained earnings

     1,571,002        1,605,125   

Accumulated other comprehensive income (Note 12)

     469,803        461,322   

Common stock in treasury, at cost

     (35,088     (32,299
  

 

 

   

 

 

 

Total Kyocera Corporation shareholders’ equity

     2,284,264        2,315,061   

Noncontrolling interests

     89,498        85,497   
  

 

 

   

 

 

 

Total equity (Note 11)

     2,373,762        2,400,558   
  

 

 

   

 

 

 

Total liabilities and equity

   ¥ 3,095,049      ¥ 3,092,949   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

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Table of Contents

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

     Nine months ended December 31,  
     2015     2016  
    

(Yen in millions and shares in thousands,

except per share amounts)

 

Net sales

   ¥ 1,093,030      ¥ 1,014,628   

Cost of sales (Note 8)

     803,743        751,398   
  

 

 

   

 

 

 

Gross profit

     289,287        263,230   

Selling, general and administrative expenses (Notes 3, 5, 8, 10 and 13)

     209,124        196,128   

Loss on impairment of goodwill (Note 5)

     14,143          
  

 

 

   

 

 

 

Profit from operations

     66,020        67,102   
  

 

 

   

 

 

 

Other income (expenses):

    

Interest and dividend income (Note 4)

     27,260        30,904   

Interest expense

     (1,098     (566

Foreign currency transaction gains, net (Note 7)

     3,343        553   

Gains on sales of securities

     277        103   

Other, net

     1,588        610   
  

 

 

   

 

 

 

Total other income (expenses)

     31,370        31,604   
  

 

 

   

 

 

 

Income before income taxes

     97,390        98,706   

Income taxes (Note 9)

     34,362        24,235   
  

 

 

   

 

 

 

Net income

     63,028        74,471   

Net income attributable to noncontrolling interests

     (3,524     (3,619
  

 

 

   

 

 

 

Net income attributable to shareholders of Kyocera Corporation

   ¥ 59,504      ¥ 70,852   
  

 

 

   

 

 

 

Per share information (Note 15):

    

Net income attributable to shareholders of Kyocera Corporation:

                                                                

Basic

   ¥ 162.20      ¥ 192.88   

Diluted

     162.20        192.88   

Average number of shares of common stock outstanding:

    

Basic

     366,860        367,334   

Diluted

     366,860        367,334   

The accompanying notes are an integral part of these statements.

 

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Table of Contents
     Three months ended December 31,  
     2015     2016  
    

(Yen in millions and shares in thousands,

except per share amounts)

 

Net sales

   ¥ 370,453      ¥ 361,385   

Cost of sales (Note 8)

     272,226        263,349   
  

 

 

   

 

 

 

Gross profit

     98,227        98,036   

Selling, general and administrative expenses (Notes 3, 5, 8, 10 and 13)

     80,013        64,719   

Loss on impairment of goodwill (Note 5)

     14,143          
  

 

 

   

 

 

 

Profit from operations

     4,071        33,317   
  

 

 

   

 

 

 

Other income (expenses):

    

Interest and dividend income (Note 4)

     13,495        15,001   

Interest expense

     (329     819   

Foreign currency transaction gains, net (Note 7)

     1,309        791   

Gains on sales of securities

     277          

Other, net

     567        200   
  

 

 

   

 

 

 

Total other income (expenses)

     15,319        16,811   
  

 

 

   

 

 

 

Income before income taxes

     19,390        50,128   

Income taxes (Note 9)

     10,066        13,933   
  

 

 

   

 

 

 

Net income

     9,324        36,195   

Net income attributable to noncontrolling interests

     (612     (1,496
  

 

 

   

 

 

 

Net income attributable to shareholders of Kyocera Corporation

   ¥ 8,712      ¥ 34,699   
  

 

 

   

 

 

 

Per share information (Note 15):

    

Net income attributable to shareholders of Kyocera Corporation:

                                                                

Basic

   ¥ 23.75      ¥ 94.36   

Diluted

     23.75        94.36   

Average number of shares of common stock outstanding:

    

Basic

     366,859        367,715   

Diluted

     366,859        367,715   

The accompanying notes are an integral part of these statements.

 

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

 

     Nine months ended December 31,  
     2015     2016  
     (Yen in millions)  

Net income

   ¥ 63,028      ¥ 74,471   
  

 

 

   

 

 

 

Other comprehensive income (loss)—net of taxes

                                                                

Net unrealized gains (losses) on securities (Notes 4, 11 and 12)

     102,450        (9,529

Net unrealized losses on derivative financial instruments (Notes 7, 11 and 12)

     (86     (207

Pension adjustments (Notes 8, 11 and 12)

     (1,007     (597

Foreign currency translation adjustments (Notes 11 and 12)

     (4,549     2,656   
  

 

 

   

 

 

 

Total other comprehensive income (loss)

     96,808        (7,677
  

 

 

   

 

 

 

Comprehensive income

     159,836        66,794   

Comprehensive income (loss) attributable to noncontrolling interests

     (3,677     (4,351
  

 

 

   

 

 

 

Comprehensive income attributable to shareholders of Kyocera Corporation

   ¥ 156,159      ¥ 62,443   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

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     Three months ended December 31,  
     2015     2016  
     (Yen in millions)  

Net income

   ¥ 9,324      ¥ 36,195   
  

 

 

   

 

 

 

Other comprehensive income (loss)—net of taxes

                                                                

Net unrealized gains (losses) on securities (Notes 4 and 12)

     116,533        (29,189

Net unrealized losses on derivative financial instruments (Notes 7 and 12)

     (55     (235

Pension adjustments (Notes 8 and 12)

     (193     (1,992

Foreign currency translation adjustments (Note 12)

     (77     65,732   
  

 

 

   

 

 

 

Total other comprehensive income (loss)

     116,208        34,316   
  

 

 

   

 

 

 

Comprehensive income

     125,532        70,511   

Comprehensive income (loss) attributable to noncontrolling interests

     (794     (9,995
  

 

 

   

 

 

 

Comprehensive income attributable to shareholders of Kyocera Corporation

   ¥ 124,738      ¥ 60,516   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

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Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

     Nine months ended December 31,  
     2015     2016  
     (Yen in millions)  

Cash flows from operating activities:

    

Net income

   ¥ 63,028      ¥ 74,471   

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

    

Depreciation and amortization

     55,755        55,688   

Provision for doubtful accounts and loss on bad debts

     609        857   

Write-down of inventories

     6,034        6,473   

Deferred income taxes

     (1,337     (843

Gains on sales of securities

     (277     (103

Gains on sales of property, plant and equipment, net (Note 13)

     (12,268     (793

Loss on impairment of goodwill (Note 5)

     14,143          

Foreign currency adjustments

     95        (2,890

Change in assets and liabilities:

                                                                

(Increase) decrease in receivables

     24,432        (2,935

Increase in inventories

     (15,202     (34,863

(Increase) decrease in other current assets

     (1,449     8,989   

Decrease in notes and accounts payable

     (2,375     (10,379

Decrease in accrued income taxes

     (2,591     (11,495

Increase (decrease) in other current liabilities

     (13,127     16,451   

Decrease in other non-current liabilities

     (2,464     (1,913

Other, net

     2,688        (1,501
  

 

 

   

 

 

 

Net cash provided by operating activities

     115,694        95,214   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Payments for purchases of held-to-maturity securities

     (84,730     (85,225

Payments for purchases of other securities

     (4,085     (2,581

Proceeds from sales of available-for-sale securities

     12,819        167   

Proceeds from maturities of held-to-maturity securities

     60,195        91,828   

Acquisitions of businesses, net of cash acquired (Note 3)

     (21,233     (19,691

Payments for purchases of property, plant and equipment

     (49,314     (52,491

Payments for purchases of intangible assets

     (5,850     (4,621

Proceeds from sales of property, plant and equipment

     16,407        2,411   

Acquisition of time deposits and certificate of deposits

     (209,751     (325,119

Withdrawal of time deposits and certificate of deposits

     222,429        297,666   

Other, net

     (2,650     (1,076
  

 

 

   

 

 

 

Net cash used in investing activities

     (65,763     (98,732
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Decrease in short-term debt, net

     (2,275     (4,716

Proceeds from issuance of long-term debt

     8,507        7,252   

Payments of long-term debt

     (9,993     (8,741

Dividends paid

     (42,175     (38,476

Purchases of noncontrolling interests

     (1,605     (1,942

Other, net

     (103     (167
  

 

 

   

 

 

 

Net cash used in financing activities

     (47,644     (46,790
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (2,185     7,014   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     102        (43,294

Cash and cash equivalents at beginning of period

     351,363        374,020   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   ¥ 351,465      ¥ 330,726   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

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NOTES TO THE UNAUDITED QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. ACCOUNTING PRINCIPLES, PROCEDURES AND FINANCIAL STATEMENTS’ PRESENTATION

In December 1975, Kyocera Corporation registered its common stock and American Depository Receipts (ADRs) with the United States Securities and Exchange Commission (SEC). In May 1980, Kyocera listed its ADRs on the New York Stock Exchange.

Kyocera Corporation has filed Form 20-F as an annual report with the SEC, which includes the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America, under section 13 of the Securities Exchange Act of 1934. Kyocera Corporation has also prepared quarterly consolidated financial statements in accordance with accounting principles generally accepted in the United States of America for interim financial statements.

The following paragraphs identify the significant differences for Kyocera Corporation and its consolidated subsidiaries (Kyocera) between accounting principles generally accepted in the United States of America and accounting principles generally accepted in Japan.

(1) Revenue recognition

Kyocera adopts the Financial Accounting Standards Board (FASB)‘s Accounting Standards Codification (ASC) 605, “Revenue Recognition.” Kyocera recognizes revenue when the risks and rewards of ownership have been transferred to the customer and revenue can be reliably measured.

(2) Business combinations

Kyocera adopts ASC 805, “Business Combinations.” Kyocera adopts the acquisition method and measures identifiable assets, liabilities and noncontrolling interests at fair value. Kyocera recognizes transaction and restructuring costs as expenses, and recognizes any tax adjustment made after the measurement period as income tax expenses. Kyocera records in-process research and development at fair value on acquisition date as a part of fair value of acquired business. In addition, Kyocera recognizes an asset acquired or a liability assumed in a business combination that arises from a contingency at fair value, at the acquisition date, if the acquisition date fair value of that asset or liability can be determined during the measurement period.

(3) Goodwill and other intangible assets

Kyocera adopts 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.

(4) Lease accounting

Kyocera adopts ASC 840, “Leases.” Kyocera classifies a lease as an operating or a capital lease, and records all capital leases as an asset and an obligation.

 

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(5) Benefit plans

Kyocera adopts ASC 715, “Compensation—Retirement Benefits.” 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.

(6) Unused compensated absence

Kyocera adopts ASC 710, “Compensation—General.” Kyocera records accrued liabilities for compensated absences that employees have earned but have not yet used.

(7) Income taxes

Kyocera adopts ASC 740, “Income Taxes.” Kyocera records assets and liabilities for unrecognized tax benefits based on the premise of being subject to income tax examination by tax authorities, when it is more likely than not that tax benefits associated with tax positions will not be sustained. Kyocera records the effect of a change in tax law or rates as a component of income tax provision, including the changes in the deferred tax assets and liabilities related to accumulated other comprehensive income (loss).

(8) Stock issuance costs

Stock issuance costs, net of taxes are deducted from additional paid-in capital.

 

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2. SUMMARY OF ACCOUNTING POLICIES

(1) Basis of consolidation and accounting for investments in affiliated companies

The quarterly consolidated financial statements include the accounts of Kyocera Corporation, its subsidiaries in which Kyocera has a controlling financial interest and variable interest entities for which Kyocera is the primary beneficiary under ASC 810, “Consolidation.” All significant inter-company transactions and accounts are eliminated. Investments in 20% to 50% owned companies and investments in variable interest entities, for which Kyocera is not the primary beneficiary but has a significant influence to, are accounted for by the equity method, whereby Kyocera includes in net income its equity in the earnings or losses from these companies. These variable interest entities do not have material impacts on Kyocera’s consolidated result of operations, financial condition and cash flows.

(2) Revenue recognition

Kyocera generates revenue principally through the sale of industrial components and telecommunications and information equipment. Kyocera’s operations consist of the following seven reporting segments: 1) Fine Ceramic Parts Group, 2) Semiconductor Parts Group, 3) Applied Ceramic Products Group, 4) Electronic Device Group, 5) Telecommunications Equipment Group, 6) Information Equipment Group and 7) Others.

Kyocera recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred and title and risk of loss have been transferred to the customer or services have been rendered, the sales price is fixed or determinable and collectability is reasonably assured in accordance with ASC 605, “Revenue Recognition.” Sales to customers in each of the above segments are based on the specific terms and conditions contained in basic contracts with customers and firm customer orders which detail the price, quantity and timing of the transfer of ownership (such as risk of loss and title) of the products.

For most customer orders, the transfer of ownership and revenue recognition occurs at the time of shipment of the products to the customer. For the remainder of customer orders, the transfer of ownership and revenue recognition occurs at the time of receipt of the products by the customer, with the exception of sales of solar power generating systems in the Applied Ceramic Products Group and information equipment in the Information Equipment Group for which sales are made to end users together with installation services. The transfer of ownership and revenue recognition in these cases occur at the completion of installation and customer acceptance, as Kyocera has no further obligations under the contracts and all revenue recognition criteria under ASC 605, “Revenue Recognition” are met. When Kyocera provides a combination of products and services, the arrangement is evaluated under ASC 605-25, “Multiple-Element Arrangements.”

In addition, in the Information Equipment Group, Kyocera may enter into sales contracts and lease agreements ranging from one to seven years directly with end users. Sales contracts and lease agreements may include installation services and have customer acceptance clauses. For sales and sales-type lease agreements, revenue is recognized at the completion of installation and customer acceptance which usually occurs on the same business day as delivery. For sales-type leases, unearned income (which represents interest) is amortized over the lease term using the effective interest method in accordance with ASC 840, “Leases.”

For all sales in the above segments, product returns are only accepted if the products are determined to be defective. There are no price protections, stock rotation or returns provisions, except for certain programs in the Electronic Device Group as noted below.

Sales Incentives

In the Electronic Device Group, sales to independent electronic component distributors may be subject to various sale programs for which a provision for incentive programs is recorded as a reduction of revenue at the time of sale, as further described below in accordance with ASC 605-50, “Customer Payments and Incentives” and ASC 605-15, “Products.”

 

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(a) Distributor Stock Rotation Program

Stock rotation is a program whereby distributors are allowed to return for credit, qualified inventory, semi-annually, equal to a certain percentage of the previous six months net sales. In accordance with ASC 605-15, “Products” an estimated sales allowance for stock rotation is recorded at the time of sale based on a percentage of distributor sales using historical trends, current pricing and volume information, other market specific information and input from sales, marketing and other key management personnel. These procedures require the exercise of significant judgments. Kyocera believes that these procedures enable Kyocera to make reliable estimates of future returns under the stock rotation program. Kyocera’s actual results have historically approximated its estimates. When the products are returned and verified, the distributor is given credit against their accounts receivables.

(b) Distributor Ship-from-Stock and Debit Program

Ship-from-Stock and Debit (ship and debit) is a program designed to assist distributors in meeting competitive prices in the marketplace on sales to their end customers. Ship and debit programs require a request from the distributor for a pricing adjustment of a specific part for a sale to the distributor’s end customers from the distributor’s stock. Ship and debit authorizations may cover current and future distributor activity for a specific part for a sale to their customers. In accordance with ASC 605, “Revenue Recognition” at the time Kyocera records the sales to distributors, an allowance for the estimated future distributor activities related to such sales is provided since it is probable that such sales to distributors will result in ship and debit activities. In accordance with ASC 605-15, “Products” Kyocera records an estimated sales allowance based on sales during the period, credits issued to distributors, distributor inventory levels, historical trends, market conditions, pricing trends noted in direct sales activity with original equipment manufacturers and other customers, and input from sales, marketing and other key management personnel. These procedures require the exercise of significant judgments. Kyocera believes that these procedures enable Kyocera to make reliable estimates of future credits under the ship and debit program. Kyocera’s actual results have historically approximated its estimates.

Sales Rebates

In the case of sales to distributors in the Applied Ceramic Products Group and Information Equipment Group, Kyocera provides cash rebates when predetermined sales targets are achieved during a certain period. Provisions for sales rebates are recorded as a reduction of revenue at the time of revenue recognition based on the best estimate of forecasted sales to each distributor in accordance with ASC 605-50, “Customer Payments and Incentives.”

Sales Returns

Kyocera records an estimated sales returns allowance at the time of sales based on historical return experience.

Products Warranty

For after-service costs to be paid during warranty periods, Kyocera accrues a product warranty liability for claims under warranties relating to the products that have been sold. Kyocera records an estimated product warranty liability based on its historical repair experience with consideration given to the expected level of future warranty costs.

In the Information Equipment Group, Kyocera provides a standard one year manufacturer’s warranty on its products. For sales directly to end users, Kyocera offers extended warranty plans that may be purchased and that are renewable in one year incremental periods at the end of the warranty term. Service revenues are recognized over the term of the related service maintenance contracts in accordance with ASC 605-20, “Services.”

 

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(3) Cash and cash equivalents

Kyocera considers cash, bank deposits and all highly liquid investments purchased with an original maturity of three months or less to be cash and cash equivalents accounted for under ASC 305, “Cash and Cash Equivalents.”

(4) Translation of foreign currencies

Assets and liabilities of consolidated foreign subsidiaries and affiliates accounted for by the equity method are translated into Japanese yen at the exchange rates in effect on the respective balance sheet dates. Operating accounts are translated at the average exchange rates for the respective periods accounted for under ASC 830, “Foreign Currency Matters.” Translation adjustments result from the process of translating foreign currency denominated financial statements into Japanese yen. These translation adjustments, which are not included in the determination of net income, are included in other comprehensive income.

Assets and liabilities denominated in foreign currencies are translated at the exchange rates in effect on the respective balance sheet dates, and resulting transaction gains or losses are included in the determination of net income.

(5) Allowance for doubtful accounts

Kyocera maintains allowances for doubtful accounts related to trade notes receivables, trade accounts receivables and finance receivables for estimated losses resulting from customers’ inability to make timely payments, including interest on finance receivables. Kyocera’s estimates are based on various factors, including the length of past due payments, historical experience and current business environments. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations, a specific allowance against these amounts is provided, considering the fair value of assets pledged by the customer as collateral.

(6) Inventories

Inventories are accounted for under ASC 330, “Inventory.” Inventories are stated at the lower of cost and net realizable value. The remaining balance of raw materials to be purchased under the long term purchase agreements are also stated at the lower of cost and net realizable value.

For finished goods and work in process, cost is mainly determined by the average method. For raw materials and supplies, cost is mainly determined by the first-in, first-out method.

Kyocera recognizes estimated write-down of inventories for excess, slow-moving and obsolete inventories.

(7) Securities

Debt and equity securities are accounted for under ASC 320, “Investments—Debt and Equity Securities.” Securities classified as available-for-sale securities are recorded at fair value, with unrealized gains and losses excluded from income and reported in other comprehensive income, net of taxes. Securities classified as held-to-maturity securities are recorded at amortized cost. Non-marketable equity securities are accounted for by the cost method in accordance with ASC 325, “Investments—Other.”

Kyocera evaluates whether the declines in fair value of securities are other-than-temporary. Other-than-temporary declines in fair value are recorded as a realized loss with a new cost basis. This evaluation is based mainly on the duration and the extent to which the fair value is less than cost, and the anticipated recoverability in fair value.

 

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Kyocera also reviews its investments accounted for by the equity method for impairment in accordance with ASC 323, “Investments—Equity Method and Joint Ventures.” Factors considered in assessing whether an indication of other-than-temporary impairment exists include the achievement of business plan objectives and milestones including cash flow projections and the results of planned financing activities, the financial condition and prospects of each investee company, the fair value of the ownership interest relative to the carrying amount of the investment, the period of time during which the fair value of the ownership interest has been below the carrying amount of the investment and other relevant factors. Impairment to be recognized is measured based on the amount by which the carrying amount of the investment exceeds the fair value of the investment. Fair value is determined through the use of various methodologies such as discounted cash flows and comparable valuations of similar companies.

(8) Property, plant and equipment and depreciation

Property, plant and equipment are accounted for under ASC 360, “Property, Plant, and Equipment.” Kyocera provides for depreciation of buildings, machinery and equipment over their estimated useful lives primarily on the declining balance method. The principal estimated useful lives used for computing depreciation are as follows:

 

Buildings

   2 to 50 years

Machinery and equipment

   2 to 20 years

Major renewals and betterments are capitalized as tangible assets and they are depreciated based on estimated useful lives. The costs of minor renewals, maintenance and repairs are charged to expenses in the period incurred. When assets are sold or otherwise disposed of, the gains or losses thereon, computed on the basis of the difference between depreciated costs and proceeds, are credited or charged to income in the period of disposal, and costs and accumulated depreciation are removed from accounts.

(9) Goodwill and other intangible assets

Goodwill and other intangible assets are accounted for under 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 straight line over their respective estimated useful lives to their estimated residual values, and reviewed for impairment which are accounted for under ASC 360, “Property, Plant, and Equipment” whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

The principal estimated useful lives for intangible assets are as follows:

 

Customer relationships

   3 to 20 years

Software

   2 to 15 years

Patent rights

   2 to 10 years

Trademarks

   2 to 21 years

Non-patent technology

   5 to 20 years

(10) Impairment of long-lived assets

Impairment of long-lived assets which include intangible assets with definite useful lives is accounted for under ASC 360, “Property, Plant, and Equipment.” Kyocera reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

In the case that their carrying amounts are considered unrecoverable and exceed their fair value, its exceeded amount is recognized as the impairment loss. The fair value is determined using the expected discounted cash flows gained from them directly.

 

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(11) Derivative financial instruments

Derivatives are accounted for under ASC 815, “Derivatives and Hedging.” All derivatives are recorded as either assets or liabilities on the balance sheet and measured at fair value. Changes in the fair value of derivatives are charged to income. However cash flow hedges may qualify for hedge accounting, if the hedging relationship is expected to be highly effective in achieving offsetting cash flows of hedging instruments and hedged items. Under hedge accounting, changes in the fair value of the effective portion of these cash flow hedge derivatives are deferred in accumulated other comprehensive income and charged to income when the underlying transaction being hedged occurs.

Kyocera designates certain foreign currency forward contracts. However, changes in fair value of most of the foreign currency forward contracts are recorded in income without applying hedge accounting as it is expected that such changes will be offset by corresponding gains or losses of the underlying hedged assets and liabilities. Kyocera’s affiliate accounted for by the equity method designates certain interest rate swaps with applying hedge accounting to this transaction.

Kyocera formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the balance sheet or forecasted transactions. Kyocera also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items. When it is determined that a derivative is not a highly effective hedge or that it has ceased to be a highly effective hedge, Kyocera discontinues hedge accounting prospectively. When a cash flow hedge is discontinued, the net derivative gains or losses remain in accumulated other comprehensive income, unless it is probable that the forecasted transaction will not occur at which point the derivative gains or losses are reclassified into income immediately.

(12) Commitments and contingencies

Commitments and contingencies are accounted for under ASC 450, “Contingencies.” Liabilities for loss contingencies are recorded when analysis indicates that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. When a range of loss can be estimated, we accrue the most likely amount. In the event that no amount in the range of probable loss is considered most likely, the minimum loss in the range is accrued. Amounts recorded are reviewed periodically and adjusted to reflect additional legal and technical information that becomes available. Legal costs are accrued as incurred.

(13) Stock-based compensation

Costs resulting from share-based payment transactions are accounted for under ASC 718, “Compensation—Stock Compensation,” Kyocera recognizes such costs in the quarterly consolidated financial statements based on the grant date fair value over the measurement method.

(14) Net income attributable to shareholders of Kyocera Corporation

Earnings per share is accounted for under ASC 260, “Earnings Per Share.” Basic earnings per share attributable to shareholders of Kyocera Corporation is 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.

(15) Research and development expenses and advertising expenses

Research and development expenses are accounted for under ASC 730, “Research and Development,” and charged to expense as incurred. Advertising expenses are accounted for under ASC 720-35, “Other Expenses—Advertising Costs,” and charged to expense as incurred.

 

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(16) Use of estimates

The preparation of the quarterly consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the quarterly consolidated financial statements and accompanying notes. However, actual results could differ from those estimates and assumptions.

(17) Recently adopted accounting standards

On April 1, 2016, Kyocera adopted ASU No. 2015-02, “Amendments to the Consolidation Analysis.” This accounting standard changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. All legal entities are subject to reevaluation under the revised consolidation model. This accounting standard affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. 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, 2016, Kyocera adopted ASU No. No. 2015-16, “Business Combinations—Simplifying the Accounting for Measurement-Period Adjustments.” This accounting standard eliminates the requirement to retrospectively account for adjustments made to provisional amounts recognized in a business combination. This accounting standard requires the acquirer to record, in the financial statements of the reporting period in which the adjustment amounts are determined, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The adoption of this accounting standard did not have a material impact on Kyocera’s consolidated results of operations, financial condition and cash flows.

(18) Recently issued accounting standards

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses.” This accounting standard replaces a methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This accounting standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this accounting standard is not expected to have a material impact on Kyocera’s consolidated results of operations, financial condition and cash flows.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments.” This accounting standard provides guidance on the eight specific cash flow classification issues with the objective of reducing the existing diversity in practice. This accounting standard will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this accounting standard is not expected to have a material impact on Kyocera’s consolidated results of operations, financial condition and cash flows.

In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes—Intra-Entity Transfers of Assets Other Than Inventory.” This accounting standard requires that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This accounting standard will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The adoption of this accounting standard is not expected to have a material impact on Kyocera’s consolidated results of operations, financial condition and cash flows.

 

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In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows—Restricted Cash.” This accounting standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This accounting standard will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this accounting standard is not expected to have a material impact on Kyocera’s consolidated results of operations, financial condition and cash flows.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other—Simplifying the Test for Goodwill Impairment.” This accounting standard eliminated Step 2 which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. Instead, this accounting standard requires that an entity should perform goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. This accounting standard will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Kyocera is currently evaluating the impact that this accounting standard will have on Kyocera’s consolidated results of operations, financial position.

(19) Reclassifications

Certain reclassifications and format changes have been made to the consolidated statements of income for the nine and three months ended December 31, 2015 and the consolidated statements of cash flows for the nine months ended December 31, 2015 and the corresponding footnotes to conform to the current presentation.

 

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3. BUSINESS COMBINATION

Business combinations for the nine months ended December 31, 2016

On May 2, 2016, Kyocera acquired 100% of the common stock of SGS Tool Company which is the U.S. based solid tool manufacturing and sales company for ¥9,046 million by cash in order to strengthen Kyocera’s cutting tool business in North America, and made it consolidated subsidiary and changed its name as Kyocera SGS Precision Tools, Inc.

Kyocera has used the acquisition method of accounting to record assets acquired and liabilities assumed in accordance with ASC 805, “Business Combinations.” The allocation of fair value to the acquired assets and assumed liabilities was completed during three months ended December 31, 2016. As a result, the allocation of fair value to them based on estimated fair value in this business combination as of the acquisition date and goodwill were recognized as described below.

Acquisition-related costs of ¥282 million were included in selling, general and administrative expenses in the consolidated statement of income for the nine months ended December 31, 2016. The result of operation of the acquired business was included into Kyocera’s quarterly consolidated financial statements since the acquisition date. For segment reporting, it is reported in the Applied Ceramic Products Group.

 

     May 2, 2016  
     (Yen in millions)  

Cash and cash equivalents

   ¥ 501   

Trade receivables

     940   

Inventories

     1,330   

Others

     145   
  

 

 

 

Total current assets

     2,916   
  

 

 

 

Property, plant and equipment

     3,514   

Intangible assets

     1,432   

Others

     1   
  

 

 

 

Total non-current assets

     4,947   
  

 

 

 

Total assets

     7,863   
  

 

 

 

Trade notes and accounts payable

     172   

Others

     779   
  

 

 

 

Total current liabilities

     951   
  

 

 

 

Non-current liabilities

     645   
  

 

 

 

Total liabilities

     1,596   
  

 

 

 

Total identified assets and liabilities

     6,267   
  

 

 

 

Purchase price (Cash)

     9,046   
  

 

 

 

Goodwill

   ¥ 2,779   
  

 

 

 

 

The total amount of goodwill is not expected to be deductible for tax purposes.

 

Intangible assets that Kyocera recorded due to this acquisition are summarized as follows:

 

  

  

     May 2, 2016  
     (Yen in millions)  

Intangible assets subject to amortization:

  

Customer relationships

   ¥ 1,160   

Trademarks

     213   

Others

     59   
  

 

 

 

Total

   ¥ 1,432   
  

 

 

 

The weighted average amortization periods for customer relationships and trademarks are 15 years and two years, respectively.

The pro forma results are not presented as the revenue and earnings were not material.

 

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On December 6, 2016, Kyocera Document Solutions Inc. acquired the common stock of Annodata Limited and Annodata Communication Systems Limited, and made them consolidated subsidiaries to advance into comprehensive service business which integrates document solutions and information technology services. Kyocera Document Solutions Inc. paid ¥6,062 million of cash to their stockholder and ¥3,561 million to an escrow account on the promise that it acquired 90% of the common stock of them on December 6, 2016 and would acquire the remaining 10% in the future.

The acquisition price of their common stock consists of the above total amount of ¥9,623 million and the future performance-linked payment, the maximum amount of which is ¥1,471 million.

Taking into account this condition, Kyocera’s ratio of voting rights has been 100% since December 6, 2016.

Kyocera will use the acquisition method of accounting to record assets acquired and liabilities assumed in accordance with ASC805, “Business Combinations”, however, the allocation of fair value to the acquired assets and assumed liabilities in this business combination has not yet completed as of December 31, 2016.

Acquisition-related costs of ¥30 million were included in selling, general and administrative expenses in the consolidated statement of income for the nine months ended December 31, 2016. The result of operation of the acquired business was included into Kyocera’s consolidated financial statements since the acquisition date. For segment reporting, it is reported in the Information Equipment Group.

 

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Business combinations for the nine months ended December 31, 2015

On September 4, 2015, Kyocera acquired the common stock and the preferred stock of Nihon Inter Electronics Corporation (NIEC) by a way of cash tender offer for ¥12,134 million, and made it a consolidated subsidiary. On September 8, 2015, Kyocera held 70.23% of the voting rights in NIEC as a result of the conversion to common stock of the preferred stock acquired by Kyocera.

Kyocera has used the acquisition method of accounting to record assets acquired and liabilities assumed in accordance with ASC805, “Business Combinations.” The allocation of fair value to the acquired assets and assumed liabilities in this business combination was completed during the three months ended December 31, 2015. Acquisition-related costs of ¥232 million were included in selling, general and administrative expenses in the consolidated statement of income for the nine months ended December 31, 2015. The result of operation of the acquired business was included into Kyocera’s consolidated financial statements since the acquisition date. For segment reporting, it is reported in the Electronic Device Group.

Kyocera conducted an absorbtion-type merger in which NIEC was the merged company with that for every 1 ordinary share of NIEC, 0.032 ordinary shares of Kyocera were allocated and delivered to the NIEC’s shareholders on August 1, 2016.

 

     September 4, 2015  
     (Yen in millions)  

Cash and cash equivalents

   ¥ 1,976   

Trade receivables

     5,630   

Inventories

     5,761   

Others

     183   
  

 

 

 

Total current assets

     13,550   
  

 

 

 

Property, plant and equipment

     4,527   

Intangible assets

     1,760   

Others

     396   
  

 

 

 

Total non-current assets

     6,683   
  

 

 

 

Total assets

     20,233   
  

 

 

 

Short-term borrowings

     3,722   

Current portion of long-term debt

     480   

Trade notes and accounts payable

     3,147   

Others

     951   
  

 

 

 

Total current liabilities

     8,300   
  

 

 

 

Non-current liabilities

     5,265   
  

 

 

 

Total liabilities

     13,565   
  

 

 

 

Total identified assets and liabilities

     6,668   
  

 

 

 

The fair value of business as of September 4, 2015*1

     17,274   
  

 

 

 

Goodwill*2

   ¥ 10,606   
  

 

 

 

 

*1 The fair value of business as of September 4, 2015 was calculated by multiplying 197 yen which was the price of tender offer for per common share by NIEC’s total number of common shares issued after deducting of the treasury shares.

 

*2 The total amount of goodwill is not expected to be deductible for tax purposes.

 

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Intangible assets that Kyocera recorded due to this acquisition are summarized as follows:

 

     September 4, 2015  
     (Yen in millions)  

Intangible assets subject to amortization:

  

Technologies

   ¥ 388   

Customer relationships

     887   

Trademarks

     465   

Others

     20   
  

 

 

 

Total

   ¥ 1,760   
  

 

 

 

The weighted average amortization periods for technologies, customer relationships and trademarks are eight years, 17 years and 21 years, respectively.

The pro forma results are not presented as the revenue and earnings were not material.

On October 19, 2015, Kyocera Document Solutions Europe B.V., a Dutch subsidiary of Kyocera Document Solutions Inc., acquired 60% of the common stock of Bilgitas Büro Makinalari Sanayi Ve Ticaret A.S. to expand its sales channels in Turkey for ¥3,538 million of cash, and it paid ¥2,195 million to an escrow account on the condition that another 40% of the common stock would be acquired later. On June 1, 2016, Kyocera acquired 27.5% of the common stock. The remaining 12.5% of the common stock will be acquired in the future.

Kyocera’s ratio of voting rights has been 100% since October 19, 2015.

 

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Kyocera has used the acquisition method of accounting to record assets acquired and liabilities assumed in accordance with ASC805, “Business Combinations.” The allocation of fair value to the acquired assets and assumed liabilities in this business combination was completed during the three months ended March 31, 2016. Acquisition-related costs of ¥68 million were included in selling, general and administrative expenses in the consolidated statement of income for the nine months ended December 31, 2015. The result of operation of the acquired business was included into Kyocera’s consolidated financial statements since the acquisition date. For segment reporting, it is reported in the Information Equipment Group.

 

     October 19, 2015  
     (Yen in millions)  

Cash and cash equivalents

   ¥ 204   

Trade receivables

     1,079   

Inventories

     762   

Others

     569   
  

 

 

 

Total current assets

     2,614   
  

 

 

 

Property, plant and equipment

     222   

Intangible assets

     2,617   

Others

     424   
  

 

 

 

Total non-current assets

     3,263   
  

 

 

 

Total assets

     5,877   
  

 

 

 

Current portion of long-term debt

     364   

Trade notes and accounts payable

     391   

Others

     284   
  

 

 

 

Total current liabilities

     1,039   
  

 

 

 

Deferred income taxes

     539   

Others

     702   
  

 

 

 

Total non-current liabilities

     1,241   
  

 

 

 

Total liabilities

     2,280   
  

 

 

 

Total identified assets and liabilities

     3,597   
  

 

 

 

Purchase price (Cash)

     5,733   
  

 

 

 

Goodwill*

   ¥ 2,136   
  

 

 

 

 

* The total amount of goodwill is not expected to be deductible for tax purposes.

Intangible assets that Kyocera recorded due to this acquisition are summarized as follows:

 

     October 19, 2015  
     (Yen in millions)  

Intangible assets subject to amortization:

  

Customer relationships

   ¥ 1,411   

Trademarks

     748   

Others

     458   
  

 

 

 

Total

   ¥ 2,617   
  

 

 

 

The weighted average amortization periods for customer relationships, trademarks and others are 20 years, 10 years and six years, respectively.

The pro forma results are not presented as the revenue and earnings were not material.

On November 3, 2015, Kyocera Document Solutions Inc. acquired 100% of the common stock of Ceyoniq Technology GmbH and related three companies to expand into solution business, making it possible to effectively control and use data handled with a company and increase productivity. The acquisition price included already-paid cash of ¥3,508 million and the performance-linked payment, the maximum amount of which is ¥308 million.

 

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Kyocera has used the acquisition method of accounting to record assets acquired and liabilities assumed in accordance with ASC805, “Business Combinations.” The allocation of fair value to the acquired assets and assumed liabilities in this business combination was completed during the three months ended March 31, 2016. Acquisition-related costs were ¥129 million. The cost of ¥127 million was included in selling, general and administrative expenses in the consolidated statement of income for the three months ended December 31, 2015 and the cost of ¥2 million was included in selling, general and administrative expenses in the consolidated statement of income for the three months ended March 31, 2016. The result of operation of the acquired business was included into Kyocera’s consolidated financial statements since the acquisition date. For segment reporting, it is reported in the Information Equipment Group.

 

     November 3, 2015  
     (Yen in millions)  

Cash and cash equivalents

   ¥ 60   

Trade receivables

     190   

Others

     129   
  

 

 

 

Total current assets

     379   
  

 

 

 

Property, plant and equipment

     50   

Intangible assets

     1,113   

Others

     53   
  

 

 

 

Total non-current assets

     1,216   
  

 

 

 

Total assets

     1,595   
  

 

 

 

Short-term borrowings

     165   

Trade notes and accounts payable

     42   

Accrued expense

     219   

Unearned income

     133   

Others

     187   
  

 

 

 

Total current liabilities

     746   
  

 

 

 

Deferred income taxes

     361   

Others

     32   
  

 

 

 

Total non-current liabilities

     393   
  

 

 

 

Total liabilities

     1,139   
  

 

 

 

Total identified assets and liabilities

     456   
  

 

 

 

Purchase price

     3,508   
  

 

 

 

Goodwill*

   ¥ 3,052   
  

 

 

 

 

* The total amount of goodwill is not expected to be deductible for tax purposes.

Intangible assets that Kyocera recorded due to this acquisition are summarized as follows:

 

     November 3, 2015  
     (Yen in millions)  

Intangible assets subject to amortization:

  

Technologies

   ¥ 478   

Customer relationships

     480   

Trademarks

     155   
  

 

 

 

Total

   ¥ 1,113   
  

 

 

 

The weighted average amortization periods for technologies, customer relationships and trademarks are seven years, 17 years and five years, respectively.

The pro forma results are not presented as the revenue and earnings were not material.

 

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4. DEBT SECURITIES, EQUITY SECURITIES AND OTHER INVESTMENTS

(1) Debt and equity securities with readily determinable fair values

Investments in debt and equity securities at March 31, 2016 and December 31, 2016, included in short-term investments in debt securities and in long-term investments in debt and equity securities in the consolidated balance sheets, are summarized as follows:

 

     March 31, 2016      December 31, 2016  
     Cost*1      Aggregate
Fair Value
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
     Cost*1      Aggregate
Fair Value
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
 
     (Yen in millions)  

Available-for-sale securities:

                       

Marketable equity securities*2

   ¥ 267,598       ¥ 1,073,390       ¥ 805,895       ¥ 103       ¥ 267,558       ¥ 1,059,575       ¥ 792,017       ¥ 0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total equity securities

     267,598         1,073,390         805,895         103         267,558         1,059,575         792,017         0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

     267,598         1,073,390         805,895         103         267,558         1,059,575         792,017         0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Held-to-maturity securities:

                       

Corporate bonds

     159,575         159,201         155         529         146,444         146,167         201         478   

Government bonds and public bonds

     4         4                   —         2         2                   —   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total held-to-maturity securities

     159,579         159,205         155         529         146,446         146,169         201         478   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 427,177       ¥ 1,232,595       ¥ 806,050       ¥ 632       ¥ 414,004       ¥ 1,205,744       ¥ 792,218       ¥ 478   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

*1 Cost represents amortized cost for held-to-maturity securities and acquisition cost for available-for-sale securities. The cost basis of the individual securities is written down to fair value as a new cost basis when other-than-temporary impairment is recognized.

 

*2 Marketable equity securities mainly consist of the shares of KDDI Corporation, which is a telecommunications carrier in Japan. At December 31, 2016, Kyocera Corporation’s equity interest in KDDI Corporation was 12.78%. Cost, aggregate fair value and gross unrealized gain of the shares of KDDI Corporation held by Kyocera are as follows:

 

     March 31, 2016      December 31, 2016  
     Cost      Aggregate
Fair Value
     Gross
Unrealized
Gain
     Gross
Unrealized
Loss
     Cost      Aggregate
Fair Value
     Gross
Unrealized
Gain
     Gross
Unrealized
Loss
 
     (Yen in millions)  

Shares of KDDI Corporation

   ¥ 242,868       ¥ 1,007,299       ¥ 764,431       ¥   —       ¥ 242,868       ¥    991,717       ¥ 748,849       ¥   —   

Kyocera received dividends from KDDI Corporation, and included them in interest and dividend income in the consolidated statements of income, are summarized as follows:

 

     Nine months ended December 31,  
     2015      2016  
     (Yen in millions)  

Dividends from KDDI Corporation

   ¥ 22,334       ¥ 25,132   
     Three months ended December 31,  
     2015      2016  
     (Yen in millions)  

Dividends from KDDI Corporation

   ¥ 12,026       ¥ 13,404   

 

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Short-term investments in debt securities and long-term investments in debt and equity securities at March 31, 2016 and December 31, 2016 are as follows:

 

     March 31, 2016      December 31, 2016  
     Available-
for-Sale
     Held-to-
Maturity
     Total      Available-
for-Sale
     Held-to-
Maturity
     Total  
     (Yen in millions)  

Short-term investment in debt securities

   ¥       ¥ 101,566       ¥ 101,566       ¥       ¥ 81,867       ¥ 81,867   

Long-term investment in debt and equity securities

     1,073,390         58,013         1,131,403         1,059,575         64,579         1,124,154   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 1,073,390       ¥ 159,579       ¥ 1,232,969       ¥ 1,059,575       ¥ 146,446       ¥ 1,206,021   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(2) Other investments

Kyocera holds time deposits and certificates of deposits which are due over three months to original maturity, non-marketable equity securities, long-term loans and investments in affiliates and an unconsolidated subsidiary. Carrying amounts of these investments at March 31, 2016 and December 31, 2016, included in other short-term investments and in other long-term investments in the consolidated balance sheets, are summarized as follows:

 

     March 31, 2016      December 31, 2016  
     (Yen in millions)  

Time deposits and certificates of deposits (due over 3 months)

   ¥ 213,967       ¥ 241,225   

Non-marketable equity securities

     13,718         16,244   

Long-term loans

     53         45   

Investments in affiliates and an unconsolidated subsidiary

     6,005         6,552   
  

 

 

    

 

 

 

Total

   ¥ 233,743       ¥ 264,066   
  

 

 

    

 

 

 

 

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5. FAIR VALUE

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of inputs that may be used to measure fair value are as follows:

 

Level 1:   Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2:   Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3:   Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

(1) Assets and liabilities measured at fair value on a recurring basis

 

     March 31, 2016      December 31, 2016  
     Level 1      Level 2      Level 3      Total      Level 1      Level 2      Level 3      Total  
     (Yen in millions)  

Current Assets:

                       

Foreign currency forward contracts

   ¥       ¥ 5,605       ¥       ¥ 5,605       ¥       ¥ 501       ¥       ¥ 501   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives

             5,605                 5,605                 501                 501   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total current assets

             5,605                 5,605                 501                 501   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Non-Current Assets:

                       

Marketable equity securities

     1,073,390                         1,073,390         1,059,575                         1,059,575   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total equity securities

     1,073,390                         1,073,390         1,059,575                         1,059,575   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total non-current assets

     1,073,390                         1,073,390         1,059,575                         1,059,575   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   ¥ 1,073,390       ¥ 5,605       ¥       ¥ 1,078,995       ¥ 1,059,575       ¥ 501       ¥       ¥ 1,060,076   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Current Liabilities:

                       

Foreign currency forward contracts

   ¥       ¥ 950       ¥       ¥ 950       ¥       ¥ 15,458       ¥       ¥ 15,458   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives

             950                 950                 15,458                 15,458   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total current liabilities

   ¥       ¥ 950       ¥       ¥ 950       ¥       ¥ 15,458       ¥       ¥ 15,458   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The fair value of Level 1 investments is quoted price in an active market with sufficient volume and frequency of transactions.

The fair value of Level 2 investments is other than quoted price included within Level 1 that is observable for the asset or liability, either directly or indirectly through corroboration with observable market data. Kyocera did not recognize any transfers between Levels 1 and 2 for the nine months ended December 31, 2016.

The fair value of Level 2 derivatives is estimated based on quotes from financial institutions. With respect to the detail information of derivatives, please refer to the Note 7 to the Quarterly Consolidated Financial Statements.

 

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(2) Assets and liabilities measured at fair value on a non-recurring basis

The following table presents the assets that were measured and recorded at fair value on a non-recurring basis for the nine months ended December 31, 2015.

 

     Balance
at December  31,
2015
     Level 1      Level 2      Level 3      Total gains  (losses)
for the nine months
ended

December 31, 2015
 
     (Yen in millions)  

Property, plant and equipment

   ¥ 2,432             ¥ 2,432       ¥ (1,522

Intangible assets

     334               334         (2,666

Goodwill

                           (14,143

Kyocera recognized ¥17,957 million of losses on impairment in total of property, plant and equipment, intangible assets subject to amortization and goodwill for the nine months ended December 31, 2015 due to the deterioration of the profitability in the liquid crystal displays business (“Reporting Unit”) included in the Electronic Devices Group. The following table presents the location and each amount of these impairment losses in the consolidated statements of income for the nine months ended December 31, 2015.

 

     

Location

   Nine months ended
December 31, 2015
 
          (Yen in millions)  

Property, plant and equipment

   Selling, general and administrative expenses    ¥ 1,148   

Intangible assets subject to amortization

   Selling, general and administrative expenses      2,666   

Goodwill

   Loss on impairment of goodwill      14,143   
     

 

 

 

Total

      ¥ 17,957   
     

 

 

 

The fair value of the Reporting Unit with a basis for the loss on impairment of goodwill as described above was determined using the discounted cash flows method (income approach).

Impairment tests for Property, plant and equipment and Intangible assets subject to amortization are accounted for under ASC360, “Property, plant and equipment.” The tested for impairment shall be performed whenever any events and changes in circumstances that might lead to impairment indicate. In the case that their carrying amounts are considered unrecoverable and exceed their fair value, its exceeded amount is recognized as the impairment loss. The fair value is determined using the expected discounted cash flows gained from them directly.

Impairment test for Goodwill is accounted for under ASC350, “Goodwill and other intangible assets” and two steps shall be performed for the test. The first step (“identification of potential impairment”) is a comparison of each reporting unit’s fair value with its carrying amount, including goodwill. If the fair value of any reporting unit exceeds its carrying amount, the goodwill of the reporting unit is considered not impaired. If the carrying amount of any reporting unit exceeds its fair value, the second step shall be performed to measure the amount of impairment loss. The second step (“measurement of impairment loss”) compares the implied fair value of a reporting unit’s goodwill with the carrying amount of the goodwill and if the carrying amount exceeds the implied fair value, the exceeded amount is recognized as impairment loss. The implied fair value of the goodwill is determined in the same manner as the amount of goodwill recognized in a business combination is determined. That is, fair value of the reporting unit is allocated to all of the assets and liabilities of the unit (including any unrecognized intangible assets), and the excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities is the implied fair value of the goodwill.

 

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(3) Fair value of financial instruments

The fair values of financial instruments and the methods and assumptions used to estimate the fair value are as follows:

 

     March 31, 2016      December 31, 2016  
     Carrying Amount      Fair Value      Carrying Amount      Fair Value  
     (Yen in millions)  

Assets (a):

           

Short-term investments in debt securities

   ¥ 101,566       ¥ 101,644       ¥ 81,867       ¥ 81,904   

Long-term investments in debt and equity securities

     1,131,403         1,130,951         1,124,154         1,123,840   

Other long-term investments (excluding investments in affiliates and an unconsolidated subsidiary)

     14,125         14,125         16,812         16,812   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 1,247,094       ¥ 1,246,720       ¥ 1,222,833       ¥ 1,222,556   
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities (b):

           

Long-term debt (including due within one year)

   ¥ 27,631       ¥ 27,631       ¥ 25,163       ¥ 25,163   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   ¥ 27,631       ¥ 27,631       ¥ 25,163       ¥ 25,163   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) For investments with active markets, fair value is based on quoted market prices. For non-marketable equity securities, it is not practicable to estimate the fair value because of the lack of the market price and difficulty in estimating fair value without incurring excessive cost. In addition, Kyocera did not identify any events or changes in circumstances that may have had a significant adverse effect on these investments. The aggregated carrying amounts of these investments included in the above table at March 31, 2016 and December 31, 2016 were ¥13,514 million and ¥16,231 million, respectively. Fair value of held-to-maturity investments in debt securities is mainly classified as Level 2.

 

(b) The fair value is estimated by discounting cash flows, using current interest rates for instruments with similar terms and remaining maturities, and classified as Level 2.

Carrying amounts of cash and cash equivalents, other short-term investments, trade notes receivables, trade accounts receivables, short-term borrowings, trade notes and accounts payable, and other notes and accounts payable approximate fair values because of the short maturity of these instruments.

6. INVENTORIES

Inventories at March 31, 2016 and December 31, 2016 are as follows:

 

     March 31, 2016      December 31, 2016  
     (Yen in millions)  

Finished goods

   ¥ 159,801       ¥ 165,557   

Work in process

     63,113         67,619   

Raw materials and supplies

     104,961         123,371   
  

 

 

    

 

 

 

Total

   ¥ 327,875       ¥ 356,547   
  

 

 

    

 

 

 

 

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7. DERIVATIVES AND HEDGING

Kyocera’s activities are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates, interest rates and stock prices. Approximately 59% of Kyocera’s net sales are generated from overseas customers, which expose Kyocera to foreign currency exchange rate fluctuations. These financial exposures to market risks are monitored and managed by Kyocera as an integral part of its overall risk management program. Kyocera’s risk management program focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

Kyocera maintains a foreign currency risk management strategy that uses derivative financial instruments, such as foreign currency forward contracts to minimize the volatility in its cash flows caused by changes in foreign currency exchange rates. Movements in foreign currency exchange rates pose a risk to Kyocera’s operations and competitive position, since exchange rate changes may affect the profitability, cash flows, and business and/or pricing strategies of non Japan-based competitors. These movements affect cross-border transactions that involve, but not limited to, direct export sales made in foreign currencies and raw material purchases incurred in foreign currencies.

By using derivative financial instruments to hedge exposures to changes in exchange rates, Kyocera became exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contracts. When the fair value of a derivative contract is positive, the counterparty owes Kyocera, which creates repayment risk for Kyocera. When the fair value of a derivative contract is negative, Kyocera owes the counterparty and, therefore, it does not possess repayment risk. Kyocera minimizes the credit (or repayment) risk in derivative financial instruments by (a) entering into transactions with creditworthy counterparties, (b) limiting the amount of exposure to each counterparty, and (c) monitoring the financial condition of its counterparties.

Kyocera does not hold or issue such derivative financial instruments for trading purposes.

Kyocera’s affiliate accounted for by the equity method uses interest rate swaps to minimize significant, unanticipated cash flow fluctuations caused by interest rate volatility. The affiliate also reduces credit risks by entering into transactions with certain creditworthy counterparty and limiting the amount of exposure to the counterparty.

Cash Flow Hedges:

Kyocera uses certain foreign currency forward contracts with terms normally lasting for less than four months designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in its forecasted transactions related to purchase commitments and sales. Kyocera’s affiliate accounted for by the equity method uses interest rate swaps mainly to convert a portion of its variable rate debt to fixed rate debt.

Other Derivatives:

Kyocera’s main direct foreign export sales and some import purchases are denominated in the customers’ and suppliers’ transaction currencies, principally the U.S. dollar and the Euro. Kyocera purchases foreign currency forward contracts to protect against the adverse effects that exchange rate fluctuations may have on foreign-currency-denominated trade receivables and payables. The gains and losses on both the derivatives and the foreign-currency-denominated trade receivables and payables are recorded as foreign currency transaction gains, net in the consolidated statement of income. Kyocera does not adopt hedge accounting for such derivatives.

 

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Table of Contents

The aggregate contractual amounts of derivative financial instruments at March 31, 2016 and December 31, 2016 are as follows:

 

     March 31, 2016      December 31, 2016  
     (Yen in millions)  

Derivatives designated as hedging instruments:

     

Foreign currency forward contracts

   ¥ 12,867       ¥ 13,256   
  

 

 

    

 

 

 

Derivatives not designated as hedging instruments:

     

Foreign currency forward contracts

     240,125         277,798   
  

 

 

    

 

 

 

Total derivatives

   ¥ 252,992       ¥ 291,054   
  

 

 

    

 

 

 

The fair value and location of derivative financial instruments in the consolidated balance sheets at March 31, 2016 and December 31, 2016 are as follows:

 

    

Location

   March 31, 2016      December 31, 2016  
          (Yen in millions)  

Derivative assets:

        

Derivatives designated as hedging instruments:

        

Foreign currency forward contracts

   Other current assets    ¥ 127       ¥ 202   
     

 

 

    

 

 

 

Derivatives not designated as hedging instruments:

        

Foreign currency forward contracts

   Other current assets            5,478               299   
     

 

 

    

 

 

 

Total derivative assets

      ¥ 5,605       ¥ 501   
     

 

 

    

 

 

 

Derivative liabilities:

        

Derivatives designated as hedging instruments:

        

Foreign currency forward contracts

   Other current liabilities    ¥ 98       ¥ 455   
     

 

 

    

 

 

 

Derivatives not designated as hedging instruments:

        

Foreign currency forward contracts

   Other current liabilities      852         15,003   
     

 

 

    

 

 

 

Total derivative liabilities

      ¥ 950       ¥ 15,458   
     

 

 

    

 

 

 

Changes in the fair value of derivative financial instruments not designated as hedging instruments for the nine months ended December 31, 2015 and 2016 are as follows:

 

          Nine months ended December 31,  

Type of derivatives

  

Location

   2015      2016  
          (Yen in millions)  

Foreign currency forward contracts

   Foreign currency transaction gains, net    ¥ 1,000       ¥ (19,331

Changes in the fair value of derivative financial instruments not designated as hedging instruments for the three months ended December 31, 2015 and 2016 are as follows:

 

   

          Three months ended December 31,  

Type of derivatives

  

Location

   2015      2016  
          (Yen in millions)  

Foreign currency forward contracts

   Foreign currency transaction gains, net    ¥    810       ¥ (22,120

Realized gains (losses) on derivative financial instruments designated as hedging instruments are not presented because the amounts were not material.

 

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8. BENEFIT PLANS

Domestic:

Kyocera Corporation and its major domestic subsidiaries sponsor funded defined benefit pension plans or unfunded retirement and severance plans for their employees.

Net periodic pension costs at Kyocera Corporation and its major domestic subsidiaries for the nine months ended December 31, 2015 and 2016 include the following components and were recorded in cost of sales, and selling general and administrative expenses in the consolidated statements of income.

 

     Nine months ended December 31,  
     2015     2016  
     (Yen in millions)  

Service cost

   ¥ 9,196      ¥ 10,237   

Interest cost

     1,055        139   

Expected return on plan assets

     (2,877     (2,998

Amortization of prior service cost

     (3,295     (3,274

Recognized actuarial loss

                1,268                 1,852   
  

 

 

   

 

 

 

Net periodic pension costs

   ¥ 5,347      ¥ 5,956   
  

 

 

   

 

 

 

Net periodic pension costs at Kyocera Corporation and its major domestic subsidiaries for the three months ended December 31, 2015 and 2016 include the following components and were recorded in cost of sales, and selling general and administrative expenses in the consolidated statements of income.

 

     Three months ended December 31,  
     2015     2016  
     (Yen in millions)  

Service cost

   ¥ 3,085      ¥ 3,412   

Interest cost

     353        46   

Expected return on plan assets

     (960     (999

Amortization of prior service cost

     (1,101     (1,091

Recognized actuarial loss

                  419                    617   
  

 

 

   

 

 

 

Net periodic pension costs

   ¥ 1,796      ¥ 1,985   
  

 

 

   

 

 

 

 

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Foreign:

Kyocera’s foreign consolidated subsidiaries, such as Kyocera International, Inc. and its consolidated subsidiaries, AVX Corporation and its consolidated subsidiaries, and TA Triumph-Adler GmbH, maintain non-contributory defined benefit pension plans in the U.S., Germany and other countries.

Net periodic pension costs at these foreign subsidiaries for the nine months ended December 31, 2015 and 2016 include the following components and were recorded in cost of sales, and selling general and administrative expenses in the consolidated statements of income.

 

     Nine months ended December 31,  
     2015     2016  
     (Yen in millions)  

Service cost

   ¥ 552      ¥ 519   

Interest cost

     1,345        1,172   

Expected return on plan assets

     (1,558     (1,283

Amortization of prior service cost

     9        14   

Recognized actuarial loss

              1,028                     812   
  

 

 

   

 

 

 

Net periodic pension costs

   ¥ 1,376      ¥ 1,234   
  

 

 

   

 

 

 

Net periodic pension costs at these foreign subsidiaries for the three months ended December 31, 2015 and 2016 include the following components and were recorded in cost of sales, and selling general and administrative expenses in the consolidated statements of income.

 

     Three months ended December 31,  
     2015      2016  
     (Yen in millions)  

Service cost

   ¥ 184       ¥ 176   

Interest cost

     447         390   

Expected return on plan assets

     (519      (428

Amortization of prior service cost

     3         5   

Recognized actuarial loss

             334                 273   
  

 

 

    

 

 

 

Net periodic pension costs

   ¥ 449       ¥ 416   
  

 

 

    

 

 

 

9. INCOME TAXES

The effective tax rates for the nine months and the three months ended December 31, 2016 decreased to 24.55% and 27.79% respectively, compared with the tax rates 35.28% and 51.91% for the nine months and the three months ended December 31, 2015. This was due mainly to recognizing a reversal of a valuation allowance recorded against a deferred tax asset attributable to the net operating loss of Nihon Inter Electronics Corporation when it merged with Kyocera Corporation for the nine months ended December 31, 2016 in addition to recognizing the nondeductible impairment loss of goodwill in the amount of ¥14,143 million for the three months ended December 31, 2015.

 

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10. COMMITMENTS AND CONTINGENCIES

(1) Assets pledged as collateral

Kyocera’s investment in Kagoshima Mega Solar Power Corporation, which was ¥1,821 million at December 31, 2016 accounted for by the equity method, is pledged as collateral for loans of ¥18,794 million from financial institutions of Kagoshima Mega Solar Power Corporation.

(2) Contractual obligations for the acquisition or construction of property, plant and equipment and lease contracts

As of December 31, 2016, Kyocera had contractual obligations for the acquisition or construction of property, plant and equipment aggregating ¥15,377 million principally due within one year.

Kyocera is a lessee under long-term operating leases primarily for office space and equipment. The future minimum lease commitments under non-cancelable leases as of December 31, 2016 are as follows:

 

     December 31, 2016  
     (Yen in millions)  

Due within 1 year

   ¥ 5,274   

Due after 1 year but within 2 years

     3,995   

Due after 2 years but within 3 years

     2,702   

Due after 3 years but within 4 years

     1,669   

Due after 4 years but within 5 years

     1,096   

Thereafter

     1,449   
  

 

 

 

Total

   ¥ 16,185   
  

 

 

 

(3) Long-term purchase agreements for the supply of raw materials

Between 2005 and 2008, Kyocera entered into four long-term purchase agreements (the “LTAs”), principally governed by Michigan law, with Hemlock Semiconductor Operations LLC and its subsidiary Hemlock Semiconductor, LLC (collectively, “Hemlock”) for the supply of polysilicon material for use in its solar energy business. As of December 31, 2016, there is a remaining balance of ¥152,340 million of polysilicon material to be purchased under the LTAs by December 31, 2020, of which ¥41,398 million is prepaid.

After the LTAs were signed, the price of polysilicon material in the world market significantly declined, thus a significant divergence between the market price of polysilicon material and the fixed contract price in the LTAs arose. In light of these circumstances, Kyocera requested Hemlock to modify the contract terms including its price and quantity, and Kyocera sued Hemlock contending that the LTAs are illegal and unenforceable because of Hemlock’s alleged abuse of a superior position which is prohibited under Japanese Antitrust Law. Taking into consideration these condition, Kyocera withheld to order the polysilicon material for the amount stated under the LTAs during the year ended December 31, 2016 (“the 2016 amount”), which is ¥30,206 million in total.

As a result, Hemlock issued an invoice for the amount equal to the difference between the 2016 amount and applicable advanced payment, which is due for payment by Kyocera on February 15, 2017. As Kyocera contends that it has the right to cure a default by purchasing the 2016 amount within a certain period from the issuance of the default notice, Kyocera has accounted for its rights and obligations under the LTAs, and has recorded ¥30,206 million as other current asset for the 2016 amount and ¥22,339 million as other account payable for the amount equal to the difference between the 2016 amount and applicable advanced payment.

In addition, Kyocera considered the obligation to purchase polysilicon material through 2020 in its analysis based on lower of cost and net realizable value approach taking into consideration the anticipated selling price of the applicable solar products and concluded no loss was incurred as of December 31, 2016.

 

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(4) Environmental matters

AVX corporation (AVX), a U.S. based subsidiary, has been identified by the United States Environmental Protection Agency (EPA), state governmental agencies or other private parties as a potentially responsible party (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) or equivalent state or local laws for clean-up and response costs associated with certain sites at which remediation is required with respect to prior contamination. Because CERCLA or such state statutes authorize joint and several liability, the EPA or state regulatory authorities could seek to recover all clean-up costs from any one of the PRPs at a site despite the involvement of other PRPs. At certain sites, financially responsible PRPs other than AVX also are, or have been, involved in site investigation and clean-up activities. AVX believes that liability resulting from these sites will be apportioned between AVX and other PRPs.

To resolve its liability at the sites at which AVX has been named a PRP, AVX has entered into various administrative orders and consent decrees with federal and state regulatory agencies governing the timing and nature of investigation and remediation. As is customary, the orders and decrees regarding sites where the PRPs are not themselves implementing the chosen remedy contain provisions allowing the EPA to reopen the agreement and seek additional amounts from settling PRPs in the event that certain contingencies occur, such as the discovery of significant new information about site conditions.

On October 10, 2012, the EPA, the United States, and the Commonwealth of Massachusetts and AVX announced that they had reached a financial settlement with respect to the EPA’s ongoing clean-up of the New Bedford Harbor in the Commonwealth (the harbor). Under the terms of the settlement, AVX was obligated to pay ¥39,643 million ($366.25 million), plus interest computed from August 1, 2012, in three installments over a two-year period for use by the EPA and the Commonwealth to complete the clean-up of the harbor. On May 26, 2015, AVX prepaid the third and final settlement installment of ¥14,894 million ($122.08 million), plus interest of ¥135 million ($1.11 million).

AVX and Kyocera recorded a charge with respect to this matter in the amount 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.

Other than the above matter, Kyocera is involved in various environmental matters and Kyocera currently has certain amount of reserves related to such environmental matters. The amount recorded for identified contingent liabilities is based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional legal and technical information that becomes available. The uncertainties about the status of laws, regulations, regulatory actions, technology and information related to individual matters make it difficult to develop an estimate of the reasonably possible aggregate environmental remediation exposure; therefore these costs could differ from our current estimates.

(5) Others

On April 25, 2013, AVX was named as a defendant in a patent infringement case filed in the United States District Court for the District of Delaware captioned Greatbatch, Inc. v AVX Corporation. This case alleged that certain AVX products infringe on one or more of nine Greatbatch patents. On January 26, 2016, the jury returned a verdict in favor of the plaintiff in the first phase of a segmented trial and found damages to Greatbatch in the amount of ¥4,350 million ($37.5 million). AVX is reviewing this initial verdict, consulting with its legal advisors on what action AVX may take in response, and continuing to litigate the rest of the case. As of December 31, 2016, AVX and Kyocera have the above mentioned amount for this case in other accrued liabilities in the consolidated balance sheets.

AVX and Kyocera have charged ¥4,575 million ($37.5 million) in selling, general and administrative expenses in the consolidated statements of income for the nine months and three months ended December 31, 2015.

Kyocera is also subject to various lawsuits and claims which arise in the ordinary course of business. Kyocera consults with legal counsel and assesses the likelihood of adverse outcome of these contingencies. Kyocera records liabilities for these contingencies when the likelihood of an adverse outcome is probable and the amount can be reasonably estimated. Based on the information available, management believes that damages, if any, resulting from these actions will not have a significant impact on Kyocera’s consolidated results of operations, financial condition and cash flows.

 

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11. EQUITY

Cash dividends per share are those declared with respect to the earnings for the respective periods for which dividends are proposed by the Board of Directors. Dividends are charged to retained earnings in the year in which they are declared.

Based on the resolution at the Ordinary General Shareholders’ Meeting held on June 24, 2016, Kyocera Corporation declared year-end cash dividends totaling ¥18,343 million, ¥50 per share of common stock effective June 27, 2016 to shareholders of record on March 31, 2016.

Based on the resolution for the payment of interim dividends at the meeting of the Board of Directors held on October 31, 2016, Kyocera Corporation declared cash dividends totaling ¥18,386 million, ¥50 per share of common stock effective December 5, 2016 to shareholders of record on September 30, 2016.

 

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Changes in Kyocera Corporation shareholders’ equity, noncontrolling interests and total equity for the nine months ended December 31, 2015 and 2016 are as follows:

 

     Nine months ended December 31, 2015  
     Kyocera Corporation
Shareholders’

Equity
    Noncontrolling
Interests
    Equity  
     (Yen in millions)  

Balance at beginning of period

   ¥ 2,215,319      ¥ 88,304      ¥ 2,303,623   

Comprehensive income

      

Net income

     59,504        3,524        63,028   

Other comprehensive income (loss)—net of taxes

      

Net unrealized gains (losses) on securities

     102,573        (123     102,450   

Net unrealized losses on derivative financial instruments

     (75     (11     (86

Pension adjustments

     (977     (30     (1,007

Foreign currency translation adjustments

     (4,866     317        (4,549
  

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

     96,655        153        96,808   
  

 

 

   

 

 

   

 

 

 

Total comprehensive income

     156,159        3,677        159,836   
  

 

 

   

 

 

   

 

 

 

Cash dividends paid to Kyocera Corporation’s shareholders

     (40,355            (40,355

Cash dividends paid to noncontrolling interests

            (2,511     (2,511

Making NIEC a consolidated subsidiary

            5,140        5,140   

Equity transactions with noncontrolling interests and others

     112        (990     (878
  

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ 2,331,235      ¥ 93,620      ¥ 2,424,855   
  

 

 

   

 

 

   

 

 

 
     Nine months ended December 31, 2016  
     Kyocera Corporation
Shareholders’

Equity
    Noncontrolling
Interests
    Equity  
     (Yen in millions)  

Balance at beginning of period

   ¥ 2,284,264      ¥ 89,498      ¥ 2,373,762   

Comprehensive income

      

Net income

     70,852        3,619        74,471   

Other comprehensive income (loss)—net of taxes

      

Net unrealized losses on securities

     (9,471     (58     (9,529

Net unrealized losses on derivative financial instruments

     (146     (61     (207

Pension adjustments

     (535     (62     (597

Foreign currency translation adjustments

     1,743        913        2,656   
  

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

     (8,409     732        (7,677
  

 

 

   

 

 

   

 

 

 

Total comprehensive income

     62,443        4,351        66,794   
  

 

 

   

 

 

   

 

 

 

Cash dividends paid to Kyocera Corporation’s shareholders

     (36,729            (36,729

Cash dividends paid to noncontrolling interests

            (2,186     (2,186

Equity transactions with noncontrolling interests and others

     5,083        (6,166     (1,083
  

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ 2,315,061      ¥ 85,497      ¥ 2,400,558   
  

 

 

   

 

 

   

 

 

 

 

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12. ACCUMULATED OTHER COMPREHENSIVE INCOME

Changes in accumulated other comprehensive income for the nine months ended December 31, 2015 and 2016 are as follows:

 

     Nine months ended December 31, 2015  
     Net
Unrealized
Gains on
Securities
    Net
Unrealized
Losses
on Derivative
Financial
Instruments
    Pension
Adjustments
    Foreign
Currency
Translation
Adjustments
    Total
Accumulated
Other
Comprehensive
Income
 
     (Yen in millions)  

Balance at beginning of period

   ¥ 467,841      ¥ (372   ¥ (28,452   ¥ 30,656      ¥ 469,673   

Other comprehensive income (loss), net

          

Other comprehensive income (loss) before reclassifications

     102,924        (107     (412     (4,853     97,552   

Amounts reclassified from accumulated other comprehensive income

     (351     32        (565     (13     (897
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net

     102,573        (75     (977     (4,866     96,655   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity transactions with noncontrolling interests

            0        (17     17        0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ 570,414      ¥ (447   ¥ (29,446   ¥ 25,807      ¥ 566,328   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Nine months ended December 31, 2016  
     Net
Unrealized
Gains on
Securities
    Net
Unrealized
Losses
on Derivative
Financial
Instruments
    Pension
Adjustments
    Foreign
Currency
Translation
Adjustments
    Total
Accumulated
Other
Comprehensive
Income
 
     (Yen in millions)  

Balance at beginning of period

   ¥ 517,190      ¥ (488   ¥ (42,648   ¥ (4,251   ¥ 469,803   

Other comprehensive income (loss), net

          

Other comprehensive income (loss) before reclassifications

     (9,439     (160     (225     1,955        (7,869

Amounts reclassified from accumulated other comprehensive income

     (32     14        (310     (212     (540
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net

     (9,471     (146     (535     1,743        (8,409
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity transactions with noncontrolling interests

     (1     0        5        (76     (72
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   ¥ 507,718      ¥ (634   ¥ (43,178   ¥ (2,584   ¥ 461,322   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Tax effect allocated to each components of other comprehensive income (loss) for the nine months ended December 31, 2015 and 2016 are as follows:

 

     Before-tax
amount
    Tax (expense)
or  benefit
    Net-of-tax
amount
 
     (Yen in millions)  

For the nine months ended December 31, 2015:

      

Net unrealized gains on securities

   ¥ 150,636      ¥ (48,186   ¥ 102,450   

Net unrealized losses on derivative financial instruments

     (119     33        (86

Pension adjustments

     (1,523     516        (1,007

Foreign currency translation adjustments

     (4,549            (4,549
  

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

   ¥ 144,445      ¥ (47,637   ¥ 96,808   
  

 

 

   

 

 

   

 

 

 

For the nine months ended December 31, 2016:

      

Net unrealized losses on securities

   ¥ (13,477   ¥ 3,948      ¥ (9,529

Net unrealized losses on derivative financial instruments

     (253     46        (207

Pension adjustments

     (956     359        (597

Foreign currency translation adjustments

         2,656               2,656   
  

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

   ¥ (12,030   ¥ 4,353      ¥ (7,677
  

 

 

   

 

 

   

 

 

 

Tax effect allocated to each components of other comprehensive income (loss) for the three months ended December 31, 2015 and 2016 are as follows:

 

   

     Before-tax
amount
    Tax (expense)
or benefit
    Net-of-tax
amount
 
     (Yen in millions)  

For the three months ended December 31, 2015:

      

Net unrealized gains on securities

   ¥ 171,349      ¥ (54,816   ¥ 116,533   

Net unrealized losses on derivative financial instruments

     (79     24        (55

Pension adjustments

     (416     223        (193

Foreign currency translation adjustments

     (77            (77
  

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

   ¥ 170,777      ¥ (54,569   ¥ 116,208   
  

 

 

   

 

 

   

 

 

 

For the three months ended December 31, 2016:

      

Net unrealized losses on securities

   ¥ (41,692   ¥   12,503      ¥ (29,189

Net unrealized losses on derivative financial instruments

     (278     43        (235

Pension adjustments

     (2,110     118        (1,992

Foreign currency translation adjustments

     65,732               65,732   
  

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

   ¥ 21,652      ¥ 12,664      ¥ 34,316   
  

 

 

   

 

 

   

 

 

 

 

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13. SUPPLEMENTAL EXPENSE INFORMATION

Supplemental expense information for the nine months ended December 31, 2015 and 2016 is as follows:

 

     Nine months ended December 31,  
                 2015                               2016               
     (Yen in millions)  

Research and development expenses

   ¥ 44,078       ¥ 41,871   

Advertising expenses

     4,645         3,587   

Shipping and handling cost included in selling, general and administrative expenses

     17,576         16,539   

Gains of ¥12,268 million on sales of property, plant and equipment, net, which was mainly comprised of a gain on sales of assets under “Semiconductor Parts Group” for the segment reporting, was deducted from the selling, general and administrative expenses during the nine months ended December 31, 2015.

Supplemental expense information for the three months ended December 31, 2015 and 2016 is as follows:

 

     Three months ended December 31,  
                 2015                               2016               
     (Yen in millions)  

Research and development expenses

   ¥ 14,976       ¥ 12,920   

Advertising expenses

     1,952         1,169   

Shipping and handling cost included in selling, general and administrative expenses

     5,962         5,982   

 

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14. SEGMENT REPORTING

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.

Kyocera categorizes its operations into seven reporting segments: (1) Fine Ceramic Parts Group, (2) Semiconductor Parts Group, (3) Applied Ceramic Products Group, (4) Electronic Device Group, (5) Telecommunications Equipment Group, (6) Information Equipment Group, and (7) Others.

Main products or businesses of each reporting segment are as follows:

(1) Fine Ceramic Parts Group

Components for Semiconductor Processing Equipment and Flat Panel Display Manufacturing Equipment

Information and Telecommunication Components

General Industrial Machinery Components

Sapphire Substrates

Automotive Components

(2) Semiconductor Parts Group

Ceramic Packages

Organic Multilayer Substrates

Multilayer Printed Wiring Boards

(3) Applied Ceramic Products Group

Solar Power Generating Systems, Battery Energy Storage Systems

Cutting Tools, Micro Drills

Medical and Dental Implants

Jewelry and Applied Ceramic Related Products

(4) Electronic Device Group

Capacitors, SAW Devices

Connectors, Crystal Components

Liquid Crystal Displays

Printing Devices

Power Semiconductor Products (Discrete Products, Power Modules)

(5) Telecommunications Equipment Group

Smartphones, Mobile Phones

PHS related Products

M2M Modules

(6) Information Equipment Group

Monochrome and Color Printers and Multifunctional Products

Wide Format Systems

Document Solutions

Application Software and Supplies

(7) Others

Information Systems and Telecommunication Services

Engineering Business

Management Consulting Business

Realty Development Business

 

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Table of Contents

Former Kyocera Chemical Group, included in “Others” until the year ended March 31, 2016, has been reclassified and included in the “Semiconductor Parts Group” commencing from the year ending March 31, 2017. Due to this change, results for the nine months ended December 31, 2015 and the three months ended December 31, 2015 have been reclassified to conform to the current presentation.

Inter-segment sales, operating revenue and transfers are made with reference to prevailing market prices. Transactions between reportable segments are immaterial and not shown separately.

Operating profit for each reporting segment represents net sales, less related costs and operating expenses, excluding corporate gains and equity in earnings of affiliates and an unconsolidated subsidiary, income taxes and net income attributable to noncontrolling interests.

 

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Table of Contents

Information by reporting segments for the nine months ended December 31, 2015 and 2016 is summarized as follows:

Reporting Segments

 

     Nine months ended December 31,  
     2015     2016  
     (Yen in millions)  

Net sales:

    

Fine Ceramic Parts Group

   ¥ 70,342      ¥ 71,027   

Semiconductor Parts Group

     180,125        181,309   

Applied Ceramic Products Group

     177,763        159,166   

Electronic Device Group

     219,780        209,799   

Telecommunications Equipment Group

     124,178        99,018   

Information Equipment Group

     245,375        227,750   

Others

     106,855        96,446   

Adjustments and eliminations

     (31,388     (29,887
  

 

 

   

 

 

 

Net sales

   ¥ 1,093,030      ¥ 1,014,628   
  

 

 

   

 

 

 

Income before income taxes:

                                                                

Fine Ceramic Parts Group

   ¥ 11,860      ¥ 9,678   

Semiconductor Parts Group

     37,435        19,389   

Applied Ceramic Products Group

     12,498        9,258   

Electronic Device Group

     3,784        21,376   

Telecommunications Equipment Group

     (3,945     (4,246

Information Equipment Group

     17,484        20,041   

Others

     (1,988     (2,708
  

 

 

   

 

 

 

Total operating profit

     77,128        72,788   

Corporate gains and equity in earnings (losses) of affiliates and an unconsolidated subsidiary

     20,250        26,995   

Adjustments and eliminations

     12        (1,077
  

 

 

   

 

 

 

Income before income taxes

   ¥ 97,390      ¥ 98,706   
  

 

 

   

 

 

 

Depreciation and amortization:

    

Fine Ceramic Parts Group

   ¥ 3,759      ¥ 3,938   

Semiconductor Parts Group

     11,903        11,936   

Applied Ceramic Products Group

     8,276        8,399   

Electronic Device Group

     12,528        12,529   

Telecommunications Equipment Group

     3,282        3,074   

Information Equipment Group

     10,492        10,635   

Others

     4,011        3,832   

Corporate

     1,504        1,345   
  

 

 

   

 

 

 

Total

   ¥ 55,755      ¥ 55,688   
  

 

 

   

 

 

 

Capital expenditures:

    

Fine Ceramic Parts Group

   ¥ 5,801      ¥ 3,431   

Semiconductor Parts Group

     9,998        13,703   

Applied Ceramic Products Group

     7,371        6,678   

Electronic Device Group

     14,553        16,106   

Telecommunications Equipment Group

     1,991        918   

Information Equipment Group

     6,667        4,854   

Others

     1,936        1,832   

Corporate

     2,574        2,116   
  

 

 

   

 

 

 

Total

   ¥ 50,891      ¥ 49,638   
  

 

 

   

 

 

 

 

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Table of Contents

Information by reporting segments for the three months ended December 31, 2015 and 2016 is summarized as follows:

Reporting Segments

 

     Three months ended December 31,  
     2015     2016  
     (Yen in millions)  

Net sales:

    

Fine Ceramic Parts Group

   ¥ 23,397      ¥ 24,268   

Semiconductor Parts Group

     58,790        63,993   

Applied Ceramic Products Group

     64,127        61,260   

Electronic Device Group

     73,569        74,798   

Telecommunications Equipment Group

     45,481        34,186   

Information Equipment Group

     82,864        80,315   

Others

     32,720        32,338   

Adjustments and eliminations

     (10,495     (9,773
  

 

 

   

 

 

 

Net sales

   ¥ 370,453      ¥ 361,385   
  

 

 

   

 

 

 

Income before income taxes:

                                                                

Fine Ceramic Parts Group

   ¥ 3,593      ¥ 3,546   

Semiconductor Parts Group

     7,833        9,423   

Applied Ceramic Products Group

     4,475        3,600   

Electronic Device Group

     (14,627     10,877   

Telecommunications Equipment Group

     1,676        2,914   

Information Equipment Group

     5,445        7,174   

Others

     (274     200   
  

 

 

   

 

 

 

Total operating profit

     8,121        37,734   

Corporate gains and equity in earnings (losses) of affiliates and an unconsolidated subsidiary

     11,348        12,711   

Adjustments and eliminations

     (79     (317
  

 

 

   

 

 

 

Income before income taxes

   ¥ 19,390      ¥ 50,128   
  

 

 

   

 

 

 

Depreciation and amortization:

    

Fine Ceramic Parts Group

   ¥ 1,434      ¥ 1,420   

Semiconductor Parts Group

     4,214        4,508   

Applied Ceramic Products Group

     2,979        3,014   

Electronic Device Group

     4,547        4,755   

Telecommunications Equipment Group

     1,221        959   

Information Equipment Group

     3,855        3,684   

Others

     1,372        1,362   

Corporate

     510        474   
  

 

 

   

 

 

 

Total

   ¥ 20,132      ¥ 20,176   
  

 

 

   

 

 

 

Capital expenditures:

    

Fine Ceramic Parts Group

   ¥ 1,651      ¥ 1,127   

Semiconductor Parts Group

     3,172        3,149   

Applied Ceramic Products Group

     3,476        2,192   

Electronic Device Group

     4,681        4,666   

Telecommunications Equipment Group

     775        318   

Information Equipment Group

     1,664        1,445   

Others

     373        409   

Corporate

     484        290   
  

 

 

   

 

 

 

Total

   ¥ 16,276      ¥ 13,596   
  

 

 

   

 

 

 

 

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Table of Contents

Geographic segments (Net sales by region)

 

     Nine months ended December 31,  
     2015     2016  
     (Yen in millions)  

Net sales:

                                                              

Japan

   ¥ 432,440     ¥ 417,735  

Asia

     237,453       223,516  

United States of America

     191,704       169,137   

Europe

     185,550       163,275  

Others

     45,883        40,965  
  

 

 

   

 

 

 

Net sales

   ¥ 1,093,030     ¥ 1,014,628  
  

 

 

   

 

 

 
     Three months ended December 31,  
     2015     2016  
     (Yen in millions)  

Net sales:

                                                              

Japan

   ¥ 151,737     ¥ 148,841  

Asia

     77,042       81,978  

United States of America

     64,222        59,240   

Europe

     62,689       56,937  

Others

     14,763       14,389  
  

 

 

   

 

 

 

Net sales

   ¥ 370,453     ¥ 361,385  
  

 

 

   

 

 

 

There are no individually material countries with respect to revenue from external customers in Asia, Europe and Others.

 

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Table of Contents

Geographic Segments (Net sales and Income before income taxes by Geographic area)

 

     Nine months ended December 31,  
     2015     2016  
     (Yen in millions)  

Net sales:

                                                                

Japan

   ¥ 460,074      ¥ 437,795   

Intra-group sales and transfer between geographic areas

     393,052        350,308   
  

 

 

   

 

 

 
     853,126        788,103   
  

 

 

   

 

 

 

Asia

     185,781        182,697   

Intra-group sales and transfer between geographic areas

     220,556        201,979   
  

 

 

   

 

 

 
     406,337        384,676   
  

 

 

   

 

 

 

United States of America

     233,841        201,047   

Intra-group sales and transfer between geographic areas

     29,631        40,101   
  

 

 

   

 

 

 
     263,472        241,148   
  

 

 

   

 

 

 

Europe

     191,139        172,512   

Intra-group sales and transfer between geographic areas

     23,899        15,137   
  

 

 

   

 

 

 
     215,038        187,649   
  

 

 

   

 

 

 

Others

     22,195        20,577   

Intra-group sales and transfer between geographic areas

     12,502        11,232   
  

 

 

   

 

 

 
     34,697        31,809   
  

 

 

   

 

 

 

Adjustments and eliminations

     (679,640     (618,757
  

 

 

   

 

 

 

Net sales

   ¥ 1,093,030      ¥ 1,014,628   
  

 

 

   

 

 

 

Income before income taxes:

    

Japan

   ¥ 41,723      ¥ 39,944   

Asia

     17,597        19,077   

United States of America

     9,492        11,004   

Europe

     8,567        7,746   

Others

     249        (705
  

 

 

   

 

 

 
     77,628        77,066   

Corporate gains and Equity in earnings (losses) of affiliates and an unconsolidated  subsidiary

     20,250        26,995   

Adjustments and eliminations

     (488     (5,355
  

 

 

   

 

 

 

Income before income taxes

   ¥ 97,390      ¥ 98,706   
  

 

 

   

 

 

 

 

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     Three months ended December 31,  
     2015     2016  
     (Yen in millions)  

Net sales:

                                                                

Japan

   ¥ 162,117      ¥ 155,921   

Intra-group sales and transfer between geographic areas

     136,384        128,328   
  

 

 

   

 

 

 
     298,501        284,249   
  

 

 

   

 

 

 

Asia

     61,419        67,117   

Intra-group sales and transfer between geographic areas

     82,622        78,304   
  

 

 

   

 

 

 
     144,041        145,421   
  

 

 

   

 

 

 

United States of America

     74,912        70,220   

Intra-group sales and transfer between geographic areas

     12,477        14,591   
  

 

 

   

 

 

 
     87,389        84,811   
  

 

 

   

 

 

 

Europe

     64,545        61,099   

Intra-group sales and transfer between geographic areas

     5,480        5,412   
  

 

 

   

 

 

 
     70,025        66,511   
  

 

 

   

 

 

 

Others

     7,460        7,028   

Intra-group sales and transfer between geographic areas

     4,096        3,795   
  

 

 

   

 

 

 
     11,556        10,823   
  

 

 

   

 

 

 

Adjustments and eliminations

     (241,059     (230,430
  

 

 

   

 

 

 

Net sales

   ¥ 370,453      ¥ 361,385   
  

 

 

   

 

 

 

Income before income taxes:

    

Japan

   ¥ 1,230      ¥ 25,827   

Asia

     6,314        9,317   

United States of America

     287        4,708   

Europe

     1,558        2,804   

Others

     164        (302
  

 

 

   

 

 

 
     9,553        42,354   

Corporate gains and Equity in earnings (losses) of affiliates and an unconsolidated  subsidiary

     11,348        12,711   

Adjustments and eliminations

     (1,511     (4,937
  

 

 

   

 

 

 

Income before income taxes

   ¥ 19,390      ¥ 50,128   
  

 

 

   

 

 

 

 

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15. PER SHARE INFORMATION

A reconciliation of the numerators and the denominators of basic and diluted earnings per share computations are as follows:

 

     Nine months ended December 31,  
     2015     2016  
    

(Yen in millions and shares in thousands,

except per share amounts)

 

Net income attributable to shareholders of Kyocera Corporation

   ¥ 59,504      ¥ 70,852   

Basic earnings per share:

                                                                

Net income attributable to shareholders of Kyocera Corporation

     162.20        192.88   

Diluted earnings per share:

    

Net income attributable to shareholders of Kyocera Corporation

     162.20        192.88   
  

 

 

   

 

 

 

Basic weighted average number of shares outstanding

     366,860        367,334   

Diluted weighted average number of shares outstanding

     366,860        367,334   
  

 

 

   

 

 

 
     Three months ended December 31,  
     2015     2016  
    

(Yen in millions and shares in thousands,

except per share amounts)

 

Net income attributable to shareholders of Kyocera Corporation

   ¥ 8,712      ¥ 34,699   

Basic earnings per share:

    

Net income attributable to shareholders of Kyocera Corporation

     23.75        94.36   

Diluted earnings per share:

    

Net income attributable to shareholders of Kyocera Corporation

     23.75        94.36   
  

 

 

   

 

 

 

Basic weighted average number of shares outstanding

     366,859        367,715   

Diluted weighted average number of shares outstanding

     366,859        367,715   
  

 

 

   

 

 

 

 

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Reference Information (Unaudited)

1. Production (Sales price)

 

     Nine months ended December 31,      Increase
(Decrease)
 
     2015      2016     
     Amount      % to
the total
     Amount      % to
the total
     %  
     (Yen in millions)  

Fine Ceramic Parts Group

   ¥ 71,725         6.3       ¥ 71,232         6.9         (0.7

Semiconductor Parts Group

     184,988         16.2         183,664         17.7         (0.7

Applied Ceramic Products Group

     199,252         17.5         164,321         15.9         (17.5

Electronic Device Group

     219,247         19.3   <