SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 20-F‘

È

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGEACT OF 1934OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2008

OR
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934
OR
‘ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934
Date of event requiring this shell company report
For the transition period fromtoCommission file number: 1-7952

Kyocera Kabushiki Kaisha(Exact name of Registrant as specified in its charter)

Kyocera Corporation(Translation of Registrant’s name into English)

Japan

6, Takeda, Tobadono-cho, Fushimi-ku,
Kyoto 612-8501, Japan(Jurisdiction of incorporation or organization)(Address of principal executive offices)

Shoich Aoki, +81-75-604-3632, shoichi.aoki.xm@kyocera.jp, +81-75-604-3557,
6, Takeda, Tobadono-cho, Fushimi-ku, Kyoto 612-8501, Japan(Name, Telephone, E-mail and/Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of Each Class

Name of Each Exchange On Which Registered

Common Stock (Shares)*
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual
report.
As of March 31, 2008, 189,454,171 shares of common stock were outstanding, comprised of 181,244,116 Shares and 8,210,055 American Depositary Shares(equivalent to 8,210,055 Shares).
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘
If this report is an annual transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. Yes ‘ No È
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes È No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer È
Accelerated filer ‘
Non-accelerated filer ‘
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP È International Financial Reporting Standards as issued by the International Accounting Standards Board ‘ Other ‘
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow. Item 17 ‘ Item 18 ‘
If this is an annual report, indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct). Yes ‘ No È
* Not for trading, but only in connection with the registration of the American Depositary Shares, each representing one share of Common Stock.

TABLE OF CONTENTS
Page

Cautionary Statement Regarding Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .

4PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1. Identity of Directors, Senior Management and Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2. Offer Statistics and Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3. Key Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Capitalization and Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Reasons for the Offer and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Information on Kyocera Corporation and its Consolidated Subsidiaries . . . . . . . . . . . . . . . . .
A. History and Development of Kyocera Corporation and its Consolidated Subsidiaries . . .
B. Business Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Property, Plants and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4A. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 5. Operating and Financial Review and Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Research and Development Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Trend Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. Off-Balance Sheet Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F. Tabular Disclosure of Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6. Directors, Senior Management and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Directors and Senior Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Board Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. Share Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Major Shareholders and Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Major Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Interests of Experts and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Consolidated Statements and Other Financial Information . . . . . . . . . . . . . . . . . . . . . . . . .
B. Significant Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9. The Offer and Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Offering and Listing Details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F. Expenses of the Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 10. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Memorandum and Articles of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Exchange Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6
6
6
6
6
7
7
7
12
12
14
24
27
29
29
29
53
57
59
59
60
60
60
65
65
66
66
70
70
71
71
71
71
71
72
72
73
73
73
73
73
73
73
73
83
83
83

2

Page

F. Dividends and Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Statement by Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
H. Documents on Display . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I. Subsidiary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Description of Securities Other Than Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

87
88
88
88
88
90

PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13. Defaults, Dividend Arrearages and Delinquencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 14. Material Modification to Rights of Security Holders and Use of Proceeds . . . . . . . . . . . . . .
Item 15. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16A. Audit Committee Financial Expert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16B. Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16C. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16D. Exemption from the Listing Standards for Audit Committees . . . . . . . . . . . . . . . . . . . . . . . .
Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers . . . . . . . . . . . . . . . . . .

91
91
91
91
91
92
92
93
95

PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 17. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 18. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 19. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

96
96
96
97

3

Cautionary Statement Regarding Forward-Looking Statements
This annual report on Form 20-F contains “forward-looking statements” within the meaning of Section 21E of
the U.S. Securities and Exchange Act of 1934. To the extent that statements in this annual report on Form 20-F
do not relate strictly to historical or current facts, they may constitute forward-looking statements. These
forward-looking statements are based upon our current assumptions and beliefs in the light of the information
currently available to us, but involve known and unknown risks, uncertainties and other factors. Such risks,
uncertainties and other factors may cause our actual actions or results to differ materially from those discussed in
or implied by the forward-looking statements. We undertake no obligation to publicly update any forwardlooking statement after the date of this annual report on Form 20-F, but investors are advised to consult any
further disclosures by us in our subsequent filings pursuant to the U.S. Securities Exchange Act of 1934.
Important risks, uncertainties and other factors that may cause our actual results to differ materially from our
expectations are generally set forth in Item 3.D “Risk Factors” of this annual report on Form 20-F and include,
without limitation:•

general conditions in the Japanese or global economy;•

unexpected changes in economic, political and legal conditions in China;•

intense competitive pressures to which our products are subject;•

manufacturing delays or defects resulting from outsourcing or internal manufacturing processes;•

various export risks which may affect the significant percentage of our revenues derived from overseas
sales;•

the effect of foreign exchange fluctuations on our results of operations;•industry demand for skilled employees;•

insufficient protection of our intellectual property;•

expenses associated with licenses we require to continue to manufacture and sell products;•

our research and development not producing desired results;•

our market or supply chains being affected by terrorism, plague, wars or similar events;•

earthquakes and other natural disasters affecting our headquarters and major facilities;•

impairment losses on investments in equity securities;•

our ability to launch innovative products and otherwise meet the advancing technical requirements ofour customers, particularly in the highly competitive markets for ceramics, semiconductors andelectronic components;and other risks discussed under Item 3.D “Risk Factors” and elsewhere in this annual report on Form 20-F.
Presentation of Certain Information
As used in this annual report on Form 20-F, references to “Kyocera,” “we,” “our” and “us” are to Kyocera
Corporation and, except as the context otherwise requires, its consolidated subsidiaries.
Also, as used in this annual report on Form 20-F:•“U.S. dollar” or “$” means the lawful currency of the United States of America, “yen” or “¥” means
the lawful currency of Japan and “Euro” means the lawful currency of the European Union.

•“U.S. GAAP” means accounting principles generally accepted in the United States of America, and“Japanese GAAP” means accounting principles generally accepted in Japan.
4

•“ADS” means an America Depositary Share, each representing one share of Kyocera’s common stock,and “ADR” means an American Depositary Receipt evidencing ADSs.

•“fiscal 2008” refers to Kyocera’s fiscal year ended March 31, 2008, and other fiscal years are referred
to in a corresponding manner.

•

Unless otherwise indicated, we have translated the yen amounts for the year ended March 31, 2008, as
of March 31, 2008 and thereafter presented in this annual report on Form 20-F into U.S. dollars solely
for your convenience. The rate we used for such translations was ¥100.00 = $1.00, which was the noonbuying rate in New York City for cable transfers in foreign currencies as certified for customs purposesby the Federal Reserve Bank of New York on March 31, 2008, rounded to the nearest yen. Thesetranslations do not imply that the yen amounts actually represent, or have been or could be converted
into, equivalent amounts in U.S. dollars.

5

PART I
Item 1.

Identity of Directors, Senior Management and Advisers

Not Applicable.
Item 2.

Offer Statistics and Expected Timetable

Not Applicable.
Item 3.

Key Information

A. Selected Financial Data
The selected consolidated financial data set forth below for each of the five fiscal years ended March 31 havebeen derived from Kyocera’s consolidated financial statements that are prepared in accordance with accounting
principles generally accepted in the United States of America.
You should read the U.S. GAAP selected consolidated financial data set forth below together with Item 5“Operating and Financial Review and Prospects” and Kyocera’s Consolidated Financial Statements included inthis annual report on Form 20-F.
2004
2005
2006
2007
2008
2008
(Yen in millions, U.S. dollars and shares in thousands, except per share amounts)

For the years ended March 31:
Net sales . . . . . . . . . . . . . . . . . . . . .
Profit from operations . . . . . . . . . . .
Income from continuing
operations . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . .
Earnings per share:
Income from continuing operations:
Basic . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . .
Net income:Basic . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . .
Weighted average number of shares
outstanding:
Basic . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . .

¥1,132,696
104,810¥1,173,660
97,660¥1,173,544
99,695¥1,283,897
135,102¥1,290,436
152,420$12,904,360
1,524,200

63,35768,08642,65745,90866,08869,696

101,329
106,504

107,244
107,244

1,072,440
1,072,440¥

339.46339.45¥227.52227.47¥352.44352.21¥538.52537.35¥566.58565.80364.79364.78244.86244.81371.68371.43566.03564.79566.58565.80186,643
186,649

187,489
187,528

187,514
187,640

188,160
188,573

189,283
189,544

Cash dividends declared per share:
Per share of common stock . . . . . . .
Per share of common stock* . . . . . .

¥$At March 31:
Total assets . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . .
Common stock . . . . . . . . . . . . . . . .
Stockholders’ equity . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . .

¥1,794,758
70,608
115,7031,150,453¥ 60,745¥ 54,901

60
0.55

¥
$

80
0.74

¥1,745,519
33,557
115,703
1,174,851¥ 58,699¥ 63,160

¥
$

100
0.84

¥1,931,522
33,360115,7031,289,077¥ 62,942¥ 88,860¥$¥2,130,464
7,283
115,7031,514,560¥ 70,155¥ 69,896* Translated into U.S. dollars based on the exchange rates at each payment date.
6

110
0.91

¥
$

$

5.67
5.66
5.67
5.66

120
1.10

¥1,976,746
8,298
115,703
1,451,165¥ 75,630¥ 85,101$19,767,460
82,9801,157,030
14,511,650$ 756,300$ 851,010

Note: Kyocera sold all of its shares in Kyocera Leasing Co., Ltd., a subsidiary engaged in financing services; as aresult, business results and profit on sale for Kyocera Leasing Co., Ltd. for fiscal 2007 have been recorded asincome from discontinued operations in conformity with Statement of Financial Accounting Standards No.144,“Accounting for the impairment or disposal of Long-Lived Assets.” Figures for fiscal 2004, 2005 and 2006 havebeen retrospectively reclassified for comparative purposes.
The following table shows the exchange rates for Japanese yen per $1.00 based upon the noon buying rate in
New York City for cash transfers in foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York:For the years ended March 31,

High

Low

Average

Period-end

2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

120.55114.30120.93121.81124.09104.18102.26104.41110.0796.88

112.75107.49113.15116.92114.31104.18107.22117.48117.5699.85

114.45109.70108.15103.99104.56105.52109.68105.42104.1996.88
100.87103.01112.45107.82107.03100.76
102.68104.36111.71106.74104.1999.85
104.53105.46

For most recent 6 months

December 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
May 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The noon buying rate for Japanese yen on June 27, 2008 was $1.00 = ¥106.28
B. Capitalization and Indebtedness
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
D. Risk Factors
You should carefully read the risks described below before making an investment decision.
(1) The Japanese or global economy may significantly reduce demand for Kyocera’s products
In fiscal 2009, fears of a business slowdown are arising in the Japanese economy as a result of slumping demands
in Japan such as housing investment, and rising energy and raw material prices. Furthermore, heightened fears ofglobal economic deceleration are leading to growing concerns of a subsequent slowdown in demand for
consumer equipment. As a result, the outlook for components demand has become increasingly uncertain.
Kyocera is substantially dependent for its growth on parallel growth in the markets for semiconductors, mobile
phone handsets and personal computer (PC) related equipment. These markets are adversely affected by demandin the electronics industry, which includes digital consumer equipment, and by sluggish consumer spending
brought by economic recession.

7

(2) Unexpected changes in economic, political and legal conditions in China, in which Kyocera is becoming
increasingly active, may have an adverse effect on Kyocera’s business
Based on its expectation that the Chinese markets for telecommunication information related products, including
electronic components, mobile phone handsets, PCs and PC peripherals will continue to grow continuously,
Kyocera has been making substantial investments in new production and marketing facilities in China. Kyocera
now has principal production facilities located in Shanghai, Dongguan, and Tianjin, and plans to make additional
investments to increase production capacity at these sites and to concurrently increase its marketing anddistribution capabilities in China. Although the Chinese economy has been growing at a rapid rate in recent
years, and the central government has been increasingly utilizing market forces as opposed to central economicplanning, growth has been uneven among various regions of the country and among various sectors of theeconomy. Unexpected changes in the central government’s economic policy or in the business climate, including
those due to changes in institutional systems in various parts of the country, may adversely affect its
telecommunication information related markets in which Kyocera seeks to manufacture and sell its products. In
addition, China is in the process of developing a comprehensive system of laws and regulations dealing witheconomic matters, such as currency controls, and foreign corporations currently active in the country, such as
Kyocera, face risks and uncertainties including enforcement of contractual terms, administrative intrusion by
local governments and difficulty with expatriation of profits.
(3) Kyocera sells a diverse variety of products, and in each of its businesses Kyocera is subject to intensecompetitive pressures, including in terms of price, technological change, product development, quality andspeed of delivery, and these pressures are likely to increase in the near term
Kyocera sells a wide variety of products and therefore faces a broad range of competitors from large international
companies to relatively small, rapidly growing and highly specialized companies. Kyocera has a variety ofbusinesses in different industries while many of its competitors specialize in one or more of these business areas.
As a result, Kyocera may not fund or invest in certain of its businesses to the same degree as its competitors, orthese competitors may have greater financial, technical, and marketing resources available to them than the
portion of its business against which they compete. While some of the factors that drive competition vary by
product area, price and speed of delivery are factors in all areas of Kyocera’s business. Price pressure has been
intense, and thus Kyocera predicts that its production prices will continue to be lower over fiscal 2009 partly
depending on the demand and competition situation. In production businesses in which Kyocera develops,
produces and distributes specialized parts for its customers’ products, its competitive position depends
significantly on being involved early in the process of creating a new product that fits its customers’ needs foreach business. To maintain these competitive advantages, it is critical to maintaining close ties with customers sothat Kyocera can ensure that it is able to meet required specifications and be the first supplier to create anddeliver the product. Kyocera’s gross margins may be reduced if the environment changes in the way that Kyocera
cannot maintain these important relationships with customers or market share or if it is forced in the future tofurther reduce prices in response to the actions of its competitors.
(4) Small manufacturing delays or defects resulting from outsourcing or internal manufacturing processes
can adversely affect Kyocera’s production yields and operating results
Kyocera ordinarily outsources the fabrication of certain components and sub-assemblies of its products, often tosole source suppliers or a limited number of suppliers. Kyocera has experienced occasional delays in obtaining
components and sub-assemblies because the manufacturing process for these items is very complex and requires
a long lead-time. Kyocera’s revenues derived from sales of these products will be materially and adversely
affected if Kyocera is unable to obtain a high quality, reliable and timely supply of these components andsub-assemblies. In addition, any reduction in the precision of these components will result in sub-standard end
products and will cause delays and interruptions in Kyocera’s production cycle.
Within Kyocera’s manufacturing facilities, minute impurities, difficulties in the production process or otherfactors can cause a substantial percentage of its products to be rejected or non-functional. These factors can result8

in lower than expected production yields, which delay product shipments and may materially and adversely
affect Kyocera’s operating results. Because the majority of Kyocera’s costs of manufacture are relatively fixed,
production yield and capacity utilization rate are critical to its financial results.
(5) Since a significant percentage of Kyocera’s revenues has been derived from foreign sales in recent years,
various export risks may disproportionately affect its revenues
Kyocera’s sales to customers located outside Japan accounted for 60.6% of its total revenues in fiscal 2008.
Kyocera believes that overseas sales will continue to account for a significant percentage of its revenues.
Therefore, the following export risks may disproportionately affect Kyocera’s revenues:•

a strong yen may make Kyocera’s products less attractive to foreign purchasers;•

political and economic instability or significant economic downturns may inhibit export of Kyocera’s
products;•

Kyocera may experience difficulties in the timeliness of collection of accounts receivable due fromforeign customers and be forced to write off those receivables;•

tariffs and other barriers may make Kyocera’s products less cost competitive;•

shipping and handling costs of Kyocera’s products may increase;•

Kyocera may have difficulty in staffing and managing its international operations; and•the laws of certain foreign countries may not adequately protect Kyocera’s trade secrets and intellectual
property.

(6) Currency exchange rate fluctuations could adversely affect Kyocera’s financial results
Kyocera conducts business in countries outside of Japan, which exposes it to fluctuations in foreign currency
exchange rates. Kyocera may enter into short-term forward exchange transaction to hedge this risk according to
its outlook on future exchange rates; nevertheless, fluctuations in foreign currency exchange rates could have an
adverse effect on its business. Fluctuations in foreign currency exchange rates may affect its results of operations
and the value of its foreign assets, which in turn may adversely affect reported earnings and the comparability of
period-to-period results of operations. Changes in currency exchange rates may affect the relative prices at which
Kyocera and foreign competitors sell products in the same market. In addition, changes in the value of therelevant currencies may affect the cost of imported items required in its operations.
(7) Industry demand for skilled employees, particularly engineering and technical personnel, exceeds thenumber of personnel available
Kyocera’s future success depends, in part, on its ability to attract and retain certain key personnel, including
engineering, operational and management personnel. Kyocera anticipates that it will need to hire additional
skilled personnel in all areas of its business. The competition for attracting and retaining these employees,
especially engineers in key fields, including software design in telecommunications, is intense. Because of thisintense competition for these skilled employees, Kyocera may be unable to retain its existing personnel or attract
additional qualified employees in the future.
(8) Insufficient protection of Kyocera’s trade secrets and patents could have a significant adverse impact on its
competitive position
Kyocera’s success and competitive position depend on protecting its trade secrets and other intellectual property.
Kyocera’s strategy is to rely both on trade secrets and patents to protect its manufacturing and sales processes
and products, but reliance on trade secrets is only an effective business practice insofar as trade secrets remain
undisclosed and a proprietary product or process is not reverse engineered or independently developed. Kyocera
9takes certain measures to protect its trade secrets, including executing nondisclosure agreements with certain of
its employees, joint venture partners, customers and suppliers. If parties breach these agreements or the measures
Kyocera takes are not properly implemented, Kyocera may not have an adequate remedy. Disclosure of its trade
secrets or reverse engineering of its proprietary products, processes or devices could materially and adversely
affect its business, financial condition and results of operations.
Kyocera is actively pursuing patents on some of its recent inventions, but these patents may not be issued. Even
if these patents are issued, they may be challenged, invalidated or circumvented. In addition, the laws of certain
other countries may not protect Kyocera’s intellectual property to the same extent as Japanese laws.
(9) Kyocera may require licenses to continue to manufacture and sell certain of its products, the expense ofwhich may adversely affect its results of operations
From time to time Kyocera has received, and may receive in the future, notice of claims of infringement of otherparties’ proprietary rights and licensing offers to commercialize third party patent rights. Although Kyocera is
not currently involved in any litigations relating to its intellectual property except in the ordinary course of its
business, Kyocera cannot assure that:•

infringement claims (or claims for indemnification resulting from infringement claims) will not be
asserted against Kyocera,•

future assertions against Kyocera will not result in an injunction against the sale of infringing or
allegedly infringing products or otherwise significantly impair its business and results of operations; or•Kyocera will not be required to obtain licenses, the expense of which may adversely affect its results ofoperations.

(10) Future initiatives and in-process research and development may not produce the desired results
Kyocera intends to expand its product lines to satisfy customer demand in its target markets. Unexpected
technical delays in completing these initiatives could lengthen development schedules and result in lower
revenues based on the products or technologies developed from these initiatives. There can be no assurance thatthe products derived from Kyocera’s in-process research and development activities will achieve market
acceptance.
(11) Companies or assets acquired by Kyocera may require more cost than expected for integration, and may
not produce returns or benefits, or bring in business opportunities, which Kyocera expects
In the course of developing its business, from time to time Kyocera considers opportunities to acquire, andundertakes the acquisition of, companies or assets through mergers and acquisitions. There can be no assurance
that Kyocera will be able to integrate the operations, products and personnel of the acquired companies with its
own in an efficient manner. Nor can there be any assurance that Kyocera will be able to achieve operational andfinancial returns or benefits, or bring in new business opportunities, which it expects from the acquisition. An
acquired company may not be able to manufacture products or offer services in the amounts or at the efficiency
levels that Kyocera plans, and the demand for such products or services may not be at the levels that Kyocera
anticipates. Failure to succeed in acquisitions could have a material adverse effect on Kyocera’s business.
(12) Kyocera’s markets or supply chains may be adversely affected by terrorism, plague, wars or similar events
Kyocera as a global company has been expanding its business worldwide. At the same time, we will be exposed
to risks of our getting involved in terrorism, plague, war and other similar events. In the case that those eventsoccur, Kyocera’s operating activities would be suspended. Furthermore, there would be delay, disorder orsuspension in Kyocera’s R&D, manufacturing, sales and services. If such delay or disruption occurs andcontinues for a long period of time, Kyocera’s business, financial condition and results of operations may be
adversely affected.
10(13) Kyocera’s headquarters and major facilities are subject to devastating effects of earthquakes and othernatural disasters
Kyocera’s headquarters and major facilities including plants, sales offices and R&D centre are located not onlyin Japan but also all over the world. It might be inevitable that Kyocera would suffer from natural disasters suchas earthquakes, typhoons, floods and so on. For instance, if a strong earthquake occurs, Kyocera’s R&D or
manufacturing facilities could be devastated. In this case, Kyocera’s operating activities would be suspended andmanufacturing and shipment would be delayed. Due to this, Kyocera would lose its sales and profits.
Furthermore, Kyocera may incur a great amount of expenses, such as medical care expenses for injured
employees and damage expenses for the damaged machines or facilities. As a consequence, Kyocera’s operating
result and financial condition may be adversely affected.
(14) Changes in our environmental liability and compliance obligations may adversely impact our operations
Kyocera is subject to various environmental laws and regulations in Japan and the other countries, which are
related to air emissions, wastewater discharges, the handling, disposal and remediation of hazardous substances,wastes and certain chemicals used or generated in our manufacturing process, employee health and safety,
labeling or other notifications with respect to the content or other aspects of our processes, products or
packaging, restrictions on the use of certain materials in or on design aspects of our products or productpackaging, and responsibility for disposal of products or product packaging. As well as our current operations,these laws and regulations can be applied to our past operations and may be applicable to the past operations ofbusinesses acquired from other companies even if such operations occurred before our acquisitions. In addition,these laws and regulations which are applied to Kyocera can be more stringent or the scope of the laws andregulations can be broadened in the future. We establish reserves for specifically identified potential
environmental liabilities when such liabilities are probable and can be reasonably estimated. In case we fail tocomply with such laws and regulations, we could be required by the relevant governmental organizations to pay
penalty costs or remediation compensation. Furthermore, we may make voluntary payments to compensate forenvironmental problems if we deem such compensation to be necessary. The cost obligations noted above may
adversely affect our results of operations and financial positions.
(15) Kyocera may have to incur impairment losses on its investments in debt and equity securities
Kyocera holds investments in equity securities of companies not affiliated with itself, which Kyocera generally
holds on a long-term basis for business relationship purposes. A substantial portion of these investments consistsof shares of common stock of public companies in Japan, including KDDI Corporation (a Japanese
telecommunication service provider), and Japanese financial institutions. As of March 31, 2008, the aggregate
fair value of equity securities included in available-for-sale securities was ¥386,162 million ($3,862 million),with gross unrealized gains in the amount of ¥113,327 million ($1,133 million) and gross unrealized losses in theamount of ¥3,149 million ($31 million). If there is a decline in the fair value, i.e., the market price, of the shares
Kyocera holds in those companies over a period of time, and it determines that the decline is other-thantemporary, Kyocera will need to record an impairment loss for the applicable fiscal period. For some of theequity securities Kyocera owns, including the shares of KDDI Corporation, Kyocera intends to keep its
ownership at the current level in light of the importance of its business relationships with the issuers of theseequity securities. For other equity securities in its portfolio, although, with periodical check, Kyocera may
dispose of some securities which lack merit for Kyocera, market conditions may not permit it to do so at the time,
speed or price it may wish.
(16) As a holder of ADSs, you will have fewer rights than a shareholder has and you will have to act throughthe depositary to exercise those rights
The rights of shareholders under Japanese law to take various actions, including voting their shares, receiving
dividends and distributions, bringing derivative actions, examining a company’s accounting books and records
and exercising appraisal rights, are available only to holders of record. Because the depositary, through its
11custodian agents, is the record holder of the Shares underlying the ADSs, only the depositary can exercise thoserights in connection with the deposited Shares. The depositary will make efforts to vote the Shares underlying
your ADSs as instructed by you and will pay to you the dividends and distributions collected from us. However,in your capacity as an ADS holder, you will not be able to bring a derivative action, examine our accounting
books and records or exercise appraisal rights through the depositary.
(17) Rights of shareholders under Japanese law may be more limited than under the law of other jurisdictions
Our Articles of Incorporation, Regulations of the Board of Directors, Regulations of the Board of Corporate
Auditors and the Corporation Act of Japan govern our corporate affairs. Legal principles relating to such mattersas the validity of corporate procedures, directors’ and officers’ fiduciary duties and shareholders’ rights may bedifferent from those that would apply if we were a U.S. company. Shareholders’ rights under Japanese law may
not be as extensive as shareholders’ rights under the laws of the United States. You may have more difficulty inasserting your rights as a shareholder than you would as a shareholder of a U.S. corporation. In addition,
Japanese courts may not be willing to enforce liabilities against us in actions brought in Japan which are based
upon the securities laws of the United States or any U.S. state.
(18) Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell
your shares of our Common Stock at a particular price on any particular trading day, or at all
Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids
and offers. These exchanges are order-driven markets without specialists or market makers to guide priceformation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation
limits for each stock, based on the previous day’s closing price. Although transactions may continue at the
upward or downward limit price if the limit price is reached on a particular trading day, no transactions may takeplace outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily
limit may not be able to sell his or her shares at such price on a particular trading day, or at all.
(19) Foreign exchange fluctuations may affect the dollar value of our ADSs and dividends payable to holdersof our ADSs
Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In addition, the U.S.
dollar amount of cash dividends and other cash payments made to holders of our ADSs would be reduced if thevalue of the yen declines against the U.S. dollar.
Item 4.

Information on Kyocera Corporation and its Consolidated Subsidiaries

A. History and Development of Kyocera Corporation and its Consolidated Subsidiaries
Kyocera Corporation is a joint stock corporation that was incorporated under the laws of Japan in 1959 with thename Kyoto Ceramic Kabushiki Kaisha. Its name was changed to Kyocera Kabushiki Kaisha (or Kyocera
Corporation) in 1982. Our corporate headquarters is at 6 Takeda Tobadono-cho, Fushimi-ku, Kyoto 612-8501,
Japan. Our telephone number is +81-75-604-3500.
Our business originally consisted of the manufacture of ceramic parts for electronic equipment. In the 1960s, we
expanded our business and technology horizontally into the design and production of fine ceramic parts, ceramic
integrated circuit (IC) packages and electronic components. In the 1970s, we began to produce consumer-related
products, including cutting tools, ceramics for medical and dental uses, jewelry and solar energy products.
In the 1980s, we diversified into new strategic fields. In 1982, we merged with Cybernet Electronics Corporation,a telecommunications equipment manufacturer in which we had made an equity investment three years earlier.
We expanded into another new business through the acquisition of Yashica Co., Ltd., a camera and camera lens12

manufacturer. We also played a leading role in the establishment of DDI Corporation (currently KDDI
Corporation), which has become one of Japan’s leading providers of telecommunications services. In 1989, we
gained a presence in the electronic connector market through our acquisition of Elco International Corporation(currently Kyocera Elco Corporation).
In the 1990s, we strengthened our position as an internationally integrated electronic components manufacturer
through our acquisition of AVX Corporation, a maker of capacitors and other passive electronic components, inJanuary 1990.
In the middle of the 1990s, Kyocera developed two main business categories, “the Components Business,” inwhich Kyocera provides parts and devices such as fine ceramics parts, semiconductor parts, applied ceramic
products and electronic components and devices to mainly electronic equipment manufacturers in IT industrial
fields, and “the Equipment Business,” in which Kyocera manufactures and sells telecommunications andinformation equipment and optical instruments, such as mobile handsets, PHS-related products, copier machines,
multifunctional systems, ECOSYS printers and digital still cameras to distributors or directly to customers.
Since 2000, we have further enhanced our position as a market leader in telecommunications and informationequipment. In February 2000, we acquired the code division multiple access (CDMA) mobile phone handset
business from QUALCOMM Inc. to create our U.S. subsidiary, Kyocera Wireless Corp. In April 2000, weinvested in Kyocera Mita Corporation, a manufacturer of copier machines and other document solutions
equipment, and made it a wholly-owned subsidiary, and in April 2002, we transferred Kyocera Corporation’s
printer business to Kyocera Mita Corporation to further enhance our information equipment business by pursuinggroup synergies.
In addition, we also strengthened the components business resources to become a leading company in IT-related
applications. In August 2002, we made Toshiba Chemical Corporation (currently Kyocera Chemical
Corporation) a wholly-owned subsidiary through a share exchange in order to reinforce our electronic
components and materials businesses by pursuing group synergies between fine chemical technologies and fineceramic technologies.
With the aim of becoming a more global enterprise and enhancing our profitability, we have been expanding our
production in China through Chinese production bases located in Shanghai and Dongguan. Kyocera alsoestablished a sales company, Kyocera (Tianjin) Sales and Trading Corporation, in March 2003 to cultivate theChinese market. We are enhancing our marketing ability for both our products manufactured in China as well as
our products imported into China. In addition, we established a subsidiary, Kyocera (Tianjin) Solar Energy Co.,
Ltd. to assemble solar modules, production of which commenced in November 2003, and to respond to market
needs swiftly.
In August 2003, we made Kinseki, Limited (currently Kyocera Kinseki Corporation), a major producer ofartificial crystal-related products, a wholly-owned subsidiary through a share exchange to strengthen ourElectronic Device Group. In addition, to further enhance our organic circuit board business by pursuing groupsynergies, we also entered into an agreement with IBM Corporation and IBM Japan, Ltd. for the transfer fromIBM Japan to Kyocera of its Surface Laminar Circuitry (SLC) business and we completed the transfer of IBM
Japan’s SLC business from IBM Japan to a newly-established wholly-owned subsidiary, Kyocera SLC
Technologies Corporation in August 2003. In April 2004, Kyocera integrated the organic material components
business into Kyocera SLC Technologies Corporation and the marketing division of Kyocera Kinseki
Corporation was merged into the marketing division of the electronic components of Kyocera Corporation andthe manufacturing division of crystal related components of Kyocera Corporation was transferred to Kyocera
Kinseki Corporation through corporate splits.
In September 2004, Kyocera and Kobe Steel, Ltd. established Japan Medical Materials Corporation and Kyocera
Corporation transferred its medical materials business to Japan Medical Materials Corporation through corporate
splits. The shareholding ratios of Kyocera and Kobe Steel in Japan Medical Materials Corporation are 77% and23%, respectively.
13

In October 2004, Kyocera Corporation invested in WILLCOM, Inc. which succeeded the PHS-related businessof DDI Pocket, Inc. The investment in WILLCOM, Inc. will enhance our PHS-related business.
To meet with strong demand for solar energy products, Kyocera established Kyocera Solar Europe S.R.O. for theassembling of solar modules in the Czech Republic in April 2005.
In August 2006, Kyocera sold all of its shares in Kyocera Leasing Co., Ltd. to Diamond Lease Company Limited(presently Mitsubishi UFJ Lease & Finance Company Limited). The sale concentrated our management
resources on our core businesses in order to enhance and improve our corporate value.
In January 2008, Kyocera executed an agreement regarding the acquisition of the mobile phone-related businessof SANYO Electric Co., Ltd. to improve the profitability of the Telecommunications Equipment Group. In April
2008, Kyocera acquired the mobile-phone related business of SANYO Electric Co., Ltd.
For a discussion of recent and current capital expenditures, please see Item 5 “Operating and Financial Review
and Prospects” of this annual report on Form 20-F. We have had no recent significant divestitures nor are any
significant divestitures currently being made.
B. Business Overview
Overview
Kyocera is engaged in numerous high-tech fields, from fine ceramic components to electronics devices,
equipment, services and networks. Our manufacturing and distribution operations are conducted worldwide. Asof March 31, 2008, we had 146 subsidiaries and 3 affiliates outside Japan and 30 subsidiaries and 7 affiliates inJapan. Our customers include individuals, corporations, governments and governmental agencies. For
information on our sales by category of activity and information on our sales by geographic area and productsegment, see Item 5.A “Operating Results” of this annual report on Form 20-F.
Business Strategy
Kyocera aims to be respected by society as “The Company,” a model company in the field of corporate ethics,
while maintaining continuous sales growth and high profitability. To achieve this management vision, Kyocera’s
management policy is to expand business further in order to be “a creative company that continues to grow.” Inorder to implement this policy, Kyocera aims to increase corporate value by expanding businesses, namely bypromoting efficient use of management resources and further strengthening consolidated group management.
<Target of Pre-tax Income to Net Sales Ratio>
To be “a creative company that continues to grow,” Kyocera aims to achieve its target of a pre-tax income ratioof 15% or higher.
<Medium Term Management Strategy>
Kyocera promotes “high-value-added diversification” as its management strategy to realize such management
policy. This involves ensuring that each business is highly profitable and pursuing synergies within Kyocera withthe objective of driving sustainable growth even in an ever-changing business environment.
Specifically, Kyocera aims to: 1) exploit competitive advantages; 2) strengthen existing businesses; and 3) create
new businesses.

14

(1) Exploit competitive advantages
The “Kyocera Philosophy,” which places people’s hearts at its core, the “Amoeba Management” system, whichis unique to Kyocera and has been a driving force for growth since Kyocera Corporation’s earliest days, and astrong financial structure, are sources of competitive advantage for Kyocera over other companies in
implementing its diversification strategy. With these foundations firmly in place, Kyocera endeavors tostrengthen competitiveness in technological development, sales and marketing in the high-growth potential
markets for telecommunications and information processing and for environmental protection, and to translate
diversification strategy into improved business performance.
(2) Strengthen existing businesses
Kyocera strives to continuously improve profitability in all existing businesses within Kyocera Group. By
strengthening ties and maximizing synergies between headquarters Kyocera Corporation and Kyocera Group
companies, Kyocera seeks to improve profitability in each business segment on a consolidated basis. In
promoting a global strategy in each business, Kyocera has created development, manufacturing and sales systems
in optimal locations, while the integration of Group-wide resources helps boost the competitiveness of existing
businesses. Kyocera regularly reviews those businesses that have lost market competitiveness and that show little
promise of expansion going forward.
(3) Create new businesses
Kyocera endeavors to create businesses that will become its core going forward in order to improve consolidated
performance over the medium term. To achieve this goal, Kyocera integrates Group-wide management resources
to develop new technologies and products and create new markets. The focus of Kyocera’s business creation
strategy lies in the markets for telecommunications and information processing and for environmental protection.
Challenges
Kyocera promotes “high-value-added diversification” as its medium-term management strategy to be “a creative
company that continues to grow.” This involves ensuring that each business is highly profitable and pursuingsynergies within Kyocera with the objective of driving sustainable growth even in an ever-changing businessenvironment.
Kyocera faces the following challenges in fiscal 2009 onward, in light of the aforementioned medium-term
management strategy.
(1) Improve profitability in the Telecommunications Equipment Group
Kyocera acquired the mobile phone business of SANYO Electric Co., Ltd. on April 1, 2008. As a result, theTelecommunications Equipment Group now generates the largest amount of sales among all of Kyocera’s
reporting segments. Going forward, Kyocera seeks to achieve the following three goals as a means to swiftly
improve profitability in such business: a) expand sales and improve profitability in the mobile phone market inNorth America; b) further expand market share and establish strong business foundations in the Japanese mobile
phone market; and c) expand the wireless telecommunication systems business.
(2) Strengthen new product development and create new businesses
Kyocera promotes the development of small ceramics and organic packages in the Semiconductor Parts Groupand electronic devices befitting sophisticated digital consumer equipment for the telecommunications andinformation processing market. Kyocera is also striving to increase the conversion efficiency of photovoltaic
generating systems for the environmental preservation market. In addition, Kyocera seeks to create new15

businesses in key markets by leveraging its cutting-edge materials and components technologies amassed acrossdepartments within Kyocera. Specifically, Kyocera is pushing ahead with development aimed at quickcommercialization of solid oxide fuel cells (SOFC) for household use by exploiting materials technology
employed in fine ceramic parts.
Operations
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.
Our principal products and services offered in each reporting segment are shown below.
(1) Fine Ceramic Parts Group
Information & Telecommunication Components,
Sapphire Substrates,
Components for Semiconductor Processing Equipment,
Components for Liquid Crystal Displays Manufacturing Equipment,
Automotive Components,
General Industrial Ceramic Components(2) Semiconductor Parts Group
Surface Mount Device (SMD) Ceramic Packages,
CCD/CMOS Sensor Ceramic Packages,
LSI Ceramic Packages,
Wireless Communication Device Packages,
Optical Communication Device Packages and Components,
Organic Multilayer Packages and Substrates(3) Applied Ceramic Products Group
Residential and Industrial Solar Power Generating Systems,
Solar Cells and Modules
Cutting Tools,
Printed Circuit Board Micro Drills,
Jewelry and Applied Products,
Dental Implants, Artificial Bone and Joint Prosthesis(4) Electronic Device Group
Ceramic Capacitors, Tantalum Capacitors,
Timing Devices (Temperature Compensated Crystal Oscillators (TCXOs), Crystal Units, Ceramic Resonators),
Surface Acoustic Wave (SAW) Filters,
RF Modules,
Connectors,
Thermal Printheads, LED Printheads,
Amorphous Silicon Photoreceptor Drums,
Liquid Crystal Displays (LCD)(5) Telecommunications Equipment GroupCDMA Mobile Phone Handsets,
Personal Handy Phone System (PHS) Related Products (PHS Mobile Phone Handsets, PHS Base Stations, High
Speed Wireless Data Transmission Systems)
16

(6) Information Equipment GroupECOSYS Printers,
Copying Machines,
Multifunctional Peripheral(7) Others
Telecommunications Engineering Business,
Information and Communication Technology Business,
Management Consulting Business,
Chemical Materials for Electronic Components,
Electrical Insulators,
Synthetic Resin Molded Products,
Optical Components,
Hotel Business,
Realty Development Business,
Insurance Agent and Travel Agent Business(1) Fine Ceramic Parts Group
Products in this reporting segment are widely used in the computing, telecommunications, automotive andvarious other industrial sectors. These products are made from a variety of ceramic materials, such as siliconcarbide, silicon nitrides and zirconia as well as alumina, utilizing their characteristics of heat resistance,
corrosion resistance and wear resistance.
Products Kyocera develops, manufactures and sells in this reporting segment include substrates, which are thinceramic bases used by manufacturers for hybrid integrated circuit (IC) foundations. Kyocera also develops,
manufactures and sells substrates for thermal printheads, ceramic/alumina tape substrates for thin film chip
resistors, substrate for HDD thin film magnetic heads, sapphire substrates for LCD projectors and LEDs,
components for LCD manufacturing equipment, components for semiconductor processing equipment,
mechanical seals for pumps, engine components for the automobile industry, friction tight discs and thread
guides for yarn texturing machines in the textile industry, rings for fishing rods, nozzles and parts for papermaking machinery.
(2) Semiconductor Parts Group
Kyocera develops, manufactures and sells inorganic (ceramic) and organic packages in this reporting segment.
Ceramic packages have the characteristics of being air and water tight and corrosion resistant, and also have theability to dissipate heat efficiently. In addition, they have a superior capacity for use in high frequency andembedded passive components. Kyocera develops, manufactures and sells ceramic packages for IC or othersemiconductor and electronic components.
The most common types of the ceramic packages Kyocera develops, manufactures and sells are multilayer
packages, including surface mount device (SMD) ceramic packages and pin grid array packages, etc. Kyocera
also develops, manufactures and sells optical communication device packages and ceramic parts for fiber-optic
communications connectors. SMD ceramic packages are used for surface acoustic wave (SAW) filters andtemperature compensated crystal oscillators (TCXOs), which are mostly inserted into mobile phone handsets. Pingrid array packages are used in MPUs and other logic ICs, and are principally inserted into informationequipment and peripherals. Kyocera also develops, manufactures and sells ceramic packages for charge-coupleddevices (CCDs) and complementary metal oxide semiconductor (CMOS) devices, which are mainly used incamera-equipped mobile phone handsets and digital still cameras.
17In the organic package business, Kyocera established a specialized high density organic circuit board
manufacturer, Kyocera SLC Technologies Corporation. Kyocera SLC Technologies Corporation develops,
manufactures and sells system in a package (SiP) substrates used in mobile phone handsets and organic flip-chippackages for high-end application specific integrated circuits (ASICs). Kyocera SLC Technologies Corporation
expects to increase sales of organic packages for MPUs and its peripheral devices used in digital consumer
equipment.
(3) Applied Ceramic Products Group
This reporting segment consists of four product lines: 1) Solar Energy Products, 2) Cutting Tools, 3) Jewelry andApplied Ceramic Related Products, 4) Dental Implants, Artificial Bone and Joint Prosthesis.
1) Solar Energy Products
Kyocera develops, manufactures and sells solar cells and modules, applied solar cell products and residential andindustrial solar power generating systems. We are expanding our solar cell and module production capacity inJapan and commenced assembly of solar modules by KYOCERA (Tianjin) Solar Energy Co., Ltd in China,
which was established as our manufacture and sales subsidiary of solar modules in May 2003. In addition,
Kyocera commenced assembly of solar module in KYOCERA Solar, Inc. Mexico Plant in Tijuana Mexico, for
U.S market in October 2004. To increase sales in Europe, Kyocera also commenced assembly of solar module inCzech Republic in October 2005. Kyocera produces solar cells and modules in global quadripartite production
system.
2) Cutting Tools
Kyocera develops, manufactures and sells cutting tools for metal processing in industrial production, particularlyin the automotive industry. To expand its cutting tools business, Kyocera Corporation acquired Tycom
Corporation (currently Kyocera Tycom Corporation, a consolidated subsidiary), which was a manufacturer ofmicro drill for printed circuit boards in the United States, in January 2001. Kyocera aims to be a market leader inthe cutting tools business by pursuing synergies between Kyocera Tycom Corporation and Kyocera Corporation
in worldwide manufacturing and sales channels.
3) Jewelry and Applied Ceramic Related Products
Recrystallized jewelry comprises mainly synthetic emeralds, alexandrines and rubies. These stones are
manufactured using a single crystal growth technology developed by us, and are chemically and physicallyequivalent to natural stones. We introduced recrystallized jewelry products to meet consumer needs and tocultivate our sales network. Kyocera also produces and sells applied ceramic related products such as kitchen
knives utilizing ceramic characteristics of wear resistance and corrosion resistance against acidity and alkalinity.
4) Dental Implants, Artificial Bone and Joint Prosthesis
Kyocera established Japan Medical Materials Corporation with Kobe Steel, Ltd. by integrating the medical
material businesses in September 2004. Japan Medical Materials Corporation produces a wide range of products
such as dental implants, artificial bone and joint prosthesis, artificial knee joint replacement systems, and ceramicmaterials helping heal hip fractures by combinations of material, processing technologies of ceramics andtitanium alloys and integrating business resources such as development, manufacturing, marketing and sales
channels with Kyocera and Kobe Steel, Ltd.
(4) Electronic Device Group
Kyocera develops, manufactures and sells high quality and cost competitive electronic components and devices
for the telecommunications and information processing industry. This field creates demand for miniaturization,
low voltage, high frequency and low energy consumption, and we develop, manufacture and sell high-value18

added products such as miniature ceramic capacitors with high capacitance capacitors, tantalum capacitors,
miniature timing devices like TCXOs, RF modules and connectors for mobile phone handsets and PCs. We also
develop, manufacture and sell thin-film products such as thermal printheads, amorphous silicon photoreceptor
drums and LCDs for audio visual electronic equipment, office automation equipment and industrial equipment.
We are strengthening our manufacturing and sales in China to enhance price competitiveness and to cultivate
new markets. Shanghai Kyocera Electronics Co., Ltd. mainly produces ceramic capacitors. We aim to expand
sales in China through the sales subsidiaries in China which markets our products made in China and around theworld.
To expand this reporting segment business, we are pursuing the synergies with subsidiaries. AVX Corporationand its consolidated subsidiaries, which develops, manufactures and sells ceramic capacitors, tantalum capacitorsand other passive components for telecommunications and information equipment, has a global manufacturing
and sales network. AVX Corporation is a major contributor to our Electronic Device Group sales and pursue
synergies with development and manufacturing in the ceramic capacitor business. In our timing device business,
Kyocera Corporation acquired Kinseki, Limited (currently Kyocera Kinseki Corporation, a consolidated
subsidiary) through a share exchange in August 2003. The marketing division of Kyocera Kinseki Corporation
was merged into the marketing division of the electronic components of Kyocera Corporation and the
manufacturing division of crystal related components of Kyocera Corporation was transferred to Kyocera
Kinseki Corporation through corporate splits to pursue synergies in development, manufacturing and marketingin April 2004.
(5) Telecommunications Equipment Group
This reporting segment includes CDMA mobile phone handsets and PHS-related products such as PHS mobile
phone handsets and base stations. These products are produced and distributed mainly for KDDI Corporation and
WILLCOM, Inc., as well as for other U.S. telecommunication service providers. KDDI Corporation is atelecommunications service company, in which we made an equity investment when it was founded in 1984,
when the telecommunications business, which had previously been monopolized by a national telephonecompany, was opened to private companies. KDDI Corporation and its subsidiaries are currently engaged inproviding domestic, long distance, international telephone services and mobile phone services. WILLCOM, Inc.
provides PHS services and Kyocera owns 30% of WILLCOM, Inc.
One of our major businesses in Telecommunications Equipment Group is the mobile phone handset business, andwe focus on CDMA protocol. We acquired the CDMA mobile phone handset business of Qualcomm Inc. andestablished Kyocera Wireless Corp., a wholly-owned subsidiary in February 2000. In addition, we established
Kyocera Wireless (INDIA) PVT. LTD., a subsidiary that developes software for CDMA mobile phone handsets,in June 2003.
In September 2005, we decided to outsource the manufacturing division of Kyocera Wireless Corp. to
Flextronics International Ltd., a leading provider of electronics manufacturing services. With regard to themobile phone handsets business, we expect to expand the CDMA mobile phone handsets business through theoutsourcing and global development structure based in Japan, the United States and India.
The other major business in the Telecommunications Equipment Group is the PHS-related business. We are
expanding this business by cultivating markets through the expansion of PHS technology. Specifically, we arepromoting new PHS mobile phone handsets and base stations compatible with the high speed data transmission
services offered in Japan. We also promote iBurst®, a wireless Internet system, which enable internet services tobe used at broadband speed with wireless technology. By promoting these businesses in appropriate market, we
expect to increase sales of PHS related products.

19

With the objective of further enhancing the Telecommunications Equipment Group, Kyocera concluded a basic
agreement with SANYO Electric Co., Ltd. in October 2007 and also concluded a final agreement in January 2008
regarding the acquisition of the mobile phone business of SANYO Electric Co., Ltd. by Kyocera. From fiscal
2009, through this acquisition, Kyocera seeks to expand sales and improve profitability in the
Telecommunications Equipment Group by expanding its sales channels in North America and by integratingproduct development and design technologies of SANYO Electric Co., Ltd. with the management resources ofKyocera.
(6) Information Equipment GroupThe major products in this reporting segment comprise page printers, copying machines and multifunctional
peripheral. Our products are marketed under the name of “ECOSYS” with a focus on the concepts of long life
cycle, ecology and economy, and which use our thin film products and amorphous silicon photoreceptor drums.
In April 2000, Kyocera Mita Corporation became our wholly-owned subsidiary. Kyocera Corporation’s
ECOSYS printer unit was merged into this subsidiary, enabling us to build a unified presence in the document
solutions business. Further efficiencies have resulted from the merger of our printer and copier sales operations
with those of Kyocera Mita Corporation. We have enhanced our product line through the standardization ofengines between the printers, copying machines and multifunctional systems. We established a new plant,
Kyocera Mita Office Equipment (Dongguan) Co., Ltd in Dongguan, China due mainly to strengthen pricecompetitiveness in December 2001.
We expect further strong demand for color ECOSYS printers, copying machines and multifunctional systems.
We are focused on expanding our comprehensive color-capable product line up of ECOSYS printers, copying
machines and multifunctional systems with original “ECOSYS” concepts as well as expanding monochrome
products.
(7) Others
This reporting segment includes revenues from telecommunication network systems. This segment also develops,
manufactures and sells electronic component materials, electric insulators and synthetic resin molded products.
Kyocera Communication Systems Co., Ltd. operates a total telecommunications network system business, fromsystem development to design, construction and maintenance services.
Kyocera Communication Systems Co., Ltd. is also expanding data center services for mobile phone content
distribution services and IT solutions services for business users by developing new products featuring network
services as well as system integration services.
Kyocera Chemical Corporation, which joined Kyocera in August 2002, mainly produces electronic component
materials. We will develop new products by pursuing the synergies with fine chemical technologies and ourcomponents technologies such as those employed by the Electronic Device Group.
In August 2006, Kyocera sold all of its shares in Kyocera Leasing Co., Ltd. to Diamond Lease Company Limited(presently Mitsubishi UFJ Lease & Finance Company Limited). The sale concentrated our management
resources on our core businesses in order to enhance and improve our corporate value.
Sales and Distribution
Kyocera products are marketed worldwide by our sales personnel, as well as by sales companies within ourgroup, and by independent distributors. We have regional sales and design application personnel in strategic
locations to provide technical and sales support for customers and distributors. We believe that this combinationof distribution channels leads to a high level of market penetration and efficient coverage of services for ourcustomers.
20

Most of the sales in the Fine Ceramic Parts Group, the Semiconductor Parts Group and the Electronic Device
Group are made directly to component and equipment manufacturers who incorporate them into their own
products.
In the Applied Ceramic Products Group, solar energy products for residential use and public/industrial use aresold primarily to users via sales subsidiaries and distributors. Cutting tools are sold to users such as automobile
parts and construction machinery parts makers, etc. through wholesale dealers and distributors. Jewelry andapplied ceramic related products are sold mainly through direct retail shops, as well as through distributors.
Dental implants, artificial bones and joint prostheses are sold mainly to dental clinics and hospitals throughdistributors.
In the Telecommunications Equipment Group, we primarily sell products directly to communications carriers inJapan and overseas markets. Our key sales destinations are KDDI Corporation and WILLCOM, Inc.
The Information Equipment Group markets products such as ECOSYS printers, copier machines andmultifunctional peripheral under the Kyocera brand through distributors and wholesalers both in Japan andabroad, while direct sales are conducted at original equipment manufacturers (OEMs).
In the Others reporting segment, services from the telecommunications engineering business and the data center
business of Kyocera Communication Systems Co., Ltd., as well as from our management consulting business areprovided directly to customers and users. Electronic materials and components from Kyocera Chemical
Corporation are sold directly to secondary manufacturers who incorporate them into their own products.
Domestic sales are made in yen, while overseas sales are made in a variety of currencies, but predominantly in
U.S. dollars and the Euro.
Sources and Availability of Raw Materials and Supplies
We purchase a variety of raw materials and other materials for our businesses.
The principal raw materials include alumina, zirconia, silicon nitride, silicon particles, nickel powder and epoxy
resins. . These raw materials are used mainly in the manufacturing of products for the Components Business.
They are also the main materials supplied for use in key components such as chip sets and liquid crystal displaysin the Equipment Business.
Our basic policy is to procure raw materials and other materials from several companies, though we may use asingle supplier if (1) the final customer selects the material supplier; or (2) the number of suppliers who candeliver high-quality raw materials or other materials to ensure the high quality of final products is limited.
The purchase price of these raw materials and other materials fluctuates depending on the supply-demandsituation, as well as the rising cost of certain raw materials and fuel, among others. We work hard to lessen theeffect of these fluctuations and to absorb rising costs by making steady internal improvements, including cost
reductions. We have also concluded long-term agreements with suppliers for certain raw materials aimed atensuring stable supply to meet plans to increase production, and a fair purchase price.
In fiscal 2008, despite a supply shortage of raw materials for certain products, the impact of this on financial
results was only slight. In fiscal 2009, we believe we can procure a sufficient level of raw materials and othermaterials to carry out our current production plans.
Patents and Licenses
Our success and competitive position depend on a number of significant patents, licenses and trade secrets
relating to our manufacturing and sales processes and products. All of Kyocera’s intellectual properties are
considered to be important. However, Kyocera believes that neither its expiration nor termination of any specific21intellectual properties would affect significant impact on Kyocera’s entire operation. The following table sets
forth information, as of March 31, 2008, with respect to our significant patents and license agreements.
(a) License permitted to produce products
Counterparty

Qualcomm
Incorporated

Country

United States

Contents

License under patents
regarding mobile phone

PeriodFrom August 31, 1996 topatent expiration(b) License—cross agreements
Counterparty

Country

Contents

PeriodMotorola, Inc.

United States

License under patents
regarding mobile phone

From July 1, 2004 toJune 30, 2009

Nokia Corporation

FinlandLicense under patents
regarding mobile phone

From October 1, 2005 to
September 30, 2008

Canon IncorporatedJapan

License under patents
regarding electric photo
printer

From April 1, 2002 topatent expiration

Competitive Position(1) Fine Ceramic Parts Group
Since our founding, Kyocera has worked continuously to develop fine ceramic materials and to cultivate newmarkets. At present, we provide fine ceramic products to a wide array of industries, notably the semiconductor
fabrication equipment market, the telecommunications and information processing market, the general industrial
machinery market and the automotive market.
Although competitors in this reporting segment differ in each market, Kyocera has established a competitive
advantage in materials technology, accumulated since our founding, and in outstanding production technology
and capability, which enables us to meet customer requirements, particularly in terms of product dimension, size
and amount. We also boast an internal integrated system from fundamental research to next-generation productdevelopment through our R&D divisions, and this differentiates us from the competition.
(2) Semiconductor Parts GroupIn this reporting segment, our goal is to further strengthen our competitive position in both the ceramic andorganic package business in the global market. To achieve this, we strive to provide high-value-added products
and to develop new applications such as wireless and optical communications in the telecommunications market,
and in the digital consumer equipment, automotive and medical industries, etc.
In the ceramic package business, Kyocera is already one of the global leaders in surface mount device (SMD)
packages for electronic components and CCD/CMOS sensor ceramic packages. We also aim to be a market
leader in other ceramic package areas and to increase customer satisfaction by applying our technological andmanagerial expertise.
In the organic package field, which we entered relatively late, to strengthen our technological expertise andexpand business, we acquired the Surface Laminar Circuitry (SLC) business of IBM Japan, Ltd. in August 2003,
and established Kyocera SLC Technologies Corporation. In April 2004, we integrated the organic material
components business into Kyocera SLC Technologies Corporation, and established a new plant in Ayabe, Kyoto
in June 2005. We aim to strengthen our position in the organic package business going forward by developing
more advanced package technology and by fully utilizing this new plant.
22

(3) Applied Ceramic Products Group
Awareness of the need for environmental preservation is growing worldwide. In the solar energy business,
Kyocera has established a quadripartite production system for solar module assembly that spans Japan, China,
Mexico and the Czech Republic. Production of solar cells and modules in fiscal 2008 amounted to approximately
200MW. In 2007, we were fourth in the world in terms of solar cell and module production volume. Aiming tobe the market leader in solar energy business, we have been expanding production capacity of solar cells since
fiscal 2008. We intend to more than double yearly production volume from the 200MW recorded in fiscal 2008
to 500MW in fiscal 2011.
We are also one of the biggest suppliers of cutting tools in Japan, with the major application being for the
automotive industry. Although we have many global competitors, we will work to expand sales of new products
in order to further increase our share in the domestic and Asian markets.
(4) Electronic Device Group
Kyocera develops, manufactures and sells capacitors, timing devices (crystal-related components), connectors
and thin-film devices. One of our competitive advantages is that we can supply a wide variety of components
compared with our competitors. We have many competitors in this field, not only in Japan but also throughout
Asia, and the market is particularly competitive in terms of price, quality and delivery.
Kyocera is one of the biggest manufacturers of capacitors and timing devices (crystal-related components) in theworld. Most of our competitors in this reporting segment are Japanese manufacturers. However, AVX
Corporation, a U.S. subsidiary, competes with overseas manufacturers in developing, manufacturing and sellingtantalum capacitors. Our thin-film products, such as thermal printheads and amorphous silicon photoreceptor
drums, are mainly used in information equipment, notably printers, copier machines and multifunction systems.
Amorphous silicon photoreceptor drums have outstanding resistance to wear compared with organic
photoconductor (OPC) drums. Incorporating our amorphous silicon photoreceptor drums into informationequipment helps to realize longer lasting products relative to the competition.
We are also continuing to seek synergies within Kyocera in order to expand sales, reduce costs and increase
market share in this reporting segment. As one measure to increase sales, we are making full use of the sales
channel of AVX Corporation in the overseas market. In production, our domestic sites specialize in
manufacturing high-value-added ceramic capacitors that are compact and have high capacity, while we makemaximum use of our facilities in China to manufacture general ceramic capacitors, as one example. Through thisstructure, we can reduce manufacturing costs and strengthen price competitiveness.
(5) Telecommunications Equipment GroupIn the Japanese market, our main competitors for mobile phone handsets are Japanese manufacturers. In themobile phone handset market outside Japan, Kyocera competes with European, U.S. and Asian manufacturers.
We are currently a middle-class supplier in terms of sales volume in the global CDMA handset market. During
fiscal 2006, Kyocera outsourced its CDMA handset production at Kyocera Wireless Corp. to Flextronics
International Ltd. to reduce manufacturing costs and improve profitability. In terms of PHS-related products inJapan, our main competitors are Japanese manufacturers.
In April 2008, Kyocera acquired the telecommunications equipment business of SANYO Electric Co., Ltd.
Through this move, we aim to further strengthen development, manufacturing and sale of CDMA handsets
worldwide, and to expand business in wireless communication systems, including next-generation PHS-related
products.

23

(6) Information Equipment GroupWe have many competitors in Japan and abroad in information equipment, such as printers, copying machines
and multifunctional peripheral. Although the scale of sales in this reporting segment is small compared with ourcompetitors, and our global market share is not high, our major strength is differentiation of our products fromthose of the competitors.
Our products are based on our unique “ECOSYS” concept that provides long life cycle and thus environmental
friendliness, while also having the benefit of low running costs for users, by utilizing our highly durable
amorphous silicon photoreceptor drum with exceptional abrasion resistance. Our ECOSYS concept is used in the
majority of our printers, copier machines and multifunction systems, in both monochrome and color, and fromlow-speed to high-speed models. These products are recognized as green products for the office, particularly inEurope, where environmental awareness is particularly high.
Government Regulation
There are various governmental regulations specifically applicable to industries in which Kyocera operates,
including regulations relating to business and investment approvals, export regulations, tariffs, intellectual
property, consumer and business taxation, and exchange controls. We do not believe that such governmental
regulations currently have material effects on Kyocera’s business.
Kyocera is also subject to various regulations concerning the environment of the countries where we operate.
These regulations cover air emissions, wastewater discharges, the handling, disposal and remediation of
hazardous substances, wastes and certain chemicals used or generated in our manufacturing process, employee
health and safety, labeling or other notifications with respect to the content or other aspects of our processes,
products or packaging, restrictions on the use of certain materials in or on design aspects of our products or
product packaging, and responsibility for disposal of products or product packaging. They also include several
new regulations for chemical substance in products, such as the European Union Directive on the Restriction on
the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS Directive), the European
Union Directive on Waste Electrical and Electronic Equipment (WEEE Directive), the European Union’s
Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), and similar regulations requiredin the other countries and areas including China. Based on our periodic reviews of the operating policies andpractices at all of our facilities, we believe that our operations are currently in substantial compliance, in allmaterial respects, with all applicable environmental laws and regulations and that the cost of continuing
compliance will not have a material effect on our financial condition or results of operations.
C. Organizational Structure
We had 186 subsidiaries and affiliates as of March 31, 2008. Our management structure is based on a businesssegment structure. Therefore, the management of each segment is conducted uniformly regardless of whether ouroperations are conducted by the parent company or by one of our subsidiaries.

24

The following table sets forth information, as of March 31, 2008, with respect to our significant subsidiaries.
Country ofIncorporation

Percentage
held by
KyoceraUnited States

100.00%

Manufacture and sale of fineceramic-related products andsale of electronic devices

Japan

100.00%

Manufacture and sale oforganic multilayer printed
circuit boards

Kyocera America, Inc. . . . . . . . . . . . . . . . . . . . . . . United States

100.00%

Manufacture and sale of fineceramic-related products

Kyocera Korea Co., Ltd. . . . . . . . . . . . . . . . . . . . . .

Korea

100.00%

Sale of fine ceramic-related
products

Shanghai Kyocera Electronics Co., Ltd. . . . . . . . . .

China

100.00%

Manufacture and sale of fineceramic-related products andelectronic devices

Kyocera Solar Corporation . . . . . . . . . . . . . . . . . . .

Japan

100.00%

Sale of solar energy products

Japan Medical Materials Corporation . . . . . . . . . . .

Japan

77.00%Development, manufactureand sale of medical materials
and equipment

Kyocera Solar, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . United States

100.00%

Manufacture and sale of solar
energy products

Kyocera Tycom Corporation . . . . . . . . . . . . . . . . . United States

100.00%

Manufacture and sale of micro
drillsKyocera (Tianjin) Solar Energy Co., Ltd. . . . . . . .

China

90.00%

Manufacture and sale of solar
energy products

Dongguan Shilong Kyocera Optics Co., Ltd. . . . . .

China

90.00%

Manufacture and sale ofcutting tools and thin-film
devices

Kyocera Precision Tools Korea Co., Ltd. . . . . . . . .

Korea

90.00%

Manufacture and sale ofcutting tools

Kyocera Solar Europe S.R.O. . . . . . . . . . . . . . . . . .

Czech

100.00%

Manufacture of solar energy
products

Kyocera Mexicana, S.A. de C.V. . . . . . . . . . . . . . .

Mexico100.00%

Manufacture of ceramicrelated products and solar
modules

Universal Optical Industries, Ltd. . . . . . . . . . . . . . .

China

100.00%

Sale of cutting tools and thinfilm devices

Kyocera Kinseki Corporation . . . . . . . . . . . . . . . . .

Japan

100.00%

Manufacture of electronic
devices

Kyocera Elco Corporation . . . . . . . . . . . . . . . . . . .

Japan

100.00%

Manufacture and sale ofelectronic devices

Name

Main Business(1) Fine Ceramic Parts Group
Kyocera Industrial Ceramics Corporation . . . . . . .

(2) Semiconductor Parts Group
Kyocera SLC Technologies Corporation . . . . . . . .

(3) Applied Ceramic Products Group(4) Electronic Device Group

25

Country ofIncorporation

Percentage
held by
KyoceraJapan

100.00%R&D of organic electro
luminescence displays

AVX Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . United States

71.20%

Manufacture and sale ofelectronic devices

Kyocera Elco Korea Co., Ltd. . . . . . . . . . . . . . . . .

100.00%

Manufacture of electronic
devices

Kyocera Wireless Corp. . . . . . . . . . . . . . . . . . . . . . United States

100.00%

Manufacture and sale oftelecommunications
equipment

Kyocera Wireless (India) PVT. Ltd. . . . . . . . . . . . .

100.00%R&D of telecommunications
equipment

100.00%R&D of telecommunications
equipment

Name

Kyocera Display Institute Co., Ltd. . . . . . . . . . . . .

Korea

Main Business(5) Telecommunications Equipment GroupIndia

Kyocera Telecommunications Research
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States(6) Information Equipment Group
Kyocera Mita Corporation . . . . . . . . . . . . . . . . . . .

Japan

100.00%

Manufacture and sale ofinformation equipment

Kyocera Mita Japan Corporation . . . . . . . . . . . . . .

Japan

100.00%

Sale of information equipment

Kyocera Mita America, Inc. . . . . . . . . . . . . . . . . . . United States

100.00%

Sale of information equipment

Kyocera Mita Office Equipment (Dongguan)Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

China

92.76%

Manufacture and sale ofinformation equipment

Kyocera Mita Europe B.V. . . . . . . . . . . . . . . . . . . .

Netherlands

100.00%

Sale of information equipment

Kyocera Mita Deutschland GmbH . . . . . . . . . . . . .

Germany

100.00%

Sale of information equipment

Kyocera Communication Systems Co., Ltd. . . . . .

Japan

76.30%

Provision of IT services

Kyocera Optec Co., Ltd. . . . . . . . . . . . . . . . . . . . . .

Japan

100.00%

Manufacture and sale of
optical equipment components

Kyocera Realty Development Co., Ltd. . . . . . . . . .

Japan

100.00%Real estate services

Hotel Kyocera Co., Ltd. . . . . . . . . . . . . . . . . . . . . .

Japan

100.00%Hotel management andoperations

Hotel Princess Kyoto Co., Ltd. . . . . . . . . . . . . . . . .

Japan

100.00%Hotel management andoperations

Kyocera International Co., Ltd. . . . . . . . . . . . . . . .

Japan

100.00%Insurance and travel agency

Kyocera Chemical Corporation . . . . . . . . . . . . . . .

Japan

100.00%

Manufacture and sale ofelectronic materials

Piazza Investment Co., Ltd. . . . . . . . . . . . . . . . . . .

China

100.00%Real estate leasing(7) Others

26

Country ofIncorporation

Percentage
held by
KyoceraKyocera International, Inc. . . . . . . . . . . . . . . . . . . . United States

100.00%Holding company andheadquarters in North America

Kyocera Asia Pacific Pte. Ltd. . . . . . . . . . . . . . . . .

Singapore

100.00%

Sale of fine ceramic-related
products and electronic
devices mainly in Southeast
Asia

Kyocera Fineceramics GmbH . . . . . . . . . . . . . . . . .

Germany

100.00%

Sale of fine ceramic-related
products, solar energy
products and thin-film devices
mainly in Europe

Kyocera (Tianjin) Sales & Trading Corporation . .

China

90.00%

Sale of fine ceramic-related
products, solar energy
products, electronic devices
and information equipment
mainly in China

Name

Main Business(8) Regional Holding or Sales Companies

In addition to the above consolidated subsidiaries, Kyocera had 133 other consolidated subsidiaries as ofMarch 31, 2008. Kyocera also had interests in two subsidiaries accounted for by the equity method and 10
affiliates accounted for by the equity method as of March 31, 2008
AVX Corporation, in our Electronic Device Group, is one of our most significant subsidiaries. Most of theelectronic devices we produce for overseas sales are distributed through AVX Corporation by utilizing AVX
Corporation’s wide range of marketing channels. In addition, we market passive components produced by AVX
Corporation in the Japanese market. We also utilize AVX Corporation’s manufacturing process for ceramic
capacitors to improve productivity and to enhance our competitiveness. In addition, AVX Corporation introduced
our materials technologies into its ceramic capacitor production. We have been seeking better ways to cooperate inexpanding our electronic device businesses. Currently, four of our directors are members of AVX Corporation’sboard of directors and AVX Corporation’s chief executive officer is one of our directors. Within the Electronic
Device Group, we have a close relationship with AVX Corporation in marketing, manufacturing, and research anddevelopment, and we are seeking and pursuing synergies to be a leading passive component manufacturer. AVX
Corporation posted net income of $149,473 thousand in fiscal 2008 and its strong performance contributed
significantly to Kyocera’s results of operations and financial condition. See Item 5.A “Operating Results” of thisannual report on Form 20-F.
D. Property, Plants and Equipment
Our manufacturing operations are conducted in Japan, the United States, Mexico, El Salvador, Brazil, the United
Kingdom, Germany, France, the Czech Republic, Singapore, South Korea, China, Taiwan, Malaysia, Israel,
Thailand and Philippines. As of March 31, 2008, we had property, plants and equipment with a net book value of¥285,899 million ($2,859 million). During the five years ended March 31, 2008, we invested a total of¥361,918 million ($3,619 million) for additions to property, plants and equipment. Our property, plants andequipment are subject to some material encumbrances or environmental issues. See Item 5.A “Operating Results”
of this annual report on Form 20-F.

27

The following table sets forth information, as of March 31, 2008, with respect to our manufacturing facilities
with floor space of more than 250,000 square feet.
Name of Plant

Location

StatusLease
Principal Products
Floor Space
Expires Manufactured(in thousandsof square feet)Japan
Hokkaido Kitami Plant . . . . Kitami, Hokkaido

Owned

295

Nagano Okaya Plant . . . . . . Okaya, Nagano

Owned

382

Kawaguchi Plant . . . . . . . . . Kawaguchi, Saitama

Owned

389

Tamaki Plant . . . . . . . . . . . . Watarai, Mie
Shiga Gamo Plant . . . . . . . . Higashi-Ohmi, Shiga

Owned
Owned

288
686

Shiga Yokaichi Plant . . . . . . Higashi-Ohmi, Shiga

Owned

1,555

Hirakata Plant . . . . . . . . . . . Hirakata, Osaka
Kagoshima Sendai Plant . . . Satsuma-Sendai,
Kagoshima

Owned
Owned

604
1,928

Owned

2,750

Owned

278

Owned
Owned

379
291

Electronic components
Organic multilayer
printed circuit boards

Owned
Owned

300
569

Semiconductor parts
Electronic components

Owned

300

Information equipment

Owned

420

Electronic components

Leased387

2016 Electronic components

Owned
Owned

308
273

Electronic components
Electronic components

Kagoshima Kokubu
Plant . . . . . . . . . . . . . . . . Kirishima, Kagoshima

Kagoshima Hayato Plant . . . Kirishima, Kagoshima
Yamagata Higashine
Plant . . . . . . . . . . . . . . . . Higashine, Yamagata
Ayabe Plant . . . . . . . . . . . . . Ayabe, Kyoto

Telecommunications
equipment,
Semiconductor parts,
Fine ceramic parts
Fine ceramic parts,
Electronic components,
Cutting tools
Electronic parts andmaterials
Information equipment
Fine ceramic parts,
Semiconductor parts
Fine ceramic parts,
Electronic components,
Solar cells, Cutting tools
Information equipment
Fine ceramic parts,
Semiconductor parts,
Electronic components,
Cutting tools
Fine ceramic parts,
Semiconductor parts,
Electronic components
Electronic components

United States
Balboa Plant . . . . . . . . . . . . San Diego, California
Myrtle Plant . . . . . . . . . . . . Myrtle Beach, South
Carolina
South Carolina Plant . . . . . . Fountain Inn, South
Carolina
El Salvador
San Salvador Plant . . . . . . . San Salvador
FranceSaint-Apollinaire Plant . . . . Saint-Apollinaire
Czech Republic
Lanskroun Plant . . . . . . . . . Lanskroun
Uherske Hradiste Plant . . . . Uherske Hradiste28Name of Plant

Location

StatusLease
Principal Products
Floor Space
Expires Manufactured(in thousandsof square feet)

China
Tianjin Plant . . . . . . . . . . . . Tianjin
Shilong Plant . . . . . . . . . . . . Dongguan, Guandong
Shilong Plant . . . . . . . . . . . . Dongguan, Guandong

Owned
Leased
Owned

520
2,331
795

Electronic components
2020 Information equipment
Cutting tools, Electronic
components
Semiconductor parts,
Electronic components

Shanghai Pudong Plant . . . . Shanghai

Owned

1,040

Owned

264

Electronic components

Owned

332

Electronic components

ThailandThailand Plant . . . . . . . . . . . Thailand
Philippines
Philippines Plant . . . . . . . . . Philippines
Item 4A. Unresolved Staff Comments
We are a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934. There are no
written comments which have been provided by the staff of the Securities and Exchange Commission regarding
our periodic reports under that Act not less than 180 days before the end of the fiscal year ended March 31, 2008
and which remain unresolved as of the date of the filing of this annual report on Form 20-F with the Commission.
Item 5.

Operating and Financial Review and Prospects

A. Operating Results
You should read the discussion of our financial condition and results of operations together with ourconsolidated financial statements and information included in this annual report on Form 20-F. This discussion
and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual
results may differ materially from those anticipated in these forward-looking statements as a result of certain
factors, including, but not limited to, those set forth under Item 3.D “Risk Factor” and elsewhere in this annual
report on Form 20-F.
Overview
Kyocera develops, produces and distributes various kinds of products for the telecommunications andinformation processing and environmental protection markets worldwide. Kyocera Corporation was establishedin 1959 as a manufacturer of ceramic parts for electronic equipment and has been expanding and diversifying its
business mainly through active mergers and acquisitions, as well as applying its fine ceramic technologies to theareas of semiconductor parts, electronic devices, telecommunication, metal processing, medical and dental
implants and solar energy fields. Kyocera develops, produces and distributes a variety of parts and devices forelectronic equipment such as computers, automobiles, printers, copiers and multi functional peripheral as well as
consumer electronic equipment such as mobile phone handsets, digital still cameras and flat panel TV sets.
Kyocera earns revenue and income and generates cash through sales of these products.
Kyocera’s operations are categorized 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. Kyocera groups
the Fine Ceramic Parts Group, the Semiconductor Parts Group, the Applied Ceramic Products Group and theElectronic Device Group into one main business referred to as “the Components Business” and groups the
Telecommunications Equipment Group and the Information Equipment Group into another main businessreferred to as “the Equipment Business.”
29

The Japanese economy in fiscal 2008 was characterized by steadily increasing exports and a high level ofcorporate earnings, while individual consumption was also stable. Slumping housing investment and risingenergy and raw material prices, however, resulted in only moderate economic expansion overall. In the UnitedStates, credit uneasiness worsened, triggered by issues related to housing loans for individuals with low
creditworthiness and culminating in heightened fears of a business slowdown beginning in the summer of 2007.
Combined with this, a drop-off in individual consumption and restrained capital investment occurred and resulted
in economic deceleration. The European economy expanded moderately, supported by an increase in exports.
Individual consumption in Europe has tapered off since the start of calendar year 2008, however, and theeconomic outlook has become increasingly uncertain. The Chinese economy continued to expand on account of
increases in capital investment and exports, together with robust individual consumption.
Most profits at Kyocera come through sales of products and providing services in the information technology(IT) markets including electronic equipment related market. In the digital consumer equipment market, which isthe principal market for Kyocera, demands for mobile phone handsets, flat panel TV sets and other equipment
expanded steadily, particularly in the first half of fiscal 2008. There have been inventory adjustments for mobile
phone handsets in certain Asian markets, however, since the start of calendar year 2008. In addition, the yen
appreciated against the U.S. dollar, with the exchange rate at one time dropping below 100 yen to the dollar.
Amid these market environments, Kyocera worked aggressively to introduce new products and improve
productivity in order to achieve continuous sales expansion and high profitability. As a result, consolidated net
sales for fiscal 2008 amounted to ¥1,290,436 million ($12,904 million), an increase of only 0.5% compared withthe year ended March 31, 2007. This result can be attributed to an increase in sales in the Components Business,
which more than offset a decrease in sales in the Equipment Business. Operating profit increased by 7.2% to¥156,332 million ($1,563 million) due to a significant increase in profit in the Equipment Business, which waspartly offset by a decrease in profit in the Components Business.

30

Results of Operations
Fiscal 2008 compared with Fiscal 2007
The following table shows a summary of Kyocera’s results of operations for fiscal 2007 and fiscal 2008:

2007
AmountYears ended March 31,
2008%
Amount%(Yen in millions and U.S. dollars in thousands)

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,283,897
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . .
900,470

100.0 ¥1,290,436
70.1
883,763

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . . . . .

383,42729.9

248,325

Profit from operations . . . . . . . . . . . . . . . . .
Interest and dividend income . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . .
Foreign currency transaction losses, net . . .
Equity in earnings of affiliates andunconsolidated subsidiaries . . . . . . . . . .
Gains (losses) on sales of securities, net . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . .

Increase(Decrease)%$12,904,360
8,837,630

100.0
68.5

0.5
(1.9)

406,673

4,066,730

31.5

6.1

19.4

254,253

2,542,530

19.7

2.4

135,102
15,472(1,647)
(65)

10.5
1.2
(0.1)
(0.0)

152,420
18,444(1,480)(956)

1,524,200
184,440(14,800)(9,560)

11.8
1.4
(0.1)
(0.1)

12.8
19.2
—
—

2,621
3,819
1,238

0.2
0.3
0.1

6,091
(622)
945

60,910(6,220)
9,450

0.5
(0.1)
0.1

132.4
—
(23.7)

21,4381.7

22,422

224,220

1.7

4.6

Income from continuing operations
before income taxes and minority
interests . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . .

156,540
48,88712.2
3.8

174,842
60,235

1,748,420
602,350

13.5
4.6

11.7
23.2

Income from continuing operations
before minority interests . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . .

107,653(6,324)8.4(0.5)

114,607(7,363)

1,146,070(73,630)

8.9
(0.6)

6.5
—

Income from continuing operations . .
Income from discontinued operations . . . . .

101,329
5,175

7.9
0.4

107,244—

1,072,440
—

8.3
—

5.8
—

Net income . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 106,504

8.3¥ 107,244$ 1,072,440

8.3

0.7

Net sales
Consolidated net sales for fiscal 2008 increased by ¥6,539 million ($65 million), or 0.5%, to ¥1,290,436 million($12,904 million), compared with ¥1,283,897 million in fiscal 2007.
Consolidated net sales in the Components Business in fiscal 2008 increased by ¥29,113 million ($291 million),or 4.5%, to ¥679,990 million ($6,800 million) compared with fiscal 2007. In particular, sales in the Applied
Ceramic Products Group increased by ¥18,839 million ($188 million), or 14.4% compared with fiscal 2007. Thissignificant increase in sales in the Applied Ceramic Products Group was driven by the solar energy business,
which was particularly strong in the overseas market. In addition, a steady increase in production in the digitalconsumer equipment market until the third quarter in fiscal 2008 led to growth in sales in the Electronic Device
Group by ¥8,045 million ($80 million), or 2.8% compared with fiscal 2007. The Semiconductor Parts Group also
posted an increase in sales of ¥2,246 million ($22 million), or 1.5% compared with fiscal 2007. On the other
hand, sales in the Fine Ceramic Parts Group in fiscal 2008 slightly decreased by ¥17 million ($0.2 million),compared with fiscal 2007 due to the effect by slowdown in semiconductor industry.
31

By contrast, consolidated net sales in the Equipment Business in fiscal 2008 decreased by ¥22,401 million ($224
million), or 4.3% to ¥497,563 million ($4,976 million) compared with fiscal 2007. Sales in the
Telecommunication Equipment Group decreased by ¥30,366 million ($304 million), or 12.1% compared withfiscal 2007, due to a decline in sales of mobile phone handsets. On the other hand, sales in the Information
Equipment Group increased by ¥7,965 million ($80 million), or 3.0% compared with fiscal 2007, spurred byenhanced sales activities through aggressive new product introductions of printers and multi functional
peripherals (MFPs).
A detailed analysis and discussion of Kyocera’s net sales by reporting segment and geographic segment are as
follows:
Net sales by reporting segment
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2007 and fiscal 2008by the seven reporting segments:

2007
AmountYears ended March 31,
2008%
Amount%(Yen in millions and U.S. dollars in thousands)

81,326
152,292
131,103
286,156

6.3
11.9
10.2
22.3

Total Components Business . . . . . . . .
Telecommunications Equipment Group . . .
Information Equipment Group . . . . . . . . . .

650,877
251,183
268,781

50.7
19.6
20.9

Total Equipment Business . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments and eliminations . . . . . . . . . . .

519,964
137,235(24,179)

40.5
10.7
(1.9)

Fine Ceramic Parts Group . . . . . . . . . . . . . .
Semiconductor Parts Group . . . . . . . . . . . .
Applied Ceramic Products Group . . . . . . . .
Electronic Device Group . . . . . . . . . . . . . .

¥¥1,283,897¥

81,309154,538
149,942294,201$

Increase(Decrease)%813,090
1,545,380
1,499,420
2,942,010

6.3
12.0
11.6
22.8

(0.0)
1.5
14.4
2.8

679,990
220,817
276,746

6,799,900
2,208,170
2,767,460

52.7
17.1
21.5

4.5
(12.1)
3.0

497,563
138,494(25,611)

4,975,630
1,384,940(256,110)

38.6
10.7
(2.0)

(4.3)
0.9
—

100.0 ¥1,290,436$12,904,360

100.0

0.5

Note 1: Commencing fiscal 2008, the “Optical Equipment Group,” previously a separate reporting segment, hasbeen reclassified into “Others.” Accordingly, net sales of “Others” in fiscal 2007 have been retroactively
reclassified and increased by ¥11,579 million and “Adjustments and eliminations” decreased by ¥(125) million
compared with those previously announced.
(1) Fine Ceramic Parts Group
Sales in this reporting segment in fiscal 2008 remained almost unchanged from fiscal 2007 at ¥81,309 million($813 million), compared with ¥81,326 million in fiscal 2007.
Sales of parts for diesel engines for automobiles, sapphire substrates for LEDs and dielectric parts for mobile
phone base stations all increased. However, there was a decrease in demand for parts for semiconductor
fabrication equipment, one of the core products in this reporting segment, due to a decrease in capital investmentin the semiconductor industry.
(2) Semiconductor Parts Group
Sales in this reporting segment in fiscal 2008 increased by ¥2,246 million ($22 million), or 1.5%, to ¥154,538
million ($1,545 million), compared with ¥152,292 million in fiscal 2007.
32

Demands for ceramic packages used in mobile phone handsets and digital-still-cameras increased steadily.
Furthermore, sales of organic packages for servers increased. Sales of parts for optical telecommunications
devices decreased due to demand adjustments and a decline in selling prices, however, leading to only a slightincrease in overall sales in this reporting segment compared with fiscal 2007.
(3) Applied Ceramic Products Group
Sales in this reporting segment in fiscal 2008 increased by ¥18,839 million ($188 million), or 14.4%, to ¥149,942
million ($1,499 million), compared with ¥131,103 million in fiscal 2007.
An increase of approximately 10% in production volume and stable selling price for PV systems due toworldwide brisk demand, notably in Europe, coupled with the depreciation of the yen against the Euro led to aconsiderable growth in sales in the solar energy business. In addition, sales in the cutting tool business also
increased due to strong sales of new products. As a result, overall sales in this reporting segment increased.
(4) Electronic Device Group
Sales in this reporting segment in fiscal 2008 increased by ¥8,045 million ($80 million), or 2.8%, to ¥294,201
million ($2,942 million), compared with ¥286,156 million in fiscal 2007.
Demands for capacitors and timing devices decreased in Asia in the fourth quarter of fiscal 2008. Production ofdigital consumer equipment was solid throughout fiscal 2008, however, resulting in steady growth in sales in thisreporting segment compared with fiscal 2007. Decline in selling prices occurred only within 10% range overall
compared with fiscal 2007, although more than 10% decline were recognized in some products.
(5) Telecommunications Equipment Group
Sales in this reporting segment in fiscal 2008 decreased by ¥30,366 million ($304 million), or 12.1%, to¥220,817 million ($2,208 million), compared with ¥251,183 million in fiscal 2007.
Although sales in PHS related products remained on par with fiscal 2007, sales in the mobile phone handset
business declined by approximately 14% compared with fiscal 2007. Shipment volume of mobile phone and PHS
handsets in fiscal 2008 decreased by approximately 6%, to approximately 12.9 million units compared withapproximately 13.7 million units in fiscal 2007.
(6) Information Equipment Group
Sales in this reporting segment in fiscal 2008 increased by ¥7,965 million ($80 million), or 3.0%, to ¥276,746
million ($2,767 million), compared with ¥268,781 million in fiscal 2007. Sales of printers, particularly inEurope, increased spurred by aggressive new product introductions and enhanced sales activities.
Unit sales of printers, copying machines and MFPs in fiscal 2008 increased by approximately 6% toapproximately 1.20 million units compared with approximately 1.13 million units in fiscal 2007. In addition,
sales of MFPs and consumables also increased compared with fiscal 2007.
(7) Others
Sales in this reporting segment in fiscal 2008 increased by ¥1,259 million ($13 million), or 0.9%, to ¥138,494
million ($1,385 million), compared with ¥137,235 million in fiscal 2007. This increase was due mainly to growthof sales in the telecommunications engineering business for mobile telecommunication market at Kyocera
Communication Systems Co., Ltd.
33

Net sales by geographic segment
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2007 and fiscal 2008,
distinguishing between domestic and overseas sales and, with respect to overseas sales, showing the geographicalareas in which such sales were made:2007
AmountJapan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 496,959
United States of America . . . . . . . . . . . . . .
274,361
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
216,663
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
210,726
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85,188¥1,283,897

Years ended March 31,
2008%
Amount%(Yen in millions and U.S. dollars in thousands)

Increase(Decrease)%38.7 ¥ 507,837 $ 5,078,370
21.4
248,760
2,487,600
16.9
232,425
2,324,250
16.4
224,066
2,240,660
6.6
77,348773,480

39.4
19.3
18.0
17.3
6.0

2.2
(9.3)
7.3
6.3
(9.2)

100.0 ¥1,290,436

100.0

0.5

$12,904,360

Sales in Japan, which comprised 39.4% of consolidated net sales, increased by ¥10,878 million ($109 million), or
2.2%, to ¥507,837 million ($5,078 million), compared with ¥496,959 million in fiscal 2007. This growth was
mainly led by an increase in sales in the Semiconductor Parts Group. This increase was caused by a rise indemand for both ceramic and organic packages and by a sales increase in “Others” business due to sales growthat Kyocera Communication Systems Co., Ltd.
Overseas sales, which comprised 60.6% of consolidated net sales, decreased by ¥4,339 million ($43 million), or
0.6%, to ¥782,599 million ($7,826 million), compared with ¥786,938 million, in fiscal 2007.
Although sales in Asia and Europe increased, sales in the United Stated and in Others declined.
Sales in the United States in fiscal 2008 decreased by ¥25,601 million ($256 million), or 9.3%, to ¥248,760
million ($2,488 million), compared with ¥274,361 million in fiscal 2007, due mainly to a decline in sales ofmobile phone handsets at Kyocera Wireless Corp.
Sales in Asia in fiscal 2008 increased by ¥15,762 million ($158 million), or 7.3%, to ¥232,425 million ($2,324
million), compared with ¥216,663 million in fiscal 2007, due to sales growth of the Electronic Device Group for
digital consumer equipment.
Sales in Europe in fiscal 2008 increased by ¥13,340 million ($133 million), or 6.3%, to ¥224,066 million ($2,241
million), compared with ¥210,726 million in fiscal 2007, due to sales growth of products in the Information
Equipment Group such as printers and MFPs combined with growth in sales in the Applied Ceramic ProductsGroup driven by expanded sales in the solar energy business.
Sales in Others in fiscal 2008 decreased by ¥7,840 million ($78 million), or 9.2%, to ¥77,348 million ($ 773
million), compared with ¥85,188 million in fiscal 2007, due mainly to sales declines in the Telecommunication
Equipment Group in Latin America and Oceania, offset by sales increases in the Information Equipment Groupin Latin America and Middle East.
Almost all of Kyocera’s overseas sales were denominated in the U.S. dollars or the Euro. On average, the yen
appreciated against the U.S. dollar by ¥3 and depreciated against the Euro by ¥12, compared with fiscal 2007.
Net sales in U.S. dollars amounted to $4,154 million and net sales in Euro amounted to €1,404 million in fiscal
2008. In converting these currencies into yen, the positive impact produced by the yen’s depreciation against theEuro outweighed the negative impact of the yen’s appreciation against the U.S. dollar, increasing net sales byapproximately ¥5,900 million ($59 million) compared with fiscal 2007.
34

Cost of sales and gross profit
In fiscal 2008, cost of sales decreased by ¥16,707 million ($167 million), or 1.9%, to ¥883,763 million ($8,838
million) from ¥900,470 million in fiscal 2007. Raw material costs of ¥377,203 million ($3,772 million)
accounted for 42.7% of the total cost of sales, and labor costs of ¥167,542 million ($1,675 million) accounted for
19.0%. The change in depreciation methods in Kyocera Corporation and its domestic subsidiaries caused anincrease of ¥11,295 million ($113 million) in the depreciation expense of cost of sales. However, due mainly to
an increase in the contribution ratio to net sales of the Components Business, of which the ratio of cost of sales to
net sales was relatively low, as well as due to improved productivity, the ratio of cost of sales to net sales was
68.5% in fiscal 2008, a decrease of 1.6 points as compared with 70.1% in fiscal 2007.
As a result, gross profit increased in fiscal 2008 by ¥23,246 million ($232 million), or 6.1%, to ¥406,673 million($4,067 million) from ¥383,427 million in fiscal 2007. The gross profit to net sales ratio increased by 1.6
percentage points from 29.9% to 31.5%.
SG&A expenses and profit from operations
Selling, general and administrative (SG&A) expenses in fiscal 2008 increased by ¥5,928 million ($59 million), or
2.4%, to ¥254,253 million ($2,543 million) compared with ¥248,325 million in fiscal 2007. Labor cost was¥123,538 million ($1,235 million), or 48.6% of total SG&A expenses, and sales promotion and advertising costwas ¥40,544 million ($405 million), or 15.9% of total SG&A expenses. The proportion of SG&A expenses to net
sales increased by 0.3 percentage points to 19.7% in fiscal 2008 from 19.4% in fiscal 2007. This increaseprimarily reflected increases in labor costs in sales subsidiaries in Europe due to the average depreciation of the
yen against the Euro compared with fiscal 2007, as well as increases in depreciation expense in Kyocera
Corporation and its domestic subsidiaries due to the change in depreciation methods. The depreciation expense
increased by ¥998 million ($10 million) due to the change in depreciation methods.
Although SG&A expenses increased as above, profit from operations increased by ¥17,318 million ($173
million), or 12.8%, to ¥152,420 million ($1,524 million), compared with ¥135,102 million in fiscal 2007, due toa further increase in gross profit. The operating margin rose by 1.3 percentage points to 11.8% in fiscal 2008,
compared with 10.5% in fiscal 2007.
Interest and dividend income
Interest and dividend income in fiscal 2008 increased by ¥2,972 million ($30 million), or 19.2%, to ¥18,444
million ($184 million), compared with ¥15,472 million in fiscal 2007. This was mainly due to favorable
investment management results and an increase in dividend income from KDDI Corporation. Kyocera has aninvestment policy aimed at low risk, stability and liquidity, and does not invest in high-risk financial instruments
only for pursuing profits.
Interest expense
Interest expense in fiscal 2008 decreased by ¥167 million ($2 million), or 10.1%, to ¥1,480 million ($15 million),compared with ¥1,647 million in fiscal 2007. This was mainly due to a decrease of borrowings at domestic
subsidiaries, in spite of a slight upward trend of interest rates in the Japanese financial market.
Foreign currency translation
During fiscal 2008, the average exchange rate for the yen appreciated by ¥3, or 2.6%, against the U.S. dollar anddepreciated by ¥12, or 8.0%, against the Euro, as compared with fiscal 2007. At March 31, 2008, the yen had
appreciated by ¥18, or 15.3%, against the U.S. dollar and had depreciated by ¥1, or 0.6%, against the Euro, as
compared with March 31, 2007. Kyocera recorded foreign currency transaction losses of ¥956 million ($10
million) in fiscal 2008.
35

Kyocera typically enters into forward exchange contracts to minimize currency exchange risks on foreign
currency denominated receivables and payables. Kyocera confines its use of derivative financial instruments forhedging its foreign exchange exposures, and does not utilize derivative transactions for trading purposes.
Gains and losses from investments
In fiscal 2008, Kyocera’s earnings on equity-method investments increased by ¥3,470 million ($35 million), or
132.4%, to ¥6,091 million ($61 million), compared with ¥2,621 million in fiscal 2007.
Kyocera’s equity in earnings of affiliates and unconsolidated subsidiaries in fiscal 2008 was derived mainly frominterests in WILLCOM, Inc.
Kyocera Corporation owns a 30% interest in WILLCOM, Inc., which operates a PHS service in Japan. Kyocera
Corporation accounted for this investment using the equity method. The increase in net income at WILLCOM,
Inc. was caused by an increase in net sales due to a steady increase in customers in fiscal 2008. As a result,
Kyocera’s earnings on equity-method investments increased significantly.
Gains (losses) on sales of securities, net in fiscal 2008 decreased by ¥4,441 million ($44 million), from a gain of¥3,819 million in fiscal 2007 to a loss of ¥622 million ($6 million) in fiscal 2008. Gains in fiscal 2007 were due
mainly to realization of unrealized gains by sale of investment securities.
Kyocera Mita Corporation owns a 30% interest in Triumph-Adler AG Group (TA), which is a distributor of
office equipment, Kyocera Mita Corporation accounted for its investment in TA under the equity method.
Kyocera recognized loss on impairment of investment in TA of ¥3,492 million due to an extended decline inTA’s market value in fiscal 2006. Kyocera did not recognize loss on impairment of investment in TA due to anincrease of TA’s market value in fiscal 2007 and 2008.
Income from continuing operations before income taxes
Income from continuing operations before income taxes in fiscal 2008 increased by ¥18,302 million ($183
million), or 11.7%, to ¥174,842 million ($1,748 million) compared with ¥156,540 in fiscal 2007.
Due mainly to an increase in depreciation costs of ¥9,510 million ($95 million), or 20.8%, in fiscal 2008
compared with fiscal 2007, which resulted from a comprehensive review of the value of fixed assets, operating
profit in Components Business decreased by ¥4,335 million ($43 million), or 4.1%, to ¥100,373 million ($1,004
million) in fiscal 2008 compared with fiscal 2007.
In Equipment business, however, the profits of both the Telecommunications Equipment Group and theInformation Equipment Group increased significantly by ¥12,063 million ($121 million) to ¥46,324 million($463 million), or 35.2% compared with fiscal 2007. In addition, interest and dividend income and equity inearnings of affiliates and unconsolidated subsidiaries, as mentioned earlier, also increased by ¥2,972 million ($30
million), or 19.2%, and by ¥3,470 million ($35 million), or 132.4%, respectively.

36

Operating profit by reporting segment
The following table shows Kyocera’s consolidated income from continuing operations before income taxes, andoperating profit for fiscal 2007 and fiscal 2008, broken down by the seven reporting segments:
2007
AmountYears ended March 31,
Increase2008(Decrease)%*
Amount%*%(Yen in millions and U.S. dollars in thousands)

Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . ¥ 15,677 19.3 ¥ 11,167 $ 111,670 13.7
Semiconductor Parts Group . . . . . . . . . . . . . . . . . .
22,210 14.6
20,027200,270 13.0
Applied Ceramic Products Group . . . . . . . . . . . . . .
22,334 17.0
32,655326,550 21.8
Electronic Device Group . . . . . . . . . . . . . . . . . . . .
44,487 15.5
36,524365,240 12.4

(28.8)(9.8)
46.2(17.9)

Total Components Business . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . .

104,708291
33,970

16.1
0.1
12.6

100,373
6,786
39,5381,003,730
67,860395,380

14.8
3.1
14.3

(4.1)
—
16.4

Total Equipment Business . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34,261
6,881

6.6
5.0

46,324
9,635

463,240
96,350

9.3
7.0

35.2
40.0

Operating profit . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earning of affiliates and unconsolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments and eliminations . . . . . . . . . . . . . . . . .

145,850
8,569

11.4
—

156,332
12,497

1,563,320
124,970

12.1
—

7.2
45.8

2,621 —
(500) —

6,091
(78)

60,910 —(780) —

132.4—

Income from continuing operations before
income taxes . . . . . . . . . . . . . . . . . . . . . . . . ¥156,540

12.2¥174,842$1,748,420

13.5

11.7

* % to net sales of each corresponding segment
Note 2: Commencing fiscal 2008, the “Optical Equipment Group,” previously a separate reporting segment, hasbeen reclassified into “Others.” Accordingly, operating profit of “Others” in fiscal 2007 have been retroactively
reclassified and decreased by ¥1,895 million compared with those previously announced.
(1) Fine Ceramic Parts GroupOperating profit in this reporting segment in fiscal 2008 decreased by ¥4,510 million ($45 million), or 28.8%, to¥11,167 million ($112 million) compared with ¥15,677 million in fiscal 2007.
This was primarily due to an increase of ¥2,995 million ($30 million) in depreciation costs, or 67.2% comparedwith fiscal 2007.
(2) Semiconductor Parts GroupOperating profit in this reporting segment in fiscal 2008 decreased by ¥2,183 million ($22 million), or 9.8%, to¥20,027 million ($200 million), compared with ¥22,210 million in fiscal 2007.
Although losses shrank substantially in the organic package business, overall operating profit in this reporting
segment decreased due mainly to an increase in depreciation costs of ¥2,086 million ($21 million), or 17.0%
compared with fiscal 2007, in addition to a decline in selling prices.
(3) Applied Ceramic Products GroupOperating profit in this reporting segment in fiscal 2008 increased by ¥10,321 million ($103 million), or 46.2%,
to ¥32,655 million ($327 million), compared with ¥22,334 million in fiscal 2007.
37

Significant sales increases in the solar energy business largely contributed to this growth in operating profit inthis reporting segment.
(4) Electronic Device GroupOperating profit in this reporting segment in fiscal 2008 decreased by ¥7,963 million ($80 million), or 17.9%, to¥36,524 million ($365 million), compared with ¥44,487 million in fiscal 2007.
This substantial decrease in operating profit compared with fiscal 2007 was due to rising production costs led byrising raw material prices and an increase in depreciation costs in total of ¥2,861 million ($ 29 million), or
13.6%.
(5) Telecommunications Equipment GroupOperating profit in this reporting segment in fiscal 2008 increased by ¥6,495 million ($65 million), to ¥6,786
million ($68 million) compared with ¥291 million in fiscal 2007.
Despite of an effort to reduce production costs, sales declined substantially in the mobile phone handset businesscompared with fiscal 2007, resulting in a decrease in operating profit to ¥4.2 billion ($42 million) compared with
¥4.9 billion in fiscal 2007. Operating profit in PHS related business, on the other hand, improved considerably infiscal 2008, posted a substantial increase of ¥7.2 billion ($72 million), led to ¥2.6 billion ($26 million), comparedwith ¥4.6 billion loss in fiscal 2007 due to concentration of the PHS business in the Japanese market.
(6) Information Equipment GroupOperating profit in this reporting segment in fiscal 2008 increased by ¥5,568 million ($56 million), or 16.4%, to¥39,538 million ($395 million), compared with ¥33,970 million in fiscal 2007.
This significant increase in operating profit was due to increased in sales of new product introductions and thecontribution of increased sales of consumables, which constituted approximately 40% of sales in this reporting
segment, in addition to the positive effect of the yen’s depreciation against the Euro.
(7) Others
Operating profit in this segment in fiscal 2008 increased by ¥2,754 million ($28 million), or 40.0%, to ¥9,635
million ($96 million), compared with ¥6,881 million in fiscal 2007.
This was due mainly to improved profitability at Kyocera Communication Systems Co., Ltd. and improved
productivity in the optical related business.
(8) Corporate
Corporate income and losses mainly constitute investment management income, and income and expenses
related to the provision of management-related services by Kyocera’s head office to each reporting segment.
Corporate income increased by ¥3,928 million ($39 million), or 45.8%, to ¥12,497 million ($125 million)
compared with ¥8,569 million in fiscal 2007. Interest and dividend income, which were the main contributors,
increased compared with fiscal 2007. As a result, corporate profit increased compared with fiscal 2007.
Taxes
Current and deferred income taxes in fiscal 2008 increased by ¥11,348 million ($113 million), or 23.2%, to¥60,235 million ($602 million) compared with ¥48,887 million in fiscal 2007.
Current income taxes in fiscal 2007 included the tax refunds of ¥4,305 million. The tax refunds were related tothe cancellation of a portion of ¥12,748 million additional taxes imposed by Osaka Regional Tax Bureau on
March 28, 2005 which Kyocera had expensed in the year ended March 31, 2005. Current income taxes in fiscal
38

2008 included the tax expense of ¥3,242 million ($32 million) by applying the Financial Accounting Standards
Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB statement
No.109” (“FIN 48”).
The effective tax rate of 34.5% in fiscal 2008 was 3.3 points higher than the effective rate in fiscal 2007 of
31.2%. The increase in the effective tax rate is due mainly to the decrease in tax refunds in fiscal 2007 by 2.8
points from the Japanese statutory tax rate, while the increase by 1.9 points from applying FIN 48 and a decreaseof 0.9 points due to a change in tax rates in Chinese subsidiaries in fiscal 2008.
For detailed information, see Note 17 to the Consolidated Financial Statements in this annual report on Form
20-F.
Minority interests
Minority interests in fiscal 2008 amounted to ¥7,363 million ($74 million) and minority interests related to AVX
Corporation, which accounted for approximately 30% of minority ownership interests, amounted to ¥4,964
million ($50 million). Minority interests in fiscal 2008 increased by ¥1,039 million ($10 million) compared withminority interests of ¥6,324 million in fiscal 2007. This was due mainly to an increase in net income at Kyocera
Communication Systems Co., Ltd., which accounted for approximately 25% of minority ownership interests.
Fiscal 2007 compared with Fiscal 2006
The following table shows a summary of Kyocera’s results of operations for fiscal 2006 and fiscal 2007:
Years ended March 31,
2006
2007
Amount%Amount(Yen in millions)%

Increase(Decrease)%

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,173,544
835,042

100.0
71.2

¥1,283,897
900,470

100.0
70.1

9.4
7.8

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . .

338,502
238,80728.8
20.3

383,427
248,325

29.9
19.4

13.3
4.0

Profit from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency transaction gains (losses), net . . . . . . . . . . . . . . . . .
Equity in (losses) earnings of affiliates and unconsolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains on sales and maturities of securities, net . . . . . . . . . . . . . . . . . .
Gains on exchange for the shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of investment in an affiliate . . . . . . . . . . . . . . . . . . . . . .
Loss on impairment of investment in an affiliate . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

99,6958,990(1,301)
(316)

8.5
0.8
(0.1)
0.0

135,102
15,472(1,647)
(65)

10.5
1.2
(0.1)
(0.0)

35.5
72.1
—
—

(1,216)
1,472
5,294
6,931
(3,492)
1,180

(0.1)
0.1
0.4
0.6
(0.3)
0.1

2,621
3,819
24
26
—
1,188

0.2
0.3
0.0
0.0
—
0.1

—
159.4
(99.5)(99.6)—
0.7

17,542

1.5

21,438

1.7

22.2

Income from continuing operations before income taxes andminority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

117,237
46,76010.0
4.0

156,540
48,887

12.2
3.8

33.5
4.5

Income from continuing operations before minority interests . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

70,477(4,389)6.0(0.4)

107,653(6,324)

8.4
(0.5)

52.7
—

Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . .

66,088
3,608

5.6
0.3

101,329
5,175

7.9
0.4

53.3
43.4

69,696

5.9¥ 106,504

8.3

52.8

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39¥

Note 3: Kyocera sold its all of our shares in Kyocera Leasing Co., Ltd., a subsidiary engaged in financing
services; as a result, business results and profit on sales for Kyocera Leasing Co., Ltd. for fiscal 2007 have beenrecorded as income from discontinued operations in conformity with Statement of Financial AccountingStandards No.144, “Accounting for the impairment or disposal of Long-Lived Assets.” Figures for fiscal 2006
have been retrospectively reclassified for comparative purposes. As a result, reclassified consolidated net sales
for fiscal 2006 decreased by ¥7,945 million compared with the result previously reported, reclassified profit fromoperations decreased by ¥3,512 million and income from continuing operations before income taxes and minority
interests for fiscal 2006 decreased by ¥4,151 million, respectively.

Net sales
Consolidated net sales for fiscal 2007 increased by ¥110,353 million, or 9.4%, to ¥1,283,897 million, comparedwith ¥1,173,544 million in fiscal 2006.
Consolidated net sales in the Components Business in fiscal 2007 increased by ¥69,058 million, or 11.9%, to¥650,877 million compared with fiscal 2006. In particular, sales in the Electronic Device Group were strong
throughout the year, notably in ceramic capacitors and timing devices. As a result, sales in the Electronic Device
Group increased by ¥26,564 million, or 10.2% compared with fiscal 2006. In addition, sales in the Fine Ceramic
Parts Group, the Semiconductor Parts Group and the Applied Ceramic Products Group also achieved growth of
17.2%, 12.6% and 11.5%, respectively, compared with fiscal 2006.
Consolidated net sales in the Equipment Business increased by ¥41,548 million, or 8.7% to ¥519,964 million
compared with fiscal 2006. Sales in the Telecommunications Equipment Group and the Information Equipment
Group increased by ¥22,148 million, or 9.7%, and ¥19,400 million, or 7.8% compared with fiscal 2006. These
increases were due to strong demand in mobile phone handsets and new printers and multifunctional systems.
A detailed analysis and discussion of Kyocera’s net sales by reporting segment and geographic segment are as
follows:
Net sales by reporting segment
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2006 and fiscal 2007
by the seven reporting segments:
Years ended March 31,
2006
2007
Amount%Amount(Yen in millions)

81,326
152,292
131,103
286,156

6.3
11.9
10.2
22.3

17.2
12.6
11.5
10.2

Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 69,373
Semiconductor Parts Group . . . . . . . . . . . . . . . . . . . . . . . .
135,299
Applied Ceramic Products Group . . . . . . . . . . . . . . . . . . . .
117,555
Electronic Device Group . . . . . . . . . . . . . . . . . . . . . . . . . .
259,592

5.9
11.6
10.0
22.1

Total Components Business . . . . . . . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . . . . . . . .

581,819
229,035
249,381

49.6
19.5
21.2

650,877
251,183
268,781

50.7
19.6
20.9

11.9
9.7
7.8

Total Equipment Business . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments and eliminations . . . . . . . . . . . . . . . . . . . . . . .

478,416
132,290(18,981)

40.7
11.3
(1.6)

519,964
137,235(24,179)

40.5
10.7
(1.9)

8.7
3.7
—

¥1,173,544

100.0¥1,283,897

100.0

9.4

40

¥

%

Increase(Decrease)%Note 4: Commencing in fiscal 2007, the Precision Machine Division of Kyocera Corporation, formerly included
in “Corporate,” has been reclassified into “Others.” In addition, commencing in fiscal 2008, the “Optical
Equipment Group,” previously a separate reporting segment, has been reclassified into “Others.” Accordingly,
previously reported results of these reporting segments for fiscal 2006 and 2007 have been retrospectively
reclassified.
(1) Fine Ceramic Parts Group
Sales in this segment in fiscal 2007 increased by ¥11,953 million, or 17.2%, to ¥81,326 million, compared with
¥69,373 million in fiscal 2006. This increase was due primarily to expanded demand for components forsemiconductor processing equipment, spurred by strong production activities in the semiconductor industry.
(2) Semiconductor Parts Group
Sales in this segment increased by ¥16,993 million, or 12.6%, to ¥152,292 million, compared with ¥135,299
million in fiscal 2006. This increase was due mainly to increased demand for ceramic packages used in mobile
phone handsets and digital still cameras.
(3) Applied Ceramic Products Group
Sales in this segment increased by ¥13,548 million, or 11.5%, to ¥131,103 million, compared with ¥117,555
million in fiscal 2006. This increase was due mainly to sales growth of solar energy products, particularly in theEuropean market, combined with increased demand for medical materials and cutting tools.
(4) Electronic Device Group
Sales in this segment increased by ¥26,564 million, or 10.2%, to ¥286,156 million, compared with ¥259,592
million in fiscal 2006. Demand for products such as ceramic capacitors, crystal-related components, andconnectors expanded primarily due to strong production activity for digital consumer equipment. In addition,
AVX Corporation, a U.S. subsidiary, also recorded increased sales.
(5) Telecommunications Equipment Group
Sales in this segment increased by ¥22,148 million, or 9.7%, to ¥251,183 million, compared with ¥229,035
million in fiscal 2006. This increase was due to sales growth of new mobile phone handsets in Japan andoverseas.
(6) Information Equipment Group
Sales in this segment increased by ¥19,400 million, or 7.8%, to ¥268,781 million, compared with ¥249,381
million in fiscal 2006. Sales of multifunctional systems and ECOSYS printers expanded overseas as a result of
the aggressive introduction of new products and enhanced marketing activities.
(7) Others
Sales in this segment increased by ¥4,945 million, or 3.7%, to ¥137,235 million, compared with ¥132,290 million
in fiscal 2006. This increase was due mainly to growth of sales in the telecommunications engineering businessat Kyocera Communication Systems Co., Ltd.

41

Net sales by geographic segment
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2006 and fiscal 2007,
distinguishing between domestic and overseas sales and, with respect to overseas sales, showing the geographicalareas in which such sales were made:Years ended March 31,
2006
2007
Amount%Amount(Yen in millions)%

Increase(Decrease)%

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 467,035
United States of America . . . . . . . . . . . . . . . . . . . . . . . . . .
253,696
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
198,731
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
184,351
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69,731

39.8
21.6
16.9
15.7
6.0

¥ 496,959
274,361
216,663
210,726
85,188

38.7
21.4
16.9
16.4
6.6

6.4
8.1
9.0
14.3
22.2

¥1,173,544

100.0¥1,283,897

100.0

9.4

Note 5: For the reasons set forth in Note 3, consolidated sales in Japan in fiscal 2006 decreased by¥7,945 million, compared with those previously reported.
Sales in Japan, which comprised 38.7% of consolidated net sales, increased by ¥29,924 million, or 6.4%, to¥496,959 million, compared with ¥467,035 million in fiscal 2006, due to sales growth in mobile phone handsets
and products in the Fine Ceramic Parts Group, such as components for semiconductor processing equipment.
Overseas sales, which comprised 61.3% of consolidated net sales, increased by ¥80,429 million, or 11.4%, to¥786,938 million, compared with ¥706,509 million in fiscal 2006, due to sales growth of the Electronic Device
Group in Asia, the Information Equipment and solar energy business in Europe, and mobile phone handsets andthe Semiconductor Parts Group in the United States.
Since almost all overseas sales were denominated in U.S. dollars or Euro, the depreciation of the yen against
these currencies during fiscal 2007 produced a positive impact of approximately ¥39.6 billion in net sales
compared with fiscal 2006, after translation into yen.
Sales in the United States increased by ¥20,665 million, or 8.1%, to ¥274,361 million, compared with ¥253,696
million in fiscal 2006, due to sales growth of mobile phone handsets at Kyocera Wireless Corp., sales growth of
the Semiconductor Parts Group, and sales growth of the Information Equipment Group. Sales in Asia increasedby ¥17,932 million, or 9.0%, to ¥216,663 million, compared with ¥198,731 million in fiscal 2006, due to higher
sales growth of the Electronic Device Group for digital consumer equipment and higher sales growth of the
Semiconductor Parts Group. Sales in Europe increased by ¥26,375 million, or 14.3%, to ¥210,726 million,
compared with ¥184,351 million in fiscal 2006, due mainly to sales growth of the Information Equipment Group,
including products such as ECOSYS printers and multifunctional systems, and sales growth of the Electronic
Device Group, combined with expanded sales in solar energy products. Sales in Others increased by ¥15,457
million, or 22.2%, to ¥85,188 million, compared with ¥69,731 million in fiscal 2006, due primarily to sales
growth of mobile phone handsets.
Cost of sales and gross profit
In fiscal 2007, cost of sales increased by ¥65,428 million, or 7.8%, to ¥900,470 million from ¥835,042 million in
fiscal 2006. This is due mainly to an increase in raw material costs as well as expansion of production due tostrong demand in the Components Business and the Equipment Business.
Raw material costs of ¥388,095 million accounted for 43.1%, and labor costs of ¥163,836 million accounted for
18.2% out of the total cost of sales. The ratio of cost of sales to net sales was 70.1%, a decrease of 1.1 points
compared with 71.2% in fiscal 2006. This decrease was primarily caused by improved productivity. Reduction of42

production costs at Kyocera Wireless Corp. as a result of structural reforms as well as cost reduction in the
Optical Equipment Group due mainly to the downsizing of the camera business contributed to this improvement.
As a result, gross profit increased by ¥44,925 million, or 13.3%, in fiscal 2007 to ¥383,427 million from¥338,502 million in fiscal 2006. The gross profit to net sales ratio increased by 1.1 points from 28.8% to 29.9%.
SG&A expenses and profit from operations
Selling, general and administrative (SG&A) expenses in fiscal 2007 increased by ¥9,518 million, or 4.0%, to¥248,325 million, compared with ¥238,807 million in fiscal 2006. This primarily reflected increases in sales
promotion costs due to strengthened marketing efforts and in software development costs in the Equipment
Business. Labor cost was ¥119,267 million, or 48.0% of total SG&A expenses, and sales promotion andadvertising cost was ¥41,337 million, or 16.6% of total SG&A expenses. The proportion of SG&A expenses to
net sales dropped by 0.9 points to 19.4% in fiscal 2007, compared with 20.3% in fiscal 2006.
The increase in gross profit was more than an increase in SG&A expenses and as a result, profit from operations
increased by ¥35,407 million, or 35.5%, to ¥135,102 million compared with ¥99,695 million in fiscal 2006 due tofurther increase of gross profit. The operating margin rose by 2.0 points to 10.5% in fiscal 2007 compared with
8.5% in fiscal 2006.
Interest and dividend income
Interest and dividend income in fiscal 2007 increased by ¥6,482 million, or 72.1%, to ¥15,472 million, comparedwith ¥8,990 million in fiscal 2006. This was mainly due to favorable investment management results and anincrease in dividend income from KDDI Corporation. Kyocera has an investment policy aimed at low risk,stability and liquidity, and it does not typically invest in high-risk financial instruments only for pursuing profits.
Interest expense
Interest expense in fiscal 2007 increased by ¥346 million, or 26.6%, to ¥1,647 million, compared with ¥1,301
million in fiscal 2006. This was mainly due to an increase in interest expense at foreign subsidiaries and a slight
upward trend of interest rates in Japanese financial market.
Foreign currency translation
During fiscal 2007, the average exchange rate for the yen depreciated by ¥4, or 3.5%, against the U.S. dollar anddepreciated by ¥12, or 8.7%, against the Euro as compared with fiscal 2006. At March 31, 2007, the yen had
depreciated by ¥1, or 0.9%, against the U.S. dollar and had depreciated by ¥14, or 9.8%, against the Euro
compared with at March 31, 2006. Kyocera recorded foreign currency transaction losses of ¥65 million in fiscal
2007.
Kyocera typically enters into forward exchange contracts to minimize currency exchange risks on foreign
currency denominated receivables and payables. Kyocera confines its use of derivative financial instruments tothe hedging of its foreign exchange exposures and does not utilize derivative transactions for trading purposes.
Gains and losses from investments
In fiscal 2007, Kyocera’s earnings or losses on equity-method investments resulted in earnings of ¥2,621 million,
an increase of ¥3,837 million, compared with losses of ¥1,216 million in fiscal 2006. Kyocera’s equity inearnings of affiliates and unconsolidated subsidiaries in fiscal 2007 was derived mainly from interests in
WILLCOM, Inc.

43

Kyocera Corporation owns a 30% interest in WILLCOM, Inc., which operates a PHS service in Japan. Kyocera
Corporation accounted for this investment using the equity method. WILLCOM, Inc. recorded net losses due
mainly to temporary sales commission in fiscal 2006. However, WILLCOM, Inc. recorded net income derived
from an increase in net sales originated by a steady increase of customers in fiscal 2007. As a result, Kyocera
recognized earnings on equity method investments.
Net gains on sales and maturities of securities in fiscal 2007 increased by ¥2,347 million, or 159.4%, to ¥3,819
million, compared with ¥1,472 million in fiscal 2006. This was due mainly to realization of unrealized gains bysale of investment securities.
Following the merger of Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., on October 1, 2005,
Kyocera’s shares of UFJ Holdings, Inc. were exchanged for the shares of the new company, Mitsubishi UFJ
Financial Group, Inc. As a result of this share exchange, Kyocera recorded a gain of ¥5,281 million in fiscal
2006.
Kyocera Corporation owned a 36.02% interest in Taito Corporation, a major affiliate which operates in theelectric amusement business. Kyocera accounted for its investment under the equity method. On September 28,
2005, Kyocera Corporation sold its entire holding of shares of Taito Corporation in a tender offer bid for theshares of Taito Corporation by Square Enix Co., Ltd., one of the leading companies in the game software
industry. As a result of this sale of the shares of Taito Corporation, Kyocera Corporation recorded a gain on salesof investment in an affiliate of ¥6,931 million in fiscal 2006.
Kyocera Mita Corporation owns a 30% interest in Triumph-Adler AG Group (TA), a distributor of officeequipment, and Kyocera Mita Corporation accounted for its investment under the equity method. Kyocera
recognized a loss on impairment of investment in TA of ¥3,492 million due to an extended decline in its market
value in fiscal 2006. Kyocera did not recognize a loss on impairment of investment in TA as a result of anincrease of its market value in fiscal 2007.
Income from continuing operations before income taxes
Enhanced profitability through the effects of increased sales and improved productivity contributed to increased
operating profit of all reporting segments in the Components Business and the Equipment Businesses. In
addition, interest and dividend income and equity in earnings of affiliates and unconsolidated subsidiaries
increased compared with fiscal 2006. As a result, income from continuing operations before income taxes forfiscal 2007 increased by ¥39,303 million, or 33.5%, to ¥156,540 million compared with ¥117,237 million in
fiscal 2006. Operating profit in the Components Business resulted in an increase of ¥26,906 million, or 34.6%,
due primarily to sales growth and improved productivity in the Electronic Device Group. Operating profit in the
Equipment Business significantly increased, growing by ¥13,434 million, or 71.0%, due to rising sales of theInformation Equipment Group. This increase resulted in a profit in the Telecommunications Equipment Groupand decreased operating loss in the Optical Equipment Group.

44

Operating profit by reporting segment
The following table shows a breakdown of Kyocera’s consolidated income from continuing operations before
income taxes, and operating profit for fiscal 2006 and fiscal 2007 by the eight reporting segments:
Years ended March 31,
2006
2007
Amount%*Amount%*(Yen in millions)Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 11,014
Semiconductor Parts Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,742
Applied Ceramic Products Group . . . . . . . . . . . . . . . . . . . . . . . . .
21,876
Electronic Device Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,170

Increase(Decrease)
%

15.9
13.1
18.6
10.5

¥ 15,677
22,21022,334
44,487

19.3
14.6
17.0
15.5

42.3
25.2
2.1
63.7

Total Components Business . . . . . . . . . . . . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . . . . . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . . . . . . . . . . . . .

77,802 13.4
(1,706) —26,412 10.6

104,708291
33,970

16.1
0.1
12.6

34.6
—
28.6

Total Equipment Business . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24,706
3,209

5.2
2.4

34,261
6,881

6.6
5.0

38.7
114.4

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in (losses) earnings of affiliates and unconsolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments and eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . .

105,717
12,7859.0—

145,850 11.4
8,569 —

38.0
(33.0)(1,216) —(49) —

2,621 —
(500) ———

Income from continuing operations before income taxes . . . . . . .

¥117,237

10.0¥156,540

12.2

33.5

* % to net sales of each corresponding segment
Note 6: Commencing in fiscal 2007, the Precision Machine Division of Kyocera Corporation, formerly included
within “Corporate,” has been reclassified into “Others.” In addition, commencing in fiscal 2008, the “Optical
Equipment Group,” previously a separate reporting segment, has been reclassified into “Others.” Accordingly,
previously reported results of these reporting segments for fiscal 2006 and 2007 have been retrospectively
reclassified.
(1) Fine Ceramic Parts GroupOperating profit in this segment increased by ¥4,663 million, or 42.3%, to ¥15,677 million, compared with
¥11,014 million in fiscal 2006. This was primarily due to sales growth of components for semiconductor
processing equipment, which are the core products in this reporting segment.
(2) Semiconductor Parts GroupOperating profit in this segment increased by ¥4,468 million, or 25.2%, to ¥22,210 million, compared with
¥17,742 million in fiscal 2006. This increase was due mainly to sales growth of ceramic packages for mobile
phone handsets and digital still cameras.
(3) Applied Ceramic Products GroupOperating profit in this segment increased by ¥458 million, or 2.1%, to ¥22,334 million, compared with ¥21,876
million in fiscal 2006. Operating profit in this segment grew mainly due to increased profit in dental implants,
artificial bone and joint prosthesis, and jewelry and applied ceramic related products.

45

(4) Electronic Device GroupOperating profit in this segment increased by ¥17,317 million, or 63.7%, to ¥44,487 million, compared with
¥27,170 million in fiscal 2006. Demand for products such as capacitors, crystal-related components, andconnectors expanded due primarily to strong production activity for digital consumer equipment throughout theyear. In addition, AVX Corporation in particular improved its operating profit.
(5) Telecommunications Equipment GroupOperating profit in this segment improved by ¥1,997 million to ¥291 million, compared with ¥1,706 million in
operating loss in fiscal 2006. Despite the impairment loss of inventory in the PHS business in fiscal 2007,
operating profit in this segment improved due to reduction of operating loss at Kyocera Wireless Corp. as a resultof structural reforms, along with sales growth of new mobile phone handsets in Japan.
In fiscal 2006, Kyocera outsourced the manufacture of mobile phone handsets of Kyocera Wireless Corp. andsold its manufacturing equipment and inventories to Flextronics International Ltd, a leading provider ofelectronics manufacturing services. Kyocera Wireless Corp. reduced its manufacturing costs significantly andimproved its profitability by taking cost-down activities in its procurements of parts and materials through astrong promotion of the outsourcing to Flextronics International Ltd. and by making fixed costs related to the
manufacturing of mobile phone handsets into variable costs. Kyocera Wireless Corp. also focused its business
operation on specializing in the research, development, sales and marketing of mobile phone handsets.
(6) Information Equipment GroupOperating profit in this segment increased by ¥7,558 million, or 28.6%, to ¥33,970 million, compared with
¥26,412 million in fiscal 2006. This was due to sales growth of ECOSYS printers, multifunctional systems andconsumables as well as due to the positive effects of the yen’s depreciation against the Euro and the U.S. dollar.
(7) Others
Operating profit in this segment increased by ¥3,672 million, or 114.4%, to ¥6,881 million, compared with
¥3,209 million in fiscal 2006. In spite of a loss on impairment of goodwill, which was caused by stagnant sales
and profit results amounting to ¥1,478 million at a domestic subsidiary in fiscal 2007, downsizing of the camera
business and an absence of expenses for structural reform, which were recorded in fiscal 2006, contributed to an
overall increase in operating profit.
(8) Corporate
Corporate income and losses constitute income and expenses related to the provision of management-related
services by Kyocera’s head office to each reporting segment, together with any profit-and-loss items thatmanagement judges not to belong within the above reporting segments, such as gains or losses relating toinvestment securities. Corporate income decreased by ¥4,216 million, or 33.0%, to ¥8,569 million, comparedwith ¥12,785 million in fiscal 2006. Interest and dividend income, which were the main contributors, increased
compared with fiscal 2006. However, the income in fiscal 2006 included a gain of ¥6,931 million through thesale of all of our shares of Taito Corporation, an exchange gain of ¥5,281 million on shares of UFJ Holdings, Inc.
in connection with the exchange of those shares of those shares of Mitsubishi UFJ Financial Group, and a loss of¥3,492 million on impairment of investment in TA, an affiliate of Kyocera Mita Corporation. As a result,corporate profit decreased compared with fiscal 2006.
Taxes
On March 28, 2005, Kyocera Corporation received a notice of tax assessment based on transfer pricing
adjustments from the Osaka Regional Tax Bureau stating that, in the Bureau’s judgment, allocation of profit
46

earned from the transfer of products between Kyocera Corporation and its overseas subsidiaries was not
appropriate for the five years from fiscal 1999 through fiscal 2003. The notice indicated that income should be
adjusted upwards by ¥24,394 million and that resultant additional tax, including local taxes, etc., amounted to¥12,748 million.
Current and deferred income taxes in fiscal 2007 increased by ¥2,127 million, or 4.5%, to ¥48,887 million
compared with ¥46,760 million in fiscal 2006.
Current income taxes in fiscal 2007 included the tax refunds of ¥4,305 million. The tax refunds were related tothe cancellation of a portion of ¥12,748 additional taxes imposed by Osaka Regional Tax Bureau on March 28,
2005 which Kyocera had expensed in the year ended March 31, 2005. For detailed information, see Note 17 to
the Consolidated Financial Statements in this annual report on Form 20-F.
The effective tax rate of 31.2% in fiscal 2007 was 8.7 points lower than 39.9% in fiscal 2006. The decrease in theeffective tax rate is due mainly to the changes in valuation allowance against deferred tax assets. In fiscal 2006,
Kyocera recognized additional valuation allowance against deferred tax assets at several subsidiaries with
continued losses, which made the effective tax rate 5.8% higher than the Japanese statutory tax rate. In fiscal
2007, there were no significant changes in valuation allowance against deferred tax assets. The tax refunds
related to the transfer pricing adjustments also contributed to the lower effective tax rate in fiscal 2007, which
made the effective tax rate 2.8% lower than the Japanese statutory tax rate. For detailed information, see Note 17
to the Consolidated Financial Statements in this annual report on Form 20-F.
Minority interests
Kyocera’s minority interests are principally related to AVX Corporation, which accounted for approximately
30% of all minority ownership interests. Minority interests increased by ¥1,935 million to ¥6,324 million in
fiscal 2007, compared with ¥4,389 million in fiscal 2006. This was due mainly to a large increase in net income
at AVX Corporation.
Discontinued Operations
On August 1, 2006, Kyocera sold all of our shares in Kyocera Leasing Co., Ltd. (presently Diamond Asset
Finance Company Limited) to Diamond Lease Company Limited (presently Mitsubishi UFJ Lease & Finance
Company Limited) for ¥25,274 million, aiming to concentrate Kyocera’s management resources on its corebusinesses to enhance and improve its corporate value. In recent years active reorganization has been ongoing
within the financing industry. Under such circumstances, Kyocera considered it better for Kyocera Leasing Co.,
Ltd. to work with Diamond Lease Company Limited and not with Kyocera, which is mainly engaged in
manufacturing, to enable Kyocera Leasing Co., Ltd. to continue to grow and further develop its businesses.
Kyocera also believed this sale would enable Kyocera to concentrate management resources on its businesses
requiring enhancement to improve its corporate value. Kyocera has accounted for the results of operations andthe sale of Kyocera Leasing Co., Ltd. less appreciable income taxes as discontinued operations in accordancewith Statement of Financial Accounting Standards (SFAS) No.144, “Accounting for the Impairment or Disposalof Long-Lived Assets,” in its consolidated statements of income.
Critical Accounting Policies and Estimates
Kyocera’s consolidated financial statements are prepared in conformity with accounting principles generally
accepted in the United States of America. The preparation of these consolidated financial statements requires theuse of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the dateof consolidated financial statements and the reported amounts of revenues and expenses during the periods
presented. Actual results may differ from these estimates, judgments and assumptions.
47

An accounting estimate in Kyocera’s consolidated financial statements is a critical accounting estimate if it
requires Kyocera to make assumptions about matters that are highly uncertain at the time the accounting estimate
is made and if either different estimates that Kyocera reasonably could have used in the current period or changes
in the accounting estimate that are reasonably likely to occur from period to period would have a material impact
on the presentation of Kyocera’s financial condition, changes in financial condition or results of operations.
Kyocera has identified the following critical accounting policies with respect to its financial presentation.
Allowances for doubtful accounts
Kyocera maintains allowances for doubtful accounts related to both trade and finance receivables for estimatedlosses 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, historicalexperience 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 thefair value of assets pledged by the customer as collateral.
Inventory valuation
Kyocera estimates the amount of write-downs required to properly value inventory. Write-downs are provided
for excess, slow-moving and obsolete inventory as well as valuation losses required to adjust recorded cost to its
market value. Kyocera generally considers all inventory aged over certain holding periods to be slow-moving or
obsolete. Kyocera also records inventory write-downs based on its projections of future demand, market
conditions and related management-led initiatives even though the age of corresponding inventory is shorter thancertain holding periods.
As a result of continuous strict controls and adjustments on inventories, Kyocera recognized inventory writedowns of ¥11,328 million and ¥5,141 million ($51 million) in fiscal 2007 and 2008, respectively. The amounts ofthese inventory write-downs by reporting segments appear in Note 19 to the Consolidated Financial Statements
included in this annual report on Form 20-F. A large portion of these inventory write-downs arose frominventories of telecommunications equipment and information equipment. These products were subject to adecrease in demand and a decline in price, and turned out to be obsolete because of their short product lives.
The majority of Kyocera’s inventories are produced for the IT industry. Each of these products generally has ashort product life, and is susceptible to market demand and price fluctuations. In light of the impacts bysegments, inventory write-downs significantly affect all the segments. If market conditions and demand in theinformation technology industry are less favorable than Kyocera’s projections, additional write-downs may berequired.
Impairment of securities and investments
Kyocera records impairment charges for debt and equity securities and investments in affiliates andunconsolidated subsidiaries accounted for under the equity method when it believes that the decline of fair value
is other-than-temporary. Kyocera regularly reviews each security and investment for impairment based on theextent to which the fair value is less than cost, the duration of the decline, the anticipated recoverability of fairvalue in the future and the financial conditions of the issuer. Poor operating results of the issuers of thesesecurities or adverse changes in the market may cause impairment losses in future periods. The impairment
losses are recorded as Corporate losses.
Kyocera recognized losses on impairment of securities (current asset) and investment securities (non-current) of¥955 million and ¥247 million ($2 million) in fiscal 2007 and 2008, respectively.
Kyocera is currently a major shareholder of KDDI Corporation. The price fluctuation of the shares of KDDI
Corporation may affect Kyocera’s financial conditions. At March 31, 2008, the unrealized gain of ¥99,697
million ($997 million) on the shares of KDDI Corporation held by Kyocera had decreased considerably48

compared with that of ¥289,853 million as of at March 31, 2007, reflecting a fluctuation of the market price ofthe shares of KDDI Corporation during fiscal 2008. As the operating results of KDDI Corporation were stable,
the performance of the shares of KDDI Corporation is considered to be temporary. For detailed information on
the gross unrealized gain or loss, see Note 5 to the Consolidated Financial Statements in this report.
Impairment of long-lived assets
Kyocera reviews its long-lived assets and intangible assets with definite useful lives for impairment periodically.
Long-lived assets and intangible assets with definite useful lives are considered to be impaired when the expectedundiscounted cash flow from the asset group is less than its carrying value. A loss on impairment is recognizedbased on the amount by which the carrying value exceeds the fair value of the long-lived assets and intangible
assets with definite useful lives.
Goodwill and other intangible assets
Kyocera has adopted SFAS No.142, “Goodwill and Other Intangible Assets.” This requires that, rather thanbeing amortized, goodwill and intangible assets with indefinite useful lives are tested for impairment at least
annually and also following any events or changes in circumstances that might lead to impairment. Intangible
assets with definite useful lives are amortized over their respective estimated useful lives to their estimatedresidual values and reviewed for impairment whenever events or changes in circumstances indicate that theircarrying amount may not be recoverable.
An increase in goodwill of ¥10,413 million ($104 million) in fiscal 2008 mainly reflected goodwill that resulted
from the acquisition of American Technical Ceramics Corp. by AVX Corporation, which is included in theElectronic Device Group. For detailed information about this acquisition, see Note 4 to the Consolidated
Financial Statements in this annual report on Form 20-F.
In the three months ended March 31, 2007, Kyocera performed the annual impairment test of goodwill and otherintangible assets and recorded an impairment loss of ¥ 1,478 million in a reporting unit in the Others segment.
The impairment charge reflected the overall decline in the fair value of a domestic subsidiary. The fair value ofthe subsidiary was estimated principally using the expected present value of future cash flow.
In the three months ended March 31, 2008, Kyocera also performed the annual impairment test and no
impairment loss was recognized.
Deferred tax assets
Kyocera records deferred tax assets with valuation allowances to adjust their carrying amounts when it believes
that it is more likely than not that the assets will not be realized. The valuation of deferred tax assets principallydepends on the estimation of future taxable income and feasible tax planning strategies. If future taxable income
is lower than expected due to future market conditions or poor operating results, significant adjustments todeferred tax assets may be required. At March 31, 2008, deferred tax assets amounted to ¥88,978 million ($890
million), which Kyocera considers will reasonably be realized in the future. This estimate is reasonable whencompared with the amounts of income from continuing operations before income taxes and income taxes in fiscal
2008.
Benefit plans
Projected benefit obligations and net periodic costs are determined on an actuarial basis and are significantly
affected by the assumptions used in their calculation, such as the discount rates, the expected long-term rate of
return on plan assets, the rate of increase in compensation levels and other assumptions. Kyocera determines thediscount rate by referencing the yield on high quality fixed income securities such as Japanese Government
Bonds. The expected return on plan assets is determined based on the rate of historical earnings and Kyocera’s
expectation of future performance of the funds in which plan assets are invested. The rate of increase in49

compensation levels is determined based mainly on results of operations and inflation. Kyocera annually reviews
the assumptions underlying its actuarial calculations, making adjustments based on current market conditions, if
necessary. If Japanese and global financial markets stagnate, Kyocera may be required to decrease its
assumptions of the discount rate and the expected long-term rate of return on plan assets, and a decrease in suchassumptions will lead to an increase in projected benefit obligations and net periodic pension costs.
As of March 31, 2007, Kyocera adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans,” which requires an employer to recognize the over funded or under funded statusof its defined benefit postretirement plans as an asset or liability in its consolidated balance sheets and torecognize changes in that funded status through comprehensive income in the year in which the changes occur.
Accordingly, if changes in the assumptions lead to increases of projected benefit obligations or decrease in thevalue of plan assets, the amounts of comprehensive income will decrease.
Sensitivity analysis of benefit plans
The following table illustrates the effect of assumed changes in discount rates and the expected rate of return onplan assets, while holding assuming all other assumptions consistent, for the benefit plan at Kyocera Corporationand its major domestic subsidiaries which accounts for a significant portion of Kyocera’s projected benefit
obligations and net periodic pension costs.
Effect on projected
benefit obligation
as of March 31, 2008
(Yen in millions)

Discount rates:
0.25% decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.25% increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 3,671(3,462)
Effect on income
before income taxes
for the year ending
March 31, 2009

Discount rates:
0.25% decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.25% increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected rate of return on plan assets:
0.25% decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.25% increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ (100)
96
(300)
300

Contingencies
Kyocera is 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 outcomes of these contingencies. Kyocera
records liabilities for these contingencies when the likelihood of an adverse outcome is probable and the amountis reasonably estimable. In making these estimates, Kyocera considers the progress of the lawsuits, the situationsof other companies that are subject to similar lawsuits and other relevant factors. The amounts of liabilities
accrued are based on estimates and may be significantly affected by further developments or the resolution ofthese contingencies in the future.
AVX Corporation has been named as a potentially responsible party in state and federal administrative
proceedings seeking contribution for costs associated with the correction and remediation of environmental
conditions at various waste disposal and operating sites. To resolve AVX Corporation’s liability at each of thesites at which AVX Corporation has been named a potentially responsible party, AVX Corporation has enteredinto various administrative orders and consent decrees with federal and state regulatory agencies. AVX
Corporation has paid, or reserved for, all estimated amounts required under the terms of these orders and decrees
corresponding to AVX Corporation’s apportioned share of the liabilities.
50

In July 2007, AVX Corporation received oral notification from the Environmental Protection Agency, and in
December 2007, written notification from the U.S. Department of Justice indicating that the United States ispreparing to exercise the reopener provision under a consent decree relating to the environmental conditions at,and remediation of, New Bedford Harbor in the Commonwealth of Massachusetts. The Environmental Protection
Agency has indicated that remediation costs through December 6, 2007 (which remediation is ongoing) areapproximately ¥31,850 million ($319 million). AVX Corporation has not yet completed an investigation of themonies spent or its available defenses in light of the notification. AVX Corporation has also not yet determined
whether or to what extent other parties may bear responsibility for these costs. On April 1, 2008, theEnvironmental Protection Agency indicated that the future work to be performed at the harbor is expected to
exceed hundreds of millions of dollars under current estimates. AVX Corporation anticipates further discussions
with the U.S. Department of Justice, the Environmental Protection Agency and the Commonwealth of
Massachusetts.
The potential impact of this matter on Kyocera’s financial position, results of operations and cash flows cannot
be determined at this time.
Revenue recognition
Kyocera sells various types of products, including fine ceramic parts, semiconductor parts, andtelecommunications equipment. Kyocera recognizes revenue upon completion of the earnings process, which
occurs when products are shipped or delivered to customers in accordance with the terms of an agreement of sale,
there is a fixed or determinable selling price, title and risk of loss have been transferred, and collectibility isreasonably assured. Most of these conditions are satisfied at the time of delivery to customers in domestic sales(FOB destination) and at the time of shipment (FOB shipping) for export sales.
Sales returns
Kyocera records an estimated sales return allowance at the time of sales based on its historical returns
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 productwarranty liability based on its historical repair experience.
Recently adopted Accounting Standards
In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (FIN 48) which clarifies theaccounting for uncertainty in income taxes recognized in the financial statements in accordance with SFAS
No. 109, “Accounting for Income Taxes.” FIN 48 also provides guidance on derecognition, classification,interest and penalties, disclosure and transitional measures. FIN 48 was effective for fiscal years beginning after
December 15, 2006. The cumulative effect of applying FIN48, which was effective April 1, 2007, increased theopening balance of retained earnings by ¥3,968 million ($40 million). For detailed information, see Note 17 to
the Consolidated Financial Statements in this annual report on Form 20-F.
Recently Issued Accounting Standards
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The purpose of SFAS No. 157
is to define fair value, establish a framework for measuring fair value and enhance disclosures about fair value
measurements. In February 2008, the FASB issued FASB Staff Position (FSP) 157-1, “Application of FASBStatement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value
Measurements for Purposes of Lease Classification or Measurement under Statement 13” (FSP 157-1) and51

FSP 157-2, “Effective Date of FASB Statement No. 157” (FSP 157-2). FSP 157-1 amends SFAS No. 157 toremove certain leasing transactions from its scope. FSP 157-2 delays the effective date of SFAS No. 157 for all
non-financial assets and non-financial liabilities. The measurement and disclosure requirements related tofinancial assets and financial liabilities are effective April 1, 2008. The adoption of SFAS No. 157 for financial
assets and financial liabilities is not expected to have a material impact on Kyocera’s consolidated results ofoperations and financial position. Kyocera is currently evaluating the impact that SFAS No. 157 will have on
Kyocera’s consolidated results of operations and financial position when it is applied to non-financial assets andnon-financial liabilities beginning after April 1, 2009.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities—Including an amendment of FASB Statement No. 115.” SFAS No.159 provides companies with an
option to report selected financial assets and liabilities at fair value. Unrealized gains and losses on items forwhich the fair value option has been elected will be recognized in earnings. SFAS No.159 is effective beginning
after April 1, 2008. The adoption of SFAS No. 159 is not expected to have a significant impact on Kyocera’s
consolidated results of operations or financial position.
In December 2007, the FASB issued SFAS No. 141 (revised 2007) (SFAS No. 141R), “Business Combinations”,
which requires assets, liabilities and noncontrolling interests be measured at fair value. Under SFAS No.141R,
transaction and restructuring costs are required to be generally expensed, as well as contingent consideration andin-process research and development be recorded at fair value on acquisition date as a part of fair value ofacquired business. In addition, any tax adjustment made after the measurement period impacts income tax
expenses. Kyocera will assess the impact of SFAS No.141R on any future acquisition and SFAS No. 141R will
become effective for Kyocera on April 1, 2009.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements an Amendment of Accounting Research Bulletin No.51.” SFAS No.160 establishes accounting andreporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount ofconsolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s
ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary isdeconsolidated. SFAS No.160 also establishes disclosure requirements that clearly identify and distinguishbetween the interests of the parent and the interests of the noncontrolling owners. SFAS No.160 is effective forfiscal years beginning on or after December 15, 2008. Kyocera is currently evaluating the impact that SFAS
No.160 will have on Kyocera’s consolidated results of operations and financial position.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities an Amendment of FASB Statement No.133”. SFAS No. 161 requires enhanced disclosures regarding
an entity’s derivative and hedging activities to provide adequate information about (a) how and why an entity
uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under
SAFS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affectan entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective beginning afterNovember 15, 2008. As SFAS No. 161 does not impact the measurement or recognition of derivative
instruments, the adoption of SFAS No. 161 will not have any impact on Kyocera’s financial position, financial
performance or cash flows.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.”
SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles usedin the preparation of financial statements of nongovernmental entities that are presented in conformity withgenerally accepted accounting principles in the United States of America. The sources of accounting principles
that are generally accepted are categorized in descending order as follows:a)

FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133
Implementation Issues, FASB Staff Positions and American Institute of Certified Public Accountants(AICPA) Accounting Research Bulletins and Accounting Principles Board Opinions that are notsuperseded by actions of the FASB52

b)

FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides
and Statements of Positionc)

AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the
FASB, consensus positions of the FASB Emerging Issues Task Force (EITF) and the Topics discussed
in Appendix D of EITF Abstracts (EITF D-Topics) andd)

Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations,
AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB
and practices that are widely recognized and prevalent either generally or in the industry

The adoption of SFAS No. 162 is not expected to have any impact on Kyocera’s consolidated results ofoperations and financial position.
B. Liquidity and Capital Resources
Capital resources
In the short term, Kyocera expects cash demands for working capital and funds for capital expenditures required
for the expansion of operations, purchases of its treasury stock and payments of dividends to stockholders.
Kyocera’s primary source of short-term liquidity is cash generated by operations. Certain subsidiaries also
generate capital in the form of loans from financial institutions. At March 31, 2008, Kyocera’s short-termborrowings and long-term debt including current portion totaled ¥19,009 million ($190 million). The ratio tototal assets of 1.0% still reflected a low level of dependence. Most borrowings were denominated in U.S. dollar
and the yen but certain borrowings were denominated in other foreign currencies. Details of these borrowings aredescribed in “Tabular Disclosure of Contractual obligations,” which also includes the information regarding
obligations for the acquisition or construction of property, plant and equipment.
Capital expenditures in fiscal 2008 increased by ¥15,205 million ($152 million), or 21.8%, to ¥85,101 million($851 million) from ¥69,896 million in fiscal 2007. In fiscal 2008, Kyocera made capital expenditures to expand
production capacity in the solar energy business, the Electronic Device Group and the Information Equipment
Group. R&D expenditures increased by ¥505 million ($5 million), or 0.8%, to ¥61,605 million ($616 million)
from ¥61,100 million in fiscal 2007. In fiscal 2008, Kyocera’s research and development activities developed
new products and strengthened functions of products in the solar energy business, the Electronic Device Groupand the Information Equipment Group. Nearly all capital and R&D expenditures were funded using cash in handor cash generated by operations.
During fiscal 2009, Kyocera expects total capital expenditures to be approximately ¥84,000 million ($840
million) and total R&D expenditures to be approximately ¥72,000 million ($720 million). In addition, Kyocera
will pay the total amount of the consideration for the acquisition of the mobile phone-related business of SANYOElectric Co., Ltd. in cash during fiscal 2009. See Note 22 to the Consolidated Financial Statements on Form 20-F
for the detail of the consideration of this acquisition. Kyocera believes that Kyocera needs to invest its resources
continuously in the development of new business areas and improved technology in order to create new products,
commercialize advanced technologies and thereby secure future earnings streams.
At March 31, 2008, Kyocera’s working capital totaled ¥816,543 million ($8,165 million), an increase of ¥76,240
million ($762 million), or 10.3%, from ¥740,303 million at March 31, 2007. This was due mainly to the effect of
decreases in notes and accounts receivables and a decrease in inventory caused by the integration of inventory
control locations at subsidiaries. Kyocera plans to continue to improve capital efficiency by shortening
manufacturing lead time and reducing inventory level.
Cash from operations has generally been sufficient for Kyocera to fund its working capital requirements and tofulfill its future capital expenditures, debt repayments and other obligations. Kyocera’s net cash provided byoperating activities in fiscal 2008 was ¥196,935 million ($1,969 million), and cash and cash equivalents at
March 31, 2008 were ¥447,586 million ($4,476 million). Kyocera believes that its working capital is sufficientfor present and predictable future requirements.
53

Kyocera Corporation acquires treasury stock to facilitate the implementation of flexible capital policies and todevelop its business in a dynamic manner in response to changes in the operating environment.
In fiscal 2008, Kyocera Corporation paid cash dividends totaling ¥22,684 million ($227 million), at ¥120 ($1.2)
per share. Kyocera Corporation received approval at the general meeting of shareholders held on June 26, 2008
for the payment of year-end dividends totaling ¥11,367 million ($114 million), ¥60 ($0.6) per share, on June 27,
2008 to all stockholders of record on March 31, 2008.
Kyocera believes cash on hand and cash from operations will be sufficient to fund all cash requirements outlined
above at least through fiscal 2009. Consequently, Kyocera does not currently intend to use any other externalfinancing sources that might affect its credit agency ratings. If cash generated by operations are insufficient for
funding purposes, Kyocera retains other financing options, including external sources, such as short-term or
long-term borrowings, as well as financing directly in the capital markets through issuances of debt or equity
securities. As evidenced by equity to assets ratio of 73.4% at March 31, 2008, Kyocera maintains a strong
financial position, which leads Kyocera to believe that any capital requirements could be secured from externalsources at a relatively low cost. Kyocera also maintains good business relationships with several major financial
institutions.
Any future significant deterioration in market demand for Kyocera’s products, or a slump in product prices tolevels substantially below those projected by Kyocera, could adversely affect Kyocera’s operating results andfinancial position, possibly resulting in reduced liquidity.
Cash flows
Fiscal 2008 compared with Fiscal 2007
The following table shows a summary of Kyocera’s cash flows for fiscal 2007 and fiscal 2008:
Years ended March 31,
Increase
2007
2008
2008
(Decrease)
AmountAmountAmount%(Yen in millions and U.S. dollars in thousands)

Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . ¥ 149,644 ¥196,935 $1,969,350
Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . .
(151,703)
14,894
148,940
Cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . .
(20,645) (28,071)(280,710)
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . .
282,208
447,586
4,475,860

31.6
—
36.0
58.6

Net cash provided by operating activities in fiscal 2008 increased by ¥47,291 million ($473 million), or 31.6%,
to ¥196,935 million ($1,969 million) from ¥149,644 million in fiscal 2007. Although accrued income taxes that
increased in fiscal 2007 decreased in fiscal 2008, receivables and inventories that increased in fiscal 2007
decreased significantly in fiscal 2008. As a result, net cash provided by operating activities in fiscal 2008
increased.
Cash flow from investing activities turned from ¥151,703 million of cash outflows in fiscal 2007 to¥14,894 million ($149 million) of cash inflows in fiscal 2008, and increased by ¥166,597 million ($1,666
million) compared with fiscal 2007. This was due mainly to a decrease in purchase of available-for-sales
securities and a large increase in withdrawal of time deposits, which exceeded increases in purchases of property,
plant and equipment, and intangible assets. This increase was also due to acquisitions of businesses as well as an
absence of proceeds from the sale of shares of Kyocera Leasing Co., Ltd. in fiscal 2007.
Net cash used in financing activities in fiscal 2008 increased by ¥7,426 million ($74 million), or 36.0%, to¥28,071 million ($281 million) from ¥20,645 million in fiscal 2007. This was due mainly to a decrease in shortterm borrowings that had increased in fiscal 2007. This decrease exceeded a decrease in payments of long-tem
debts in fiscal 2008.
54

On August 1, 2006, Kyocera sold its shares of Kyocera Leasing Co., Ltd., a subsidiary engaged in financing
services. As a result, both the amounts of proceeds from issuance of short-tem and long-term debts, and theamounts of payments of short-term and long-term debt, which were included in financial activities, decreased infiscal 2008. However, such decreases did not have significant effects on Kyocera’s cash flows in total.
The yen’s appreciation against the U.S. dollar between March 31, 2007 and March 31, 2008 resulted in decreases
in cash and cash equivalents of ¥18,380 million ($184 million).
At March 31, 2008, cash and cash equivalents totaled ¥447,586 million ($4,476 million). This represented aincrease of ¥165,378 million ($1,654 million), or 58.6%, from ¥282,208 million at March 31, 2007. Most of
Kyocera’s cash and cash equivalents were denominated in yen but certain cash and cash equivalents, mainly inoverseas subsidiaries, were denominated in foreign currencies, such as the U.S. dollar.
Fiscal 2007 compared with Fiscal 2006
The following table shows a summary of Kyocera’s cash flows for fiscal 2006 and fiscal 2007:
Years ended March 31,
Increase
2006
2007(Decrease)
AmountAmount%(Yen in millions)

Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 171,077 ¥ 149,644(165,467) (151,703)(23,289)(20,645)
300,809282,208(12.5)(8.3)(11.4)(6.2)

Net cash provided by operating activities in fiscal 2007 decreased by ¥21,433 million, or 12.5%, to ¥149,644
million from ¥171,077 million in fiscal 2006. This was due mainly to decreases in cash inflow related toinventories and receivables, although net income increased by ¥36,808 million, or 52.8%, to ¥106,504 million
from ¥69,696 million in fiscal 2006. As a result, net cash provided by operating activities in fiscal 2007
decreased compared with fiscal 2006.
Net cash used in investing activities in fiscal 2007 decreased by ¥13,764 million, or 8.3%, to ¥151,703 million
from of ¥165,467 million in fiscal 2006.
There was ¥24,553 million of cash inflow proceeds from sale of shares of Kyocera Leasing Co., Ltd. in fiscal
2007, whereas there was ¥24,133 million of cash flow proceeds from sale of shares of Taito Corporation in fiscal
2006. In addition, although acquisition of time deposits significantly increased, there were decreases in paymentsfor purchases of property, plant and equipment, and purchases of available-for-sales securities as well as
increases in sales or redemptions of available-for-sales securities and withdrawals of time deposits. As a result,net cash used in investing activities in fiscal 2007 decreased compared with fiscal 2006.
Net cash used in financing activities in fiscal 2007 decreased by ¥2,644 million, or 11.4%, to ¥20,645 million
from ¥23,289 million in fiscal 2006. This was due to an increase of ¥5,327 million in sale of treasury stock by
exercises of stock options and a decrease in payments of long-term debt, which exceeded decreases in proceedsfrom short-term borrowings and long-term debt.
The yen’s depreciation against the U.S. dollar and the Euro between March 31, 2006 and March 31, 2007
resulted in increases in cash and cash equivalents of ¥4,103 million.
At March 31, 2007, cash and cash equivalents totaled ¥282,208 million. This represented a decrease of ¥18,601
million, or 6.2%, from ¥300,809 million at March 31, 2006. Most of Kyocera’s cash and cash equivalents weredenominated in yen but certain cash and cash equivalents, mainly in overseas subsidiaries, were denominated inforeign currencies, such as the U.S. dollar.
55

Assets, liabilities and stockholders’ equity
Kyocera’s total assets at March 31, 2008 decreased by ¥153,718 million ($1,537 million), or 7.2% to ¥1,976,746
million ($19,767 million), compared with ¥2,130,464 million at March 31, 2007.
Cash and cash equivalents increased by ¥165,378 million ($1,654 million), or 58.6%, to ¥447,586 million($4,476 million). This was due mainly to the effect of sales of government bonds and withdrawal of time deposits
in addition to an increase of operating profit.
Short-term investments decreased by ¥65,992 million ($660 million), or 30.9%, to ¥147,503 million ($1,475
million), due mainly to withdrawals of certificate and time deposits at Kyocera Corporation.
Accounts receivables decreased by ¥30,858 million ($309 million), or 13.1%, to ¥205,522 million ($2,055
million), due mainly to a decrease in sales of the Telecommunications Equipment Group in United States ofAmerica.
Other current assets increased by ¥14,378 million ($144 million), or 35.3%, to ¥55,135 million ($551 million),
due mainly to an increase of advance payments of the long-term purchase agreements for certain materials at
Kyocera.
Securities and other investments decreased by ¥253,199 million ($2,532 million), or 36.7%, to ¥437,369 million($4,374 million), due mainly to declines in market values of the shares of KDDI Corporation and other equity
securities at March 31, 2008 compared with March 31, 2007.
Total property, plant and equipment at cost, net of accumulated depreciation, increased by ¥4,993 million ($50
million), or 1.8%, to ¥285,899 million ($2,859 million). Capital expenditure in fiscal 2008 was ¥85,101 million($851 million), and depreciation was ¥75,630 million ($756 million) including ¥12,293 million ($123 million)
which was influenced by the change in depreciation methods.
Kyocera’s total liabilities at March 31, 2008 decreased by ¥88,402 million ($884 million), or 16.1%, to ¥460,579
million ($4,606 million), compared with ¥ 548,981 million at March 31, 2007.
Notes and accounts payable increased by ¥17,623 million ($176 million), or 35.9%, to ¥66,757 million ($668
million) compared with March 31, 2007, due mainly to a significant increase in payable for acquisitions ofcertificate deposits at March 31, 2008.
Deferred income taxes-non-current liabilities decreased by ¥88,842 million ($888 million), or 42.9%, to¥118,016 million ($1,180 million), due mainly to declines in market values of the shares of KDDI Corporationand other equity securities at March 31, 2008 compared with March 31, 2007.
Minority interests in subsidiaries, principally AVX Corporation, decreased by ¥1,921 million ($19 million), or
2.9%, to ¥65,002 million ($650 million), compared with ¥66,923 million at March 31, 2007, due mainly to theimpact of substantial appreciation of the yen against the U.S dollar at March 31, 2008 compared with March 31,
2007.
Total stockholders’ equity at March 31, 2008 decreased by ¥63,395 million ($634 million), or 4.2%, to¥1,451,165 million ($14,512 million), compared with ¥1,514,560 million at March 31, 2007.
Retained earnings at March 31, 2008 increased by ¥88,528 million ($885 million), or 8.4%, due to a net income
for fiscal 2008 of ¥107,244 million ($1,072 million) and a cumulative effect of applying FIN 48 of the¥3,968 million ($40 million) on the balance at April 1, 2007, offset by cash dividend payments of ¥22,684
million ($227 million).
Accumulated other comprehensive income decreased by ¥158,990 million ($1,590 million), or 78.3%, to ¥44,066
million ($441 million). Net unrealized gains on securities decreased by ¥119,871 million ($1,199 million), or
64.9%, due mainly to declines in market values of the shares of KDDI Corporation and other equity securities at
March 31, 2008 compared with March 31, 2007. Foreign currency translation adjustments decreased56

by ¥36,698 million ($367 million) to ¥(33,794 million) ($(338 million)), due mainly to the appreciation of the
yen against the U.S dollar.
The stockholders’ equity ratio at March 31, 2008 was 73.4%, up 2.3 percentage points from 71.1% at March 31,
2007.
C. Research and Development Activities
Kyocera continuously aims at expanding sales and boosting profitability in its Components and Equipment
Businesses. To achieve these objectives, Kyocera seeks to create new technologies, products and businesses byintegrating group-wide management resources while advancing and focusing technological capabilities.
Kyocera will channel its energies into high-growth-potential areas; namely, the markets for telecommunications
and information processing and for environmental preservation. R&D activities are conducted in all of thesemarkets in the realms of materials, components, devices and equipment. Specific initiatives in each reporting
segment are as follows.
(1) Fine Ceramic Parts GroupBy making effective use of fine ceramic materials technology, processing technology and design technology,
Kyocera is seeking to strengthen the development of fine ceramic components such as for next generation
semiconductor processing equipment, and higher quality sapphire substrates for LEDs, the demand for which is
expected to expand.
In the growing automotive market, efforts are being undertaken to develop products that meet the need foradvanced electronics and safety and growing concerns with the environment. Specific endeavors include thedevelopment and production of glow plugs by fully utilizing the high temperature durability of ceramics andpiezoelectric-stacks that enable precision control for the fuel injection of diesel engine cars, which are becoming
more widespread in Europe.
(2) Semiconductor Parts Group
Kyocera is advancing the development of new ceramic packages and organic packages for digital consumer
equipment, where demand is expected to expand. In the ceramic package business, efforts are being made to
develop smaller, thinner and more highly sophisticated ceramic packages with a variety of built-in functions thatmeet advancements in mobile phone handsets. In the organic package business, Kyocera is developing new flip
chip packages for next-generation high-performance semiconductors and narrow pitch flip-chip system in a
package (SiP) substrates to realize even thinner packages.
(3) Applied Ceramic Products Group
While striving to further increase the conversion efficiency and cost reduction of solar cells for the environmental
preservation market, Kyocera is developing a variety of next-generation solar cells. Kyocera is also eagerly
working toward the practical application of SOFCs, which are expected to be the next-generation distributed
power generation system for small-scale power sources.
(4) Electronic Device Group
Kyocera develops small, thin ceramic capacitors and various filters for mobile phone handsets and otherelectronic products in the wireless telecommunications market. In the industrial machinery and automotive
related market, Kyocera is developing various sensors and actuators through piezoelectric ceramic technology.
In thin film components, Kyocera is developing thermal printheads for high-resolution digital photo printers andsmall printer module units. Development is also being done towards the mass-producing of organic light emitting
diode (OLED) displays that realize low power consumption and that have moving image quality seen as
outstanding for mobile devices.
57

(5) Telecommunications Equipment GroupBy making effective use of component, device and software technologies within the group, Kyocera isconducting research and development towards introduction of high-value-added products for the mobile
telecommunications equipment market, in which functions are becoming increasingly advanced. In the domestic
PHS market, Kyocera is developing handsets compatible with high-performance PHS base stations to ensure
faster data transmission rates and the provision of diverse services. Kyocera is also strengthening thedevelopment of equipment for wireless broadband systems such as iBurst® and VoIP (Voice over Internet
Protocol) that enable stable, high-speed and high-data rate communication.
(6) Information Equipment Group
Kyocera is promoting the development of more color-based and solutions-oriented products based on the“ECOSYS” concept. We are pursuing this goal through the incorporation of our amorphous silicon photoreceptor
drum with high abrasion resistance. Apart from bolstering the lineup for both black and white and color
ECOSYS printers, copying machines and multifunction peripherals, Kyocera is advancing the development of
document solutions products that can handle the integrated management of documents and digital information.
Efforts are also being made to strengthen security functions.
(7) Others
Kyocera Communications Systems Co., Ltd. is conducting the development of engineering, optimization, andother related advance technologies by anticipating the needs of next-generation mobile telecommunication
infrastructures such as WiMAX. In addition, Kyocera Communication Systems Co., Ltd. continues to develop
authentication and security technologies, which seek to meet the needs of fast advancing next-generation
networks.
Kyocera Chemical Corporation is currently strengthening the development of materials for semiconductor andelectronic components. Focused efforts include the development of epoxy molding compounds forsemiconductors and the development of conductive paste for electronic components.
R&D expenses by reporting segment are as follows.
Years ended March 31,
2006
AmountIncrease
2007
2008(Decrease)
AmountAmount%(Yen in millions and U.S. dollars in thousands)

Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . . . .
Semiconductor Parts Group . . . . . . . . . . . . . . . . . . . . .
Applied Ceramic Products Group . . . . . . . . . . . . . . . . .
Electronic Device Group . . . . . . . . . . . . . . . . . . . . . . .

¥ 3,107
3,549
3,923
10,940¥ 3,7693,757
4,138
12,123¥ 3,655
3,498
5,146
11,641$ 36,550
34,98051,460116,410

(3.0)
(6.9)
24.4
(4.0)

Total Components Business . . . . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . . . . .

21,51915,313
16,41623,787
15,123
17,98323,94012,396
19,587

239,400
123,960
195,8700.6(18.0)
8.9

Total Equipment Business . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31,7294,188

33,106
4,207

31,983
5,682

319,830
56,820(3.4)
35.1

R&D expenses . . . . . . . . . . . . . . . . . . . . . . . ¥57,436¥61,100¥61,605$616,050

0.8

—

—

% to net sales . . . . . . . . . . . . . . . . . . . . . . . .

4.9%

4.8%

4.8%

Note: Commencing fiscal 2008, the “Optical Equipment Group,” previously a separate reporting segment, hasbeen reclassified into “Others.” Accordingly, R&D expenses of “Others” in fiscal 2007 have been retroactively
reclassified.
58

We have a variety of patents in Japan and other countries, and we hold licenses for the use of patents from others.
Details are set forth in “Patents and Licenses” included in Item 4 B “Business Overview” in this annual report on
Form 20-F.
D. Trend Information
Kyocera endeavors to strengthen competitiveness in technological development, sales and marketing in the highgrowth potential markets for telecommunications and information processing and for environmental protection,
and we seek to translate our diversification strategy into improved business performance.
In fiscal 2009, the global economic downturn is expected to intensify, fueling fear of a negative impact on
demand for digital consumer equipment, and therefore uncertainty in the outlook for components demand.
In the mid to long-term trend, however, Kyocera has a positive view for digital consumer equipment markets. In
the telecommunications and information processing markets, which are key areas for Kyocera, demand formobile handsets in emerging markets is expected to expand, coupled with the commencement of new services indeveloped countries. More specifically, rising popularity of advanced mobile handsets featuring built-in cameras
and other functions including GPS (global positioning system) and terrestrial TV broadcasting is expected topropel demand for mobile phone handsets. In addition, stable growth is predicted to continue for PC-related
products, digital still cameras, game consoles, and flat panel TVs. Kyocera expects growth in these areas will
positively impact both the components and equipment businesses.
In the information equipment industry, demand for color MFPs is expected to grow. To seize this opportunity, we
aim to expand our product lines, particularly for high-speed color models.
In the environmental preservation market, which is another key area for Kyocera, the solar energy market is
growing rapidly on a global scale as an alternative energy source due to increasing environmental awareness.
Demand for solar energy products is expanding, especially in Europe, where demand is stimulated bygovernment subsidy systems. While there is an outlook for the reexamination to decrease the amount ofgovernmental subsidies in some parts of European counties, as such systems are also being introduced in the
United States and other Asian countries, the demand for solar energy is expected to continuously expand on
worldwide basis. In addition, demand for ceramic components for automobiles that comply with current
environmental regulations is also expected to grow in the future.
E. Off-Balance Sheet Arrangements
Refer to Note 15 in The Consolidated Financial Statements included in this annual report on Form 20-F.
As a part of our ongoing business, we have no unconsolidated special purpose financing or partnership entities
that are likely to create material contingent obligations.

59

F. Tabular Disclosure of Contractual Obligations
The following tables provide information about Kyocera’s contractual obligations and other commercial
commitments that will affect Kyocera’s liquidity for the next several years, as of March 31, 2008. Kyocera
anticipates that the funds required to fulfill these debt obligations and commitments will be generated internallyfrom operations.
Contractual obligations

Less than
1 year2-3 years

4-5 years
Thereafter(Yen in millions)

Total

Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . ¥ 7,279 ¥
—
¥
—
¥
—
¥
7,279
Interest payments for short-term borrowings* . . . . .
252
—
—
—
252
Long-term debt (including due within one year) . . .
3,432
5,912
1,423
963
11,730Interest payments for long-term debt* . . . . . . . . . . .
262
271
67
48
648
Supply agreement material used in operation . . . . . .
9,489
31,922
39,141
83,171
163,723
Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,651
6,706
2,916
3,946
19,219Obligations for the acquisition or construction ofproperty, plant and equipment . . . . . . . . . . . . . . . .
16,057———
16,057
Total Contractual Obligations . . . . . . . . . . . . . . . . . .

¥ 42,422

Contractual obligations

Less than
1 year¥ 44,811¥ 43,547¥ 88,128¥ 218,908

2-3 years
4-5 years
Thereafter(U.S. dollars in thousands)

Total

Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . $ 72,790 $
—
$
—
$
—
$ 72,790
Interest payments for short-term borrowings* . . . . .
2,520
—
—
—
2,520
Long-term debt (including due within one year) . . .
34,32059,120
14,2309,630
117,300
Interest payments for long-term debt* . . . . . . . . . . .
2,620
2,710
670
480
6,480
Supply agreement material used in operation . . . . . .
94,890319,220
391,410
831,710
1,637,230
Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56,51067,06029,16039,460
192,190
Obligations for the acquisition or construction ofproperty, plant and equipment . . . . . . . . . . . . . . . .
160,570———
160,570
Total Contractual Obligations . . . . . . . . . . . . . . . . . .

$424,220$448,110$435,470$881,280$2,189,080* For Kyocera’s variable interest rate of borrowings and debt, Kyocera utilized the rates in effect as ofMarch 31, 2008 when estimating schedule of interest payments.
In addition to contractual obligations shown in the above tables, Kyocera forecasts to contributing ¥9,255 million($93 million) to its defined benefit pension plans in fiscal 2009.
Item 6.

Directors, Senior Management and Employees

A. Directors and Senior Management
Kyocera believes that its current management system enables faster decision-making across the board throughthe use of a top management system comprising the chairman, the deputy chairman and the president. With thissetup, the chairman takes on the position as the head of the board of directors, providing guidance to thepresident, while the president has total responsibility for daily business execution. It is also believed that moreaccurate management decisions can be made with this management system, as the chairman, the deputy chairman
and the president can provide diverse perspectives on critical issues.

60

The following table shows Kyocera’s Directors and Corporate Auditors as of June 26, 2008.
Name

Kensuke Itoh . . . . . . . . . . . . . . . . .
Noboru Nakamura . . . . . . . . . . . . .
Yuzo Yamamura . . . . . . . . . . . . . .
Naoyuki Morita . . . . . . . . . . . . . . .
Makoto Kawamura . . . . . . . . . . . . .
Michihisa Yamamoto . . . . . . . . . . .
Isao Kishimoto . . . . . . . . . . . . . . . .
Hisao Hisaki . . . . . . . . . . . . . . . . . .
Rodney N. Lanthorne . . . . . . . . . . .
John S. Gilbertson . . . . . . . . . . . . .
Tetsuo Kuba . . . . . . . . . . . . . . . . . .
Tatsumi Maeda . . . . . . . . . . . . . . . .
Yoshihiko Nishikawa . . . . . . . . . . .
Kokichi Ishibitsu . . . . . . . . . . . . . .
Osamu Nishieda . . . . . . . . . . . . . . .
Shigekazu Tamura . . . . . . . . . . . . .
Kazuo Yoshida . . . . . . . . . . . . . . . .

Date of Birth

Position

December 17, 1937
October 6, 1944

Director and Executive Advisor
Representative Director andChairman
December 4, 1941
Representative Director andVice Chairman
April 8, 1942
Representative Director andVice Chairman
August 13, 1949
Representative Director andPresident
November 13, 1942 Director
November 30, 1943 Director
July 2, 1946
Director
February 5, 1945
Director
December 4, 1943
Director
February 2, 1954
Director
January 1, 1953
Director
September 11, 1945 Full-time Corporate Auditor
December 25, 1943 Full-time Corporate Auditor
January 10, 1943
Corporate Auditor
February 18, 1950
Corporate Auditor
January 10, 1948
Corporate Auditor

Since

1975
1991
(Chairman 2006)
2003
2003
2005
(President 2005)
1987
1993
1991
1989
1995
2008
2008
2005
2008
1993
2005
2008

Kensuke Itoh has served as a Director and the Executive Advisor of Kyocera Corporation since 2005. He becamea Director in 1975, a Managing Director in 1979, a Senior Managing Director in 1981, an Executive Vice
President and Representative Director in 1985, a Representative Director and President in 1989 and the Chairmanof the Board and Representative Director in 1999. He joined Kyocera Corporation in 1959 and has served as
Representative Director and Chairman of Kyoto Purple Sanga Ltd.
Noboru Nakamura has served as a Representative Director and Chairman of Kyocera Corporation since 2006. He
became a Director in 1991, a Managing Director in 1995, a Senior Managing and Representative Director in1997 and an Executive Vice President and Representative Director in 1999. He joined Kyocera Corporation in1967 and has served as the Representative Director and Chairman of Kyocera Chemical Corporation,
Representative Director and Chairman of Japan Medical Materials Corporation, Representative Director andChairman of Kyocera Solar Corporation, Representative Director and Chairman of Kyocera SLC Technologies
Corporation, and Representative Director and Chairman of Kyocera Display Institute Co., Ltd., Representative
Director and Chairman of Kyocera Realty Development, and Representative Director and Chairman of Kyoto
Optec Co., Ltd., and Representative Director and Chairman of Kyocera Mita Corporation.
Yuzo Yamamura has served as a Representative Director and Vice Chairman since 2006. He rejoined Kyocera
Corporation as a Director in 2003. He first became a Director in 1987 and retired in 1993. He rejoined Kyocera
Corporation as a Senior Managing and Representative Director in 1995 and retired again in 1999. He originallyjoined Kyocera Corporation in 1965 and has served as the President and Representative Director of Kyocera Elco
Corporation, and General Manager of Corporate Communication Equipment Group.
Naoyuki Morita has served as a Representative Director and Vice Chairman since 2006. He rejoined Kyocera
Corporation as a Director in 2003. He first became a Director in 1987, a Managing Director in 1989 and a Senior
Managing and Representative Director in 1995, and he retired in 1999. He originally joined Kyocera Corporationin 1967 and has served as the Representative Director and Chairman of Kyocera Communication Systems Co.,
Ltd., and Representative Director and Chairman of Couei Corporation.
61

Makoto Kawamura has served as a Representative Director and President of Kyocera Corporation since 2005. He
became a Director in 2001 and retired in 2003. He rejoined as a Representative Director and President in 2005.
He joined Kyocera Corporation in 1973 and has served as the Chairman of the Board of Directors of Shanghai
Kyocera Electronics Co., Ltd. and Chairman of the Board of Directors of Donggaun Shilong Kyocera Optics Co.,
Ltd.
Michihisa Yamamoto has served as a Director of Kyocera Corporation since 1987. He became a Director in 1987,
a Managing Director in 1989, a Senior Managing and Representative Director in 1992, and an Executive Vice
President and a Representative Director in 1999. He joined Kyocera Corporation in 1970 and has served as a
Deputy General Manager of Corporate Communication Equipment Group.
Isao Kishimoto has served as a Director of Kyocera Corporation since 1993. He became a Director in 1993, aManaging Director in 1997 and a Senior Managing Director in 2001. He joined Kyocera Corporation in 1967 andhas served as the Representative Director and President of Kyocera Kinseki Corporation.
Hisao Hisaki has served as a Director of Kyocera Corporation since 1991. He joined Kyocera Corporation in1969 and has served as the General Manager and Chairman of the Board of Directors of Kyocera Tianjin Sales
and Trading Corporation.
Rodney N. Lanthorne has served as a Director of Kyocera Corporation since 1989. He became a Director in 1989,
a Managing Director in 1990 and a Senior Managing and Representative Director in 1999. He joined Kyocera
International, Inc. in 1979 and has served as Director and President of Kyocera International, Inc.
John S. Gilbertson has served as a Director of Kyocera Corporation since 1995. He became a Director in 1995
and a Managing Director in 1999. He joined AVX Corporation in 1981 and has served as Director, President andChief Executive Officer of AVX Corporation.
Tetsuo Kuba has served as a Director of Kyocera Corporation since 2008. He became a Director in 2008. He
joined Kyocera Corporation in 1982 and has served as the Representative Director and Chairman and President
in Kyocera Korea Co., Ltd.
Tatsumi Maeda has served as a Director of Kyocera Corporation since 2008. He became a Director in 2001, andretired in 2003. He rejoined as a Director in 2008. He joined Kyocera Corporation in 1975 and has served as the
Chairman of the Board of Kyocera (Tianjin) Solar Energy Co., Ltd., and General Manager of Solar Energy
Group.
Yoshihiko Nishikawa has served as a Full-time Corporate Auditor of Kyocera Corporation since 2005. He
became a Director in 1995 and retired in 2003. He joined Kyocera Corporation in 1970.
Kokichi Ishibitsu has served as a Full-time Corporate Auditor of Kyocera Corporation since 2008. He became a
Director in 1991 and retired in 2000. He joined Kyocera Corporation in 1975.
Osamu Nishieda has served as a Corporate Auditor of Kyocera Corporation since 1993. He has served as an
In-House Council of Kyocera Corporation.
Shigekazu Tamura has served as a Corporate Auditor of Kyocera Corporation since 2005. He is registered as a
Certified Public Accountant as defined by the Certified Public Accountant Law of Japan.
Kazuo Yoshida has served as a Corporate Auditor of Kyocera Corporation since 2008. He has served as Professor
at Kyoto University.
Kyocera adopts an “executive officer system,” which aims to establish corporate governance appropriate for a
global corporation together with a decision making system responsive to the business environment and to train
the next generation of senior executives.
62

The following table shows Kyocera’s Executive Officers as of June 26, 2008.
Name

Position

Makoto Kawamura . . . . Executive Officer and President
Tetsuo Kuba . . . . . . . . . Senior Managing Executive Officer(General Manager of Corporate Fine Ceramics Group and Corporate Semiconductor
Components Group)
Tatsumi Maeda . . . . . . . Senior Managing Executive Officer(General Manager of Corporate Solar Energy Group)
Hisashi Sakumi . . . . . . . Managing Executive Officer(General Manager of Corporate Environment and Education Group)
Tsutomu Yamori . . . . . . Managing Executive Officer(General Manager of Corporate General Affairs Human Resources Group)
Takashi Itou . . . . . . . . . Managing Executive Officer(General Manager of Corporate Purchasing Group)
Osamu Nomoto . . . . . . . Managing Executive Officer(General Manager of Corporate Electronic Components Group)
Akiyoshi Okamoto . . . . Managing Executive Officer(General Manager of Shanghai Kyocera Electronics Co., Ltd.)
Eiichi Toriyama . . . . . . Managing Executive Officer(Deputy General Manager of Corporate Communication Equipment Group (In chargeof Sales))Keijiro Minami . . . . . . . Senior Executive Officer(General Manager of Corporate Legal and Intellectual Property Group)
Gorou Yamaguchi . . . . . Senior Executive Officer(Deputy General Manager of Corporate Semiconductor Components Group andGeneral Manager of Corporate Semiconductor Components Sales Division)
Yoshihito Ohta . . . . . . . Senior Executive Officer(General Manager of Corporate Office of the Chief Executives)
Yasuyuki Yamamoto . . Senior Executive Officer(Deputy General Manager of Corporate Communication Equipment Group & General
Manager of Corporate 1st Mobile Communication Equipment Division & General
Manager of Corporate Communication Systems Equipment Division)
Takenori Ugari . . . . . . . Senior Executive Officer(Deputy General Manager of Corporate Communication Equipment Group & General
Manager of Corporate 2nd Mobile Communication Equipment Division)
Yasushi Matsumura . . . Executive Officer(General Manager of Corporate Display Group, Representative Director and Presidentof Kyocera Display Institute)
Yukihiro Takarabe . . . . Executive Officer(General Manager of Corporate Cutting Tool Group)
Junichi Jinno . . . . . . . . . Executive Officer(General Manager of Corporate R&D Group for Equipment and Systems)
Gen Takayasu . . . . . . . . Executive Officer(General Manager of Corporate Communication Devices Division, Corporate
Semiconductor Components Group)
Nobuhiro Ochiai . . . . . . Executive Officer(General Manager of Corporate Capacitor Division, Corporate Electronic Components
Group)
63

Name

Position

Junzo Katsuki . . . . . . . . Executive Officer(General Manager of Corporate Electronic Components Sales Division, Corporate
Electronic Components Group)
Masakazu Mitsuda . . . . Executive Officer(General Manager of Corporate Business Systems Administration Group)
Toshimi Gejima . . . . . . Executive Officer(General Manager of Corporate Automotive Components Group)
Michiaki Furuhashi . . . . Executive Officer(General Manager of General Affairs Division, Corporate General Affairs Human
Resources Group)
Mitsuru Imanaka . . . . . . Executive Officer(Representative Director and President of Kyocera Fineceramics GmbH)
Shoichi Aoki . . . . . . . . . Executive Officer(General Manager of Corporate Financial & Accounting Group)
Yoshihiro Kano . . . . . . . Executive Officer(General Manager of Corporate Development Group)
Yoichi Yamashita . . . . . Executive Officer(General Manager of Corporate Production Technology & Development Group)
Robert E. Whisler . . . . . Executive Officer(Director and President of Kyocera America Inc.)John S. Rigby . . . . . . . . Executive Officer(Director and President of Kyocera Industrial Ceramics Corporation)
Masaki Kozu . . . . . . . . . Executive Officer(General Manager of Education and Planning Division, Corporate Environment and
Education Group)
Hitoshi Takao . . . . . . . . Executive Officer(General Manager of Corporate Thin Film Components Group)
Yoshiharu Nakamura . . Executive Officer(Deputy General Manager of Corporate Fine Ceramics Group)
Kazumasa Umemura . . . Executive Officer(General Manager of International Division, Corporate Office of the Chief
Executives)
Takafumi Matsuda . . . . Executive Officer(General Manager of Jewelry & Application Products Division)
Masaaki Itou . . . . . . . . . Executive Officer(General Manager of Corporate Communications Division, Corporate General Affairs
Human Resources Group)
Masahisa Shimizu . . . . . Executive Officer(Deputy General Manager of Corporate 2nd Mobile Communication Equipment
Division, Corporate Communication Equipment Group)
Tsuyoshi Egami . . . . . . Executive Officer(Deputy General Manager of Corporate 2nd Mobile Communication Equipment
Division, Corporate Communication Equipment Group)
Katsumi Komaguchi . . . Executive Officer(Representative Director and President of Kyocera Mita Corporation)

64

B. Compensation
The aggregate amount of compensation, including bonuses, paid by Kyocera Corporation and its certain
subsidiaries in fiscal 2008 to all Directors, Executive Officers and Corporate Auditors of Kyocera Corporation
was ¥1,585 million ($16 million).
In accordance with our internal provision, when a Director or Corporate Auditor retires, a proposal to pay a lump
sum retirement allowance is submitted to the ordinary general meeting of shareholders for approval. After suchapproval, the amount to be paid to each Director is considered and fixed by the Board of Directors, and theamount to be paid to each Corporate Auditor is also consulted with and fixed by the Board of Corporate
Auditors.
Annual provisions are made in the accounts of Kyocera Corporation for the estimated cost of the retirement
allowance for Directors and Corporate Auditors. The annual provisions and costs charged to income for such
retirement allowance in fiscal 2008 were ¥85 million ($1 million).
The annual provisions and costs charged to income for retirement allowance of Executive Officers in fiscal 2008
were ¥94 million ($1 million).
We have neither disclosed to our shareholders nor otherwise made public any of the information specified in thisitem for individually named Directors, Officers or Corporate Auditors.
C. Board Practices
In accordance with the requirements of the Corporation Act of Japan which came into effect on May 1, 2006 (theCorporation Act), our Articles of Incorporation provide for not more than five Corporate Auditors. Corporate
Auditors are elected at a general meeting of shareholders, and their normal term of office is four years. However,Corporate Auditors may serve any number of consecutive terms. At least half of the Corporate Auditors must be
persons who have not been Directors or employees of Kyocera Corporation or its subsidiaries (Outside Corporate
Auditors). Corporate Auditors form the Board of Corporate Auditors. Corporate Auditors are under a statutory
duty to oversee the administration of our affairs by the Directors, to examine our financial statements andbusiness reports to be submitted by the Board of Directors to the general meetings of shareholders and to reporttheir opinions thereon to the shareholders. They are obliged to attend meetings of the Board of Directors and to
express their opinions, but they are not entitled to vote. Corporate Auditors also have a statutory duty to provide
their report on the audit report prepared by our independent certified public accountants to the Board of
Corporate Auditors, which must submit its audit report to the Board of Directors. The Board of Corporate
Auditors will also determine matters relating to the duties of the Corporate Auditors, such as audit policy andmethods of investigation of our affairs.
Under the Corporation Act, the Directors and Corporate Auditors are liable for any damages suffered by us as aresult of their violation of laws or regulations or any failure to perform their duties. Under our Articles ofIncorporation, any such liabilities incurred by the Outside Corporate Auditors may, except in the case of willful
misconduct or gross negligence or in certain other cases, be limited by a liability limitation agreement enteredinto between the Outside Corporate Auditors and us, up to an amount to be calculated in accordance with therelevant provisions of the Corporation Act with reference to annual remuneration, retirement allowance andprofits received upon exercise or transfer of stock options, if any.
Kyocera Corporation has no remuneration committee. Matters of remuneration are decided by top management
as a group. None of our Directors have contracts with us providing for benefits upon termination. It is customary
to provide lump-sum severance benefits to Directors and Corporate Auditors upon retirement and we provide
such benefits in accordance with our internal regulations.
There is no arrangement or understanding between any Director or Corporate Auditor and any other person
pursuant to which he was elected as a Director or a Corporate Auditor.
65

There is no family relationship between any Director or Corporate Auditor and any other Director or Corporate
Auditor.
D. Employees
At March 31, 2008, Kyocera had 66,496 employees, of whom 3,526 worked in the Fine Ceramic Parts Group,
10,389 worked in the Semiconductor Parts Group, 6,225 worked in the Applied Ceramic Products Group, 23,548
worked in the Electronic Device Group, 2,982 worked in the Telecommunications Equipment Group, 13,218
worked in the Information Equipment Group, 4,913 worked for Others and 1,695 worked in Corporate.
Kyocera’s number of employees at March 31, 2008 increased by 3,019 from 63,477 employees at March 31,
2007.
Kyocera Corporation had 13,128 employees, and their average age and average service years were 38.5 and 15.6,
respectively.
Most regular employees of Kyocera Corporation, other than management, are members of the Kyocera Union.
Over 90% of Kyocera Corporation’s regular employees are members of this union. The Kyocera Union is only
open to Kyocera Corporation employees, not to our Japanese or overseas subsidiaries. The employees at three ofour subsidiaries in Japan are unionized. Employees at our Japanese subsidiaries are not otherwise unionized. Our
employees in the United States are generally unionized, and employees at some of our subsidiaries in othercountries are unionized as well. Employees of our overseas subsidiaries belong to industry-wide labor unions, as
opposed to a company-specific union like the Kyocera Union. Our relationship with our employee union groups
is generally good. However, no assurance can be given that, in response to changing economic conditions and thecompany’s actions, labor unrest or strikes will not occur.
E. Share Ownership
As of March 31, 2008, Kyocera’s Directors, Corporate Auditors and Executive Officers owned 1,502,826 sharesof Kyocera Corporation in total (1,476,360 shares of common stock of Kyocera Corporation and 26,466 ADRs of
Kyocera Corporation), or 0.8% of the outstanding shares of Kyocera Corporation. The numbers of shares owned
by each Directors, Corporate Auditors and Executive Officers are shown in the following table.
Name

Kensuke Itoh . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noboru Nakamura . . . . . . . . . . . . . . . . . . . . . . .
Yuzo Yamamura . . . . . . . . . . . . . . . . . . . . . . . .
Naoyuki Morita . . . . . . . . . . . . . . . . . . . . . . . . .
Makoto Kawamura . . . . . . . . . . . . . . . . . . . . . .
Michihisa Yamamoto . . . . . . . . . . . . . . . . . . . .
Isao Kishimoto . . . . . . . . . . . . . . . . . . . . . . . . . .
Hisao Hisaki . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rodney N. Lanthorne . . . . . . . . . . . . . . . . . . . .
John S. Gilbertson . . . . . . . . . . . . . . . . . . . . . . .
Tetsuo Kuba . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tatsumi Maeda . . . . . . . . . . . . . . . . . . . . . . . . .
Yoshihiko Nishikawa . . . . . . . . . . . . . . . . . . . .
Kokichi Ishibitsu . . . . . . . . . . . . . . . . . . . . . . . .
Osamu Nishieda . . . . . . . . . . . . . . . . . . . . . . . . .
Shigekazu Tamura . . . . . . . . . . . . . . . . . . . . . . .
Kazuo Yoshida . . . . . . . . . . . . . . . . . . . . . . . . .
Hisashi Sakumi . . . . . . . . . . . . . . . . . . . . . . . . .
Tsutomu Yamori . . . . . . . . . . . . . . . . . . . . . . . .
Takashi Itou . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Osamu Nomoto . . . . . . . . . . . . . . . . . . . . . . . . .

Title

Number of Shares

Director and Executive Advisor
Representative Director and Chairman
Representative Director and Vice Chairman
Representative Director and Vice Chairman
Representative Director and President
Director
Director
Director
Director
Director
Director
Director
Corporate Auditor
Corporate Auditor
Corporate Auditor
Corporate Auditor
Corporate Auditor
Managing Executive Officer
Managing Executive Officer
Managing Executive Officer
Managing Executive Officer

527,072
4,200
82,000
3,100
3,000
9,232
5,500
3,171
3,589 (ADR)
18,186 (ADR)
2,000
1,100
2,102
1,800
776,037
—
—
9,000
2,700
9,000
2,415

66

Name

Akiyoshi Okamoto . . . . . . . . . . . . . . . . . . . . . . .
Eiichi Toriyama . . . . . . . . . . . . . . . . . . . . . . . . .
Keijiro Minami . . . . . . . . . . . . . . . . . . . . . . . . .
Gorou Yamaguchi . . . . . . . . . . . . . . . . . . . . . . .
Yoshihito Ohta . . . . . . . . . . . . . . . . . . . . . . . . . .
Yasuyuki Yamamoto . . . . . . . . . . . . . . . . . . . . .
Takenori Ugari . . . . . . . . . . . . . . . . . . . . . . . . . .
Yasushi Matsumura . . . . . . . . . . . . . . . . . . . . . .
Yukihiro Takarabe . . . . . . . . . . . . . . . . . . . . . . .
Junichi Jinno . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gen Takayasu . . . . . . . . . . . . . . . . . . . . . . . . . .
Nobuhiro Ochiai . . . . . . . . . . . . . . . . . . . . . . . .
Junzo Katsuki . . . . . . . . . . . . . . . . . . . . . . . . . .
Masakazu Mitsuda . . . . . . . . . . . . . . . . . . . . . . .
Toshimi Gejima . . . . . . . . . . . . . . . . . . . . . . . . .
Michiaki Furuhashi . . . . . . . . . . . . . . . . . . . . . .
Mitsuru Imanaka . . . . . . . . . . . . . . . . . . . . . . . .
Shoichi Aoki . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yoshihiro Kano . . . . . . . . . . . . . . . . . . . . . . . . .
Yoichi Yamashita . . . . . . . . . . . . . . . . . . . . . . .
Robert E. Whisler . . . . . . . . . . . . . . . . . . . . . . .
John S. Rigby . . . . . . . . . . . . . . . . . . . . . . . . . . .
Masaki Kozu . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hitoshi Takao . . . . . . . . . . . . . . . . . . . . . . . . . .
Yoshiharu Nakamura . . . . . . . . . . . . . . . . . . . . .
Kazumasa Umemura . . . . . . . . . . . . . . . . . . . . .
Takafumi Matsuda . . . . . . . . . . . . . . . . . . . . . . .
Masaaki Itou . . . . . . . . . . . . . . . . . . . . . . . . . . .
Masahisa Shimizu . . . . . . . . . . . . . . . . . . . . . . .
Tsuyoshi Egami . . . . . . . . . . . . . . . . . . . . . . . . .
Katsumi Komaguchi . . . . . . . . . . . . . . . . . . . . .

Title

Managing Executive Officer
Managing Executive Officer
Senior Executive Officer
Senior Executive Officer
Senior Executive Officer
Senior Executive Officer
Senior Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Number of Shares

4,864
2,900
900
3,900
1,000
100
—
700
400
—
500
1,000
1,000
600
1,400
7,967
1,100
200
100
100
4,019(ADR)
672(ADR)
1,300
100
1,100
600
400
200
—
—
500

Stock Option Plans
On June 25, 2003, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approvalof the issuance of stock acquisition rights (Plan 2003) to directors, corporate auditors, corporate executive
officers and certain key employees of Kyocera. The stock acquisition rights were granted on September 1, 2003
and fully vested on October 1, 2003 to 1,388 persons to acquire amounts ranging from 600 to 8,000 shares ofcommon stock each, or to acquire 1,070,100 shares of common stock in the aggregate. The exercise price of Plan
2003 has been set at ¥7,900 per share, and the exercisable period is from October 1, 2003 to September 30, 2008.
On June 25, 2004, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approvalof the issuance of stock acquisition rights (Plan 2004) to directors, corporate auditors, corporate executive
officers and certain key employees of Kyocera. The stock acquisition rights were granted on September 1, 2004
and fully vested on October 1, 2004 to 1,644 persons to acquire amounts ranging from 600 to 8,000 shares ofcommon stock each, or 1,243,300 shares of common stock in the aggregate. The exercise price of Plan 2004 has
been set at ¥8,725 per share, and the exercisable period is from October 1, 2004 to September 30, 2008.
On June 28, 2005, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approvalof the issuance of stock acquisition rights (Plan 2005) to directors, corporate auditors, corporate executive
officers and certain key employees of Kyocera. The stock acquisition rights were granted on September 1, 2005
67

and fully vested on October 1, 2005 to 1,715 persons to acquire common stock ranging from 600 to 8,000 sharesor to acquire 1,301,900 shares of common stock in the aggregate. The exercise price and the exercisable period ofPlan 2005 have been set at ¥8,619 per share, and from October 1, 2005 to September 30, 2008.
Kyocera Corporation did not grant any stock options for the years ended March 31, 2007 and 2008.
Kyocera Corporation covers Plan 2003, Plan 2004 and Plan 2005 by utilizing common stock held by Kyocera
Corporation (treasury stock).
As of May 31, 2008, the amount of common stock to be issued upon the exercise of all outstanding stockacquisition rights issued to Directors, Corporate Auditors and Executive Officers is set forth in further detail in
the following table. Note, however, that there can be no assurances that the stock acquisition rights described
below will be exercised in whole or in part.
Total Stock
Acquisition Rights
Outstanding

Exercise Price per Share

Kensuke Itoh . . . . . . . . .
Noboru Nakamura . . . . .

—
—

—
—

Naoyuki Morita . . . . . . .

6,000 (Plan 2003)
6,000 (Plan 2004)
6,000 (Plan 2005)—

7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)—

2,000 (Plan 2003)
4,000 (Plan 2004)
8,000 (Plan 2005)
6,000 (Plan 2004)
6,000 (Plan 2005)
6,000 (Plan 2005)—
1,500 (Plan 2004)
4,500 (Plan 2005)
4,500 (Plan 2003)
4,500 (Plan 2004)
4,500 (Plan 2005)
2,100 (Plan 2004)
4,000 (Plan 2004)
3,000 (Plan 2004)
3,000 (Plan 2005)————
4,000 (Plan 2004)
4,000 (Plan 2005)——
3,000 (Plan 2005)
3,000 (Plan 2004)

7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,619 YEN (Plan 2005)—
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,725 YEN (Plan 2004)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)————
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)——
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)

Option Holder

Title

Director and Executive Advisor
Representative Director andChairmanYuzo Yamamura . . . . . . Representative Director and Vice
Chairman
Representative Director and Vice
Chairman
Makoto Kawamura . . . . Representative Director and President

Michihisa Yamamoto . .

Director

Isao Kishimoto . . . . . . . Director
Hisao Hisaki . . . . . . . . . Director
Rodney N. Lanthorne . . Director
John S. Gilbertson . . . . .

Director

Tetsuo Kuba . . . . . . . . . Director
Tatsumi Maeda . . . . . . . Director
Yoshihiko Nishikawa . . Corporate Auditor
Kokichi Ishibitsu . . . . . .
Osamu Nishieda . . . . . .
Shigekazu Tamura . . . .
Kazuo Yoshida . . . . . . .
Hisashi Sakumi . . . . . . .

Corporate Auditor
Corporate Auditor
Corporate Auditor
Corporate Auditor
Managing Executive Officer

Tsutomu Yamori . . . . . .
Takashi Itou . . . . . . . . .
Osamu Nomoto . . . . . . .
Akiyoshi Okamoto . . . .

Managing Executive Officer
Managing Executive Officer
Managing Executive Officer
Managing Executive Officer
68

Option Holder

Eiichi Toriyama . . . . . .

Title

Managing Executive Officer

Keijiro Minami . . . . . . . Senior Executive Officer
Gorou Yamaguchi . . . . . Senior Executive Officer
Yoshihito Ohta . . . . . . . Senior Executive Officer
Yasuyuki Yamamoto . . Senior Executive Officer

Takenori Ugari . . . . . . . Senior Executive Officer
Yasushi Matsumura . . . Executive Officer

Yukihiro Takarabe . . . .
Junichi Jinno . . . . . . . . .
Gen Takayasu . . . . . . . .
Nobuhiro Ochiai . . . . . .
Junzo Katsuki . . . . . . . .
Masakazu Mitsuda . . . .

Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Toshimi Gejima . . . . . .

Executive Officer

Michiaki Furuhashi . . . .

Executive Officer

Mitsuru Imanaka . . . . . .

Executive Officer

Shoichi Aoki . . . . . . . . .
Yoshihiro Kano . . . . . . .
Yoichi Yamashita . . . . .

Executive Officer
Executive Officer
Executive Officer

Robert E. Whisler . . . . .

Executive Officer

John S. Rigby . . . . . . . .

Executive Officer

Masaki Kozu . . . . . . . . .

Executive Officer

Hitoshi Takao . . . . . . . . Executive Officer
Yoshiharu Nakamura . . Executive Officer
Kazumasa Umemura . . . Executive Officer
Takafumi Matsuda . . . . Executive Officer
Masaaki Itou . . . . . . . . . Executive Officer
Masahisa Shimizu . . . . . Executive Officer
Tsuyoshi Egami . . . . . . Executive Officer
Katsumi Komaguchi . . . Executive Officer
Total

Total Stock
Acquisition Rights
Outstanding

Exercise Price per Share

1,000 (Plan 2004)
4,000 (Plan 2005)—
3,000 (Plan 2005)
2,500 (Plan 2005)
2,500 (Plan 2003)
2,500 (Plan 2004)
2,500 (Plan 2005)—
100 (Plan 2003)
1,600 (Plan 2004)
3,000 (Plan 2005)
2,500 (Plan 2005)—
2,500 (Plan 2005)
2,500 (Plan 2004)
1,400 (Plan 2005)
1,100 (Plan 2004)
1,200 (Plan 2005)
2,500 (Plan 2004)
2,500 (Plan 2005)
400 (Plan 2004)
2,500 (Plan 2005)
1,200 (Plan 2004)
2,500 (Plan 2005)—
2,500 (Plan 2005)
600 (Plan 2004)
1,700 (Plan 2005)
2,500 (Plan 2004)
500 (Plan 2005)
1,000 (Plan 2004)
3,000 (Plan 2005)
600 (Plan 2003)
600 (Plan 2004)
600 (Plan 2005)—
600 (Plan 2005)—
600 (Plan 2005)
600 (Plan 2004)
600 (Plan 2005)——
2,500 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)—
8,619 YEN (Plan 2005)
8,619 YEN (Plan 2005)
7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)—
7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,619 YEN (Plan 2005)—
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)—
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)
7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)—
8,619 YEN (Plan 2005)—
8,619 YEN (Plan 2005)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)——
8,619 YEN (Plan 2005)

15,700 (Plan 2003)
56,200 (Plan 2004)
87,700 (Plan 2005)
69

Item 7.

Major Shareholders and Related Party Transactions

A. Major Shareholders
As far as is known to us, Kyocera is not, directly or indirectly, owned or controlled by any other corporation orby the Japanese or any foreign government, and there is no arrangement which may at a subsequent date result ina change in control of Kyocera.
The following table shows the ten largest stockholders of record of Kyocera Corporation at March 31, 2008.
Name

Shares owned(in thousands)

Ownership(%)

17,925

9.37

10,836

5.66

9,224
7,218
6,806

4.82
3.77
3.56

5,110
5,076
4,680
4,351
3,550
74,777

2.67
2.65
2.45
2.27
1.86
39.09

State Street Bank and Trust Company(Standing proxy: Mizuho Corporate Bank, Ltd.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Master Trust Bank of Japan, Ltd.
(Trust Account) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan Trustee Services Bank, Ltd.
(Trust Account) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Bank of Kyoto, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kazuo Inamori . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nats Cumco(Standing proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.) . . . . . . . . . . . . . . . . . . .
The Bank of Tokyo-Mitsubishi UFJ, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Inamori Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deutsche Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
KI Enterprise Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

None of the above shareholders has voting rights that are different from those of other shareholders.
Under the Financial Instruments and Exchange Law of Japan, any person that becomes a holder (together with its
related persons) of 5% of the total issued voting shares of a company listed on any Japanese stock exchange(including ADSs representing such shares) must file a report with the Director of the relevant Local Finance
Bureau and send a copy of such report to the company. A similar report must also be filed if the percentage
holding of a holder of more than 5% of the total issued voting shares of a company increases or decreases by 1%
or more.
In accordance with the Financial Instruments and Exchange Law of Japan, Dodge & Cox (see below) informed
us that it became a holder of over 5% of the total issued voting shares of Kyocera Corporation. However, it is notincluded in the above major shareholders because we do not identify it as a single holder on our shareholders
record as of March 31, 2008.
Filing Date

March 21, 2008 . . . . . . . . . . . . . .

NameDodge & Cox

Shares owned(in thousands)

Ownership(%)

Holding 14,578 thousand shares
as of March 14, 2008

7.62

None of the above shareholders has voting rights that are different from those of other shareholders.
According to Citibank N.A., depositary for Kyocera’s ADSs, as of March 31, 2008, 8,209,060 shares ofKyocera’s common stock were held in the form of ADSs and there were 844 ADS holders of record in the UnitedStates. According to Kyocera’s register of shareholders, as of March 31, 2008, there were 65,310 holders ofKyocera’s common stock of record worldwide. As of March 31, 2008, there were 110 record holders ofKyocera’s common stock with addresses in the United States, holding 39,028,525 shares of the outstanding70

common stock on that date. Because some of these shares were held by brokers or other nominees, the number ofrecord holders with addresses in the United States might not fully show the number of beneficial owners in the
United States.
B. Related Party Transactions
Significant customer
In fiscal 2008, Kyocera’s sales to KDDI Corporation amounted to ¥128,330 million ($1,283 million), or 9.9% ofconsolidated net sales.
KDDI Corporation provides telecommunication services, and Kyocera sells mainly telecommunicationequipment to KDDI Corporation. Kyocera Corporation made an equity investment in KDDI Corporation when it
was founded, and currently a director of Kyocera Corporation is a member of the board of directors of KDDI
Corporation. At March 31, 2008, Kyocera Corporation’s equity interest in KDDI Corporation was 12.77%.
Kyocera serves KDDI Corporation as an independent vendor in terms of price determination, remittancecondition and product distribution. All of the agreements and ongoing contractual commitments between
Kyocera and KDDI Corporation have been made on an arm’s -length basis. Kyocera expects that KDDI
Corporation will remain a significant customer in the future. See Note 19 to the Consolidated financial
Statements in this annual report on Form 20-F.
C. Interests of Experts and Counsel
Not Applicable.
Item 8.

Financial Information

A. Consolidated Statements and Other Financial Information
Financial Statements
The information required by this item is set forth beginning on page F-3 of this annual report on Form 20-F.
Dividend Policy
Kyocera believes that the best way to increase corporate value and meet shareholders’ expectations is to improve
future consolidated performance. Kyocera therefore strongly takes into consideration the linkage between
dividend amounts and consolidated performance and has implemented a dividend policy aiming for a
consolidated dividend ratio of approximately 20% to 25%. In addition, Kyocera determines dividend amounts
based on an overall assessment, taking into account various factors that include the amount of capital
expenditures necessary for medium to long-term growth.
Pursuant to this policy and based on performance during fiscal 2008, Kyocera determined a year-end dividend forthe year ended March 31, 2008 of 60 yen per share. When aggregated with the interim dividend in the amount of
60 yen per share, the total annual dividend amount was 120 yen per share, an increase of 10 yen compared withfiscal 2007.
It is also proposed that other general reserve shall be set aside, in order to take into account the necessary reserveamounts for creation of new businesses, cultivation of new markets, development of new technologies andacquisition of outside management resources needed to achieve stable and sustainable corporate growth ofKyocera.
We held a board of directors meeting for the interim dividend on October 30, 2007.
B. Significant Changes
Except as disclosed in this annual report on Form 20-F, there have been no significant changes since March 31,
2008.
71

Item 9.

The Offer and Listing

A. Offering and Listing Details
Price Range of Shares
The principal non-United States market on which the shares of Common Stock of Kyocera Corporation are
traded is the Tokyo Stock Exchange, the largest stock exchange in Japan. The American Depositary Shares ofKyocera Corporation, each representing one share of Common Stock of Kyocera Corporation, are traded on the
New York Stock Exchange. Citibank, N.A. acts as the Depositary in respect of the American Depositary Shares.
Common Stock of Kyocera Corporation is also listed on the Osaka Securities Exchange in Japan.

Years ended March 31

Tokyo Stock Exchange
Price per Share ofCommon Stock
(yen)
High
Low

New York Stock Exchange
Price per American
Depositary Share(U.S. dollars)*
High
Low

2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,970
9,630
10,83011,59013,390

5,570
7,080
7,090
8,180
7,760

84.66
90.90
91.59
98.01
110.01

47.25
67.81
62.58
71.73
73.09

Most Recent 6 months

High

Low

High

Low

December 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
May 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,290
9,560
9,020
9,010
9,640
10,340

9,500
7,760
8,060
8,000
8,180
9,410

92.78
88.45
84.00
89.97
92.90
99.10

83.91
73.09
75.06
81.43
82.23
90.20

* The prices of American Depositary Shares are based upon reports by the New York Stock Exchange, with all
fractional figures rounded up to the nearest two decimal points.
The following table shows the information about high and low sales prices for each quarterly period in fiscal
2007 and 2008 in respect of the shares of Common Stock of Kyocera Corporation on the Tokyo Stock Exchange,
and the American Depositary Shares on the New York Stock Exchange.
For Voting Securities by Fiscal Quarter
2007
1st

Common Stock:Market price per share (A) . . . . . . . . . . . . . . . . . . . . . . .

Cash dividends paid per share (C) . . . . . . . . . . . . . . . . . .

72

3rd

4th

—High
—Low

¥11,590 ¥10,250 ¥11,310 ¥11,480
8,180
8,300
9,970
10,040
50.00
—
50.00
—

—High
—Low

$ 98.01 $ 87.75 $ 95.51 $ 95.65
71.73
71.85
86.52
86.43
0.43
—
0.43
—

Cash dividends paid per share . . . . . . . . . . . . . . . . . . . . .
American Depositary Share:
Market price per share (B) . . . . . . . . . . . . . . . . . . . . . . .

2nd

2008
1st

Common Stock:Market price per share (A) . . . . . . . . . . . . . . . . . . . . . . . .

Cash dividends paid per share (C) . . . . . . . . . . . . . . . . . . .

3rd

4th

—High
—Low

¥13,180 ¥13,390 ¥11,190 ¥9,560
10,970
9,930
9,300
7,760
60.00
—
60.00
—

—High
—Low

$108.00 $110.01 $ 95.97 $89.97
94.07
87.16
81.00
73.09
0.48
—
0.54
—

Cash dividends paid per share . . . . . . . . . . . . . . . . . . . . . .
American Depositary Share:
Market price per share (B) . . . . . . . . . . . . . . . . . . . . . . . .

2nd(A) Price on the Tokyo Stock Exchange(B) Price on the New York Stock Exchange(C) Translated into U.S. dollars based on the exchange rates at each payment date
B. Plan of Distribution
Not Applicable.
C. Markets
See Item 9.A. of this annual report on Form 20-F for information on the markets on which our common stock islisted or quoted.
D. Selling Shareholders
Not Applicable.
E. Dilution
Not Applicable.
F. Expenses of the Issue
Not Applicable.
Item 10.

Additional Information

A. Share Capital
Not Applicable.
B. Memorandum and Articles of Association
GeneralSet out below is certain information regarding the organization and shares of Kyocera Corporation, including
brief summaries of certain provisions of the Articles of Incorporation, the Share Handling Regulations and theRegulations of the Board of Directors of Kyocera Corporation and of the Corporation Act relating to joint stock
corporations (kabushiki kaisha) and certain related legislation, all as currently in effect.
Organization
Kyocera Corporation is a joint stock corporation (kabushiki kaisha) incorporated in Japan under the Corporation
Act. It is registered in the Commercial Register maintained by the Kyoto Local Registry Office of the Ministry ofJustice.
73

Objects and Purposes
The objects of Kyocera Corporation are set forth in Article 2 of its Articles of Incorporation, as follows:(1) Manufacture and sale of and research on fine ceramics and various kinds of products utilizing fine ceramics;(2) Manufacture and sale of and research on single crystal materials and various kinds of products utilizing
single crystal materials;(3) Manufacture and sale of and research on composite materials;(4) Manufacture and sale of and research on specialty plastics;(5) Manufacture and sale of and research on measurement instruments for electronics;(6) Manufacture and sale of and research on electronic and electric instruments and parts thereof;(7) Manufacture and sale of and research on component parts of automobiles;(8) Manufacture and sale of and research on precious metals, precious stones and semiprecious stones andvarious kinds of products utilizing precious metals, precious stones and semiprecious stones;(9) Manufacture and sale of and research on accessories and interior and exterior decorations and ornaments;(10) Wholesales and retail sale of health foods;(11) Manufacture and sale of and research on material and equipment for medical use;(12) Manufacture and sale of and research on equipment utilizing solar energy;(13) Manufacture and sale of and research on optical machinery and instruments and precision machinery andinstruments and parts hereof;(14) Manufacture and sale of and research on machinery and equipment for business use and machinery andequipment for industrial use and parts thereof;(15) Manufacture and sale of and research on photosensitive materials for photographic use;(16) Design, control and contract of construction relating to public works, building, electric equipment andpiping construction;(17) Sale, purchase, lease, maintenance and brokerage of real estate;(18) Lease, maintenance and management of facilities relating to sports, recreation, medical care, hotels andrestaurants, and the travel agency business;(19) Road freight handling and warehousing;(20) Business relating to non-life insurance agency and life insurance canvassing, and general leasing, factoring
and finance business;(21) Sale and purchase of various kinds of plants and technology related thereto;(22) Design and sale of software relating to computers;(23) Disposition through sale and the like and acquisition through purchase and the like of patents and otherindustrial property rights and know-how appertaining to the preceding items and acting as intermediary insuch transactions;(24) Businesses relating to import and export of any of the foregoing items; and(25) All commercial activities relating or incidental to any of the foregoing.
74

Directors
Under the Corporation Act, the Board of Directors has the ultimate responsibility for the management of Kyocera
Corporation and each Representative Director, who is elected from among the members of the Board of
Directors, has the statutory authority to represent Kyocera Corporation in all respects. Under both the
Corporation Act and the Regulations of the Board of Directors of Kyocera Corporation, the Directors mustrefrain from engaging in any business competing with Kyocera Corporation unless approved by the Board of
Directors and any Director who has a material interest in the subject matter of a resolution to be taken by the
Board of Directors cannot vote in such resolution. The Corporation Act and the Articles of Incorporation of
Kyocera Corporation provide that remuneration of Directors and Corporate Auditors shall be determined at a
general meeting of shareholders.
Except as stated below, neither the Corporation Act nor Kyocera Corporation’s Articles of Incorporation makeany special provision as to a Director’s or Corporate Auditor’s power to vote in connection with theircompensation; or the borrowing powers exercisable by a Representative Director (or a Director who is given
power by a Representative Director to exercise such powers), their retirement age or requirement to hold any
shares of capital stock of Kyocera Corporation.
The Corporation Act specifically requires a resolution of the Board of Directors for a joint stock corporation,
among other things, to acquire or dispose of material assets; to borrow substantial amounts of money; to employ
or discharge from employment important employees, such as executive officers; to establish, change or abolish amaterial corporate organization such as a branch office; or to issue bonds. A resolution of the Board of Directors
is also specifically required for the establishment of a control system to ensure adequacy of Kyocera
Corporation’s affairs, such as a control system to ensure the exercise of Directors’ duty to comply with laws andregulations and the Articles of Incorporation of Kyocera Corporation. The Regulations of the Board of Directorsof Kyocera Corporation require a resolution of the Board of Directors for Kyocera Corporation, among otherthings, to issue bonds or bonds with stock acquisition rights; to borrow, lend or contribute a significant amount ofmoney; to give a guarantee of a significant amount of debt; or to waive the right to receive a significant amountof money. The Regulations of the Board of Directors of Kyocera Corporation defines a “significant amount” asfive billion yen or more with respect to borrowing and one hundred million yen or more with respect to othermatters. The Regulations of the Board of Directors of Kyocera Corporation also require a resolution of the Boardof Directors to approve any transaction between a Director and Kyocera Corporation; allocate remuneration andbonuses of Directors as previously determined or approved by the general meeting of shareholders; or determine
the amount and manner of payment of retirement allowances or condolence money payable to Directors,
determination of which has been previously entrusted to the Board of Directors by the general meeting ofshareholders.
Capital Stock
General
All issued shares are fully paid, non-assessable, and in registered form. Transfer of shares is effected by deliveryof share certificates, but in order to assert shareholders’ rights against Kyocera Corporation, the transferee musthave his or her name and address registered in Kyocera Corporation’s register of shareholders. For this purpose,shareholders are required to file their names, addresses and seals with Kyocera Corporation’s transfer agent(effective on the effective date of the New Clearing Law (as defined below), such seals will become
unnecessary). Non-resident shareholders are required to appoint a standing proxy in Japan or provide a mailingaddress in Japan. Japanese securities firms and commercial banks customarily act as standing proxy and provide
related services at market rates.
Kyocera Corporation’s transfer agent is Daiko Clearing Services Corporation.
The Law Concerning Central Clearing of Share Certificates and Other Securities of Japan establishes a central
clearing system that is applicable to the shares. Pursuant to this system, a holder of shares is able to choose, at hisor her discretion, to participate in this system, and all share certificates elected to be placed into this75

system are deposited with Japan Securities Depository Center, Inc. (“JASDEC”) (through a participating
institution having a clearing account with JASDEC, if the holder is not such a participating institution). All suchshares are registered in the name of JASDEC in Kyocera Corporation’s register of shareholders. Eachparticipating shareholder will, in turn, be registered in Kyocera Corporation’s register of beneficial shareholders
and treated in the same way as shareholders registered in its register of shareholders. In connection with transferof shares under this system, entry of the transfer of shares in the book maintained by JASDEC for theparticipating institutions, or entry in the book maintained by each participating institution for its customers, orboth have the same effect as delivery of share certificates.
A statute establishing a new electronic central clearing system for shares of listed companies and eliminating theissuance and use of certificates for such shares (the “New Clearing Law”) was promulgated in June 2004, andcertain parts of the New Clearing Law that are relevant to the shares will become effective within five years ofthe date of the promulgation. Currently, the effective date has not yet been determined but it is expected to be
January 5, 2009. On the effective date, all existing share certificates will become null and void, and a newelectronic central clearing system will be established and become responsible for handling shares of all Japanesecompanies listed on any Japanese stock exchange, including the shares of Kyocera Corporation. Thereafter, thetransfer of such shares will be effected exclusively through entry in the records maintained under the newelectronic central clearing system.
Under the new electronic central clearing system, promptly after record dates and certain other dates as describedin the New Clearing Law, the operator of the new electronic central clearing system will provide Kyocera
Corporation with notice with respect to shareholders as of each such date (sou-kabunushi-tsuuchi), containing,among other information, the name and number of shares held by each shareholder. Kyocera Corporation, uponreceipt of each such notice, will update its register of shareholders to reflect the information such notice contains.
In connection with the introduction of this new electronic central clearing system, shares not deposited withJASDEC (which is expected to be the operator of the new electronic central clearing system) by two weeks prior
to the effective date of the New Clearing Law will be registered in a “special account” with JASDEC maintained
by Kyocera Corporation and will not be transferable to any third party other than Kyocera Corporation unlessfirst transferred to the shareholder’s own account. Any shares constituting less than one unit (see “‘Unit’ sharesystem” below) will be registered in the special account upon introduction of the new electronic central clearing
system. It is expected that the entry of such shares in the special account will be made 15 business days after theeffective date of the New Clearing Law. In addition, the transfer of such shares from the special account to theshareholder’s own account, as a matter of practice, may not be immediate. Accordingly, shares not deposited
with JASDEC by two weeks prior to the effective date of the New Clearing Law, including shares constituting
less than one unit, will not be transferable for approximately one month following the effective date of the New
Clearing Law, and thereafter, any transfer of shares registered in the special account may not be immediate.
Authorized capital
Article 5 of the Articles of Incorporation of Kyocera Corporation provides that the total number of sharesauthorized for issuance by Kyocera Corporation is 600,000,000 shares. If shares of common stock are retired, thenumber of shares so retired shall be deducted from the total number of shares authorized to be issued by Kyocera
Corporation.
Distributions of Surplus
GeneralUnder the Corporation Act, distributions of cash or other assets by joint stock corporations to their shareholders,so-called “dividends,” are referred to as “distributions of Surplus” (“Surplus” is defined in “—Restriction on
distributions of Surplus”). Kyocera Corporation may make distributions of Surplus to its
76shareholders any number of times per fiscal year, subject to certain limitations described in “—Restriction on
distributions of Surplus”. Distributions of Surplus are required in principle to be authorized by a resolution of ageneral meeting of shareholders, but may also be made pursuant to a resolution of the Board of Directors if all
the requirements described in (a) through (c) are met:(a) Kyocera Corporation’s Articles of Incorporation provide that the Board of Directors has the authority
to decide to make distributions of Surplus;(b) the normal term of office of Kyocera Corporation’s Directors is not longer than one year; and(c) Kyocera Corporation’s non-consolidated annual financial statements and certain documents for thelatest fiscal year present fairly its assets and profit or loss, as required by ordinances of the Ministry ofJustice.
In the case of Kyocera Corporation, at present, the requirements in (a) and (b) above are not met. Nevertheless,
Kyocera Corporation may make distributions of Surplus in cash as an interim dividend (an “interim dividend”) to
its shareholders by resolutions of the Board of Directors once per fiscal year under Kyocera Corporation’s
Articles of Incorporation and the Corporation Act.
Under Kyocera Corporation’s Articles of Incorporation, a year-end dividend may be distributed to shareholders ofrecord as of March 31 of each year pursuant to a resolution of a general meeting of shareholders, and an interim
dividend may be distributed to shareholders of record as of September 30 of each year pursuant to a resolution of
the Board of Directors. In addition, under the Corporation Act, Kyocera Corporation may make further distributionsof Surplus by resolution of general meetings of shareholders. Kyocera Corporation is not obliged to pay any
dividends unclaimed for a period of three years after the date on which they first became payable.
Distributions of Surplus, other than interim dividends, may be made in cash or in kind in proportion to thenumber of shares held by each shareholder. A resolution of a general meeting of shareholders or the Board of
Directors authorizing a distribution of Surplus must specify the kind and aggregate book value of the assets to be
distributed, the manner of allocation of such assets to shareholders, and the effective date of the distribution. If a
distribution of Surplus is to be made in kind, Kyocera Corporation may, pursuant to a resolution of a general
meeting of shareholders or (as the case may be) the Board of Directors, grant a right to its shareholders to require
Kyocera Corporation to make such distribution in cash instead of in kind. If no such right is granted toshareholders, the relevant distribution of Surplus must be approved by a special resolution of a general meetingof shareholders (see “Voting rights” with respect to a “special resolution”).
In Japan the “ex-dividend” date and the record date for dividends precede the date of determination of theamount of the dividend to be paid. The market price of shares generally goes ex-dividend on the third business
day prior to the record date.
Restriction on distributions of Surplus
When Kyocera Corporation makes a distribution of Surplus, it must, until the sum of its additional paid-in capitaland legal reserve reaches one-quarter of its stated capital, set aside in its additional paid-in capital and/or legal
reserve an amount equal to one-tenth of the amount of Surplus so distributed.
The amount of Surplus at any given time must be calculated in accordance with the following formula:
A + B + C + D - (E + F + G)
In the above formula:“A” = the total amount of other capital surplus and other retained earnings, each such amount being thatappearing on Kyocera Corporation’s non-consolidated balance sheet as of the end of the last fiscal
year“B” = (if Kyocera Corporation has disposed of its treasury stock after the end of the last fiscal year) theamount of the consideration for such treasury stock received by Kyocera Corporation less the bookvalue thereof77

“C” = (if Kyocera Corporation has reduced its stated capital after the end of the last fiscal year) the amountof such reduction less the portion thereof that has been transferred to additional paid-in capital or
legal reserve (if any)
“D” = (if Kyocera Corporation has reduced its additional paid-in capital or legal reserve after the end of thelast fiscal year) the amount of such reduction less the portion thereof that has been transferred tostated capital (if any)“E” = (if Kyocera Corporation has cancelled its treasury stock after the end of the last fiscal year) the bookvalue of such treasury stock“F” = (if Kyocera Corporation has distributed Surplus to its shareholders after the end of the last fiscal
year) the total book value of the Surplus so distributed“G” = certain other amounts set forth in ordinances of the Ministry of Justice, including (if Kyocera
Corporation has reduced Surplus and increased its stated capital, additional paid-in capital or legal
reserve after the end of the last fiscal year) the amount of such reduction and (if Kyocera
Corporation has distributed Surplus to its shareholders after the end of the last fiscal year) theamount set aside in its additional paid-in capital or legal reserve (if any) as required by ordinances ofthe Ministry of Justice
The aggregate book value of Surplus distributed by Kyocera Corporation may not exceed a prescribed
distributable amount (the “Distributable Amount”), as calculated on the effective date of such distribution. The
Distributable Amount at any given time shall be equal to the amount of Surplus less the aggregate of (a) the bookvalue of its treasury stock, (b) the amount of consideration for any of its treasury stock disposed of by it after theend of the last fiscal year and (c) certain other amounts set forth in ordinances of the Ministry of Justice,including (if the sum of one-half of goodwill and the deferred assets exceeds the total of stated capital, additional
paid-in capital and legal reserve, each such amount being that appearing on Kyocera Corporation’s
non-consolidated balance sheet as of the end of the last fiscal year) all or certain part of such exceeding amountas calculated in accordance with the ordinances of the Ministry of Justice.
If Kyocera Corporation has become at its option a company with respect to which consolidated balance sheets
should also be taken into consideration in the calculation of the Distributable Amount (renketsu haito kisei tekiyo
kaisha), it will be required to further deduct from the amount of Surplus the excess amount, if any, of (x) the total
amount of shareholders’ equity appearing on its non-consolidated balance sheet as of the end of the last fiscal
year and certain other amounts set forth by an ordinance of the Ministry of Justice over (y) the total amount ofshareholders’ equity and certain other amounts set forth by an ordinance of the Ministry of Justice appearing on
its consolidated balance sheet as of the end of the last fiscal year.
If Kyocera Corporation has prepared interim financial statements as described below, and if such interim
financial statements have been approved by the Board of Directors or (if so required by the Corporation Act) by ageneral meeting of shareholders, then the Distributable Amount must be adjusted to take into account the amountof profit or loss, and the amount of consideration for any of its treasury stock disposed of by it, during the period
in respect of which such interim financial statements have been prepared. Kyocera Corporation may prepare
non-consolidated interim financial statements consisting of a balance sheet as of any date subsequent to the endof the last fiscal year and an income statement for the period from the first day of the current fiscal year to thedate of such balance sheet. Interim financial statements so prepared by Kyocera Corporation must be audited by
its Corporate Auditors and independent certified public accountants, as required by ordinances of the Ministry ofJustice.
General Meeting of Shareholders
Pursuant to the Articles of Incorporation of Kyocera Corporation, an ordinary general meeting of shareholders ofKyocera Corporation shall be convened within three months after the last day of each fiscal year. In addition,
Kyocera Corporation may hold an extraordinary general meeting of shareholders whenever necessary.
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Notice of a shareholders’ meeting, setting forth the place, time and purpose thereof, must be mailed to eachshareholder having voting rights (or, in the case of a non-resident shareholder, to the resident proxy or mailingaddress thereof in Japan) at least two weeks prior to the date set for the meeting. Under the Corporation Act, such
notice may be given to shareholders by electronic means, subject to the consent of the relevant shareholders.
Any shareholder or group of shareholders holding at least 300 voting rights or one percent of the total number ofvoting rights for six months or more may propose a matter to be considered at a general meeting of shareholders
by submitting a request to a Representative Director at least eight weeks prior to the date set for such meeting. If
Kyocera Corporation’s Articles of Incorporation so provide, any of the minimum percentages, time periods andnumber of voting rights necessary for exercising the minority shareholder rights described above may bedecreased or shortened.
Voting rights
A holder of shares constituting one or more whole units (see “‘Unit’ share system” below) is entitled to one votefor each whole unit of shares. However, in general, neither Kyocera Corporation nor any corporate shareholder or
certain other entity one-quarter or more of the total voting rights of which are directly or indirectly held byKyocera Corporation, has voting rights in respect of the shares held by Kyocera Corporation or such entity.
Except as otherwise provided by law or by the Articles of Incorporation of Kyocera Corporation, a resolution canbe adopted at a general meeting of shareholders by a majority of the total number of voting rights represented at
the meeting. Under the Corporation Act and Kyocera Corporation’s Articles of Incorporation, however, thequorum for the election of Directors and Corporate Auditors is one-third of the total number of voting rights.
Kyocera Corporation’s shareholders are not entitled to cumulative voting in the election of Directors.
Shareholders may exercise their voting rights through proxies, provided that the proxies are also shareholders
holding voting rights. Kyocera Corporation’s shareholders also may cast their votes in writing. Holders of shares
who do not attend a general meeting of shareholders may also exercise their voting rights by electronic means if
the Board of Directors approves such method of exercising voting rights.
The Corporation Act provides that certain important matters shall be approved by a “special resolution” of ageneral meeting of shareholders. Under Kyocera Corporation’s Articles of Incorporation, the quorum for a
special resolution is one-third of the total number of voting rights and the approval of at least two-thirds of thevoting rights represented at the meeting is required for adopting a special resolution. Such important matters
include:(i)purchase of shares by Kyocera Corporation from a specific shareholder other than a Kyocera
Corporation subsidiary;(ii) consolidation of shares;(iii) issuance or transfer of new shares or existing shares held by Kyocera Corporation as treasury stock topersons other than the shareholders at a “specially favorable” price;(iv) issuance of stock acquisition rights (including those incorporated in bonds with stock acquisitionrights) to persons other than the shareholders under “specially favorable” conditions;(v) removal of Kyocera Corporation’s Corporate Auditor;(vi) exemption from a portion of liability of Kyocera Corporation’s Directors, Corporate Auditors or
independent auditors;(vii) reduction of stated capital (subject to certain exceptions);(viii) distribution of Surplus in kind with respect to which shareholders are not granted the right to require
Kyocera Corporation to make distribution in cash instead of in kind;79

(ix) any amendment to Kyocera Corporation’s Articles of Incorporation (except for such amendments that
may be made without approval by shareholders under the Corporation Act);(x) transfer of the whole or a substantial part of Kyocera Corporation’s business;(xi) taking over of the whole of the business of another company requiring shareholders’ approval;(xii) dissolution, merger or consolidation requiring shareholders’ approval;(xiii) corporate split requiring shareholders’ approval; and(xiv) establishment of a parent and wholly-owned subsidiary relationship by way of a share transfer(kabushiki-iten) or share exchange (kabushiki-kokan) requiring shareholders’ approval.
Under the Corporation Act, Kyocera Corporation’s shareholders will possess various rights, such as the right toreview and make copies of its Articles of Incorporation and the register of shareholders, to convene a general
meeting of shareholders, to propose a matter to be considered at a general meeting of shareholders, and to bringderivative actions, depending upon the number of shares held by them and the duration of their shareholding.
Subscription rights
Holders of Kyocera Corporation’s shares of capital stock have no pre-emptive rights under its Articles ofIncorporation. Authorized but unissued shares may be issued at such times and upon such terms as the Board of
Directors determines, subject to the limitations as to the offering of new shares at a “specially favorable” pricementioned under “Voting rights” above. The Board of Directors may, however, determine that shareholders of aparticular class of stock shall be given subscription rights regarding a particular issue of new shares of that class,in which case such rights must be given on uniform terms to all shareholders of that class of stock as at a record
date of which not less than two weeks’ prior public notice must be given. Each of the shareholders to whom suchrights are given must also be given notice of the expiry thereof at least two weeks’ prior to the date on whichsuch rights expire.
Liquidation rights
In the event of a liquidation of Kyocera Corporation, the assets remaining after payment of all debts, liquidation
expenses and taxes will be distributed among the holders of our shares of common stock in proportion to therespective numbers of shares held by each holder.
Record date
March 31 is the record date for the determination of shareholders entitled to receive Kyocera Corporation’s
year-end dividends and to vote at the ordinary general meeting of shareholders with respect to the fiscal year
ending on such March 31. September 30 is the record date for interim dividends. In addition, Kyocera
Corporation may set a record date for determining the shareholders and/or beneficial shareholders entitled toother rights and for other purposes by giving at least two weeks’ prior public notice.
Acquisition by Kyocera Corporation of its capital stock
Kyocera Corporation may acquire shares (i) by soliciting all its shareholders to offer to sell shares held by them(in this case, certain terms of such acquisition, such as the total number of shares to be purchased and the total
amount of consideration, shall be set by an ordinary resolution of a general meeting of shareholders in advance,
and acquisition shall be effected pursuant to a resolution of the Board of Directors), (ii) from a specificshareholder other than any of Kyocera Corporation’s subsidiaries (pursuant to a special resolution of a general
meeting of shareholders), (iii) from any of Kyocera Corporation’s subsidiaries (pursuant to a resolution of theBoard of Directors), or (iv) by way of purchase on any Japanese stock exchange on which the shares are listed orby way of tender offer (in either case pursuant to an ordinary resolution of a general meeting of shareholders or a80

resolution of the Board of Directors). In the case of (ii) above, any other shareholder may make a request to
Kyocera Corporation’s Representative Director that such other shareholder be included as a seller in the proposed
purchase, provided that no such right will be available if the purchase price or any other consideration to bereceived by the relevant specific shareholder will not exceed the higher of (x) the last trading price of the shareson the relevant stock exchange on the day immediately preceding the date on which the resolution mentioned in(ii) above was adopted (or, if there is no trading in the shares on the stock exchange or if the stock exchange is
not open on such day, the price at which the shares are first traded on such stock exchange thereafter) and (y) if
the shares are subject to a tender offer on the day immediately preceding the date on which the resolution
mentioned in (ii) above was adopted, the price of the shares under the agreement with respect to such tender offer
on such day.
The total amount of the purchase price of shares may not exceed the Distributable Amount, as described in“Distributions of Surplus—Restriction on distributions of Surplus.”
The Corporation Act permits Kyocera Corporation to hold shares acquired by it as treasury stock. Treasury stock
may be held by Kyocera Corporation for any time period and may be cancelled by resolution of its Board of
Directors. Kyocera Corporation may also transfer to any person shares held by it as treasury stock, subject to a
resolution of its Board of Directors, and subject also to other requirements similar to those applicable to theissuance of new shares. Kyocera Corporation may also utilize its treasury stock for the purpose of transfer to any
person upon exercise of stock acquisition rights or for the purpose of acquiring another company by way ofmerger, share exchange or corporate split through exchange of treasury stock for shares or assets of the acquiredcompany. No specific approval by the Board of Directors or shareholders at a shareholders meeting is required
for this utilization of treasury stock, although the grant of the relevant stock acquisition rights or the relevant
merger, share exchange or corporate split must be approved, as the case may be, by the Board of Directors or
shareholders at Kyocera Corporation’s shareholders’ meeting.
“Unit” share system
Under Kyocera Corporation’s Articles of Incorporation, 100 shares constitute one “unit.” The Board of Directors
is permitted to reduce the number of shares constituting a unit or to abolish the unit share system in its entirety byamending Kyocera Corporation’s Articles of Incorporation without approval by shareholders. The number ofshares constituting one unit may not exceed 1,000.
Kyocera Corporation’s Articles of Incorporation and Share Handling Regulations provide that no sharecertificates shall, in general, be issued with respect to any shares constituting less than one unit. Consequently, no
certificates for shares other than a full unit or an integral multiple thereof will be issued (except for the purposeof protection of the holders of shares constituting less than one unit). As the transfer of shares normally requiresdelivery of the relevant share certificates, any fraction of a unit for which no share certificates are issued will not
be transferable.
Under the unit share system, a shareholder has one vote for each unit of shares held by it. Shares constituting lessthan one unit will carry no voting rights and be excluded for the purposes of calculating the quorum for voting
purposes. Moreover, holders of shares constituting less than one unit will have no other shareholder rights if
Kyocera Corporation’s Articles of Incorporation so provide, except that such holders may not be deprived ofcertain rights specified in the Corporation Act or an ordinance of the Ministry of Justice, including the right toreceive distribution of Surplus.
A holder of shares constituting less than one unit may require Kyocera Corporation to purchase such shares attheir market value. The Articles of Incorporation and the Share Handling Regulations of Kyocera Corporation
provide that a holder of shares constituting less than one unit has the right to require Kyocera Corporation to sell
to such holder shares constituting less than one unit which, when added to shares constituting less than one unit
currently owned by such holder, shall constitute a full one unit. The request of such purchase or sale may not be
withdrawn without Kyocera Corporation’s consent.
81

A holder who owns ADRs evidencing less than 100 ADSs will indirectly own less than a whole unit. Although,as discussed above, under the unit share system holders of less than one unit have the right to require Kyocera
Corporation to purchase their shares, holders of ADRs evidencing ADSs that represent other than integral
multiples of whole units are unable to withdraw the underlying shares of capital stock representing less than one
unit and, therefore, are unable, as a practical matter, to exercise the right to require Kyocera Corporation topurchase such underlying shares. As a result, access to the Japanese markets by holders of ADRs through thewithdrawal mechanism will not be available for dispositions of shares in lots of less than one unit. The unit sharesystem does not affect the transferability of ADSs, which may be transferred in lots of any size.
Miscellaneous
The Financial Instruments and Exchange Law of Japan and related regulations require any person who has
become, beneficially and solely or jointly, a holder of more than five percent of the total issued voting shares ofKyocera Corporation to file a report concerning such shareholdings with the Director of the relevant Local
Finance Bureau of the Ministry of Finance within five business days.
For this purpose, shares to be issued or transferred to these persons upon the exercise of stock acquisition rights
are included in determining both the size of the holding and Kyocera Corporation’s total issued voting sharecapital.
A similar report must also be filed in respect of any subsequent change of one percent or more in any suchholding, with certain exceptions. (For this purpose, any shares of Kyocera Corporation issuable to such person
upon conversion of convertible securities or exercise of stock acquisition rights, of which none are currently
outstanding, would be taken into account in determining both the number of shares held by such holder andKyocera Corporation’s total issued share capital.) Copies of such report must also be furnished to Kyocera
Corporation and to all Japanese stock exchanges on which the shares of Kyocera Corporation are listed.
Except for the general limitation under Japanese anti-trust and anti-monopoly regulations against holding ofshares of capital stock of a Japanese corporation which leads or may lead to a restraint of trade or monopoly, andexcept for general limitations under the Corporation Act or Kyocera Corporation’s Articles of Incorporation on
the rights of shareholders applicable regardless of residence or nationality, there is no limitation under Japaneselaws and regulations applicable to Kyocera Corporation or under its Articles of Incorporation on the rights of
non-resident or foreign shareholders to hold or exercise voting rights on the shares of capital stock of Kyocera
Corporation.
There is no provision in Kyocera Corporation’s Articles of Incorporation that would have an effect of delaying,deferring or preventing a change in control of Kyocera Corporation and that would operate only with respect tomerger, acquisition or corporate restructuring involving Kyocera Corporation.
Daily Price Fluctuation Limits under Japanese Stock Exchange Rules
Share prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids
and offers. These exchanges set daily price limits, which limit the maximum range of fluctuation within a single
trading day. Daily price limits are set according to the previous day’s closing price or special quote. Althoughtransactions may continue at the upward or downward limit price if the limit price is reached on a particular
trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a
price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular
trading day, or at all.

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On June 27, 2008, the closing price of our shares of Common Stock on the Tokyo Stock Exchange was¥10,220 per share. The following table shows the daily price limit for a stock on the Tokyo Stock Exchange witha closing price of between ¥5,000 and ¥10,000 per share, as well as the daily price limit if our per share pricewere to rise to between ¥10,000 and ¥20,000, or fall to between ¥3,000 and ¥5,000. Other daily price limits
would apply if our per share price moved to other ranges.
Selected Daily Price Limits
Maximum Daily
Price Movement

Previous Day’s Closing Price or Special Quote

Over ¥3,000 Less than ¥5,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over ¥5,000 Less than ¥10,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over ¥10,000 Less than ¥20,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 500¥1,000¥2,000For a history of the trading price of our shares of Common Stock on the Tokyo Stock Exchange, see Item 9.A“Offering and Listing Details” of this annual report on Form 20-F.
C. Material Contracts
During the preceding two years we have not entered into any material contracts, other than in the ordinary courseof business.
D. Exchange Controls
There is no foreign exchange control in Japan that may materially affect the import or export of capital, including
the availability of cash and cash equivalents for use by Kyocera Corporation, or the remittance of dividends orother payments to nonresident holders of Kyocera Corporation’s shares or of ADRs evidencing ADSs.
E. Taxation
Japanese Taxation
The following is a discussion summarizing material Japanese tax consequences to an owner of shares or ADSs
who is a non-resident of Japan or a non-Japanese corporation without a permanent establishment in Japan towhich the relevant income is attributable. The statements regarding Japanese tax laws set forth below are basedon the laws in force and as interpreted by the Japanese taxation authorities as at the date hereof. These statements
are subject to changes in the applicable Japanese laws or double taxation conventions occurring after that date.
This summary is not exhaustive of all possible tax considerations which may apply to a particular investor.
Potential investors should satisfy themselves as to:•the overall tax consequences of the ownership and disposition of shares or ADSs, including specificallythe tax consequences under Japanese law,•

the laws of the jurisdiction of which they are a resident, and•any tax treaty between Japan and their country of residence, by consulting their own tax advisers.

Generally, a non-resident of Japan or a non-Japanese corporation is subject to Japanese withholding tax on
dividends paid by Japanese corporations. Stock splits, subject to the following, are not subject to Japaneseincome tax.
•

The Convention Between the United States of America and Japan for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “Treaty”),
establishes the maximum rate of Japanese withholding tax which may be imposed on dividends paid toa United States resident or corporation not having a “permanent establishment” in Japan. A “permanent83

establishment” in Japan is generally a fixed place of business for industrial or commercial activity inJapan. Under the Treaty, the maximum withholding rate for most qualified portfolio shareholders islimited to 10% of the gross amount of the dividends and 5% of the gross amount of the dividends if thebeneficial owner is a qualified company that owns, directly or indirectly, on the date on which
entitlement to the dividend is determined, at least 10% (but not more than 50%) of the voting stock of
the issuing company. The Treaty provides that no Japanese tax will be imposed on dividends paid to aqualified pension fund that is a United States resident, if such dividends are not derived from thecarrying on of a business, directly or indirectly, by such pension fund.
For purposes of the Treaty and Japanese tax law, U.S. holders of ADRs will be treated as the owners of theshares underlying the ADSs evidenced by the ADRs.
Japan has income tax treaties, conventions or agreements, which generally provide that the rate of withholding
tax may not exceed 15% for portfolio investors, with, among others, Australia, Belgium, Canada, Denmark,Finland, Germany, Ireland, Italy, Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain,
Sweden and Switzerland. Japan’s income tax treaties with France and the United Kingdom have recently been
amended to reduce the maximum withholding tax rate to 10%. In principle, the rate of Japanese withholding tax
applicable to dividends paid by Kyocera Corporation to non-residents or non-Japanese corporations is 20%.
However, with respect to dividends paid by Kyocera Corporation to any corporate or individual shareholders
who are non-residents of Japan or non-Japanese corporations, except for any individual shareholder who holds
5% or more of the outstanding total of the shares issued by Kyocera Corporation, the said 20% withholding tax
rate is reduced to (i) 7% for dividends due and payable on or before March 31, 2009 and (ii) 15% for dividends
due and payable on or after April 1, 2009. Under Japanese tax law, whichever is the lower of the maximum rate
provided in the relevant tax treaty, convention or agreement and the Japanese statutory rate will be applicable.
Gains derived from the sale outside Japan of the shares or ADSs by a non-resident of Japan or a non-Japanese
corporation are in general not subject to Japanese income or corporation taxes. In addition, gains derived fromthe sale of shares or ADSs within Japan by a non-resident of Japan or non-Japanese corporation not having apermanent establishment in Japan are in general not subject to Japanese income or corporation taxes.
Kyocera Corporation has paid or will pay any stamp, registration or similar tax imposed by Japan in connection
with the issue of the shares, except that Kyocera Corporation will not pay any tax payable in connection with thetransfer or sale of the shares by a holder thereof.
Japanese inheritance and gift taxes at progressive rates may be payable by an investor who has acquired shares or
ADRs as legatee, heir or donee.
United States Taxation
The following discusses United States federal income tax consequences of the ownership of shares or ADSs. It
only applies to U.S. holders (as defined below) of shares who hold their ADSs as capital assets. It does notaddress special classes of holders, some of whom may be subject to special rules including:•tax-exempt entities,•

certain insurance companies,•

broker-dealers,•

traders in securities that elect to mark to market,•

investors liable for alternative minimum tax,•

investors that hold shares or ADSs as part of a straddle or a hedging or conversion transaction,•

investors whose functional currency is not the U.S. dollar, or•investors that actually or constructively own 10% or more of Kyocera Corporation’s voting stock.
84This discussion is based on the tax laws of the United States, including the Internal Revenue Code of 1986, as
amended, its legislative history, existing and proposed regulations and administrative and judicial interpretations,as currently in effect, as well as on the Treaty. These laws are subject to change, possibly on a retroactive basis.
In addition, this discussion is based in part upon the representations of the depositary and the assumption thateach obligation in the deposit agreement relating to the ADRs and any related agreement will be performed inaccordance with its terms.
For purposes of this discussion, a “U.S. holder” is a beneficial owner of shares or ADSs that is:•a citizen or resident of the United States,•

a domestic corporation,•an estate whose income is subject to United States federal income tax regardless of its source, or•a trust if a United States court can exercise primary supervision over the trust’s administration and one
or more United States persons are authorized to control all substantial decisions of the trust.

This discussion addresses only United States federal income taxation. An investor should consult its own tax
advisor regarding the United States federal, state and local and other tax consequences of owning and disposingof shares or ADSs in its particular circumstances.
In general, and taking into account the earlier assumptions, for United States federal income tax purposes, if theinvestor holds ADRs evidencing ADSs, the investor will be treated as the owner of the shares represented bythose ADSs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to United Statesfederal income tax.
Taxation of Dividends
Subject to the PFIC rules discussed below, under the United States federal income tax laws, if the investor is a
U.S. holder, the gross amount of any dividend paid by Kyocera Corporation out of its current or accumulated
earnings and profits, as determined for United States federal income tax purposes, is subject to United Statesfederal income taxation. If the investor is a non-corporate U.S. holder, dividends paid in taxable years beginningbefore January 1, 2011 that constitute qualified dividend income will be taxable at a maximum rate of 15%
provided that the shares or ADSs are held for more than 60 days during the 121-day period beginning 60 days
before the ex-dividend date and meet other holding period requirements. Dividends paid with respect to shares or
ADSs generally will be qualified dividend income. The investor must include any Japanese tax withheld from thedividend payment in this gross amount even though he does not in fact receive it.
The dividend must be included in income when the investor, in the case of shares, or the depositary, in the caseof ADSs, receives the dividend, actually or constructively. The dividend will not be eligible for the dividendsreceived deduction generally allowed to United States corporations in respect of dividends received from other
United States corporations.
The amount of the dividend distribution that the investor must include in its income as a U.S. holder will be theU.S. dollar value of the Japanese yen payments made, determined at the spot Japanese yen/U.S. dollar rate on thedate the dividend distribution is includible in the investor’s income, regardless of whether the payment is in fact
converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during theperiod from the date the investor includes the dividend payment in income to the date it converts the payment
into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rateapplicable to qualified dividend income. The gain or loss generally will be income or loss from sources within
the United States for foreign tax credit limitation purposes.
Distributions in excess of current and accumulated earnings and profits, as determined for United States federal
income tax purposes, will be treated as a non-taxable return of capital to the extent of the investor’s basis in theshares or ADSs and thereafter as capital gain.
85

Subject to certain limitations, the Japanese tax withheld in accordance with the Treaty and paid over to Japan willbe creditable against the investor’s United States federal income tax liability. Special rules apply in determining
the foreign tax credit limitation with respect to dividends that are subject to the maximum 15% tax rate. To theextent a refund of the tax withheld is available to the investor under Japanese law or under the Treaty, the amountof tax withheld that is refundable will not be eligible for credit against the investor’s United States federal
income tax liability. Please see “Japanese Taxation,” above, for the procedures for obtaining a tax refund.
Dividends will constitute income from sources outside the United States. Dividends paid in taxable years
beginning before January 1, 2007 generally will be “passive” or “financial services” income, and dividends paidin taxable years beginning after December 31, 2006 will, depending on the investor’s circumstances, be“passive” or “general” income, which, in either case, is treated separately from other types of income forpurposes of computing the foreign tax credit allowable to the investor.
Distributions of additional shares to the investor with respect to shares or ADSs that are made as part of a pro
rata distribution to all shareholders of Kyocera Corporation generally will not be subject to United States federal
income tax.
Taxation of Capital Gains
Subject to the PFIC rules discussed below, if the investor is a U.S. holder and the investor sells or otherwise
disposes of his shares or ADSs, the investor will recognize capital gain or loss for United States federal income
tax purposes equal to the difference between the U.S. dollar value of the amount that the investor realizes and his
tax basis, determined in U.S. dollars, in his shares or ADSs. Capital gain of a non-corporate U.S. holder that isrecognized in taxable years beginning before January 1, 2011 is generally taxed at a maximum rate of 15% where
the holder has a holding period greater than one year. Additionally, gain or loss will generally be income or loss
from sources within the United States for foreign tax credit limitation purposes.
PFIC Rules
We believe that our shares and ADSs should not be treated as stock of a PFIC for United States federal income
tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject tochange.
In general, if the investor is a U.S. holder, we will be a PFIC with respect to the investor if for any taxable year inwhich the investor held our ADSs or shares:•

at least 75% of our gross income for the taxable year is passive income or•at least 50% of the value, determined on the basis of a quarterly average, of our assets is attributable toassets that produce or are held for the production of passive income.

Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties
derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income.
If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation istreated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, andas receiving directly its proportionate share of the other corporation’s income.
If we are treated as a PFIC, and the investor is a U.S. holder that did not make a mark-to-market election, as
described below, the investor will be subject to special rules with respect to:•

any gain the investor realizes on the sale or other disposition of your shares or ADSs and•any excess distribution that we make to the investor (generally, any distributions to the investor during
a single taxable year that are greater than 125% of the average annual distributions received by theinvestor in respect of the shares or ADSs during the three preceding taxable years or, if shorter, theinvestor’s holding period for the shares or ADSs).
86

Under these rules:•

the gain or excess distribution will be allocated ratably over the investor’s holding period for the sharesor ADSs,•

the amount allocated to the taxable year in which the investor realized the gain or excess distribution
will be taxed as ordinary income,•the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate ineffect for that year, and•the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax
attributable to each such year.

The special PFIC tax rules described above will not apply to the investor if it makes a QEF election, that is, if theinvestor elects to have us treated as a qualified electing fund and we provide certain required information to theinvestor. We do not intend to provide U.S. holders with such information as may be required to make a QEF
election effective.
Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a
PFIC.
If the investor owns shares or ADSs in a PFIC that are treated as marketable stock, the investor may make amark-to-market election. Our shares and ADSs will be treated as marketable stock for a calendar year if they are
regularly traded (within the meaning of applicable Treasury regulations) on a qualified exchange (which includes
the New York Stock Exchange) during such calendar year. If the investor makes this election, the investor will
not be subject to the PFIC rules described above. Instead, in general, the investor will include as ordinary income
each year the excess, if any, of the fair market value of its shares or ADSs at the end of the taxable year over its
adjusted basis in its shares or ADSs. These amounts of ordinary income will not be eligible for the favorable tax
rates applicable to qualified dividend income or long-term capital gains. The investor will also be allowed to takean ordinary loss in respect of the excess, if any, of the adjusted basis of its shares or ADSs over their fair market
value at the end of the taxable year (but only to the extent of the net amount of previously included income as aresult of the mark-to-market election). The investor’s basis in the shares or ADSs will be adjusted to reflect any
such income or loss amounts.
In addition, notwithstanding any election the investor makes with regard to the shares or ADSs, dividends that it
receives from us will not constitute qualified dividend income to the investor if we are a PFIC either in the
taxable year of the distribution or the preceding taxable year. Moreover, the investor’s shares or ADSs will betreated as stock in a PFIC if we were a PFIC which was not a qualified electing fund with respect to the investor
at any time during its holding period in its shares or ADSs, even if we are not currently a PFIC. For purposes ofthis rule, if the investor makes a mark-to-market election with respect to its shares or ADSs, the investor will betreated as having a new holding period in its shares or ADSs beginning on the first day of the first taxable year
beginning after the last taxable year for which the mark-to-market election applies. Dividends that the investor
receives that do not constitute qualified dividend income are not eligible for taxation at the 15% maximum rateapplicable to qualified dividend income. Instead, the investor must include the gross amount of any such
dividend paid by us out of our accumulated earnings and profits (as determined for United States federal income
tax purposes) in its gross income, and it will be subject to tax at rates applicable to ordinary income.
If the investor owns shares or ADSs during any year that we are a PFIC with respect to the investor, it must file
Internal Revenue Service Form 8621.
F. Dividends and Paying Agents
Not Applicable.
87

G. Statement by Experts
Not Applicable.
H. Documents on Display
We are subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance
therewith, we will file annual reports on Form 20-F within six months of our fiscal year-end and other reports
and information on Form 6-K with the Securities and Exchange Commission. These reports and otherinformation can be inspected at the public reference room at the Securities and Exchange Commission at 100 F
Street, N.E., Washington, D.C. 20549. You can also obtain copies of such material by mail from the public
reference room of the Securities and Exchange Commission at prescribed fees. You may obtain information on
the operation of the Securities and Exchange public reference room by calling the Securities and Exchange
Commission in the United States at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a
web site at www.sec.gov that contains reports, proxy statements and other information regarding registrants thatfile electronically with the Securities and Exchange Commission. As a foreign private issuer, we are exempt fromthe rules under the Securities Exchange Act of 1934 prescribing the furnishing and content of proxy statements toshareholders.
I. Subsidiary Information
Not Applicable.
Item 11.

Quantitative and Qualitative Disclosures about Market Risk

Kyocera is exposed to market risk, including changes in foreign currency exchange rates, interest rates and equity
prices. In order to hedge against these risks, Kyocera uses derivative financial instruments. Kyocera does nothold or issue derivative financial instruments for trading purposes. Kyocera regularly assesses these market risks
based on policies and procedures established to protect against the adverse effects of these risks and otherpotential exposures, primarily by reference to the market value of financial instruments. Although Kyocera may
be exposed to losses in the event of non-performance by counterparties, Kyocera believes that its counterpartiesare creditworthy and does not expect such losses, if any, to be significant. In the normal course of business,
Kyocera also faces other risks such as country risk, credit risk, or legal risk, but they are not represented in thefollowing tables.
Foreign Currency Exchange Risk
Kyocera enters into foreign currency forward contracts to hedge certain existing assets and liabilities
denominated in foreign currencies, principally the U.S. dollar and the Euro. All such contracts currently in effectwill generally mature within four months. The following tables provide information about Kyocera’s major
foreign currency forward contracts existing at March 31, 2008, which include hedge accounting setting forth thecontract amounts, fair value, and weighted average exchange rates. The contract amounts are generally used to
calculate the contractual payments to be exchanged under the contracts.
Forward exchange contracts to sell foreign currencies(Pay/Receive) (Except average contractual rates)
US$/Yen
Euro/Yen
US$/STG(Yen in millions)Contract amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average contractual rates . . . . . . . . . . . . . . . . . . . . . . . . . .

¥39,480
2,285
0.009

88

¥50,880232
0.006¥31,725294
1.978

(Receive/Pay) (Except average contractual rates)
Yen/ US$
US$/YenCZK/STG(Yen in millions)

Forward exchange contracts to purchase foreign currencies

Contract amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average contractual rates . . . . . . . . . . . . . . . . . . . . . . . . . .

Currency swaps

9,506
294
102.677

¥ 57
56
55
53
51
0.039 0.039 0.039 0.040 0.041
US$/YenContract amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$394,800
22,850Forward exchange contracts to purchase foreign currencies

Yen/ US$Contract amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$95,060
2,940

2009

Contract amounts . . . . . . . . . . . . . . . . .

$570

86
(1)
0.010

145
0.042

550

530

510

Total

Fair value

¥417
—

¥ (3)
—

$508,800
2,320$317,250
2,940(Receive/Pay)
US$/YenCZK/STG(U.S. dollars in thousands)

$860
(10)

(S$ Receive/THB Pay)
Expected maturity date
2010
2011
2012
2013
Thereafter(U.S. dollars in thousands)

560¥ 7,70698
32.517(Pay/Receive)
Euro/Yen
US$/STG(U.S. dollars in thousands)

Forward exchange contracts to sell foreign currencies

Currency swaps¥(S$ Receive/THB Pay)
Expected maturity date
2010
2011
2012
2013
Thereafter(Yen in millions)2009

Contract amounts . . . . . . . . . . . . . . . . .
Swap rates . . . . . . . . . . . . . . . . . . . . . . .

¥

1,450

$77,060
980

Total

Fair value$4,170$(30)

Interest Rate Risk
Kyocera may enter into interest rate swaps and other contracts to reduce market risk exposure to changes ininterest rates. The tables below provide information about Kyocera’s financial instruments that are sensitive tochanges in interest rates.
Expected maturity date
2011
2012
2013 Thereafter(Yen in millions)Long term debt(including due within one year)

Averagepay rate

Loans, principally frombanks . . . . . . . . . . . . . . .

2.62% ¥ 3,432

3,011Long term debt(including due within one year)

Averagepay rate

2010

Loans, principally frombanks . . . . . . . . . . . . . . .

2.62% $34,320 30,110 29,010 9,190 5,040

2009

2009

2010

2,901

919

504

963

Expected maturity date
2011
2012
2013 Thereafter(U.S. dollars in thousands)

9,630

Total

Fair value¥ 11,730 ¥ 11,735
Total

Fair value$117,300 $117,350

Equity Price Risk
Kyocera has marketable equity and debt securities that are classified as available-for-sale and are carried in the
consolidated balance sheets at fair value. Changes in fair value are recognized as other comprehensive income,net of taxes, as a separate component of stockholders’ equity. Gross unrealized gains on marketable equity
89

securities, which were ¥113,327 million ($1,133 million), included ¥99,697 million ($997 million) derived froma rise in the market price of the shares of KDDI Corporation held by Kyocera. Detailed information appears in
Note 5 to the Consolidated Financial Statements included in this annual report on Form 20-F. Kyocera evaluates
whether declines in fair value of debt and equity securities with readily determinable fair values are other-thantemporary. Other-than-temporary declines in fair value are recorded as a realized loss with a new cost basis. Thisevaluation is based mainly on the duration and the extent to which the fair value is less than cost and theanticipated recoverability of fair value in the future. Other-than-temporary loss on debt and equity securities withreadily determinable fair values for the years ended March 31, 2006, 2007 and 2008 amounted to ¥113 million,¥797 million and ¥174 million ($2 million), respectively. At March 31, 2008, Kyocera held the following
available-for-sale marketable equity and debt securities.
March 31, 2008
Cost
Fair Value
Cost
Fair Value(Yen in millions and U.S. dollars in thousands)

Due within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after 1 year to 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 12.

¥

5,558
6,471
2,714
275,984

¥

5,454
6,288
2,606
386,162$

55,58064,71027,1402,759,840$¥290,727¥400,510$2,907,270$4,005,100

Description of Securities Other Than Equity Securities

Not Applicable.

90

54,54062,88026,0603,861,620

PART II
Item 13.

Defaults, Dividend Arrearages and Delinquencies

None.
Item 14.

Material Modification to Rights of Security Holders and Use of Proceeds

None.
Item 15.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures
Kyocera’s management, with the participation of its principal executive and principal financial officers,
evaluated the effectiveness of Kyocera’s disclosure controls and procedures (as defined in Rules 13a-15(e) under
the U.S. Securities Exchange Act of 1934) as of March 31, 2008. Based on that evaluation, Kyocera’s principal
executive and principal financial officers concluded that the disclosure controls and procedures were effective asof that date.
Management’s Report on Internal Control Over Financial Reporting
Kyocera’s management is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rules 13a-15(f) under the U.S. Securities Exchange Act of 1934). Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections ofany evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Kyocera’s management, with the participation of its principal executive and principal financial officers,
evaluated the effectiveness of Kyocera’s internal control over financial reporting using the criteria set forth inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on this evaluation, Kyocera’s management concluded that Kyocera’s internal
control over financial reporting was effective as of March 31, 2008. Kyocera’s independent registered public
accounting firm, Kyoto Audit Corporation , has audited the effectiveness of Kyocera’s internal control overfinancial reporting as of March 31, 2008, as stated in their report which appears on page F-1 of this annual reporton Form 20-F.
Management has excluded American Technical Ceramics Corp. (ATC) in the United States from its assessmentof internal control over financial reporting as of March 31, 2008. AVX Corporation, our subsidiary, acquired
ATC in a business combination on September 25, 2007. ATC’s total assets as of March 31, 2008 and its total
revenues for the period from the acquisition date through March 31, 2008 both represent around 1.0 % of therelated consolidated financial statement amounts of Kyocera as of and for the year ended March 31, 2008.
Evaluation of Changes in Internal Control Over Financial Reporting
Kyocera’s management, with the participation of its principal executive and principal financial officers, also
carried out an evaluation of changes in our internal control over financial reporting during the year ended
March 31, 2008. Based on that evaluation, there was no change in Kyocera’s internal control over financial
reporting that occurred during the year ended March 31, 2008 that materially affected, or is reasonably likely tomaterially affect, Kyocera’s internal control over financial reporting.
Item 16A. Audit Committee Financial Expert
Our Board of Corporate Auditors has determined that Shigekazu Tamura, a Corporate Auditor of Kyocera
Corporation, is an “audit committee financial expert” as such term is defined by Item 16A of annual report on91Form 20-F. He was elected as one of Kyocera Corporation’s corporate auditors at the general meeting ofshareholders held on June 28, 2005. See Item 6.A. for additional information regarding Mr. Tamura. Mr. Tamura
meets the independence requirements imposed on corporate auditors under the Corporation Act.
Item 16B. Code of Ethics
Kyocera has adopted a code of ethics that applies to Chief Executive Officer, Chief Financial Officer and themembers of Kyocera Disclosure Committee. Kyocera’s code of ethics has been attached as Exhibit 11.1 to thisannual report on Form 20-F and is incorporated herein by reference.
Item 16C. Principal Accountant Fees and Services
Principal Independent Registered Public Accounting Firm Fees
Kyoto Audit Corporation served as our independent registered public accounting firm for fiscal 2008, andaudited our consolidated financial statements included in this annual report on Form 20-F.
MISUZU PricewaterhouseCoopers served as our independent registered public accounting firm until June 27,
2007. Since June 27, 2007, Kyoto Audit Corporation has been our independent registered public accounting firm.
See “Change of Our Independent Registered Public Accounting Firm” below.
As MISUZU PricewaterhouseCoopers terminated its operation on July 31, 2007, the Kyoto office of MISUZU
PricewaterhouseCoopers decided to establish Kyoto Audit Corporation to succeed to the business it formerly
carried out as part of MISUZU PricewaterhouseCoopers. As such, Kyoto Audit Corporation is the successor to
the assurance practice and business of the Kyoto office of MISUZU PricewaterhouseCoopers. Kyoto Audit
Corporation’s personnel are substantially the same as those previously employed by the Kyoto office of
MISUZU PricewaterhouseCoopers, including those who have been assigned to Kyocera.
The following table presents the aggregate fees for professional services and other services rendered by MISUZU
PricewaterhouseCoopers and member firms of the PricewaterhouseCoopers network to Kyocera in fiscal 2007
and by Kyoto Audit Corporation and member firms of the PricewaterhouseCoopers network to Kyocera in fiscal
2008.
Years ended March 31,
2008
2008
(Yen in millions andU.S. dollars in thousands)

2007

Audit Fees (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,157
Audit-related Fees (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Tax Fees (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
283
All Other Fees (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,473
1)

2)
3)
4)

¥1,6379479
18¥2,143$16,370
90
4,790
180
$21,430

Amounts represent fees for the annual audit of Kyocera for fiscal 2007 and fiscal 2008, reviews ofKyocera’s financial statements for interim periods, other regulatory filings in fiscal 2007 and fiscal 2008
and the statutory audit of internal control over financial reporting for fiscal 2007 and fiscal 2008.
Amounts primarily represent fees for other procedures related to documents filed with the SEC andconsultations concerning financial accounting and reporting standards in fiscal 2007 and fiscal 2008.
Amounts represent fees for tax services performed by the tax department of the independent registered public
accounting firm other than financial audit and international tax compliance in fiscal 2007 and fiscal 2008.
All other fees in fiscal 2008 mainly represent fees for advisory assurance service of the preparation of
Kyocera’s sustainability report.
92

Policies and Procedures of the Board of Corporate Auditors
In accordance with the regulations of the Securities and Exchange Commission issued pursuant to Sections 202
and 208 of the Sarbanes-Oxley Act of 2002, our Board of Corporate Auditors has adopted a pre-approval policy
regarding non-audit work performed by Kyoto Audit Corporation and by member firms of thePricewaterhouseCoopers network for Kyocera and its subsidiaries, other than such work performed for AVX
Corporation, which is itself an SEC-reporting entity and follows the pre-approval policy that its audit committee
has adopted. Under Kyocera’s pre-approval policy, there are two types of pre-approval procedures, “General
Pre-Approval” and “Specific Pre-Approval”.
Under the pre-approval procedure for “General Pre-Approval”, each of Kyocera group companies (other than AVX
Corporation) must make a proposal to Kyocera’s Board of Corporate Auditors for the types of services andestimated fee levels of each category of services to be generally pre-approved. Such proposal must be madeannually. If such proposal is accepted, Kyocera’s Board of Corporate Auditors includes these services in a “General
Pre-Approved List”. In addition, our Board of Corporate Auditors is notified of each such service actually rendered.
Under the pre-approval procedure for “Specific Pre-Approval”, if any proposed services are not on the General
Pre-Approved List, each of Kyocera group companies (other than AVX Corporation) must submit an application
to Kyocera’s Board of Corporate Auditors for such services. After reviewing the details and estimated fee levels
for each engagement, Kyocera’s Board of Corporate Auditors may make a specific pre-approval decision onthese services. Also, if any approved services in the General Pre-Approved List exceed the fee levels prescribedon the List, each of Kyocera group companies (other than AVX Corporation) must submit an application to
Kyocera’s Board of Corporate Auditors for new fee levels for such services. Kyocera’s Board of Corporate
Auditors may make a pre-approval decision after reviewing the details of the services and the estimated fee
levels for each engagement.
All of the services provided by Kyoto Audit Corporation, or by member firms of the PricewaterhouseCoopers
network as well as (until June 27, 2007) MISUZU PricewaterhouseCoopers and member firms of thePricewaterhouseCoopers network since Rule 2-01(c)(7) of Regulation S-X became effective were approved by
Kyocera’s Board of Corporate Auditors pursuant to the pre-approval policy described above, and none of suchservices were approved pursuant to the procedures described in Rule 2-01(c)(7)(i)(C) of Regulation S-X, which
waives the general requirement for pre-approval in certain circumstances.
Change of Our Independent Registered Public Accounting Firm
On May 30, 2007, MISUZU PricewaterhouseCoopers announced that it would terminate its business anddissolve effective July 31, 2007. In connection with this, the audit team of MISUZU PricewaterhouseCoopersthat has been covering Kyocera transferred to a newly established public accounting firm, Kyoto Audit
Corporation, which registered with the Public Company Accounting Oversight Board on June 12, 2007. Kyoto
Audit Corporation is a cooperating firm of PricewaterhouseCoopers. On June 27, 2007, we appointed Kyoto
Audit Corporation as our new independent registered public accounting firm.
Item 16D. Exemption from the Listing Standards for Audit Committees
With respect to the requirements of Rule 10A-3 under the Securities Exchange Act of 1934 relating to listedcompany audit committees, which apply to us through Section 303A.06 of the New York Stock Exchange’s
Listed Company Manual, we rely on an exemption provided by paragraph (c)(3) of that Rule available to foreign
private issuers with boards of corporate auditors meeting certain requirements. For a New York Stock Exchangelisted Japanese company with a board of corporate auditors, the requirements for relying on paragraph (c)(3) ofRule 10A-3 are as follows:(a) The board of corporate auditors must be established, and its members must be selected, pursuant toJapanese law expressly requiring such a board for Japanese companies that elect to have a corporate
governance system with corporate auditors.
93

(b) Japanese law must and does require the board of corporate auditors to be separate from the board of
directors.
(c) None of the members of the board of corporate auditors is elected by management, and none of thelisted company’s executive officers is a member of the board of corporate auditors.
(d) Japanese law must and does set forth standards for the independence of the members of the board ofcorporate auditors from the listed company or its management.
(e) The board of corporate auditors, in accordance with Japanese law or the listed company’s governing
documents, must be responsible, to the extent permitted by Japanese law, for the appointment, retention
and oversight of the work of any registered public accounting firm engaged (including, to the extent
permitted by Japanese law, the resolution of disagreements between management and the auditor
regarding financial reporting) for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the listed company, including its principal accountant which
audits its consolidated financial statements included in its annual reports on Form 20-F.
(f)

To the extent permitted by Japanese law:•

the board of corporate auditors must establish procedures for (i) the receipt, retention andtreatment of complaints received by us regarding accounting, internal accounting controls, orauditing matters, and (ii) the confidential, anonymous submission by our employees of concerns
regarding questionable accounting or auditing matters;•

the board of corporate auditors must have the authority to engage independent counsel and otheradvisers, as it determines necessary to carry out its duties; and•the listed company must provide for appropriate funding, as determined by its board of corporate
auditors, for payment of (i) compensation to any registered public accounting firm engaged for the
purpose of preparing or issuing an audit report or performing other audit, review or attest services
for us, (ii) compensation to any advisers employed by the board of corporate auditors, and(iii) ordinary administrative expenses of the board of corporate auditors that are necessary or
appropriate in carrying out its duties.

In our assessment, our Board of Corporate Auditors, which meets the requirements for reliance on the exemption
in paragraph (c)(3) of Rule 10A-3 described above, is not materially less effective than an audit committee
meeting all the requirements of paragraph (b) of Rule 10A-3 (without relying on any exemption provided by thatRule) at acting independently of management and performing the functions of an audit committee ascontemplated therein.

94

Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
The following table sets forth certain information with respect to purchases of our own shares by us and ouraffiliated purchasers.

(b) Average
Price Paid
per Share(or Unit)(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs(d) Maximum Number(or Approximate Dollar Value)of Shares (or Units)that May Yet Be
Purchased Under thePlans or Programs

2,236
1,318
1,528
4,842
1,994
857
1,428
643
1,601
985
383
640

11,381.16
11,689.26
12,503.26
13,101.23
11,569.59
10,602.53
10,620.68
9,546.50
9,827.20
9,415.22
8,349.89
8,510.53

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

18,455

11,406.60——(a) Total
Number of
Shares(or Units)
Purchased

April 1 to April 30, 2007 . . . . . . . . . . . .
May 1 to May 31, 2007 . . . . . . . . . . . . .
June 1 to June 30, 2007 . . . . . . . . . . . . .
July 1 to July 31, 2007 . . . . . . . . . . . . . .
August 1 to August 31, 2007 . . . . . . . . .
September 1 to September 30, 2007 . . .
October 1 to October 31, 2007 . . . . . . .
November 1 to November 30, 2007 . . .
December 1 to December 31, 2007 . . . .
January 1 to January 31, 2008 . . . . . . . .
February 1 to February 29, 2008 . . . . . .
March 1 to March 31, 2008 . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . .

PeriodNote: Under the Corporation Act , a holder of shares constituting less than one full unit may request Kyocera
Corporation to purchase such shares at their market value (See “Memorandum and Articles of Association—
Capital stock—“‘Unit’ share system” in “Item 10. Additional Information”.). All purchases described in theabove table were made pursuant to such requests by shareholders.

95PART IV
Item 17.

Financial Statements

In lieu of responding to this item, we have responded to Item 18 of this annual report on Form 20-F.
Item 18.

Financial Statements

The information required by this item is set forth beginning on page F-1 of this annual report on Form 20-F.
Description

(1)

Page

Report of Independent Registered Public Accounting Firm related to the Consolidated
Financial Statements listed below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-1 & F-2

(2)

Consolidated Balance Sheets at March 31, 2007 and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-3 & F-4

(3)

Consolidated Statements of Income for the years ended March 31, 2006, 2007 and 2008 . . . . .

F-5

(4)

Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2006, 2007
and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-6 & F-7

Consolidated Statements of Cash Flows for the years ended March 31, 2006, 2007 and2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-8

Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-9 to F-51

(5)
(6)

96

Item 19.

Exhibits

Exhibit
NumberDescription

1.1

Articles of Incorporation (English translation) (incorporated by reference to the Registrant’s annual
report on Form 20-F filed on June 29, 2006)

1.2

Share Handling Regulations of the Registrant (English translation) (incorporated by reference to theRegistrant’s annual report on Form 20-F filed on June 29, 2006)

1.3

Regulations of the Board of Directors of the Registrant (English translation) (incorporated byreference to the Registrant’s annual report on Form 20-F filed on June 29, 2006)

1.4

Regulations of the Board of Corporate Auditors of the Registrant (English translation) (incorporated
by reference to the Registrant’s annual report on Form 20-F filed on July 4, 2007)

2.1

Specimen common stock certificate of the Registrant (incorporated by reference to the Registrant’s
annual report on Form 20-F filed on September 24, 2001)

2.2

Deposit Agreement, dated as of June 29, 1998 among Kyocera Corporation, Citibank N.A. as
Depositary and all owners and holders from time to time of American Depositary Receipts, including
the form of American Depositary Receipt, as amended by Amendment No.1 thereto, dated as ofJanuary 5, 1999 (incorporated by reference to the Registrant’s annual report on Form 20-F filed on
September 24, 2001)

8.1

List of Significant Subsidiaries (See “Organizational Structure” in Item 4.C. of the Registrant’s
annual report on Form 20-F)

11.1

Code of Ethics (incorporated by reference to the Registrant’s annual report on Form 20-F filed on
July 4, 2007)

12.1

Certification of the principal executive officer of the Registrant required by Rule 13a-14(a)12.2

Certification of the principal financial officer of the Registrant required by Rule 13a-14(a)13.1

Certification of the principal executive officer of the Registrant required by Rule 13a-14(b) andSection 1350 of Chapter 63 of Title 18 of the United States Code

13.2

Certification of the principal financial officer of the Registrant required by Rule 13a-14(b) andSection 1350 of Chapter 63 of Title 18 of the United States Code

15.1

Consent of Kyoto Audit Corporation with respect to its report on the audit of the financial statements
included in the Registrant’s annual report on Form 20-F

Kyocera has not included as exhibits certain instruments with respect to its long-term debt, the amount of debt
authorized under each of which does not exceed 10% of its total assets, and it agrees to furnish a copy of any
such instrument to the Securities and Exchange Commission upon request.

97

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders ofKyocera Corporation
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income,stockholders’ equity and cash flows present fairly, in all material respects, the financial position of Kyocera
Corporation and its consolidated subsidiaries (“the Company”) at March 31, 2007 and 2008, and the results of
their operations and their cash flows for each of the three years in the period ended March 31, 2008 in conformity
with accounting principles generally accepted in the United States of America. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of March 31, 2008,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company’s management is responsible for thesefinancial statements, for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in Management’s Report on Internal
Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on thesefinancial statements and on the Company’s internal control over financial reporting based on our integrated
audits (which were integrated audits in 2008 and 2007). We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audits to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement and whether effective internal control over financial reporting was maintained in allmaterial respects. Our audits of the financial statements included examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting,assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such otherprocedures as we considered necessary in the circumstances. We believe that our audits provide a reasonablebasis for our opinions.
As discussed in Note 11 to the consolidated financial statements, the Company changed the manner in which it
accounts for defined benefit pensions effective March 31, 2007.
As described in Note 1 to the consolidated financial statements, the Company and its domestic subsidiaries
changed its depreciation method effective April 1, 2007.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (iii) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.
F-1

As described in Management’s Report on Internal Control over Financial Reporting appearing under Item 15,
management has excluded American Technical Ceramics Corp. (“ATC”) in the United Sates from its assessmentof internal control over financial reporting as of March 31, 2008. AVX Corporation, subsidiary of Kyocera
Corporation, acquired ATC in a business combination on September 25, 2007. We have also excluded ATC from
our audit of internal control over financial reporting. ATC’s total assets as of March 31, 2008 and its total
revenues for the period from the acquisition date through March 31, 2008 both represent around 1.0% of therelated consolidated financial statement amounts of Kyocera as of and for the year ended March 31, 2008.
/s/

Kyoto Audit Corporation

Kyoto, Japan
June 27, 2008

F-2

Consolidated Balance Sheets
Kyocera Corporation and Consolidated Subsidiaries
March 31, 2007 and 2008ASSETS

2007
2008
2008
(Yen in millions and U.S. dollars
and shares in thousands—Note 2)

Current assets:
Cash and cash equivalents (Note 14) . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments (Notes 5 and 14) . . . . . . . . . . . . . . . . . . . .
Trade receivables (Note 8):
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 282,208
213,495¥ 447,586
147,503$ 4,475,860
1,475,030

25,033
236,380

20,375205,522

203,750
2,055,220

261,413

225,8972,258,970

Less allowances for doubtful accounts and sales returns(Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5,960)(4,352)(43,520)

Inventories (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

255,453
209,188
45,39040,757

221,545
205,212
41,24455,1352,215,450
2,052,120
412,440
551,350

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,046,491

1,118,225

11,182,250

Investments and advances:
Investments in and advances to affiliates and unconsolidated
subsidiaries (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities and other investments (Notes 5 and 14) . . . . . . . . . . . . .

10,093
690,568

16,753437,369

167,530
4,373,690

700,661

454,122

4,541,220

Property, plant and equipment, at cost (Note 10):Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,806
261,998
729,6367,362

57,155274,206
718,812
17,920571,550
2,742,060
7,188,120
179,200

Less accumulated depreciation . . . . . . . . . . . . . . . . . . . .

1,055,802(774,896)

1,068,093(782,194)

10,680,930(7,821,940)

Goodwill (Notes 4 and 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets (Notes 4 and 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets (Notes 11 and 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

280,906
32,89424,65744,855285,899
39,79429,82948,8772,858,990
397,940
298,290
488,770¥2,130,464¥1,976,746$19,767,460

The accompanying notes are an integral part of these statements.

F-3

Consolidated Balance Sheets—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
March 31, 2007 and 2008
LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITYCurrent liabilities:
Short-term borrowings (Notes 10 and 14) . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt (Notes 10 and 14) . . . . . . . . . . .
Notes and accounts payable:
Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities:
Payroll and bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . .

2007
2008
2008
(Yen in millions and U.S. dollars
and shares in thousands—Note 2)¥

15,250
5,853

¥

7,279
3,432

$

72,79034,320100,295
49,134

95,39066,757

953,900
667,570

41,68036,47533,391
24,11043,207
27,11832,81525,684432,070
271,180
328,150
256,840

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .

306,188

301,682

3,016,820

Long-term debt (Notes 10 and 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance liabilities (Note 11) . . . . . . . . . . . . . . .
Deferred income taxes (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . .

7,283
16,297
206,858
12,355

8,298
15,041
118,016
17,542

82,980150,410
1,180,160
175,420

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

548,981460,579

4,605,790

Minority interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66,92365,002650,020

Stockholders’ equity (Note 16):
Common stock:
Authorized 600,000 shares
Issued 191,309 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . .
Common stock in treasury, at cost (Note 12):2,660 shares at March 31, 2007 and1,885 shares at March 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . .

115,703
162,363
1,055,293
203,056

115,703
162,864
1,143,821
44,066

1,157,030
1,628,640
11,438,210
440,660(21,855)(15,289)(152,890)

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . .

1,514,560

1,451,165

14,511,650¥2,130,464¥1,976,746$19,767,460

Commitments and contingencies (Note 15)

The accompanying notes are an integral part of these statements.

F-4

Consolidated Statements of Income
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2008
2006

2007
2008
(Yen in millions and U.S. dollars
and shares in thousands,
except per share amounts—Note 2)

2008

Net sales (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,173,544 ¥1,283,897 ¥1,290,436 $12,904,360
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
835,042
900,470
883,763
8,837,630
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . .
338,502383,427
406,673
4,066,730
Selling, general and administrative expenses . . . . . . . . . . . .
238,807248,325
254,253
2,542,530
Profit from operations . . . . . . . . . . . . . . . . . .
99,695
135,102
152,420
1,524,200
Other income (expenses):
Interest and dividend income . . . . . . . . . . . . . . . . . . . . .
8,990
15,472
18,444
184,440
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,301)(1,647)(1,480)(14,800)
Foreign currency transaction losses, net (Note 13) . . . .
(316)
(65)
(956)
(9,560)Equity in (losses) earnings of affiliates andunconsolidated subsidiaries (Notes 8 and 13) . . . . . .
(1,216)2,621
6,091
60,910Gains (losses) on sales of securities, net . . . . . . . . . . . .
1,472
3,819
(622)
(6,220)Gains on exchange for the shares (Note 5) . . . . . . . . . .
5,294
24
—
—
Gains on sale of investment in an affiliate (Note 8) . . .
6,931
26
—
—
Loss on impairment of investment in an affiliate(Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,492)———Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,180
1,188
945
9,450
17,542
21,43822,422
224,220
Income from continuing operations before
income taxes and minority interests . . . . . .
117,237
156,540
174,842
1,748,420
Income taxes (Note 17):
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,24053,76561,662
616,620
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
520(4,878)(1,427)(14,270)
46,76048,887
60,235602,350
Income before continuing operations before
minority interests . . . . . . . . . . . . . . . . . . . .
70,477
107,653
114,607
1,146,070
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,389)(6,324)(7,363)(73,630)
Income from continuing operations . . . . . . . .
66,088101,329
107,244
1,072,440
Income from discontinued operations (Notes 3 and 13) . . . .
3,608
5,175
—
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 69,696 ¥ 106,504 ¥ 107,244 $ 1,072,440
Earnings per share (Note 20):
Income from continuing operations:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 352.44 ¥ 538.52 ¥ 566.58 $Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
352.21537.35565.80
Income from discontinued operations:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.24
27.51
—
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.22
27.44
—
Net income:Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
371.68566.03566.58
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
371.43564.79565.80Cash dividends declared per share:
Per share of common stock . . . . . . . . . . . . . . . . . .
100.00110.00120.00Weighted average number of shares of common stock
outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
187,514
188,160
189,283
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
187,640
188,573
189,544
The accompanying notes are an integral part of these statements.
F-5

5.67
5.66
—
—
5.67
5.66
1.20

Consolidated Statements of Stockholders’ Equity
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2008

CommonStock

Additional
Paid-in
CapitalRetained
Earnings(Note 16)

Accumulated
Other
Comprehensive
Income(Note 16)

Treasury
Stock(Note 12)Comprehensive
Income(Yen in millions and U.S. dollars and shares in thousands—Note 2)

Balance, March 31, 2005 (187,481) . . . . . . . . . . . . .
Net income for the year . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . .
Minimum pension liability adjustment—net oftaxes of ¥322 (Note 11) . . . . . . . . . . . . . . . . .
Net unrealized gains on securities—net oftaxes of ¥29,400 (Note 5) . . . . . . . . . . . . . . .
Reclassification adjustments for net gains on
securities—net of taxes of ¥1,206(Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized losses on derivative financial
instruments (Note 13) . . . . . . . . . . . . . . . . . .
Reclassification adjustments for net losses onderivative financial instruments (Note 13) . .
Total comprehensive income for the year . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock (20) . . . . . . . . . . . . .
Reissuance of treasury stock (294) . . . . . . . . . .
Balance, March 31, 2006 (187,755) . . . . . . . . . . . . .
Net income for the year . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . .
Minimum pension liability adjustment—net oftaxes of ¥108 (Note 11) . . . . . . . . . . . . . . . . .
Net unrealized gains on securities—net oftaxes of ¥70,986 (Note 5) . . . . . . . . . . . . . . .
Reclassification adjustments for net gains on
securities—net of taxes of ¥6 (Note 5) . . . . .
Net unrealized gains on derivative financial
instruments (Note 13) . . . . . . . . . . . . . . . . . .
Reclassification adjustments for net losses onderivative financial instruments (Note 13) . .
Total comprehensive income for the year . . . . .

¥115,703¥162,061¥916,628
69,696¥ 11,839¥(31,380)

21,396¥ 69,696
21,396

(428)

(428)

42,05442,054(1,866)(1,866)

(75)

(75)

27

27
¥130,804(18,748)

115,703(67)
161,994

Adjustment for initially applying SFAS
No. 158—net of taxes of ¥12,035(Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock (24) . . . . . . . . . . . . .
Reissuance of treasury stock (918) . . . . . . . . . .
Stock option plan of subsidiaries . . . . . . . . . . .

967,576
106,504

72,947(170)
2,407(29,143)

10,474¥106,504
10,474(82)(82)

103,334

103,334(1,313)(1,313)

89

89

49

49
¥219,055

17,558(18,787)
127
242

F-6

(251)
7,539

Consolidated Statements of Stockholders’ Equity—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2008

CommonStock

Additional
Paid-in
CapitalRetained
Earnings(Note 16)

Accumulated
Other
Comprehensive
Income(Note 16)

Treasury
Stock(Note 12)Comprehensive
Income(Yen in millions and U.S. dollars and shares in thousands—Note 2)

Balance, March 31, 2007 (188,649) . . . . . . . . . . . . .
Cumulative effect of applying FIN48 toopening balance (Note 17) . . . . . . . . . . . . . .
Net income for the year . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . .
Pension adjustments—net of taxes of ¥914
(Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustments for pension
adjustments net of taxes of ¥1,191(Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized losses on securities—net oftaxes of ¥83,189 (Note 5) . . . . . . . . . . . . . . .
Reclassification adjustments for net gains on
securities—net of taxes of ¥11 (Note 5) . . . .
Net unrealized gains on derivative financial
instruments (Note 13) . . . . . . . . . . . . . . . . . .
Reclassification adjustments for net gains onderivative financial instruments (Note 13) . . . .
Total comprehensive income (loss) for theyear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115,703

Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock (18) . . . . . . . . . . . . . .
Reissuance of treasury stock (823) . . . . . . . . . .
Stock option plan of subsidiaries . . . . . . . . . . .
Balance, March 31, 2008 (189,454) . . . . . . . . . . . . . ¥ 115,703
Balance, March 31, 2007 . . . . . . . . . . . . . . . . . . . . . $1,157,030
Cumulative effect of applying FIN48 toopening balance (Note 17) . . . . . . . . . . . . . .
Net income for the year . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . .
Pension adjustments—net of taxes of $9,140(Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustments for pension
adjustments net of taxes of $11,910(Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized losses on securities—net oftaxes of $831,890 (Note 5) . . . . . . . . . . . . . .
Reclassification adjustments for net gains on
securities—net of taxes of $110 (Note 5) . . .
Net unrealized gains on derivative financial
instruments (Note 13) . . . . . . . . . . . . . . . . . .
Reclassification adjustments for net gains onderivative financial instruments (Note 13) . .
Total comprehensive income (loss) for theyear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . .
Reissuance of treasury stock . . . . . . . . . . . . . . .
Stock option plan of subsidiaries . . . . . . . . . . .
Balance, March 31, 2008 . . . . . . . . . . . . . . . . . . . . . $1,157,030

162,363

1,055,293

203,056(21,855)

3,968
107,244(36,698)¥

107,244(36,698)

(762)

(762)

(1,792)(1,792)(118,541)(118,541)(1,330)(1,330)

210

210

(77)

(77)
¥

(51,746)(22,684)
(211)
6,777

254
247
¥ 162,864 ¥ 1,143,821¥

44,066¥ (15,289)$1,623,630$ 2,030,560$(218,550)$10,552,930
39,6801,072,440(366,980)$ 1,072,440(366,980)(7,620)(7,620)(17,920)(17,920)(1,185,410)(1,185,410)(13,300)(13,300)

2,100

2,100

(770)

(770)
$ (517,460)(226,840)
2,540
2,470
$1,628,640

The accompanying notes are an integral part of these statements.

F-7(2,110)67,770$11,438,210$

440,660$(152,890)

Consolidated Statements of Cash Flows
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2008
2006

2007

2008

2008

(Yen in millions andU.S. dollars in thousands—Note 2)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-down of inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in (earnings) losses of affiliates and unconsolidated subsidiaries(Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Gains) losses on sales of securities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains on sales of investment in an affiliate (Note 8) . . . . . . . . . . . . . . . . . . . .
Loss on impairment of investment in an affiliate (Note 8) . . . . . . . . . . . . . . . .
Gains on sales of investment in subsidiaries (Note 3) . . . . . . . . . . . . . . . . . . .
Gains on exchange for shares (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in assets and liabilities:(Increase) decrease in receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) decrease in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in notes and accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (Decrease) in accrued income taxes . . . . . . . . . . . . . . . . . . . . . .
Increase in other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (Decrease) in other non-current liabilities . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 69,696¥ 106,504¥ 107,244$ 1,072,440

73,186
(466)
8,446
(218)
4,389

82,182(494)
11,328(4,878)6,324

87,045(181)
5,141(1,427)
7,363

870,450(1,810)51,410(14,270)
73,6301,216(1,652)(6,931)
3,492—(5,294)272(2,621)(3,819)(26)—(8,252)(24)
160(6,091)622————(1,588)(60,910)
6,220
—
—
—
—
(15,880)(9,237)
21,263(3,331)
14,390(4,720)
3,284
(118)
3,410

(32,626)(25,100)(1,901)
6,015
9,066
11,111(7,062)
3,757

13,732(9,766)(14,008)
5,177(8,817)
6,010
4,230
2,249

137,320(97,660)(140,080)
51,770(88,170)
60,10042,30022,490Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101,381

43,14089,691

896,910

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . .

171,077

149,644

196,935

1,969,350

Cash flows from investing activities:
Payments for purchases of available-for-sale securities . . . . . . . . . . . . . . . . . . . . . .
Payments for purchases of held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . .
Payments for purchases of investments and advances . . . . . . . . . . . . . . . . . . . . . . .
Sales and maturities of available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . .
Maturities of held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions of businesses, net of cash acquired (Notes 4 and 21) . . . . . . . . . . . . .
Proceeds from sales of investment in an affiliate (Note 8) . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of investment in subsidiaries (Note 3) . . . . . . . . . . . . . . . . . . .
Payments for purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . .
Payments for purchases of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of property, plant and equipment, and intangible assets . . . . .
Acquisition of certificate of deposits and time deposits . . . . . . . . . . . . . . . . . . . . . .
Withdrawal of certificate of deposits and time deposits . . . . . . . . . . . . . . . . . . . . . .
Pro rata distribution of available-for-sale securities (Note 5) . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(98,219)(11,070)(224)
50,0902,340
324,133—(91,436)(10,589)
3,350(132,286)
100,923—(2,482)(44,582)(26,867)(307)
99,23027,889(756)
60
24,602(64,751)(8,215)2,693(356,169)
203,076—(7,606)(20,785)(17,959)(3,293)92,02932,784(26,483)70—(71,827)(6,442)877(372,798)
423,845(12,818)(2,306)(207,850)(179,590)(32,930)
920,290327,840(264,830)
700—(718,270)(64,420)8,770(3,727,980)
4,238,450(128,180)(23,060)

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . .

(165,467)(151,703)

14,894

148,940

Cash flows from financing activities:
Increase (Decrease) in short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reissuance of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23,363
19,876(48,458)(20,473)
(170)
2,339
234

9,369
1,928
(13,361)(20,632)
(251)
7,666
(5,364)(7,202)
5,000(6,647)(24,566)
(211)
7,031
(1,476)(72,020)
50,000(66,470)(245,660)(2,110)70,310(14,760)

Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(23,289)(20,645)(28,071)(280,710)

Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . .

7,896

4,103

(18,380)(183,800)

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9,783)
310,592(18,601)
300,809

165,378
282,208

1,653,780
2,822,080

Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 300,809¥ 282,208¥ 447,586$ 4,475,860

The accompanying notes are an integral part of these statements.

F-8

Notes to The Consolidated Financial Statements
Kyocera Corporation and Consolidated Subsidiaries
1. ACCOUNTING POLICIESFinancial Statements Presentation:
The accounts of Kyocera Corporation and its Japanese subsidiaries are generally maintained in accordance withaccounting principles generally accepted in Japan. Adjustments, which are not recorded in Kyocera Corporationand its Japanese subsidiaries’ books of account, have been booked to the accompanying consolidated financial
statements in order to present them in conformity with accounting principles generally accepted in the UnitedStates of America.
Basis of Consolidation and Accounting for Investments in Affiliated Companies:
The consolidated financial statements include the accounts of Kyocera Corporation, its majority-owned
subsidiaries and a variable interest entity for which Kyocera Corporation is the primary beneficiary under
Financial Accounting Standard Board (FASB) Interpretation No. 46 (revised December 2003), “Consolidation of
Variable Interest Entities.” All significant intercompany transactions and accounts are eliminated. Investments in
20% to 50% owned companies are accounted for under the equity method, whereby Kyocera includes in net
income its equity in the earnings or losses from these companies.
The consolidated variable interest entity for which Kyocera Corporation is the primary beneficiary does not havea material effect on Kyocera’s financial position and results of operations.
Revenue Recognition:
Kyocera sells various types of products, including fine ceramic parts, semiconductor parts, andtelecommunications equipment. Kyocera recognizes revenue upon completion of the earnings process, which
occurs when products are shipped or delivered to customers in accordance with the terms of an agreement of sale,
there is a fixed or determinable selling price, title and risk of loss have been transferred, and collectibility isreasonably assured. Most of these conditions are satisfied at the time of delivery to customers in domestic sales(FOB destination) and at the time of shipment (FOB shipping) for export sales.
Sales returns
Kyocera records an estimated sales return allowance at the time of sales based on its historical returns
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 productwarranty liability based on its historical repair experience.
Revenue from financial services
In addition to the tangible products as discussed above, Kyocera also provided certain services, primarily
financial services provided by Kyocera Leasing Co., Ltd. until August 2006. Revenue from direct financing
leases was recognized over the term of the lease, and amortization of unearned lease income was recognizedusing the interest method. Interest income on installment loans was recognized on an accrual basis. Interest
income was no longer accrued at the time the collection of the interest was past due one year or more, or

F-9Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
the collection of the principal was past due six months or more. The interest received from cash payments on
impaired loans was recorded as income, unless the collectibility of the remaining investments was doubtful, in
which case the cash receipt was recorded as collection of the principal.
Cash and Cash Equivalents:
Cash and cash equivalents include time deposits and certificates of deposit with original maturities of threemonths or less.
Translation of Foreign Currencies:
Assets and liabilities of consolidated foreign subsidiaries and affiliates accounted for by the equity method aretranslated into Japanese yen at the exchange rates in effect on the respective balance sheet dates. Operating
accounts are translated at the average rates of exchange for the respective years. Translation adjustments result
from the process of translating foreign currency financial statements into Japanese yen. These translation
adjustments, which are not included in the determination of net income, are reported in other comprehensive
income.
Assets and liabilities denominated in foreign currencies are translated at the exchange rates in effect at therespective balance sheet dates, and resulting transaction gains or losses are included in the determination of net
income.
Allowances 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 ofpast due payments, historical experience and current business environments. In circumstances where it is awareof a specific customer’s inability to meet its financial obligations, a specific allowance against these amounts isprovided considering the fair value of assets pledged by the customer as collateral.
Inventories:
Inventories are stated at the lower of cost or market. Cost is determined by the average method for approximately
62% and 66% of finished goods and work in process as well as approximately 21% and 17% of raw materials
and supplies at March 31, 2007 and 2008, respectively. The first-in, first-out method is applied to the otherinventories. Kyocera recognizes estimated write-down of inventories for excess, slow-moving and obsolete
inventories.
Securities:
Certain investments in debt and equity securities are accounted for under Statement of Financial AccountingStandards (SFAS) No. 115 “Accounting for Certain Investments in 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. Kyocera evaluates whether the declines in fair value of debt and equity
securities with readily determinable fair values are other-than-temporary. Other-than-temporary declines in fairvalue are recorded as a realized loss with a new cost basis. This evaluation is based mainly on the duration andthe extent to which the fair value is less than cost, and the anticipated recoverability in fair value.
F-10

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Property, Plant and Equipment and Depreciation:
Property, Plant and Equipment are recorded at cost less accumulated depreciation. Kyocera provides fordepreciation of buildings, machinery and equipment over their estimated useful lives primarily on the decliningbalance method. The principal estimated useful lives used for computing depreciation are as follows:
Buildings
Machinery and equipment

2 to 50 years
2 to 20 years

The cost of maintenance, repairs and minor renewals is charged to expense in the year incurred; major renewals
and betterments are capitalized.
When assets are sold or otherwise disposed of, the profits or losses thereon, computed on the basis of thedifference between depreciated costs and proceeds, are credited or charged to income in the year of disposal, andcosts and accumulated depreciation are removed from the accounts.
Effective April 1, 2007, Kyocera Corporation and its domestic subsidiaries, as a result of taking the businesssituation into consideration, has adopted” the 250 percent declining-balance depreciation method” for buildings,
machinery and equipment. Estimated useful lives and estimated salvage values were also changed in conjunction
with this change. Under the new provisions of SFAS No. 154 “Accounting Changes and Error Corrections, areplacement of APB Opinion No. 20 and FASB Statement No. 3,” a change in depreciation method is treated as achange in estimate. The effect of the change in depreciation method has been reflected on a prospective basis
beginning April 1, 2007, and prior period results were not restated.
Kyocera Corporation and its domestic subsidiaries believe that the change from the declining-balance
depreciation method to the 250 percent declining-balance depreciation method better reflects future businesssituation and provides a better matching of costs and revenues over the assets’ estimated useful lives. The change
in depreciation methods caused a decrease in net income by ¥7,736 million ($77,360 thousand), basic earnings
per share of net income and diluted earnings per share of net income by ¥40.87 and ¥40.81 for the year ended
March 31, 2008, respectively.
Goodwill and Other Intangible Assets:
Kyocera has adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” This requires that, rather thanbeing amortized, goodwill and intangible assets with indefinite useful lives are tested for impairment at least
annually, and also following any events and changes in circumstances that might lead to impairment. Intangible
assets with definite useful lives are amortized over their respective estimated useful lives to their estimatedresidual values, and reviewed for impairment whenever events or changes in circumstances indicate that theircarrying amount may not be recoverable.
The principal estimated useful lives for intangible assets are as follows:
Patent rights
Software
Customer relationships

2 to 8 years
2 to 8 years
5 to 18 years

Impairment of Long-Lived Assets:
Pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” Kyocera reviews
its long-lived assets and intangible assets with definite useful lives for impairment periodically.
F-11

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Long-lived assets and intangible assets with definite useful lives are considered to be impaired when the expectedundiscounted cash flow from the asset group is less than its carrying value. A loss on impairment is recognizedbased on the amount by which the carrying value exceeds the fair value of the long-lived assets and intangible
assets with definite useful lives.
Derivative Financial Instruments:
Kyocera utilizes derivative financial instruments to manage its exposure resulting from fluctuations of foreign
currencies and interest rates. These derivative financial instruments include foreign currency forward contracts
and interest rate swaps. Kyocera does not hold or issue such derivative financial instruments for trading purposes.
Kyocera applies SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by
SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities an Amendmentof FASB Statement No. 133.” All derivatives are recorded as either assets or liabilities on the balance sheet andmeasured at fair value. Changes in the fair value of derivatives are charged in current earnings. However cash
flow hedges which meet the criteria of SFAS No. 133 may qualify for hedge accounting treatment. Changes in
the fair value of the effective portion of these hedge derivatives are deferred in other comprehensive income andcharged to earnings when the underlying transaction being hedged occurs.
Kyocera designates certain foreign currency forward contracts and interest rate swaps as cash flow hedges under
SFAS No. 133. Most of Kyocera’s foreign currency forward contracts are entered into as hedges of existing
foreign currency denominated assets and liabilities and as such do not qualify for hedge accounting. Accordingly,
Kyocera records changes in fair value of these foreign currency forward contracts currently in earnings. It is
expected that such changes will be offset by corresponding gains or losses on the underlying assets and liabilities.
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 allderivatives designated as cash flow hedge are linked 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 ofhedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to bea highly effective hedge, Kyocera discontinues hedge accounting prospectively. When hedge accounting is
discontinued, the derivative will continue to be carried on the balance sheet at its fair value, with deferred
unrealized gains or losses charged immediately in current earnings.
Stock-Based Compensation:
Prior to April 1, 2006, Kyocera accounted for stock-based compensation in accordance with SFAS No. 148,
“Accounting for Stock-Based Compensation-Transition and Disclosure,” an Amendment of FASB Statement
No. 123, “Accounting for Stock-Based Compensation.” As allowed by SFAS No. 148, Kyocera measured stockbased compensation expense using the intrinsic value method in accordance with Accounting Principles Board(APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related interpretations. Effective
April 1 2006, Kyocera adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), “Share—Based Payment” andrecognized the cost resulting from share-based payment transactions in financial statements by adopting fairvalue based measurement method in accordance with SFAS No. 123R. Under the modified prospective methodof adoption for SFAS No. 123R, Kyocera recognized compensation cost which includes: (a) compensation cost
for all stock options granted prior to, but not yet vested as of April 1, 2006, and (b) compensation cost for all
stock options granted or modified subsequent to April 1, 2006.
F-12

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
The following table illustrates the effect on income from continuing operations, net income and earnings per
share if Kyocera had applied the fair value recognition provision of SAFS123 for the year ended March 31, 2006.
Year ended
March 31, 2006

Income from continuing operations, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deduct: Total stock-based employee compensation expense determined under fair value based
method for all awards—net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥66,088

Pro forma income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64,5383,608

Pro forma net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥68,146

Earnings per share:
Income from continuing operations:
Basic, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic, pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted, pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥352.44344.18352.21
343.94

Net income:Basic, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic, pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted, pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

371.68363.42371.43363.17(1,550)Earnings and Cash Dividends per Share:
Basic earnings per share is computed based on the weighted average number of shares outstanding during eachperiod. Diluted earnings per share assumes the dilution that could occur if all stock options were exercised andresulted in the issuance of common stock.
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 inwhich they are paid.
Research and Development Expenses and Advertising Expenses:
Research and development expenses and advertising expenses are charged to operations as incurred.
Use of Estimates:
The preparation of the 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 theamounts reported in the consolidated financial statements and accompanying notes. However, actual results
could differ from those estimates.
Recently adopted Accounting Standards:
In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—aninterpretation of FASB Statement No. 109” (FIN 48) which clarifies the accounting for uncertainty in income
F-13Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
taxes recognized in the financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.”
FIN 48 also provides guidance on derecognition, classification, interest and penalties, disclosure and transitional
measures. FIN 48 was effective for fiscal years beginning after December 15, 2006. Cumulative effect ofapplying FIN48, which was effective April 1, 2007, increased the opening balance of retained earnings by¥3,968 million ($39,680 thousand). For detailed information, see Note 17 to the Consolidated Financial
Statements in this annual report.

Recently Issued Accounting Standards:
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The purpose of SFAS No. 157
is to define fair value, establish a framework for measuring fair value and enhance disclosures about fair value
measurements. In February 2008, the FASB issued FASB Staff Position (FSP) 157-1, “Application of FASBStatement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value
Measurements for Purposes of Lease Classification or Measurement under Statement 13” (FSP 157-1) and FSP
157-2, “Effective Date of FASB Statement No. 157” (FSP 157-2). FSP 157-1 amends SFAS No. 157 to remove
certain leasing transactions from its scope. FSP 157-2 delays the effective date of SFAS No. 157 for all
non-financial assets and non-financial liabilities. The measurement and disclosure requirements related tofinancial assets and financial liabilities are effective April 1, 2008. The adoption of SFAS No. 157 for financial
assets and financial liabilities is not expected to have a material impact on Kyocera’s consolidated results ofoperations and financial position. Kyocera is currently evaluating the impact that SFAS No. 157 will have on
Kyocera’s consolidated results of operations and financial position when it is applied to non-financial assets andnon-financial liabilities beginning after April 1, 2009.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities—Including an amendment of FASB Statement No. 115”. SFAS No. 159 provides companies with an
option to report selected financial assets and liabilities at fair value. Unrealized gains and losses on items forwhich the fair value option has been elected will be recognized in earnings. SFAS No. 159 is effective beginning
after April 1, 2008. The adoption of SFAS No. 159 is not expected to have a significant impact on Kyocera’s
consolidated results of operations and financial position.
In December 2007, the FASB issued SFAS No. 141 (revised 2007) (SFAS No. 141R), “Business Combinations”,
which requires assets, liabilities and noncontrolling interests be measured at fair value. Under SFAS No. 141R,
transaction and restructuring costs are required to be generally expensed, as well as contingent consideration andin-process research and development be recorded at fair value on acquisition date as a part of fair value ofacquired business. In addition, any tax adjustment made after the measurement period impacts income tax
expenses. Kyocera will assess the impact of SFAS No. 141R on any future acquisition. SFAS No. 141R will beeffective for Kyocera April 1, 2009.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statement an Amendment of Accounting Research Bulletin No. 51”. SFAS No. 160 establishes accounting andreporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount ofconsolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s
ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary isdeconsolidated. SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguishbetween the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective forfiscal years beginning on or after December 15, 2008. Kyocera is currently evaluating the impact that
SFAS No. 160 will have on Kyocera’s consolidated results of operations and financial position.
F-14

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative instruments and Hedging
Activities an Amendment of FASB Statement No. 133”. SFAS No. 161 requires enhanced disclosures regarding
an entity’s derivative and hedging activities to provide adequate information about (a) how and why an entity
uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under
SAFS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affectan entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective beginning afterNovember 15, 2008. As SFAS No. 161 does not impact the measurement or recognition of derivative
instruments, the adoption of the SFAS No. 161 will not have any impact on Kyocera’s financial position,
financial performance and cash flows.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.”
SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles usedin the preparation of financial statements of nongovernmental entities that are presented in conformity withgenerally accepted accounting principles in the United States of America. The sources of accounting principles
that are generally accepted are categorized in descending order as follows:a) FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133
Implementation Issues, FASB Staff Positions and American Institute of Certified Public Accountants(AICPA) Accounting Research Bulletins and Accounting Principles Board Opinions that are notsuperseded by actions of the FASBb) FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides
and Statements of Positionc) AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the
FASB, consensus positions of the FASB Emerging Issues Task Force (EITF) and the Topics discussed
in Appendix D of EITF Abstracts (EITF D-Topics) andd) Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations,
AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB
and practices that are widely recognized and prevalent either generally or in the industry
The adoption of SFAS No. 162 is not expected to have any impact on Kyocera’s financial position, financial
performance and cash flows.
Reclassifications:Certain reclassifications of previously reported amounts have been made to the corresponding footnote of theconsolidated statement for the year ended March 31, 2007 in order to conform to the current year presentation.
Such reclassifications have no effect on net assets, net income and cash flows.
2. U.S. DOLLAR AMOUNTS:
The consolidated financial statements as of and for the year ended March 31, 2008 presented herein are
expressed in Japanese yen, and, solely for the convenience of readers, have been translated into U.S. dollar at therate of ¥100 for US$1, the rate prevailing on March 31, 2008.
This translation should not be construed as a representation that the yen amounts shown could be so converted
into U.S. dollar at ¥100 for US$1 or at any other rate.
3. DISCONTINUED OPERATIONSOn August 1, 2006, Kyocera sold 100% of the shares of Kyocera Leasing Co., Ltd. (presently Diamond Asset
Finance Company Limited) to Diamond Lease Company Limited (presently Mitsubishi UFJ Lease & Finance
Company Limited) for ¥25,274 million, aimed to concentrate management resources on its core businesses toenhance and improve its corporate value. Kyocera has accounted for the results of operations and the sale ofKyocera Leasing Co., Ltd. less income tax, as discontinued operations in accordance with SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets” in its consolidated statements of income.
F-15

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
The results of operations of discontinued operations for the years ended March 31, 2006 and 2007 aresummarized as follows:
March 31,
2006
2007
(Yen in millions)

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥9,213 ¥1,779
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,150
862
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
542
381
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,608
481
Gain on sale of discontinued operations—net of taxes of ¥3,534 . . . . . . . . . . . . . . . . . . . . . . . . .
—4,694
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,608
5,175
4. BUSINESS COMBINATIONS
Kyocera Mita Corporation acquired all operations and related assets of Docusource L.L.C. on May 31, 2007.
Kyocera Mita Corporation also acquired by merger all of the outstanding capital stock of Garing Business
Machines, Inc. on November 27, 2007. These business acquisitions had no material impact on Kyocera’s
consolidated results of operations and financial positions.
On September 25, 2007, AVX Corporation (AVX) acquired by merger all of the outstanding capital stock ofAmerican Technical Ceramics Corp. (ATC) in exchange for approximately ¥26,920 million ($269,200 thousand)in cash, plus related acquisition costs. ATC designs, develops, manufactures and markets electronic components,
including ceramic multilayer capacitors and custom thin film circuits. ATC’s products are used in a broad rangeof commercial applications, including wireless infrastructure, fiber optics, medical electronics, semiconductor
manufacturing equipment and satellite equipment. ATC has manufacturing facilities and sales offices in New
York, manufacturing and research and development facilities in Florida, and sales offices in Sweden and China.
AVX has used the purchase method of accounting to record the acquisition in accordance with SFAS No. 141,
“Business Combinations”. In accordance with the purchase method, the purchase price is allocated to the assets
acquired and liabilities assumed based on their estimated fair values. As of September 30, 2007, the allocation of
the purchase price was prepared based on preliminary estimates of fair values. The initial estimated purchaseprice allocation was revised as of March 31, 2008 resulting in an increase to goodwill of ¥652 million ($6,520
thousand) as reflected in the table below. The results of operations for ATC were included in the accompanying
Consolidated Statement of Operations since the acquisition date and were not material. For Kyocera’s segment
reporting, ATC is reported in the Electronic Device Group which includes AVX and goodwill associated with theacquisition is allocated to the reporting unit within AVX.
September 25, 2007
(Yen in millions and U.S. dollars in thousands)

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total identified assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-16¥ 7,550
14,866
22,416
1,376
3,912
5,288
17,12826,920¥ 9,792$ 75,500
148,660
224,160
13,76039,12052,880171,280
269,200$ 97,920

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Intangible assets that AVX recorded due to the acquisition of ATC are summarized as follows:
March 31,2008
2008
Gross Carrying
Accumulated
Gross Carrying Accumulated
AmountAmortization
AmountAmortization(Yen in millions and U.S. dollars in thousands)

Intangible assets subject to amortization:
Customer relationships . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥5,100
1,205

¥

141
59

$51,000
12,050$1,410590

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥6,305¥200$63,050$2,0002008
Gross Carrying Gross Carrying
AmountAmountIntangible assets not subject to amortization:
Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,400$34,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,400$34,000

The estimated aggregate amortization expenses for intangible assets that AVX recorded due to the acquisition of
ATC for the next five years are as follows:
Years ending March 31,(Yen in millions and U.S. dollars in thousands)

2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥446
431
430
429
429

$4,460
4,310
4,300
4,290
4,290

5. INVESTMENTS IN DEBT AND EQUITY SECURITIES
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 tax. Held-to-maturity securities are recorded at amortizedcost. In gross unrealized gains and losses on equity securities, ¥289,853 million of gross unrealized gain atMarch 31, 2007 and ¥99,697 million ($996,970 thousand) of gross unrealized gain at March 31, 2008 were
derived from a fluctuation in the market value of the shares of KDDI Corporation.
Other-than-temporary loss on debt and equity securities with readily determinable fair values for the years ended
March 31, 2006, 2007 and 2008 amounted to ¥113 million, ¥797 million and ¥174 million ($1,740 thousand),
respectively.
Due to the merger of Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., on October 1, 2005,
Kyocera’s holding shares in UFJ Holdings, Inc. were exchanged for shares of the new company, Mitsubishi UFJ
Financial Group. As a result of this share exchange, Kyocera recognized a gain in the amount of ¥5,281 million
for the year ended March 31, 2006 in accordance with Emerging Issues Task Force 91-5, “Nonmonetary
Exchange of Cost-Method Investments.”

F-17

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Investments in debt and equity securities at March 31, 2007 and 2008, included in short-term investments(current assets) and in securities and other investments (non-current assets) are summarized as follows:
March 31,
2007

Cost*

2008

Gross
Gross
Aggregate Unrealized Unrealized
Fair Value
Gains
LossesCost*(Yen in millions)

Available-for-salesecurities:
Corporate debt
securities . . . . . . . . . . ¥ 3,842 ¥ 4,033 ¥194
Other debt securities . . .
74,56374,57471
Equity securities . . . . . . 272,653 585,274 312,724
Total available-for-salesecurities . . . . . . . . . . . . 351,058 663,881 312,989
Held-to-maturity
securities:
Other debt securities . . .
33,51233,447—
Total held-to-maturity
securities . . . . . . . . . . . .
33,51233,447—
Total investments in debt
and equity securities . . . ¥384,570 ¥697,328 ¥312,989

¥

3
60
103

¥

9,205 ¥ 8,971 ¥
46
5,538
5,377
2
275,984 386,162 113,327

¥ 280
163
3,149

166

290,727

400,510

113,375

3,592

65

15,904

15,98985—

65

15,904

15,98985—¥306,631 ¥416,499 ¥113,460¥3,592

¥231

Cost*

Available-for-sale securities:
Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross
Gross
Aggregate Unrealized Unrealized
Fair Value
Gains
Losses$

92,05055,3802,759,840

March 31, 2008
Gross
Aggregate
Unrealized
Fair Value
Gains(U.S. dollars in thousands)

$

Gross
Unrealized
Losses89,710 $460
53,77020
3,861,620
1,133,270$ 2,800
1,630
31,490Total available-for-sale securities . . . . . . . . . . . . . . . . . . . . .

2,907,270

4,005,100

1,133,750

35,920

Held-to-maturity securities:
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

159,040

159,890850—

Total held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . .

159,040

159,890850—

Total investments in debt and equity securities . . . . . . . . . . .

$3,066,310$4,164,990$1,134,600$35,920

F-18

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
At March 31, 2008, the contractual maturities of available-for-sale and held-to-maturity securities are
summarized as follows:
Available-for-Sale
Aggregate
Fair
Cost*
Value

March 31, 2008
Held-to-Maturity
Available-for-Sale
Aggregate
Aggregate
Fair
Fair
Cost*
Value
Cost*
Value
(Yen in millions and U.S. dollars in thousands)

Held-to-Maturity
Aggregate
Fair
Cost*
Value

Due within 1 year . . . . ¥ 5,558 ¥ 5,454 ¥ 5,000 ¥ 5,023 $ 55,580 $ 54,540 $ 50,000 $ 50,230
Due after 1 year to
5 years . . . . . . . . . .
6,471
6,288 10,904 10,966
64,71062,880 109,040 109,660
Due after 5 years . . . .
2,714
2,606
—
—
27,14026,060——Equity securities . . . . . 275,984 386,162——
2,759,840 3,861,620——¥290,727 ¥400,510 ¥15,904 ¥15,989 $2,907,270 $4,005,100 $159,040 $159,890*

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

Proceeds from sales of available-for-sale securities and the related gross realized gains and losses for the years
ended March 31, 2006, 2007 and 2008 are as follows:
Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Proceeds from sales of available-for-sale securities . . . . . . . . . . . . . . .
Gross realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross realized losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥48,173
2,769
1,346

¥99,171
6,055
2,305

¥88,617
3,224
4,078

$886,170
32,24040,780For the purpose of computing gains and losses, the cost of those securities is determined by the moving averagemethod.
Kyocera’s available-for-sale securities were classified by length of unrealized loss position at March 31, 2007
and 2008 as follows:
within 1 year
Aggregate
Gross
Fair
Unrealized
Value
LossesCorporate debt securities . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

March 31, 2007
over 1 year
Aggregate
Gross
Fair
Unrealized
Value
Losses(Yen in millions)

Total
Aggregate
Gross
Fair
Unrealized
Value
Losses¥529
50,867
1,700

¥

3
60
103

¥—
—
—

¥—
—
—

¥

529
50,8671,700¥¥53,096

¥166

¥—

¥—

¥53,096

¥166

F-19

3
60
103

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries

within 1 year
Aggregate
Gross
Fair
Unrealized
Value
LossesCorporate debt securities . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 7,279
4,984
14,288¥26,551

¥ 280
163
3,148
¥3,591

within 1 year
Aggregate
Gross
Fair
Unrealized
Value
LossesCorporate debt securities . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 72,790
49,840142,880$265,510$ 2,800
1,630
31,480$35,910

March 31, 2008
over 1 year
Aggregate
Gross
Fair
Unrealized
Value
Losses(Yen in millions)

¥—
—

¥—
—

2
¥ 2

1
¥ 1

Total
Aggregate
Gross
Fair
Unrealized
Value
Losses¥ 7,279
4,984
14,290¥26,553

¥ 280
163
3,149
¥3,592

March 31, 2008
over 1 year
Total
Aggregate
Gross
Aggregate
Gross
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses(U.S. dollars in thousands)

$—
—
20
$ 20

$—
—
10
$ 10

$ 72,790
49,840142,900$265,530$ 2,800
1,630
31,490$35,920At March 31, 2007 and 2008, the number of individual available-for-sale securities in an unrealized loss position
held by Kyocera were 38 and 252, respectively. Unrealized loss position at March 31, 2008 included
183 securities held by AVX.
On December 20, 2007, AVX received a pro rata distribution of the underlying securities that had previously
been held in a money market investment account previously included in cash and cash equivalents in the
consolidated balance sheet. The securities are classified as either current or long-term assets based on theirunderlying expected cash flows and are being recorded at fair market value. At the time of the pro rata
distribution, a loss of ¥ 111 million ($1,110 thousand) was charged to the results of operations for the difference
between the cost basis in the money market investment account and the fair value of the underlying securities.
AVX’s available-for-sale securities at March 31, 2008 are summarized as follows:

Cost

Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥4,103
4,798¥8,901

Cost

Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-20$41,030
47,980$89,010

March 31, 2008
Estimated
Gross
Fair
Unrealized
Value
Gains
(Yen in millions)¥4,057
4,688¥8,745

¥1
2
¥3

Gross
Unrealized
Losses

¥ 47
112
¥159

March 31, 2008
Estimated
Gross
Gross
Fair
Unrealized Unrealized
Value
Gains
Losses(U.S. dollars in thousands)$40,570
46,880$87,450

$10
20
$30

$ 470
1,120
$1,590Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
6. INVENTORIESInventories at March 31, 2007 and 2008 are as follows:
March 31,
2008
2008
(Yen in millions andU.S. dollars in thousands)

2007

Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥106,135
44,80658,247¥101,353
42,444
61,415$1,013,530
424,440
614,150¥209,188¥205,212$2,052,120

7. VALUATION AND QUALIFYING ACCOUNTS
Changes in valuation and qualifying accounts are as follows:

Description

Additions
ChargedBalance
Charged to (Credited) to
at Beginning of
Costs andother
PeriodExpenses
Accounts(A) Deductions (B)(Yen in millions and U.S. dollars in thousands)

Balanceat End ofPeriodFor the year ended March 31, 2006:
Allowance for doubtful accounts . . . . . . . . . . .
Allowance for sales returns . . . . . . . . . . . . . . .

¥21,039
3,899

¥

696
7,039

¥

388
364

¥ (9,939)(7,590)¥12,184
3,712

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥24,938¥ 7,735¥

752¥(17,529)¥15,896

For the year ended March 31, 2007:
Allowance for doubtful accounts . . . . . . . . . . .
Allowance for sales returns . . . . . . . . . . . . . . .

¥12,184
3,712

¥

804
7,811

¥(4,802)65¥ (3,204)(8,499)¥ 4,982
3,089

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥15,896¥ 8,615¥(4,737)¥(11,703)¥ 8,071

For the year ended March 31, 2008:
Allowance for doubtful accounts . . . . . . . . . . .
Allowance for sales returns . . . . . . . . . . . . . . .

¥ 4,982
3,089

¥

628
8,510

¥ (406)(549)¥ (1,324)(8,615)¥ 3,880
2,435

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 8,071¥ 9,138¥ (955)¥ (9,939)¥ 6,315

For the year ended March 31, 2008:
Allowance for doubtful accounts . . . . . . . . . . .
Allowance for sales returns . . . . . . . . . . . . . . .

$49,820
30,890$ 6,280
85,100$(4,060)(5,490)$(13,240)(86,150)$38,800
24,350Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$80,710$91,380$(9,550)$(99,390)$63,150(A) Foreign currency translation adjustments and the decrease by the sale of Kyocera Leasing Co., Ltd.
(B) Charge-offs

F-21

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
8. INVESTMENTS IN AND ADVANCES TO AFFILIATES
Kyocera Corporation owned a 36.02% interest in Taito Corporation, a major affiliate which operates in theelectric amusement business and accounted for its investment under the equity method. On September 28, 2005,
Kyocera Corporation sold its entire holding of shares of Taito Corporation in a tender offer bid for Taito sharesby Square Enix Co. Ltd., one of the leading companies in the game software industry. As a result of this sale of
Taito Corporation shares, Kyocera Corporation recorded a gain of ¥6,931 million for the year ended March 31,
2006.
Kyocera Corporation owns a 30% interest in WILLCOM, Inc., which operates a Personal Handyphone Systembusiness accounted for by the equity method.
Kyocera Mita Corporation owns a 30% interest in Triumph-Adler AG Group (TA) and accounted for its
investment by the equity method. TA, a listed company in Germany, is a distributor of office equipment. Kyocera
recognized loss on impairment of investment in an affiliate of ¥3,492 million due to an extended decline in its
market value for the year ended March 31, 2006.
The market values of investment in TA at March 31, 2007 and 2008 were ¥3,375 million and ¥4,798 million($47,980 thousand), respectively. The carrying amount of investment in TA accounted for by the equity method
at March 31, 2007 and 2008 were ¥2,263 million and ¥3,096 million ($30,960 thousand), respectively. Kyocera
did not recognize losses on impairment of investment in TA as results of increases of TA’s market value in theyears ended March 31, 2007 and 2008.
Related party transactions with the affiliates, accounted for by the equity method are as follows:
March 31,
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Kyocera’s investments in and advances to affiliates . . . . . . . . . . . . . . . .
Kyocera’s trade receivables from affiliates . . . . . . . . . . . . . . . . . . . . . . .

¥ 9,818
13,940¥16,408
15,433$164,080
154,330

Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Kyocera’s equity in (losses) earnings of affiliates . . . . . . . . . . . . . . . . ¥ (1,311) ¥ 2,593 ¥ 6,080 $ 60,800
Kyocera’s sales to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,822
39,18942,291
422,910
9. GOODWILL AND OTHER INTANGIBLE ASSETS
Intangible assets are summarized as follows:
2007
Gross
Carrying
AmountMarch 31,
2008

2008

Gross
Gross
Accumulated Carrying Accumulated Carrying
Amortization Amount Amortization
Amount(Yen in millions and U.S. dollars in thousands)

Accumulated
Amortization

Intangible assets subject to amortization:
Patent rights . . . . . . . . . . . . . . . . . . . . . ¥29,008
Software . . . . . . . . . . . . . . . . . . . . . . . . 27,626
Customer relationships . . . . . . . . . . . . .
307
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,255¥17,710
16,876
136
3,819¥27,775
29,772
5,596
8,334¥21,253
18,825298
4,674$277,750
297,720
55,96083,340$212,530
188,250
2,980
46,740Total . . . . . . . . . . . . . . . . . . . . . ¥63,196¥38,541¥71,477¥45,050$714,770$450,500

F-22Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
2007
Gross Carrying
Amount2008
Gross Carrying
Amount2008
Gross Carrying
Amount¥—2¥3,4002$34,000
20¥¥3,402$34,020

Intangible assets not subject to amortization:
Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2Intangible assets acquired during the year ended March 31, 2008 are as follows:Year ended March 31
2008
2008
(Yen in millions and U.S. dollars in thousands)

Intangible assets subject to amortization:
Patent rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets not subject to amortization:
Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

453
5,816
6,299
2,250

$

4,530
58,16062,99022,500

4,012

40,120¥18,830$188,300

The weighted average amortization periods for patent rights, software and customer relationships are five years,
four years and 17 years, respectively.
Total amortization of intangible assets during the years ended March 31, 2006, 2007 and 2008 amounted to¥10,042 million, ¥11,666 million and ¥11,132 million ($111,320 thousand), respectively.
The estimated aggregate amortization expenses for intangible assets for the next five years are as follows:
Years ending March 31,(Yen in millions and U.S. dollars in thousands)

2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-23¥8,517
5,426
3,110
1,374
762

$85,170
54,26031,10013,7407,620

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
The changes in the carrying amounts of goodwill by reporting segment for the years ended March 31, 2007 and2008 are as follows:
Fine
Ceramic
Parts
Group

Balance at March 31,
2006 . . . . . . . . . . . . . . . . . .
Goodwill acquired during theyear . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . .
Translation adjustments andreclassification to otheraccounts . . . . . . . . . . . . . . .
Balance at March 31,
2007 . . . . . . . . . . . . . . . . . .
Goodwill acquired during theyear . . . . . . . . . . . . . . . . . .
Translation adjustments andreclassification to otheraccounts . . . . . . . . . . . . . . .
Balance at March 31,
2008 . . . . . . . . . . . . . . . . . .
Balance at March 31,
2007 . . . . . . . . . . . . . . . . . .
Goodwill acquired during theyear . . . . . . . . . . . . . . . . . .
Translation adjustments andreclassification to otheraccounts . . . . . . . . . . . . . . .
Balance at March 31,
2008 . . . . . . . . . . . . . . . . . .

Applied
Semiconductor
Ceramic
Electronic Information
Parts
Products
DeviceEquipment
Group
Group
Group
Group
(Yen in millions and U.S. dollars in thousands)¥

OthersTotal

684¥ 4,137¥ 31,351

¥ 100

¥ 912

¥ 7,046¥ 18,472

—
—

—
—

—
—

2,699
—

—
—

19
(1,478)2,718(1,478)

—

—

60

239

5

(1)

303

100

912

7,106

21,410689

2,677

32,894———

10,211

202—

10,413——(1,083)(2,298)(132)—(3,513)

¥ 100

¥ 912

¥ 6,023¥ 29,323¥

759¥ 2,677¥ 39,794$1,000$9,120$ 71,060$214,100$ 6,890$26,770$328,940———

102,1102,020—

104,130——(10,830)(22,980)(1,320)—(35,130)$1,000$9,120$ 60,230$293,230$ 7,590$26,770$397,940

The goodwill of ¥10,413 million ($104,130 thousand) which Kyocera acquired during fiscal 2008 was mainly
based on acquisition of ATC by AVX included in the “Electronic Device Group”. For detailed information ofthis acquisition, see Note 4 to the Consolidated Financial Statements in this annual report on Form 20-F.
Kyocera performed the annual impairment test of goodwill and other intangible assets and recorded an
impairment loss of ¥ 1,478 million in a reporting unit in Others segment in the three months ended March 31,
2007. The impairment charge reflected the overall decline in the fair value of a domestic subsidiary. The fairvalue of the subsidiary was estimated principally using the expected present value of future cash flow.
Kyocera also performed this test in the three months ended March 31, 2008 and no impairment loss wasrecognized.

F-24

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
10. SHORT-TERM BORROWINGS AND LONG-TERM DEBT:
Short-term borrowings at March 31, 2007 and 2008 are comprised of the following:
Loans, principally from banks with average interest rate of 5.17% and 3.46% at March 31, 2007 and 2008,
respectively.
March 31,
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥15,250¥7,279$72,790

Long-term debt at March 31, 2007 and 2008 are comprised of the following:
Loans, principally from banks with interest rates ranging from 0.15% to 5.82% and from 0.15% to 5.51% at
March 31, 2007 and 2008, respectively.
March 31,
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 3,256
9,880¥ 2,585
9,145$ 25,850
91,450Less, portion due within one year . . . . . . . . . . . . . . . . . . . . . . . . .

13,136(5,853)

11,730(3,432)

117,300(34,320)¥ 7,283¥ 8,298$ 82,980

Aggregate maturities of long-term debt at March 31, 2008 are as follows:
Years ending March 31,(Yen in millions and U.S. dollars in thousands)

2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,011
2,901
919
504
963

$30,11029,010
9,190
5,040
9,630

¥8,298$82,980

Kyocera’s assets pledged as collateral of property, plant and equipment, net of accumulated depreciation for
long-term debt at March 31, 2007 and 2008 were ¥5,374 million and ¥5,145 million ($51,450 thousand),
respectively.
11. BENEFIT PLANS
Adoption of SFAS No. 158:
As of March 31, 2007, Kyocera adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106 and 132 (R),” which requires
an employer to recognize the over funded or under funded status of its defined benefit postretirement plans as an
asset or liability in its consolidated balance sheet and to recognize changes in that funded status in the year inwhich the changes occur through comprehensive income. Kyocera initially recognized the funded status of its
defined benefit plans and to provide the required disclosures in accordance with this standard at March 31, 2007.
F-25

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
The following tables show the incremental effect of the applying SFAS No. 158 at March 31, 2007 on the
consolidated balance sheet line items listed below. These adjustments had no effect on Kyocera’s consolidated
statements of income and cash flows for the year ended March 31, 2007.
BeforeApplication of
SFAS No. 158

Investments in and advances to affiliates and unconsolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued benefit liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . .

¥Adjustments(Yen in millions)

After
Application of
SFAS No. 158

—
12
8,354
568

¥ 1,033(12)(2,555)23,614¥ 1,033—
5,799
24,182

17,856
1,466(942)(2,139)(4,931)9,480(27)
17,55812,925
10,946(969)
15,419Domestic:a. Defined benefit plans
At March 31, 2008, Kyocera Corporation and its major domestic subsidiaries sponsor funded defined benefit
pension plans or unfunded retirement and severance plans for their employees.
Kyocera Corporation adopted a variable expected interest rate for benefits paid for pensioners, which is linked
with the long-term interest rate prevailing in Japan instead of a fixed expected interest rate, effective April 2004.
Benefits under the plan of Kyocera Corporation were previously calculated based on base salary, employee’s
position, length of service period and conditions at the time of retirement. However, after April 2005, Kyocera
adopted “point system” whereby benefits under the plan are calculated according to (i) accumulated “points” thatare earned based on employee’s position, extent of contribution and length of service period during employment,and (ii) conditions at the time of retirement. In addition, employees were provided an option to receive lifetime
pension payments for the full amount of their retirement payment, while after April 2005, employees areprovided an option to receive lifetime pension payments for 50% of their retirement payment and 50% of pension
payments for 20 years in maximum. These amendments reduced the projected benefit obligation of the pension
plan for Kyocera Corporation. This effect of the reduction in the projected benefit obligation was reflected as aprior service cost.
Major domestic subsidiaries also amended their benefit plans and adopted the “point system” effective April
2006 and April 2007. As a result of this amendment, their projected benefit obligations decreased and suchdecreases were reflected as prior service costs.

F-26

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
The funded statuses of the benefit plans at Kyocera Corporation and its major domestic subsidiaries at March 31,
2007 and 2008 are as follows:
March 31,
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Change in projected benefit obligations:
Projected benefit obligation at beginning of year . . . . . . . . . . . . . . ¥110,530
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,873
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,098
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,792)
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,355)
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5,329)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—¥110,025
7,668
2,166
(275)
(3,615)110
560$1,100,250
76,68021,660(2,750)(36,150)
1,100
5,600

Projected benefit obligation at end of year . . . . . . . . . . . . . . . . . . . .

110,025

116,639

1,166,390

Change in plan assets:
Fair value of plan assets at beginning of year . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

119,920
2,033
8,935(3,236)—

127,652(799)
8,910(3,538)206

1,276,520(7,990)89,100(35,380)
2,060

Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . . . . . .

127,652

132,431

1,324,310

Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 17,627¥ 15,792$ 157,920

Amounts recognized in the consolidated balance sheets consist of:Prepaid benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued benefit liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 24,182(6,555)¥ 23,652(7,860)$ 236,520(78,600)

Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 17,627¥ 15,792$ 157,920

Amounts recognized in accumulated other comprehensive income(loss) consist of:
Net transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

(337)
55,642(26,235)¥(111)
51,204(28,943)$

Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . .

¥ 29,070¥ 22,150$ 221,500

Accumulated benefit obligation at end of year . . . . . . . . . . . . . . . . . . . .

¥108,037¥116,133$1,161,330

Pension plans with an accumulated benefit obligation in excess of plan
assets at the end of year are as follows:
Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 17,614
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,211
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,059¥ 20,880
20,47913,299$ 208,800
204,790132,990F-27(1,110)512,040(289,430)

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Net periodic pension costs at Kyocera Corporation and its major domestic subsidiaries in the years ended
March 31, 2006, 2007 and 2008, include the following components:
Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of transition obligation . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 6,661
2,045(2,159)221(4,445)1,350¥ 7,873
2,098(2,870)185(4,739)1,310¥ 7,668
2,166(3,193)226(4,328)1,030$ 76,680
21,660(31,930)2,260(43,280)
10,300Net periodic pension costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 3,673¥ 3,857¥ 3,569$ 35,690

Changes in other comprehensive income (loss) at Kyocera Corporation and its major domestic subsidiaries in theyear ended March 31, 2008 include the following components:
Year ended March 31,
2008
2008
(Yen in millions andU.S. dollars in thousands)

Prior service cost due to plan amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net actuarial loss incurred during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

110
3,738
(226)
4,328
(1,030)$ 1,100
37,380(2,260)43,280(10,300)

Change in other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 6,920$ 69,200

Transition obligation, prior service cost and actuarial loss expected to be amortized at Kyocera Corporation andits major domestic subsidiaries in the year ending March 31, 2009 are as follows:Year ending March 31,
2009
2009
(Yen in millions andU.S. dollars in thousands)

Amortization of transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥111(4,329)906$ 1,110(43,290)
9,060

Assumptions used to determine projected benefit obligations at Kyocera Corporation and its major domestic
subsidiaries at March 31, 2007 and 2008 are as follows:
March 31,

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-28

2007

2008

1.75%-2.00%

1.75%-2.00%

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Assumptions used to determine net periodic pension costs at Kyocera Corporation and its major domestic
subsidiaries for the years ended March 31, 2006 , 2007 and 2008 are as follows:
2006

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected long-term rate of return on plan assets . . . . . . . . . . . . .

2007
Years ended March 31,

2.00%
2.00%-2.50%

1.75%-2.00%
2.00%-2.50%

2008

1.75%-2.00%
2.50%-3.00%

Kyocera Corporation and its domestic subsidiaries use a December 31 measurement date for their plans. Certain
domestic subsidiaries use a March 31 measurement date for their plans. Kyocera Corporation and its domestic
subsidiaries, which currently use a December 31 measurement date, will use a March 31 measurement date upon
the adoption of measurement provision of SFAS No. 158 for the year ending March 31, 2009. Kyocera
Corporation and its domestic subsidiaries are currently evaluating the impact of the adoption of the measurement
date provision of SFAS No. 158 on retained earnings in the year ending March 31, 2009.
Rate of increase in compensation levels was not used in the calculation of projected benefit obligation and net
periodic pension costs for the years ended March 31, 2006, 2007 and 2008 under the “point system.”
Kyocera Corporation and its major domestic subsidiaries determine its expected long-term rate of return on plan
assets based on the defined yields of life insurance company general account, which occupies major part of plan
assets categories, and their consideration of the current expectations for future returns and the historical returnsof other plan assets categories in which they invest.
Plan assets categories at Kyocera Corporation and its major domestic subsidiaries at March 31, 2007 and 2008
are as follows:
March 31,
2007
2008

Life insurance company general account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58.6%
25.6%
8.2%
1.4%
6.2%

58.5%
22.4%
6.6%
5.5%
7.0%

100.0%

100.0%

Kyocera Corporation and its major domestic subsidiaries manage and operate their plan assets with a target ofobtaining better performance more than earnings from the expected rate of return on plan assets to ensure thesources of funds sufficient to cover the pension benefits paid to participants and beneficiaries into the future. In
terms of the plan assets management, they make appropriate investment choices and optimal portfolios with aconsideration of its performances, expected returns and risks, and entrusts their plan assets to the fund trustees
which can be expected to be the most appropriate to accomplish Kyocera’s objective. They also make an effort tomaintain their portfolios within reasonable allocations of plan assets. They evaluate their categories of plan assets
allocations and can change their portfolios when it is needed. Their long-term strategy is to allocate
approximately 60% Life insurance company general account which assures fixed income, and approximately
25% equity and debt securities and approximately 15% cash and other for their defined benefit plans.
Kyocera Corporation and its major domestic subsidiaries forecast to contribute ¥8,489 million ($84,890
thousand) to the defined benefit pension plans in the year ending March 31, 2009.
F-29

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Estimated future benefit payments at Kyocera Corporation and its major domestic subsidiaries are as follows:
Years ending March 31,(Yen in millions and U.S. dollars in thousands)

2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 to 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 4,981
5,126
5,066
5,619
5,658
38,080$ 49,810
51,26050,66056,19056,580380,800

b. Other plan
Kyocera Corporation and its major domestic subsidiaries also provide for lump-sum severance benefits withrespect to directors and corporate auditors. To reserve future payments of lump-sum severance benefits todirectors and corporate auditors, annual provisions are made in the accounts for the estimated cost of thistermination plan, which is not funded.
Foreign:a. Pension plans
Kyocera International, Inc. and its consolidated subsidiaries (KII) and AVX which are both consolidated U.S.
subsidiaries of Kyocera Corporation, maintain non-contributory defined benefit pension plans in the U.S. andcontributory defined benefit pension plans outside the U.S. The KII plan covers substantially all full-time
employees in the U.S., of which benefits are based on years of service and the employees’ average compensation.
AVX sponsors various defined benefit pension plans covering certain employees. Pension benefits provided tocertain U.S. employees covered under collective bargaining agreements are based on a flat benefit formula.
Effective December 31, 1995. AVX froze benefit accruals under its domestic non-contributory defined benefit
pension plan for a significant portion of the employees covered under collective bargaining agreements. AVX’s
pension plans for certain European employees provide for benefits based on a percentage of final pay. AVX’s
funding policy is to contribute amounts sufficient to meet minimum funding requirements as set forth in
employee benefit and tax laws.

F-30

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
The following table sets forth the funded statuses of the KII’s and AVX’s plans at March 31, 2007 and 2008:
March 31,
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Change in benefit obligations:Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . ¥26,854
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
538
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,431
Plan participants’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . .
98
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(491)
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(987)
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
154
Foreign exchange adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,884¥29,481556
1,514—(2,120)(1,219)—(3,795)$294,810
5,560
15,140—(21,200)(12,190)—(37,950)

Benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in plan assets:
Fair value of plan assets at beginning of year . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participants’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29,481

24,417244,170

19,681
1,927
1,095
98
(987)
(64)
1,359

23,109
1,645
1,158
85
(1,219)—(3,502)231,090
16,450
11,580850(12,190)—(35,020)

Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . . . . .
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts recognized in the consolidated balance sheets consist of:
Accrued benefit liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23,109¥ (6,372)

21,276¥ (3,141)

212,760$ (31,410)(6,372)(3,141)(31,410)

Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ (6,372)¥ (3,141)$ (31,410)

Amounts recognized in accumulated other comprehensive income(loss) consist of:Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ (159)(3,782)¥ (129)(2,570)$ (1,290)(25,700)

Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . .

¥ (3,941)¥ (2,699)$ (26,990)

March 31,
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Accumulated benefit obligation at end of year . . . . . . . . . . . . . . . . . . .
Pension plans with an accumulated benefit obligation in excess ofplan assets at the end of year:
Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-31¥27,567¥22,957$229,570¥19,685
19,51014,725¥16,477
16,21013,845$164,770
162,100
138,450

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
KII’s and AVX’s net periodic pension costs in the years ended March 31, 2006 , 2007 and 2008 include thefollowing components:
Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

433
1,252
(1,283)
13
163

¥

538
1,431
(1,482)
17
238

¥

556
1,514
(1,639)15
205$ 5,560
15,140(16,390)150
2,050

Net periodic pension costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

¥

¥

$ 6,510

578

742

651

Changes in other comprehensive income (loss) at KII and AVX in the year ended March 31, 2008 include thefollowing components:
Year ended March 31,
2008
2008
(Yen in millions and U.S. dollars in thousands)

Net actuarial gain incurred during the year . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(2,126)
(15)
(205)

$(21,260)(150)(2,050)Change in other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . .

¥(2,346)$(23,460)

KII’s and AVX’s prior service cost and actuarial loss expected to be amortized in the year ending March 31,
2009 are as follows:Year ending March 31,
2009
2009
(Yen in millions and U.S. dollars in thousands)

Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 11
133

$ 110
1,330

KII’s and AVX’s assumptions used to determine projected benefit obligations at March 31, 2007 and 2008 are as
follows:
March 31,

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2007

2008

4.40%-6.00%
3.40%-4.50%

5.50%-6.50%
3.90%-4.50%

KII’s and AVX’s assumptions used to determine net periodic pension costs in the years ended March 31, 2006,
2007 and 2008 are as follows:
2006

Years ended March 31,
2007

2008

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.50%-6.00% 4.25%-5.50% 4.40%-6.00%
Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . . . . 1.25%-4.50% 3.00%-4.50% 3.40%-4.50%
Expected long-term rate of return on plan assets . . . . . . . . . . . . . . 6.30%-8.50% 6.40%-8.50% 6.60%-8.50%
F-32

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
KII and AVX use a December 31 measurement date for their plans. KII and AVX, which currently use a
December 31 measurement date, will use a March 31 measurement date upon the adoption of the measurement
provision of SFAS No. 158 for the year ending March 31, 2009. KII and AVX are currently evaluating theimpact of the adoption of the measurement date provision of SFAS No. 158 on retained earnings for the year
ending March 31, 2009. KII and AVX determine their expected long-term rate of return on plan assets based on
the consideration of the current expectations for future returns and the historical returns of other plan assets
categories in which they invest.
KII’s and AVX’s plan assets categories at March 31, 2007 and 2008 are as follows:
March 31,
2007
2008

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65.9%
30.5%
2.2%
1.4%

56.5%
36.8%
5.1%
1.6%

100.0%

100.0%

KII’s long-term strategy is for target allocation of 70%-80% equity securities and 20%-30% debt securities for its
defined benefit plans. AVX’s long-term strategy is for target allocation of 40% equity and 60% fixed income for
its U.S. defined benefit plans and 60% equity and 40% fixed income for its non-U.S. defined benefit plans.
AVX forecasts to contribute ¥766 million ($7,660 thousand) to the defined benefit pension plans in the year
ending March 31, 2009.
AVX’s and KII’s estimated future benefit payments are as follows:
Years ending March 31,(Yen in millions and U.S. dollars in thousands)

2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 to 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 921
982
1,041
1,109
1,182
7,088

$ 9,2109,820
10,41011,09011,82070,880b. Savings plans
KII and AVX maintain retirement savings plans which allow eligible U.S. employees to defer part of their annualcompensation.
AVX also maintains non-qualified deferred compensation programs which permit key employees to annuallyelect to defer a portion of their compensation until retirement. Contributions to the plans for the years ended
March 31, 2006, 2007 and 2008 were ¥928 million, ¥1,003 million and ¥979 million ($9,790 thousand),
respectively.

F-33

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
12. STOCK OPTION PLANS
Kyocera Corporation:
Kyocera Corporation granted directors, corporate auditors, corporate executive officers and certain key
employees of Kyocera with stock option plans until the year ended March 31, 2006. Under the plans, they were
granted options to purchase Kyocera Corporation’s shares of common stock at a price determined by the higherof (1) multiplying by 1.1 the average market price of Kyocera Corporation’s common stock in previous month ofthe date of the grant or (2) the market price of Kyocera Corporation’s common stock at the date of grant and an
option’s maximum term is five years. All options vested and are exercisable.
At March 31, 2008, Kyocera Corporation reserved 1,237 thousand shares of its common stock for the plans.
The following table summarizes information on stock option plans for the year ended March 31, 2008:
Weighted
Average
Exercise
Price

Number of
Options(in thousands)

Outstanding at March 31, 2007 . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . .
Expired and cancelled . . . . . . . . . . . . .
Outstanding at March 31, 2008 . . . . .

2,113
—
(821)
(55)
1,237

¥8,564
—
8,533
8,585
¥8,584$85.64
—
85.33
85.85
$85.84

Exercisable at March 31, 2008 . . . . . .

1,237¥8,584$85.84Weighted
Average
Contractual
life remaining(years)Aggregated Intrinsic Value(Yen in millions andU.S. dollars in thousands)¥3,006$30,060

0.5¥ (265)$ (2,650)

0.5¥ (265)$ (2,650)

The total aggregate intrinsic value of options exercised is ¥626 million, ¥2,103 million and ¥3,006 million($30,060 thousand) for the years ended March 31, 2006, 2007 and 2008, respectively.
At March 31, 2008, there was no unrecognized compensation costs related to unvested awards. The total
aggregate fair value of options vested was ¥1,248 million for the year ended March 31, 2006.
Because Kyocera granted no stock options after the year ended March 31, 2007 and requisite service period of
Kyocera’s stock options granted prior to April 1, 2006 did not attribute to the year ended March 31, 2008, nostock based compensation expense was recognized for the year ended March 31, 2008.
Cash received from the exercise of stock options was ¥2,332 million, ¥7,654 million and ¥7,006 million ($70,060
thousand) for the years ended March 31, 2006, 2007 and 2008, respectively.
Kyocera’s weighted average fair value is estimated at the date of grant using Black Scholes model. Kyocera
estimated expected life, volatility and expected dividends by considering historical record.
The following are significant weighted average assumptions used estimating the fair value of options issued
under Kyocera’s stock option plans:Year ended March 31,
2006

Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-34

¥

959
0.20%
2.7 years
28.00%
1.30%

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
AVX Corporation:
AVX has four fixed stock option plans. Under the 1995 stock option plan, as amended, AVX could grant options
to employees for the purchase of up to an aggregate of 9,300 thousand shares of common stock. Under the
non-employee directors’ stock option plan, as amended, AVX could grant options for the purchase of up to an
aggregate of 650 thousand shares of common stock. No awards were made under these two plans after August 1,
2005. Under the 2004 stock option plan AVX may grant options to employees for the purchase of up to an
aggregate of 10,000 thousand shares of common stock. Under the 2004 non-employee directors’ stock option
plan, AVX may grant options for the purchase of up to an aggregate of 1,000 thousand shares of common stock.
Under all plans, the exercise price of each option shall not be less than the market price of AVX’s stock on thedate of grant and an option’s maximum term is 10 years. Options granted under the 1995 stock option plan andthe 2004 stock option plan vest as to 25% annually and options granted under the non-employee directors’ stock
option plan and the 2004 non-employee directors’ stock option plan vest as to one third annually. Requisite
service periods related to all of the plans begin on the grant date. The number of shares of common stock
available for future issuance under all of the plans, consisting of options available to be granted and options
currently outstanding, was 14,697 thousand at March 31, 2008.
Activity under AVX’s stock option plans is summarized as follows:

Number of
Options(in thousands)

Weighted
Average
Exercise
Price

Outstanding at March 31, 2007 . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired and cancelled . . . . . . . . . . . . . . . . . . . .

4,821
616
(571)
(37)

$15.14
17.55
10.28
18.89

Outstanding at March 31, 2008 . . . . . . . . . . . . .

4,829$15.99Exercisable at March 31, 2008 . . . . . . . . . . . . . .

3,498$16.17Weighted
Averagecontractual
life remaining(years)Aggregated Intrinsic Value(Yen in millions andU.S. dollars in thousands)¥375$ 3,750

5.13¥(1,538)$(15,380)

3.95¥(1,176)$(11,760)

The total aggregate intrinsic value of options exercised is ¥120 million, ¥323 million and ¥375 million ($3,750
thousand) for the years ended March 31, 2006, 2007 and 2008 respectively.
Unvested share activity under AVX’s stock options plans at March 31, 2008 is summarized as follows:
Number of
Options(in thousands)

Weighted Average
Grant-Dated
Fair Value

Unvested balance at March 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Option forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,257
616
(14)
(528)

$5.39
5.63
5.40
5.84

Unvested balance at March 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,331

$5.51

At March 31, 2008, ¥403 million ($4,030 thousand) of total unrecognized compensation costs related to unvested
awards is expected to be recognized over the vesting period, approximately four years. The total aggregate fairvalue of options vested is ¥497 million, ¥463 million and ¥352 million ($3,520 thousand) for the years ended
March 31, 2006, 2007 and 2008, respectively.
F-35

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
The weighted average estimated fair value of AVX’s stock options granted at grant date market prices was $4.91,$5.44 and $5.63 per option for the years ended March 31, 2006, 2007 and 2008, respectively. The consolidated
statement of income includes ¥268 million ($2,680 thousand), net of ¥46 million ($460 thousand) of tax benefit,
in stock based compensation expense for the year ended March 31, 2008.
Cash received from the exercise of stock options was ¥646 million, ¥516 million and ¥ 669 million ($6,690
thousand) for the years ended March 31, 2006, 2007 and 2008, respectively. Excess tax benefit from stock-based
payment arrangements was ¥78 million and ¥113 million ($1,130 thousand) for the year ended March 31, 2007
and 2008, respectively.
AVX’s weighted average fair value is estimated at the date of grant using Black Scholes model. AVX estimatedvolatility by considering AVX’s historical stock volatility. AVX calculated the dividend yield based on historical
dividend paid. In accordance with SFAS No. 123R AVX has estimated forfeitures in determining the weighted
average fair value calculation. The forfeiture rate used for the year ended March 31, 2008 was 6.4%. The
following are significant weighted average assumptions used for estimating the fair value of options issued under
AVX’s stock option plans:
Years ended March 31,
2006
2007
2008

Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.00%
4 years
55.74%
1.31%

4.90%
5 years
35.25%
0.98%

4.53%
5 years
32.51%
0.88%

Kyocera Wireless Corp. (KWC):
KWC provides key employees with stock options. The options become vested gradually over a four-year period
provided participants remain a KWC employee. The exercise price shall not be less than 85% of the fair value ofthe common stock at the time the option is granted, and the grant has a maximum term of 10 years. Since KWC’ssecurities are not traded on any stock exchange, KWC’s Board of Directors is responsible for determining the fairvalue using reasonable means. KWC may grant options to all key employees for the purchase for up to an
aggregate of 3,800 thousand shares of common stock. The issuance of new options under this plan has beensuspended as of April 1, 2006.
Activity under KWC’s stock option plan is summarized as follows:

Number of
Options(in thousands)

Weighted
Average
Exercise
Price

Outstanding at March 31, 2007 . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired and cancelled . . . . . . . . . . . . . . . . . . .

1,539
—
—
(460)

$2.42
—
—
2.29

Outstanding at March 31, 2008 . . . . . . . . . . . .

1,079

$2.47

Exercisable at March 31, 2008 . . . . . . . . . . . . .

989

$2.29

F-36

Weighted
Averagecontractual
life remaining(years)Aggregated Intrinsic Value(Yen in millions andU.S. dollars in thousands)

¥—

$

—

4.35

¥(235)$(2,350)

4.11¥(197)$(1,970)

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Unvested share activity under KWC’s stock options plan at March 31, 2008 is summarized as follows:

Number of Options(in thousands)

Weighted
Average
Grant-Date
Fair Value

Unvested balance at March 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Option forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

286
—
(76)
(120)

$0.87
—
0.88
0.96

Unvested balance at March 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

90

$0.73

At March 31, 2008, ¥5 million ($50 thousand) of total unrecognized compensation costs related to unvested
awards is expected to be recognized over the vesting period, approximately one year. The total aggregate fairvalue of options vested is ¥76 million, ¥22 million and ¥13 million ($130 thousand) for the years ended
March 31, 2006, 2007 and 2008, respectively.
The weighted average estimated fair value of KWC’s stock options granted at grant date was $0.63 per option forthe year ended March 31, 2006. The consolidated statement of income includes ¥15 million ($150 thousand) instock based compensation expense for the year ended March 31, 2008.
KWC’s weighted average fair value is estimated at the date of grant using Black Scholes model. KWC estimatedvolatility by considering historical volatility. The following are significant weighted average assumptions used
for estimating the fair value of options issued under KWC’s stock option plan:
Year ended March 31,
2006

Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

0.63
4.21%
5 years
45.00%—

13. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Kyocera’s activities are exposed to a variety of market risks, including the effects of changes in foreign currency
exchange rates and interest rates. Approximately 60% of Kyocera’s revenues are generated from overseas
customers, which exposes Kyocera to foreign currency exchange rates fluctuations. These financial exposures aremonitored 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 potentiallyadverse 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, suchas 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 andcompetitive position, since exchange rates changes may affect the profitability, cash flows, and business and/or
pricing strategies of non Japan-based competitors. These movements affect cross-border transactions thatinvolve, but not limited to, direct export sales made in foreign currencies and raw material purchases incurred inforeign currencies.
F-37

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Kyocera maintains an interest rate risk management strategy that may use derivative financial instruments, suchas interest rate swaps, to minimize significant, unanticipated cash flow fluctuations caused by interest rate
volatility.
By using derivative financial instruments to hedge exposures to changes in exchange rates and interest rates,
Kyocera became exposed itself to credit risk. Credit risk is the failure of the counterparty to perform under theterms 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 (1) entering into transactions with creditworthy
counterparties, (2) limiting the amount of exposure to each counterparty, and (3) monitoring the financial
condition of its counterparties.
Cash Flow Hedges
Kyocera uses certain foreign currency forward contracts 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 charged deferred net losses of ¥27 million and ¥8 million and net gains of ¥60 million ($600 thousand)from accumulated other comprehensive income to foreign currency transaction losses, net in the consolidated
statements of income for the years ended March 31, 2006, 2007 and 2008, as a result of the execution of thehedged transactions.
Also, Kyocera uses interest rate swaps mainly to convert a portion of its variable rate debt to fixed rates. Kyocera
charged deferred net losses of ¥23 million from accumulated other comprehensive income to income fromdiscontinued operations in the consolidated statement of income for the year ended March 31, 2007. Kyocera
charged deferred net losses of ¥18 million and net gains of ¥17 million ($170 thousand) from accumulated othercomprehensive income to equity in (losses) earnings of affiliates in the consolidated statements of income for theyear ended March 31, 2007 and 2008, respectively.
Kyocera recognized net gains of ¥63 million and ¥196 million ($1,960 thousand) in accumulated othercomprehensive income at March 31, 2007 and 2008.
Other Derivatives
Kyocera’s main direct foreign export sales and some import purchases are denominated in the customers’ andsuppliers’ local currency, principally the U.S. dollar, Euro and STG. Kyocera purchases foreign currency forward
contracts with terms normally lasting less than four months to protect against the adverse effects that exchangerate 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 receivable and payable are recorded as
foreign currency transaction gains (losses), net in the consolidated of income. Kyocera does not adopt hedge
accounting for such derivatives.
The aggregate contract amounts of derivative financial instruments to which hedge accounting is not applied are
as follows:
March 31,
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Foreign currency forward contracts to sell . . . . . . . . . . . . . . . . .
Foreign currency forward contracts to purchase . . . . . . . . . . . . .
Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-38¥135,227
14,961—¥123,560
11,321417$1,235,600
113,210
4,170

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of financial instruments at March 31, 2007 and 2008 and the methods and assumptions used toestimate the fair value are as follows:
2007
Carrying
AmountMarch 31,
2008
2008
Fair
Carrying
Fair
Carrying
Value
AmountValue
Amount(Yen in millions and U.S. dollars in thousands)

Fair
Value

Non-derivatives:
Assets:Cash and cash
equivalents(a) . . . . . . . . ¥ 282,208 ¥ 282,208 ¥ 447,586 ¥ 447,586 $ 4,475,860 $ 4,475,860
Short-term
investments(b) . . . . . . .
213,495
213,447
147,503
147,526
1,475,030
1,475,260
Securities and otherinvestments(b) . . . . . . .
690,568
690,527
437,369
437,481
4,373,690
4,374,810¥1,186,271 ¥1,186,182 ¥1,032,458 ¥1,032,593 $10,324,580 $10,325,930
Liabilities:
Short-termborrowings(a) . . . . . . . . ¥ (15,250) ¥ (15,250) ¥Current portion of
long-term debt(c) . . . . .
(5,853)(5,880)Long-term debt(c) . . . . . .
(7,283)(7,285)(7,279) ¥(7,279) $(72,790) $(72,790)(3,432)(8,298)(3,461)(8,274)(34,320)(82,980)(34,610)(82,740)¥ (28,386) ¥ (28,415) ¥ (19,009) ¥ (19,014) $ (190,090) $ (190,140)
Derivatives:
Foreign currency forward
contracts to sell(d) . . . . ¥Foreign currency forward
contracts topurchase(d) . . . . . . . . . .
Currency swaps(d) . . . . . .

(1,386) ¥(1,386) ¥2,905 ¥

2,905 $

29,050 $29,050

70
—

70
—

405
(3)

405
(3)

4,050
(30)

4,050
(30)

(a) The carrying amount approximates fair value because of the short maturity of these instruments.
(b) The fair value is based on quoted market prices. It was not practicable to estimate the fair value ofinvestments in unlisted common stock because of the lack of the market price and difficulty in estimating
fair value without incurring excessive cost, and Kyocera did not identify any events or changes incircumstances that may have had a significant adverse effect on these investments. The aggregated carrying
amounts of these investments included in the table at March 31, 2007 and 2008 were ¥2,100 million and¥5,603 million ($56,030 thousand), respectively.
(c) The fair value is estimated by discounting cash flows, using current interest rates for instruments withsimilar terms and remaining maturities.
(d) The fair value is estimated based on quotes from financial institutions.
15. COMMITMENTS AND CONTINGENCIESAs of March 31, 2008, Kyocera had contractual obligations for the acquisition or construction of property, plantand equipment aggregating ¥16,057 million ($160,570 thousand) due within one year.
F-39

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Kyocera is lessee under long-term operating leases primarily for office space and equipment. Rental expenses for
operating leases were ¥11,485 million, ¥7,681 million and ¥10,577 million ($105,770 thousand) for the years
ended March 31, 2006, 2007 and 2008, respectively.
Future minimum lease commitments under non-cancelable operating leases at March 31, 2008 are as follows:
Years ending March 31,(Yen in millions and U.S. dollars in thousands)

2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 5,651
4,116
2,590
1,599
1,317
3,946

$ 56,510
41,16025,90015,99013,17039,460¥19,219$192,190

Kyocera has entered into material supply agreements for a significant portion of anticipated material used in its
operations. Under those agreements, during the year ended March 31, 2008, Kyocera purchased ¥4,055 million($40,550 thousand) and is obligated to purchase ¥163,723 million ($1,637,230 thousand) in total by the end of
December 2019.
Kyocera guarantees the debt of employees, an investee and an unconsolidated subsidiary. At March 31, 2008, thetotal amount of these guarantees was ¥857 million ($8,570 thousand). The financial guarantees are made in theform of commitments and letters of awareness issued to financial institutions and generally obligate Kyocera to
make payments in the event of default by the borrowers.
AVX has been named as a potentially responsible party (PRP) in state and federal administrative proceedings
seeking contribution for costs associated with the correction and remediation of environmental conditions at
various waste disposal and operating sites. To resolve AVX’s liability at each of 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. AVX has paid, or reserved for, all estimated amounts required under the terms of theseorders and decrees corresponding to AVX’s apportioned share of the liabilities.
In July 2007, AVX received oral notification from the Environmental Protection Agency (EPA), and in
December 2007, written notification from the U.S. Department of Justice indicating that the United States ispreparing to exercise the reopener provision under a 1991 consent decree relating to the environmental
conditions at, and remediation of, New Bedford Harbor in the Commonwealth of Massachusetts. The EPA has
indicated that remediation costs through December 6, 2007 (which remediation is ongoing) are approximately¥31,850 million ($318,500 thousand). AVX has not yet completed an investigation of the monies spent or its
available defenses in light of the notification. AVX has also not yet determined whether or to what extent otherparties may bear responsibility for these costs.
On April 1, 2008, the EPA indicated that the future work to be performed at the harbor is expected to exceed
hundreds of millions of dollars under current estimates. AVX anticipates further discussions with the U.S.
Department of Justice, the EPA and the Commonwealth of Massachusetts.
The potential impact of this matter on Kyocera’s financial position, results of operations and cash flows cannot
be determined at this time.

F-40

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Kyocera is 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 amountis reasonably estimated. However, based on the information available, management believes that damages, ifany, resulting from these actions will not have a significant effect on Kyocera’s consolidated results of operations
and financial position.
16. STOCKHOLDERS’ EQUITY
Under the Corporation Act of Japan (the Corporation Act), the entire amount paid in for the shares is principally
required to be capitalized as stated capital, although Kyocera Corporation may, by resolution of its Board of
Directors, capitalize an amount not exceeding one-half of the amount paid in for the shares as additional paid-in
capital.
The Corporation Act requires a domestic company to appropriate as legal reserve or additional paid-in capital, anamount equal to 10% of the amount paid out for dividends until the sum of the legal reserve and additional
paid-in capital equals 25% of its stated capital. The legal reserve and additional paid-in capital, which could bedecreased due to stockholder actions, may be transferred to stated capital or used to reduce a deficit principally.
The appropriated legal reserve at March 31, 2008 included in retained earnings was ¥21,021 million ($210,210
thousand).
The Corporation Act does not permit any payment of dividends in connection with repurchased treasury stock. At
March 31, 2008, Kyocera Corporation reserved ¥15,289 million ($152,890 thousand) of treasury stock
repurchased mainly for stock options, which are restricted as to the payment of cash dividends. The amount of
statutory retained earnings of Kyocera Corporation available for the payment of dividends to stockholders at
March 31, 2008 was ¥701,408 million ($7,014,080 thousand).
The accompanying consolidated financial statements do not include any provision for the dividend of ¥60 ($0.60)
per share aggregating ¥11,367 million ($113,670 thousand) payable on June 27, 2008 which was approved by thestockholders at the meeting held on June 26, 2008.
Kyocera’s equity in retained earnings or deficits of affiliates and unconsolidated subsidiaries accounted for by
the equity method of accounting aggregating ¥ (7,256 million) ($(72,560 thousand)) at March 31, 2008 wasincluded in retained earnings.

F-41

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Changes in accumulated other comprehensive income are as follows:

Foreign
Minimum
Currency
PensionTranslation
PensionLiability
Adjustments Adjustments Adjustments

Net
Unrealized
Gains onSecurities

Net
Unrealized
Gains (Losses) on
Total
Derivative
Accumulated
FinancialComprehensive
Instruments
Income(Yen in millions and U.S. dollars in thousands)

Balance at March 31, 2005 . . . . . . . . . ¥ (28,966) ¥Net change for the year . . . . . . . .
21,396——¥(1,629) ¥(428)

42,46140,188¥ (27)(48)¥

11,83961,108

Balance at March 31, 2006 . . . . . . . . .
Net change for the year . . . . . . . .
Adjustment for SFAS No. 158 . . .

(7,570)10,474———
15,419(2,057)(82)
2,139

82,649102,021
—

(75)
138
—

72,947
112,551
17,558

Balance at March 31, 2007 . . . . . . . . .
Net change for the year . . . . . . . .

2,904(36,698)

15,419(2,554)——

184,670(119,871)

63133

203,056(158,990)

Balance at March 31, 2008 . . . . . . . . . ¥ (33,794) ¥ 12,865 ¥—¥

64,799¥ 196¥

Balance at March 31, 2007 . . . . . . . . . $ 29,040 $154,190 $Net change for the year . . . . . . . . (366,980) (25,540)——$ 1,846,700(1,198,710)

$ 630
1,330

$ 2,030,560(1,589,900)

Balance at March 31, 2008 . . . . . . . . . $(337,940) $128,650 $—$$1,960$647,990

44,066440,660

17. INCOME TAXES
Income from continuing operations before income taxes and minority interests and income taxes for the years
ended March 31, 2006, 2007 and 2008 are made up of the following components:
Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Income from continuing operations before income
taxes and minority interests:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 93,078
24,159¥102,048
54,492¥121,498
53,344$1,214,980
533,440

Total income from continuing operations before
income taxes and minority interests . . . . . . . . . . . . .

¥117,237¥156,540¥174,842$1,748,420

Income taxes:
Current income taxes:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 39,025
7,215¥ 41,227
12,538¥ 48,941
12,721$ 489,410
127,210

Total current income taxes . . . . . . . . . . . . . . . . . . . . . .

46,24053,76561,662

616,620

Deferred income taxes:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,202)
1,722(4,479)(399)

26(1,453)

260(14,530)

Total deferred income taxes . . . . . . . . . . . . . . . . . . . . .

520(4,878)(1,427)(14,270)

Total income taxes . . . . . . . . . . . . . . . . . . . . . . . .

¥ 46,760¥ 48,887¥ 60,235$ 602,350

In Japan, a company is subject to a number of taxes, based on income, which in the aggregate indicate normal
statutory income tax rates for the years ended 2006, 2007 and 2008 of approximately 41.0%.
F-42Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Reconciliations between the Japanese statutory income tax rate and Kyocera’s effective tax rate for the years
ended March 31, 2006, 2007 and 2008 are as follows:
Years ended March 31,
2006
2007
2008

Japanese statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference in statutory tax rates of foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credit for research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Tax refunds related to transfer pricing adjustments . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of FIN 48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax rate change* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41.0%
(2.8)
5.8
(3.6)
—
—
—
(0.5)

41.0%
(4.6)
0.0
(3.3)
(2.8)
—
—
0.9

41.0%
(4.7)
0.6
(2.5)
(0.2)
1.9
(0.9)
(0.7)

Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39.9%

31.2%

34.5%

*

On March 16, 2007, the Enterprise Income Tax Law was approved at the 10th National People’s Congress ofChina, which was designated to unify income tax rates for companies at 25.0% effective after January 1,
2008. Kyocera recognized a decrease of income taxes by ¥1,660 million ($16,600 thousand) mainly due torevaluation of deferred tax assets and liabilities recorded in Chinese subsidiaries by applicable tax rates inthe year ended March 31, 2008.

The components of the deferred tax assets and deferred tax liabilities at March 31, 2007 and 2008 are as follows:
March 31,
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Deferred tax assets:
Enterprise tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating losses and tax credit carry forwards . . . . . . . . . . .
Liquidation of a foreign subsidiary . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

2,521
22,358
1,972
9,178
18,774
31,1652,194
32,500
3,800
4,817

¥

1,692
19,493
1,668
10,237
19,152
38,134
1,945
29,337
3,931
3,169

$

16,920
194,930
16,680102,370
191,520
381,340
19,450293,370
39,31031,690Total gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

129,279(42,124)

128,758(39,780)

1,287,580(397,800)

Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 87,155¥ 88,978$ 889,780

¥

¥

4,773
3,862
132,493
10,794
2,273$

Deferred tax liabilities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deduction of foreign branch losses . . . . . . . . . . . . . . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,566
5,474
214,900
10,9462,968

47,73038,6201,324,930
107,940
22,730Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 236,854¥154,195$1,541,950

Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . .

¥(149,699)¥ (65,217)$ (652,170)

F-43

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Net deferred tax assets and liabilities at March 31, 2007 and 2008 are reflected in the consolidated balance sheets
under the following captions.
March 31,
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Deferred income taxes—current assets . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes—non-current liabilities . . . . . . . . . . . . . . . . . .

¥ 45,390
12,024(255)(206,858)¥ 41,244
11,573(18)(118,016)$

412,440
115,730(180)(1,180,160)

Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(149,699)¥ (65,217)$ (652,170)

At March 31, 2008, Kyocera had net operating losses carried forward of approximately ¥ 77,958 million($779,580 thousand), which are available to offset future taxable income. Of these net operating losses carriedforward, the amount of ¥20,540 million ($205,400 thousand) recorded at domestic subsidiaries will expire within
next seven years, and the amount of approximately ¥14,806 million ($148,060 thousand) recorded at U.S.
subsidiaries will expire within next 20 years. Certain other foreign subsidiaries have net operating losses carriedforward totaling approximately ¥42,612 million ($426,120 thousand) of which most have no expiration date.
Kyocera intends to reinvest certain undistributed earnings of foreign subsidiaries for an indefinite period of time.
Therefore, no deferred tax liabilities have been provided on undistributed earnings of these subsidiaries, which
are not expected to be remitted in the foreseeable future. Kyocera estimates this unrecognized deferred tax
liabilities are ¥21,454 million ($214,540 thousand) at March 31, 2008. The undistributed earnings of thesesubsidiaries are ¥191,674 million ($1,916,740 thousand) at March 31, 2008.
Total gross deferred tax assets at March 31, 2007 and 2008 were reduced by valuation allowances of¥42,124 million and ¥39,780 million ($397,800 thousand), respectively. The total valuation allowance for theyear ended March 31, 2008 decreased by ¥2,344 million ($23,440 thousand). This decrease was due to foreign
currency translation adjustments of ¥3,504 million ($35,040 thousand) offset by additional valuation allowanceof ¥1,160 million ($11,600 thousand) during the year ended March 31, 2008.
In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—aninterpretation of FASB statement No. 109” (FIN 48) which clarifies the accounting for uncertainty in income
taxes recognized in the financial statements in accordance with FASB Statement No. 109, “Accounting forIncome Taxes.” FIN 48 was effective for fiscal years beginning after December 15, 2006. Cumulative effect ofapplying FIN48, which was effective April 1, 2007, increased the opening balance of retained earnings by¥3,968 million ($39,680 thousand).
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:(Yen in millions and U.S. dollars in thousand)

Balance at April 1, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase—tax position in prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase—tax position in current year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease—tax position in prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements with taxing authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,650
3,356
1,839
(203)
—
—

$36,500
33,56018,390(2,030)——

Balance at March 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥8,642$86,420

F-44

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Gross unrecognized tax benefits on the balance sheet that if recognized would affect the effective tax rate is¥3,650 million ($36,500 thousand) and ¥8,642 million ($86,420 thousand), at the date of adoption and at
March 31, 2008, respectively. Kyocera does not expect that any significant change in unrecognized tax benefits
will occur within the next 12 months. Kyocera recorded interest and penalties accrued related to unrecognized tax
benefits by ¥676 million ($6,760 thousand) as current income taxes in the consolidated statement of income forthe year ended March 31, 2008 and by ¥755 million ($7,550 thousand) as other non-current liabilities in the
consolidated balance sheet at March 31, 2008, respectively. The above table excludes this accrual for estimatedinterest and penalties.
At March 31, 2008, Kyocera is subject to income tax examinations by tax authorities for the tax years 2001 andforward in Japan, and for the tax year 2002 and for the tax years 2005 and forward in the United States for its
major jurisdictions.
On March 28, 2005, Kyocera Corporation received a notice of tax assessment based on transfer pricing
adjustments from the Osaka Regional Tax Bureau for the five years from the year ended March 31, 1999 throughthe year ended March 31, 2003. The notice indicated that resultant additional taxes, including local taxes, etc.,
amounted to ¥12,748 million, which Kyocera had recognized as current income taxes in its consolidated
statement of income for the year ended March 31, 2005.
On May 24, 2005, Kyocera Corporation filed a request for reinvestigation to the tax assessment based on transfer
pricing adjustments with the Osaka Regional Tax Bureau. On September 25, 2006, Kyocera Corporation received
a decision letter from the Osaka Regional Tax Bureau that voided a portion of the original assessment. In
accordance with this decision, ¥4,305 million of tax refunds, including local taxes, was recognized in current
income taxes for the year ended March 31, 2007. Kyocera Corporation also filed a request for reconsideration
with the Osaka National Tax Tribunal on October 23, 2006 and filed applications with the National Tax Agency
for mutual agreement procedures for avoidance of double taxation with the United States, Singapore andGermany as of December 26, 2006, April 27, 2007 and August 10, 2007, respectively.
Kyocera Corporation received a notice on November 8, 2007 from the National Tax Agency to the effect thatmutual agreements with the United States had been concluded and received a notice on November 30, 2007 fromthe Osaka Regional Tax Bureau to the effect that the amount of the revised tax had been reduced. Also, Kyocera
received a letter on December 19, 2007 from the Internal Revenue Service suggesting her will to adjust incomeof a U.S. subsidiary downwards for tax refund. Upon the adoption of FIN 48, these tax refunds met the “morelikely-than not” recognition threshold and were recognized in retained earnings as of April 1, 2007 within the
cumulative effect of applying FIN 48. These prior year refund claims and related interest were not recognized asof March 31, 2007 because they were considered gain contingencies under Statement of Financial AccountingStandards No. 5, “Accounting for Contingencies” and could not be recognized until the contingency lapsed.
Kyocera has also applied for tax refunds by mutual agreement procedures in Japan, Singapore and Germany,
which have been incorporated within the FIN 48 analysis. Kyocera does not anticipate the final resolution ofthese procedures to have a material impact on the consolidated statements of income in the future.
18. SUPPLEMENTAL EXPENSE INFORMATION
Research and development expenses for the years ended March 31, 2006, 2007 and 2008 amounted to¥57,436 million, ¥61,100 million and ¥61,605 million ($616,050 thousand), respectively.
Advertising expenses for the years ended March 31, 2006, 2007 and 2008 amounted to ¥10,840 million,¥11,845 million and ¥11,036 million ($110,360 thousand), respectively.
F-45

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Shipping and handling costs for the years ended March 31, 2006, 2007 and 2008 amounted to ¥13,984 million,¥15,945 million and ¥17,802 million ($178,020 thousand), respectively, and were included in selling, general andadministrative expenses in the Consolidated Statements of Income.
19. SEGMENT REPORTING
Kyocera manufactures and sells a highly diversified range of products, including components involving fineceramic technologies and applied ceramic products, telecommunications and information equipment etc. Main
products or businesses of each reporting segment are as follows:(Fine Ceramic Parts Group)
Information & Telecommunication Components
Sapphire Substrates
Components for Semiconductor Processing Equipment
Components for LCD Manufacturing Equipment
Automotive Components
General Industrial Ceramic Components(Semiconductor Parts Group)
Surface Mount Device (SMD) Ceramic Packages
CCD / CMOS Sensor Ceramic Packages
LSI Ceramic Packages
Wireless Communication Device Packages
Optical Communication Device Packages and Components
Organic Multilayer Packages and Substrates(Applied Ceramic Products Group)
Residential and Industrial Solar Power Generating Systems
Solar Cells and Modules
Cutting Tools
Micro Drills
Jewelry and Application Products
Medical and Dental Implants(Electronic Device Group)
Ceramic Capacitors
Tantalum Capacitors
Timing Devices [Temperature Compensated Crystal Oscillators (TCXOs), Crystal Units, Ceramic
Resonators]
Surface Acoustic Wave (SAW) filters
RF Modules
Connectors
Thermal Printheads
LED Printheads
Amorphous Silicon Photoreceptor Drums
Liquid Crystal Displays(Telecommunications Equipment Group)
CDMA Mobile Phone Handsets
Personal Handy Phone System (PHS) Related Products [PHS Mobile Phone Handsets, PHS Base
Stations, High Speed Wireless Data Transmission Systems]
F-46

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries(Information Equipment Group)
ECOSYS Printer
Copying Machines
Multifunction Peripheral(Others)
Telecommunication Engineering BusinessInformation and Communication Technology Business
Management Consulting Business
Chemical Materials for Electronic Components
Electrical Insulators
Molded Products
Optical Components
Hotel Business
Realty Development BusinessInsurance Agent and Travel Agent Business
Commencing for the year ended March 31, 2008, the “Optical Equipment Group,” previously an independent
reporting segment, has been reclassified into “Others.” Accordingly, reported results of related segments for theyears ended March 31, 2006 and 2007 have been reclassified.
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 revenue and expenses, equity in (losses) earnings, income taxes and minority interest.
Assets for each reporting segment represent those assets associated with a specific reporting segment. Corporate
assets consist primarily of cash and cash equivalents, the facilities of corporate headquarters and various otherinvestments and assets that are not specific to each reporting segment.
Kyocera’s sales to KDDI Corporation and its consolidated subsidiaries, which are mainly recorded at the
Telecommunications Equipment group, for the years ended March 31, 2006, 2007 and 2008 comprised of 8.1%,
9.6% and 9.9% to consolidated net sales, respectively.

F-47

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Information by reporting segment at and for the years ended March 31, 2006, 2007 and 2008 is summarized on
the following page:
Reporting segments
Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Net sales:
Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . .
Semiconductor Parts Group . . . . . . . . . . . . . . . . . . .
Applied Ceramic Products Group . . . . . . . . . . . . . . .
Electronic Device Group . . . . . . . . . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments and eliminations . . . . . . . . . . . . . . . . . .

¥69,373 ¥
135,299
117,555
259,592
229,035
249,381132,290(18,981)¥1,173,544
Operating profit:
Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . .
Semiconductor Parts Group . . . . . . . . . . . . . . . . . . .
Applied Ceramic Products Group . . . . . . . . . . . . . . .
Electronic Device Group . . . . . . . . . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥Depreciation and amortization:
Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . .
Semiconductor Parts Group . . . . . . . . . . . . . . . . . . .
Applied Ceramic Products Group . . . . . . . . . . . . . . .
Electronic Device Group . . . . . . . . . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-48¥1,283,897

81,309 $ 813,090
154,538
1,545,380
149,942
1,499,420
294,201
2,942,010
220,817
2,208,170
276,746
2,767,460
138,494
1,384,940(25,611)(256,110)¥1,290,436$12,904,360¥$

11,014 ¥17,742
21,87627,170(1,706)
26,412
3,209

15,67722,21022,334
44,487291
33,9706,881

105,717
12,785

145,850
8,569

156,332
12,497

1,563,320
124,970(1,216)
(49)

2,621
(500)

6,091
(78)

60,910(780)¥ 117,237¥ 156,540¥ 174,842$ 1,748,420

¥

4,126
10,623
7,167
21,202
8,692
12,641
5,624
2,996

¥

4,500
12,533
8,097
21,537
9,075
16,326
7,419
2,575

¥

7,511
14,647
9,685
24,627
8,753
12,024
6,922
2,876

$

75,110146,470
96,850246,270
87,530120,240
69,22028,760¥73,071¥

82,062¥87,045$

870,450

Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in (losses) earnings of affiliates andunconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Adjustments and eliminations . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before income
taxes and minority interests . . . . . . . . . . . . . . . . . . . .

81,326 ¥152,292
131,103
286,156
251,183
268,781
137,235(24,179)

11,16720,02732,65536,524
6,786
39,538
9,635

111,670
200,270
326,550
365,240
67,860395,380
96,350Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Write-down of inventories:
Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . . ¥Semiconductor Parts Group . . . . . . . . . . . . . . . . . . .
Applied Ceramic Products Group . . . . . . . . . . . . . . .
Electronic Device Group . . . . . . . . . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures:
Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . .
Semiconductor Parts Group . . . . . . . . . . . . . . . . . . .
Applied Ceramic Products Group . . . . . . . . . . . . . . .
Electronic Device Group . . . . . . . . . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14 ¥
382
1,176
385
4,184
2,079
226
—

54 ¥
1,848
1,283
670
5,208
1,791
474
—

153 $
160
899
512
1,798
1,372
247
—

1,530
1,600
8,990
5,120
17,98013,720
2,470
—

¥

8,446

¥

11,328

¥

5,141

$

51,410¥4,182
24,136
14,545
21,562
2,639
12,389
5,853
3,554

¥

7,447
11,432
7,330
19,812
3,800
11,962
5,774
2,339

¥

9,253
8,752
10,71425,8552,317
15,475
6,056
6,679

$

92,53087,520107,140
258,550
23,170154,750
60,56066,790¥88,860¥69,896¥

85,101$

851,010

March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Assets:Fine Ceramic Parts Group . . . . . . . . . . . . . . . . . . . . .
Semiconductor Parts Group . . . . . . . . . . . . . . . . . . .
Applied Ceramic Products Group . . . . . . . . . . . . . . .
Electronic Device Group . . . . . . . . . . . . . . . . . . . . . .
Telecommunications Equipment Group . . . . . . . . . .
Information Equipment Group . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥43,822
103,302112,422
383,150
87,343
185,362259,358¥

54,860106,359
125,266
412,979
92,584
207,862
133,072¥

53,713100,041
149,870
400,851
66,191
203,248
131,946$

537,130
1,000,410
1,498,700
4,008,510
661,9102,032,480
1,319,460

Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,174,759
815,833

1,132,982
1,056,646

1,105,860
906,159

11,058,600
9,061,590

Investments in and advances to affiliates andunconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Adjustments and eliminations . . . . . . . . . . . . . . . . . . . . . .

7,355(66,425)

10,093(69,257)

16,753(52,026)

167,530(520,260)

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,931,522¥2,130,464¥1,976,746$19,767,460

F-49

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries
Information for revenue from external customers by destination and long-lived assets based on physical location
as of and for the years ended March 31,2006, 2007 and 2008 are summarized as follows:
Geographic segments
Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Net sales:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States of America . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-lived assets:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States of America . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 467,035
253,696
198,731
184,351
69,731¥ 496,959
274,361
216,663
210,726
85,188¥ 507,837
248,760
232,425
224,066
77,348$ 5,078,370
2,487,600
2,324,250
2,240,660
773,480¥1,173,544¥1,283,897¥1,290,436$12,904,360¥ 251,555
36,24837,30822,3443,711¥ 235,325
36,77742,204
24,3984,635¥ 233,569
54,19038,71322,783
7,806$ 2,335,690
541,900
387,130
227,830
78,060¥ 351,166¥ 343,339¥ 357,061$ 3,570,610

There are no individually material countries with respect to revenue from external customers and long-lived
assets in Asia, Europe and Others.
20. EARNINGS PER SHARE
A reconciliation of the numerators and the denominators of basic and diluted earnings per share computations is
as follows:
Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands except per share amounts)

Income from continuing operations . . . . . .
Income from discontinued operations . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . .

¥66,088
3,608
69,696¥101,329
5,175
106,504¥107,244—
107,244$1,072,440—
1,072,440

Basic earnings per share:
Income from continuing operations . . . .
Income from discontinued operations . . .
Net income . . . . . . . . . . . . . . . . . . . . . . .

352.4419.24
371.68538.5227.51
566.03566.58—566.58

5.67
—
5.67

Diluted earnings per share:
Income from continuing operations . . . .
Income from discontinued operations . . .
Net income . . . . . . . . . . . . . . . . . . . . . . .

352.2119.22
371.43537.3527.44
564.79565.80—565.80

5.66
—
5.66

F-50

Notes to The Consolidated Financial Statements—(Continued)
Kyocera Corporation and Consolidated Subsidiaries

Basic weighted average number of shares outstanding . . . . . . . . . . . .
Dilutive effect of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted weighted average number of shares outstanding . . . . . . . . . .

2006Years ended March 31,
2007(shares in thousands)

2008

187,514
126
187,640

188,160
413
188,573

189,283261
189,544

21. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental information related to the Consolidated Statements of Cash Flows is as follows:
Years ended March 31,
2006
2007
2008
2008
(Yen in millions and U.S. dollars in thousands)

Cash paid during the year:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,933 ¥ 1,603 ¥ 1,217 $ 12,170
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,037
52,847
66,989669,890
Acquisitions of businesses:
Fair value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥65 ¥ 1,151 ¥32,959 $329,590
Fair value of liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . .
(45)
(333)
(5,537)(55,370)
Minority Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)
—
—
—
Cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15)
(62)
(939)
(9,390)
¥

(3) ¥

756

¥26,483$264,830

22. SUBSEQUENT EVENTS
Acquisition of Mobile Phone Related Business of SANYO Electric Co., Ltd.
On April 1, 2008, Kyocera acquired the mobile phone related business, and its related assets and liabilities, fromSANYO Electric Co., Ltd. (SANYO). The calculation of the consideration for this acquisition and the calculationof the amount of the identifiable assets and liabilities have not yet been completed. The consideration shall be
determined based on ¥50,000 million ($500,000 thousand) which will be revised subject to a working capitaladjustment, acquisition costs and closing adjustments which shall be made based on items separately agreed by
Kyocera and SANYO.

F-51

SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, Kyocera certifies that itmeets all of the requirements for filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Kyocera Corporation(Company)
By

June 30, 2008/s/ SHOICHI AOKI
Shoichi Aoki
General Manager
Corporate Financial & Accounting Groupand Executive Officer

INDEX OF EXHIBITS
Exhibit
NumberDescription

1.1

Articles of Incorporation (English translation) (incorporated by reference to the Registrant’s annual
report on Form 20-F filed on June 29, 2006)

1.2

Share Handling Regulations of the Registrant (English translation) (incorporated by reference to theRegistrant’s annual report on Form 20-F filed on June 29, 2006)

1.3

Regulations of the Board of Directors of the Registrant (English translation) (incorporated byreference to the Registrant’s annual report on Form 20-F filed on June 29, 2006)

1.4

Regulations of the Board of Corporate Auditors of the Registrant (English translation) (incorporated
by reference to the Registrant’s annual report on Form 20-F filed on July 4, 2007)

2.1

Specimen common stock certificate of the Registrant (incorporated by reference to the Registrant’s
annual report on Form 20-F filed on September 24, 2001)

2.2

Deposit Agreement, dated as of June 29, 1998 among Kyocera Corporation, Citibank N.A. as
Depositary and all owners and holders from time to time of American Depositary Receipts, including
the form of American Depositary Receipt, as amended by Amendment No.1 thereto, dated as ofJanuary 5, 1999 (incorporated by reference to the Registrant’s annual report on Form 20-F filed on
September 24, 2001)

8.1

List of Significant Subsidiaries (See “Organizational Structure” in Item 4.C. of the Registrant’s
annual report on Form 20-F)

11.1

Code of Ethics (incorporated by reference to the Registrant’s annual report on Form 20-F filed on
July 4, 2007)

12.1

Certification of the principal executive officer of the Registrant required by Rule 13a-14(a)12.2

Certification of the principal financial officer of the Registrant required by Rule 13a-14(a)13.1

Certification of the principal executive officer of the Registrant required by Rule 13a-14(b) andSection 1350 of Chapter 63 of Title 18 of the United States Code

13.2

Certification of the principal financial officer of the Registrant required by Rule 13a-14(b) andSection 1350 of Chapter 63 of Title 18 of the United States Code

15.1

Consent of Kyoto Audit Corporation with respect to its report on the audit of the financial statements
included in the Registrant’s annual report on Form 20-F

Exhibit 12.1
CERTIFICATION
I, Makoto Kawamura, certify that:1.

I have reviewed this annual report on Form 20-F of Kyocera Corporation;2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to statea material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of thecompany as of, and for, the periods presented in this report;

4.

The company’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company andhave:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is reasonably
likely to materially affect, the company’s internal control over financial reporting; and5.

The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the company’s auditors and the audit committee of the company’s boardof directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the company’s ability to record,
process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the company’s internal control over financial reporting.

Date: June 30, 2008/s/ MAKOTO KAWAMURA
Name: Makoto Kawamura
Title: President and Representative Director(Principal Executive Officer)

Exhibit 12.2

CERTIFICATION
I, Shoichi Aoki, certify that:1.

I have reviewed this annual report on Form 20-F of Kyocera Corporation;2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to statea material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of thecompany as of, and for, the periods presented in this report;

4.

The company’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company andhave:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is reasonably
likely to materially affect, the company’s internal control over financial reporting; and5.

The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the company’s auditors and the audit committee of the company’s boardof directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the company’s ability to record,
process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the company’s internal control over financial reporting.

Date: June 30, 2008/s/ SHOICHI AOKIName: Shoichi Aoki
Title: General Manager
Corporate Financial & Accounting Group and
Executive Officer(Principal Financial Officer)

Exhibit 13.1

CERTIFICATION
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Kyocera Corporation (the “Company”) hereby
certifies, to such officer’s knowledge, that the Company’s annual report on Form 20-F for the year ended
March 31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of
the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in allmaterial respects, the financial condition and results of operations of the Company.
Dated: June 30, 2008

/S/ MAKOTO KAWAMURA
Name: Makoto Kawamura
Title: President and Representative Director(Principal Executive Officer)

Exhibit 13.2

CERTIFICATION
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Kyocera Corporation (the “Company”) hereby
certifies, to such officer’s knowledge, that the Company’s annual report on Form 20-F for the year ended March
31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the
Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Dated: June 30, 2008

/S/ SHOICHI AOKIName: Shoichi Aoki
Title: General Manager
Corporate Financial & Accounting Groupand Executive Officer(Principal Financial Officer)

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos.3384904, 33-98132, 33-99134, 33-99140, 33-99150, 33-99154, 333-109200, 333-118678, 333-127976 and 333138316) of our report dated June 27, 2008 relating to the financial statements and the effectiveness of internal
control over financial reporting which appear in Kyocera’s Annual Report on Form 20-F for the year ended
March 31, 2008.
/s/

Kyoto Audit Corporation

Kyoto, Japan
June 27, 2008