SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 20-F
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGEACT OF 1934
OR

⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2007
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 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)

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 theperiod covered by the annual report.
As of March 31, 2007, 188,649,089 shares of common stock were outstanding, comprised of 184,820,723 Shares and 3,828,366
American Depositary Shares (equivalent to 3,828,366 Shares).

⌧ No 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes



⌧

If this report is an annual transition report, indicate by check mark if the registrant is not required to file reports pursuant toNoSection 13 or 15(d) of the Securities Exchange Act of 1934. Yes
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 filesuch reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
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 and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer
Accelerated filer
Non-accelerated filer

⌧





Indicate by check mark which financial statement item the Registrant has elected to follow.



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
Exchange Act). Yes
No* Not for trading, but only in connection with the registration of the American Depositary Shares, each representing one share ofCommon Stock.

TABLE OF CONTENTS
Page

Cautionary Statement Regarding Forward-Looking Statements
PART I
Item 1.
Item 2.
Item 3.

Identity of Directors, Senior Management and Advisers
Offer Statistics and Expected Timetable
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
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F. Dividends and Paying Agents
G. Statement by Experts
H. Documents on Display
I. Subsidiary Information
Quantitative and Qualitative Disclosures about Market Risk
Description of Securities Other Than Equity Securities

Item 11.
Item 12.
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
PART IV
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
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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 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 andbeliefs 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 forward-looking statement after thedate of this 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 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 of our customers,
particularly in the highly competitive markets for ceramics, semiconductors and electronic components;and other risks discussed under Item 3.D “Risk Factors” and elsewhere in this Form 20-F.
-4-

Presentation of Certain information
As used in this Form 20-F, references to “Kyocera,” “we,” “our” and “us” are to Kyocera Corporation and, except as thecontext otherwise requires, its consolidated subsidiaries.
Also, as used in this Form 20-F:•“U.S. dollar” or “$” means the lawful currency of the United States of America, “yen” or “¥” means the lawful currency ofJapan 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.

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

•“fiscal 2007” refers to Kyocera’s fiscal year ended March 31, 2007, and other fiscal years are referred to in acorresponding manner.

•

Unless otherwise indicated, we have translated the yen amounts for the year ended March 31, 2007, as of March 31, 2007
and thereafter presented in this Form 20-F into U.S. dollars solely for your convenience. The rate we used for suchtranslations was ¥118.00 = $1.00, which was the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of New York on March 30, 2007, rounded to thenearest yen. These translations do not imply that the yen amounts actually represent, or have been or could be converted
into, equivalent amounts in the 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 have been 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 in this Form 20-F.
2003

For the years ended March 31:
Net sales
Profit from operations
Income from continuing operations
Income before cumulative effect of change inaccounting principle
Net income
Earnings per share :Income from continuing operations:
Basic
DilutedIncome before cumulative effect of change inaccounting principle:
Basic
Diluted
Net income:
Basic
DilutedWeighted average number of shares
outstanding:
Basic
DilutedCash dividends declared per share:
Per share of common stock
U.S. dollars equivalents*
At March 31:
Total assets
Long-term debt
Common stock
Stockholders’ equity
Depreciation
Capital expenditures(Yen in millions, U.S. dollars and shares in thousands, except per share amounts)
2004
2005
2006
2007
2007

¥1,062,013 ¥1,132,696 ¥1,173,660 ¥1,173,544 ¥1,283,897 $10,880,483
78,950104,810
97,66099,695
135,102
1,144,932
39,84063,35742,65766,088101,329858,720¥¥$

43,421
41,16568,08668,08645,90845,90869,696
69,696

106,504
106,504

213.81 ¥213.76339.46 ¥339.45227.52 ¥227.47352.44 ¥352.21538.52 $537.35

4.56
4.55

233.02232.97364.79364.78244.86244.81371.68371.43566.03564.794.80
4.79

220.91220.86364.79364.78244.86244.81371.68371.43566.03564.794.80
4.79

186,338
186,382

186,643
186,649

187,489
187,528

187,514
187,640

188,160
188,57360 ¥
0.49 $

60 ¥0.55 $

80 ¥0.74 $

100 ¥0.84 $

902,576
902,576

110
0.92¥1,635,014 ¥1,794,758 ¥1,745,519 ¥1,931,522 ¥2,130,464 $18,054,780
60,73670,60833,55733,3607,283
61,720115,703
115,703
115,703
115,703
115,703
980,534
1,000,207 1,150,453 1,174,851 1,289,077 1,514,560 12,835,255¥ 64,913 ¥ 60,745 ¥ 58,699 ¥ 62,942 ¥ 70,155 $ 594,534¥ 38,981 ¥ 54,901 ¥ 63,160 ¥ 88,860 ¥ 69,896 $ 592,339* Translated into U.S. dollars based on the exchange rates at each respective payment date.
Note 1. Kyocera sold its entire shares in Kyocera Leasing Co., Ltd. (KLC), a subsidiary engaged in financing services; as a result,business results and profit on sales for KLC for fiscal 2007 have been recorded as income from discontinued operations in conformity
with Statement of Financial Accounting Standards (SFAS) No.144, “Accounting for the impairment or disposal of Long-Lived
Assets.” Figures for fiscal 2006 have been retrospectively reclassified for comparative purposes.
-6-The following table shows the exchange rates for Japanese yen per $1.00 based upon the noon buying rate in New York City for cashtransfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York:
High

Low

Average Period-end

For the years ended March 31,
2003
2004
2005
2006
2007

133.40 115.71 121.94
120.55 104.18 112.75
114.30 102.26 107.49
120.93 104.41 113.15
121.81 110.07 116.92

118.07104.18107.22117.48117.56

For most recent 6 months
January, 2007
February, 2007
March, 2007
April, 2007
May, 2007
June, 2007121.81 118.49 120.45
121.77 118.33 120.50
118.15 116.01 117.26
119.84 117.69 118.93
121.79 119.77 120.77
124.09 121.08 122.69

121.02118.33117.56
119.44121.76123.39The noon buying rate for Japanese yen on July 3, 2007 was $1.00 = ¥122.40
B. Capitalization and Indebtedness
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
-7-

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
The Japanese economy showed stable growth due mainly to an expanded market for digital consumer equipment from the second halfof fiscal 2006. However, the economic outlook has been uncertain and has been negatively affected by inventory reductions in the ITrelated industries. Though the current global economic outlook, including for the U.S., also remains to grow, there may continue to beinstability in light of the appreciation of the yen and the rise in prices of oil and certain raw materials. Kyocera is substantiallydependent for its growth on the markets for semiconductors, mobile phone handsets and PC-related equipment. These markets may be
adversely affected by demand in electronics industry and by sluggish consumer spending brought by economic recession.
(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 IT-related products, including electronic components, mobile phone handsets,
personal computers (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 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 economic planning, growth has been uneven among
various regions of the country and among various sectors of the economy. 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 IT-related markets in which Kyocera seeks to sell its products. In addition, China is in the process of developing acomprehensive system of laws and regulations dealing with economic 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 intense competitive pressures,
including in terms of price, technological change, product development, quality and speed of delivery, and these pressures arelikely 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 torelatively small, rapidly growing and highly specialized companies. Kyocera has a variety of businesses 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, or these 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 varyby 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 2008 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. This requires maintaining close ties with customers so that Kyocera can ensure that it is able to meet required specifications
and be the first supplier to create and deliver the product. Kyocera’s gross margins may be reduced if it cannot maintain theseimportant relationships or market share or if it is forced in the future to further reduce prices in response to the actions of its
competitors.
-8-(4) Small manufacturing delays or defects resulting from outsourcing or internal manufacturing processes can adversely affectKyocera’s production yields and operating results
Kyocera ordinarily outsources the fabrication of certain components and sub-assemblies of its products, often to sole 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 theseproducts will be materially and adversely affected if Kyocera is unable to obtain a high quality, reliable and timely supply of thesecomponents and sub-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 other factors can cause asubstantial percentage of its products to be rejected or non-functional. These factors can result in lower than expected production
yields, which delay product shipments and may materially and adversely affect Kyocera’s operating results. Because the majority ofKyocera’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 61.3% of its total revenues in fiscal 2007. Kyocera believes thatoverseas 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 may inhibit export of Kyocera’s products;•

Kyocera may experience difficulties in the timeliness of collection of accounts receivable due from foreign customers andbe 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 affectreported earnings and the comparability of period-to-period results of operations. Changes in currency exchange rates may affect therelative 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 the number of personnel
available
Kyocera’s future success depends, in part, on its ability to attract and retain certain key personnel, including engineering, operationaland 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 intelecommunications, is intense. Because of this intense competition for these skilled employees, Kyocera may be unable to retain its
existing personnel or attract additional qualified employees in the future.
-9-(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 takes certain measures to protect its trade secrets, including executing nondisclosureagreements with certain of its employees, joint venture partners, customers and suppliers. If parties breach these agreements or themeasures Kyocera takes are not properly implemented, Kyocera may not have an adequate remedy. Disclosure of its trade secrets orreverse 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 areissued, 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 of which 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 other parties’ 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 of operations.

(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 incompleting 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 that the products derived from Kyocera’s in-process research anddevelopment activities will achieve market acceptance.
(11) 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 events occur, Kyocera’s operating activities would
be suspended. Furthermore, there would be delay, disorder or suspension in Kyocera’s R&D, manufacturing, sales and services. If
such delay or disruption occurs and continues for a long period of time, Kyocera’s business, financial condition and results ofoperations may be adversely affected.
- 10 -

(12) Kyocera’s headquarters and major facilities are subject to devastating effects of earthquakes and other natural disasters
Kyocera’s headquarters and major facilities including plants, sales offices and R&D centre are located not only in Japan but also all
over the world. It might be inevitable that Kyocera would suffer from natural disasters such as earthquake, typhoon, and floods and soon. For instance, if a strong earthquake occurs, Kyocera’s R&D or manufacturing facilities will be damaged devastatingly. In thiscase, Kyocera’s operating activities would be suspended and manufacturing and shipment would be delayed. Due to this, Kyocera
would lose its sales and profits. Furthermore, Kyocera may incur a great amount of expenses, for example, medical care expenses forinjured employees and damage expenses for the damaged machines or facilities will be incurred. As a consequence, Kyocera’s
operating result and financial condition may be adversely affected.
(13) 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-termbasis for business relationship purposes. A substantial portion of these investments consists of shares of common stock of publiccompanies in Japan, including KDDI Corporation (a Japanese telecommunication service provider), and Japanese financial
institutions. As of March 31, 2007, the aggregate fair value of equity securities included in available-for-sale securities was ¥585,274
million ($4,960 million), with gross unrealized gains in the amount of ¥312,724 million ($2,650 million) and gross unrealized losses
in the amount of ¥103 million ($1 million). If there is a decline in the fair value, i.e., the market price, of the shares Kyocera holds inthose companies over a period of time, and it determines that the decline is other-than-temporary, Kyocera will need to record an
impairment loss for the applicable fiscal period. During fiscal 2007, Kyocera recorded losses on impairment of securities (current
assets) and investment securities (non-current assets) amounting to ¥955 million ($8 million), which were attribute mainly to
management’s estimation that certain debt securities were under fair value over one year and certain non-public companies in which
Kyocera invested would need considerable periods to gain profitability in their operating activities. For some of the equity securities
Kyocera owns, including the shares of KDDI Corporation, Kyocera intends to keep its ownership at the current level in light of theimportance of its business relationships with the issuers of these equity securities. For other equity securities in its portfolio, although
Kyocera may dispose of them over time, market conditions may not permit it to do so at the time, speed or price it may wish.
(14) As a holder of ADSs, you will have fewer rights than a shareholder has and you will have to act through the depositary to
exercise those rights
The rights of shareholders under Japanese law to take various actions, including voting their shares, receiving dividends anddistributions, bringing derivative actions, examining a company’s accounting books and records and exercising appraisal rights, areavailable only to holders of record. Because the depositary, through its custodian agents, is the record holder of the Shares underlying
the ADSs, only the depositary can exercise those rights in connection with the deposited Shares. The depositary will make efforts tovote 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 andrecords or exercise appraisal rights through the depositary.
- 11 -

(15) 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 theCompany Law of Japan govern our corporate affairs. Legal principles relating to such matters as the validity of corporate procedures,
directors’ and officers’ fiduciary duties and shareholders’ rights may be different 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 UnitedStates. You may have more difficulty in asserting 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.
(16) 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. Theseexchanges are order-driven markets without specialists or market makers to guide price formation. 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, notransactions 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.
(17) Foreign exchange fluctuations may affect the dollar value of our ADSs and dividends payable to holders of 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 ofcash dividends and other cash payments made to holders of our ADSs would be reduced if the value 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 the name 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 ourbusiness 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, atelecommunications equipment manufacturer in which we had made an equity investment three years earlier. We expanded intoanother new business through the acquisition of Yashica Co., Ltd., a camera and camera lens manufacturer. We also played a leadingrole 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).
- 12 -

In the 1990s, we strengthened our position as an internationally integrated electronic components manufacturer through ouracquisition of AVX Corporation, a maker of capacitors and other passive electronic components, in January 1990.
In the middle of the 1990s, Kyocera developed two main business categories, “the Components Business,” in which 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 manufacturesand sells telecommunications and information 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 information equipment. 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, we invested in Kyocera Mita Corporation, a manufacturer of copier machines
and other document solutions equipment, and make it a wholly-owned subsidiary, and in April 2002, we transferred Kyocera
Corporation’s printer business into 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 througha share exchange in order to reinforce its electronic components and materials businesses by pursuing group synergies between finechemical technologies and fine ceramic technologies.
With the aim of becoming a more global enterprise and enhancing its profitability, Kyocera has been expanding its production in
China through Chinese production bases located in Shanghai and Dongguan. Kyocera also established a sales company, Kyocera(Tianjin) Sales and Trading Corporation, in March 2003 to cultivate the Chinese market. We are enhancing our marketing ability forboth 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 torespond to market needs swiftly.
In August 2003, we made Kinseki, Limited (currently Kyocera Kinseki Corporation), a major producer of artificial crystal-related
products, a wholly-owned subsidiary through a share exchange to strengthen our Electronic Device Group. In addition, to further
enhance our organic circuit board business by pursuing group synergies, we also made an agreement with IBM Corporation and IBM
Japan, Ltd. for the transfer from IBM Japan to Kyocera of its Surface Laminar Circuitry (SLC) business and we completed thetransfer of IBM Japan’s SLC business from IBM Japan to a newly-established wholly-owned subsidiary, Kyocera SLC Technologies
Corporation (KST) in August 2003. In April 2004, Kyocera integrated the organic material components business into KST and themarketing 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. In organic circuit board business, KST established Kyocera SLC Components
Corporation as a manufacturing company of build-up substrates in Ayabe, Kyoto Prefecture in August 2004.
In September 2004, Kyocera and Kobe Steel, Ltd. established Japan Medical Materials Corporation (JMM) and Kyocera Corporationtransferred its medical materials business to JMM through corporate splits. The shareholding ratios of Kyocera and Kobe Steel in
JMM are 77% and 23%, respectively.
In October 2004, Kyocera Corporation invested in WILLCOM, Inc. which succeeded PHS business provided by DDI Pocket Inc. toenhance PHS-related business.
To meet with strong demand for solar energy products, Kyocera established Kyocera Solar Europe S.R.O. for assembling of solar
modules in the Czech Republic in April 2005.
- 13 -

In August 2006, Kyocera sold its entire of shares in Kyocera Leasing Co., Ltd. to Diamond Lease Company Limited, aimed toconcentrate Kyocera’s management resources on its core businesses to enhance and improve its corporate value.
For a discussion of recent and current capital expenditures, please see Item 5 “Operating and Financial Review and Prospects” of thisForm 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 andnetworks. Our manufacturing and distribution operations are conducted worldwide. As of March 31, 2007, we had 138 subsidiaries
and 3 affiliates outside Japan and 31 subsidiaries and 7 affiliates in Japan. Our customers include individuals, corporations,
governments and governmental agencies. For information on our sales by category of activity and information on our sales bygeographic area and product segment, see Item 5.A “Operating Results” of this Form 20-F.
Business Strategy
Kyocera aims to be a company respected by society from the perspective of corporate ethics, while maintaining continuous sales
growth and high profitability. To achieve its management vision, Kyocera’s management policy is to further drive business expansion
to be “a creative company that continues to grow.” Kyocera promotes efficient resource management, emphasizes consolidated groupmanagement and intends to increase corporate value through improvement in business performance.
<Target of Pre-tax Income to Net Sales Ratio>
To be “a creative company that continues to grow,” Kyocera aims to quickly achieve its target of a pre-tax income to net sales ratio of
15% or higher.
<Medium Term Management Strategy>
Kyocera seeks to implement “high-value-added diversification” as its management strategy to realize its management policy. This
involves ensuring that each business is highly profitable and pursuing synergies within Kyocera with the objective of driving
sustainable growth in an ever-changing business environment.
Specifically, Kyocera aims to: (1) exploit competitive advantages; (2) strengthen existing businesses; and (3) create new businesses.
(1) Exploit competitive advantages
We believe the “Kyocera Philosophy,” which places people’s hearts at its core, the Amoeba Management System, which is unique toKyocera and has been a driving force for growth since Kyocera Corporation’s earliest days, and a strong financial structure, aresources of competitive advantage for Kyocera over other companies in implementing its diversification strategy. With thesefoundations firmly in place, Kyocera seeks to strengthen competitiveness in technological development, sales and marketing in thehigh-growth potential markets for telecommunications and information processing and for environmental protection, and to translate
its diversification strategy into improved business performance.
(2) Strengthen existing businesses
Kyocera strives to continuously improve profitability in all existing businesses within the Kyocera Group. Elsewhere, bystrengthening ties and maximizing synergies between Kyocera Corporation and the 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 hascreated 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 thatshow little promise of expansion going forward.
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(3) Create new businesses
Kyocera endeavors to create businesses that will become part of its core going forward in order to improve consolidated performanceover the medium term. To achieve this goal, Kyocera seeks to integrate group-wide management resources to develop newtechnologies and products and create new markets. The focus of Kyocera’s business creation strategy lies in the markets fortelecommunications and information processing and for environmental protection.
Challenges
To be “a creative company that continues to grow,” Kyocera seeks to continuously expand sales and to attain high profitability in its
Components and Equipment Businesses. To accomplish these goals, Kyocera continues reinforcing the “Amoeba Management
System” (go back to the origin of “Amoeba Management”) and create new value in fiscal 2008.
Kyocera plans to strengthen “operational excellence,” which refers to vitality in the workplace, across development, manufacturing,sales and back office divisions. The goal is to boost “executional excellence,” which means the ability to achieve targets, and thus
create a highly profitable company.
In addition, Kyocera aims to improve its quality, optimize manufacturing locations worldwide and expand production capacity inorder to enhance management foundations in the mid-to long-term range. Kyocera will seek to create new businesses and markets by
pursuing Group synergies. Efforts will also be made to strengthen strategic businesses and to improve efficiency in operation ofassets.
Operations
Kyocera is classified into eight 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, (7) Optical Equipment Group and (8) 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 LCD Manufacturing Equipment,
Automotive Components,
ITS related 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 / Components,
Organic Multilayer Packages / Substrates(3) Applied Ceramic Products Group
Residential & Industrial Solar Power Generating Systems,
Solar Cells / Modules
Cutting Tools,
Printed Circuit Board Micro Drills,
Jewelry & Applied Ceramic Related Products,
Dental Implants, Artificial Bone and Joint Prosthesis- 15 -

(4) Electronic Device Group
Ceramic Capacitors, Tantalum Capacitors,
Timing Devices (Temperature Compensated Crystal Oscillators (TCXOs), Ceramic Resonators, Crystal Units),
RF Modules,
Surface Acoustic Wave (SAW) Filters,
Connectors,
Thermal Printheads, LED Printheads,
Amorphous Silicon Photoreceptor Drums,
LCDs(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)(6) Information Equipment GroupECOSYS Printers,
Copying Machines,
Multifunctional Systems(7) Optical Equipment Group
Optical Modules, Lenses(8) Others
Chemical Materials for Electronic Components,
Electrical Insulators,
Synthetic Resin Molded Parts,
Telecommunications Engineering Business,
Information and Communication Technology Business,
Management Consulting Business,
Hotel Business,
Realty Development Business,
Insurance Agent and Travel Agent Businesses(1) Fine Ceramic Parts Group
Products in this reporting segment are widely used in the computing, telecommunications, automotive and various industrial sectors.
These products are made from a variety of ceramic materials, such as silicon carbide, 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 thin ceramic bases used bymanufacturers for hybrid integrated circuit (“IC”) foundations. Kyocera also develops, manufactures and sells substrates for thermal
printheads, ceramic/alumina tape substrates for chip resistors, substrates 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 texturingmachines in the textile industry, rings for fishing rods, nozzles and parts for paper-making 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 air and water tight and corrosion resistance as well as having the ability to dissipate heat efficiently. In
addition, they have a superior capacity for use in high frequency and embedded passive components. Kyocera develops, manufacturesand sells ceramic packages for IC or other semiconductor and electronic components.
- 16 -

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. Kyocera also develops, manufactures and sells opticalcommunication device packages and ceramic parts for fiber-optic communications connectors. SMD ceramic packages are used forsurface acoustic wave (SAW) filters and temperature compensated crystal oscillators (TCXOs), which are mostly inserted into mobile
phone handsets. Pin grid array packages are sold to manufacturers of MPUs and of other logic ICs, which are principally inserted into
information equipment and peripherals. Kyocera also develops, manufactures and sells ceramic packages for charge-coupled-devices(CCDs) and complementary metal oxide semiconductor (CMOS) devices, which are mainly used in camera-equipped mobile phonehandsets and digital still cameras.
In the organic package business, Kyocera established a specialized high density organic circuit board manufacturer, Kyocera SLC
Technologies Corporation (KST). KST develops, manufactures and sells system in a package substrates (SiP) used in mobile phonehandsets and organic flip-chip packages for high-end application specific integrated circuits (ASICs). KST aims to increase sales oforganic package for new micro processor units (MPUs) and its peripheral devices for 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 and Applied 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 and industrial solar
power generating systems. We are expanding our solar cell production capacity in Japan 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 the U.S. market in October 2004. To increase sales in Europe, Kyocera also commenced assembly of solar modules in the
Czech Republic in October 2005. Kyocera produces solar cells and modules through a global quadripartite production system.
2) Cutting Tools
Kyocera develops, manufactures and sells cutting tools for metal processing in industrial production, particularly in 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 of micro drills for printed circuit boards in the United States, inJanuary 2001. Kyocera aims to be a market leader in the cutting tools business by pursuing synergies between Kyocera Tycom
Corporation and Kyocera Corporation via 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 physically equivalent to natural stones. We introduce
recrystallized jewelry products to meet consumer needs and to cultivate our sales network. Kyocera also produces and sales applied
ceramic related products such as kitchen knives utilizing ceramic characteristics of wear and corrosion resistance from acid andalkalinity.
- 17 -

4) Dental Implants, Artificial Bone and Joint Prosthesis
Kyocera established Japan Medical Materials Corporation (JMM) with Kobe Steel, Ltd. by integrating the two companies’ medical
material businesses in September 2004. JMM produces a wide range of products such as dental implants, artificial bone and joint
prosthesis, artificial knee joint replacement systems, and ceramic materials helping heal hip fractures by combinations of material,
processing technologies of ceramics and titanium alloys and integrating business resources such as development, manufacturing,marketing and sales channels of Kyocera and Kobe Steel, Ltd.
(4) Electronic Device Group
Kyocera develops, manufactures and sells high quality and cost competitive electronic components and devices for thetelecommunications 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-value-added products such as miniature ceramic capacitorswith 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 competition and to cultivate new markets. Shanghai
Kyocera Electronics Co., Ltd. mainly produces ceramic capacitors and timing devices. We aim to expand sales in China through oursales company in Tianjin which markets our products made both in China and outside China.
To expand this reporting segment business, we are pursuing the synergies with subsidiaries. AVX Corporation and its consolidated
subsidiaries (AVX), which develops, manufactures and sells ceramic capacitors, tantalum capacitors and other passive components
for telecommunications and information equipment, has a global manufacturing and sales network. AVX is a major contributor to ourElectronic Device Group sales and pursue synergies with development and manufacturing in ceramic capacitor business. In ourtiming 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 themarketing 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 indevelopment, manufacture and marketing in April 2004. Kyocera Kinseki Corporation acquired Hertz Technology Inc. (currently
Kyocera Kinseki Hertz Corporation, a consolidated subsidiary) in order to enhance its crystal devices business and gained newtechnology for tuning-fork crystal units, in July 2006.
(5) Telecommunications Equipment Group
This reporting segment includes CDMA mobile phone handsets and PHS-related products such as PHS mobile phone handsets andbase stations. These products are produced and distributed mainly for KDDI Corporation (KDDI) and WILLCOM, Inc. (WILLCOM),
as well as for other Asian and U.S. telecommunication service providers. KDDI is a telecommunications service company, in which
we made an equity investment when it was founded in 1984, at a time when the telecommunications business in Japan, which had
previously been monopolized by a national telephone company, was opened to private companies. KDDI and KDDI’s subsidiaries are
currently engaged in providing domestic, long distance, international telephone services and mobile phone services. WILLCOM
provides PHS services and our shareholder ratio in WILLCOM is 30%.
One of our major businesses in the Telecommunications Equipment Group is mobile phone handset business focused on CDMA
protocol. This technology has become one of the fastest growing mobile phone protocols. We acquired the CDMA mobile phonehandset business of Qualcomm Inc. and established Kyocera Wireless Corp. as a wholly-owned subsidiary in February 2000. In
addition, we established Kyocera Wireless (INDIA) PVT. LTD., a subsidiary for developing software for CDMA mobile phonehandsets in June 2003.
- 18 -

In September 2005, we decided to outsource the manufacturing division of Kyocera Wireless Corp. to Flextronics International Ltd., aleading provider of electronics manufacturing services. With regard to the mobile phone handsets business, we expect to increase
sales of CDMA mobile phone handsets through the outsourcing and global development structures based in Japan, the United Statesand India.
Our other major business in the Telecommunications Equipment Group is the PHS-related business. We are expanding this businessby cultivating new markets through expansion of application of PHS technology. Specifically, we are promoting new PHS mobile
phone handsets and base stations that work with the high speed data transmission services offered in Japan. We also promote wirelessInternet systems, which enable internet services to be used at broadband speed with wireless technology. By promoting thesebusinesses in appropriate market, we will seek to increase sales of PHS-related products.
(6) Information Equipment GroupThe major products in this reporting segment comprise page printers, digital copying machines and multifunctional systems. Our
products are marketed under the name of “ECOSYS” with a long life cycle, ecology and economy concept utilizing our thin film
products, amorphous silicon photoreceptor drums.
In April 2000, Kyocera Mita Corporation became our wholly-owned subsidiary. Kyocera Corporation’s ECOSYS printer unit wasmerged into this subsidiary, enabling us to build a unified presence in the document solutions business. Further efficiencies haveresulted 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 of engines between the printers, copying machines and multifunctional systems. We
established 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 focus on expanding
our comprehensive color-capable product line up of ECOSYS printers, copying machines and multifunctional systems with theoriginal “ECOSYS” concept as well as monochrome products.
(7) Optical Equipment GroupThe major products in this reporting segment include optical modules for camera-equipped mobile phone handsets and various lenses
such as aspherical lenses.
We are developing our optical components business through the integration of internal technologies such as lense design,
manufacturing process and of expertise in electronic devices.
(8) Others
This reporting segment includes revenues from telecommunication network systems and our office leasing business in Japan andAsia. This segment also develops, manufactures and sells electronic component materials, electric insulators and synthetic resin
molded parts.
Kyocera Communication Systems Co., Ltd. (KCCS) operates a total telecommunications network system business, from systemdevelopment to design, construction and maintenance services. KCCS 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 as well as system
integration services.
Kyocera Chemical Corporation, which joined Kyocera in August 2002, mainly produces electronic component materials. We develop
new products by pursuing synergies with fine chemical technologies and our components technologies such as the Electronic Device
Group.
In August 2006, Kyocera sold its entire of shares in Kyocera Leasing Co., Ltd.,a subsidiary engaged in financing services, to enhanceand improve its corporate value by concentrating Kyocera’s management resources on its core businesses.
- 19 -

Sales and Distribution
Our products are marketed worldwide by our sales personnel, as well as through sales companies within our group compensatedsolely on a commission basis, and by independent distributors. We have regional sales and design application personnel in strategic
locations to provide technical and sales support for independent manufacturers’ representatives and independent distributors. We
believe that this combination of distribution channels leads to a high level of market penetration and efficient coverage for ourcustomers on a cost-effective basis.
Most of the sales of the Fine Ceramic Parts Group, the Semiconductor Parts Group and the Electronic Device Group are made directly
to manufacturers worldwide who incorporate them into their own products. However, the Applied Ceramic Products Group, which
creates products such as cutting tools, recrystallized jewelry, solar energy products and various other applied fine ceramics products,
tend to be sold to distributors and wholesalers. Jewelry sales are made mainly through direct retail shops and agencies in Japan. Salesof consumer solar energy products are made through direct sales companies, as well as through sales distributors. Dental implants,
artificial bone and joint prosthesis are mainly sold through distributors. In the Telecommunications Equipment Group, our domestic
sales of mobile handsets comprise sales to KDDI Corporation and PHS handsets to WILLCOM INC., and we also sell our handsets
directly to telecommunication providers in overseas markets. The Information Equipment Group markets products such as ECOCSYS
printers, copier machines and multifunctional systems both in Japan and abroad under our brand name through distributors andwholesalers. In the Optical Equipment Group, optical modules for mobile phone handsets are marketed directly to mobile phonehandsets manufacturers. Office renting and other services are provided to companies outside our group, mainly in Japan. Our
telecommunication network engineering and data center services are provided directly to customers and users.
Domestic sales are made in the yen, while overseas sales are made in a variety of currencies, but predominantly in the U.S. dollars
and Euro.
Sources and Availability of Raw Materials and Supplies
We purchase a variety of raw materials. The principal ones in terms of volume are alumina (a mineral substance produced frombauxite and from which aluminum is made), zirconia, titania, silicon nitride, tungsten, tantalum and silicon used for the products of
the Fine Ceramic Parts Group, the Semiconductor Parts Group, the Applied Ceramic Products Group and the Electronic Device
Group. Each of these materials is subject to price volatility.
In terms of costs, gold, which is primarily used in the production process for ceramic packages in the Semiconductor Parts Group, isalso subject to price volatility, and is our most significant raw material. Our policy is to hedge against fluctuations in the price of goldby keeping a small gold inventory and by generally pricing products on a “gold adder” system so that customers pay for the gold
contained in semiconductor parts at a rate which approximates our cost.
Our main supplies are ICs, LCDs and Printed Circuit Board, used for products in the Electronic Device Group, theTelecommunications Equipment Group and the Information Equipment Group, such as thin-film devices, mobile phone handsets,
ECOSYS printers, copier machines and multifunctional systems.
As we typically receive our supply of these raw materials and supplies from several large companies which we believe are reliable
sources, we have not generally experienced, and we do not anticipate experiencing in the near future, any difficulty in obtaining raw
materials or supplies or in meeting fuel requirements. Although oil prices have risen recently, the increases have not materiallyaffected our purchase price of certain oil-related supplies.
During fiscal 2007, no single supplier accounted for a significant portion of our consolidated purchases of raw materials and supplies.
However, a number of components and sub-assemblies used in our products are sourced by sole source suppliers. These tend to becomplex, precision components that are sometimes produced only by a limited number of suppliers or a single supplier that may own
intellectual property related to the component or sub-assembly.
- 20 -

Patents and Licenses
Our success and competitive position depend on a number of significant patents, licenses and trade secrets relating to ourmanufacturing and sales processes and products. The following table sets forth information, as of March 31, 2007, with respect to oursignificant patents and license agreements.
(a) License permitted to produce products
Counterparty

Country

Contents

PeriodQualcomm Incorporated

United States License under patents regarding
mobile phone

From August 31, 1996 to patent
expiration

Interdigital Group

United States License under patents regarding
mobile phone

From July 1, 2004 to June 30,
2009

Monotype Imaging

Japan

From June 25, 1999 to patent
expiration

License under patents regarding
font software(b) License – cross agreements
Counterparty

Country

Contents

PeriodMotorola, Inc.

United States License under patents regarding
mobile phone

From July 1, 2004 to June 30,
2009

Lucent Technologies International Sales
LimitedNokia Corporation

United States License under patents regarding
mobile phone
FinlandLicense under patents regarding
mobile phone
Japan
License under patents regarding
electric photo printerFrom September 26, 2005 to
December 31, 2009
From October 1, 2005 to
September 30, 2008
From April 1, 2002 to patent
expiration

Canon Incorporated

Competitive Position(1) Fine Ceramic Parts Group
Products in this reporting segment are highly customized, and major customers are primarily secondary manufacturers who
incorporate our products in their products. Therefore, our competitive position largely depends on maintaining close contacts with,and being the first to meet the needs of, secondary manufacturers. We compete with different ceramic manufacturers depending on
the product.
(2) Semiconductor Parts GroupIn this reporting segment, our goal is to further strengthen our competitive position in both the ceramic and organic materials package
business in the world market. To meet with the latest technologies, we seek to strengthen our R&D activities to develop new
applications such as wireless and optical communications, digital consumer equipment, and in the automobile and medical areas.
- 21 -

In the ceramic package field, we believe surface mount device packages for electronic components and CCD/CMOS sensor ceramic
packages are already market leaders. We also aim to be a market leader in the ceramic packages and to satisfy customer needs byapplying our technological and managerial expertise.
In the organic package field, in which we are a relatively late comer, we compete with plastic electronic device manufacturers. To
strengthen our technological expertise and expand our business in this area, we acquired the Surface Laminar Circuitry business of
IBM Japan in September 2003 and established Kyocera SLC Technologies Corporation (KST). We integrated our management
resources into KST in April 2004, and Kyocera SLC Components Corporation, a wholly-owned subsidiary of KST established a newplant in Kyoto, Japan in June 2005. We aim to strengthen our organic material components business going forward by fully utilizing
this new plant.
(3) Applied Ceramic Products GroupThe awareness of the importance of environmental protection is evident worldwide. We are one of major manufacturer of solar cells
and modules in the world. To be a market leader in the solar energy products business, we expanded solar cell production line with
20MW capacity per month in Japan in fiscal 2006 and established solar modules assembling bases in quadripartite plants in Japan,
China, Mexico and the Czech Republic. From fiscal 2008, we expect to expand production volume of solar cells and aim to achieve
500MW/year production in fiscal 2011.
We believe we are the major supplier of cutting tools in Japan, and our major application of cutting tools is for the automotive
industry. Although we have many global competitors, we introduced new facilities to handle material processing and started verticallyin-house integrated production in fiscal 2006. We intend to expand our market share on a global basis by utilizing our verticallyintegrated production line.
(4) Electronic Device GroupWe believe we are a unique electronic device manufacturer compared with our competitors, who specialize in passive components.
We produce not only passive components but also crystal related products, connectors and thin-film devices. In this reporting
segment, one of our advantages is that we can supply a variety of components. Since products in this reporting segment are largely
standardized, competition is based largely on price, quality and delivery time.
Kyocera is one of the major manufacturers of capacitors and crystal-related components. Most of our competitors in this reporting
segment are Japanese manufacturers. However, AVX Corporation, a U.S. subsidiary, competes with overseas manufacturers in
producing tantalum capacitors. We believe our thin-film products, such as thermal printheads, and amorphous silicon photoreceptor
drums, are market-leading products in applications for printers and copier machines.
We are also continuing to seek synergies within Kyocera and reduce costs in order to expand this business. We strive to optimize ourdevelopment, production, and sales throughout our global network, reduce manufacturing costs, and enhance price competitiveness.
Specifically, we believe these goals can be achieved by maximizing our production capability of Chinese production bases.
(5) Telecommunications Equipment GroupIn the Japanese market, our main competitors for mobile phone handsets are Japanese manufacturers. In the mobile phone handsets
market outside Japan, Kyocera competes with U.S., European and Asian manufacturers. We are currently a middle-class supplier interms of sales volume in the global CDMA handsets 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 PHSrelated products in Japan, our main competitors are Japanese manufacturers.
- 22 -

(6) Information Equipment GroupWe compete with both Japanese and overseas manufacturers in the information equipment such as copier machines, printers andmultifunctional systems. Our products are based on our unique “ECOSYS” concept that provide long life cycle, ecology and economy
concept by utilizing our highly durable amorphous silicon photoreceptor drums. Our ECOSYS concept is widely used in our printers,
copier machines and multifunctional systems as well as monochrome and color, low speed to high speed models, and we believe it
differentiates us from other manufacturers.
(7) Optical Equipment GroupWe compete against both Japanese and overseas competitors for our camera modules for mobile phone handsets. We focus on highvalue-added, small optical modules for mobile phone handsets with high pixels by utilizing our in-house lens design technology,
manufacturing process technology and integrated expertise in electronic device and in semiconductor parts.
Government Regulation
There are some governmental regulations specifically applicable to industries in which Kyocera operates. However, we do not believethat such governmental regulations currently have material effects on Kyocera’s business.
C. Organizational Structure
We had 179 subsidiaries and affiliates as of March 31, 2007. Our management structure is based on a business segment structure.
Therefore, the management of each segment is conducted uniformly regardless of whether our operations are conducted by the parent
company or by one of our subsidiaries.
The following table sets forth information, as of March 31, 2007, with respect to our significant subsidiaries.

Name(1) Fine Ceramic Parts Group
Kyocera Industrial Ceramics
Corporation
Kyocera Asia Pacific Pte. Ltd.
(2) Semiconductor Parts Group
Kyocera SLC Technologies
Corporation
Kyocera SLC Components
Corporation
Kyocera America, Inc.
Kyocera Korea Co., Ltd.

Country ofIncorporation

United States

Percentage
held by
KyoceraMain BusinessSingapore

100.00% Manufacture and sale of fine ceramic-related products and sale ofelectronic devices
100.00% Sale of fine ceramic-related products and electronic devices

Japan

100.00% Manufacture and sale of organic multilayer printed circuit board

Japan

100.00% Manufacture of organic multilayer printed circuit board

United States
Korea

100.00% Manufacture and sale of fine ceramic-related products
100.00% Sale of fine ceramic-related products- 23 -

Name

Shanghai Kyocera Electronics Co.,Ltd.
(3) Applied Ceramic Products Group
Kyocera Solar Corporation
Japan Medical Materials Corporation

Country ofIncorporation

Percentage
held by
KyoceraMain Business

China

100.00% Manufacture and sale of fine ceramic-related products
and electronic devices

Japan
Japan

100.00% Sale of solar energy products
77.00% Development, manufacture and sale of medical materials andequipment
100.00% Manufacture and sale of solar energy products
100.00% Manufacture and sale of micro drills
90.00% Manufacture and sale of solar energy products

Kyocera Solar, Inc.
Kyocera Tycom Corporation
Kyocera (Tianjin) Solar Energy Co.,Ltd.
Kyocera Fineceramics GmbH

United States
United States
China

Kyocera Precision Tools Korea Co.,Ltd.
Kyocera Solar Europe S.R.O.
Kyocera Mexicana, S.A. de C.V.

Korea

100.00% Sale of fine ceramic-related products, thin-film devices and solar
energy products
90.00% Manufacture and sale of cutting tools

Czech
Mexico100.00% Manufacture of solar energy products
100.00% Manufacture of ceramic-related products and solar modules(4) Electronic Device Group
Kyocera Kinseki Corporation
Kyocera Elco Corporation
Kyocera Display Institute Co., Ltd.

Japan
Japan
Japan

100.00% Manufacture of electronic devices
100.00% Manufacture and sale of electronic devices
100.00% R&D of organic electro luminescence display

Germany- 24 -Name

AVX Corporation
Kyocera Elco Korea Co., Ltd.
Kyocera Elco Hong Kong Ltd.
Kyocera (Tianjin) Sales & Trading
Corporation(5) Telecommunications Equipment
Group
Kyocera Wireless Corp.
Kyocera Wireless (India) PVT. Ltd.
Kyocera Telecommunications
Research Corporation(6) Information Equipment Group
Kyocera Mita Corporation
Kyocera Mita Japan Corporation
Kyocera Mita America, Inc.
Kyocera Mita Office Equipment(Dongguan) Co., Ltd.
Kyocera Mita Europe B.V.
Kyocera Mita Deutschland GmbHCountry ofIncorporation

Percentage
held by
KyoceraMain Business

United States
Korea
China
China

70.95% Manufacture and sale of electronic devices
100.00% Manufacture of electronic devices
100.00% Sale of electronic devices
90.00% Sale of electronic devices, fine ceramic-related products andinformation equipment

United States
India
United States

100.00% Manufacture and sale of telecommunications equipment
100.00% R&D of telecommunications equipment
100.00% R&D of telecommunications equipment

Japan
Japan
United States
China

100.00% Manufacture and sale of information equipment
100.00% Sale of information equipment
100.00% Sale of information equipment
90.00% Manufacture and sale of information equipment

Netherlands
Germany

100.00% Sale of information equipment
100.00% Sale of information equipment- 25 -

Name

Country ofIncorporation

Percentage
held by
Kyocera(7) Optical Equipment Group
Kyocera Optec Co., Ltd.
Universal Optical Industries, Ltd.

Japan
China

100.00%100.00%

Dongguan Shilong Kyocera Optics Co., Ltd.

China

90.00%(8) Others
Kyocera Communication Systems Co., Ltd.
Kyocera Realty Development Co., Ltd.
Hotel Kyocera Co., Ltd.
Hotel Princess Kyoto Co., Ltd.
Kyocera International Co., Ltd.
Kyocera Chemical Corporation
Piazza Investment Co., Ltd.
Shanghai Kyocera Realty Development Co., Ltd.

Japan
Japan
Japan
Japan
Japan
Japan
China
China

76.30%
100.00%100.00%100.00%100.00%100.00%100.00%100.00%Main Business

Manufacture and sale of optical components
Manufacture and sale of optical components,
cutting tools and thin-film devices
Manufacture and sale of optical components,
cutting tools and thin-film devices
Provision of IT services
Real estate services
Hotel management and operations
Hotel management and operations
Insurance and travel agency
Manufacture and sale of electronic materials
Real estate leasing
Real estate leasing

In addition to the above consolidated subsidiaries, Kyocera had 124 other consolidated subsidiaries as of March 31, 2007, including
Kyocera International Inc., a wholly-owned U.S. subsidiary which is a holding company established to own Kyocera’s subsidiaries inNorth America. 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, 2007.
AVX Corporation, in our Electronic Device Group, is one of our most significant subsidiaries. Most of the electronic devices we
produce for overseas sales are distributed by 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 tocooperate in expanding our electronic device businesses. Currently, four of our directors are members of AVX Corporation’s board 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 and development, and we are seeking and pursuingsynergies to be a leading passive component manufacturer. AVX Corporation posted net income of $153,865 thousand in fiscal 2007,
compared to $81,752 thousand in fiscal 2006, and its strong performance contributed significantly to Kyocera’s results of operations
and financial condition for fiscal 2006 and 2007. See Item 5.A “Operating Results” of this Form 20-F.
- 26 -

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,
2007, we had property, plants and equipment with a net book value of ¥280,906 million ($2,381 million). During the five years ended
March 31, 2007, we invested a total of ¥315,798 million ($2,676 million) for additions to property, plants and equipment. Our
property, plants and equipment are not subject to any material encumbrances or environmental issues.
The following table sets forth information, as of March 31, 2007, with respect to our manufacturing facilities with floor space of morethan 100,000 square feet.
Name of Plant

Location

StatusJapan
Hokkaido Kitami Plant

Kitami, Hokkaido

Owned

295

Fukushima Tanagura Plant

Higashi-Shirakawa, Fukushima

Owned

126

Koriyama Plant
Nagano Okaya Plant

Koriyama, Fukushima
Okaya, Nagano

Owned
Owned

157
382

Kawasaki Plant
Kawaguchi Plant
Ise Plant
Tamaki Plant
Shiga Gamo Plant

Kawasaki, Kanagawa
Kawaguchi, Saitama
Ise, Mie
Watarai, Mie
Higashi-Ohmi, Shiga

Owned
Owned
Owned
Owned
Owned

159
389
102
200
724

Shiga Yokaichi Plant

Higashi-Ohmi, Shiga

Owned

1,417

Hirakata Plant
Kagoshima Sendai Plant

Hirakata, Osaka
Satsuma-Sendai, Kagoshima

Owned
Owned

421
1,522

- 27 -

Floor Space(in thousandsof square feet)

Lease
Expires

Principal Products Manufactured

Telecommunications
equipment, Semiconductor
parts, Fine ceramic parts
Telecommunications
equipment
Electronic parts and materials
Fine ceramic parts, Electronic
components,
Cutting tools
Electronic parts and materials
Electronic parts and materials
Solar modules
Information equipments
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

Location

StatusKagoshima Kokubu Plant

Kirishima, Kagoshima

Owned

2,092

Kagoshima Hayato Plant
Hokkaido Ebetsu Plant
Yamagata Higashine Plant
Shiga Yasu Plant

Kirishima, Kagoshima
Ebetsu, Hokkaido
Higashine, Yamagata
Yasu, Shiga

Owned
Owned
Owned
Owned

278
100
379
146

Ayabe Plant

Ayabe, Kyoto

Owned

291

Owned
Owned

300
134

Semiconductor parts
Cutting tools

Myrtle Plant
Olean Plant
Raleigh Plant
South Carolina Plant

San Diego, California
Mountain Home, North
Carolina
Myrtle Beach, South Carolina
Olean, New York
Raleigh, North Carolina
Fountain Inn, South Carolina

Owned
Owned
Owned
Owned

604
113
203
300

Electronic components
Electronic components
Electronic components
Information equipments

MexicoTijuana Plant

Tijuana

Owned

117

Semiconductor parts,
Solar modules

El Salvador
San Salvador Plant

San Salvador

Owned

438

Electronic components

United Kingdom
Paignton Plant
Coleraine Plant

Paignton, England
Coleraine, Northern Ireland

Owned
Owned

127
171

Electronic components
Electronic components

Germany
Betzdorf Plant

Betzdorf

Owned

115

Electronic components

FranceSaint-Apollinaire Plant

Saint-Apollinaire

Leased387

2010

Electronic components

Czech Republic
Lanskroun Plant
Lanskroun Plant
Uherske Hradiste Plant
Kadan Plant

Lanskroun
Lanskroun
Uherske Hradiste
Kadan

Leased
Owned
Owned
Owned

219
308
258
134

2017

Electronic components
Electronic components
Electronic components
Solar modules

United States
Balboa Plant
Mountain Home Plant- 28 -

Floor Space(in thousandsof square feet)

Lease
ExpiresName of Plant

Principal Products Manufactured

Fine ceramic parts,
Semiconductor parts,
Electronic components
Electronic components
Electronic components
Electronic components
Organic multilayer printed
circuit boards
Organic multilayer printed
circuit boards

Floor Space(in thousandsof square feet)

Lease
ExpiresName of Plant

Location

StatusPrincipal Products Manufactured

China
Tianjin Plant
Shilong Plant
Shilong Plant
Shilong Plant

TianjinDongguan, Canton
Dongguan, Canton
Dongguan, Canton

Owned
LeasedLeasedLeased

520
2,331
156
776

2020
2008
2016

Shanghai Pudong Plant

ShanghaiLeased

1,040

2010

Hong Kong Plant

Hong Kong

Leased183

2008

Malaysia
Penang Plant

PenangOwned

162

Electronic components

Singapore
Singapore Plant

Singapore

Owned

129

Electronic parts andmaterials

ThailandThailand Plant

Thailand

Owned

264

Electronic components

Philippines
Philippines Plant

Philippines

Owned

332

Electronic components

Electronic components
Information equipments
Information equipments
Optical Equipment,
Cutting tools
Semiconductor parts,
Electronic components
Information equipments

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 notless than 180 days before the end of the fiscal year ended March 31, 2007 and which remain unresolved as of the date of the filing of
this 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 our consolidated financial
statements and information included in this Form 20-F. This discussion and analysis contains forward-looking statements thatinvolve 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 inthis Form 20-F.
- 29 -

Overview
Kyocera develops, produces and distributes various kinds of products mainly for the telecommunications and information processing
and environmental protection markets. Kyocera Corporation was established in 1959 as a manufacturer of ceramic parts for electronicequipment and has been expanding and diversifying its business mainly through active mergers and acquisitions, as well as applying
its fine ceramic technologies to the areas 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 for electronicequipment such as computers, automobiles, printers, copying machines and multifunctional systems, as well as consumer electronicequipment such as mobile phone handsets, digital still cameras and digital TVs Kyocera earns revenue and income and generates cash
through sales of these products.
Kyocera’s operations are classified into eight 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, (7) Optical Equipment Group and (8) Others. Kyocera categorizes the Fine Ceramic Parts Group, theSemiconductor Parts Group, the Applied Ceramic Products Group and the Electronic Device Group into one main business referred toas “the Components Business,” and categorizes the Telecommunications Equipment Group, the Information Equipment Group andthe Optical Equipment Group into another main business referred to as “the Equipment Business.”
Most of Kyocera’s profits are derived from sales of products and provision of services in the information technology (IT) markets,
including the electronic equipment related market. In fiscal 2007, production of digital consumer equipment such as mobile phonehandsets, digital TVs and new game consoles recorded a significant year-on-year increase, which led to strong components demand
for such electronic equipment. Amid a favorable market environment with strong demand for digital consumer equipment throughout
fiscal 2007, Kyocera worked aggressively to launch new products and to improve productivity with the goal of achieving continuous
sales expansion and high profitability. In addition, during fiscal 2007, efforts were made to strengthen the “Amoeba Management
System,” Kyocera’s unique management system, in order to revitalize all business segments (“operational excellence”) within the
Kyocera Group and to boost ability to achieve goals (“executional excellence”) across the Kyocera Group. As a result, sales andprofits increased both in the Components and the Equipment Businesses compared with fiscal 2006.
- 30 -

Results of Operations
Fiscal 2007 compared with Fiscal 2006
The following table shows a summary of Kyocera’s results of operations for fiscal 2006 and fiscal 2007:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2006
AmountNet sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Profit from operations
Interest and dividend income
Interest expense
Foreign currency transaction 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
Income from continuing operations before income
taxes and minority interests
Income taxes
Income from cotinuing operations before minority
interests
Minority interests
Income from continuing operations
Income from discontinued operations
Net income%

2007
Amount%¥1,173,544 100.0 ¥1,283,897 $10,880,483 100.0
835,04271.2
900,470
7,631,102
70.1
338,50228.8
383,427
3,249,381
29.9
238,80720.3
248,325
2,104,449
19.4
99,6958.5
135,102
1,144,932
10.5
8,990
0.8
15,472
131,119
1.2(1,301)(0.1)(1,647)(13,958)
(0.1)
(316)
(0.0)
(65)
(551)
(0.0)

¥

Increase(Decrease)
%

9.4
7.8
13.3
4.0
35.5
72.1
—
—

(1,216)
1,472
5,294
6,931
(3,492)
1,180
17,542

(0.1)
0.1
0.4
0.6
(0.3)
0.1
1.5

2,621
3,819
24
26
—
1,188
21,43822,21232,365203
220—
10,068
181,678

0.2
0.3
0.0
0.0
—
0.1
1.7

—
159.4
(99.5)(99.6)—
0.7
22.2

117,237
46,76010.0
4.0

156,540
48,887

1,326,610
414,297

12.2
3.8

33.5
4.5

70,477(4,389)66,0883,608
69,696

6.0
107,653(0.4)(6,324)
5.6
101,3290.3
5,175
5.9 ¥ 106,504 $

912,313(53,593)858,720
43,856
902,576

8.4
(0.5)
7.9
0.4
8.3

52.7
—
53.3
43.4
52.8

Note 2: For the reasons set forth in Note 1, 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 from operations decreased by ¥3,512 million and income from continuing operations before income taxes andminority interests for fiscal 2006 decreased by ¥4,151 million, respectively.
Net sales
Consolidated net sales for fiscal 2007 increased by ¥110,353 million ($935 million), or 9.4%, to ¥1,283,897 million ($10,880 million)
compared with ¥1,173,544 million in fiscal 2006.
Consolidated net sales in the Components Business in fiscal 2007 increased by ¥69,058 million ($585 million), or 11.9%, to ¥650,877
million ($5,516 million) compared with fiscal 2006. In particular, sales in the Electronic Device Group were strong throughout theyear, notably ceramic capacitors and timing devices. As a result, sales in the Electronic Device Group resulted in an increase of¥26,564 million ($225 million), or 10.2% compared with fiscal 2006. In addition, sales in the Fine Ceramic Parts Group, theSemiconductor Parts Group and the Applied Ceramic Products Group also achieved growth of 17.2%, 12.6% and 11.5%,
respectively, compared with fiscal 2006.
- 31 -

Consolidated net sales in the Equipment Business increased by ¥38,305 million ($325 million), or 7.8%, to ¥531,668 million ($4,506
million) compared with fiscal 2006. Sales in the Telecommunications Equipment Group and the Information Equipment Group
increased by ¥22,148 million ($188 million), or 9.7% and ¥19,400 million ($164 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 eightreporting segments:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2006
AmountFine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Total Components BusinessTelecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
Total Equipment Business
OthersAdjustments and eliminations%

2007
Amount%Increase(Decrease)%¥69,373
5.9 ¥ 81,326 $ 689,203
6.3
135,299
11.6
152,292
1,290,610
11.9
117,555
10.0
131,103
1,111,042
10.2
259,59222.1
286,156
2,425,051
22.3
581,81949.6
650,877
5,515,906
50.7
229,03519.5
251,183
2,128,670
19.6
249,38121.2
268,7812,277,805
20.9
14,947
1.3
11,704
99,1870.9
493,36342.0
531,668
4,505,662
41.4
117,40910.0
125,656
1,064,881
9.8(19,047)(1.6)(24,304)(205,966)(1.9)¥1,173,544 100.0 ¥1,283,897 $10,880,483 100.0

17.2
12.6
11.5
10.2
11.9
9.7
7.8
(21.7)
7.8
7.0
—
9.4

Note 3: Commencing in fiscal 2007, the Precision Machine Division of Kyocera Corporation, formerly included within “Corporate,”
has been reclassified into “Others.” Accordingly, previously reported results of these reporting segments for fiscal 2006 have been
retrospectively reclassified.
Note 4: For the reasons set forth in Note 1 and Note 3, net sales of “Others” in fiscal 2006 decreased by ¥7,565 million and“Adjustments and eliminations” increased by ¥(380) million compared with those previously reported.
(1) Fine Ceramic Parts Group
Sales in this segment in fiscal 2007 increased by ¥11,953 million ($101 million), or 17.2%, to ¥81,326 million ($689 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.
- 32 -

(2) Semiconductor Parts Group
Sales in this segment increased by ¥16,993 million ($144 million), or 12.6%, to ¥152,292 million ($1,291 million) compared with
¥135,299 million in fiscal 2006. This increase was due mainly to increased demand for ceramic packages used in mobile phonehandsets and digital-still-cameras.
(3) Applied Ceramic Products Group
Sales in this segment increased by ¥13,548 million ($115 million), or 11.5%, to ¥131,103 million ($1,111 million) compared with
¥117,555 million in fiscal 2006. This increase was due mainly to sales growth of solar energy products, particularly in the European
market, combined with increased demand for medical materials and cutting tools.
(4) Electronic Device Group
Sales in this segment increased by ¥26,564 million ($225 million), or 10.2%, to ¥286,156 million ($2,425 million) compared with
¥259,592 million in fiscal 2006. Demand for products such as ceramic capacitors, crystal-related components and connectors,
expanded due primarily to strong production activity for digital consumer equipment. In addition, AVX Corporation (AVX), a U.S.
subsidiary, also recorded increased sales.
(5) Telecommunications Equipment Group
Sales in this segment increased by ¥22,148 million ($188 million), or 9.7%, to ¥251,183 million ($2,129 million) compared with
¥229,035 million in fiscal 2006. This increase was due to sales growth of new mobile phone handsets in Japan and overseas.
(6) Information Equipment Group
Sales in this segment increased by ¥19,400 million ($164 million), or 7.8%, to ¥268,781 million ($2,278 million) compared with
¥249,381 million in fiscal 2006. Sales of multifunctional systems and ECOSYS printers expanded in overseas resulting from theaggressive introduction of new products and enhanced marketing activities.
(7) Optical Equipment Group
Sales in this segment decreased by ¥3,243 million ($27 million), or 21.7%, to ¥11,704 million ($99 million) compared with ¥14,947
million in fiscal 2006. This decrease was due mainly to the downsizing of the camera business and slow demand for camera modules
for mobile phone handsets.
(8) Others
Sales in this segment increased by ¥8,247 million ($70 million), or 7.0%, to ¥125,656 million ($1,065 million) compared with
¥117,409 million in fiscal 2006. This increase was due mainly to growth of sales in the telecommunications engineering business at
Kyocera Communication Systems Co., Ltd (KCCS).
- 33 -

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 geographical areas in which such sales weremade:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2006
AmountJapan
United States of America
Asia
EuropeOthers¥ 467,035
253,696
198,731
184,351
69,731¥1,173,544

%

39.8
21.6
16.9
15.7
6.0
100.0

2007
Amount¥ 496,959
274,361
216,663
210,726
85,188¥1,283,897$ 4,211,517
2,325,093
1,836,127
1,785,814
721,932$10,880,483%

Increase(Decrease)
%

38.7
21.4
16.9
16.4
6.6
100.0

6.4
8.1
9.0
14.3
22.2
9.4

Note 5: For the reasons set forth in Note 1, consolidated sales in Japan in fiscal 2006 decreased by ¥7,945 million, compared withthose previously reported.
Sales in Japan, which comprised 38.7% of consolidated net sales, increased by ¥29,924 million ($254 million), or 6.4%, to ¥496,959
million ($4,212 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 ($682 million), or 11.4%, to ¥786,938 million ($6,669 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 of mobile phone handsets and the 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 ($336 million) in net sales compared with fiscal 2006, after
translation into yen.
Sales in the United States increased by ¥20,665 million ($175 million), or 8.1%, to ¥274,361 million ($2,325 million) compared with
¥253,696 million in fiscal 2006 due to sales growth of mobile phone handsets at Kyocera Wireless Corp. (KWC), of the
Semiconductor Parts Group and of the Information Equipment Group. Sales in Asia increased by ¥17,932 million ($152 million), or
9.0%, to ¥216,663 million ($1,836 million) compared with ¥198,731 million in fiscal 2006 due to higher sales growth of theElectronic Device Group for digital consumer equipment and of the Semiconductor Parts Group. Sales in Europe increased by¥26,375 million ($224 million), or 14.3%, to ¥210,726 million ($1,786 million) compared with ¥184,351 million in fiscal 2006 due
mainly to sales growth of the Information Equipment Group such as ECOSYS printers and multifunctional systems and the Electronic
Device Group, combined with expanded sales in solar energy products. Sales in Others increased by ¥15,457 million ($131 million),or 22.2%, to ¥85,188 million ($722 million) compared with ¥69,731 million in fiscal 2006 due primarily to sales growth of mobile
phone handsets.
- 34 -

Cost of sales and gross profit
In fiscal 2007, cost of sales increased by ¥65,428 million ($554 million), or 7.8%, to ¥900,470 million ($7,631 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 ($3,289 million) accounted for 43.1%, and labor costs of ¥163,836 million ($1,388 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 comparedwith 71.2% in fiscal 2006, which was led by improved productivity. Reduction of production costs at KWC as a result of structuralreforms as well as cost reduction in the Optical Equipment Group due mainly to the downsizing of the camera business contributed tothis improvement.
As a result, gross profit increased by ¥44,925 million ($381 million), or 13.3%, in fiscal 2007 to ¥383,427 million ($3,249 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 ($81 million), or 4.0%, to ¥248,325
million ($2,104 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($1,011 million), or 48.0% of total SG&A expenses, and sales promotion and advertising cost was ¥41,337 million ($350 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.
Although SG&A expenses increased as above, profit from operations increased by ¥35,407 million ($300 million), or 35.5%, to¥135,102 million ($1,145 million) compared with ¥99,695 million in fiscal 2006 due to further 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 ($55 million), or 72.1%, to ¥15,472 million ($131 million)
compared with ¥8,990 million in fiscal 2006. This was mainly due to favorable investment management results and an increase individend income from KDDI Corporation. Kyocera has an investment policy aimed at low risk, stability and liquidity, and does not
typically invest in high-risk financial instruments only for pursuing profits.
Interest expense
Interest expense in fiscal 2007 increased by ¥346 million ($3 million), or 26.6%, to ¥1,647 million ($14 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 trendof interest rates in Japanese financial market.
- 35 -

Foreign currency translation
During fiscal 2007, the average exchange rate for the yen depreciated by ¥4, or 3.5%, against the U.S. dollar and depreciated by ¥12,
or 8.7%, against Euro compared with fiscal 2006, respectively. At March 31, 2007, the yen depreciated by ¥1, or 0.9%, against the
U.S. dollar and depreciated by ¥14, or 9.8%, against Euro compared with at March 31, 2006, respectively. Kyocera recorded foreign
currency transaction losses of ¥65 million ($1 million) in fiscal 2007.
Kyocera typically enters into forward exchange contracts to minimize currency exchange risks on foreign currency denominatedreceivables and payables. Kyocera confines its use of derivative financial instruments to the 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 ($22 million), an
increase of ¥3,837 million ($33 million) compared with losses of ¥1,216 million in fiscal 2006. Kyocera’s equity in earnings ofaffiliates and unconsolidated subsidiaries in fiscal 2007 was derived mainly from interests in WILLCOM INC. (WILLCOM).
Kyocera Corporation owns a 30% interest in WILLCOM, which operates a PHS service in Japan. Kyocera Corporation accounted forthis investment using the equity method. WILLCOM recorded net losses due mainly to temporary sales commission in fiscal 2006.
However, WILLCOM 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.
Gains on sales and maturities of securities, net in fiscal 2007 increased by ¥2,347 million ($20 million), or 159.4%, to ¥3,819 million($32 million) compared with ¥1,472 million in fiscal 2006. This was due mainly to realization of unrealized gains by sale ofinvestment 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 shareexchange, 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 the electric amusementbusiness. 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 the shares of Taito Corporation by Square Enix Co., Ltd., one of theleading companies in the game software industry. As a result of this sale of the shares of Taito Corporation, Kyocera Corporation
recorded a gain on sales of investment in an affiliate of ¥6,931 million in fiscal 2006.
Kyocera Mita Corporation (KMC) owns a 30% interest in Triumph-Adler AG Group (TA), which is a distributor of office equipment
and accounted for its investment under the equity method. Kyocera recognized 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 loss on impairment of investment inTA due to an increase 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 allreporting 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 for fiscal 2007 increased by ¥39,303 million ($333 million), or 33.5%, to ¥156,540 million ($1,327
million) compared with ¥117,237 million in fiscal 2006. Operating profit in the Components Business resulted in an increase of¥26,906 million ($228 million), or 34.6% due primarily to sales growth and improvement productivity in the Electronic Device
Group. Operating profit in the Equipment Business significantly increased by ¥13,434 million ($114 million), or 71.0% due to risingsales of the Information Equipment Group, making a profit in the Telecommunications Equipment Group and decreased operating
loss in the Optical Equipment Group.
- 36 -

Operating profit by reporting segment
The following table shows a breakdown of Kyocera’s consolidated income from continuing operations before income taxes, andoperating profit for fiscal 2006 and fiscal 2007 by the eight reporting segments:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,%

Increase(Decrease)
%

19.3
14.6
17.0
15.5
16.1
0.1
12.6
—
6.1
7.0
11.4
—

42.3
25.2
2.1
63.7
34.6
—
28.6
—
71.0
(2.3)
38.0
(33.0)(1,216) ——2,621
22,212(49) —(500)(4,237) —¥117,237 10.0 ¥156,540 $1,326,610 12.2

—
—
33.5

2006
AmountFine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Total Components BusinessTelecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
Total Equipment Business
OthersOperating profit
Corporate
Equity in (losses) earning of affiliates and unconsolidated
subsidiaries
Adjustments and eliminations
Income from continuing operations before income taxes¥ 11,014
17,742
21,87627,17077,802(1,706)
26,412(5,774)
18,932
8,983
105,717
12,785%

2007
Amount15.9 ¥ 15,677 $ 132,856
13.1
22,210188,220
18.6
22,334
189,271
10.5
44,487
377,00913.4 104,708
887,356
—
291
2,466
10.6
33,970287,881—(1,895)(16,059)
3.8
32,366274,2887.7
8,776
74,373
9.0 145,850
1,236,017—
8,569
72,618Note 6: For the reasons set forth in Note 1 and Note 3, operating profit of “Others” in fiscal 2006 decreased by ¥3,577 million,“Corporate” decreased by ¥573 million and “Adjustments and eliminations” increased by ¥(1) million compared with thosepreviously announced.
(1) Fine Ceramic Parts GroupOperating profit in this segment increased by ¥4,663 million ($40 million), or 42.3%, to ¥15,677 million ($133 million) comparedwith ¥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 ($38 million), or 25.2%, to ¥22,210 million ($188 million) comparedwith ¥17,742 million in fiscal 2006. This increase was due mainly to sales growth of ceramic packages for mobile phone handsets anddigital still cameras.
- 37 -

(3) Applied Ceramic Products GroupOperating profit in this segment increased by ¥458 million ($4 million), or 2.1%, to ¥22,334 million ($189 million) compared with
¥21,876 million in fiscal 2006. Operating profit in this segment grew mainly due to increased profit in dental implants, artificial boneand joint prosthesis and jewelry and applied ceramic related products.
(4) Electronic Device GroupOperating profit in this segment increased by ¥17,317 million ($147 million), or 63.7%, to ¥44,487 million ($377 million) comparedwith ¥27,170 million in fiscal 2006. Demand for products such as capacitors, crystal-related components and connectors expanded
due primarily to strong production activity for digital consumer equipment throughout the year. In addition, AVX in particular,
improved its operating profit.
(5) Telecommunications Equipment GroupOperating profit in this segment improved by ¥1,997 million ($17 million) to ¥291 million ($2 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 thissegment improved due to reduction of operating loss at KWC as a result of structural reforms along with sales growth of new mobile
phone handsets in Japan.
(6) Information Equipment GroupOperating profit in this segment increased by ¥7,558 million ($64 million), or 28.6%, to ¥33,970 million ($288 million) comparedwith ¥26,412 million in fiscal 2006. This was due to sales growth of ECOSYS printers, multifunctional systems and consumables aswell as the positive effects of the yen’s depreciation against the European currencies and the U.S. dollar.
(7) Optical Equipment GroupOperating loss in this segment decreased by ¥3,879 million ($33 million), to ¥1,895 million ($16 million) compared with ¥5,774
million in fiscal 2006 due mainly to the downsizing of the camera business and absence of expenses for structural reform.
(8) Others
Operating profit in this segment decreased by ¥207 million ($2 million), or 2.3%, to ¥8,776 million ($74 million) compared with
¥8,983 million in fiscal 2006. This decline was due mainly to impairment of goodwill, which was caused by stagnant sales and profit
results, amounting to ¥1,478 million ($13 million) at a domestic subsidiary.
(9) Corporate
Corporate income and losses constitute income and expenses related to the provision of management-related services by Kyocera’shead office to each reporting segment, together with any profit-and-loss items that management judges not to belong within the above
reporting segments, such as gains or losses relating to investment securities. Corporate income decreased by ¥4,216 million ($36
million), or 33.0%, to ¥8,569 million ($73 million) compared with ¥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 the sale of entire shares of Taito Corporation, an exchange gain of ¥5,281 million on shares of UFJ Holdings,
Inc. in connection with the exchange of shares for the shares of Mitsubishi UFJ Financial Group, and a loss of ¥3,492 million on
impairment of investment in TA, an affiliate of KMC. As a result, corporate profit decreased compared with fiscal 2006.
- 38 -

TaxesCurrent and deferred income taxes in fiscal 2007 increased by ¥2,127 million ($18 million), or 4.5%, to ¥48,887 million ($414
million) compared with ¥46,760 million in fiscal 2006.
Current income taxes in fiscal 2007 included the tax refunds of ¥4,305 million ($36 million). The tax refunds were related to thecancellation 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 14 to the Consolidated Financial Statements in thisannual report.
The effective tax rate of 31.2% in fiscal 2007 was 8.7 points lower than 39.9% in fiscal 2006. The decrease in the effective tax rate isdue 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 thanthe 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 madethe effective tax rate 2.8% lower than the Japanese statutory tax rate. For detailed information, see Note 16 to the Consolidated
Financial Statements in this annual report.
Minority interests
Kyocera’s minority interests are principally related to AVX, which accounted for approximately 30% of all minority ownershipinterests. Minority interests increased by ¥1,935 million ($16 million) to ¥6,324 million ($54 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.
Sale of the shares of Kyocera Leasing Co., Ltd.
On August 1, 2006, Kyocera sold its entire of shares in KLC (presently Diamond Asset Finance Company Limited) to Diamond
Lease Company Limited (presently Mitsubishi UFJ Lease & Finance Company Limited) for ¥25,274 million ($214 million), aimed toconcentrate Kyocera’s management resources on its core businesses to enhance and improve its corporate value. In recent years,
within the financing industry, active reorganization has been ongoing. Amid such circumstances, Kyocera considered it was better for
KLC to work with Diamond Lease Company Limited, not with Kyocera which is mainly engaged in manufacturing, to enable KLC tocontinue 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 and the sale of KLC less appreciable income taxes, as discontinued operations inaccordance with SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets” in its consolidated statements ofincome.
- 39 -

Fiscal 2006 compared with Fiscal 2005
The following table shows a summery of Kyocera’s results of operations for fiscal 2005 and fiscal 2006:(Yen in millions)Years ended March 31,

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Profit from operations
Interest and dividend income
Interest expense
Foreign currency transaction gains (losses), net
Equity in losses of affiliates and unconsolidated subsidiaries(Losses) 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
Income from continuing operations before income taxes andminority interests
Income taxes
Income from continuing operations before minority interests
Minority interests
Income from continuing operations
Income from discontinued operations
Net income

2005
Amount¥1,173,660
852,527
321,133
223,473
97,6606,443(1,275)2,606(1,678)(2,084)
—
—
—
2,341
6,353
104,013
58,21445,799(3,142)42,6573,251¥ 45,908

Increase(Decrease)
%

%

2006
Amount

%

100.0
72.6
27.4
19.0
8.4
0.5
(0.1)
0.2
(0.1)
(0.2)
—
—
—
0.2
0.5

¥1,173,544
835,042
338,502
238,807
99,6958,990(1,301)(316)(1,216)
1,472
5,294
6,931
(3,492)
1,180
17,542

100.0
71.2
28.8
20.3
8.5
0.8
(0.1)
(0.0)
(0.1)
0.1
0.4
0.6
(0.3)
0.1
1.5

(0.0)
(2.1)
5.4
6.9
2.1
39.5
—
—
—
—
—
—
—
(49.6)
176.1

8.9
5.0
3.9
(0.3)
3.6
0.3
3.9

117,237
46,76070,477(4,389)66,088
3,608¥ 69,696

10.0
4.0
6.0
(0.4)
5.6
0.3
5.9

12.7
(19.7)
53.9
—
54.9
11.0
51.8

Note 7: For the reasons set forth in Note 1, KLC’s business results for fiscal 2005 and 2006 retrospectively reclassified as income
from discontinued operations in conformity with SFAS No. 144, “Accounting for the impairment or disposal of Long-Lived Assets.”
Net sales
Consolidated net sales in fiscal 2006 decreased by ¥116 million, or (0.0)%, to ¥1,173,544 million compared with ¥1,173,660 million
in fiscal 2005.
In the component business, demand for electronic equipment only showed a slight recovery in the first quarter of fiscal 2006, andperformance was affected negatively by a considerable decline in component prices. In the equipment business, structural reforms ofthe mobile phone handset business at Kyocera Wireless Corp., a U.S. subsidiary, were conducted in the first half of fiscal 2006. At thesame time, the camera business of the Optical Equipment Group was considerably reduced. As a result, consolidated net sales in thefirst half amounted to ¥542,238 million.
- 40 -

On the other hand, production activities for core digital consumer equipment such as mobile phone handsets, PCs and digital home
appliances expanded markedly from last summer. Furthermore, demand for electronic components remained high into the fourth
quarter. In addition, the introduction of new mobile phone handsets and PHS-related products coupled with aggressive efforts in
expanding sales of printers and digital- multifunction products led to a substantial increase in sales in the equipment business in thesecond half. Consequently, consolidated net sales in the second half were ¥631,306 million, which showed a significant increase of¥89,068 million, or 16.4%, compared with the first half.
Consolidated net sales in the components business in fiscal 2006 increased by ¥23,272 million, or 4.2%, compared with fiscal 2005.
In particular, sales in the Applied Ceramic Products Group were strong throughout the year, notably solar energy products and cutting
tools. Sales in the Applied Ceramic Products Group resulted in an increase of ¥23,676 million, or 25.2%, compared with fiscal 2005.
Consolidated net sales in the equipment business decreased by ¥34,476 million, or 6.5%, compared with fiscal 2005. Sales in the
Telecommunications Equipment Group and the Optical Equipment Group declined by ¥21,883 million and ¥20,829 million, or 8.7%
and 58.2%, respectively, compared with fiscal 2005, due to continued structural reforms.
A detailed analysis and discussion of Kyocera’s net sales by the reporting and the geographic segments are as follows:
Net sales by reporting segment
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2005 and fiscal 2006 by the eightreporting segments:(Yen in millions)Years ended March 31,

Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersAdjustments and eliminations

2005
Amount%73,711
127,960
93,879262,997
250,918
241,145
35,776
110,595(23,321)¥1,173,660

6.3
10.9
8.0
22.4
21.4
20.5
3.1
9.4
(2.0)
100.0

¥

2006
Amount%69,373
135,299
117,555
259,592
229,035
249,381
14,947
117,409(19,047)¥1,173,544

5.9
11.6
10.0
22.1
19.5
21.2
1.3
10.0
(1.6)
100.0

¥

Increase(Decrease)
%

(5.9)
5.7
25.2
(1.3)
(8.7)
3.4
(58.2)
6.2—(0.0)

Note 8: For the reasons set forth in Note 1 and Note 3, previously reported results of related segments in fiscal 2005 and 2006 werereclassified.
(1) Fine Ceramic Parts Group
Sales in this reporting segment in fiscal 2006 decreased by ¥4,338 million, or 5.9%, to ¥69,373 million compared with
¥73,711 million in fiscal 2005. This decrease was due to less demand for ceramic parts used in semiconductor fabrication equipment
than in fiscal 2005, and to decreased sales of sapphire products for LCD projectors resulting from intensified market competition withother substitute materials.
- 41 -

(2) Semiconductor Parts Group
Sales in this reporting segment increased by ¥7,339 million, or 5.7%, to ¥135,299 million compared with ¥127,960 million in fiscal
2005. Demand for ceramic packages for digital consumer products such as mobile phone handsets and digital cameras recovered in
the second half. Furthermore, sales of organic packages for servers and digital consumer products increased. Approximately 85% ofsales in this reporting segment were sales of ceramic packages.
(3) Applied Ceramic Products Group
Sales in this reporting segment increased by ¥23,676 million, or 25.2%, to ¥117,555 million compared with ¥93,879 million in fiscal
2005. This increase was due to strong sales growth recorded in the solar energy business amid an expanding global market spurred byrising environmental awareness. Sales of cutting tools also grew due to healthy production activity in the automobile industry.
(4) Electronic Device Group
Sales in this reporting segment decreased by ¥3,405 million, or 1.3%, to ¥259,592 million compared with ¥262,997 million in fiscal
2005. Components demand for digital consumer products such as mobile phone handsets started to recover last summer. However,this was insufficient to compensate for a decline in sales in the first half of fiscal 2006, mainly due to slow sales of thin-film devices
resulting from decreased demand for LCDs for mobile phone handsets and crystal related components for digital still cameras andmobile phone handsets. However sales at AVX Corporation, a key subsidiary in this reporting segment, grew steadily, especially inthe digital consumer equipment and telecommunications equipment markets.
(5) Telecommunications Equipment Group
Sales in this reporting segment decreased by ¥21,883 million, or 8.7%, to ¥229,035 million compared with ¥250,918 million in fiscal
2005. Although domestic sales of new mobile phone handsets and PHS handsets were strong, overseas sales of mobile phonehandsets decreased as Kyocera Wireless Corp. was in the process of executing structural reforms in the first half of fiscal 2006. Slowoverseas sales of PHS-related products also contributed to the decrease.
(6) Information Equipment Group
Sales in this reporting segment increased by ¥8,236 million, or 3.4%, to ¥249,381 million compared with ¥241,145 million in fiscal
2005. This increase reflected the introduction of new printers and digital multifunction products and encouraged sales activities,
which contributed to higher sales volume.
(7) Optical Equipment Group
Sales in this reporting segment decreased by ¥20,829 million, or 58.2%, to ¥14,947 million compared with ¥35,776 million in fiscal
2005. The main reason for the considerable decrease was the withdrawal from the digital still camera business as a result of thestructural reform of Kyocera’s camera business in fiscal 2005.
(8) Others
Sales in this reporting segment increased by ¥6,814 million, or 6.2%, to ¥117,409 million compared with ¥110,595 million in fiscal
2005. The increase was due in part to strong sales recorded in the telecommunications engineering business of Kyocera
Communication Systems Co., Ltd. Sales at a subsidiary of Kyocera Communication Systems Co., Ltd., which was newly
consolidated in fiscal 2005, also contributed to the overall increase in sales. However, sales of Kyocera Chemical Corporation
decreased compared with fiscal 2005 due to slow sales of molding products and flexible print boards.
- 42 -

Net sales by geographic segment
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2005 and fiscal 2006, distinguishing
between domestic and overseas sales and, in respect of overseas sales, showing the geographical areas in which such sales were made:(Yen in millions)Years ended March 31,
2005
AmountJapan
United States of America
Asia
EuropeOthers¥ 465,422
248,333
203,848
175,850
80,207¥1,173,660

%

39.6
21.2
17.4
15.0
6.8
100.0

2006
Amount¥ 467,035
253,696
198,731
184,351
69,731¥1,173,544

%

39.8
21.6
16.9
15.7
6.0
100.0

Increase(Decrease)
%

0.3
2.2
(2.5)
4.8
(13.1)(0.0)

Note 9: For the reasons set forth in Note 1 and Note 3, previously reported results of related segments in fiscal 2005 and 2006 werereclassified.
Sales in Japan, which comprised 39.8% of consolidated net sales, increased by ¥1,613 million, or 0.3%, to ¥467,035 million
compared with ¥465,422 million in fiscal 2005 due to sales growth in solar energy products, mobile phone handsets and PHS-related
products. Overseas sales, which comprised 60.2% of consolidated net sales, decreased by ¥1,729 million, or 0.2%, to¥706,509 million compared with ¥708,238 million in fiscal 2005 due primarily to decreased sales in the Telecommunications
Equipment Group.
Since almost all overseas sales were denominated in the U.S. dollars or Euro, the depreciation of the yen against these currencies
during fiscal 2006 increased consolidated net sales by approximately ¥32.2 billion compared with fiscal 2005 after translation into theyen.
An increase in sales in Japan was attributed to the strong growth in solar energy products, mobile phone handsets and PHS-related
products, combined with steady sales growth in the telecommunications engineering business of Kyocera Communication Systems
Co., Ltd., which is based in Japan.
Sales in the United States increased by ¥5,363 million, or 2.2%, to ¥253,696 million compared with ¥248,333 million in fiscal 2005.
Although sales in the Telecommunications Equipment Group in the United States declined due to continued structural reforms at
Kyocera Wireless Corp., sales in the Electronic Device Group, the solar energy business and the Information Equipment Group
increased.
Sales in Asia decreased by ¥5,117 million, or 2.5%, to ¥198,731 million compared with ¥203,848 million in fiscal 2005. Althoughsales in solar energy business and cutting tools business in the Applied Ceramic Products Group and sales in the Electronic Groupgrew, sales in the Telecommunications Equipment Group, especially mobile phone handsets, decreased.
Sales in Europe increased by ¥8,501 million, or 4.8%, to ¥184,351 million compared with ¥175,850 million in fiscal 2005 due mainly
to growth in the solar energy business amid continued market expansion.
Sales in Others decreased by ¥10,476 million, or 13.1%, to ¥69,731 million compared with ¥80,207 million in fiscal 2005 due todecreased sales of the Telecommunications Equipment Group in Latin America, particularly mobile phone handsets.
- 43 -

Cost of sales and gross profit
In fiscal 2006, cost of sales decreased by ¥17,485 million, or 2.1%, to ¥835,042 million from ¥852,527 million in fiscal 2005. Raw
material costs of ¥345,309 million accounted for 41.4%, and labor costs of ¥156,363 million accounted for 18.7% of this total. The
ratio of cost of sales to net sales was 71.2%, a decrease of 1.4 points compared with 72.6% in fiscal 2005. In fiscal 2005, Kyocera
recorded ¥5,421 million of one time expenses in line with structural reforms in the Telecommunications Equipment Group and the
Optical Equipment Group. Cost of sales in fiscal 2006 decreased due mainly to outsourcing the manufacture of mobile phonehandsets at Kyocera Wireless Corp. to Flextronics International Ltd., a leading provider of electronics manufacturing services, in the
Telecommunications Equipment Group and to significantly downsizing of the camera business in the Optical Equipment Group.
As a result, gross profit increased by ¥17,369 million, or 5.4%, in fiscal 2006 to ¥338,502 million from ¥321,133 million in fiscal
2005. The gross profit to net sales ratio increased by 1.4 points from 27.4% to 28.8%.
SG&A expenses and profit from operations
Selling, general and administrative (SG&A) expenses in fiscal 2006 increased by ¥15,334 million, or 6.9%, to ¥238,807 million
compared with ¥223,473 million in fiscal 2005. Labor cost was ¥114,787 million, or 48.1% of total SG&A expenses, and sales
promotion and advertising cost was ¥38,209 million, or 16.0% of total SG&A expenses. The proportion of SG&A expenses to net
sales rose by 1.3 points to 20.3% in fiscal 2006 compared with 19.0% in fiscal 2005. The increase in SG&A expenses in fiscal 2006
reflected an increase in costs associated with aggressive R&D activities for new businesses and new products. As a result, profit fromoperations increased by ¥2,035 million, or 2.1%, to ¥99,695 million compared with ¥97,660 million in fiscal 2005. The operating
margin rose by 0.1 point to 8.5% in fiscal 2006 compared with 8.4% in fiscal 2005.
Interest and dividend income
Interest and dividend income in fiscal 2006 increased by ¥2,547 million, or 39.5%, to ¥8,990 million compared with ¥6,443 million in
fiscal 2005. This was mainly due to an increase in dividend income from KDDI Corporation and favorable fund management results
at AVX Corporation. Kyocera has an investment policy aimed at low risk, stability and liquidity, and does not typically invest in
high-risk financial instruments only for pursuing profits.
Interest expense
Interest expense in fiscal 2006 increased by ¥26 million, or 2.0%, to ¥1,301 million compared with ¥1,275 million in fiscal 2005.
Though interest rates in the Japanese financial market were on a slight upward trend, there was not material impact on interest
expense.
Foreign currency translation
During fiscal 2006, the yen depreciated by ¥5, or 4.6%, against the U.S. dollar and depreciated by ¥3, or 2.2%, against Euro
compared with fiscal 2005, respectively. At March 31, 2006, the yen depreciated by ¥10, or 9.3%, against the U.S. dollar anddepreciated by ¥4, or 2.9%, against Euro compared with at March 31, 2005, respectively. Kyocera recorded foreign currencytransaction losses of ¥316 million in fiscal 2006.
Kyocera typically enters into forward exchange contracts to minimize currency exchange risks on foreign currency denominatedreceivables and payables. Kyocera confines its use of derivative financial instruments to the hedging of its foreign exchange
exposures, and does not utilize derivative transactions for trading purposes.
- 44 -

Gains and losses from investments
In fiscal 2006, Kyocera’s earnings or losses on equity method investments resulted in losses of ¥1,216 million, a decrease of¥462 million compared with losses of ¥1,678 million in fiscal 2005.
Kyocera’s equity in earnings or losses of affiliates and unconsolidated subsidiaries in fiscal 2006 was derived mainly from interests in
WILLCOM, Inc. Kyocera Corporation owns a 30% interest in WILLCOM, Inc., which operates a PHS service. Kyocera Corporationaccounted for this investment using the equity method. Net losses at WILLCOM, Inc. decreased compared with fiscal 2005 due to
one time expenses related to the business acquisition in fiscal 2005. As a result, Kyocera’s loss on its equity method investment
decreased.
Kyocera Corporation owned a 36.02% interest in Taito Corporation, a major affiliate which operates in the electric amusementbusiness and accounted for by the equity method. On September 28, 2005, Kyocera Corporation sold its entire holding of shares of
Taito Corporation in a tender offer bid for the shares of Taito Corporation by Square Enix Co., Ltd., a Japanese game softwaredeveloper. As a result of this sale of the shares of Taito Corporation, Kyocera recorded a gain on sales of investment in an affiliate of¥6,931 million.
Kyocera Mita Corporation owns a 30% interest in Triumph-Adler AG Group, a distributor of an office equipment and accounted for
its investment by the equity method. Kyocera recognized loss on impairment of investment in affiliate of ¥3,492 million due to an
extended decline in its market value in fiscal 2006.
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 shareexchange, Kyocera recorded a gain of ¥5,281 million in the third quarter of fiscal 2006.
Income from continuing operations before income taxes
The Applied Ceramic Products Group, especially the solar energy business, recorded higher sales, although sales in the Electronics
Device Group significantly declined in the first half. As a result, operating profit in the components business decreased comparedwith fiscal 2005. In contrast, operating profit in the equipment business increased compared with fiscal 2005. The increase inoperating profit reflected benefits of structural reforms in the Optical Equipment Group and the Telecommunication Equipment
Group in fiscal 2005. Consequently, income from continuing operations before income taxes increased by ¥13,224 million, or 12.7%,
to ¥117,237 million compared with ¥104,013 million in fiscal 2005.
- 45 -

Operating profit by reporting segment
The following table shows a breakdown of Kyocera’s consolidated income before income taxes, and operating profit for fiscal 2005
and fiscal 2006 by the eight reporting segments:(Yen in millions)Years ended March 31,

Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersCorporate
Equity in earnings (losses) of affiliates and unconsolidated subsidiaries
Adjustments and eliminations
Income before income taxes

2005
Amount2006
Amount¥ 11,535
17,55017,12935,406(14,918)
36,186(15,387)
9,705
97,206
8,480(1,678)
5¥104,013¥ 11,014
17,742
21,87627,170(1,706)
26,412(5,774)
8,983
105,717
12,785(1,216)(49)¥117,237

Increase(Decrease)
%

(4.5)
1.1
27.7
(23.3)—(27.0)
—
(7.4)
8.8
50.8
—
—
12.7

Note 10: For the reasons set forth in Note 1 and Note 3, previously reported results of related segments in fiscal 2005 and 2006 werereclassified.
(1) Fine Ceramic Parts GroupOperating profit in this reporting segment decreased by ¥521 million, or 4.5%, to ¥11,014 million compared with ¥11,535 million in
fiscal 2005. This was primarily due to the decrease in sales of parts for semiconductor fabrication equipment and sapphire products
for LCD projectors, the core products in this reporting segment.
(2) Semiconductor Parts GroupOperating profit in this reporting segment increased by ¥192 million, or 1.1%, to ¥17,742 million compared with ¥17,550 million in
fiscal 2005. Operating profit was impacted by an increase in depreciation costs combined with capital expenditures of ¥24,136 million
geared towards business expansion, including the construction of a new plant for organic packages. Profit from increased sales ofceramic packages, however, led to a slight increase in overall operating profit in this reporting segment.
(3) Applied Ceramic Products GroupOperating profit in this reporting segment increased by ¥4,747 million, or 27.7%, to ¥21,876 million compared with ¥17,129 million
in fiscal 2005. Increased sales and enhanced productivity of solar energy business and cutting tools business, core areas in thisreporting segment, led to an increase in operating profit. In particular, effective utilization of four production bases located globallyenhanced productivity and led to a significant increase in profit in the solar energy business, despite a trend of increases in raw
material costs.
- 46 -

(4) Electronic Device GroupOperating profit in this reporting segment decreased by ¥8,236 million, or 23.3%, to ¥27,170 million compared with ¥35,406 million
in fiscal 2005. Component demand for digital consumer products began to recover last summer, which contributed to a marked
improvement in operating profit in the second half. Nonetheless, a decline in demand for thin-film devices combined with stagnant
demand and declining unit prices, especially in components for mobile phone handsets in the first half which contributed to thedecrease in operating profit.
(5) Telecommunications Equipment GroupOperating loss in this reporting segment improved significantly by ¥13,212 million to ¥1,706 million compared with ¥14,918 million
in fiscal 2005. Despite a one time expense of approximately ¥3.1 billion recorded in fiscal 2006 in line with structural reforms at
Kyocera Wireless Corp. that included the transfer of mobile phone handsets manufacturing operations to Flextronics International
Ltd., operating profits from sales of mobile phone handsets and PHS handsets in the domestic market increased.
(6) Information Equipment GroupOperating profit in this reporting segment decreased by ¥9,774 million, or 27.0%, to ¥26,412 million compared with ¥36,186 million
in fiscal 2005. This was due mainly to a decline in product prices amid intensified global market competition and increased
development costs for color printers and digital multifunction products equipped with solutions for business expansion. R&D
expenses in this reporting segment increased by ¥3,146 million compared with fiscal 2005.
(7) Optical Equipment GroupOperating loss in this reporting segment improved by ¥9,613 million to ¥5,774 million compared with ¥15,387 million in fiscal 2005.
The downsizing of the camera business, which included the withdrawal of the digital camera business, led to the reduction in
operating loss.
(8) Others
Operating profit in this reporting segment decreased by ¥722 million, or 7.4%, to ¥8,983 million compared with ¥9,705 million in
fiscal 2005. This was due mainly to a decline in sales at Kyocera Chemical Corporation.
(9) Corporate
Corporate income and losses constitute income and expenses related to the provision of management-related services by Kyocera’shead office to each reporting segment, together with any profit-and-loss items that management judges not to belong within the above
reporting segments, such as gains or losses on valuation of investment securities. Corporate income increased by ¥4,305 million, or
50.8%, to ¥12,785 million compared with ¥8,480 million in fiscal 2005. Interest and dividends were the main contributors. In
addition, income in fiscal 2006 included a gain of ¥6,931 million through the sale of all of Kyocera’s shares of Taito Corporation, again of ¥5,281 million on shares of UFJ Holdings, Inc. in connection with the exchange of shares for the shares of Mitsubishi UFJ
Financial Group, Inc. and a loss of ¥3,492 million on impairment of the investment in Triumph-Adler AG Group, an affiliate ofKyocera Mita Corporation. As a result, corporate gain increased compared with fiscal 2005.
- 47 -

TaxesCurrent and deferred income taxes in fiscal 2006 decreased by ¥11,454 million, or 19.7%, to ¥46,760 million compared with¥58,214 million in fiscal 2005. The effective tax rate of 39.9% in fiscal 2006 was 16.1 points lower than 56.0% in fiscal 2005. The
amount of income taxes in fiscal 2005 included the additional income taxes of ¥12,748 million by receiving 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
earned from transfers of products between Kyocera Corporation and its overseas subsidiaries was not appropriate from fiscal 1999 to
fiscal 2003.
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 ¥1,247 million to ¥4,389 million in fiscal 2006 compared with ¥3,142 million in
fiscal 2005. This was mainly due to a large increase in net income at AVX Corporation.
Structural reforms
In the Telecommunications Equipment Group, Kyocera transferred production location of Kyocera Wireless Corp. to Mexico in fiscal
2005. The purpose of this move is to reduce costs in response to cost competition from rival companies. Kyocera recorded¥503 million as headcount reduction costs related to this transfer of production.
In fiscal 2006, Kyocera outsourced the manufacture of mobile phone handsets of Kyocera Wireless Corp., and sold its manufacturing
equipment and inventories to Flextronics International Ltd, a leading provider of electronics manufacturing services. Kyocera
Wireless Corp. reduced its manufacturing costs significantly and improved its profitability by taking cost-down activities upon its
procurements of parts and materials through a strong 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.
In the Optical Equipment Group, structural reform was focused on downsizing the camera business. Since the acquisition of YashicaCo., Ltd. in 1983, Kyocera advanced its optical equipment business centered on the camera business under the CONTAX,KYOCERA and YASHICA brands. With the shift from still to digital cameras in the camera market in 2004, Kyocera pushed ahead
with the production and sale of digital cameras best suited to consumer needs. The digital camera market has expanded considerably
on a global scale, however, and because the optical equipment business was unable to achieve sufficient cost reductions to counter theensuing intense cost competition with competitors, it was forced into a difficult business situation. As a result of extensive
investigation into how to effectively utilize management resources under the policies of “business selection and concentration” and“high-value-added diversification,” Kyocera started to downsize the Optical Equipment Group in fiscal 2005. As part of the programto scale back this business, Kyocera closed two overseas sales companies, Yashica Kyocera GmbH Group and Kyocera Optics Inc.,
during fiscal 2005. Costs associated with the closure of two overseas sales companies amounted to ¥3,285 million, including expenses
mainly related to headcount reductions. In addition to the closure of overseas sales companies, a further ¥3,581 million of one time
charge in fiscal 2005 was spent to downsize the domestic camera business. This included the implementation of sales promotions to
reduce inventory. During fiscal 2006, Kyocera completed its downsizing of the camera business.
Receipt of a notice of tax assessment based on transfer pricing adjustments and filing complaint against it
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 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 noticeindicated that income should be adjusted upwards by ¥24,394 million and that resultant additional tax, including local taxes, etc.,
amounted to ¥12,748 million.
- 48 -

Investment in WILLCOM, Inc. in fiscal 2005
On June 21, 2004, the Carlyle Group, Kyocera, KDDI Corporation and DDI Pocket Inc. reached an agreement that a consortium of
the Carlyle Group, Kyocera and KDDI Corporation would acquire the business of DDI Pocket Inc., a subsidiary of KDDI
Corporation. Under the agreement, the company that succeeds DDI Pocket’s business, the name of which was changed to
WILLCOM, Inc. in February 2005, was invested 30% by Kyocera. In cooperation with WILLCOM, Inc., Kyocera will endeavor to
expand sales in its PHS-related business by carving out new markets in Japan as well as overseas.
Establishment of Japan Medical Materials Corporation in fiscal 2005
On May 21, 2004, Kyocera reached an agreement with Kobe Steel, Ltd. to merge the medical material operations of both companies
into a successor company, Japan Medical Materials Corporation, which was established on September 1, 2004. As a dedicatedmanufacturer of medical materials, the successor company is expected to benefit from the integration of the specialized expertise of
Kyocera and Kobe Steel, Ltd in material processing technologies, while maximizing synergies by integrating development,
production and marketing divisions. It also seeks to expand its business worldwide.
Critical Accounting Policies and Estimates
Kyocera’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the UnitedStates of America. The preparation of these consolidated financial statements requires the use of estimates, judgments, andassumptions that affect the reported amounts of assets and liabilities at the date of consolidated financial statements and the reported
amounts of revenues and expenses during the periods presented. Actual results may differ from these estimates, judgments andassumptions.
An accounting estimate in Kyocera’s consolidated financial statements is a critical accounting estimate if it requires Kyocera to makeassumptions about matters that are highly uncertain at the time the accounting estimate is made, and 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 estimated losses resulting from
customers’ inability to make timely payments, including interest on finance receivables. Kyocera’s estimates are based on various
factors including the length of past due payments, historical experience and current business environments. In circumstances where itis aware of a specific customer’s inability to meet its financial obligations, a specific allowance against these amounts is provided
considering the fair value of assets pledged by the customer as collateral.
- 49 -

Inventory valuation
Kyocera estimates the amount of write-downs required to properly value inventory. Write-downs are provided for excess, slowmoving 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 ofcorresponding inventory is shorter than certain holding periods.
As a result of continuous strict controls and adjustments on inventories, Kyocera recognized inventory write-downs of ¥8,446 millionand ¥11,328 million ($96 million) in fiscal 2006 and 2007, respectively. The amounts of these inventory write-downs by reporting
segments appear in Note 18 to the Consolidated Financial Statements included in this annual report. A large portion of theseinventory write-downs arose from inventories of telecommunications equipment and semiconductor parts. These products were
subject to a decrease in demand and a decline in price, or turned 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 a short product life, andis susceptible to market demand and price fluctuations. In light of the impacts by segments, inventory write-downs primarily affect all
segments except Others. If market conditions and demand in the information technology industry are less favorable than Kyocera’s
projections, additional write-downs may be required.
Impairment of securities and investments
Kyocera records impairment charges for debt and equity securities and investments in affiliates and unconsolidated subsidiaries
accounted for under the equity method when it believes that the decline of fair value is considered to be other-than-temporary.
Kyocera regularly reviews each security and investment for impairment based on the extent to which the fair value is less than cost,
the duration of the decline, the anticipated recoverability of fair value in the future and the financial conditions of the issuer. Poor
operating results of the issuers of these securities 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 ¥385 million and¥955 million ($8 million) in fiscal 2006 and 2007, respectively. Losses on impairment in fiscal 2007 were attributable mainly to
management’s estimation that certain debt securities were under fair value over one year and certain non-public companies in which
Kyocera invested would need considerable periods to gain profitability in their operating activities.
Kyocera Corporation is currently a major shareholder of KDDI. The price fluctuation of the KDDI shares may affect Kyocera’s
financial conditions. At March 31, 2007, the unrealized gain of ¥289,853 million ($2,456 million) on KDDI shares held by Kyocera
Corporation increased compared with that of ¥111,178 million at March 31, 2006 reflecting a fluctuation of the market price of theKDDI shares during fiscal 2007. As the operating results of KDDI recently grew steadily, the performance of KDDI shares is
considered to be stable. For detailed information on the gross unrealized gain or loss, see Note 4 to the Consolidated Financial
Statements in this annual 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 expected undiscounted cash flow from the asset
is less than its carrying value. A loss on impairment is recognized based on the amount by which the carrying value exceeds the fairvalue of the long-lived assets and intangible assets with definite useful lives. In fiscal 2007, Kyocera recognized losses on impairmentof long-lived assets in some subsidiaries. However these losses on impairment did not have a material impact on Kyocera’s
consolidated results of operations and financial position.
- 50 -

Goodwill and other intangible assets
Kyocera has adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” This requires that, rather than being amortized,
goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually, and also following any events orchanges in circumstances that might lead to impairment. Intangible assets with definite useful lives are amortized over their respective
estimated useful lives to their estimated residual values, and reviewed for impairment whenever events or changes in circumstancesindicate that their carrying amount may not be recoverable.
Kyocera performed the annual impairment test of goodwill and other intangible assets and recorded an impairment loss of ¥1,478
million ($13 million) in a reporting unit in the “Others” segment in fiscal 2007. The impairment charge reflected the overall decline in
the fair value of a domestic subsidiary, which caused by stagnant sales and profit results. The fair value of the subsidiary wasestimated principally using the expected present value of future cash flow.
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 principally depends on the estimation of futuretaxable income and feasible tax planning strategies. If future taxable income is lower than expected due to future market conditions orpoor operating results, significant adjustments to deferred tax assets may be required. At March 31, 2007, deferred tax assets
amounted to ¥87,155 million ($739 million), which Kyocera considers will reasonably be realized in the future compared with theamounts of income from continuing operations before income taxes and income taxes in fiscal 2007.
Benefit plans
Projected benefit obligations and net periodic costs are determined on an actuarial basis and are significantly affected by theassumptions used in their calculation, such as the discount rates, the expected long-term rate of return on plan assets, the rate ofincrease in compensation levels and other assumptions. Kyocera determines the discount 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 ofhistorical earnings and Kyocera’s expectation of future performance of the funds in which plan assets are invested. The rate ofincrease in compensation levels is determined based mainly on results of operations and inflation. Kyocera annually reviews theassumptions underlying its actuarial calculations, making adjustments based on current market conditions, if necessary. If Japaneseand global financial markets stagnate, Kyocera may be required to decrease its assumptions of the discount rate and the expectedlong-term rate of return on plan assets, and a decrease in such assumptions will lead to an increase in projected benefit obligations andnet periodic pension costs.
Particularly, an increase in projected benefit obligations may negatively affect Kyocera’s accrued pension and severance liabilities in
the consolidated balance sheet and labor costs included in cost of sales and selling, general and administrative expenses in the
consolidated statement of income.
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 status of its defined benefit
postretirement plans as an asset or liability in its consolidated balance sheets and to recognize changes in that funded status in the year
in which the changes occur through comprehensive income. Accordingly, in case that changes in the assumptions lead to increases ofprojected benefit obligations or decrease in the value of plan assets, the amounts of comprehensive income will decrease.
- 51 -

Sensitivity analysis of benefit plans
The following table illustrates the effect of assumed changes in discount rates and the expected rate of return on plan assets, withassuming all other assumptions consistent, for the benefit plan at Kyocera Corporation and its major domestic subsidiaries which
accounts for a significant portion of Kyocera’s projected benefit obligations and net periodic pension costs.
(Yen in millions)
Effect on projected benefit obligation
as of March 31, 2007

Discount rates:
0.25% decrease
0.25% increase

¥

3,411
(3,280)Effect on income before income taxes
for the year ending March 31, 2008

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

¥

(86)
89
(285)
285

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 thelikelihood of an adverse outcome is probable and the amount is reasonably estimable. In making these estimates, Kyocera considers
the progress of the lawsuits, the situations of 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.
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 earned from transfers of products between Kyocera
Corporation and its overseas subsidiaries was not appropriate for the five years from the year ended March 31, 1999 through the year
ended March 31, 2003. The notice indicated that income should be adjusted upwards ¥24,394 million and that resultant additional tax,
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 complaint against tax
assessment based on transfer pricing adjustments with the Osaka Regional Tax Bureau.
On September 25, 2006, Kyocera Corporation received decision letter from the Bureau that voided a portion of the originalassessment. In accordance with this decision, ¥4,305 million ($36 million) of tax refunds, including local taxes, was recognized incurrent income taxes in fiscal 2007. Kyocera Corporation remains in disagreement with the decision concerning the portion of theoriginal assessment that was not voided, and therefore, on October 23, 2006, Kyocera submitted a written claim for examination with
the Osaka Board of Tax Appeals. Furthermore, with the objective of avoiding duplicate taxation within Kyocera Group, a noticestating mutual agreement with the United States was submitted to the National Tax Agency on December 26, 2006.
- 52 -

Revenue recognition
Kyocera sells various types of products, including fine ceramic parts, semiconductor parts, and telecommunications equipment.
Kyocera recognizes revenue upon completion of the earnings process, which occurs when products are shipped or delivered tocustomers 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 is reasonably assured. Most of these conditions are satisfied at the time of delivery tocustomers 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 estimate based on its historical repair experience.
Recently Issued 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 the accounting 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 shall be effective forfiscal years beginning after December 15, 2006. Kyocera is currently evaluating the impact of adoption of FIN 48 in its consolidated
results of operations and financial position.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The purpose of SFAS No. 157 is to define fairvalue, establish a framework for measuring fair value and enhance disclosures about fair value measurements. The measurement anddisclosure requirements are effective beginning after November 15, 2007. Kyocera is currently evaluating the impact of adoption of
SFAS No. 157 in its consolidated results of operations and financial position.
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 andliabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized inearnings. SFAS No.159 is effective for fiscal years beginning after November 15, 2007 and Kyocera will adopt SFAS No. 159
effective April 1, 2008. Kyocera is currently evaluating the impact of adoption of SFAS No. 159 in its 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 ofoperations, purchases of Kyocera Corporation’s common stock, and payments of dividends to stockholders. Kyocera’s primary sourceof short-term liquidity is cash generated by operations. Certain subsidiaries also generate capital in the form of loans from financial
institutions. At March 31, 2007, Kyocera’s short-term borrowings and long-term debt including current portion totaled ¥28,386
million ($241 million). The ratio to total assets of 1.3% still reflected at a low level of dependence. Most borrowings weredenominated in the yen, the U.S. dollar and the Euro but certain borrowings were denominated in other foreign currencies. Details ofthese borrowings are described in “Tabular Disclosure of Contractual obligations,” which also includes the information regarding
obligations for the acquisition or construction of property, plant and equipment.
- 53 -

Capital expenditures in fiscal 2007 decreased by ¥18,964 million ($161 million), or 21.3%, to ¥69,896 million ($592 million) from¥88,860 million in fiscal 2006. In fiscal 2007, Kyocera made capital expenditures particularly to increase production capacity in theElectronic Device Group with business expansion. However, overall capital expenditures in fiscal 2007 decreased compared withfiscal 2006, which included large-scale capital expenditures in the organic package business and the solar energy business. R&D
expenditures increased by ¥3,664 million ($31 million), or 6.4%, to ¥61,100 million ($518 million) from ¥57,436 million in fiscal
2006. Nearly all capital and R&D expenditures were funded using cash in hand or cash generated by operations.
During fiscal 2008, Kyocera expects total capital expenditures to be approximately ¥86,000 million ($729 million), and total R&D
expenditures to be approximately ¥67,000 million ($568 million). 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, 2007, Kyocera’s working capital totaled ¥740,303 million ($6,274 million), an increase of ¥198,258 million ($1,680
million), or 36.6%, from ¥542,045 million at March 31, 2006. This was due to the effect of an increase in short-term investments
including negotiable certificate of deposits and a decrease of debt by the sale of KLC in fiscal 2007. Kyocera plans to continue toimprove 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 to fulfill its future capital expenditures, debt repayments andother obligations. Kyocera’s net cash provided by operating activities in fiscal 2007 was ¥149,644 million ($1,268 million) and cash
and cash equivalents at March 31, 2007 were ¥282,208 million ($2,392 million). Kyocera believes that its working capital issufficient for present and predictable future requirements.
Kyocera Corporation holds its treasury stock to facilitate the implementation of flexible capital policies and to develop its business ina dynamic manner in response to changes in the operating environment.
In fiscal 2007, Kyocera Corporation paid cash dividends totaling ¥18,787 million ($159 million), at ¥100 ($0.8) per share. Kyocera
Corporation received approval at the general meeting of shareholders held on June 27, 2007 for the payment of year-end dividends
totaling ¥11,319 million ($96 million), ¥60 ($0.5) per share, on June 28, 2007 to all stockholders of record on March 31, 2007.
Kyocera believes cash on hand and cash from operations will be sufficient to fund all cash requirements outlined above, at least
through fiscal 2008. Consequently, Kyocera does not currently intend to use any other external financing 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 throughissuances of debt or equity securities. As evidenced by an equity to assets ratio of 71.1% at March 31, 2007, Kyocera maintains astrong financial position, which leads Kyocera to believe that any capital requirements could be secured from external sources 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 to levels substantiallybelow those projected by Kyocera, could adversely affect Kyocera’s operating results and financial position, possibly resulting in
reduced liquidity.
- 54 -Cash flows
Fiscal 2007 compared with Fiscal 2006
The following table shows a summary of Kyocera’s cash flows for fiscal 2006 and fiscal 2007:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,

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

2006
Amount2007
Amount2007
Amount¥ 171,077(165,467)(23,289)
300,809¥ 149,644(151,703)(20,645)282,208$ 1,268,169(1,285,619)(174,958)
2,391,593

Increase(Decrease)%(12.5)(8.3)(11.4)(6.2)

Net cash provided by operating activities in fiscal 2007 decreased by ¥21,433 million ($182 million), or 12.5%, to ¥149,644 million($1,268 million) from ¥171,077 million in fiscal 2006. This was due mainly to decreases in cash inflow related to inventories andreceivables, although net income increased by ¥36,808 million ($312 million), or 52.8%, to ¥106,504 million ($903 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 ($117 million), or 8.3%, to ¥151,703 million ($1,286
million) from of ¥165,467 million in fiscal 2006.
There was ¥24,553 million ($208 million) of cash inflow proceeded from sale of shares of KLC in fiscal 2007 whereas there was¥24,133 million of cash flow proceeded from sale of shares of Taito Corporation in fiscal 2006. In addition, although acquisition oftime deposits significantly increased, there were decreases in payments for purchases of property, plant and equipment, and purchasesof 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 ($22 million), or 11.4%, to ¥20,645 million ($175
million) from ¥23,289 million in fiscal 2006. This was due to an increase by ¥5,327 million ($45 million) in sale of treasury stock by
exercises of stock options and a decrease in payments of long-term debt, which exceeded decreases in proceeds from short-termborrowings and long-term debt.
On August 1, 2006, Kyocera sold its shares in KLC, a subsidiary engaged in financing services. As a result, both the amounts ofproceed from insurance of short-tem and long-term debts, and the amounts of payments of short-term and long-term debt, which areincluded in financial activities, will decrease in fiscal 2008 and afterwards, however, such decreases will not have significant effects
on Kyocera’s cash flows in total. See Note 3 to the Consolidated Financial Statements in this annual report.
The yen’s depreciation against the U.S. dollar and Euro between March 31, 2006 and 2007 resulted in increases in cash and cash
equivalents of ¥4,103 million ($35 million).
At March 31, 2007, cash and cash equivalents totaled ¥282,208 million ($2,392 million). This represented a decrease of ¥18,601
million ($158 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 in foreign currencies,
such as the U.S. dollar.
- 55 -

Fiscal 2006 compared with Fiscal 2005
(Yen in millions)Years ended March 31,

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

2005
Amount2006
Amount¥ 145,523(132,494)(67,344)
310,592¥ 171,077(165,467)(23,289)
300,809

Increase(Decrease)
%

17.6
24.9
(65.4)(3.1)

Net cash provided by operating activities in fiscal 2006 increased by ¥25,554 million, or 17.6%, to ¥171,077 million from¥145,523 million in fiscal 2005. This was due to an increase in net income by ¥23,788 million, or 51.8%, to ¥69,696 million from¥45,908 million in fiscal 2005, coupled with a decrease in inventory as a result of inventory normalization and an increase in notes
and account payable in line with an increase in orders and production.
Net cash used in investing activities in fiscal 2006 increased by ¥32,973 million, or 24.9%, to ¥165,467 million from net cash used ininvesting activities of ¥132,494 million in fiscal 2005. In fiscal 2006, proceeds from sales of Taito Corporation shares and a decreasein payment for purchase of investments and advances compared with fiscal 2005 provided cash inflow in investing activities.
Nonetheless, payment for purchases of property, plant and equipment increased owing to aggressive capital expenditure, payment forpurchase of securities increased in line with fund management, and deposits of negotiable certificates of deposits and time deposits
increased compared with fiscal 2005. As a result, net cash used in investing activities in fiscal 2006 increased compared with fiscal
2005.
Net cash used in financing activities in fiscal 2006 decreased by ¥44,055 million, or 65.4%, to ¥23,289 million from ¥67,344 million
in fiscal 2005. Although dividend payments increased in fiscal 2006 compared with fiscal 2005, an increase in short-term debt caused
net cash used in financing activities to decrease compared with fiscal 2005.
The yen’s depreciation against the U.S. dollar and Euro between March 31, 2005 and 2006 resulted in an increase in cash and cash
equivalents of ¥7,896 million.
At March 31, 2006, cash and cash equivalents totaled ¥300,809 million. This represented a decrease of ¥9,783 million, or 3.1%, from
¥310,592 million at March 31, 2005. Most of Kyocera’s cash and cash equivalents were denominated in the yen but certain cash andcash equivalents, mainly in overseas subsidiaries, were denominated in foreign currencies, such as the U.S. dollar.
- 56 -

Assets, liabilities and stockholders’ equity
Kyocera’s total assets at March 31, 2007 increased by ¥198,942 million ($1,686 million), or 10.3%, to ¥2,130,464 million ($18,055
million), compared with ¥1,931,522 million at March 31, 2006.
Cash and cash equivalents decreased by ¥18,601 million ($158 million), or 6.2%, to ¥282,208 million ($2,392 million). This was due
mainly to the effect of net cash used to cover dividend payments and deposit of negotiable certificates of deposits aiming for higher
interest, exceeding net cash gained by operating activities as well as the sale of all of Kyocera’s shares of KLC.
Short-term investments increased by ¥125,553 million ($1,064 million), or 142.8%, to ¥213,495 million ($1,809 million), due mainly
to increases in negotiable certificates of deposits and bonds maturing within one year, which were reclassified from securities andother investments.
Short-term and long-term finance receivables that were recognized as loan assets by KLC., were eliminated. This is because KLC
ceased being a consolidated subsidiary of Kyocera as a result of the sale of all of Kyocera’s shares of KLC in August 2006.
Accounts receivables increased by ¥25,987 million ($220 million), or 12.4%, to ¥236,380 million ($2,003 million), due mainly to anincrease in sales in the Telecommunications Equipment Group at Kyocera Corporation and at KMC.
Inventories increased by ¥18,624 million ($158 million), or 9.8%, to ¥209,188 million ($1,773 million). This was due mainly toincreases in finished goods held by KMC and Kyocera International Inc. (KII) as well as work-in-progress items of Kyocera
Corporation and AVX, in line with increased sales and more new product lines.
Securities and other investments increased by ¥137,191 million ($1,163 million), or 24.8%, to ¥690,568 million ($5,852 million), due
mainly to increased market value at March 31, 2007 of KDDI stock and other equity securities compared with March 31, 2006.
Total property, plant and equipment at cost, net of accumulated depreciation, decreased by ¥4,440 million ($38 million), or 1.6%, to¥280,906 million ($2,381 million). Capital expenditure in fiscal 2007 was ¥69,896 million ($592 million), and depreciation was¥70,155 million ($595 million).
Other assets increased by ¥23,627 million ($200 million), or 111.3%, to ¥44,855 million ($380 million). This increase was due
mainly to an increase of ¥23,614 million ($200 million) prepaid benefit costs upon Kyocera’s adoption of SFAS No. 158,
“Employer’s Accounting for Defined Benefit Pension and Other Post-retirement Plans.”
Kyocera’s total liabilities at March 31, 2007 decreased by ¥28,522 million ($242 million), or 4.9%, to ¥548,981 million ($4,652
million), compared with ¥577,503 million at March 31, 2006.
Total debt, composed of short-term borrowings and long-term debt including debt due within one year, decreased by ¥112,186
million ($951 million), or 79.8%, to ¥28,386 million ($241 million), due mainly to the sale of KLC.
Deferred income taxes-non-current liabilities increased by ¥81,172 million ($688 million), or 64.6%, to ¥206,858 million ($1,753
million), due mainly to an increase in market value at March 31, 2007 of KDDI stock and other equity securities compared with
March 31, 2006.
- 57 -

Minority interests in subsidiaries, principally AVX, increased by ¥1,981 million ($17 million), or 3.1%, to ¥66,923 million ($567
million), compared with ¥64,942 million at March 31, 2006, due mainly to strong performance at AVX.
Total stockholders’ equity at March 31, 2007 increased by ¥225,483 million ($1,911 million), or 17.5%, to ¥1,514,560 million($12,835 million), compared with ¥1,289,077 million at March 31, 2006.
Retained earnings at March 31, 2007 increased by ¥87,717 million ($743 million), or 9.1%, due to net income for fiscal 2007 of¥106,504 million ($903 million), less cash dividend payments of ¥18,787 million ($159 million).
Accumulated other comprehensive income increased by ¥130,109 million ($1,103 million), or 178.4%, to ¥203,056 million ($1,721
million). Net unrealized gains on securities increased by ¥102,021 million ($865 million), or 123.4%, due mainly to increased market
value at March 31, 2007 of KDDI stock and other equity securities compared with March 31, 2006. Pension adjustments, which werereported for the first time upon Kyocera’s adoption of the SFAS No. 158, were ¥15,419 million ($131 million), at March 31, 2007.
Foreign currency translation adjustments increased by ¥10,474 million ($89 million), to ¥2,904 million ($25 million), due mainly tothe depreciation of the yen against Euro.
The stockholders’ equity ratio at March 31, 2007 was 71.1%, up 4.4 percentage points from 66.7% at March 31, 2006.
C. Research and development activities
Kyocera continuously aims at expanding sales and boosting profitability in its Components and Equipment Businesses. To achievethese objectives, Kyocera seeks to create new technologies, products and businesses by integrating group-wide management resources
while advancing and focusing technological capabilities. Kyocera will channel its energies into two high-growth-potential areas;
namely, the markets for telecommunications and information processing and for environmental preservation. R&D activities are
conducted in all of these markets 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 tostrengthen the development of fine ceramic components for next-generation semiconductor processing equipment and large-sized
LCD manufacturing equipment and of high-quality, cost-competitive sapphire substrates for LEDs, whose applicability is expected toincrease. In the growing automotive market, efforts are being undertaken to develop products that meet the need for advanced
electronics and safety and growing concerns with the environment. Specific endeavors include the development of glow plugs byfully utilizing the high temperature durability of ceramics and piezo 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 highlysophisticated ceramic packages with a variety of built-in functions in order to meet rapid advancements in mobile phone handsets.
Kyocera is also developing ceramic packages for various types of sensors for use in the automotive market. In the organic package
business, Kyocera is developing new flip chip packages for next-generation high-performance semiconductors and narrow pitch flipchip system in a package (SiP) substrates to realize even thinner.
- 58 -

(3) Applied Ceramic Products Group
While striving to further increase the conversion efficiency of solar cells for the environmental preservation market, Kyocera isdeveloping a variety of next-generation solar cells. Kyocera is also working toward the practical application of solid oxide fuel cells(SOFCs) for residential use, which are expected to be the next-generation distributed power generation system for small-scale powersources.
(4) Electronic Device Group
Kyocera develops various electronic components for digital consumer equipment market and the high-growth-potential sensor related
market. Particular areas of our development include small and high-capacitance capacitors, low-pass filters for mobile phone handsetswith One-Seg terrestrial digital broadcasting capability, small crystal units and timing devices for the sensors.
In thin-film devices, Kyocera is developing thermal printheads for high-resolution digital photo printers, and industrial LCDs
equipped with an LED backlight to meet needs from an environmental perspective. Work is also being done towards the massproducing of organic light emitting diode (OLED) displays that realize low power consumption and that have moving image quality
seen as outstanding for mobile devices.
(5) Telecommunications Equipment GroupBy making effective use of component, device and software technologies within the group, Kyocera is seeking to develop high-valueadded products for the mobile telecommunications equipment market, in which functions are becoming increasingly advanced. In thedomestic PHS market, Kyocera is developing handsets compatible with high-performance PHS base stations to ensure faster datatransmission rates and the provision of diverse services. Kyocera is also strengthening the development of equipment for wirelessbroadband systems such as *iBurst™ and VoIP (Voice over Internet Protocol) that enable stable, high-speed and high-data rate
communication.
* iBurst™ is a trademark of ArrayComm, Inc.
(6) Information Equipment Group
Kyocera is promoting the development of more color-based and solutions-oriented products based on the “ECOSYS” concept, whichis realized through the incorporation of a long-lasting amorphous silicon photoreceptor drum. Apart from bolstering the lineup forboth black and white and color ECOSYS printers, copying machines and multifunctional systems, Kyocera is advancing thedevelopment 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) Optical Equipment Group
Leveraging optical and image processing technologies amassed within the group, Kyocera is strengthening the development of opticalcomponents for the barcode reader market. Kyocera is also continuing the development of lenses and image processing technology
for the automotive market.
(8) Others
Kyocera Chemical Corporation is currently strengthening the development of semiconductor and crystal-related materials. Focused
efforts include the development of photo-sensitive, heat-resistant resin as a protective coating for the surface of semiconductors andof photo spacers for LCDs.
KCCS is promoting development in the area of fixed mobile convergence (FMC) and optimization by anticipating the needs for nextgeneration mobile phone handsets and other mobile communication equipment. In addition, KCCS continues to develop
authentication and security technologies, which seek to meet needs for fast changing next-generation networks.
- 59 -

R&D expenses by reporting segment are as follows.
Years ended March 31,

Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Total Components BusinessTelecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
Total Equipment Business
OthersR&D expenses% to net sales

2005
Amount2006
Amount¥ 4,252
2,890
2,747
11,416
21,305
14,972
13,2702,636
30,8782,215¥54,398
4.6%¥ 3,107
3,549
3,923
10,94021,51915,313
16,416
1,079
32,8083,109¥57,436
4.9%

2007
Amount¥ 3,7693,757
4,138
12,12323,787
15,123
17,983585
33,691
3,622¥61,100
4.8%

Increase (Decrease)
Fiscal 2007
compared with
Fiscal 2006%

$ 31,941
31,83935,068102,737
201,585
128,161
152,398
4,958
285,51730,695$517,797
—

21.3
5.9
5.5
10.8
10.5
(1.2)
9.5
(45.8)
2.7
16.5
6.4
—

We have a variety of patents in Japan and other countries, and hold licenses for the use of patents from others. Details are set forth in
Item 4 B “Patents and Licenses” in this Form 20-F.
D. Trend Information
The following statements contain forward-looking statements. They are based on estimates and assumptions of our management
about the future and are subject to significant uncertainty. You should read these statement in conjunction with the Item 3.D “Risk
Factors” in this Form 20-F, which describe factors that may contribute to actual events or our results of operations differing fromthat stated in the forward looking statements below, including changes in the Japanese or world economies and demand for our
products.
The information below should be read in conjunction with other sections within Item 5 “Operating and Financial Review andProspects” of this Form 20-F, which contains some of the trend information required by this item.
Market Trends
In the telecommunications and information processing market, a key area for Kyocera, demand for mobile handsets in the emerging
markets is expected to expand coupled with the commencement of new services in developed countries. More specifically the rising
popularity of advanced mobile handsets featuring high-pixel color LCDs, built-in cameras and other functions including GPS (global
positioning system), and terrestrial TV broadcasting, is expected to propel demand for mobile phone handsets. In addition, stable
growth is predicted to continue in PC-related and digital still cameras, while strong growth in demands for new game consoles andflat panel digital TVs is anticipated. Kyocera expects these areas of growth will produce a positive impact on both the components
and equipment businesses.
In the information equipment industry, demand for high-speed multifunctional products equipped with printers, copiers and facsimile,
is expected to grow. To seize this opportunity by meeting with such needs, we aim at expanding our product lines ranging from black
and white models to color models.
In the environmental preservation market, which is another key area for Kyocera, solar energy market is growing rapidly on a global
basis as an alternative energy due to rising environmental awareness. Demand for solar energy products are expanding, especially inJapan and Europe supported by governmental subsidy systems. As such subsidy systems are being introduced in the United States andother Asian countries, the solar energy market is expected to expand in the future. In addition, ceramic components for automobiles,
which comply with current environmental regulations, are also expected to grow in the future.
- 60 -

E. Off-Balance Sheet Arrangements
Refer to Note 14 in The Consolidated Financial Statements included in this Form 20-F.
As a part of its ongoing business, we have no unconsolidated special purpose financing or partnership entities that are likely to creatematerial contingent obligations.
- 61 -

F. Tabular Disclosure of Contractual Obligations
The following tables provide information about Kyocera’s contractual obligations and other commercial commitments that will affectKyocera’s liquidity for the next several years, as of March 31, 2007. Kyocera anticipates that funds to be required to fulfill these debt
obligations and commitments will be generated internally from operations.
Contractual obligations(Yen in millions)Less than
1 yearShort-term borrowings*
Interest payments for short-term borrowings*
Long-term debt (including due within one year)*Interest payments for long-term debt*
Supply agreement material used in operation
Operating Leases
Obligations for the acquisition or construction of property, plant andequipment
Total Contractual Obligations

4-5 years

Thereafter¥ 15,250 ¥
—
788
—
5,853
3,387
270
268
3,310
16,856
6,346
7,123

¥

¥

12,542
3,351¥ 44,359 ¥ 30,985—¥ 29,225

Contractual obligations

2-3 years

—
—
2,390
110
22,584
4,141

Total

— ¥ 15,250
—
788
1,506
13,13647
695
64,188106,938
5,270
22,880—15,893¥ 71,011 ¥ 175,580(U.S. dollars in thousands)
Less than
1 yearShort-term borrowings*
Interest payments for short-term borrowings*
Long-term debt (including due within one year)*Interest payments for long-term debt*
Supply agreement material used in operation
Operating Leases
Obligations for the acquisition or construction of property, plant andequipment
Total Contractual Obligations

4-5 years

Thereafter$129,237 $
—
6,678
—
49,602
28,7032,288
2,273
28,051 142,847
53,78060,3642-3 years$——
20,254
932
191,390
35,093$

Total

106,288
28,398$375,924 $262,585—$247,669—
134,686$601,788 $1,487,966— $ 129,237—
6,678
12,763111,322398
5,891
543,966
906, 254
44,661
193,898* For Kyocera’s variable interest rate of borrowings and debt, Kyocera utilized the rates in effect as of March 31, 2007 whenestimating schedule of interest payments.
In addition to contractual obligations shown in the above tables, Kyocera forecasts to contribute ¥9,684 million ($82 million) to its
defined benefit pension plans in fiscal 2008.
- 62 -

Item 6.

Directors, Senior Management and Employees

A. Directors and Senior Management
Since April 1, 2006, Kyocera implemented a new management system. In June 2005, Kyocera initiated a management system withthe roles of the Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and the Chief Operating Officer (COO).
Subsequently, however, Kyocera decided that its traditional management system, which had been in place for many years, enables
faster decision-making across-the-board through the use of a top management system comprising the chairman, the deputy chairman
and the president. With this setup, 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 more accurate management
decisions can be made with the traditional system as the chairman, the deputy chairman and the president can provide diverse
perspectives on critical issues.
The following table shows Kyocera’s Directors and Corporate Auditors as of June 28, 2007.
Name

Date of Birth

Position

Since

Kensuke Itoh

December 17, 1937

Director and Advisor

1975

Noboru Nakamura

October 6, 1944

Representative Director and Chairman(Representative Director and Chairman of JAPANMEDICAL MATERIALS CORPORATION and
Representative Director and Chairman of KYOCERACHEMICAL CORPORATION)

Masahiro Umemura

August 8, 1943

Representative Director and Vice Chairman

1991

Yuzo Yamamura

December 4, 1941

Representative Director and Vice Chairman(Representative Director and President of KYOCERA ELCOCORPORATION and General Manager of Corporate
Communication Equipment Group)

2003

Naoyuki Morita

April 8, 1942

Representative Director and Vice Chairman(Representative Director and Chairman and President of
KYOCERA COMMUNICATIONSYSTEMS CO., LTD.)

2003

Makoto Kawamura

August 13, 1949

Representative Director and President- 63 -

1991(Chairman
2006)

2005
(President
2005)

Name

Date of Birth

Position

Since

Koji Seki

December 8, 1937

Director (Representative Director and Chairman of
KYOCERA MITA CORPORATION)

2003

Michihisa Yamamoto

November 13, 1942

Director (Representative Director and Chairman of
KYOCERA OPTEC CO., LTD., and Deputy General
Manager of Corporate Communication Equipment Group)

1987

Isao Kishimoto

November 30, 1943

Director (Representative Director and President of
KYOCERA KINSEKI CORPORATION)

1993

Hisao Hisaki

July 2, 1946

Director (General Manager of KYOCERA (TIANJIN)SALES AND TRADING CORPORATION)

1991

Rodney N. Lanthorne

February 5, 1945

Director(Director and President of KYOCERA INTERNATIONAL,
INC.)

1989

John S. Gilbertson

December 4, 1943

Director(Director, President and Chief Executive Officer of AVX
CORPORATION)

1995

Yoshihiko Nishikawa

September 11, 1945

Full-time Corporate Auditor

2005

Yasuo Akashi

May 29, 1944

Full-time Corporate Auditor

2003

Osamu Nishieda

January 10, 1943

Corporate Auditor (Lawyer)

1993

Shinji Kurihara

July 19, 1932

Corporate Auditor (General Manager of TAKEDA Hospital
Research Institute)2003

Shigekazu Tamura

February 18, 1950

Corporate Auditor(Certified Public Accountant)

2005

Kensuke Itoh has served as a Director and the Advisor of Kyocera Corporation since 2005. He became a Director in 1975, aManaging Director in 1979, and a Senior Managing Director in 1981 and the Chairman of 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.
- 64 -

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 in 1997 and an Executive Vice President andRepresentative Director in 1999. He joined Kyocera Corporation in 1967 and has served as the Representative Director and Chairmanof Kyocera Chemical Corporation, Representative Director and Chairman of Japan Medical Materials Corporation, Representative
Director and Chairman 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 Chairmanof Kyocera International Co., Ltd., and Representative Director and President of Kyoto Fashion Center Ltd.
Masahiro Umemura has served as a Representative Director and Vice Chairman since 2005. He became a Director in 1991, aManaging Director in 1993 and a Senior Managing and Representative Director in 1997 and an Executive Vice President andRepresentative Director in 1999. He joined Kyocera Corporation in 1966 and is in charge of Finance and Corporate Development
Group and has served as the Chairman of the Board of Directors of Kyocera Management Consulting Service (Shanghai) Co., Ltd.
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 andRepresentative Director in 1995 and retired again in 1999. He originally joined Kyocera Corporation in 1965 and has served as the
President and Representative Director of Kyocera ELCO Corporation.
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 retired in 1999. He originally joined Kyocera Corporation in 1967 and has served as the Representative Director
and Chairman and President of Kyocera Communication Systems Co., Ltd.
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 Representative Director and Chairman and President in Kyocera Korea Co., Ltd., 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.
Koji Seki rejoined Kyocera Corporation as a Director in 2003. He first became a Director in 1989 and a Managing Director in 1999,
and he retired in 2001. He originally joined Kyocera Corporation in 1982 and has served as the Representative Director and Chairmanof Kyocera Mita Corporation.
Michihisa Yamamoto has served as a Director of Kyocera Corporation since 1987. He became a Director in 1987, and a Managing
Director in 1989 and 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 the Representative Director and Chairman of Kyocera
Optec Co., Ltd.
Isao Kishimoto has served as a Director of Kyocera Corporation since 1993. He became a Director in 1993, a Managing Director in1997 and a Senior Managing Director in 2001. He joined Kyocera Corporation in 1967 and has 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 in 1969 and has served as
the representative Director and Chairman of the Board of Directors of Kyocera Tianjin Sales and Trading Corporation.
- 65 -

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 and Chief Executive Officer of AVX
Corporation.
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.
Yasuo Akashi has served as a Full-time Corporate Auditor of Kyocera Corporation since 2003. He became a Director in 1991, aManaging Director in 1993 and a Senior Managing and Representative Director in 1997. He joined Kyocera Corporation in 1967.
Osamu Nishieda has served as a Corporate Auditor of Kyocera Corporation since 1993. He has served as an In-House Council ofKyocera Corporation.
Shinji Kurihara has served as a Corporate Auditor of Kyocera Corporation since 2003. He has served as the General Manager ofTakeda Hospital Research Institute.
Shigekazu Tamura has served as a Corporate Auditor of Kyocera Corporation since 2005. He is registered as the Certified Public
Accountant defined by the Certified Public Accountant Law of Japan.
Kyocera adopts an “executive officer system,” of which objectives are 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.
The following table shows Kyocera’s Executive Officers as of June 28, 2007.
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 ItohManaging 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 KYOCERAELECTRONICS CO., LTD.)

Eiichi Toriyama

Managing Executive Officer(Deputy General Manager of Corporate
Communication Equipment Group (In charge ofSales) )- 66 -

Name

Position

Keijiro Minami

Senior Executive Officer(General Manager of Corporate Legal & Intellectual
Property Group)

Goro Yamaguchi

Senior Executive Officer(Deputy General Manager of Corporate
Semiconductor Components Group and General
Manager of Corporate Semiconductor Components
Sales Division)

Yoshihito Ota

Senior Executive Officer(General Manager of Corporate Office of the Chief
Executives)

Yasushi Matsumura

Executive Officer(General Manager of Corporate Display Group)

Yukihiro Takarabe

Executive Officer(General Manager of Corporate Cutting Tool Group)

Yasuyuki Yamamoto

Executive Officer(General Manager of Corporate Mobile
Communication Equipment Division and Corporate
Communication Systems Equipment Division,
Corporate Communication Equipment 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)

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(Director and President of Kyocera Fine Ceramics
GmbH)

Shoichi Aoki

Executive Officer(General Manager of Corporate Financial &Accounting Group)

Hiroshi Togi

Executive Officer(General Manager of Corporate Ceramic Packages
Division, Corporate Semiconductor Components

Group)
Yoshihiro Kano

Executive Officer(General Manager of Corporate Development Group)- 67 -

Name

Position

Yoichi Yamashita

Executive Officer(General Manager of Corporate Production
Technology and 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 Kouzu

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)

B. Compensation
The aggregate amount of compensation, including bonuses, paid by Kyocera Corporation and its certain subsidiaries in the fiscal year
ended March 31, 2007 to all Directors, Executive Officers and Corporate Auditors of Kyocera Corporation and its certain subsidiaries
was ¥1,320 million ($11 million).
In accordance with customary Japanese business practice, 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 such approval, the amount to be
paid to each Director or Corporate Auditor is consulted with and fixed by the Board of Directors in accordance with Kyocera
Corporation’s internal regulations. Annual provisions are made in the accounts of Kyocera Corporation for the estimated cost of theretirement allowance for Directors and Corporate Auditors.
The annual provisions and costs charged to income for such retirement allowance for fiscal 2007 were ¥64 million ($1 million).
We have neither disclosed to our shareholders nor otherwise made public any of the information specified in this item for individually
named Directors, Officers or Corporate Auditors.
C. Board Practices
In accordance with the requirements of the Company Law of Japan which came into effect on May 1, 2006 (the “Company Law”),
our Articles of Incorporation provide for not more than five Corporate Auditors. Corporate Auditors are elected at a general meetingof 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 orits subsidiaries (“Outside Corporate Auditors”). Corporate Auditors form the Board of Corporate Auditors. Corporate Auditors areunder a statutory duty to oversee the administration of our affairs by the Directors, to examine our financial statements and business
reports to be submitted by the Board of Directors to the general meetings of shareholders and to report their opinions thereon to theshareholders. They are obliged to attend meetings of the Board of Directors and to express their opinions, but they are not entitled tovote. 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 and methods ofinvestigation of our affairs.
- 68 -

Under the Company Law, the Directors and Corporate Auditors are liable for any damages suffered by us as a result of their violationof laws or regulations or any failure to perform their duties. Under our Articles of Incorporation, any such liabilities incurred by theOutside Corporate Auditors may, except in the case of willful misconduct or gross negligence or in certain other cases, be limited by aliability limitation agreement entered into between the Outside Corporate Auditors and us, up to an amount to be calculated inaccordance with the relevant provisions of the Company Law with reference to annual remuneration, retirement allowance and profits
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 waselected as a Director or a Corporate Auditor.
There is no family relationship between any Director or Corporate Auditor and any other Director or Corporate Auditor.
The rights of ADR holders, including their rights relating to corporate governance practice, are provided in the Amended andRestated Deposit Agreement and an amendment thereto which are included in an exhibit to this Form 20-F. See also Item 10.B
“Memorandum and Articles of Association” of this Form 20-F.
D. Employees
At March 31, 2007, Kyocera had 63,477 employees, of whom 2,951 worked in the Fine Ceramic Parts Group, 10,111 worked in the
Semiconductor Parts Group, 5,852 worked in the Applied Ceramic Products Group, 22,490 worked in the Electronic Device Group,
3,073 worked in the Telecommunications Equipment Group, 12,194 worked in the Information Equipment Group, 1,080 worked in
the Optical Equipment Group, 4,126 worked for Others and 1,600 worked in Corporate. Kyocera’s number of employees at March 31,
2007 increased by 2,009 compared with the number of employees of 61,468 at March 31, 2006.
Kyocera Corporation had 12,613 employees, and their average age and average service years were 38.6 and 15.8, 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, notto our Japanese or overseas subsidiaries. The employees at three of our subsidiaries in Japan are unionized. Employees at ourJapanese subsidiaries are not otherwise unionized. In the United States, our employees are generally unionized, subsidiaries in othercountries are unionized on a case-by-case basis. Employees of our overseas subsidiaries belong to labor unions organized by industry,
as opposed to a company specific union like the Kyocera Union. There is no material item to be specifically addressed regarding
relationships between labor and management.
- 69 -

E. Share Ownership
As of March 31, 2007, Kyocera’s Directors, Corporate Auditors and Executive Officers owned 1,708,094 shares of Kyocera
Corporation in total (1,684,501 shares of common stock of Kyocera Corporation and 23,593 ADRs of Kyocera Corporation), or 1.0%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

Title

Number of Shares

Kensuke ItohDirector and Advisor

Noboru Nakamura

Representative Director andChairman

4,100

Representative Director and Vice
Chairman

5,100

Representative Director and Vice
Chairman82,000

Representative Director and Vice
Chairman

5,600

Representative Director andPresident

3,000

Koji Seki

Director

2,318

Michihisa Yamamoto

Director

9,232

Isao Kishimoto

Director

4,100

Hisao Hisaki

Director

3,171

Rodney N. Lanthorne

Director

3,562 (ADR)John S. Gilbertson

Director

17,418 (ADR)

Yoshihiko Nishikawa

Corporate Auditor

2,102

Yasuo Akashi

Corporate Auditor

6,323

Osamu Nishieda

Corporate Auditor

980,037

Shinji Kurihara

Corporate Auditor

500

Shigekazu Tamura

Corporate Auditor—

Tetsuo Kuba

Senior Managing Executive Officer

2,000

Tatsumi Maeda

Senior Managing Executive Officer

1,100

Hisashi Sakumi

Managing Executive Officer

9,000

Masahiro Umemura
Yuzo Yamamura
Naoyuki Morita
Makoto Kawamura

527,072- 70 -

Name

Title

Number of Shares

Tsutomu Yamori

Managing Executive Officer

1,100

Takashi ItohManaging Executive Officer

9,000

Osamu Nomoto

Managing Executive Officer

1,315

Akiyoshi Okamoto

Managing Executive Officer

4,864

Eiichi Toriyama

Managing Executive Officer

1,100

Keijiro Minami

Senior Executive Officer

700

Goro Yamaguchi

Senior Executive Officer

3,800

Yoshihito Ota

Senior Executive Officer

900

Yasushi Matsumura

Executive Officer

200

Yukihiro Takarabe

Executive Officer

300

Yasuyuki Yamamoto

Executive Officer—

Junichi Jinno

Executive Officer—

Gen Takayasu

Executive Officer

500

Nobuhiro Ochiai

Executive Officer

1,000

Junzo Katsuki

Executive Officer

900

Masakazu Mitsuda

Executive Officer

500

Toshimi Gejima

Executive Officer

1,400

Michiaki Furuhashi

Executive Officer

7,867

Mitsuru Imanaka

Executive Officer

1,100

Shoichi Aoki

Executive Officer

200

Hiroshi Togi

Executive Officer

200

Yoshihiro Kano

Executive Officer—

Yoichi Yamashita

Executive Officer—- 71 -

Name

Title

Number of Shares

Robert E. Whisler

Executive Officer

1,504(ADR)John S. Rigby

Executive Officer

1,109(ADR)

Masaki Kouzu

Executive Officer—

Hitoshi Takao

Executive Officer—

Yoshiharu Nakamura

Executive Officer

800

Kazumasa Umemura

Executive Officer—

Stock Option Plans
On June 25, 2003, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approval of the issuance ofstock acquisition rights (Plan 2003) to directors, corporate auditors, corporate executive officers and certain key employees ofKyocera. Plan 2003 were granted on September 1, 2003 and fully vested on October 1, 2003 to 1,390 persons to acquire amounts
ranging from 600 to 8,000 shares of common stock each, or to acquire 1,070,100 shares of common stock in the aggregate. The
exercise price and the exercisable period of Plan 2003 have been set at ¥7,900 per share, and from October 1, 2003 to September 30,
2008.
On June 25, 2004, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approval of the issuance ofstock acquisition rights (Plan 2004) to directors, corporate auditors, corporate executive officers and certain key employees ofKyocera. Plan 2004 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 of common stock each, or to acquire 1,243,300 shares of common stock in the aggregate. The
exercise price and the exercisable period of Plan 2004 have been set at ¥8,725 per share, and from October 1, 2004 to September 30,
2008.
On June 28, 2005, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approval of the issuance ofstock acquisition rights (Plan 2005) to directors, corporate auditors, corporate executive officers and certain key employees ofKyocera. Plan 2005 were granted on September 1, 2005 and fully vested on October 1, 2005 to 1,715 persons to acquire common
stock ranging from 600 to 8,000 shares or to acquire 1,301,900 shares of common stock in the aggregate. The exercise price and theexercisable period of Plan 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 year ended March 31, 2007.
Kyocera Corporation covers Plan 2003, Plan 2004 and Plan 2005 by utilizing common stock held by Kyocera Corporation (treasury
stock).
- 72 -

As of May 31, 2007, the amount of common stock to be issued upon the exercise of all outstanding options issued to Directors,
Corporate Auditors and Executive Officers is set forth in further detail in the following table. Note, however, that there can be noassurances that the options described above will be exercised in whole or in part.
Option Holder

Title

Kensuke ItohDirector and Advisor

Noboru Nakamura

Total Options
Outstanding

Exercise Price per Share

8,000 (Plan 2004)
8,000 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Representative Director andChairman——

Masahiro Umemura

Representative Director andVice Chairman

6,000 (Plan 2004)
8,000 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Yuzo Yamamura

Representative Director andVice Chairman

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)

Naoyuki Morita

Representative Director andVice Chairman——

2,000 (Plan 2003)
4,000 (Plan 2004)
8,000 (Plan 2005)

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

Makoto Kawamura

Representative Director andPresident

Koji Seki

Director——

Michihisa Yamamoto

Director

4,500 (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)

Isao Kishimoto

Director

6,000 (Plan 2005)

8,619 YEN (Plan 2005)

Hisao Hisaki

Director

2,000 (Plan 2004)

8,725 YEN (Plan 2004)

Rodney N. Lanthorne

Director

4,500 (Plan 2003)
4,500 (Plan 2004)
4,500 (Plan 2005)

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

John S. Gilbertson

Director

4,500 (Plan 2003)
4,500 (Plan 2004)
4,500 (Plan 2005)

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

Yoshihiko Nishikawa

Corporate Auditor

3,000 (Plan 2004)
3,000 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Yasuo Akashi

Corporate Auditor

3,000 (Plan 2003)

7,900 YEN (Plan 2003)

Osamu Nishieda

Corporate Auditor——

Shinji Kurihara

Corporate Auditor——

Shigekazu Tamura

Corporate Auditor——

Tetsuo Kuba

Senior Managing Executive
Officer

2,100 (Plan 2004)

8,725 YEN (Plan 2004)

Senior Managing Executive
Office4,000 (Plan 2004)

8,725 YEN (Plan 2004)

Tatsumi Maeda
Hisashi Sakumi

Managing Executive Officer

4,000 (Plan 2004)
4,000 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Tsutomu Yamori

Managing Executive Officer

2,500 (Plan 2003)
4,000 (Plan 2004)
4,000 (Plan 2005)

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

Takashi ItohManaging Executive Officer——

Osamu Nomoto

Managing Executive Officer

4,000 (Plan 2005)

8,619 YEN (Plan 2005)

- 73 -

Option Holder

Total Options
Outstanding

Title

Exercise Price per Share

Akiyoshi Okamoto

Managing Executive Officer

3,000 (Plan 2004)

8,725 YEN (Plan 2004)

Eiichi Toriyama

Managing Executive Officer

2,700 (Plan 2004)
4,000 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Keijiro Minami

Senior Executive Officer

1,300 (Plan 2004)
700 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Goro Yamaguchi

Senior Executive Officer

1,200 (Plan 2004)
3,000 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Yoshihito Ota

Senior Executive Officer

2,500 (Plan 2004)
2,500 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Yasushi Matsumura

Executive Officer

400 (Plan 2003)
2,500 (Plan 2004)
3,000 (Plan 2005)

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

Yukihiro Takarabe

Executive Officer

2,100 (Plan 2004)
2,500 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Yasuyuki Yamamoto

Executive Officer

2,500 (Plan 2003)
2,500 (Plan 2004)
2,500 (Plan 2005)

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

Junichi Jinno

Executive Officer

1,200 (Plan 2004)
2,500 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Gen Takayasu

Executive Officer

2,500 (Plan 2005)

8,619 YEN (Plan 2005)

Nobuhiro Ochiai

Executive Officer

1,000 (Plan 2003)
2,500 (Plan 2004)
2,500 (Plan 2005)

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

Junzo Katsuki

Executive Officer

1,000 (Plan 2003)
2,500 (Plan 2004)
2,500 (Plan 2005)

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

Masakazu Mitsuda

Executive Officer

2,100 (Plan 2004)
2,500 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Toshimi Gejima

Executive Officer

2,500 (Plan 2004)
2,500 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Michiaki Furuhashi

Executive Officer

1,700 (Plan 2004)
2,500 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Mitsuru Imanaka

Executive Officer

1,200 (Plan 2003)
1,200 (Plan 2004)
2,500 (Plan 2005)

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

Shoichi Aoki

Executive Officer

2,500 (Plan 2005)

8,619 YEN (Plan 2005)

Hiroshi Togi

Executive Officer

2,500 (Plan 2005)

8,619 YEN (Plan 2005)

Yoshihiro Kano

Executive Officer

2,500 (Plan 2005)

8,619 YEN (Plan 2005)

Yoichi Yamashita

Executive Officer

600 (Plan 2004)
2,500 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Robert E. Whisler

Executive Officer

2,500 (Plan 2003)
2,500 (Plan 2004)
3,000 (Plan 2005)

7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)- 74 -

Option Holder

Total Options
Outstanding

Title

Exercise Price per ShareJohn S. Rigby

Executive Officer

2,500 (Plan 2004)
3,000 (Plan 2005)

8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)

Masaki Kouzu

Executive Officer

600 (Plan 2003)
600 (Plan 2004)
600 (Plan 2005)

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

Hitoshi Takao

Executive Officer

600 (Plan 2005)

8,619 YEN (Plan 2005)

Yoshiharu Nakamura

Executive Officer

600 (Plan 2005)

8,619 YEN (Plan 2005)

Kazumasa Umemura
Total

Executive Officer

600 (Plan 2005)
36,200 (Plan 2003)
95,800 (Plan 2004)
122,600 (Plan 2005)

8,619 YEN (Plan 2005)

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 or by the Japanese or any
foreign government, and there is no arrangement which may at a subsequent date result in a change in control of Kyocera.
The following table shows the ten largest stockholders of record of Kyocera Corporation at March 31, 2007.
Name

Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
State Street Bank and Trust Company
The Bank of Kyoto, Ltd.
Kazuo Inamori
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Inamori Foundation
BNP Paribas Securities (Japan) Limited
KI Enterprise Co., Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account 4)
Total

Shares owned(in thousands)

Ownership (%)

11,074
10,900
7,932
7,218
6,806
5,076
4,680
3,639
3,550
3,121
63,996

5.79
5.70
4.15
3.77
3.56
2.65
2.45
1.90
1.86
1.63
33.45

None of the above shareholders has voting rights that are different from those of other shareholders.
Under the Securities and Exchange Law of Japan, any person that becomes a holder (together with its related persons) of 5% of thetotal issued voting shares of a company listed on any Japanese stock exchange (including ADSs representing such shares) must file areport with the Director of the relevant Local Finance Bureau and send a copy of such report to the company. A similar report mustalso be filed if the percentage holding of a holder of more than 5% of the total issued voting shares of a company increases ordecreases by 1% or more.
- 75 -

In accordance with the Securities and Exchange Law of Japan, the financial institutions below informed us that they and their related
partners became a holder of over 5% of the total issued voting shares of Kyocera Corporation. However, they were not included in theabove major shareholders as a single major holder because not all partners of them were shareholders of record as of March 31, 2007.
Filing Date

November 15, 2006

Shares owned(in thousands)

Name

Mitsubishi UFJ Financial Group, Inc. and its
related partners

Holding 10,570 thousand shares as of
October 31, 2006

Ownership (%)

5.53

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, 2007, 3,826,821 shares of Kyocera’s common stock
were held in the form of ADSs and there were 833 ADS holders of record in the United States. According to Kyocera’s register ofshareholders, as of March 31, 2007, there were 65,741 holders of Kyocera’s common stock of record worldwide. As of March 31,
2007, there were 117 record holders of Kyocera’s common stock with addresses in the United States, holding 24,860,697 shares ofthe outstanding 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 2007, Kyocera’s sales to KDDI amounted to ¥123,163 million ($1,044 million), or 9.6% of consolidated net sales.
KDDI provides telecommunication services, and Kyocera sells mainly telecommunication equipments to KDDI. Kyocera Corporation
made an equity investment in KDDI when it was founded and currently, a director of Kyocera Corporation is a member of the boardof directors of KDDI. At March 31, 2007, Kyocera Corporation’s equity interest in KDDI was 12.76%. Kyocera serves KDDI as anindependent vendor in terms of price determination, remittance condition and product distribution. All of the agreements and ongoing
contractual commitments between Kyocera and KDDI have been made on an arm’s -length basis. Kyocera expects that KDDI willremain a significant customer in the future.
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-2 of this Form 20-F.
- 76 -

Dividend Policy
Kyocera considers that the best way to respond to shareholders’ expectations is to improve consolidated performance, thus enhancing
the corporate value, of Kyocera into the future.
Kyocera strongly takes into consideration the linkage between dividend amounts and the consolidated performance of Kyocera andhas 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 consideration various factors including the amount of
capital expenditures necessary for the medium to long term growth of Kyocera.
Pursuant to this policy and based on its performance through fiscal 2007, Kyocera proposed a year-end dividend for fiscal 2007 of 60
yen per share, a 10 yen increase as compared with fiscal 2006 in the ordinary general meeting of shareholders on June 27, 2007.
When aggregated with the interim dividend in the amount of 50 yen, the total annual dividend amount was 110 yen per share.
Kyocera also proposed that other general reserve shall be set aside, in order to take into account the necessary reserve amounts forcreation of new businesses, development of new markets and new technologies and acquisition of outside management resources
needed to achieve sustainable corporate growth of Kyocera.
We held a board of directors meeting for the interim dividend on October 30, 2006.
B. Significant Changes
Except as disclosed in this Form 20-F, there have been no significant changes since March 31, 2007.
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 of Kyocera Corporation, each representing one shareof Common Stock of Kyocera Corporation, are traded on the New York Stock Exchange. Citibank, N.A. acts as the Depositary inrespect of the American Depositary Shares. Common Stock of Kyocera Corporation is also listed on the Osaka Securities Exchange inJapan.
Tokyo Stock ExchangeYears ended March 31

Price per Share ofCommon Stock (yen)
High
Low

2003
2004
2005
2006
2007

10,0708,970
9,630
10,83011,590

5,630
5,570
7,080
7,090
8,180

Tokyo Stock Exchange

Most Recent 6 months

Price per Share ofCommon Stock (yen)
High
Low

January, 2007
February, 2007
March, 2007
April, 2007
May, 2007
June, 2007

11,480
11,20011,27011,86011,98013,18010,800
10,58010,04010,97011,47011,850

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

80.27
84.66
90.90
91.59
98.01

47.96
47.25
67.81
62.58
71.73

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

95.56
92.80
95.65
99.66
99.75
108.00

90.37
88.46
86.43
94.07
95.70
98.01

* The prices of American Depositary Shares are based upon reports by the New York Stock Exchange, with all fractional figuresrounded up to the nearest two decimal points.
- 77 -

The following table shows the information about high and low sales prices for each quarterly period in fiscal 2006 and 2007 in respectof 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
2006
1st

Common Stock:Market price per share (A)Cash dividends paid per share
American Depositary Share:
Market price per share (B)

2nd

3rd

4th

—High
—Low

¥ 8,500 ¥ 8,670 ¥ 8,860 ¥10,830
7,090
7,640
7,220
8,510
50.00
—
50.00
—

—High
—Low

$ 78.45 $ 78.02 $ 74.27 $ 91.59
67.20
69.01
62.58
73.33
0.45
—
0.41
—

Cash dividends paid per share (C)

2007
1st

Common Stock:Market price per share (A)Cash dividends paid per share
American Depositary Share:
Market price per share (B)

2nd

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 (C)(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 respective payment date
- 78 -

B. Plan of Distribution
Not Applicable.
C. Markets
See Item 9.A. of this Form 20-F for information on the markets on which our common stock is listed 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 ofcertain provisions of the Articles of Incorporation, the Share Handling Regulations and the Regulations of the Board of Directors ofKyocera Corporation and of the Company Law 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 Company Law. It is registered in
the Commercial Register maintained by the Kyoto Local Registry Office of the Ministry of Justice.
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;- 79 -

(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 and various 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 and instruments and parts
hereof;(14) Manufacture and sale of and research on machinery and equipment for business use and machinery and equipment 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 and piping 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 and restaurants, and thetravel 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 other industrial property rights
and know-how appertaining to the preceding items and acting as intermediary in such 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.
- 80 -

Directors
Under the Company Law, 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 Company Law and the Regulations of the Board of Directors of Kyocera
Corporation, the Directors must refrain 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 Company Law 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 Company Law nor Kyocera Corporation’s Articles of Incorporation make any special provision as
to a Director’s or Corporate Auditor’s power to vote in connection with their compensation; or the borrowing powers exercisable by aRepresentative 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 Company Law specifically requires a resolution of the Board of Directors for a joint stock corporation, among other things, toacquire 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 a material corporate organization such as a branch office; or toissue 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 Directors of Kyocera
Corporation require a resolution of the Board of Directors for Kyocera Corporation, among other things, to issue of bonds or bonds
with stock acquisition rights; to borrow, lend or contribute a significant amount of money; to give a guarantee of a significant amountof debt; or to waive the right to receive a significant amount of money. The Regulations of the Board of Directors of Kyocera
Corporation defines a “significant amount” as five billion yen or more with respect to borrowing and one hundred million yen or
more with respect to other matters. The Regulations of the Board of Directors of Kyocera Corporation also require a resolution of theBoard of Directors to approve any transaction between a Director and Kyocera Corporation; allocate remuneration and bonuses of
Directors as previously determined or approved by the general meeting of shareholders; or determine the amount and manner ofpayment 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 of shareholders.
Capital Stock
Authorized capital
Article 5 of the Articles of Incorporation of Kyocera Corporation provides that the total number of shares authorized for issuance byKyocera Corporation is 600,000,000 shares. If shares of common stock are retired, the number of shares so retired shall be deductedfrom the total number of shares authorized to be issued by Kyocera Corporation.
Distributions of Surplus
GeneralUnder the Company Law, 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 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:
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(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 the latest fiscal year
present fairly its assets and profit or loss, as required by ordinances of the Ministry of Justice.

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 theBoard of Directors once per fiscal year under Kyocera Corporation’s Articles of Incorporation and the Company Law.
Under Kyocera Corporation’s Articles of Incorporation, a year-end dividend may be distributed to shareholders of record as ofMarch 31 of each year pursuant to a resolution of a general meeting of shareholders, and an interim dividend may be distributed toshareholders of record as of September 30 of each year pursuant to a resolution of the Board of Directors. In addition, under theCompany Law, Kyocera Corporation may make further distributions of 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 firstbecame payable.
Distributions of Surplus, other than interim dividends, may be made in cash or in kind in proportion to the number 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 torequire Kyocera Corporation to make such distribution in cash instead of in kind. If no such right is granted to shareholders, therelevant distribution of Surplus must be approved by a special resolution of a general meeting of 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 the amount of the dividend tobe 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 capital and 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 that appearing 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) the amount of theconsideration for such treasury stock received by Kyocera Corporation less the book value thereof- 82 -

“C”=(if Kyocera Corporation has reduced its stated capital after the end of the last fiscal year) the amount of 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 the last fiscal year)
the amount of such reduction less the portion thereof that has been transferred to stated capital (if any)“E”=

(if Kyocera Corporation has cancelled its treasury stock after the end of the last fiscal year) the book value of suchtreasury stock“F”=(if Kyocera Corporation has distributed Surplus to its shareholders after the end of the last fiscal year) the total bookvalue 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) the amount set aside in its additional paid-in capital or legal reserve (if any) as requiredby ordinances of the 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 beequal to the amount of Surplus less the aggregate of (a) the book value of its treasury stock, (b) the amount of consideration for any of
its treasury stock disposed of by it after the end 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 asof the end of the last fiscal year) all or certain part of such exceeding amount as 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 nonconsolidated balance sheet as of the end of the last fiscal year and certain other amounts set forth by an ordinance of the Ministry ofJustice over (y) the total amount of shareholders’ equity and certain other amounts set forth by an ordinance of the Ministry of Justiceappearing 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 havebeen approved by the Board of Directors or (if so required by the Company Law) by a general meeting of shareholders, then theDistributable Amount must be adjusted to take into account the amount of 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 theend of the last fiscal year and an income statement for the period from the first day of the current fiscal year to the date of suchbalance sheet. Interim financial statements so prepared by Kyocera Corporation must be audited by its Corporate Auditors andindependent certified public accountants, as required by ordinances of the Ministry of Justice.
- 83 -

General Meeting of Shareholders
Pursuant to the Articles of Incorporation of Kyocera Corporation, an ordinary general meeting of shareholders of Kyocera
Corporation shall be convened within three months after the last day of each fiscal year, either in Kyoto City or at the Shiga Factoryof Kyocera Corporation. In addition, Kyocera Corporation may hold an extraordinary general meeting of shareholders whenevernecessary.
Notice of a shareholders’ meeting, setting forth the place, time and purpose thereof, must be mailed to each shareholder having voting
rights (or, in the case of a non-resident shareholder, to the resident proxy or mailing address thereof in Japan) at least two weeks prior
to the date set for the meeting. Under the Company Law, such notice may be given to shareholders by electronic means, subject to theconsent by the relevant shareholders.
Any shareholder or group of shareholders holding at least 300 voting rights (see “‘Unit’ share system” below) or one percent of thetotal number of voting rights for six months or more may propose a matter to be considered at a general meeting of shareholders bysubmitting 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 and number of voting rights necessary forexercising the minority shareholder rights described above may be decreased or shortened.
Voting rights
A holder of shares constituting one or more whole units (see “‘Unit’ share system” below) is entitled to one vote for each whole unitof shares. However, in general, neither Kyocera Corporation nor any corporate shareholder or certain other entity one-quarter or moreof the total voting rights of which are directly or indirectly held by Kyocera 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 can be adopted at a
general meeting of shareholders by a majority of the total number of voting rights represented at the meeting. Under the Company
Law and Kyocera Corporation’s Articles of Incorporation, however, the quorum 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 theelection 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 suchmethod of exercising voting rights.
The Company Law provides that certain important matters shall be approved by a “special resolution” of a general meeting ofshareholders. 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 the voting 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 Kyocera Corporation’s subsidiary;(ii) consolidation of shares;(iii) issuance or transfer of new shares or existing shares held by Kyocera Corporation as treasury stock to persons other than
the shareholders at a “specially favorable” price;(iv) issuance of stock acquisition rights (including those incorporated in bonds with stock acquisition rights) to persons otherthan the shareholders under “specially favorable” conditions;- 84 -

(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;(ix) any amendment to Kyocera Corporation’s Articles of Incorporation (except for such amendments that may be madewithout approval by shareholders under the Company Law);(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 shareexchange (kabushiki-kokan) requiring shareholders’ approval.
Under the Company Law, Kyocera Corporation’s shareholders will possess various rights, such as the right to review and makecopies of its Articles of Incorporation and the register of shareholders, to convene a general meeting of shareholders, to propose amatter to be considered at a general meeting of shareholders, and to bring derivative 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 of Incorporation. 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” price mentioned under “Voting rights” above. The Board of Directors may,
however, determine that shareholders of a particular 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 arecord date of which not less than two weeks’ prior public notice must be given. Each of the shareholders to whom such rights are
given must also be given notice of the expiry thereof at least two weeks’ prior to the date on which such rights expire.
Liquidation rights
In the event of a liquidation of Kyocera Corporation, the assets remaining after payment of all debts and liquidation expenses andtaxes will be distributed among the holders of our shares of common stock in proportion to the respective 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 tovote at the ordinary general meeting of shareholders with respect to the fiscal year ending on such March 31. September 30 is therecord date for interim dividends. In addition, Kyocera Corporation may set a record date for determining the shareholders and/or
beneficial shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice.
- 85 -

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 theBoard of Directors), (ii) from a specific shareholder 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 or by way of tender
offer (in either case pursuant to an ordinary resolution of a general meeting of shareholders or a 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 othershareholder 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 be received by the relevant specific shareholder will not exceed the higher of (x) the last trading price of theshares on the relevant stock exchange on the day immediately preceding the date on which the resolution mentioned in (ii) above wasadopted (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 atwhich the shares are first traded on such stock exchange thereafter) and (y) if the share 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 theagreement 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 Company Law permits Kyocera Corporation to hold shares acquired by it as treasury stock. Treasury stock may be held byKyocera Corporation for any time period and may be cancelled by resolution of its Board of Directors. Kyocera Corporation may alsotransfer to any person shares held by it as treasury stock, subject to a resolution of its Board of Directors, and subject also to otherrequirements similar to those applicable to the issuance 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 acquired company. 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 toreduce the number of shares constituting a unit or to abolish the unit share system in its entirety by amending Kyocera Corporation’s
Articles of Incorporation without approval by shareholders. The number of shares constituting one unit may not exceed 1,000.
Kyocera Corporation’s Articles of Incorporation and Share Handling Regulations provide that no share certificates 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 purpose of protection of the holders of shares constituting less than one unit).
As the transfer of shares normally requires delivery of the relevant share certificates, any fraction of a unit for which no sharecertificates 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 not constituting a full unit will carryno voting rights and be excluded for the purposes of calculating the quorum for voting purposes. Moreover, holders of sharesconstituting 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 of certain rights specified in the Company Law or an ordinance of the Ministry ofJustice, including the right to receive distribution of Surplus.
- 86 -

A holder of shares constituting less than one unit may require Kyocera Corporation to purchase such shares at their market value. The
Articles of Incorporation and the Share Handling Regulations of Kyocera Corporation provide that a holder of shares constituting lessthan 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.
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 a 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 ofcapital stock representing less than a unit and, therefore, are unable, as a practical matter, to exercise the rights to require Kyocera
Corporation to purchase 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 a unit. The unit share system does not affectthe transferability of ADSs, which may be transferred in lots of any size.
Miscellaneous
The Securities 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 of Kyocera Corporation to file a report concerning suchshareholdings 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 indetermining both the size of the holding and Kyocera Corporation’s total issued voting share capital.
A similar report must also be filed in respect of any subsequent change of one percent or more in any such holding, 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 thenumber of shares held by such holder and Kyocera 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 of shares of capital stock ofa Japanese corporation which leads or may lead to a restraint of trade or monopoly, and except for general limitations under theCompany Law or Kyocera Corporation’s Articles of Incorporation on the rights of shareholders applicable regardless of residence or
nationality, there is no limitation under Japanese laws and regulations applicable to Kyocera Corporation or under its Articles ofIncorporation on the rights of non-resident or foreign shareholders to hold or exercise voting rights on the shares of capital stock ofKyocera 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 to merger, acquisition or corporate
restructuring involving Kyocera Corporation.
- 87 -

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. Theseexchanges 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. 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 take place outside these limits. Consequently, aninvestor 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 aparticular trading day, or at all.
On July 3, 2007, the closing price of our shares of Common Stock on the Tokyo Stock Exchange was ¥ 13,180 per share. The
following table shows the daily price limit for a stock on the Tokyo Stock Exchange with a closing price of between ¥5,000 and¥10,000 per share, as well as the daily price limit if our per share price were 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
Previous Day’s Closing Price or Special Quote

Over
Over
Over

¥ 3,000¥ 5,000¥10,000

Less thanLess thanLess thanMaximum Daily Price Movement¥ 5,000¥10,000¥20,000

¥
¥
¥

500
1,000
2,000

For 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 Form 20-F.
C. Material Contracts
During the preceding two years we have not entered into any material contracts, other than in the ordinary course of 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 or other payments to nonresident holders ofKyocera 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-residentof Japan or a non-Japanese corporation without a permanent establishment in Japan to which the relevant income is attributable. The
statements regarding Japanese tax laws set forth below are based on 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 aparticular investor. Potential investors should satisfy themselves as to:•the overall tax consequences of the ownership and disposition of shares or ADSs, including specifically the tax
consequences under Japanese law,
- 88 -

•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 byJapanese corporations. Stock splits, subject to the following, are not subject to Japanese income tax.
•

The Convention Between the United States of America and Japan for the Avoidance of Double Taxation and thePrevention 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 to an United States resident or corporation not having a“permanent establishment” in Japan. A “permanent establishment” in Japan is generally a fixed place of business forindustrial or commercial activity in Japan. Under the Treaty, the maximum withholding rate for most qualified portfolio
shareholders is limited 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 thatno Japanese tax will be imposed on dividends paid to a qualified pension fund that is a United States resident, if such
dividends are not derived from the carrying 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 the shares 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 withFrance and the United Kingdom have recently been amended to reduce the maximum withholding tax rate to 10%. In principle, therate 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 nonresidents of Japan or non-Japanese corporations, except for any individual shareholder who holds 5% or more of the outstanding totalof the shares issued by Kyocera Corporation, the said 20% withholding tax rate is reduced to (i) 7% for dividends due and payable onor before March 31, 2009 and (ii) 15% for dividends due and payable on or after April 1, 2009. Under Japanese tax law, whichever isthe lower of the maximum rate provided in the relevant tax treaty, convention or agreement and the Japanese statutory rate will beapplicable.
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 from the sale of shares or ADSs within Japanby a non-resident of Japan or non-Japanese corporation not having a permanent establishment in Japan are in general not subject toJapanese 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 theshares, except that Kyocera Corporation will not pay any tax payable in connection with the transfer 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.
- 89 -

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 not address special classes of holders, some ofwhom 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.

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 theTreaty. 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 that each obligation in the deposit agreement relating to the ADRs and any
related agreement will be performed in accordance 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 UnitedStates 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 theUnited States federal, state and local and other tax consequences of owning and disposing of shares or ADSs in its particular
circumstances.
In general, and taking into account the earlier assumptions, for United States federal income tax purposes, if the investor holds ADRs
evidencing ADSs, the investor will be treated as the owner of the shares represented by those ADSs. Exchanges of shares for ADRs,
and ADRs for shares, generally will not be subject to United States federal income tax.
- 90 -

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 grossamount of any dividend paid by Kyocera Corporation out of its current or accumulated earnings and profits, as determined for UnitedStates federal income tax purposes, is subject to United States federal income taxation. If the investor is a non-corporate U.S. holder,
dividends paid in taxable years beginning before 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 the dividend payment in this gross amounteven 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 case of ADSs, receives thedividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed toUnited 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 the U.S. dollar value of
the Japanese yen payments made, determined at the spot Japanese yen/U.S. dollar rate on the date 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 orloss resulting from currency exchange fluctuations during the period from the date the investor includes the dividend payment inincome 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 rate applicable 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 the shares or ADSs and thereafter as capitalgain.
Subject to certain limitations, the Japanese tax withheld in accordance with the Treaty and paid over to Japan will be creditableagainst 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 the extent a refund of the tax withheld is available to theinvestor under Japanese law or under the Treaty, the amount of 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 likely 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 paid in taxable years beginning after
December 31, 2006 will, depending on the investor’s circumstances, be “passive” or “general” income, which, in either case, istreated separately from other types of income for purposes 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 allshareholders of Kyocera Corporation generally will not be subject to United States federal income tax. Taxation of Capital Gains- 91 -

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 is recognized 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 thisconclusion is a factual determination that is made annually and thus may be subject to change.
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 in which 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 to assets 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 is treated for purposes of the PFIC tests as owning its
proportionate share of the assets of the other corporation, and as 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, theinvestor 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 the investor in respect of the shares or
ADSs during the three preceding taxable years or, if shorter, the investor’s holding period for the shares or ADSs).

Under these rules:•

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

the amount allocated to the taxable year in which the investor realized the gain or excess distribution will be taxed asordinary income,•the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year,
and•the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to eachsuch year.
- 92 -

The special PFIC tax rules described above will not apply to the investor if it makes a QEF election, that is, the investor elects to haveus treated as a qualified electing fund and we provide certain required information to the investor. 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 a mark-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 take an ordinary loss inrespect 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 (butonly to the extent of the net amount of previously included income as a result 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 be treated 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 aPFIC. For purposes of this rule, if the investor makes a mark-to-market election with respect to its shares or ADSs, the investor willbe treated as having a new holding period in its shares or ADSs beginning on the first day of the first taxable year beginning after thelast 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 rate applicable 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 UnitedStates 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.
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 fileannual 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 other information 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 UnitedStates 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 that file electronically with the Securities and Exchange Commission.
As a foreign private issuer, we are exempt from the rules under the Securities Exchange Act of 1934 prescribing the furnishing andcontent of proxy statements to shareholders.
- 93 -

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 tohedge against these risks, Kyocera uses derivative financial instruments. Kyocera does not hold or issue derivative financial
instruments for trading purposes. Kyocera regularly assesses these market risks based on policies and procedures established toprotect against the adverse effects of these risks and other potential 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
counterparties are creditworthy and does not expect such losses, if any, to be significant. On August 1, 2006, Kyocera sold 100% of
the shares of KLC, a subsidiary engaged financial services. As a result of this transaction, Kyocera recognized no financial
receivables as well as significant decrease of debts on its consolidated balance sheet at March 31, 2007, which led to quantitativechange in market risk exposure by a significant decrease in interest rate risk at March 31, 2007, when compared to March 31, 2006. In
the normal course of business, Kyocera also faces other risks such as country risk, credit risk, or legal risk, but they are notrepresented in the following 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 Euro. All such contracts currently in effect will mature generally within three months. The
following tables provide information about Kyocera’s major foreign currency forward contracts existing at March 31, 2007, which
include hedge accounting, setting forth the contract 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(Yen in millions) (Pay/Receive)(Except average contractual rates)
US$/Yen
Euro/Yen
US$/STG

Contract amounts
Fair value
Weighted average contractual rates¥52,113
(288)
0.009

Forward exchange contracts to purchase foreign currencies(Yen in millions) (Receive/Pay)(Except average contractual rates)
Yen/ US$
US$/YenCZK/STG

Contract amounts
Fair value
Weighted average contractual rates¥8,152
108117.979

Forward exchange contracts to sell foreign currencies(U.S. dollars in thousands)(Pay/Receive)
US$/Yen
Euro/Yen
US$/STG

Contract amounts
Fair value$441,636(2,441)

Forward exchange contracts to purchase foreign currencies(U.S. dollars in thousands)(Receive/Pay)
Yen/ US$
US$/YenCZK/STG

Contract amounts
Fair value$ 69,085
915- 94 -¥51,598(1,034)0.007¥6,603(59)
0.008$437,271(8,763)$ 55,958(500)¥31,21159
1.957¥5,790741,305$264,500500$ 49,068
59Interest Rate Risk
Kyocera may enter into interest rate swaps and other contracts to reduce market risk exposure to changes in interest rates. The tables
below provide information about Kyocera’s financial instruments that are sensitive to changes in interest rates.
Long term debt (including due within one year)(Yen in millions)Averagepay rate

Loans, principally from banks

2008

Expected maturity date
2009
2010
2011
2012

2.75% ¥ 5,853 1,899 1,488 1,370 1,020

ThereafterLong term debt (including due within one year)

Fair value(U.S dollars in thousands)
Averagepay rate

Loans, principally from banks

Total

1,506 ¥ 13,136 ¥ 13,165

2008

Expected maturity date
2009
2010
2011
2012

2.75% $49,602 16,093 12,610 11,610 8,644

Thereafter

Total

Fair value

12,763 $ 111,322 $ 111,568

Equity Price Risk
Kyocera has marketable equity and debt securities, which are classified as available-for-sale and are carried in the consolidatedbalance 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 securities, which were ¥312,724 million ($2,650
million), included ¥289,853 million ($2,456 million) derived from a rise in the market price of KDDI shares held by Kyocera
Corporation. Detailed information appears in Note 4 to the Consolidated Financial Statements included in this annual report. Kyocera
evaluates whether declines in fair value of debt and equity securities with readily determinable fair values are other-than-temporary.
Other-than-temporary declines in fair value are recorded as a realized loss with a new cost basis. This evaluation is based mainly on
the duration and the extent to which the fair value is less than cost and the anticipated recoverability of fair value in the future. Otherthan-temporary loss on debt and equity securities with readily determinable fair values for the years ended March 31, 2005, 2006 and2007 amounted to ¥1 million, ¥113 million and ¥797 million ($7 million), respectively. At March 31, 2007, Kyocera held thefollowing available-for-sale marketable equity and debt securities.
(Yen in millions and U.S. dollars in thousands)
March 31, 2007
Cost
Fair Value
Cost
Fair Value

Due within 1 year
Due after 1 year to 5 years
Due after 5 years
Equity securities¥ 24,168
52,338
1,899
272,653¥351,058- 95 -¥ 24,295
52,391
1,921
585,274¥663,881$ 204,814
443,542
16,093
2,310,619$2,975,068$ 205,890
443,991
16,2804,959,949$5,626,110

Item 12. Description of Securities Other Than Equity Securities
Not Applicable.
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 ofKyocera’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the U.S. Securities Exchange Act of 1934) as ofMarch 31, 2007. Based on that evaluation, Kyocera’s principal executive and principal financial officers concluded that the disclosure
controls and procedures were effective as of 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 definedin 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 of any evaluation of effectiveness to future periods are subject tothe risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.
Kyocera’s management, with the participation of its principal executive and principal financial officers, evaluated the effectiveness ofKyocera’s internal control over financial reporting using the criteria set forth in Internal 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, 2007. Kyocera’s independent
registered public accounting firm, MISUZU PricewaterhouseCoopers, has issued an audit report on management’s assessment of thecompany’s internal control over financial reporting, which appears on page F-1 of this Form 20-F.
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 evaluationof changes in our internal control over financial reporting during the year ended March 31, 2007. Based upon that evaluation, there
was no change in Kyocera’s internal control over financial reporting that occurred during the year ended March 31, 2007 thatmaterially affected, or is reasonably likely to materially affect, Kyocera’s internal control over financial reporting.
- 96 -

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 Form 20-F. He was elected as one of Kyocera Corporation’s
corporate auditors at the general meeting of shareholders 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 Company Law.
Item 16B. Code of Ethics
Kyocera has adopted a code of ethics that applies to Chief Executive Officer, Chief Financial Officer and the members of Kyocera
Disclosure Committee. Kyocera’s code of ethics has been attached as Exhibit 11.1 to this Form 20-F and is incorporated herein byreference.
Item 16C. Principal Accountant Fees and Services
Principal Independent Registered Public Accounting Firm Fees
ChuoAoyama PricewaterhouseCoopers served as our independent registered public accounting firm for fiscal 2005, and fiscal 2006
for which audited financial statements appear in this Form 20-F.
MISUZU PricewaterhouseCoopers, which was renamed from ChuoAoyama PricewaterhouseCoopers in September 2006, has served
as our independent registered public accounting firm for 2007 for which audited financial statements appear in this Form 20-F.
The following table presents the aggregate fees for professional services and other services rendered by ChuoAoyama
PricewaterhouseCoopers and the related parties of the PricewaterhouseCoopers to Kyocera in fiscal 2006 and by MISUZU
PricewaterhouseCoopers and the related parties of the PricewaterhouseCoopers to Kyocera in fiscal 2007.
(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2006
2007
2007

Audit Fees (1)Audit-related Fees (2)Tax Fees (3)All Other Fees (4)
Total

¥

¥

1,335
299
353
38
2,025

¥

¥

2,157
27
283
6
2,473

$

$

18,280229
2,398
51
20,958

1)

Amounts represent fees for the annual audit of Kyocera for fiscal 2006 and fiscal 2007, reviews of Kyocera’s financial
statements for interim periods, other regulatory filings in fiscal 2006 and fiscal 2007 and the statutory audit of internal control
over financial reporting for fiscal 2007. Amounts for fiscal 2006 include the statutory audit of internal control over financial
reporting for the U.S. listed subsidiary.

2)

Amounts primarily represent fees for other procedures related to documents filed with the SEC and consultations concerning
financial accounting and reporting standards and internal control in fiscal 2006 and fiscal 2007.

3)

Amounts represent fees for tax services performed by the tax department of the independent registered public accounting firmother than financial audit and international tax compliance in fiscal 2006 and fiscal 2007.
- 97 -

4)

All other fees in fiscal 2006 mainly represent fees for advisory assurance service of the preparation of Kyocera’s sustainability
report.

Kyocera’s Board of Corporate Auditors determined that the provisions of non-audit services by ChuoAoyama
PricewaterhouseCoopers to Kyocera during fiscal 2006 and by MISUZU PricewaterhouseCoopers to Kyocera during fiscal 2007 werecompatible with maintaining the independent registered public accounting firm’s independence.
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 performedby MISUZU PricewaterhouseCoopers and the related parties except for AVX Corporation which follows its own pre-approval policy.
Under Kyocera’s pre-approval policy, there are two types of pre-approval procedures, “General Pre-Approval” and “Specific PreApproval”.
Under the pre-approval procedure for “General Pre-Approval”, each of Kyocera group companies must make a proposal to Kyocera’s
Board of Corporate Auditors for the types of services and estimated fee levels of each category of services to be generally preapproved. Such proposal must be made annually. 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 actuallyrendered.
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 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 preapproval decision on these services. Also, if any approved services in the General Pre-Approved List exceed the fee levels prescribedon the List, each of Kyocera group companies 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 theservices and the estimated fee levels for each engagement.
All of the services provided by MISUZU PricewaterhouseCoopers and the related parties 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, andnone of such services 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 and dissolve effective July 31,
2007. In connection with this, the audit team of MISUZU PricewaterhouseCoopers that has been covering Kyocera will transfer to a
newly established public accounting firm, Kyoto Audit Corporation, which registered with the Public Company Accounting
Oversight Board on June 12, 2007. We have appointed Kyoto Audit Corporation as our new independent registered public accounting
firm starting in fiscal 2008.
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 listed company 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 meetingcertain requirements. For a New York Stock Exchange-listed Japanese company with a board of corporate auditors, the requirements
for relying on paragraph (c)(3) of Rule 10A-3 are as follows:- 98 -

(a)The board of corporate auditors must be established, and its members must be selected, pursuant to Japanese law expressly
requiring such a board for Japanese companies that elect to have a corporate governance system with corporate auditors.

(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 the listed 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 of corporate auditorsfrom 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 ofdisagreements 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 and treatment of complaints received
by us regarding accounting, internal accounting controls, or auditing 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 other advisers, 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 ofcorporate 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 that Rule) at acting independently of management and performing
the functions of an audit committee as contemplated therein.
- 99 -

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 our affiliated purchasers.

PeriodApril 1 to April 30, 2006
May 1 to May 31, 2006
June 1 to June 30, 2006
July 1 to July 31, 2006
August 1 to August 31, 2006
September 1 to September 30, 2006
October 1 to October 31, 2006
November 1 to November 30, 2006
December 1 to December 31, 2006
January 1 to January 31, 2007
February 1 to February 28, 2007
March 1 to March 31, 2007
Total(a) Total
Number of
Shares (orUnits)
Purchased(b) Average
Price Paid
per Share(or Unit)(c) Total Number of
Shares (or Units)
Purchased as Partof 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

2,317
1,141
730
2,085
2,258
2,062
3,081
1,672
2,617
2,744
2,411
1,048
24,166

10,807.84
10,278.07
8,980.57
8,727.88
9,615.24
10,043.01
10,564.49
10,492.77
10,921.83
11,186.74
10,978.24
10,783.13
10,389.95

—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—
—

- 100 -

Note: Under the Company Law , a holder of shares constituting less than one full unit may request Kyocera Corporation to purchasesuch 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 the above table were made pursuant to such requests by shareholders.
PART IV
Item 17. Financial Statements
In lieu of responding to this item, we have responded to Item 18 of this Form 20-F.
Item 18. Financial Statements
The information required by this item is set forth beginning on page F-1 of this Form 20-F.
Description

Page(1) Report of Independent Registered Public Accounting Firm related to the Consolidated Financial Statements listed
below(2) Consolidated Balance Sheets at March 31, 2006 and 2007

F-1
F-2 & F-3

(3) Consolidated Statements of Income for the years ended March 31, 2005, 2006 and 2007
(4) Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2005, 2006 and 2007
(5) Consolidated Statements of Cash Flows for the years ended March 31, 2005, 2006 and 2007
(6) Notes to the Consolidated Financial Statements

F-4
F-5
F-6
F-7 to F-35

(7) SCHEDULE II. Valuation and Qualifying Accounts for the years ended March 31, 2005, 2006 and 2007
- 101 -

F-36

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 the Registrant’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 by reference to theRegistrant’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)

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 of January 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 this Form 20-F)

11.1

Code of Ethics

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) and Section 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) and Section 1350 of Chapter
63 of Title 18 of the United States Code

15.1

Consent of PricewaterhouseCoopers with respect to its report on the audit of the financial statements included in thisForm 20-F

Kyocera has not included as exhibits certain instruments with respect to its long-term debt, the amount of debt authorized under eachof 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.
- 102 -

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders ofKyocera Corporation
We have completed an integrated audit of Kyocera Corporation’s 2007 consolidated financial statements and of its internal control
over financial reporting as of March 31, 2007 and audits of its 2005 and 2006 consolidated financial statements in accordance withthe standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented
below.
Consolidated financial statements
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, thefinancial position of Kyocera Corporation and its consolidated subsidiaries (“Kyocera”) at March 31, 2006 and 2007, and the resultsof their operations and their cash flows for each of the three years in the period ended March 31, 2007 in conformity with accounting
principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in
the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with therelated consolidated financial statements. These financial statements are the responsibility of Kyocera’s management. Our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statementsin accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit of financial statements includes 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. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1 to the consolidated financial statements, Kyocera changed the manner in which it accounts for defined benefit
pensions effective March 31, 2007.
Internal control over financial reporting
Also, in our opinion, management’s assessment, included in the “Management’s Report on Internal Control over Financial Reporting”
appearing under Item 15, that Kyocera maintained effective internal control over financial reporting as of March 31, 2007 based on
criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, Kyocera
maintained, in all material respects, effective internal control over financial reporting as of March 31, 2007, based on criteria
established in Internal Control - Integrated Framework issued by the COSO. Kyocera’s management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of Kyocera’s internal
control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordancewith the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan andperform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control overfinancial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides areasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposes in accordance 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 thecompany; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’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, projectionsof 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 the policies or procedures may deteriorate.
/s/ MISUZU PricewaterhouseCoopers
Osaka, Japan
June 28, 2007

F-1

Consolidated Balance Sheets
Kyocera Corporation and Consolidated Subsidiaries
March 31, 2006 and 2007
(Yen in millions and U.S. dollars and shares in thousands–Note 2)
ASSETS

Current assets:
Cash and cash equivalents (Note 13)
Short-term investments (Notes 4 and 13)
Trade receivables (Notes 7):
Notes
Accounts
Short-term finance receivables (Notes 3, 5 and 13)
Less allowances for doubtful accounts and sales returns
Inventories (Notes 6)
Deferred income taxes (Note 16)
Other current assets
Total current assets
Investments and advances:
Investments in and advances to affiliates and unconsolidated subsidiaries (Note 7)
Securities and other investments (Notes 4 and 13)
Long-term finance receivables (Notes 3, 5 and 13)
Property, plant and equipment, at cost (Note 9):Land
Buildings
Machinery and equipment
Construction in progress

2006

2007

2007

¥ 300,809
87,942¥ 282,208
213,495$ 2,391,593
1,809,280

24,597
210,393
39,505
274,495(7,425)
267,070
190,564
40,41133,872920,668

25,033
236,380—
261,413(5,960)255,453
209,188
45,39040,757
1,046,491

212,144
2,003,220—
2,215,364(50,508)
2,164,856
1,772,780
384,661
345,398
8,868,568

7,355
553,377
560,732

10,093
690,568
700,661

85,534
5,852,271
5,937,805

80,970——58,286
249,506
697,383
13,473
1,018,648(733,302)
285,346
31,351
31,227
21,228¥1,931,522

Less accumulated depreciation
Goodwill (Note 8)
Intangible assets (Note 8)
Other assets (Notes 10 and 16)

The accompanying notes are an integral part of these statements.
F-2

56,806
261,998
729,6367,362
1,055,802(774,896)
280,906
32,89424,65744,855¥2,130,464

481,4072,220,322
6,183,356
62,3908,947,475(6,566,916)
2,380,559
278,763
208,958
380,127$18,054,780

LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITYCurrent liabilities:
Short-term borrowings (Notes 3, 9 and 13)
Current portion of long-term debt (Notes 3, 9 and 13)
Notes and accounts payable:
Trade
Other
Accrued liabilities:
Payroll and bonus
Income taxes
Other
Other current liabilities (Note 16)
Total current liabilities
Long-term debt (Notes 3, 9 and 13)
Accrued pension and severance liabilities (Note 10)
Deferred income taxes (Note 16)
Other non-current liabilities
Total liabilities
Minority interests in subsidiaries

2006

¥

90,865
16,347

2007¥

15,250
5,853

2007

$

129,237
49,602

103,503
51,997100,295
49,134

849,958
416,390

37,99827,65831,414
18,841
378,623
33,36027,092
125,686
12,742577,503
64,942

41,68036,47533,391
24,110306,188
7,283
16,297
206,858
12,355548,981
66,923353,220
309,110
282,975
204,3222,594,814
61,720138,110
1,753,034
104,7034,652,381
567,144

115,703
161,994
967,576
72,947

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

980,534
1,375,958
8,943,161
1,720,814(29,143)
1,289,077¥1,931,522(21,855)
1,514,560¥2,130,464(185,212)
12,835,255$18,054,780

Commitments and contingencies (Notes 14)
Stockholders’ equity (Note 15):
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 11):3,554 shares at March 31, 2006 and 2,660 shares at March 31, 2007
Total stockholders’ equity

The accompanying notes are an integral part of these statements.
F-3

Consolidated Statements of Income
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2007
(Yen in millions and U.S. dollars and shares in thousands, except per share amounts–Note 2)
Net sales (Note 7)
Cost of sales
Gross profit
Selling, general and administrative expenses
Profit from operations

2005

2006

2007

2007

¥1,173,660
852,527
321,133
223,473
97,660¥1,173,544
835,042
338,502
238,807
99,695¥1,283,897
900,470
383,427
248,325
135,102$10,880,483
7,631,102
3,249,381
2,104,449
1,144,932

6,443(1,275)
2,606

8,990
(1,301)(316)

15,472(1,647)(65)

131,119(13,958)(551)(1,678)(2,084)
—
—
—
2,341
6,353

(1,216)
1,472
5,294
6,931
(3,492)
1,180
17,542

2,621
3,819
24
26
—
1,188
21,43822,21232,365203
220—
10,068
181,678

104,013

117,237

156,540

1,326,610

52,606
5,608
58,21445,799(3,142)42,6573,251
45,90846,24053,765520(4,878)46,76048,88770,477
107,653(4,389)(6,324)66,088101,329
3,608
5,175
69,696 ¥ 106,504

455,636(41,339)414,297
912,313(53,593)858,720
43,856
902,576

Other income (expenses):
Interest and dividend income
Interest expense (Note 12)
Foreign currency transaction gains (losses), net (Note 12)
Equity in (losses) earnings of affiliates and unconsolidated
subsidiaries (Note 7)(Losses) gains on sales and maturities of securities, net
Gains on exchange for the shares (Note 4)
Gain on sale of investment in an affiliate (Note 7)
Loss on impairment of investment in an affiliate (Note 7)
Other, net
Income from continuing operations before income taxes andminority interests
Income taxes (Note 16):
Current (Note 14)
DeferredIncome from continuing operations before minority interests
Minority interests
Income from continuing operations
Income from discontinued operations (Notes 3, 12 and 18)
Net income
Earnings per share (Note 19):
Income from continuing operations:
Basic
DilutedIncome from discontinued operations:
Basic
Diluted
Net income:
Basic
DilutedCash dividends declared per share:
Per share of common stock
Weighted average number of shares of common stock outstanding:
Basic
DilutedThe accompanying notes are an integral part of these statements.
F-4

¥

¥

227.52227.47¥¥352.44352.21¥538.52537.35

$

$

4.56
4.55

17.34
17.34

19.24
19.22

27.51
27.44

0.24
0.24

244.86244.81371.68371.43566.03564.79

4.80
4.79

80.00

100.00110.000.93

187,489
187,528

187,514
187,640

188,160
188,573

Consolidated Statements of Stockholders’ Equity
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2007
(Yen in millions and U.S. dollars and shares in thousands–Note 2)

Balance, March 31, 2004 (187,484)
Net income for the year
Foreign currency translation adjustments
Minimum pension liability adjustment - net of taxesof ¥125 (Note 10)
Net unrealized losses on securities - net of taxes of¥11,909 (Note 4)
Reclassification adjustments for net losses on
securities - net of taxes of ¥1,234 (Note 4)
Net unrealized losses on derivative financial
instruments (Note 12)
Reclassification adjustments for net losses onderivative financial instruments (Note 12)
Total comprehensive income for the year
Cash dividends
Purchase of treasury stock (21)Reissuance of treasury stock (18)Stock option plan of a subsidiary
Balance, March 31, 2005 (187,481)
Net income for the year
Foreign currency translation adjustments
Minimum pension liability adjustment - net of taxesof ¥322 (Note 10)
Net unrealized gains on securities - net of taxes of¥29,400 (Note4)
Reclassification adjustments for net gains on
securities - net of taxes of ¥1,206 (Note 4)
Net unrealized losses on derivative financial
instruments (Note 12)
Reclassification adjustments for net losses onderivative financial instruments (Note 12)
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 of taxes

CommonStock

Additional
Paid-in
CapitalRetained
Earnings(Note 15)

¥115,703¥ 162,091¥ 881,969
45,908

Accumulated Other
Comprehensive Income(Note 15)

Treasury Stock(Notes 11 and 15)¥¥

22,046Comprehensive
Income(31,356)

6,704¥

45,908
6,704

(152)

(152)

(18,441)(18,441)

1,661

1,661

(27)

(27)

48
¥

48
35,701(11,249)

115,703(5)(25)
162,061(170)
146
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

967,576
106,504

72,947(170)
2,407(29,143)¥

10,474

106,504
10,474of ¥108 (Note 10)
Net unrealized gains on securities - net of taxes of¥70,986 (Note 4)
Reclassification adjustments for net gains on
securities - net of taxes of ¥6 (Note 4)
Net unrealized gains on derivative financial
instruments (Note 12)
Reclassification adjustments for net losses onderivative financial instruments (Note 12)
Total comprehensive income for the year
Adjustment for initially applying SFAS No. 158 net of taxes of ¥12,035 (Note 10)
Cash dividends
Purchase of treasury stock (24)
Reissuance of treasury stock (918)
Stock option plans of subsidiaries
Balance, March 31, 2007 (188,649)
Balance, March 31, 2006
Net income for the year
Foreign currency translation adjustments
Minimum pension liability adjustment - net of taxesof $915 (Note 10)
Net unrealized gains on securities - net of taxes of$601,576 (Note4)
Reclassification adjustments for net gains on
securities - net of taxes of $51 (Note 4)
Net unrealized gains on derivative financial
instruments (Note 12)
Reclassification adjustments for net losses onderivative financial instruments (Note 12)
Total comprehensive income for the year
Adjustment for initially applying SFAS No. 158 net of taxes of $ 101,992 (Note 10)
Cash dividends
Purchase of treasury stock
Reissuance of treasury stock
Stock option plans of subsidiaries
Balance, March 31, 2007

(82)

(82)

103,334

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

89

89

49
¥

49
219,055

17,558(18,787)¥115,703$980,534

127
242¥ 162,363$1,372,831

(251)
7,539
¥1,055,293$8,199,797
902,576¥$

203,056
618,195¥$(21,855)(246,975)

88,763$

902,576
88,763

(695)

(695)

875,712875,712(11,127)(11,127)

754

754

415

415
$ 1,856,398

148,797(159,212)$980,534

1,076
2,051
$1,375,958

The accompanying notes are an integral part of these statements.
F-5(2,127)63,890$8,943,161$

1,720,814$(185,212)

Consolidated Statements of Cash Flows
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2007
(Yen in millions and U.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
Minority interests
Losses (gains) on sales and maturities of securities, net
Equity in losses (earnings) of affiliates and unconsolidated
subsidiaries (Note 7)
Gain on sales of investment in an affiliate (Note 7)
Loss on impairment of investment in an affiliate (Note 7)
Gains on sales of investment in subsidiaries (Note 3)
Gains on exchange for the shares (Note 4)
Foreign currency adjustments
Change in assets and liabilities:
Decrease (increase) in receivables(Increase) decrease in inventories
Decrease (increase) in other current assets(Decrease) increase in notes and accounts payable
Increase (decrease) in accrued income taxes(Decrease) increase in other current liabilities
Decrease in other non-current liabilities
Other, net
Total adjustments
Net cash provided by operating activities
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
Proceeds from sales of investment in an affiliate (Note 7)
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
assetsAcquisition of businesses, net of cash acquired (Note 20)
Deposit of negotiable certificate of deposits and time deposits
Withdrawal of negotiable certificate of deposits and time deposits
Other, net
Net cash used in investing activities
Cash flows from financing activities:(Decrease) increase in short-term debt
Proceeds from issuance of long-term debt
Payments of long-term debt
Dividends paid
Purchase of treasury stock
Sales of treasury stock
Other, net

2005

2006

2007

2007

¥ 45,908¥ 69,696¥ 106,504

65,909(18)
10,405
5,608
3,142
2,037

73,186
(466)
8,446
(218)
4,389
(1,652)

82,182(494)
11,328(4,878)6,324(3,819)696,457(4,186)96,000(41,339)
53,593(32,365)

1,678
—
—
—
—
(2,391)

1,216(6,931)
3,492—(5,294)272(2,621)(26)—(8,252)(24)
160(22,212)(220)—(69,932)
(203)
1,356

68,558(25,598)
14(31,914)
13,566(1,744)(11,464)
1,827
99,615145,523(9,237)
21,263(3,331)
14,390(4,720)
3,284
(118)
3,410
101,381
171,077(32,626)(25,100)(1,901)
6,015
9,066
11,111(7,062)
3,757
43,140149,644(276,492)(212,712)(16,110)50,97576,83094,161(59,847)
31,839365,593
1,268,169(81,946)(10,141)(11,858)
40,955
8,719——(59,381)(4,820)(98,219)(11,070)(224)
50,0902,340
24,133—(91,436)(10,589)(44,582)(26,867)(307)
99,23027,88960
24,602(64,751)(8,215)(377,814)(227,685)(2,602)840,932
236,347508
208,492(548,737)(69,619)

2,920(2,794)(112,903)
95,2203,535(132,494)

3,350
3(132,286)
100,923(2,482)(165,467)

2,693
(756)
(356,169)
203,076(7,606)(151,703)

22,822(6,407)(3,018,381)
1,720,983(64,458)(1,285,619)(18,490)
21,077(58,720)(12,614)
(170)
142
1,431

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)

79,39816,339(113,229)(174,847)(2,127)64,966(45,458)$

902,576

Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

(67,344)(23,289)(20,645)(174,958)
3,775
7,896
4,103
34,772(50,540)(9,783)(18,601)(157,636)
361,132
310,592
300,8092,549,229¥ 310,592 ¥ 300,809 ¥ 282,208 $ 2,391,593

The accompanying notes are an integral part of these statements.
F-6

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 with accounting principles
generally accepted in Japan. Adjustments, which are not recorded in KC and 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 United States 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 variableinterest entity for which Kyocera Corporation is a primarily beneficiary under the Financial Accounting Standard Board Interpretation
No. 46 (revised December 2003), “Consolidation of Variable Interest Entities.” The consolidated variable interest entity for which
Kyocera Corporation is the primary beneficiary does not have a material effect on Kyocera’s financial position and result of
operations. All significant intercompany transactions and accounts are eliminated. Investments in 20% to 50% owned companies areaccounted for under the equity method, whereby Kyocera includes in net income its equity in the earnings or losses from thesecompanies.
Revenue Recognition:
Kyocera sells various types of products, including fine ceramic parts, semiconductor parts, and telecommunications equipment.
Kyocera recognizes revenue upon completion of the earnings process, which occurs when products are shipped or delivered tocustomers 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 is reasonably assured. Most of these conditions are satisfied at the time of delivery tocustomers 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 product warranty 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. (KLC) until August 2006. Revenue from direct financing leases was recognized over the term of thelease, and amortization of unearned lease income was recognized using the interest method. Interest income on installment loans wasrecognized on an accrual basis. Interest income was no longer accrued at the time the collection of the interest was past due 1 year or
more, or the collection of the principal was past due 6 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 wasrecorded as collection of the principal.
Cash and Cash Equivalents:
Cash and cash equivalents include time deposits and certificates of deposit with original maturities of three months or less.
Translation of Foreign Currencies:
Assets and liabilities of consolidated foreign subsidiaries and affiliates accounted for under the equity method are translated into
Japanese yen at the exchange rates in effect on the respective balance sheet dates. Operating accounts are translated at the average
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 the respective 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 both trade and finance receivables for estimated losses resulting from
customers’ inability to make timely payments, including interest on finance receivables. Kyocera’s estimates are based on various
factors including the length of past due payments, historical experience and current business environments. In circumstances where itis aware of specific customer’s inability to meet its financial obligations, a specific allowance against these amounts is provided
considering the fair value of assets pledged by the customer as collateral.
Inventories:
Inventories are stated at the lower of cost or market. Cost is determined by the average method for approximately 57% and 62% offinished goods and work in process as well as approximately 24% and 21% of raw materials and supplies at March 31, 2006 and2007, respectively. The first-in, first-out method is applied to the other inventories. 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 the Statement of Financial Accounting Standards (SFAS)
No. 115 “Accounting for Certain Investments in Debt and Equity Securities.” Securities classified as available-for-sale securities arerecorded at the fair value, with unrealized gains and losses excluded from income and reported in other comprehensive income, net oftaxes. Securities classified as held-to-maturity securities are recorded at amortized cost. Kyocera evaluates whether the declines in fairvalue of debt and equity securities with readily determinable fair values are other-than-temporary. Other-than-temporary declines infair value are recorded as a realized loss with a new cost basis. This evaluation is based mainly on the duration and the extent towhich the fair value is less than cost, and the anticipated recoverability in fair value.
F-7

Property, Plant and Equipment and Depreciation:
Property, Plant and Equipment are recorded at cost less accumulated depreciation. Kyocera provides for depreciation of buildings,
machinery and equipment over their estimated useful lives primarily on the declining balance method. The principal estimated useful
lives used for computing depreciation are as follows:
Buildings
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 the difference between
depreciated costs and proceeds, are credited or charged to income in the year of disposal, and costs and accumulated depreciation are
removed from the accounts.
Goodwill and Other Intangible Assets:
Kyocera has adopted SFAS No.142, “Goodwill and Other Intangible Assets.” This requires that, rather than being amortized,
goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually, and also following any events orchanges in circumstances that might lead to impairment. Intangible assets with definite useful lives are amortized over their respective
estimated useful lives to their estimated residual values, and reviewed for impairment whenever events or changes in circumstancesindicate that their carrying amount may not be recoverable.
The principal estimated useful lives for intangible assets are as follows:
Patent rights
Software2 to 8 years
2 to 5 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. Long-lived assets and intangible assets with definite
useful lives are considered to be impaired when the expected undiscounted cash flow from the asset group is less than its carrying
value. A loss on impairment is recognized based 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 nothold 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 Amendment of Financial AccountingStandards Board (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 whichmeet the criteria of SFAS No. 133 may qualify for hedge accounting treatment. Changes in the fair value of the effective portion ofthese hedge derivatives are deferred in other comprehensive income and charged to earnings when the underlying transaction being
hedged occurs.
Kyocera designates certain foreign currency forward contracts and certain 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 denominatedassets 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 orlosses 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 all derivatives 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 thehedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective inoffsetting cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to
be a highly effective hedge, Kyocera discontinues hedge accounting prospectively. When hedge accounting is discontinued, thederivative will continue to be carried on the balance sheet at its fair value, with deferred unrealized gains or losses chargedimmediately in current earnings.
F-8

Stock-Based Compensation:
Prior to April 1, 2006, Kyocera accounted for stock-based compensation in accordance with SFAS No. 148, “Accounting for StockBased Compensation-Transition and Disclosure,” an Amendment of FASB Statement No. 123, “Accounting for Stock-Based
Compensation.” As allowed by SFAS No. 148, Kyocera measured stock-based 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” and recognized the cost resulting from share-based payment transactions in financial statements by adopting fair-value
based measurement method in accordance with SFAS No. 123R. Under the modified prospective method of 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.
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 provisions of SFAS 123 for the years ended March 31, 2005 and 2006.
(Yen in millions except per share amounts)
Years ended March 31,
2005
2006

Income from continuing operations, as reported
Add: Stock-based employee compensation expense included in reported income - net of taxes
Deduct: Total stock-based employee compensation expense determined under fair value based method for allawards - net of taxes
Pro forma income from continuing operations
Income from discontinued operations
Pro forma net income
Earnings per share:
Income from continuing operations:
Basic, as reported
Basic, pro forma
Diluted, as reported
Diluted, pro forma
Net income:Basic, as reported
Basic, pro forma
Diluted, as reported
Diluted, pro forma
F-9¥ 42,657(25)¥ 66,088—(2,772)39,8603,251¥ 43,111(1,550)64,5383,608¥ 68,146¥ 227.52
212.60227.47212.55¥ 352.44
344.18352.21
343.94244.86229.94244.81229.89371.68363.42371.43363.17

Earnings and Cash Dividends per Share:
Basic earnings per share is computed based on the weighted average number of shares outstanding during each period. Diluted
earnings per share assumes the dilution that could occur if all stock options were exercised and resulted 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 areproposed by the Board of Directors. Dividends are charged to retained earnings in the year in which 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:
Preparation of consolidated financial statements in conformity with generally accepted accounting principles requires managements’estimates and assumption if it is expected to have any impacts on assets and liabilities, which includes contingently arose, at theperiod end date, and also on revenue and expenses during the period. However, the results may possibly differ from the estimates.
Accounting Changes:
In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, “Inventory Costs-an amendment of
ARB No. 43, Chapter 4.” SFAS No. 151 requires that all abnormal idle facility expense, freight, handling costs, and spoilage berecognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151
requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production
facilities. SFAS No. 151 was effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of
SFAS No. 151 did not have a material impact on Kyocera’s consolidated results of operations and financial position.
In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion
No. 20 and FASB Statement No. 3.” SFAS No. 154 replaces APB Opinion No. 20, “Accounting Changes”, and SFAS No. 3,“Reporting Accounting Changes in Interim Financial Statements”, and changes the requirements for the accounting for and reportingof a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle. It also applies to changes
required by an accounting pronouncement when the pronouncement does not include specific transition provisions. APB Opinion
No. 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of theperiod of the change the cumulative effect of changing to the new accounting principle. SFAS No. 154 requires retrospective
application to prior periods’ financial statements of changes in accounting principle. SFAS No. 154 was effective for accountingchanges and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 did nothave a material impact on Kyocera’s consolidated results of operations and financial position.
In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment.” This statement is a revision of SFAS No. 123,
“Accounting for Stock-Based Compensation.” SFAS No. 123R supersedes APB Opinion No. 25, “Accounting for Stock Issued to
Employees,” and its related interpretations. SFAS No. 123R requires that the cost resulting from all share-based payment transactions
be recognized in the financial statements. SFAS No. 123R establishes fair value as the measurement objective in accounting forshare-based payment arrangements and requires all entities to apply a fair-value based measurement method in accounting for sharebased payment transactions with employees except for equity instruments held by employee share ownership plans. SFAS No. 123R
was announced to be effective as of the beginning of the first fiscal year that would begin after June 15, 2005, however, on April 14,
2005, the Securities and Exchange Commission (SEC) staff postponed implementation of SFAS No. 123R. Kyocera adopted SFAS
No.123R effective April 1, 2006, and the impact of adoption of SFAS No. 123R was ¥333 million ($2,822 thousand) on Kyocera’s
consolidated results of operations for the year ended March 31, 2007.
In September 2006, SEC staff published Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB No. 108). SAB No. 108 provides
guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of amateriality assessment. SAB No. 108 requires quantification of the effects of financial statement errors by two approaches generally
referred to as “rollover” and “iron curtain”. SAB No. 108 shall be effective for fiscal years ending after November 15, 2006. The
adoption of SAB No. 108 did not have a material impact on Kyocera’s consolidated results of operations and financial position.
In September 2006, the FASB issued 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 theoverfunded or underfunded status of its defined benefit postretirement plans as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income.
Kyocera recognized the funded status of its defined benefit plans and provided the required disclosures in accordance with SFAS
No. 158 as of the year ended March 31, 2007. For the impact of adoption of SFAS No. 158 on Kyocera’s consolidated results ofoperations and financial position, see Note 10 to the Consolidated Financial Statements in this annual report. SFAS No. 158 alsorequires an employer to measure the funded status of a plan as of the date of its year end statement of financial position. Kyocera will
be required to measure the funded status of its plans at the date of its year end as of the year ending March 31, 2009. Kyocera iscurrently evaluating the impact of adoption of this requirement for measurement date in its consolidated results of operations andfinancial position.
F-10

Recently Issued Accounting Standards:
In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASBStatement No.109” (FIN 48) which clarifies the accounting for uncertainty in income taxes recognized in the financial statements inaccordance 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 shall be effective for fiscal years beginning after December 15,
2006. Kyocera is currently evaluating the impact of adoption of FIN 48 in its consolidated results of operations and financial position.
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. The measurementand disclosure requirements are effective beginning after November 15, 2007. Kyocera is currently evaluating the impact of adoptionof SFAS No. 157 in its consolidated results of operations and financial position.
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 for which the fair value option has been elected will berecognized in earnings. SFAS No.159 is effective for fiscal years beginning after November 15, 2007 and Kyocera will adopt SFAS
No. 159 effective April 1, 2008. Kyocera is currently evaluating the impact of adoption of SFAS No. 159 in its consolidated results ofoperations and financial position.
Reclassifications:Certain reclassifications of previously reported amounts have been made to the consolidated statements of income, cash flows andcorresponding footnotes for the year ended March 31, 2005 and 2006 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, 2007 presented herein are expressed in the Japaneseyen, and, solely for the convenience of the readers, have been translated into the U.S. dollar at the rate of ¥118 for US$1, the rate
prevailing on March 30, 2007.
This translation should not be construed as a representation that the yen amounts shown could be so converted into the U.S.
dollar at ¥118 for US$1 or at any other rate.
3. DISCONTINUED OPERATIONSOn August 1, 2006, Kyocera sold 100% of the shares of KLC (presently Diamond Asset Finance Company Limited) to Diamond
Lease Company Limited (presently Mitsubishi UFJ Lease & Finance Company Limited) for ¥25,274 million ($214,186 thousand),aimed to concentrate Kyocera’s management resources on its core businesses to enhance and improve its corporate value. Kyocera
has accounted for the results of operations and the sale of KLC less income taxes, 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.
Accordingly, the prior years’ financial statements and related footnote disclosures have been reclassified.
For comparative purposes, the components of the income from discontinued operations, which had been reported as the“Others” segment previously, are summarized as follows:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005
2006
2007
2007

Net sales
Income before income taxes
Income taxes
Net income
Gain on sales of discontinued operations - net of taxes of ¥3,534 ($ 29,949)
Income from discontinued operations¥ 9,069 ¥ 9,213 ¥ 1,779 $ 15,076
3,517
4,150
862
7,305
266
542
381
3,229
3,251
3,608
481
4,076
—
—
4,694
39,780
3,251
3,608
5,175
43,856

The financial positions of discontinued operations at March 31, 2006 are summarized as follows:(Yen in millions)
March 31, 2006

Short-term finance receivables
Long-term finance receivables
Other assets¥

48,12180,971
4,981

Total assets
Short-term borrowings
Long-term debt (including portion due within one year)
Other liabilities
Total liabilities¥
F-11

134,073
80,35125,857
11,772
117,980

4. 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 othercomprehensive income, net of tax. Held-to-maturity securities are recorded at amortized cost. In gross unrealized gains and losses on
equity securities, ¥111,178 million of gross unrealized gain at March 31, 2006 and ¥289,853 million ($2,456,381 thousand) of grossunrealized gain at March 31, 2007 were derived from a fluctuation in the market value of the shares of KDDI Corporation (KDDI)
held by Kyocera Corporation.
Other-than-temporary loss on debt and equity securities with readily determinable fair values for the years ended March 31,
2005, 2006 and 2007 amounted to ¥1 million, ¥113 million and ¥797 million ($6,754 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 thisshare 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 (EITF) 91-5, “Nonmonetary Exchange of Cost-Method Investments.”
Investments in debt and equity securities at March 31, 2006 and 2007, included in short-term investments (current assets) and insecurities and other investments (non-current assets) are summarized as follows:(Yen in millions)
March 31,
2006

Cost*

Available-for-sale securities:
Corporate debt securities
Other debt securities
Equity securities
Total available-for-sale securities
Held-to-maturity securities:
Other debt securities
Total held-to-maturity securities
Total investments in debt and equity
securities¥

Aggregate
Fair Value

2007

Gross
Unrealized
Gains

Gross
Unrealized
LossesGross
Unrealized
Gains

Aggregate
Fair Value

Cost*

Gross
Unrealized
Losses3,745 ¥ 3,908 ¥184 ¥21 ¥ 3,842 ¥ 4,033 ¥194 ¥133,758 132,660
29
1,127
74,56374,574
71
274,985 415,950 141,059
94 272,653 585,274 312,724
412,488 552,518 141,272
1,242 351,058 663,881 312,989

3
60
103
166

34,39834,39865
65

34,01534,015

—
—

383
383

33,51233,51233,44733,447——¥446,886 ¥586,533 ¥141,272 ¥ 1,625 ¥384,570 ¥697,328 ¥312,989 ¥(U.S. dollars in thousands)
March 31, 2007
Gross
Unrealized
Aggregate
Gains
Fair Value

Gross
Unrealized
Losses32,559631,890
2,310,619
2,975,068$

34,178631,983
4,959,949
5,626,110

$

1,644
602
2,650,203
2,652,449$

284,000
284,000$3,259,068

283,449
283,449$5,909,559——$2,652,449

551
551$ 1,958

Cost*

Available-for-sale securities:
Corporate debt securities
Other debt securities
Equity securities
Total available-for-sale securities
Held-to-maturity securities:
Other debt securities
Total held-to-maturity securities
Total investments in debt and equity securities

$

F-12

231

25
509
873
1,407

At March 31, 2007, the contractual maturities of available-for-sale and held-to-maturity securities are summarized as follows:

Available-for-Sale
Aggregate
Fair Value
Cost*(Yen in millions and U.S. dollars in thousands)
March 31, 2007
Held-to-Maturity
Available-for-Sale
Aggregate
Aggregate
Fair Value
Fair Value
Cost*
Cost*

Held-to-Maturity
Aggregate
Fair Value
Cost*

Due within 1 year
Due after 1 year to 5 years
Due after 5 years
Equity securities¥ 24,168 ¥ 24,295 ¥17,110 ¥ 17,062 $ 204,814 $ 205,890 $145,000 $144,593
52,33852,391 16,402
16,385443,542443,991 139,000 138,856
1,899
1,921
—
—
16,093
16,280——272,653 585,274——
2,310,619 4,959,949——¥351,058 ¥663,881 ¥33,512 ¥ 33,447 $2,975,068 $5,626,110 $284,000 $283,449* Cost represents amortized cost for held-to-maturity securities and acquisition cost for available-for-sale securities. The cost basis of
the individual securities is written down to fair value as a new cost basis when other-than-temporary impairment is recognized.
Proceeds from sales of available-for-sale securities and the related gross realized gains and losses for the years ended March 31, 2005,
2006 and 2007 are as follows:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005
2006
2007
2007

Proceeds from sales of available-for-sale securities
Gross realized gains
Gross realized losses¥22,662
2,015
4,224

¥48,173
2,769
1,346

¥99,171
6,055
2,305

$840,432
51,314
19,534

For the purpose of computing gains and losses, the cost of those securities is determined by the moving average method.
Kyocera’s available-for-sale securities were classified by its length of an unrealized loss position at March 31, 2006 and 2007 as
follows:

within 1 year
Gross
Unrealized
Aggregate
LossesFair Value

Corporate debt securities
Other debt securities
Equity securities(Yen in millions)
March 31, 2006
over 1 year
Aggregate
Gross
Fair
Unrealized
Value
Losses¥1,012 ¥
21 ¥
131,942
1,127
1,252
87
¥134,206 ¥ 1,235 ¥

— ¥
—
25
25 ¥

—
—

Total
Aggregate
Fair Value

Gross
Unrealized
Losses¥ 1,012 ¥21
131,942
1,127
7
1,277
94
7 ¥134,231 ¥ 1,242(Yen in millions)
March 31, 2007
within 1 year
Gross
Unrealized
Aggregate
LossesFair Value

Corporate debt securities
Other debt securities
Equity securities

¥

529 ¥
50,8671,700¥ 53,096 ¥over 1 year
Aggregate
Gross
Fair
Unrealized
Value
Losses

3 ¥
60
103
166 ¥

—
—
—
—

¥

¥

—
—
—
—

Aggregate
Fair Value

Total
Gross
Unrealized
Losses¥529 ¥50,8671,700¥ 53,096 ¥

3
60
103
166

(U.S. dollars in thousands)
March 31, 2007
within 1 year
over 1 year
Total
Gross
Aggregate
Gross
Gross
Unrealized
Fair
Unrealized
Unrealized
Aggregate
Aggregate
Losses
Value
Losses
LossesFair Value
Fair Value

Corporate debt securities
Other debt securities
Equity securities$

4,483 $
25 $
431,076509
14,407873$449,966 $ 1,407 $

—
—
—
—

$

$

—
—
—
—

$ 4,483 $25
431,076509
14,407873$449,966 $ 1,407

At March 31, 2006 and 2007, the number of individual available-for-sale securities in an unrealized loss position held byKyocera were 33 and 38, respectively.

F-13

5. FINANCE RECEIVABLES
On August 1, 2006, Kyocera sold 100% of the shares of KLC. Detailed information regarding this transaction is described in Note 3.
Finance receivables at March 31, 2006 consist of the following:(Yen in millions)
March 31, 2006

Investments in financing leases :Minimum lease payments receivable
Unearned lease income¥

Less-allowance for doubtful accounts
Less-current portion¥
Other finance receivables
Less-allowance for doubtful accounts¥

Less-current portion
¥
¥

7,469
(639)
6,830
(501)
6,329
(2,499)3,830
119,911(5,831)
114,080(36,940)
77,14080,970Investments in financing leases consisted primarily of direct financing leases of telecommunications equipment and informationequipment. Other finance receivables consisted primarily of installment loans to unrelated third parties.
Investments in loans of ¥5,146 million at March 31, 2006 were considered to be impaired, for which valuation allowances at
March 31, 2006 were provided of ¥3,567 million, calculated under SFAS No.114, “Accounting by Creditors for Impairment of aLoan” and included in allowances for doubtful accounts.
The average recorded investments in impaired loans for the years ended March 31, 2005 and 2006 were ¥9,567 million and¥6,179 million, respectively. The related recognized interest income for the years ended March 31, 2005 and 2006 were, ¥43 millionand ¥34 million, respectively.
The principal amount of the loan on which interest income was no longer accrued at March 31, 2006 was ¥6,207 million, and at
March 31, 2006 there was no loan, on which the collection of the principal was past due ninety days or more and on which interest
income was still accrued.
Changes in allowances for doubtful accounts on finance receivables are as follows:(Yen in millions)Years ended March 31,
2005
2006

Beginning balance
Provision charged to income
Charge-offs
Ending balance¥ 36,315
508(21,904)¥ 14,919
F-14¥14,919326(8,913)¥ 6,332

6. INVENTORIESInventories at March 31, 2006 and 2007 are as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

Finished goods
Work in process
Raw materials and supplies¥

95,492
38,42556,647¥ 190,564¥ 106,135
44,80658,247¥ 209,188$

899,449
379,712493,619$ 1,772,780

7. INVESTMENTS IN AND ADVANCES TO AFFILIATES
Kyocera Corporation owned a 36.02% interest in Taito Corporation, a major affiliate which operates in the electric amusementbusiness 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 shares by 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 Mita Corporation owns a 30% interest in Triumph-Adler AG Group (TA), which is a distributor of office equipment
and accounted for its investment under the equity method. 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.
Kyocera Corporation owns a 30% interest in WILLCOM, INC., which operates a Personal Handyphone System (PHS) businessand is accounted for its investment under the equity method.
On March 31, 2006 and 2007, TA was a listed company. The market values of investment in TA at March 31, 2006 and 2007
were ¥2,669 million and ¥3,375 million ($28,602 thousand), respectively.
Related party transactions with the affiliates, accounted for under the equity method is as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

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

¥

2005

Kyocera’s equity in (losses) earnings of affiliates
Kyocera’s sales to affiliates¥
F-15(1,712)
21,3207,107
15,851¥

9,818
13,940$(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2006
2007

¥

(1,311)42,822¥

2,593
39,18983,203
118,136

2007$

21,975332,110

8. GOODWILL AND OTHER INTANGIBLE ASSETS
Intangible assets subject to amortization are summarized as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007
Gross Carrying
Accumulated
Gross Carrying
Accumulated
Gross Carrying
Accumulated
AmountAmortization
AmountAmortization
AmountAmortization

Patent rights
Software
Other

¥

¥

31,75524,314
6,754
62,823¥¥

15,546
13,0193,031
31,596¥¥29,00827,626
6,562
63,196¥¥

17,71016,876
3,955
38,541$$

245,830
234,119
55,610535,559$ 150,085
143,01733,517$ 326,619

The carrying amount of intangible assets other than goodwill having an indefinite life at March 31, 2006 and 2007 were notsignificant.
Intangible assets acquired during the year ended March 31, 2007 totaled ¥5,710 million ($48,390 thousand) and primarily
consist of patent rights of ¥626 million ($5,305 thousand) and software of ¥4,661 million ($39,500 thousand).
The weighted average amortization periods for patent rights and software are 5 years and 4 years, respectively.
Total amortization of intangible assets during the years ended March 31, 2005, 2006 and 2007 amounted to ¥7,008 million,¥10,042 million and ¥11,666 million ($98,864 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)

2008
2009
2010
2011
2012

¥

9,433
7,504
4,539
1,359
435

$

79,941
63,59338,466
11,517
3,686

The changes in the carrying amounts of goodwill by reporting segment for the years ended March 31, 2006 and 2007 are as follows:

Balance at March 31, 2005
Goodwill acquired during
the yearTranslation adjustments andreclassification to otheraccounts
Balance at March 31, 2006
Goodwill acquired during
the yearImpairment of goodwill
Translation adjustments
and reclassification toother accounts
Balance at March 31, 2007
Balance at March 31, 2006
Goodwill acquired during
the yearImpairment of goodwill
Translation adjustments
and reclassification toother accounts
Balance at March 31, 2007

Fine Ceramic
Parts Group

Semiconductor
Parts Group(Yen in millions and U.S. dollars in thousands)
Applied CeramicElectronic
Information
Products Group
Device Group
Equipment Group

¥

¥

¥

¥
$

—

6,293

¥

17,099¥OthersTotal

586¥ 4,132¥ 28,110

100

912

150

754

44

5

1,965

—
100

—
912

603
7,046

619
18,472

54
684

—
4,137

1,276
31,351

—
—

—
—

—
—

2,699
—

—
—

19
(1,478)2,718(1,478)60
7,106
59,712239¥ 21,410$ 156,542

5
689
5,797

(1)
¥ 2,677$ 35,059

303¥ 32,894$265,686——

22,873———

161(12,525)

23,034(12,525)

508
60,2202,026$ 181,441

42
5,839

(8)
$ 22,687

2,568$278,763

—
100
847

¥
$

—
—

$

—

—
847

—
912
7,729

¥
$

—
—

$

—
7,729

$

¥
$

$

Kyocera performed the annual impairment test of goodwill and other intangible assets and recorded an impairment loss of¥1,478 million ($12,525 thousands), which caused by stagnant sales and profit results in a reporting unit in the “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 fair value of the subsidiary was estimated principally using the expected present value of future cash flow.
F-16

9. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2006 and 2007 are comprised of the following:
Loans, principally from banks with average interest rate of 0.71% and 5.17% at March 31, 2006 and 2007, respectively.
(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

Unsecured*¥

90,865¥ 15,250$

129,237

Long-term debt at March 31, 2006 and 2007 are comprised of the following:
Loans, principally from banks with interest rates ranging from 0.15% to 5.45% and from 0.15% to 5.82% at March 31, 2006 and2007, respectively.
(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

SecuredUnsecured *

¥

4,149
45,55849,707(16,347)
33,360Less, portion due within one year
¥

¥

3,256
9,880
13,136(5,853)¥ 7,283$$

27,59383,729111,322(49,602)61,720* See note 3 for more information.
Aggregate maturities of long-term debt at March 31, 2007 are as follows:
Years ending March 31,(Yen in millions and U.S. dollars in thousands)

2009
2010
2011
2012
2013 and thereafter

¥

¥

1,899
1,488
1,370
1,020
1,506
7,283

$

$

Kyocera’s assets pledged as collateral of property, plant and equipment, net of accumulated depreciation for long-term debt at
March 31, 2006 and 2007 were ¥5,692 million and ¥5,374 million ($45,542 thousand), respectively.
F-17

16,093
12,61011,6108,644
12,76361,72010. 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 theover 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 in which 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 thisstandard at March 31, 2007.
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 theyear ended March 31, 2007.
(Yen in millions)

Investments in and advances to affiliates and unconsolidated
subsidiaries
Intangible assets
Deferred tax assets
Prepaid benefit cost

Before Applicationof SFAS No. 158

Adjustments

After Applicationof SFAS No. 158

¥

¥

¥

Accrued benefit liability
Deferred tax liabilities
Minority interests in subsidiaries
Accumulated other comprehensive income (loss)

—
12
8,354
568
17,856
1,466(942)(2,139)1,033(12)(2,555)23,614

1,033
—
5,799
24,182(4,931)9,480(27)
17,55812,925
10,946(969)
15,419(U.S. dollars in thousands)

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

Before Applicationof SFAS No. 158

Adjustments

After Applicationof SFAS No. 158

$

$

$

—
102
70,797
4,813
151,322
12,424(7,983)(18,127)

8,754
(102)
(21,653)
200,119(41,788)
80,339(229)
148,796

8,754—
49,144204,932
109,534
92,763(8,212)
130,669

Domestic:a. Defined benefit plans
At March 31, 2007, 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 longterm 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 ofservice 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” that are earned based on employee’s position, extent ofcontribution 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 are provided 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 a prior service cost.
Major domestic subsidiaries also amended their benefit plans and adopted the “point system” effective April 2006. As a result of
this amendment, their projected benefit obligations decreased and such decreases were reflected as prior service costs.
F-18

The funded statuses of the benefit plans at Kyocera Corporation and its major domestic subsidiaries at March 31, 2006 and 2007
are as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

Change in projected benefit obligations:
Projected benefit obligation at beginning of year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Amendment
Projected 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
Benefits paid
Fair value of plan assets at end of year
Funded status
Amounts recognized in the consolidated balance sheets consist of:Prepaid benefit costAccrued benefit liability
Net amount recognized
Reconciliation from funded status to amounts recognized in the consolidated balance
sheets consist of:Funded status
Unrecognized net transition obligation
Prior service cost not yet recognized
Unrecognized actuarial loss
Net amount recognized
Amounts recognized in accumulated other comprehensive income (loss) consist of:
Net transition obligation
Prior service cost
Actuarial loss
Accumulated other comprehensive income¥ 104,484 ¥ 110,530 $
6,661
7,873
2,045
2,098
1,464
(1,792)(3,292)(3,355)(832)(5,329)110,530
110,025

936,695
66,72017,780(15,186)(28,432)(45,161)
932,416

107,265
119,920
1,016,271
6,482
2,033
17,2299,043
8,935
75,720(2,870)(3,236)(27,423)
119,920
127,652
1,081,797¥
9,390 ¥ 17,627 $ 149,381¥

657 ¥(17,239)¥ (16,582) ¥24,182 $(6,555)
17,627 $204,932(55,551)
149,381

¥

—
—
—
—
—

—
—
—
—
—

(337) $
55,642(26,235)¥ 29,070 $(2,856)
471,542(222,330)
246,356

9,390
(522)
55,051(28,557)¥ (16,582)
—
—
—
—

¥

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

Accumulated benefit obligation at end of year
Pension plans with an accumulated benefit obligation in excess of plan assets at the end ofyear are as follows:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
F-19¥ 106,963¥ 108,037$

915,568¥¥$

149,271
145,856
93,72025,731
22,477
8,653

17,614
17,211
11,059

Net periodic pension costs at Kyocera Corporation and its major domestic subsidiaries in the years ended March 31, 2005 , 2006 and2007, include the following components:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005
2006
2007
2007

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

¥ 6,494
2,385(1,789)221(2,283)
1,243¥ 6,271¥ 6,661
2,045(2,159)221(4,445)
1,350¥ 3,673¥ 7,873
2,098(2,870)185(4,739)1,310¥ 3,857$ 66,720
17,780(24,322)
1,568(40,161)
11,101$ 32,686

Transition obligation, actuarial loss, and prior service cost expected to be amortized at Kyocera Corporation and its major domestic
subsidiaries in the year ending March 31, 2008 are as follows:(Yen in millions and U.S. dollars in thousands)
Year ending March 31,
2008
2008

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

226
(4,320)
1,047

$

1,915
(36,610)
8,873

Assumptions used to determine projected benefit obligations at Kyocera Corporation and its major domestic subsidiaries at March 31,
2006 and 2007 are as follows:
March 31,

Discount rate

2006

2007

1.75% -2.00%

1.75% -2.00%

Assumptions used to determine net periodic pension costs at Kyocera Corporation and its major domestic subsidiaries for the years
ended March 31, 2005 , 2006 and 2007 are as follows:

Discount rate
Expected long-term rate of return on plan assets
Rate of increase in compensation levels

2005

Years ended March 31,
2006

2.00%
2.00%-2.50%
3.00%

2.00%
2.00%-2.50%—

2007

1.75%-2.00%
2.00%-2.50%—

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.
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 and 2007 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 theirconsideration of the current expectations for future returns and the historical returns of other plan assets categories in which they
invest.
Plan assets categories at Kyocera Corporation and its major domestic subsidiaries at March 31, 2006 and 2007 are as follows:
March 31,
2006
2007

Life insurance company general accountEquity securities
Debt securities
Cash and cash equivalents
Other

65.1% 58.6%
21.9% 25.6%
9.5%
8.2%
2.2%
1.4%
1.3%
6.2%
100.0% 100.0%

F-20

Kyocera Corporation and its major domestic subsidiaries manage and operate their plan assets with a target of obtaining better
performance more than earnings from the expected rate of return on plan assets to ensure the sources of funds sufficient to cover thepension 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 a consideration 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 aneffort to maintain 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 30% equity and debt securities and approximately 10% cash andother for their defined benefit plans.
Kyocera Corporation and its major domestic subsidiaries forecast to contribute ¥8,753 million ($74,178 thousand) to the defined
benefit pension plans in the year ending March 31, 2008.
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)

2008
2009
2010
2011
2012
2013 to 2017

¥

4,368
5,372
5,420
5,269
5,843
32,453$37,01745,52545,93244,65349,517275,025b. Other plan
Kyocera Corporation and its major domestic subsidiaries also provide for lump-sum severance benefits with respect to directors andcorporate auditors. To reserve future payments of lump-sum severance benefits to directors and corporate auditors, annual provisions
are made in the accounts for the estimated cost of this termination plan, which is not funded.
Foreign:a. Pension plans
Kyocera International, Inc. and its consolidated subsidiaries (KII) and AVX Corporation and its consolidated subsidiaries (AVX)
which are both consolidated U.S. subsidiaries of Kyocera Corporation, maintain non-contributory defined benefit pension plans in the
U.S. and contributory 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 to certain 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-21

The following table sets forth the funded statuses of the KII’s and AVX’s plans at March 31, 2006 and 2007:(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

Change in benefit obligations:Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Actuarial loss (gain)
Benefits paid
Amendment
Foreign exchange adjustment
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
Fair value of plan assets at end of year
Funded status
Amounts recognized in the consolidated balance sheets consist of:
Intangible assets
Accrued benefit liability
Accumulated other comprehensive loss
Net amount recognized
Reconciliation from funded status to amounts recognized in the consolidated balance
sheets consist of:Funded status
Prior service cost not yet recognized
Unrecognized actuarial loss
Net amount recognized
Amounts recognized in accumulated other comprehensive Income (loss) consist of:Prior service cost
Actuarial loss
Accumulated other comprehensive loss

¥ 22,142
433
1,252
90
2,590
(979)
—
1,272
26,800¥ 26,854
538
1,431
98
(491)
(987)
154
1,884
29,481

16,893
2,079
630
90
(979)
(621)
1,589
19,681¥ (7,119)

19,681
1,927
1,095
98
(987)
(64)
1,359
23,109¥ (6,372)

$

¥

¥

$

¥

¥

¥

21
(5,615)
4,614
(980)

¥

(7,119)(15)(6,124)
(980)
—
—
—

—
(6,372)—(6,372)

$

$

—
—
—
—
¥
¥

(159)
(3,782)(3,941)

227,576
4,559
12,127830(4,161)(8,364)
1,305
15,967
249,839
166,788
16,3309,280
830(8,364)(542)
11,517
195,839(54,000)—(54,000)—(54,000)

—
—
—
—
$
$

(1,347)(32,051)(33,398)(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

Accumulated benefit obligation at end of year
Pension plans with an accumulated benefit obligation in excess of plan assets at theend of year:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
F-22¥ 25,054¥ 27,567$

233,619¥ 26,800
25,054
19,681¥ 19,685
19,51014,725$

166,822
165,339
124,788

KII’s and AVX’s net periodic pension costs in the years ended March 31, 2005 , 2006 and 2007 include the following components:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005
2006
2007
2007

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial loss
Net periodic pension cost

¥

845
1,186
(1,118)13
166¥ 1,092

¥

433
1,252
(1,283)
13
163
¥ 578

¥

538
1,431
(1,482)
17
238
¥ 742

$ 4,559
12,127(12,559)
144
2,017$ 6,288

KII’s and AVX’s actuarial losses and prior service costs expected to be amortized in the year ending March 31, 2008 are as follows:(Yen in millions and U.S. dollars in thousands)
Year ending March 31,
2008
2008

Amortization of prior service cost
Recognized actuarial loss

¥

15
196

$

127
1,661

KII’s and AVX’s assumptions used to determine projected benefit obligations at March 31, 2006 and 2007 are as follows:
March 31,2006

Discount rate
Rate of increase in compensation levels

2007

4.25%-5.50% 4.40%-6.00%
2.00%-4.50% 3.40%-4.50%

KII’s and AVX’s assumptions used to determine net periodic pension costs in the years ended March 31, 2005 , 2006 and 2007 are as
follows:
2005

Discount rate
Rate of increase in compensation levels
Expected long-term rate of return on plan assets

Years ended March 31,
2006

2007

5.25%-6.00% 4.50%-6.00% 4.25%-5.50%
1.25%-4.50% 1.25%-4.50% 3.00%-4.50%
7.00%-8.50% 6.30%-8.50% 6.40%-8.50%

KII and AVX use a December 31 measurement date for their plans. KII and AVX determine their expected long-term rate of returnon 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, 2006 and 2007 are as follows:
March 31,
2006
2007

Equity securities
Debt securities
Cash and cash equivalents
Other

65.9%
33.2%
0.9%
—
100.0%

65.9%
30.5%
2.2%
1.4%
100.0%

KII’s long-term strategy is for target allocation of 65%-75% equity securities and 15%-35% 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 ¥931 million ($7,890 thousand) to the defined benefit pension plans in the year ending March 31, 2008.
KII’s and AVX’s estimated future benefit payments are as follows:
Years ending March 31,

2008
2009
2010
2011
2012

(Yen in millions and U.S. dollars in thousands)

¥

964
1,004
1,072
1,136
1,203

$

8,169
8,508
9,085
9,627
10,195

7,1482013 to 2017
F-23

60,576

b. Savings plans
KII and AVX maintain retirement savings plans which allow eligible U.S. employees to defer part of their annual compensation.
AVX also maintains non-qualified deferred compensation programs which permit key employees to annually elect to defer a
portion of their compensation until retirement.
Contributions to the plans for the years ended March 31, 2005, 2006 and 2007 were ¥853 million, ¥928 million and¥1,003 million ($8,500 thousand), respectively.
11. STOCK OPTION PLANS
Kyocera Corporation:
Kyocera Corporation granted directors, corporate auditors, corporate executive officers and certain key employees of Kyocera withstock 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 higher of (1) multiplying by 1.1 the average market price ofKyocera Corporation’s common stock in previous month of the date of the grant or (2) the market price of Kyocera Corporation’scommon stock at the date of grant and an option’s maximum term is 5 years. All options vested and are exercisable.
At March 31, 2007, Kyocera Corporation reserved 2,113 thousand shares of its common stock for the plans.
The following table summarizes information on stock option plans for the year ended March 31, 2007:

Number of
Options(in thousands)

Outstanding at March 31, 2006
GrantedExercised
Expired and cancelled
Outstanding at March 31, 2007
Exercisable at March 31, 2007

Weighted Average
Exercise Price

Weighted
Average
Contractual
life remaining(years)

3,087 ¥ 8,498
—
— $ —
(918)
8,344
70.71
(56)
8,531
72.30
2,113 ¥ 8,564 $ 72.58
2,113 ¥ 8,564 $ 72.58

AggregatedIntrinsic Value(Yen in millions and U.S.
dollars in thousands)¥ 2,103 $17,822

1.5 ¥ 5,380 $1.5 ¥ 5,380 $

45,59345,593

The total aggregate intrinsic value of options exercised is ¥16 million, ¥626 million and ¥2,103 million ($17,822 thousand) for theyears ended March 31, 2005, 2006 and 2007, respectively.
At March 31, 2007, there was no unrecognized compensation costs related to unvested awards. The total aggregate fair value of
options vested was ¥2,419 million and ¥1,248 million for the years ended March 31, 2005 and 2006, respectively.
Because Kyocera granted no stock options during 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, 2007, no stock based compensation expense
was recognized for the year ended March 31, 2007.
Cash received from the exercise of stock options was ¥120 million, ¥2,332 million and ¥7,654 million ($64,864 thousand) for
the years ended March 31, 2005, 2006 and 2007, 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 the Kyocera’s
stock option plans:
Years ended March 31,
2005
2006

Fair value
Interest rate
Expected life
Volatility
Expected dividends

¥

1,946
0.39%
3.7 years
39.09%
1.00%

¥

959
0.20%
2.7 years
28.00%
1.30%

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 toemployees 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 the date of grant
and an option’s maximum term is 10 years. Options granted under the 1995 stock option plan and the 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 ofshares of common stock available for future issuance under all of the plans, consisting of options available to be granted and options
currently outstanding, was 15,300 thousand at March 31, 2007.
Options exercised under the AVX’s stock option plans are issued from the AVX’s treasury shares.
F-24

Activity under the AVX’s stock option plans is summarized as follows:

Number of
Options(in thousands)

Outstanding at March 31, 2006
GrantedExercised
Expired and cancelled
Outstanding at March 31, 2007
Exercisable at March 31, 2007

4,813
513
(430)
(75)
4,821
3,564

Weighted
Average
Exercise Price

$

$
$

14.72
15.27
10.27
18.62
15.14
15.69

Weighted
Averagecontractual
life remaining(years)AggregatedIntrinsic Value(Yen in millions and U.S.
dollars in thousands)

¥
5.11
4.03

323

$

2,737

¥
33
¥ (207)$$280(1,754)

The total aggregate intrinsic value of options exercised is ¥14 million, ¥120 million and ¥323 million ($2,737 thousand) for the years
ended March 31, 2005, 2006 and 2007, respectively.
Unvested share activity under the AVX’s stock options plans at March 31, 2007 is summarized as follows:
Weighted Average
GrantDated Fair Value

Number of Options(in thousands)

Unvested balance at March 31, 2006
Options granted
Option forfeited
Options vested
Unvested balance at March 31, 2007

1,382
513
(36)
(602)
1,257

$

$

5.65
5.44
5.60
6.57
5.39

At March 31, 2007, ¥438 million ($3,712 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 fair value of options vested is ¥658 million,¥497 million and ¥463 million ($3,924 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively.
The weighted average estimated fair value of the AVX’s stock options granted at grant date market prices was $6.07, $4.91 and$5.44 per option for the years ended March 31, 2005, 2006 and 2007, respectively. The consolidated statement of income includes¥263million ($2,229 thousand), net of ¥45 million ($381 thousand) of tax benefit, in stock based compensation expense for the year
ended March 31, 2007.
Cash received from the exercise of stock options was ¥31 million, ¥646 million and ¥ 516 million ($4,373 thousand) for theyears ended March 31, 2005, 2006 and 2007, respectively. Excess tax benefit from stock-based payment arrangements was¥78 million ($661 thousand) for the year ended March 31, 2007.
AVX’s weighted average fair value is estimated at the date of grant using Black Scholes model. AVX estimated volatility byconsidering the AVX’s historical stock volatility. AVX calculated the dividend yield based on historical dividend paid. In accordancewith SFAS No. 123R AVX has estimated forfeitures in determining the weighted average fair value calculation. The forfeiture rateused for the year ended March 31, 2007 was 6.4%. The following are significant weighted average assumptions used for estimating
the fair value of options issued under the AVX’s stock option plans:
2005

Interest rate
Expected life
Volatility
Expected dividends

Years ended March 31,
2006
2007

3.53%
4.00%
4.90%
4 years
4 years
5 years
55.97%
55.74%
35.25%
1.07%
1.31%
0.98%

Kyocera Wireless Corp. (KWC):
KWC provides key employees with stock options. The options become vested gradually over a four-year period provided participantsremain a KWC employee. The exercise price shall not be less than 85% of the fair value of the common stock at the time the option is
granted, and the grant has a maximum term of 10 years. Since KWC’s securities are not traded on any stock change, KWC’s Board of
Directors is responsible for determining the fair value using reasonable means. KWC may grant options to all key employees for thepurchase 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 the KWC’s stock option plans is summarized as follows:Number of
Options(in thousands)

Outstanding at March 31, 2006
GrantedExercised
Expired and cancelled
Outstanding at March 31, 2007
Exercisable at March 31, 2007

2,124
—
—
(585)
1,539
1,253
F-25

Weighted
Average
Exercise Price

$

$
$

2.33
—
—
2.41
2.30
2.38

Weighted
Averagecontractual
life remaining(years)5.45
5.45

AggregatedIntrinsic Value(Yen in millions and U.S.
dollars in thousands)¥ (363)¥ (307)$$(3,076)(2,602)Unvested share activity under the KWC’s stock options plans at March 31, 2007 is summarized as follows:
Weighted Average
GrantDated Fair Value

Number of Options(in thousands)

Unvested balance at March 31, 2006
Options granted
Option forfeited
Options vested
Unvested balance at March 31, 2007

669
—
(149)
(234)
286

$

0.92
—
1.11
0.87
0.87

$

At March 31, 2007, ¥36 million ($305 thousand) of total unrecognized compensation costs related to unvested awards is expected tobe recognized over the vesting period, approximately four years. The total aggregate fair value of options vested is ¥78 million,¥76 million and ¥22 million ($186 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively.
The weighted average estimated fair value of the KWC’s stock options granted at grant date was $1.43 and $0.63 per option forthe years ended March 31, 2005 and 2006, respectively. The consolidated statement of income includes ¥(25) million and ¥25 million($212 thousand) in stock based compensation expense for the years ended March 31, 2005 and 2007, respectively.
KWC’s weighted average fair value is estimated at the date of grant using Black Scholes model. KWC estimated volatility byconsidering historical volatility. The following are significant weighted average assumptions used for estimating the fair value of
options issued under the KWC’s stock option plans:
Years ended March 31,
2005
2006

Fair value
Interest rate
Expected life
Volatility
Expected dividends

$

1.43
3.65%
5 years
45.00%
—

$

0.63
4.21%
5 years
45.00%—

12. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Kyocera’s activities are exposed it to a variety of market risks, including the effects of changes in foreign currency exchange rates andinterest rates. Approximately 60% of Kyocera’s revenues are generated from overseas customers, which exposes Kyocera to foreign
currency exchange rates fluctuations. These financial exposures are monitored and managed by Kyocera as an integral part of its
overall risk management program. Kyocera’s risk management program focuses on the unpredictability of financial markets andseeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.
Kyocera maintains a foreign currency risk management strategy that uses derivative financial instruments, such as foreign
currency forward contracts, to minimize the volatility in its cash flows caused by changes in foreign currency exchange rates.
Movements in foreign currency exchange rates pose a risk to Kyocera’s operations and competitive position, since exchange rates
changes may affect the profitability, cash flows, and business and/or pricing strategies of non Japan-based competitors. Thesemovements affect cross-border transactions that involve, but not limited to, direct export sales made in foreign currencies and raw
material purchases incurred in foreign currencies.
Kyocera maintains an interest rate risk management strategy that may use derivative financial instruments, such as 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 the terms of the derivative contracts. Whenthe fair value of a derivative contract is positive, the counterparty owes Kyocera, which creates repayment risk for Kyocera. When thefair 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 withcreditworthy 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 and sales.
Kyocera charged deferred net gains of ¥30 million and net losses of ¥27 million and ¥8 million ($68 thousand) from

accumulated other comprehensive income to foreign currency transaction gains (losses), net in the consolidated statements of income
for the years ended March 31, 2005, 2006 and 2007, as a result of the execution of the hedged 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 ¥78 million and ¥23 million ($195 thousand) from accumulated other comprehensive income to income fromdiscontinued operations in the consolidated statements of income for the years ended March 31, 2005 and 2007. Kyocera charged
deferred net losses of ¥18 million ($152 thousand) from accumulated other comprehensive income to equity in (losses) earnings ofaffiliates in the consolidated statement of income for the year ended March 31, 2007.
Kyocera recognized net losses of ¥75 million and net gains of ¥63 million ($534 thousand) in accumulated other comprehensive
income at March 31, 2006 and 2007, respectively
F-26

Other Derivatives
Kyocera’s main direct foreign export sales and some import purchases are denominated in the customers’ and suppliers’ local
currency, principally the U.S. dollar, Euro and STG. Kyocera purchases foreign currency forward contracts with terms normallylasting less than three months to protect against the adverse effects that exchange-rate fluctuations may have on foreign-currencydenominated trade receivables and payables. Kyocera does not adopt hedge accounting for such derivatives. The gains and losses onboth the derivatives and the foreign-currency-denominated trade receivables and payables are recorded as foreign currencytransaction gains (losses), net in the consolidated statements of income.
The aggregate contract amounts of derivative financial instruments to which hedge accounting is not applied are as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

Foreign currency forward contracts to sell
Foreign currency forward contracts to purchase
Interest rate swaps¥ 118,911
8,572
13,000¥ 135,227
14,961—$ 1,145,992
126,788—

13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of financial instruments at March 31, 2006 and 2007 and the methods and assumptions used to estimate the fair value
are as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007
Carrying
Carrying
Carrying
Fair Value
Fair Value
Fair Value
AmountAmountAmountNon-derivatives:
Assets:Cash and cash equivalents (a)Short-term investments (b)Short-term finance receivables (c)Securities and other investments (b)Long-term finance receivables (c)Liabilities:
Short-term borrowings (a)Current portion of long-term debt (c)Long-term debt (c)¥ 300,809 ¥ 300,809 ¥ 282,208 ¥ 282,208 $ 2,391,593 $ 2,391,593
87,942
87,791
1,809,280
1,808,873
213,495
213,447
36,94036,946————553,377
553,144690,568
690,527
5,852,271
5,851,924
77,14077,164————¥1,056,208 ¥1,055,854 ¥1,186,271 ¥1,186,182 $10,053,144 $10,052,390¥ (90,865) ¥ (90,865) ¥ (15,250) ¥ (15,250) $ (129,237) $ (129,237)(16,347)(16,367)(5,853)(5,880)(49,602)(49,831)(33,360)(33,470)(7,283)(7,285)(61,720)(61,737)¥ (140,572) ¥ (140,702) ¥ (28,386) ¥ (28,415) $ (240,559) $ (240,805)

Derivatives:
Foreign currency forward contracts
to sell(d)¥ (1,271) ¥ (1,271) ¥ (1,386) ¥ (1,386) $ (11,746) $Foreign currency forward contracts
to purchase (d)
(27)
(27)
593
70
70
Interest rate swaps (d)
(511)
(511)
—
—
—
At March 31, 2006, both short-term finance receivables and long-term finance receivables in the above do not include
investments in direct financing leases.
(a)
(b)

(c)

(d)

(11,746)
593—

The carrying amount approximates fair value because of the short maturity of these instruments.
The fair value is based on quoted market prices. It was not practicable to estimate the fair value of investments in unlistedcommon 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 in circumstances that may have had a significant adverse effect on theseinvestments. The aggregated carrying amounts of these investments included in the table at March 31, 2006 and 2007 were¥2,258 million and ¥2,100 million ($17,797 thousand), respectively.
The fair value is estimated by discounting cash flows, using current interest rates for instruments with similar terms andremaining maturities.
The fair value is estimated based on quotes from financial institutions.

F-27

14. COMMITMENTS AND CONTINGENCIESAt March 31, 2007, Kyocera had contractual obligations for the acquisition or construction of property, plant and equipment
aggregating ¥15,893 million ($134,686 thousand) principally due within one year.
Kyocera is lessee under long-term operating leases primarily for office space and equipment. Rental expenses for operatingleases were ¥12,204 million, ¥11,485 million and ¥7,681 million ($65,093 thousand) for the years ended March 31, 2005, 2006 and2007, respectively.
Future minimum lease commitments under non-cancelable operating leases at March 31, 2007 are as follows:
Years ending March 31,(Yen in millions and U.S. dollars in thousands)

2008
2009
2010
2011
2012
2013 and thereafter

¥

¥

6,346
4,126
2,997
2,370
1,771
5,270
22,880$$53,78034,96625,39820,08515,00844,661
193,898

Kyocera has entered into material supply agreements for a significant portion of their anticipated material used in its operations.
Under those agreements, during the year ended March 31, 2007, Kyocera purchased ¥2,414 million ($20,458 thousand) and is
obligated to purchase ¥106,938 million ($906,254 thousand) in total by the end of December 2018.
Kyocera guarantees the debt of employees, customers, an investee and an unconsolidated subsidiary. At March 31, 2007, thetotal amount of these guarantees was ¥850 million ($7,203 thousand). The financial guarantees are made in the form 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. Kyocera also guarantees the leasing debts of customers of the Information Equipment Group. At March 31, 2007, theamount of such guarantee was ¥180 million ($1,525 thousand).
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 amount is reasonably estimated. However, based on the information
available, management believes that damages, if any, resulting from these actions will not have a significant effect on Kyocera’s
consolidated results of operations and financial position.
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 earned from transfers of products between
Kyocera Corporation and its overseas subsidiaries was not appropriate for the five years from the year ended March 31, 1999 throughthe year ended March 31, 2003. The notice indicated that income should be adjusted upwards ¥24,394 million and 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 complaint
against tax assessment based on transfer pricing adjustments with the Osaka Regional Tax Bureau.
On September 25, 2006, Kyocera Corporation received decision letter from the Bureau that voided a portion of the originalassessment. In accordance with this decision, ¥4,305 million ($36,483 thousand) of tax refunds, including local taxes, was recognizedin current income taxes in fiscal 2007. Kyocera Corporation remains in disagreement with the decision concerning the portion of theoriginal assessment that was not voided, and therefore, on October 23,2006, Kyocera submitted a written claim for examination with
the Osaka Board of Tax Appeals. Furthermore, with the objective of avoiding duplicate taxation within Kyocera Group, a noticestating mutual agreement with the United States was submitted to the National Tax Agency on December 26, 2006.
15. STOCKHOLDERS’ EQUITY
Under the Company Law of Japan (the “Company Law”), the entire amount paid in for the shares is principally required to becapitalized as stated capital, although Kyocera Corporation may, by resolution of its Board of Directors, capitalize an amount notexceeding one-half of the amount paid in for the shares as additional paid-in capital.
The Company Law requires a domestic company to appropriate as legal reserve or additional paid-in capital, an amount equal to
10% of the amount paid out for dividends until the sum of the legal reserve and the additional paid-in capital equals 25% of its statedcapital. The legal reserve and additional paid-in capital, which could be decreased due to stockholder actions, may be transferred tostated capital or used to reduce a deficit principally. The appropriated legal reserve at March 31, 2007 included in retained earnings
was ¥18,873 million ($ 159,941 thousand).

F-28

The Company Law does not permit any payment of dividends in connection with the repurchased treasury stock. At
March 31,2007, Kyocera Corporation reserved ¥21,855 million ($185,212 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, 2007 was ¥649,412 million ($5,503,492 thousand).
The accompanying consolidated financial statements do not include any provision for the dividend of ¥60 ($0.51) per share
aggregating ¥11,319 million ($95,924 thousand) payable on June 28, 2007 which was approved by the stockholders at the meeting
held on June 27, 2007.
Kyocera’s equity in retained earnings or deficits of affiliates and unconsolidated subsidiaries accounted for by the equity methodof accounting aggregating ¥ (13,373 million) ($(113,331 thousand)) at March 31, 2007 was included in retained earnings.
Changes in accumulated other comprehensive income are as follows:(Yen in millions and U.S. dollars in thousands)
Net Unrealized
Gains (Losses)
Minimum
Net Unrealized
on Derivative
PensionGains
Financial
Liability
Pensionon
Instruments
Adjustments
Adjustments
Securities

Total
Accumulated
Other
Comprehensive
Income¥ (35,670)
6,704(28,966)
21,396(7,570)10,474¥¥—¥ 2,904$ (64,153)
88,763

15,419¥ 15,419
$
—
—

2,139
¥
—
$ (17,432)(695)—$ 24,610

130,670$ 130,670$

Foreign
Currency
Translation
Adjustments

Balance at March 31, 2004
Net change for the year
Balance at March 31, 2005
Net change for the year
Balance at March 31, 2006
Net change for the year
Adjustment for initially applying
SFAS No.158
Balance at March 31, 2007
Balance at March 31, 2006
Net change for the year
Adjustment for initially applying
SFAS No.158
Balance at March 31, 2007

—
—
—
—
—
—

¥

(1,477)(152)(1,629)(428)(2,057)(82)

18,127—¥¥$59,241(16,780)
42,46140,18882,649102,021—
184,670
700,415
864,585—$ 1,565,000

¥

¥
$

$

(48)
21
(27)
(48)
(75)
138
—
63
(635)
1,169
—
534

¥
$

22,046(10,207)
11,83961,10872,947
112,551
17,558203,056
618,195
953,822

148,797$ 1,720,814

16. INCOME TAXES
Income from continuing operations before income taxes and minority interests and income taxes for the years ended March 31, 2005,
2006 and 2007 are made up of the following components:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005
2006
2007
2007

Income from continuing operations before income taxes and minority interests:
Domestic
Foreign
Total income from continuing operations before income taxes andminority interests
Income taxes:
Current income taxes:
Domestic
Foreign
Total current income taxes
Deferred income taxes:
Domestic
Foreign
Total deferred income taxes
Total income taxes
F-29¥ 89,673
14,340¥ 93,078
24,159¥102,048
54,492$ 864,813
461,797¥104,013¥117,237¥156,540$1,326,610¥ 47,400
5,206
52,606¥ 39,025
7,215
46,240¥ 41,227
12,53853,765$ 349,382
106,254455,636

(723)
6,331
5,608
¥ 58,214(1,202)
1,722
520¥ 46,760(4,479)(399)(4,878)¥ 48,887(37,958)(3,381)(41,339)$ 414,297

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 March 31, 2005, 2006 and 2007 of approximately 41.0%.
Reconciliations between the Japanese statutory income tax rate and Kyocera’s effective tax rate for the years ended March 31,
2005, 2006 and 2007 are as follows:

2005

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 (Note 14)
Adjustments of transfer pricing (Note 14)
Other
Effective income tax rateYears ended
March 31,
2006

41.0%
(4.1)
9.8
(2.3)
—
12.3
(0.7)
56.0%

2007

41.0% 41.0%
(2.8)
(4.6)
5.8
0.0
(3.6)
(3.3)
—
(2.8)
—
—
(0.5)
0.9
39.9% 31.2%

The components of the deferred tax assets and deferred tax liabilities at March 31, 2006 and 2007 are as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

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
Total gross deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Depreciation and amortization
Deduction of foreign branch losses
Securities
Prepaid benefit cost
Other
Total deferred tax liabilities
Net deferred tax liabilities¥

2,162 ¥
2,521 $
21,364
19,22822,358
189,475
2,851
1,972
16,712
7,478
9,178
77,78020,825
18,774
159,10228,244
31,165
264,1102,390
2,194
18,59331,37832,500275,424
3,479
3,800
32,2036,456
4,817
40,822
124,491
129,279
1,095,585(42,149)(42,124)(356,983)¥ 82,342 ¥ 87,155 $
738,602¥3,496 ¥
2,566 $
21,746
5,670
5,474
46,390143,734
214,900
1,821,186
269
10,946
92,763973
2,968
25,153¥ 154,142 ¥ 236,854 $ 2,007,238¥ (71,800) ¥ (149,699) $ (1,268,636)
F-30

Net deferred tax assets and liabilities at March 31, 2006 and 2007 are reflected in the consolidated balance sheets under the following
captions.
(Yen in millions and U.S. dollars in thousands)
March 31,
2006
2007
2007

Deferred income taxes - current assets
Other assets
Other current liabilities
Deferred income taxes - non-current liabilities
Net deferred tax liabilities¥

40,411 ¥ 45,390 $ 384,661
13,504
12,024
101,898(29)(255)(2,161)(125,686)(206,858)(1,753,034)¥ (71,800) ¥ (149,699) $ (1,268,636)

At March 31, 2007, Kyocera had net operating losses carried forward of approximately ¥ 89,177 million ($755,737 thousand), which
are available to offset future taxable income. Of these net operating losses carried forward, the amount of ¥20,429 million ($173,127
thousand) recorded at domestic subsidiaries will expire within next seven years, and the amount of approximately ¥16,615 million($140,805 thousand) recorded at U.S. subsidiaries will expire within next twenty years. Certain other foreign subsidiaries have net
operating losses carried forward totaling approximately ¥52,133 million ($441,805 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, nodeferred tax liabilities have been provided on undistributed earnings of these subsidiaries, which are not expected to be remitted in theforeseeable future. Kyocera estimates that this unrecognized deferred tax liability amount are ¥17,862 million ($151,373 thousand) at
March 31, 2007. The undistributed earnings of these subsidiaries are ¥172,320 million ($1,460,339 thousand) at March 31, 2007.
Total gross deferred tax assets at March 31, 2006 and 2007 were reduced by valuation allowances of ¥42,149 million and¥42,124 million ($356,983 thousand), respectively. The total valuation allowance for the year ended March 31, 2007 decreased by¥25 million ($212 thousand).
17. SUPPLEMENTAL EXPENSE INFORMATION
Research and development expenses for the years ended March 31, 2005, 2006 and 2007 amounted to ¥54,398 million,¥57,436 million and ¥61,100 million ($517,797 thousand), respectively.
Advertising expenses for the years ended March 31, 2005, 2006 and 2007 amounted to ¥13,914 million, ¥10,840 million and¥11,845 million ($100,381 thousand), respectively.
Shipping and handling costs for the years ended March 31, 2005, 2006 and 2007 amounted to ¥12,914 million, ¥13,984 millionand ¥15,945 million ($135,127 thousand), respectively, and were included in selling, general and administrative expenses in theConsolidated Statements of Income.
F-31

18. SEGMENT REPORTING
Kyocera manufactures and sells a highly diversified range of products, including components involving fine ceramic technologies andapplied ceramic products, telecommunications and information equipment and optical instruments, etc. Main products or businessesof each reporting segment are as follows:(Fine Ceramic Parts Group)
Information & Telecommunication Components
Sapphire Substrates
Components for Semiconductor Processing Equipment
Components for LCD Fabrication Equipment
Automotive Components
ITS-related Components
Ceramic Components for General Industrial Equipment(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
Printed Circuit Board Micro Drills
Jewelry
Applied Ceramic Related Products
Dental and Medical Implants(Electronic Device Group)
Ceramic Capacitors
Tantalum Capacitors
Timing Devices (Temperature Compensated Crystal Oscillators (TCXOs), Ceramic Resonators, Crystal Units)
RF Modules
Surface Acoustic Wave (SAW) Filters
Connectors
Thermal Printheads
LED Printheads
Amorphous Silicon 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)(Information Equipment Group)
ECOSYS Printers
Copying Machines
Multifunctional Systems(Optical Equipment Group)
Optical Modules and Lenses(Others)
Chemical Materials for Electronic Components
Electrical Insulators
Synthetic Resin Molded Parts
Telecommunication Engineering BusinessInformation and Communication Technology Business
Management Consulting Business
Hotel Business
Realty Development BusinessInsurance Agent and Travel Agent Business
Kyocera Corporation sold its shares of KLC, a subsidiary engaged in financing services included in “Others.” As a result, businessresults and profit on sale of its shares of KLC for the year ended March 31, 2007 have been recorded as income from discontinued
operations. Additionally, commencing for the year ended March 31, 2007, results of Precision Machine Division of Kyocera
Corporation, previously included within “Corporate,” has been reclassified into “Others.” Accordingly, reported results of related
segments for the years ended March 31, 2005 and 2006 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, lessrelated costs and operating expenses, excluding corporate revenue and expenses, equity in earnings (losses), income taxes andminority 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 other investments and assetsthat are not specific to each reporting segment.
Kyocera’s sales to KDDI and its consolidated subsidiaries, which are mainly recorded at the Telecommunications Equipmentgroup, for the years ended March 31, 2005, 2006 and 2007 comprised of 7.6%, 8.1% and 9.6% to consolidated net sales, respectively.
Information by reporting segment at and for the years ended March 31, 2005, 2006 and 2007 is summarized on the following
page:
F-32

Reporting segments(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005
2006
2007
2007

Net sales:
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersAdjustments and eliminations¥

Operating profit:
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersCorporate
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries
Adjustments and eliminations
Income from continuing operations before income taxes andminority interests
Depreciation and amortization:
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersCorporate

73,711
127,960
93,879262,997
250,918
241,145
35,776
110,595(23,321)¥1,173,660¥

69,373 ¥ 81,326
135,299
152,292
117,555
131,103259,592
286,156
229,035
251,183
249,381
268,781
14,947
11,704
117,409125,656(19,047)(24,304)¥1,173,544 ¥1,283,897

$

¥

¥

$

11,535
17,55017,12935,406(14,918)
36,186(15,387)
9,705
97,206
8,480(1,678)5¥ 104,013¥ 117,237¥ 156,540

132,856
188,220
189,271377,0092,466
287,881(16,059)
74,373
1,236,017
72,61822,212(4,237)$ 1,326,610

4,320 ¥
4,126 ¥
4,500 $
38,135
8,922
10,623
12,533106,212
4,645
7,167
8,097
68,61921,723
21,202
21,537
182,517
8,101
8,692
9,075
76,907
8,953
12,641
16,326
138,356
2,909
1,635
655
5,551
4,197
3,989
6,764
57,322
2,039
2,996
2,575
21,822¥ 65,809 ¥ 73,071 ¥ 82,062 $ 695,441* Depreciation and amortization of KLC amounted to ¥100 million, ¥115 million and ¥120 million ($1,017 thousand) for the years
ended March 31, 2005, 2006 and 2007 respectively, are no longer included in the above table since the result of operations of KLC
are reported as discontinued operations. Therefore, the total amounts of depreciation and amortization in the above table differ
from the depreciation and amortization reported in the statements of cash flows.
F-33¥

11,014 ¥ 15,677
17,742
22,21021,87622,334
27,17044,487(1,706)291
26,412
33,970(5,774)(1,895)
8,983
8,776
105,717
145,850
12,7858,569(1,216)
2,621
(49)
(500)

689,2031,290,610
1,111,042
2,425,051
2,128,670
2,277,805
99,187
1,064,881(205,966)$10,880,483

Reporting segments(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005
2006
2007
2007

Write-down of inventories:
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersCorporate¥¥
Capital expenditures:
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersCorporate

¥

¥

14
45
312
598
4,053
1,583
3,793
7
—
10,405

¥

4,394
7,111
7,584
19,453
5,170
11,751
2,248
2,387
3,062
63,160

¥

¥

¥

14
382
1,176
385
4,184
2,079
194
32
—
8,446

¥

4,182
24,136
14,545
21,562
2,639
12,389
199
5,654
3,554
88,860

¥

¥

¥

54
1,848
1,283
670
5,208
1,791
464
10
—
11,328$

7,447
11,432
7,330
19,812
3,800
11,962
322
5,452
2,339
69,896

$

$

$

458
15,661
10,873
5,678
44,135
15,1783,932
85—
96,00063,11096,881
62,119167,898
32,203
101,3732,729
46,204
19,822592,339(Yen in millions and U.S. dollars in thousands)
March 31,
2005
2006
2007
2007

Assets:Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
Others¥Corporate
Investments in and advances to affiliates and unconsolidated subsidiaries
Adjustments and eliminations
Total assets
F-34

43,41479,711
85,595
357,797
98,877
178,596
31,338
218,423
1,093,751
682,725
30,623(61,580)¥1,745,519¥

43,822 ¥ 54,860
103,302106,359
112,422
125,266
383,150
412,979
87,34392,584
185,362
207,862
16,211
11,934
243,166
121,150
1,174,778
1,132,994
815,833
1,056,646
7,355
10,093(66,444)(69,269)¥1,931,522 ¥2,130,464$

464,915
901,348
1,061,576
3,499,822
784,610
1,761,542
101,136
1,026,695
9,601,644
8,954,627
85,534(587,025)$18,054,780

Information for revenue from external customers by destination and long-lived assets based on physical location as of and for theyears ended March 31,2005, 2006 and 2007 are summarized as follows:
Geographic segments(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005
2006
2007
2007

Net sales:Japan
United States of America
Asia
EuropeOthers¥ 465,422 ¥ 467,035 ¥ 496,959 $ 4,211,517
248,333
253,696274,361
2,325,093
203,848
198,731
216,663
1,836,127
175,850
184,351
210,726
1,785,814
80,207
69,731
85,188
721,932¥1,173,660 ¥1,173,544 ¥1,283,897 $10,880,483(Yen in millions and U.S. dollars in thousands)
March 31,
2005
2006
2007
2007

Long-lived assets:
Japan
United States of America
Asia
EuropeOthers¥ 212,291 ¥ 251,555 ¥ 235,325 $ 1,994,280
35,712
36,24836,777
311,669
31,07037,30842,204
357,661
23,26922,344
24,398
206,763
3,294
3,711
4,635
39,280¥ 305,636 ¥ 351,166 ¥ 343,339 $ 2,909,653

There are no individually material countries with respect to revenue from external customers and long-lived assets in Asia, Europe
and Others.
19. EARNINGS PER SHARE
A reconciliation of the numerators and the denominators of basic and diluted earnings per share computations is as follows:(Yen in millions and U.S. dollars in thousands
except per share amounts)
Years ended March 31,
2005
2006
2007
2007

Income from continuing operations
Income from discontinued operations
Net income
Basic earnings per share:
Income from continuing operations
Income from discontinued operations
Net income
Diluted earnings per share:
Income from continuing operations
Income from discontinued operations
Net income¥42,657
3,251
45,908¥66,088
3,608
69,696¥101,329
5,175
106,504$858,720
43,856
902,576227.5217.34
244.86352.4419.24
371.68538.5227.51
566.03

4.56
0.24
4.80

227.4717.34
244.81352.2119.22
371.43537.3527.44
564.79

4.55
0.24
4.79

(shares in thousands)
Years ended March 31,
2005
2006
2007

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

187,489 187,514 188,160
39
126
413
187,528 187,640 188,573

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

Cash paid during the year:
Interest
Income taxes
Acquisitions of businesses:
Fair value of assets acquired
Fair value of liabilities assumed
Minority Interests
Cash acquired

F-35

2005

2006

2007

2007

¥ 2,33140,055¥ 1,933
53,037¥ 1,603
52,847$ 13,585
447,856¥ 8,478(2,683)(2,440)(561)¥ 2,794¥¥ 1,151
(333)
—
(62)
¥ 756

$

¥

65
(45)
(8)
(15)
(3)

9,754
(2,822)—(525)$ 6,407

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
For the years ended March 31, 2005, 2006 and 2007

Balanceat Beginning of
PeriodYen in millions
Column C
Additions
Charged(Credited)to otherCharged to
Accounts
Costs andExpenses(A)¥

42,792
4,408
47,200

¥

548
8,473
¥ 9,021¥

21,0393,899
24,938

¥

696
7,039
¥ 7,735

¥

388
364
752

¥ (9,939)(7,590)¥(17,529)¥12,184
3,712¥15,896

12,184
3,712
15,896¥¥ (4,802)65¥ (4,737)¥ (3,204)(8,499)¥(11,703)¥ 4,982
3,089¥ 8,071

Column A

Column B

Description

For the year ended March 31, 2005:
Allowance for doubtful accounts
Allowance for sales returns
Total
For the year ended March 31, 2006:
Allowance for doubtful accounts
Allowance for sales returns
Total
For the year ended March 31, 2007:
Allowance for doubtful accounts
Allowance for sales returns
Total

¥
¥
¥
¥
¥

804
7,811
¥ 8,615¥¥

Column D

Column E

Deductions(B)

Balanceat End ofPeriod109
58
167¥(22,410)(9,040)¥(31,450)¥21,039
3,899¥24,938(A) Foreign currency translation adjustments, beginning balance of newly consolidated subsidiaries and the decrease by the sale ofKyocera Leasing Co., Ltd.
(B) Charge-offs
F-36

SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, Kyocera certifies that it meets all of therequirements 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 /s/ Shoichi Aoki
Shoichi Aoki
Executive Officer
General Manager ofCorporate Financial & Accounting Group
July 4, 2007

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 the Registrant’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 by reference 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)

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 of January 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 this Form 20-F)

11.1

Code of Ethics

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) and Section 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) and Section 1350 of Chapter
63 of Title 18 of the United States Code

15.1

Consent of PricewaterhouseCoopers with respect to its report on the audit of the financial statements included in thisForm 20-F

Exhibit 1.4(TRANSLATION)REGULATIONS OF THE BOARD OF CORPORATE AUDITORS
Amended on July 19, 2006
KYOCERA CORPORATION
THE BOARD OF CORPORATE AUDITORSREGULATIONS OF THE BOARD OF CORPORATE AUDITORSOFKYOCERA CORPORATION
Article 1. Purpose
All matters relating to the Board of Corporate Auditors of the Company shall be governed by laws and regulations and the
Articles of Incorporation and by these Regulations.
Article 2. Organization
1. The Board of Corporate Auditors shall consist of all Corporate Auditors.
2. The Board of Corporate Auditors shall appoint Standing Corporate Auditors and a Chairman of the Board of Corporate
Auditors.
Article 3. Purpose of the Board of Corporate Auditors
The Board of Corporate Auditors shall receive reports on, discuss and resolve important matters relating to the auditing;provided, however, that each Corporate Auditor shall not be prevented from exercising its powers.
Article 4. Duties of the Board of Corporate Auditors
The Board of Corporate Auditors shall conduct the following duties; provided, however, that no decision as set forth in item
(3) may prevent each Corporate Auditor from exercising its powers:(1)

Preparation of Audit Reports;(2)

Appointment and dismissal of Standing Corporate Auditors; and(3)

Determination of auditing guidelines, methods of research on status of business and assets and other matters related to
conduct of duties of Corporate Auditors.
-1-Article 5. Appointment and Dismissal of Standing Corporate Auditors
The Board of Corporate Auditors shall appoint or dismiss Standing Corporate Auditors from among the Corporate Auditors by
resolution of the Board of Corporate Auditors.
Article 6. Chairman
1. The Board of Corporate Auditors shall elect a Chairman from among the Corporate Auditors by resolution of the Board of
Corporate Auditors.
2. The Chairman of the Board of Corporate Auditors shall conduct these duties delegated to him/her by the Board of Corporate
Auditors, as well as the duties set forth in paragraph 1 of Article 8; provided, however, that, the Chairman shall not prevent each
Corporate Auditor from exercising its powers.
Article 7. Meetings
Meetings of the Board of Corporate Auditors shall, in principle, be held at least four (4) times each fiscal year; provided,
however, that extraordinary meetings may be held whenever necessary.
Article 8. Person Entitled to Convene Meetings
1. The Chairman shall convene and manage the meetings of the Board of Corporate Auditors.
2. Any Corporate Auditor may request the Chairman, to convene a meeting of the Board of Corporate Auditors.
3. If, notwithstanding any request as set forth in the immediately preceding paragraph, the Chairman does not convene a meetingof the Board of Corporate Auditors, the requesting Corporate Auditor may convene and manage such meeting of the Board of
Corporate Auditors.
-2-Article 9. Convocation Procedure
1. In order to convene a meeting of the Board of Corporate Auditors, a notice of the meeting of the Board of Corporate Auditors
shall be dispatched to each Corporate Auditor at least three (3) days prior to the date of such meeting.
2. The convocation procedure for a meeting of the Board of Corporate Auditors may be omitted with the consent of all
Corporate Auditors.
Article 10. Manner of Adopting Resolutions
1. Resolutions of the Board of Corporate Auditors shall be adopted by the majority vote of the Corporate Auditors.
2. Resolutions shall be adopted following deliberation based on sufficient materials.
Article 11. Resolutions on Auditing Policy
1. Matters such as auditing policy, auditing plan, auditing methods and allocation of duties shall be determined by resolution of
the Board of Corporate Auditors.
2. All matters other than those referred to in the immediately preceding paragraph, which any Corporate Auditor deems
necessary in conducting its duties, including budget for auditing expenses, shall be determined by resolution of the Board of
Corporate Auditors.
3. Substance of the following systems and other matters shall be determined by resolution of the Board of Corporate Auditors,
and the Board of Corporate Auditors shall request the Directors to improve such systems and other matters:(1)

Matters concerning employee supporting the Corporate Auditors’ conduct of their duties;(2)

Matters concerning independence from the Directors of the employees referred to in the immediately preceding paragraph;(3)

A system concerning reports to the Corporate Auditors, including those from the Directors and employees; and(4)Other systems to ensure the audits by the Corporate Auditors are conducted effectively.
-3-

Article 12. Regular Meetings with Representative Directors, etc.
1. The Board of Corporate Auditors shall seek to promote mutual understanding between the Representative Directors and theBoard of Corporate Auditors by, among other things, holding meetings with the Representative Directors on a regular basis andexchanging opinions on issues to be addressed by the Company, improvement of the environment for audit by the Corporate Auditors
and important auditing issues, etc., as well as by making requests judged to be necessary.
2. The Board of Corporate Auditors shall explain auditing policy, auditing plan and status of implementation of auditing and theeffect thereof, as appropriate, to the Representative Directors and the Board of Directors.
3. The Board of Corporate Auditors shall, based on the system provided in paragraph 3, item 3 of the immediately preceding
Article, receive reports from Directors and employees on matters determined, in consultation with the Directors, to be reported to theBoard of Corporate Auditors by the Directors and the employees, as well as such matters as may be provided by law.
Article 13. Reports to the Board of Corporate Auditors
1. Each Corporate Auditor shall report to the Board of Corporate Auditors on the status of conducting its duties on a regularbasis and from time to time as well as whenever requested by the Board of Corporate Auditors.
2. A Corporate Auditor who receives a report from the Accounting Auditors, the Directors, the employees of any internal
auditing department, etc. or other staff shall report the same to the Board of Corporate Auditors.
-4-

3. The Board of Corporate Auditors shall request the Accounting Auditors, the Directors, the employees of any internal auditing
department, etc. and other staff, to make reports whenever necessary.
4. In connection with paragraphs 1 through 3 of this Article, if any of the Corporate Auditors, the Accounting Auditors, theDirectors, the employees of any internal auditing department, etc. or other staff reports to all of the Corporate Auditors any matter thatshould be reported to the Board of Corporate Auditors, no further report to the Board of Corporate Auditors on such matter will benecessary.
Article 14. Measures for Reports
If the Board of Corporate Auditors receives any of the following reports, the Board of Corporate Auditors shall conduct
necessary research and take appropriate measures depending on the situation:(1)

A report from a Director stating that such Director has discovered a fact which may be materially prejudicial to theCompany;(2)

A report from an Accounting Auditor that such Accounting Auditor has discovered misconduct or a material fact violatinglaws or regulations or the Articles of Incorporation, in connection with a Director’s conduct of duties; or(3)

A report from a Director or an employee on such matters as have been determined in advance upon consultation with the
Directors.

Article 15. Preparation of Audit Report
1. The Board of Corporate Auditors shall prepare an Audit Report based on the Audit Report(s) prepared by each of the
Corporate Auditors after deliberation.
2. If the content of the Audit Report prepared by the Board of Corporate Auditors differs from that of the Audit Report preparedby any of the Corporate Auditors, and if such Corporate Auditor so requests, the Board of Corporate Auditors shall append thematters set forth in such Corporate Auditor’s Audit Report to the Audit Report prepared by the Board of Corporate Auditors.
-5-

3. Either the signature or the name and seal (including electronic signature) of each Corporate Auditor shall be affixed to the
Audit Report prepared by the Board of Corporate Auditors. The Standing Corporate Auditors and outside Corporate Auditors shall beidentified or recorded as such in the Audit Report.
4. Paragraphs 1 through 3 of this Article shall apply mutatis mutandis to interim financial statements or consolidated statements,
if prepared by the Company.
Article 16. Consent to the Appointment of the Corporate Auditors
1. The following matters relating to the appointment of the Corporate Auditors shall be handled by resolution of the Board of
Corporate Auditors:(1)

Consent to submission to the General Meeting of Shareholders of any proposal relating to the appointment of Corporate
Auditor(s);(2)

Request to include in the agenda of the General Meeting of Shareholders any appointment of Corporate Auditor(s); and(3)

Request to submit to the General Meeting of Shareholders any proposal relating to the appointment of Corporate Auditor(s).

2. The immediately preceding paragraph shall apply mutatis mutandis to appointment of Corporate Auditor(s) to fill a vacancy.
Article 17. Consent, etc. to Appointment of Accounting Auditors
1. The Board of Corporate Auditors shall evaluate the appropriateness of re-appointment of Accounting Auditors.
-6-

2. The following matters relating to the appointment, non-reappointment and dismissal of the Accounting Auditors shall behandled by resolution of the Board of Corporate Auditors:(1)

Consent to submission to the General Meeting of Shareholders of any proposal relating to the appointment of Accounting
Auditor(s);(2)

Consent to inclusion in the agenda of the General Meeting of Shareholders of the dismissal or non-reappointment of
Accounting Auditors;(3)

Request to submit to the General Meeting of Shareholders any proposal relating to the appointment of Accounting Auditor
(s);

(4)

Request to include in the agenda of the General Meeting of Shareholders the appointment, dismissal or non-reappointmentof Accounting Auditor(s); and(5)

Appointment of a provisional Accounting Auditor in the case of absence of an Accounting Auditor.

3. Consent, to be given by all Corporate Auditors, to dismiss any Accounting Auditor for any of the reasons as provided by law
shall be obtained upon consultation at a meeting of the Board of Corporate Auditors. In such case, a Corporate Auditor nominated by
the Board of Corporate Auditors shall report such dismissal and the reason therefor at the General Meeting of Shareholders to be held
immediately following such dismissal.
4. The consent referred to in the immediately preceding paragraph may be given in written form or by electronic record in caseof urgent necessity.
Article 18. Consent to Remuneration, etc. of Accounting Auditors
Consent to remuneration of the Accounting Auditors or those who provisionally conduct the duties of an Accounting Auditor
shall be resolved at the Board of Corporate Auditors.
-7-

Article 19. Consent to Partial Exemption of Directors from their Liability
1. The following consents, to be given by all Corporate Auditors, shall be obtained upon consultation at a meeting of the Boardof Corporate Auditors:(1)

Consent to submission to the General Meeting of Shareholders of any proposal relating to partial exemption of Directors
from their liability;(2)

Consent to submission to the General Meeting of Shareholders of any proposal relating to amendment of the Articles ofIncorporation to make it possible to partly exempt Directors from their liability; and(3)Consent to submission to the General Meeting of Shareholders of any proposal relating to amendment of the Articles ofIncorporation to make it possible to enter into agreements with outside Corporate Auditors providing partial exemption ofoutside Corporate Auditors from their liability.

2. The consents referred to in the immediately preceding paragraph may be given in written form or by electronic record in caseof urgent necessity.
Article 20. Consent to Participate for Assistance
1. Consent, to be given by all Corporate Auditors, to participation by the Company in any shareholder litigation in order to assist
a defendant Director shall be obtained upon consultation at a meeting of the Board of Corporate Auditors.
2. The consent referred to in the immediately preceding paragraph may be given in written form or by electronic record in caseof urgent necessity.
Article 21. Consultation concerning Exercising Powers of the Corporate Auditors
The Corporate Auditors may consult at a meeting of the Board of Corporate Auditors about the following matters prior to
exercise of their powers or performance of their duties:(1)

Explanation responding to inquiries posed in a notification by a shareholder prior to the General Meeting of Shareholders;(2)

Reporting to the Board of Directors and requesting convocation of a meeting of the Board of Directors;
-8-

(3)

Results of research on proposals and documents to be submitted to the General Meeting of Shareholders;(4)

Request for suspension of action by a Director that is beyond the purposes of the Company or otherwise in violation oflaws or regulations or the Articles of Incorporation;(5)

Providing an opinion at the General Meeting of Shareholders as to, among others, the appointment, dismissal, resignation
and remuneration of the Corporate Auditors;(6)

Matters relating to litigation between the Company and any of the Directors; and(7)

Other matters relating to litigation.

Article 22. Consultation concerning Remuneration, etc.
Consultation concerning remuneration, etc. of the Corporate Auditors may be conducted by the Board of Corporate Auditors,
subject to the unanimous consent from all Corporate Auditors.
Article 23. Minutes
1. The Board of Corporate Auditors shall prepare minutes stating the following matters, and either the signature or the name andseal (including electronic signature) of each Corporate Auditor present at the meeting shall be affixed to the minutes:(1)

The time and place at which the meeting was held (including methods of attendance of Corporate Auditors, Directors or
Accounting Auditors attending such meeting from other places, if any);(2)

Substance of the proceedings of the meeting and the results thereof;(3)

If any opinion or statement regarding the following matters is expressed at such meeting, a summary of such opinion orstatement:(a)a report from a Director stating that such Director has discovered a fact which may be materially prejudicial to theCompany; and(b)a report from an Accounting Auditor that such Accounting Auditor has discovered misconduct or a material fact
violating laws or regulations or the Articles of Incorporation in connection with a Director’s conduct of duties;
-9-

(4)

Names of the Directors and/or Accounting Auditors who attended the meeting of the Board of Corporate Auditors; and(5)

The name of the Chairman of the Board of Corporate Auditors.

2. If a report to the Board of Corporate Auditors is deemed unnecessary pursuant to paragraph 4 of Article 13, minutes setting
forth the following matters shall be prepared:(1)

The substance of the matter on which a report was deemed unnecessary;(2)

The date on which a report to the Board of Corporate Auditors was deemed unnecessary; and(3)

The name(s) of the Corporate Auditor(s) who engaged in preparation of the minutes.

3. The minutes referred to in paragraphs 1 and 2 of this Article, shall be kept for ten (10) years at the head office of theCompany.
Article 24. Secretariat of the Board of Corporate Auditors
Employees supporting the Corporate Auditors’ conduct of their duties, such as staff for the Board of Corporate Auditors, shallhandle secretarial business concerning convocation of meetings of the Board of Corporate Auditors, preparation of the minutes
thereof and other affairs concerning the management of the Board of Corporate Auditors.
Article 25. Auditing Standards of the Corporate Auditors
Matters concerning the Board of Corporate Auditors and audits by the Corporate Auditors shall be governed by laws andregulations, the Articles of Incorporation, these Regulations and the auditing standards of the Corporate Auditors determined by the
Board of Corporate Auditors.
Article 26. Amendment to and Abolishment of these Regulations
Amendment to and abolishment of these Regulations shall be made by the Board of Corporate Auditors.
- 10 -

SUPPLEMENTARY PROVISIONS
These Regulations came into force on July 19, 2006; provided, however, that the provisions of Article 18 shall be applicable toremuneration of Accounting Auditors or provisional Accounting Auditors from the fiscal year beginning on April 1, 2007.
These Regulations:- Established on June 30, 1994.
- Amended in part on July 29, 1997.
- Amended in part on May 1, 2002.
- Amended on July 30, 2004.
- Amended on July 19, 2006.
- 11 -

Exhibit 11.1
KYOCERA CORPORATION
Code of Ethics for Chief Executive Officer, Chief Financial Officer andMembers of Kyocera Disclosure Committee(Amended on July 1, 2006)
Article 1. Purpose
This Code of Ethics (the “Code”) sets forth standards in compliance with the internal regulations of Kyocera Corporation(“Kyocera”) such as Kyocera Philosophy, Kyocera Guidelines for Ethical Conduct and Kyocera Accounting Policies, that Kyocera’s
Chief Executive Officer (the “CEO”), Chief Financial Officer (the “CFO”) and members of Kyocera Disclosure Committee(1) (collectively, “Covered Members”) must follow in performing their duties to;(1)

promote faithful and ethical conduct, including the ethical handling of conflicts of interest;(2)

promote full, fair, accurate, timely and understandable disclosure;(3)

promote compliance with applicable laws and regulations; and(4)deter wrongdoing.

Article 2. Faithful and Ethical Conduct
Each Covered Member must act faithfully and ethically in performing his or her duties and must always maintain high level ofprofessional ethics.
Article 3. Compliance with Applicable Laws
Each Covered Member must comply with, and observe the spirit of, all Japanese and foreign laws, accounting standards,
regulations of self-regulating organizations applicable to him or herself and with internal regulations and guidelines of Kyocera
including the Code.
Article 4. Conflict of Interest
A conflict of interest occurs when an individual’s private interest interferes or appears to interfere with the interests of Kyocera.
A conflict of interest can arise when a Covered Member takes actions or has interests that may make it difficult to perform his or her
work at Kyocera objectively and effectively.
Each Covered Member must:(1)

always set his or her work duties above his or her private interest;(2)

deter the occurrence of conflicts of interest;(3)

promptly notify the CEO when the occurrence of a conflict of interest is reasonably foreseeable in course of a transaction,etc.; and(4)

refrain from engaging in any transactions listed above without a prior approval of the CEO.
1

Article 5. Notice of Violation(1)

Discretion and responsibility to apply and enforce the Code shall lie with the CEO.

(2)

Each Covered Member must immediately notify the CEO of any existing or potential violation of the Code whenreasonably so judged.

(3)

Upon being notified of a violation of the Code in accordance with the above clause or by an employee or other party, theCEO shall take all actions he considers appropriate to investigate such violation.

(4)

When the CEO determines the existence of a violation or a potential violation of the Code as a result of the investigation
conducted in accordance with the above clause, the CEO shall take a punitive action against a violator, and shall take all
corrective and preventive actions against such violation.

(5)

A person who was reported for violation of the Code must not retaliate against any person who made such report in goodfaith.

Article 6. Disclosure of Financial and Related Information
Each Covered Member must:(1)

be responsible for the information contained in any document submitted to the public authorities and any other materials
disclosed to the public and the method of disclosure of such information to be fair, appropriate timely and understandable;(2)

be responsible for the establishment and maintenance of the disclosure and internal control system regarding the
documents and materials described in the above clause. He or she must familiarize him or herself with and comply withdisclosure requirements applicable to the Company, including controls and procedures regarding any reports andstatements the Company is required to submit to the United States Securities Exchange Commission (the “SEC”);(3)fully review and study such information prior to the disclosure by him or herself, or by appointed third party he or she
considers appropriate to conduct such review and study as necessary; and(4)

not knowingly misrepresent, or cause an employee who is engaged in preparation of Kyocera’s financial statements, an
independent auditor, a government regulatory authority and a self-regulating organization to materially misrepresent thefacts about Kyocera upon preparing Kyocera’s financial and related information.

Article 7. Waiver and Its Disclosure
Any waiver of the Code must require an approval of the CEO. Regardless of whether explicitly or implicitly granted, such
waiver must be disclosed in an appropriate manner in accordance with applicable laws, including the SEC regulations.
Article 8. Amendment and Disclosure
Any change of the Code must require an approval of the CEO. Such change must be disclosed in an appropriate manner inaccordance with applicable laws and regulations, including the SEC regulations.
2Article 9. Effective Date
The Code is effective on and from July 1, 2006.
(Established) September 10, 2004
(Amended) June 1, 2005
(Amended) July 1, 2006
Note:
Kyocera Disclosure Committee consists of Executive Officers and Senior Managers who are responsible for disclosure of Kyocera’s
information listed below and governs the management of Kyocera’s disclosure control.
- General affairs, human resource, stock-related- Business strategies- Legal affairs and intellectual properties- Business systems administration- Accounting and taxation- Financial affairs and investor relations- Corporate development- Internal Control and risks related financial affairs and accounting
3

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 state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith 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 allmaterial respects the financial condition, results of operations and cash flows of the company 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 and have:

5.

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, ismade 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 the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;(c)

Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; and(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during theperiod covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s
internal control over financial reporting; andThe company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons
performing the equivalent functions):(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich 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 a significant role in thecompany’s internal control over financial reporting.

Date: July 4, 2007
/s/ Makoto Kawamura
Name: Makoto Kawamura
Title: President and Representative Director(Principal Executive Officer)

Exhibit 12.2
CERTIFICATION
I, Masahiro Umemura, 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 state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith 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 allmaterial respects the financial condition, results of operations and cash flows of the company 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 and have:

5.

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, ismade 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 the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;(c)

Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; and(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during theperiod covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s
internal control over financial reporting; andThe company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons
performing the equivalent functions):(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich 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 a significant role in thecompany’s internal control over financial reporting.

Date: July 4, 2007
/s/ Masahiro Umemura
Name: Masahiro Umemura
Title: Vice Chairman
and Representative Director(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 suchofficer’s knowledge, that the Company’s annual report on Form 20-F for the year ended March 31, 2007 (the “Report”) fullycomplies 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 theCompany.
Dated: July 4, 2007
/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 suchofficer’s knowledge, that the Company’s annual report on Form 20-F for the year ended March 31, 2007 (the “Report”) fullycomplies 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 theCompany.
Dated: July 4, 2007
/s/ Masahiro Umemura
Name: Masahiro Umemura
Title: Vice Chairman
and Representative Director(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.33-84904, 33-98132, 3399134, 33-99140, 33-99150, 33-99154, 333-109200, 333-118678, 333-127976 and 333-138316) of our report dated June 28, 2007
relating to the financial statements, financial statement schedule, management’s assessment of the effectiveness of internal control
over financial reporting and the effectiveness of internal control over financial reporting which appear in this Annual Report on Form
20-F.
/s/ MISUZU PricewaterhouseCoopers
Osaka, Japan
July 4, 2007