SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

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

⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2005
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE 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, 2005, 187,481,084 shares of common stock were outstanding, comprised of 183,237,380 Shares and 4,243,704
American Depositary Shares (equivalent to 4,243,704 Shares).
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 fileNosuch reports), and (2) has been subject to such filing requirements for the past 90 days. Yes⌧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. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
A. Selected Financial Data
B. Capitalization and Indebtedness
C. Reasons for the Offer and Use of Proceeds
D. Risk Factors
Item 4. Information on Kyocera Corporation and its Consolidated Subsidiaries
A. History and Development of Kyocera Corporation and its Consolidated Subsidiaries
B. Business Overview
C. Organizational Structure
D. Property, Plants and Equipment
Item 5. Operating and Financial Review and Prospects
A. Operating Results
B. Liquidity and Capital Resources
C. Research and Development, Patent and Licenses, and etc.
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
F. Dividends and Paying Agents
G. Statement by Experts
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6
6
6
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7
7
11
11
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31
31
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61
64
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99
99

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. Exemptions 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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99
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108

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 economic conditions in our markets, which are primarily Japan, North America, Europe, and Asia, including inparticular China ;•the effect of foreign exchange fluctuations on our results of operations, particularly between the yen and each of the U.S.
dollar and the Euro, in which we make significant sales;•

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;•

the level of continuing demand for existing products of our competitors and the pricing of those products, and their ability tointroduce new products;•

the extent and pace of future growth or contraction in information technology (IT)-related markets around the world,
including those for communications and personal computers;•

the level of continuing demand for, and timing of sales of, our existing products;•

declining prices for our products and services;•

the effect of future acquisitions on our financial condition and results of operations;•the effect of prevailing interest rates and the performance of equity and other financial markets generally;•

the timing of new product introductions and market acceptance for our new products;•

an increase in the incidence of product returns;•

events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of diseases;

and other risks discussed under Item 3.D “Risk Factors” and elsewhere in this Form 20-F.
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.
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•“ADS” means an America Depositary Share, each representing one share of Kyocera’s common stock, and “ADR” meansan American Depositary Receipt evidencing ADSs.

•“fiscal 2005” refers to Kyocera’s fiscal year ended March 31, 2005, and other fiscal years are referred to in a corresponding
manner.

•Unless otherwise indicated, we have translated the yen amounts for the year ended March 31, 2005 and as of March 31,
2005 presented in this Form 20-F into U.S. dollars solely for your convenience. The rate we used for such translations was¥107.00 = $1.00, which was the noon buying rate in New York City for cable transfers in foreign currencies as certified forcustoms purposes by the Federal Reserve Bank of New York on March 31, 2005, rounded to the nearest yen. Thesetranslations do not imply that the yen amounts actually represent, or have been or could be converted into, equivalentamounts in the U.S. dollars.
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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 (U.S. GAAP).
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.
(Yen in millions, U.S. dollars and shares in thousands, except per share amounts)

Years ended March 31:
Net sales
Profit from operations
Income before cumulative effect ofchange in accounting principle
Net income
Earnings per share :Income before cumulative effect ofchange in accounting principle:
Basic
Diluted
Net income:
Basic
DilutedWeighted average number of shares
outstanding:
Basic
DilutedCash dividends declared per share:
Per share of common stock
Per share of common stock *At March 31:
Total assets
Long-term debt
Common stock
Stockholders’ equity
Depreciation
Capital expenditures

2001

2002

2003

2004

2005

2005

¥1,285,053
207,200¥1,034,574
51,561¥1,069,770
83,388¥1,140,814
108,962¥1,180,655
100,968$11,034,159
943,626

216,236
216,236

33,791
31,95343,421
41,16568,08668,08645,90845,908429,047
429,047¥ 1,143.78
1,140.46¥$¥

178.74178.59¥233.02232.97¥364.79364.78¥244.86244.81

1,143.78
1,140.46

169.02168.88220.91220.86364.79364.78244.86244.81

189,053
189,604

189,050
189,204

186,338
186,382

186,643
186,649

187,489
187,528

60
0.51

¥
$

60
0.49

¥
$

60
0.49

¥
$

60
0.55

¥
$

$

2.29
2.29
2.29
2.29

80
0.74

¥1,728,056¥1,645,458¥1,635,014¥1,794,758¥1,745,519$16,313,262

52,306
115,703
1,018,772¥ 67,096¥ 105,944

96,856
115,703
1,036,185¥ 76,252¥ 54,631

60,736
115,7031,000,207¥ 64,988¥ 40,614

70,608
115,7031,150,453¥ 60,861¥ 54,937

33,557
115,703
1,174,851¥ 58,790¥ 63,176

313,617
1,081,336
10,979,916$ 549,439$ 590,430* Translated into the U.S. dollars based on the exchange rates at each payment date
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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

Years ended March 31,
2001
2002
2003
2004
2005

¥125.54134.77133.40120.55114.30¥104.19115.89115.71104.18102.26¥110.96125.05121.94112.75107.49¥ 125.54
132.70118.07104.18107.22

Calendar Year 2005
March
April
May
June
July
August107.49108.67108.17110.91113.42112.12103.87104.64104.41106.64110.47109.37105.25107.19106.60108.75111.95110.61

107.22104.64107.97110.91112.25110.84

The noon buying rate for Japanese yen on September 14, 2005 was $1.00 = ¥ 110.27
B. Capitalization and Indebtedness
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
D. Risk Factors
You should carefully read the risks described below before making an investment decision.
(1) Continued or increasing weakness in 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 home appliances and favorable trends inthe automotive industry in the first half of fiscal 2005. However, in the second half of fiscal 2005, the economic outlook has been
uncertain and has been affected by inventory reductions in the IT-related industries. The current global economic outlook, including
for the U.S., also remains uncertain, and Kyocera believes there will continue to be instability considering the yen’s appreciation andthe rise in prices of oil and certain materials. Kyocera is substantially dependent for its growth on the markets for semiconductors andcomponents for mobile phone handsets and PC-related equipment. Though these markets have been expanding favorably inaccordance with growing demand for digital appliances, these may be adversely affected by sluggish consumer spending brought byeconomic recession.
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(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 cellular telephones and IT-related products, including personal computers andprinters, will continue to grow rapidly, Kyocera has been making substantial investments in new production and marketing facilities
in China. Kyocera now has four principal production facilities, located in Shanghai, Dongguan and Guiyang, Tianjin and Kyoceraplans to make substantial 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 down over fiscal 2006 partly depending on the demand and competition
situation. In production businesses in which Kyocera produces 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 supplierto create and deliver the product. Kyocera’s gross margins may be reduced if it cannot maintain these important relationships or
market share or if it is forced in the future to further reduce prices in response to the actions of its competitors.
(4) Small manufacturing delays or defects resulting from outsourcing or internal manufacturing processes can adversely 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.
-8-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 have been from foreign sales in recent years, various export risks may
disproportionately affect its revenues
Kyocera’s sales to customers located outside Japan accounted for 60% of its total revenues in fiscal 2005. Kyocera believes thatinternational 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 and beforced to write off those receivables;•

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

shipping 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.
(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.
-9-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 may have to incur impairment losses on its investments in 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, 2005, the aggregate fair value of equity securities included in available-for-sale securities was ¥343,208
million ($3,208 million), with gross unrealized gains in the amount of ¥71,448 million ($668 million) and gross unrealized losses in
the amount of ¥246 million ($2 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 2005, Kyocera recorded losses on impairment of investment securities
in the amount of ¥132 million ($1million), mainly due to management’s estimation that certain non-public companies in which
Kyocera invested would need considerable time to show profitability in their operating activities. For some of the equity securities
Kyocera owns, including the KDDI shares, Kyocera intends to keep its ownership at the current level in light of the importance 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.
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(12) 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.
(13) 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 theJapanese Commercial Code 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 werea 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.
(14) 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.
(15) 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.
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Our business originally consisted of the manufacture of ceramic parts for electronic equipment. In the 1960’s, 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 1980’s, 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
Corporation (currently Kyocera Elco Corporation).
In the 1990’s, we strengthened our position as an internationally integrated electronic components manufacturer through our merger
with AVX Corporation, a maker of capacitors and other passive electronic components, in January 1990.
In the middle of the 1990’s, Kyocera developed two main business categories, its “Components Business,” in which Kyocera
provides parts and devices such as fine ceramics parts, semiconductor parts, electronic components and devices and applied ceramic
products to mainly electronic equipment manufacturers in IT industrial fields, and its “Equipment Business,” in which Kyocera
manufactures and sells telecommunications and information equipment and optical instruments, such as mobile handsets, PHS-related
products, copiers, multifunctional products, 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 ourUnited States subsidiary, Kyocera Wireless Corp. In April 2000, we invested in Kyocera Mita Corporation, a manufacturer of copiersand other document solutions equipment, to 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 our 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 three Chinese production bases located in Shanghai, Dongguan and Guiyang. Kyocera also established a sales
company, Kyocera (Tianjin) Sales and Trading Corporation, in March 2003 to cultivate the Chinese market. We are enhancing ourmarketing ability for both our products manufactured in China as well as our products imported into China. In addition, weestablished a subsidiary, Kyocera (Tianjin) Solar Energy Co., Ltd. to assemble solar modules, production of which commenced in
November 2003, and to respond to market needs swiftly.
- 12 -

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. To further enhance ourorganic 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. In September 2003, we completed thetransfer of IBM Japan’s SLC business from IBM Japan to a newly-established wholly-owned subsidiary, Kyocera SLC Technologies
Corporation. In April 2004, Kyocera integrated the organic material components business into Kyocera SLC Technologies
Corporation and the marketing division of Kyocera Kinseki Corporation was merged into the marketing division of the electronic
components of Kyocera Corporation and the manufacturing division of crystal related components of Kyocera Corporation wastransferred to Kyocera Kinseki Corporation through corporate splits.
In September 2004, Kyocera and Kobe Steel, Ltd. established “Japan Medical Materials Corporation (JMM)” and Kyocera
Corporation transferred its medical materials business to JMM through corporate splits. The shareholding ratios of Kyocera and Kobe
Steel in JMM are 77% and 23%, respectively.
We made a strategic decision during fiscal 2005 to downsize the camera business due mainly to sluggish business performance
resulting from intensified price competition. We are concentrating instead on the optical components business based on our
accumulated optical technology. Please see “Restructuring Activities” in Item 5 “Operating and Financial Review and Prospects “ ofthis Form 20-F for details.
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
We are 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, 2005, we have 136 subsidiaries
and 8 affiliates outside Japan and 31 subsidiaries and 6 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
We strive to be a “creative company that continues to grow.” To achieve this goal, we promote “high-value-added diversification.”
Based on the technologies we currently possess and will acquire, we will strive to exploit new markets by advancing and specializing
those technologies, or integrating technologies from both within and outside the Kyocera group. The goal of “diversification” is tocreate a cluster of businesses whose technological power allows them to overcome the competition and equal specialist manufacturesin competitiveness. Our “diversification” is based on the premise that we will select “high-value-added” businesses that promise
future growth and concentrate our management resources on them. Kyocera will continue to promote its “high-value-added
diversification” strategy to add greater value to each of our components and equipment businesses.
1. Criteria of “High-Value-Added Business”
We define “high-value-added business” as components and equipment businesses generating a pre-tax profit ratio of 15% or more.
Whether or not to remain in a particular business is based on our judgment as to whether there exists a need in the relevant market andthe possibility of serving that market need with the current or attainable technologies. Our unique management system allows us tomake accurate and swift assessments of individual business conditions to facilitate timely decision-making and maximize synergies
among businesses and to identify “high-value-added businesses.”- 13 -

2. Promotion of “High-Value-Added Diversification”
By promoting the development of business diversification, we aim to drive stable and continuous corporate growth in a rapidlychanging business environment. The most important management resource for successful business diversification is technologicalprowess. Based on this conviction, we strive to expand and diversify applications through advancement and specialization oftechnical expertise, thereby promptly responding to the variety of market needs brought about by rapid changes in society. We also
view sales competency and brand awareness as vital management resources for business expansion, and constantly work to strengthen
these elements to maintain a sound financial position and to enable the pursuit of new business development and market creation. To
achieve “high-value-added diversification,” we have the three following management policies.
(1) Efficient Resource Management
We plan to concentrate management resources into “high-value-added” business fields and its candidates. With the objective ofoutperforming the competition and becoming the leader in each business area, we will strive to create new markets and technologies
through the integration of Group resources, including technical and sales competencies, while utilizing external management
resources as necessary. Authorization of decision-making with respect to planning, execution and control of the business is delegatedto each Corporate Business Group to act as an independent company, in order to speed up management decision-making processes.
Moreover, a prime emphasis is placed on cash flows, in particular, boosting returns on capital investment, improving inventory
control and shortening lead-times.
(2) Emphasizing Consolidated Group Results
We aim to increase the profitability of each operating segment on a consolidated basis by strengthening ties between Kyocera Group
companies and each Corporate Business Group of Kyocera Corporation, and by maximizing synergies we will also employ a global
strategy in each business and strive to optimize R&D, production and sales structures.
In addition, since June 1, 2005, Kyocera implemented a new executive officer system to enhance Kyocera Group’s management
organization under a global consolidation system, and accordingly, appointed a Chief Executive Officer (CEO), a Chief Financial
Officer (CFO) and a Chief Operating Officer (COO). The CEO takes responsibility for mid and long-term Group management policy
and strategy formulation and execution, while the CFO is responsible for constructing and executing a financial strategy for the Group
that ensures the effective implementation of these management strategies. The COO is in charge of daily management issues andbusiness execution to achieve yearly management plans. At the same time, Kyocera also introduced a new corporate business groupsystem, headed by the executive officers. These business group leaders are responsible for each product line on a consolidated basis.
(3) Focusing on Stockholder Value
In order to increase stockholder value (market capitalization), we seek to generate a higher return on investment to maximize future
profits and cash flows. Moreover, we plan to offer a stock option plan to senior managers to further increase value by ensuring theirinterests are in line with those of stockholders and investors.
- 14 -

Operations
Kyocera had previously classified its operations into four reporting segments, namely, “Fine Ceramics Group,” “Electronic Device
Group,” “Equipment Group” and “Others.” However, taking into consideration of changes in the size of the operations of eachbusiness division and changes in management structure, management has changed its reporting segments for fiscal 2005.
Kyocera currently has eight reporting segments as follows: “Fine Ceramic Parts Group,” “Semiconductor Parts Group,” “Applied
Ceramic Products Group,” “Electronic Device Group,” “Telecommunications Equipment Group,” “Information Equipment Group,”“Optical Equipment Group” and “Others.”
Kyocera’s principal products or services offered by each reporting segment are as follows.
Fine Ceramic Parts Group:
Information & Telecommunication Components,
Sapphire Substrates,
Semiconductor Process Equipment Components, LCD
Process Equipment Components,
Automotive & ITS related Components,
General Industrial Ceramic Components
Semiconductor Parts Group:
Ceramic Packages for Surface Mount Devices,
Ceramic Multilayer Package / Multilayer Substrates,
Metallized Products,
Optical Communication Ceramic Packages / Components,
Organic Multilayer Packages / Substrates
Applied Ceramic Products Group:
Residential & Industrial Photovoltaic Generating Systems,
Solar Cells / Modules,
Cutting Tools, Micro Drills,
Dental & Orthopedic Implants,
Jewelry & Applied Ceramic related productsElectronic Device Group:
Ceramic Chip Capacitors,
Tantalum Capacitors,
Timing Devices (Temperature Compensated Crystal Oscillators (TCXOs),
Voltage Controlled Oscillators (VCOs)),
RF Modules,
Ceramic Resonators / Filters,
Thermal Printheads,
LED Printheads,
Amorphous Silicon Drums,
Liquid Crystal Displays,
Connectors
Telecommunications Equipment Group:
CDMA Mobile Phone Handsets and Base Stations,
PDC Mobile Phone Handsets,
PHS Related Products(PHS Handsets, PHS Base Stations, Wireless Local Loop Systems,
High Speed Wireless Data Communications Systems)- 15 -

Information Equipment Group:
ECOSYS Non-cartridge Printers and Copiers
Digital Network Multi-function Products
Optical Equipment Group:
Optical Modules
Digital Still Cameras
Single-lens Reflex Cameras
Compact Cameras
Camera Lenses
Optical Modules
Others:Chemical Materials for Electronic Components,
Insulators, Resin Products,
Telecommunications Network Systems,
Computer Network Systems
IT Solutions Services
Consulting Services
Leasing Services
Hotel Business
Real Estate Development,
Insurance Agent & Travel Agent Business(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 sales in this reporting segment include substrates, which are thin ceramic bases used bymanufacturers for hybrid integrated circuit (IC) foundations. Kyocera also produces substrates for thermal printheads,
ceramic/alumina tape substrates for thin film chip resistors, substrate for HDD thin film magnetic heads, parts for LCD fabricationequipment, sapphire substrates for LCD projectors and LEDs, parts for semiconductor fabrication equipment, mechanical seals forpumps, engine components for the automobile industry, friction tight discs and thread guides for yarn texturing machines in the textile
industry, rings for fishing rods, nozzles and parts for paper-making machinery.
(2) Semiconductor Parts Group
Kyocera develops, manufactures and sales inorganic (ceramic) and organic packages in this reporting segment.
Ceramic packages have the characteristics of being air and water tight and corrosion resistant and also have the ability to dissipate
heat efficiently. In addition, they have a superior capacity for use in high frequency and embedded passive components.
Kyocera develops, produces and sales ceramic packages for ceramic IC or other semiconductor and electronic components. The mostcommon types of ceramic IC packages Kyocera develops, makes and sales are multilayer packages, including SMD packages and pin
grid arrays. Kyocera also develops, produces and sales opto-electronic packages and ceramic parts for fiberoptic communications
connectors. SMD packages are used for surface acoustic wave (SAW) filters and oscillators, which are mostly inserted into mobile
phone handsets. Pin grid arrays are sold to manufacturers of MPUs and of other logic ICs, which are principally inserted into
information equipment and peripherals. Kyocera also produces ceramic packages for charge-coupled-devices (CCDs) andcomplementary metal oxide semiconductor (CMOS) devices, which are mainly used in camera-equipped mobile phone handsets.
- 16 -

In organic package business, Kyocera established a specialized high density organic circuit board manufacturer, Kyocera SLC
Technologies Corporation (KST),.KST develops, produces and sales system in a package substrates (SiP) used in miniature and highfunctional electronic equipment such as mobile phone handsets, digital still cameras and mobile music players and organic packages
for high-end application specific integrated circuits (ASICs). In addition, KST is working on the mass-production of a new organic
package for next-generation micro processor units (MPUs) and peripheral devices for digital consumer products. On June 29, 2005,
we reached agreement to purchase the land, buildings and other assets where KST is based, in Yasu City, Japan, from IBM Japan Ltd.
(3) Applied Ceramic Products Group
This reporting segment consists of four product lines: 1) Solar Energy Products, 2) Cutting Tools, 3) Dental and Orthopedic Implants
and, 4) Jewelry and Applied Ceramic Related Products.
1) Solar Energy Products
Kyocera develops, manufactures and sales solar cells and modules, applied solar cell products and photovoltaic systems forgenerating electricity. We are expanding our solar cell production capacity in Japan and have commenced assembling solar modules
through KYOCERA (Tianjin) Solar Energy Co., Ltd. in China, which was established as manufacture and sales subsidiary of solar
modules in May 2003. In addition, Kyocera constructed a solar module assemble facility in Tijuana, Mexico for the U.S market in
October 2004. To increase sales in Europe, Kyocera plans to construct a new plant for solar module in Czech Republic.
2) Cutting Tools
Kyocera produces cutting tools for metal processing in industrial production, particularly in the automotive industry. To expand thecutting tools business, Kyocera Corporation acquired Tycom Corporation (currently a consolidated subsidiary, Kyocera Tycom
Corporation), which was a U.S major manufacturer of carbide cutting tools for the printed circuit board industry, in January 2001.
Kyocera aims to be a market leader in the cutting tools business by pursuing synergies between Kyocera Tycom Corporation andKyocera.
3) Dental and Orthopedic Implants
Kyocera established Japan Medical Materials Corporation (JMM) with Kobe Steel, Ltd. by integrating each of the medical material
businesses of the two companies in September 2004. JMM produces a wide range of orthopedic and dental applications such as dental
and orthopedic implants, artificial knee joint replacement systems, and ceramic materials helping heal hip fractures through a
combination with other material and processing technologies of ceramics and titanium alloys and integrating business resources suchas development, manufacturer, marketing and sales channels with Kyocera and Kobe Steel, Ltd.
4) Jewelry and Applied Ceramic Related Products
Kyocera produces recrystallized jewelry, mainly synthetic emeralds, alexandrines and rubies. These stones are manufactured using asingle crystal growth technology developed by us, and are chemically and physically equivalent to natural stones. We have introduced
recrystallized jewelry products to meet consumer needs and to cultivate our sales network. Kyocera also produces applied ceramic
related products such as kitchen knives utilizing ceramic and its characteristics of wear resistance and resistance from acid andalkalinity corrosion.
(4) Electronic Device GroupOur electronic device group develops, manufactures and sells high quality and cost competitive electronic components and devices
for the telecommunications and information processing industry. This field creates demand for miniaturization, low voltage, highfrequency and low energy consumption, and we produce high-value-added products such as miniature ceramic capacitors with highcapacitance capacitors, tantalum capacitors, miniature timing devices such as a temperature compensated crystal oscillators (TCXOs)
or voltage-controlled oscillators (VCOs), and high frequency modules for mobile phone handsets and PCs. We also produce thin-film
devices such as thermal printheads, amorphous silicon drums and LCDs for audio visual electronic equipment, office automationequipment and industrial equipment.
- 17 -

We are strengthening manufacturing and sales activity in China to enhance price competitiveness and cultivate new markets. We
commenced the production of ceramic capacitors and timing devices in Shanghai Kyocera Electronics Co., Ltd. in fiscal 2001. In
fiscal 2004, we established a sales company in Tianjin and started marketing of products made both in China and in other areas
around the world through this company due to expansion of the sales in China.
To expand the business of this reporting segment, we are pursuing synergies with subsidiaries. AVX Corporation and its consolidated
subsidiaries (AVX), which produce and market ceramic capacitors, tantalum capacitors and other passive components fortelecommunications and information equipment, have a global manufacturing and sales network. AVX is a major contributor to ourElectronic Device Group sales and pursue synergies in the development and manufacturing of the ceramic capacitor business. In thetiming device business, Kyocera Corporation acquired Kinseki, Limited (currently a consolidated subsidiary, Kyocera Kinseki
Corporation) through a share exchange in August 2003. The marketing division of Kyocera Kinseki Corporation and its consolidated
subsidiaries (Kyocera Kinseki) were 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 in April 2004
through corporate splits to pursue synergies in development, manufacturing and sales.
(5) Telecommunications Equipment Group
This reporting segment includes CDMA mobile phone handsets and base stations, PDC mobile phone handsets and PHS-related
products such as PHS mobile phone handsets and base stations. These products are produced mainly for KDDI Corporation (KDDI)and WILLCOM, Inc. (WILLCOM), as well as for other Asian and U.S. telecommunication service providers. KDDI is atelecommunications service company, in which we made an equity investment when it was founded in 1984, when thetelecommunications business, which had previously been monopolized by a national telephone company, was opened to privatecompanies. KDDI and KDDI’s subsidiaries are currently engaged in providing long distance and international telephone services andcellular services. WILLCOM, formerly DDI Pocket Inc. Company, was renamed in February 2005, and provides PHS services. Our
shareholding ratio in WILLCOM is 30%.
We aim to be a top supplier of CDMA mobile phone handsets. This technology has become one of the fastest growing mobile phone
protocols. We acquired the CDMA mobile phone handset business of Qualcomm Inc. and established Kyocera Wireless Corp., awholly-owned subsidiary in February 2000. In addition, we established a joint venture, Kyocera Zhenhua Communication Equipment
Co., Ltd., which develops, manufactures, sells and provides after-sale servicing of CDMA mobile phone handsets in Guiyang City in
China in December 2001, and commenced the production of CDMA mobile phone handsets for China in January 2002. We aim tobecome a leader in the CDMA market by pursuing a global marketing strategy with bases in Japan, the United States and China, andto optimize our global product development and production structure.
The other major area in Telecommunications Equipment Group is PHS-related business. This business is expanded by cultivating newmarkets overseas through our three telecommunication systems based on PHS technology. Specifically, we seek to expand sales of
PHS systems through the expansion of PHS mobile phone handsets and base stations in China. We plan to spread the same PHS
system prevailing in China to other Asian countries as well as promote new PHS mobile phone handsets and base stations with highspeed data transmission services through WILLCOM in Japan. We also promote sales of Wireless Local Loop (WLL) systems incountries where fixed phone networks are not as yet widespread. Furthermore, we have promoted wireless Internet systems, whichenable Internet services to be used at broadband speed with wireless technology. To promote these three systems in the appropriate
markets, we expect to increase sales of PHS-related products.
- 18 -

(6) Information Equipment GroupThe major products in this reporting segment comprise page printers, digital copiers and multifunction products. Our products market
under the name of “ECOSYS” and have a long life cycle and cartridge-free technology utilizing our thin film products, amorphoussilicon drums.
In April 2000, Kyocera Mita Corporation became one of our wholly-owned subsidiaries. Kyocera Corporation’s ECOSYS printerdepartment was transferred into this subsidiary through corporate splits, enabling us to build a unified presence in the document
solutions business. Further efficiencies have resulted from the integration of our printer and copier sales operations with those of
Kyocera Mita Corporation. We have enhanced our line up of our products through the standardization of engines between printers andmulti function products (MFPs). In addition, we established a plant, Kyocera Mita Office Equipment (Dongguan) Co., Ltd in
Dongguan, China mainly to strengthen price competitiveness.
We expect further strong demand for color printers, copiers and MFPs. We are focusing on expanding a comprehensive color-capableproduct line up of printers, copiers and MFPs with inexpensive running costs, as well as monochrome products.
(7) Optical Equipment Group
This reporting segment includes digital still cameras, optical modules, compact cameras, SLR cameras and lenses.
To enhance cost competitiveness in the camera business, we mass produce digital still cameras through our joint venture, Dongguan
Shilong Kyocera Optics Co., Ltd. However, we could not improve profitability in the camera business due mainly to a rapid demand
shift from conventional still cameras to digital still cameras and a continuous market price hike in digital still cameras. As a result, wemade a decision to downsize our camera business and focus on the optical module business.
In the optical module business, we decided to significantly downsize our camera business including digital still cameras and film
cameras, and to focus on optical components business, during fiscal 2005. We commenced the production and sale of optical modules
for camera - equipped phones in fiscal 2005. We plan to expand the application of optical modules and units for automobiles,
monitoring systems in LCD projectors and rear-projection TVs.
(8) Others
This reporting segment includes revenues from telecommunication network systems, financial services such as leasing and credit
financing, office leasing, and other services in Japan and Asia. This segment also includes the development, manufacturing and salesof electronic component materials, electric insulators and synthetic resin molded parts.
Kyocera Leasing Co., Ltd. is principally involved in providing credit financing services and commercial leasing services for copiers,
MFPs and other equipment. It therefore supports the operations of our Equipment Group.
Kyocera Communication Systems Co., Ltd. and its consolidated subsidiaries (KCCS) operate a total telecommunications network
system business from system development to design, construction and maintenance services. KCCS also expands data center services
for mobile content distribution services and IT solutions services for business users by developing new products featuring network
services as well as system integration services.
Kyocera Chemical Corporation, which joined in Kyocera in August 2002, mainly produces electronic component materials. Kyocera
Chemical Corporation will develop new products by pursuing synergies with fine chemical technologies and our components
technologies such as the Electronic Device Group.
Sales and Distribution
Our products are marketed worldwide by our own sales personnel, as well as through sales companies, compensated solely on acommission basis, and by independent distributors. We have regional sales and design application personnel in strategic locations toprovide technical and sales support for independent manufacturers’ representatives and independent distributors. We believe that thiscombination of distribution channels provides a high level of market penetration and efficient coverage of our customers on a costeffective basis.
- 19 -

Most of all our sales of the Fine Ceramic Parts Group, the Semiconductor Parts Group and the Electronic Device Group worldwide
are made directly to manufacturers who incorporate them into their own products. However, the Applied Fine Ceramics Group, which
creates products such as ceramic 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 sales shops and agencies inJapan. Sales of consumer solar energy products are made through direct sales shops, as well as through sales distributors.
BIOCERAM (orthopedic and dental implants) are in some cases supplied directly to dentists and hospitals. In the
Telecommunications Equipment Group, our domestic sales of mobile handsets comprise sales mainly to KDDI Corporation and
WILLCOM INC., and we also sell our handsets to communication providers directly in overseas markets. The Information
Equipment Group, in particular, makes products such as page printers, copiers and digital multifunctional products sales, both in thedomestic market and abroad, made under our own brand name through distributors and wholesalers. Sales of optical modules in the
Optical Equipment Group for mobile phone handsets are made directly to mobile phone handsets manufacturer. Financing and leasing
services are provided to companies and individuals in Japan. Office renting and other services are provided to companies outside ourgroup, mainly in Japan. Our telecommunication network engineering service and data center service are provided directly tocustomers and users.
Domestic sales are made in yen, while overseas sales are made in a variety of currencies, but predominantly in U.S. dollars and theEuro.
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), zircon, titania, silicon nitride, Tungsten and Tantalum, used for the products of the Fine
Ceramic Parts Group, the Semiconductor Parts Group, the Applied Fine Ceramics Group and the Electronic Device Group, and eachmaterial is subject to price volatility. In terms of costs, gold, which is primarily used in the production process for IC packages in the
Semiconductor Parts Group and is also subject to price volatility, is the most significant raw material. Our policy is to protect
ourselves from fluctuations in the price of gold by keeping a small gold inventory and by pricing products generally 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, Liquid Crystals and Printed Circuit Board, used for the products of the Electronic Device Group, the Telecommunications
Equipment Group and the Information Equipment Group, such as thin-film devices, mobile handsets, printers, copiers and optical
instruments.
As we typically receive our supply of these raw materials and supplies from several large companies which we feel are reliable
sources, we have not generally experienced, and we do not anticipate, any difficulty in obtaining raw materials or supplies, or inmeeting fuel requirements. Although oil prices have risen recently, the increases have not materially affected our purchase price of
certain oil-related supplies.
During fiscal 2005, 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 to 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, 2005, with respect to oursignificant patents and license agreements. Under all of the following agreements, we are permitted to produce products using thelicensed technology and we pay a fee to the counterparty based on the amount of sales of those products.
Counterparty

Country

Contents

License under patents regarding
amorphous silicon drums anddevices using such drums

PeriodSemiconductor Energy Laboratory Co.,
Ltd.

Japan

International Business Machines
Corporation

United States License under patents regarding
From June 30, 1995 to patentceramic products, electric/ electronic expiration
parts and components
License under patents regarding
information processing systems

Qualcomm Incorporated

United States License under patents regarding
cellular phones using CDMAtechnology

From August 31, 1996 to patent
expiration

Solar Physics Corporation

United States License under patents regarding
amorphous silicon drums anddevices using such drums

From February 5, 1997 to patent
expiration

Johnson Marthey Semiconductor
Packages, Inc.

United States License regarding semiconductor
packages and printed circuit boards

From June 11, 1997 to June 11, 2007

Philips Electronics N.V.

Netherlands

License under patents regarding
global system for mobile
communication (“GSM”) cellular
handsets

From February 15, 1999 to February
11, 2009

Hitachi Displays, Ltd.

Japan

License under patents regarding
liquid crystal display elements

From April 1, 1999 to March 31,
2007

NEC CorporationJapan

License under patents regarding
PDC handsets and PHS handsets

From July 1, 2000 to September 14,
2010

Advanced Ceramics Research
Incorporated

United States License to use technology andpatents regarding ceramic fiber

From September 15, 2000 to patent
expiration

Eastman Kodak Company

United States License under patents regarding
digital camera

From April 1, 2002 to March 31,
2012- 21 -

From February 15, 1994 to patent
expiration

Counterparty

Country

Contents

PeriodForgent Networks, Inc./
Compression Labs, Inc.

United States

License under patents regarding
digital camera

From October 30, 2002 to
September 17, 2007

Toshiba CorporationJapan

License under patents regardingaluminum nitride

From January 1, 2003 to
December 31, 2007

Seiko Epson CorporationJapan

License under patents regarding
LCD panel modules (Super
twisted nematic (“STN”)

From January 1, 2003 to
December 31, 2007

Koninklijke Philips Electronics N.V.

Netherlands

License under patents regarding
PDC handsets and PHS handsets

From March 19, 2003 to patent
expiration

NEC CorporationJapan

License under patents regarding
telecommunications handsets
based on STD-T53 and IS-95
standard.

From August 1, 2003
to April 28, 2015

International Business Machines
Corporation

United States

License under patents regarding
SLC technology

From September 1, 2003 to patent
expiration

Motorola Incorporated

United States

License under patents regarding
mobile phone

From July 1, 2004 to June 30,
2009

Openwave Systems Inc.

United States

Master Browser License regarding
mobile phones using CDMA

From September 27, 2004 to
September 27, 2005

Ricoh Company, LTDJapan

License under patents regarding
electronic photo printerFrom June 1, 2001 to May 31,
2006

Ricoh Company, LTDJapan

License under patents regarding
electronic photo printerFrom January 1, 2002 to
December 31, 2007

Canon IncorporatedJapan

License under patents regarding
electronic photograph

From April 1, 2002
to patent expiration

Ricoh Company, LTDJapan

License under patents regarding
facsimile technology

From June 1, 2004
to May 31, 2009- 22 -

Competitive Position(a) Fine Ceramic Parts Group
Products in this segment are highly specialized to the needs of our customers, primarily secondary manufacturers who incorporate our
products in their own products. Therefore, our competitive position is largely dependent on maintaining close contacts with, andbeing first to meet the needs of, secondary manufacturers. We compete with different ceramic manufacturers depending on the
product.
(b) Semiconductor Parts GroupIn this segment, our goal is to further strengthen our competitive position by becoming a “Total Package Supplier” in the world
market. To offer opportunities for higher-added-value products, we are strengthening our R&D activities to develop new applications
for telecommunication areas such as wireless and optical communications. In the ceramic package field, SMD packages is one
example. We believe that we can maintain our market leadership in the area of ceramic packages and satisfy customer needs byapplying our technological and managerial expertise.
In the organic package field, we are a relative late comer and we compete with plastic electronic device manufacturers. To strengthen
our technological expertise and expand our business, we acquired the Surface Laminar Circuitry business of IBM Japan in September
2003 and established Kyocera SLC Technologies Corporation (KST). In April 2004, we integrated our management resources into
KST. In addition, a new plant in Ayabe, Kyoto City, Japan is under construction during fiscal 2005, and has been completed in June
2005. We aim to strengthen our organic material components business going forward.
(c) Applied Fine Ceramics GroupThe consciousness of environmental protection is evident worldwide. We are a secondary global manufacturer of solar cells andmodules. To be a market leader in the solar energy business, we expect to expand out solar cell production line with capacity of
20MW per month during fiscal 2006. We are a major supplier in the Japanese indexable market in cutting tools, and our major
application of this business is in the automotive industry. Although we have a lot of global competitors, we expect to introduce newfacilities to handle new material processing internally and create an in-house integrated production line to expand global market
share.
(d) Electronic Device GroupAs we entered this area of production as we increased our capability to produce technologically advanced products for the Fine
Ceramic Parts Group, we believe we are a unique electronic device manufacturer compared with our competitors. We produce not
only passive components but also crystal related products, connectors and thin-film devices. In this segment, one of our advantages is
the supply of a wide range of components. However, the products in this segment are largely standardized, so competition is basedlargely on price, quality and delivery time.
Kyocera is one of the major manufacturers by sales volume of capacitors and timing devices. Most of our competitors in this segment
are Japanese manufacturers. However, AVX, a U.S. subsidiary, competes against overseas manufacturers in producing tantalum
capacitors. Our thin-film products, such as thermal printheads, or amorphous silicon drums, are market-leading products inapplications for printers and copiers.
In addition, to promote this business, we are continuing to seek synergies within Kyocera Group and reduce costs. We strive to
optimize our development, production, and sales throughout our global network, and to maximize our production and sales operationsin China to reduce manufacturing costs and enhance price competitiveness.
- 23 -

(e) Telecommunications Equipment GroupIn the Japanese market, our main competitors for cellular handsets are Japanese manufacturers that launch handsets in Japanesemarket. In the cellular handset market outside Japan, Kyocera competes with U.S., European and Asian manufacturers. We are
currently a middle-class supplier in terms of units volume in the global CDMA cellular handsets market. In terms of PHS-related
products, our main competitors are Japanese manufacturers.
(f) Information Equipment GroupWe compete with Japanese and the U.S. manufacturers producing information equipment such as copiers and printers on a global
basis.
(g) Optical Instruments GroupIn the optical instruments field, Japanese manufacturers are our main competitors for both cameras and camera modules for cellular
handsets.
Government Regulation
There are some governmental regulations specifically applicable to industries in which Kyocera operates, however, they currently do
not have material effects on Kyocera’s business.
C. Organizational Structure
We had 181 subsidiaries and affiliates as of March 31, 2005. Our management structure is based on a group segment structure.
Therefore, the management of each segment is conducted uniformly regardless of whether the group’s operations are conducted by us
as the parent company or by one of our subsidiaries.
The following table sets forth information, as of March 31, 2005, with respect to our significant subsidiaries.

Name

Country ofIncorporation

Percentage
held by
KyoceraMain Business

Fine Ceramic Parts Group
Kyocera Industrial Ceramics Corp.

United States

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

Kyocera Asia Pacific Pte. Ltd.

Singapore

100.00% Sale of fine ceramic-related products andelectronic devices

Kyocera Fineceramics GmbHGermany

100.00% Sale of fine ceramic-related products andelectronic devices

Japan

100.00% Manufacture and sale of organic multilayer
printed circuit board

Semiconductor Parts Group
Kyocera SLC Technologies Corp.

- 24 -

Percentage
held by
Kyocera

Name

Country ofIncorporation

Kyocera America, Inc.

United States

100.00% Manufacture and sale of fine ceramic-related parts

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

Mexico100.00% Manufacture of ceramic-related products, solar
energy products and telecommunications
equipment

Shanghai Kyocera Electronics Co., Ltd.

China

90.00% Manufacture and sale of semiconductor parts andelectronic devices

Kyocera Solar Corp.

Japan

100.00% Sale of solar energy products

Japan Medical Materials Corp.

Japan

77.00% Development, manufacture and sale of medical
materials and equipment

Kyocera Solar, Inc.

United States

100.00% Manufacture and sale of solar energy products

Kyocera Tycom Corp.

United States

100.00% Manufacture and sale of micro drills

Main Business

Applied Ceramic Products Group

Kyocera (Tianjin) Solar Energy Co., Ltd.

China

90.00% Manufacture and sale of solar energy products

Kyocera Precision Tools Korea Co., Ltd.

Korea

90.00% Manufacture and sale of cutting tools

Kyocera Kinseki Corp.

Japan

100.00% Manufacture and sale of electronic device
products

Kyocera Elco Corp.

Japan

100.00% Manufacture and sale of electronic devices

Kyocera Display Institute Co., Ltd.

Japan

100.00% R&D, manufacture and sale of organic electro
luminescence display

United States

70.42% Manufacture and sale of electronic devices

Electronic Device Group

AVX Corporation- 25 -

Name

Country ofIncorporation

Percentage
held by
KyoceraMain Business

Kyocera Elco Korea Co., Ltd.

Korea

100.00% Manufacture and sale of electronic devices

Kyocera Elco Hong Kong Ltd.

Hong Kong

100.00% Sale of electronic devices

United States

100.00% Manufacture and sale of telecommunications
equipment

Telecommunications Equipment Group
Kyocera Wireless Corp.
Kyocera Wireless (India) PVT. Limited
Kyocera Telecommunications Research Corp.
Kyocera Zhenhua Communication Equipment Co.,
Ltd.

India

100.00% R&D of telecommunications equipment

United States

100.00% R&D of telecommunications equipment

China70.00% Manufacture and sale of telecommunications
equipment

Kyocera Mita Corp.

Japan

100.00% Manufacture and sale of information equipment

Kyocera Mita Japan Corp.

Japan

100.00% Sale of information equipment

Kyocera Mita America, Inc.

United States

100.00% Sale of information equipment

Information Equipment Group

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

China

90.00% Manufacture and sale of information equipment

Kyocera Mita Europe B.V.

Netherlands

100.00% Sale of information equipment

Kyocera Mita Deutschland GmbHGermany

100.00% Sale of information equipment

Kyocera Mita (U.K.) Ltd.

UnitedKingdom

100.00% Sale of information equipment

Kyocera Mita France S.A.

France100.00% Sale of information equipment

Kyocera Mita Italia S.P.A.

Italy

100.00% Sale of information equipment- 26 -

Name

Country ofIncorporation

Kyocera Mita Australia PTY. LTD.

Australia

Percentage
held by
KyoceraMain Business100.00% Sale of information equipment

Optical Equipment Group
Kyocera Optec Co., Ltd.

Japan

100.00% Manufacture and sale of optical instruments

Kyocera Yashica do Brasil Indústria e Comércio Ltda.

Brazil100.00% Manufacture and sale of optical instruments

Yashica Hong Kong, Co., Ltd.

Hong Kong

100.00% Intermediary services as to sale of optical
instruments

Universal Optical Industries, Ltd.

Hong Kong

100.00% Manufacture and sale of optical instruments

Dongguan Shilong Kyocera Optics Co., Ltd.

China

90.00% Manufacture and sale of optical instruments andcutting tools

Kyocera Leasing Co., Ltd.

Japan

100.00% Various leasing services, property management andfinancing services

Kyocera Communication Systems Co., Ltd.

Japan

76.30% Provision of IT services

Kyocera Realty Development Co., Ltd.

Japan

100.00% Real estate services

Hotel Kyocera Co., Ltd.

Japan

100.00% Hotel management and operations

Hotel Princess Kyoto Co., Ltd.

Japan

100.00% Hotel management and operations

Kyocera International Co., Ltd.

Japan

100.00% Insurance and travel agency

Kyocera Chemical CorporationJapan

100.00% Manufacture and sale of electronic materials

Others

Piazza Investment Co., Ltd.

Hong Kong- 27 -

100.00% Real estate leasing

Country ofIncorporation

Name

Shanghai Kyocera Realty Development Co., Ltd.

Percentage
held by
Kyocera

China

Main Business100.00% Real estate leasing

In addition to the above consolidated subsidiaries, Kyocera had 118 other consolidated subsidiaries as of March 31, 2005, 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 14 affiliates accounted for by
the equity method as of March 31, 2005.
AVX, in our Electronic Device Group, is one of our most significant subsidiaries. Most of the electronic devices we produce foroverseas sales are distributed by AVX by utilizing AVX’s wide range of marketing channels. In addition, we market passive
components produced by AVX in the Japanese market. We also utilize AVX’s manufacturing process for ceramic capacitors to
improve productivity and to enhance our competitiveness. In addition, AVX introduced our materials technologies into its ceramic
capacitor production. We have been seeking better ways to cooperate in expanding our electronic device businesses. Currently, five ofour directors are members of AVX’s board of directors and AVX’s chief executive officer is one of our directors. Within ourElectronic Device Group, we have a close relationship with AVX in marketing, manufacturing, and research and development, andwe are seeking and pursuing synergies to be a leading passive component manufacturer. AVX posted net income of $55,732 thousandin fiscal 2005, compared to a net loss of $107,606 thousand in fiscal 2004. Our results of operations and financial condition for fiscal
2004 were adversely affected due to AVX’s weak performance. See Item 5.A “Operating Results” of this Form 20-F.
Changed in Organization Structure in fiscal 2005
1) Kinseki, Ltd., a wholly-owned subsidiary, and Kyocera Corporation re-organized their operations related to crystal components
on April 1, 2004. The marketing division of Kinseki Ltd. was merged into the marketing division of the electronic component ofKyocera Corporation and the manufacturing division of crystal related components of Kyocera Corporation was transferred toKinseki Ltd. At the same time, Kinseki Ltd. changed its name to Kyocera Kinseki Corporation (Kyocera Kinseki).
2)

On April 1, 2004, Kyocera integrated its organic material components business into Kyocera SLC Technologies Corporation(KST), a wholly owned subsidiary. Management resources relating to the organic material components business wereconcentrated in KST to enhance synergistic effects within Kyocera and to expand the business base.

3)

On June 21, 2004, the Carlyle Group (Carlyle), Kyocera, KDDI Corporation (KDDI) and DDI Pocket, Inc. (DDI Pocket)
reached an agreement pursuant to which a consortium of Kyocera and Carlyle would acquire the business of DDI Pocket, a
subsidiary of KDDI. Under the agreement, Kyocera invested 30% in the company that succeeded DDI Pocket’s business, thename of which was changed to “WILLCOM, Inc.” in February 2005 (the “New Co”). In cooperation with New Co, Kyocera will
endeavor to expand sales in its PHS-related business by carving out new markets in Japan as well as overseas.

4)

Kyocera and Kobe Steel, Ltd. established “Japan Medical Materials Corporation (JMM)” on September 1, 2004 by merging the
medical materials businesses of both companies and commenced operation on the same day. JMM will benefit from theintegration of the specialized expertise of both companies in material and processing technologies, while maximizing synergies
by integrating their development, production and marketing divisions. JMM will also seek to expand its business worldwide, asa dedicated manufacturer of medical materials.
- 28 -

5)

On December 17, 2004, Kyocera announced the transfer of its domestic sales division for solar energy products (which handles
sales of solar power generation systems for use by domestic public sector industries) by means of a corporate split to Kyocera
Solar Corporation, a consolidated subsidiary of Kyocera, in April 2005. The aim of this move is to expand sales of solar-related
products to domestic public sector industries.

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, Hong Kong, China, Taiwan, Malaysia, Indonesia, Israel, Thailand andPhilippines. As of March 31, 2005, we had property, plants and equipment with a net book value of ¥258,997 million ($2,421
million). During the five years ended March 31, 2005, we invested a total of ¥319,302 million ($2,984 million) for additions toproperty, 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, 2005, with respect to our manufacturing facilities with floor space of morethan 100,000 square feet.
Name of Plant

Location

StatusFloor Space

Lease
Expires

Principal Products
Manufactured(in thousandsof square feet)Japan
Hokkaido Kitami Plant

Kitami, Hokkaido

Owned

294

Fukushima Tanagura Plant

Tanagura, Fukushima

Owned

126

Koriyama Plant

Koriyama, Fukushima

Owned

152

Nagano Okaya Plant

Okaya, Nagano

Owned

422

Kawasaki Plant

Kawasaki, Kanagawa

Owned

172

Kawaguchi Plant

Kawaguchi, Saitama

Owned

497

Ise Plant
Tamaki Plant

Ise, Mie
Tamaki, Mie

Owned
Owned

102
200

Shiga Plant

Gamo and Higashi-Ohmi,
Shiga

Owned

1,613

Osaka Hirakata Plant

Hirakata, Osaka

Owned

410

Kagoshima Sendai Plant

Satsuma-Sendai, Kagoshima

Owned

1,504

Kagoshima Kokubu Plant

Kokubu, Kagoshima

Owned

1,946

Kagoshima Hayato Plant

Hayato, Kagoshima

Owned

231

- 29 -

Fine ceramic parts, mobile
phone handsets
Telecommunications
Equipment
Electronic parts andmaterials
Fine ceramic parts,
Electronic components
Electronic parts andmaterials
Electronic parts andmaterials
Solar module
Non-cartridge printers andcopiers, digital network
multi function equipment
Fine ceramic parts,
Semiconductor parts,
Electronic components,
Solar cells
Non-cartridge printers andcopiers, digital network
multi function equipment
Fine ceramic parts,
Semiconductor parts,
Electronic components
Fine ceramic parts,
Semiconductor parts,
Electronic components
Electronic components

Name of Plant

Location

StatusFloor Space

Lease
Expires

Principal Products
Manufactured

2014Electronic parts
Organic multilayer printed
circuit board

2008

Semiconductor parts
Mobile phone handsets
Cutting tool

(in thousandsof square feet)

Yamagata Higashine Plant
Shiga Yasu Plant

Higashine, Yamataga
Yasu, Shiga

Owned
Leased

379
146

Owned
Leased
Owned

300
415
134

Myrtle Plant
Olean Plant
Raleigh Plant
South Carolina Plant

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

Owned
Owned
Owned
Owned

559
110
206
300

Electronic components
Electronic components
Electronic components
Non-cartridge printers andcopiers, digital network
multi function equipment

MexicoTijuana Plant

Tijuana

Owned

117

Semiconductor parts

El Salvador
San Salvador Plant

San Salvador

Owned

306

Electronic components

United Kingdom
Paignton Plant
Coleraine Plant

Paignton, England
Coleraine, Northern Ireland

Owned
Owned

128
185

Electronic components
Electronic components

Germany
Betzdorf Plant

Betzdorf

Owned

102

Electronic components

FranceSaint-Apollinaire Plant

Saint-Apollinaire

Leased321

2007

Electronic components

Czech Republic
Lanskroun Plant
Lanskroun Plant
Uherske Hradiste Plant

Lanskroun
Lanskroun
Uherske Hradiste

Leased
Owned
Owned

239
281
319

2017

Electronic components
Electronic components
Electronic components

Hong Kong
Hong Kong Plant

Hong Kong

Leased183

2008

Non-cartridge printers andcopiers, digital network
multi function equipment

China
Tianjin Plant
Shilong Plant

Tianjin, China
Dongguan, Canton

Owned
Leased

500
1,460

2017

United States
Balboa Plant
Campus Plant
Mountain Home Plant- 30 -

Electronic components
Non-cartridge printers andcopiers, digital network
multi function equipment

Name of Plant

Location

StatusFloor Space

Lease
Expires

Principal Products
Manufactured

Non-cartridge printers andcopiers, digital network
multi function equipment
Optical equipments
Cutting tools
Semiconductor parts,
Electronic components(in thousandsof square feet)

Shilong Plant

Dongguan, Canton

Leased156

2008

Shilong Plant

Dongguan, Canton

Leased523

2016

Shanghai Putong Plant

ShanghaiLeased

1,026

2023

Malaysia
Penang Plant

PenangOwned

149

Electronic components

Singapore
Singapore Plant

Singapore

Owned

128

Electronic parts andmaterials

Thailand

Owned

264

Electronic parts

Philippines

Owned

135

Electronic parts

ThailandThailand Plant
Philippines
Philippines Plant

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.
Overview
Kyocera produces and distributes various kinds of products for the telecommunications and information processing, environmental
protection and quality of life 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 merger and acquisition activities, as well as
by applying its ceramic technologies to the areas of semiconductor parts, electronic components, telecommunication, metal
processing, medical and dental implants and the solar energy fields. Kyocera develops, produces and distributes a variety of parts anddevices for electronic equipment such as computers, automobiles, printers and copiers as well as consumer electronic products such as
mobile phone handsets and digital still cameras. Kyocera earns revenue and income and generates cash from sales of these products.
Kyocera divides its worldwide operations into eight reporting segments for its financial reporting purposes: the Fine Ceramic Parts
Group, the Semiconductor Parts Group, the Applied Ceramic Products Group (former “Consumer-Related Products” business), theElectronic Device Group, the Telecommunications Equipment Group, the Information Equipment Group, the Optical Equipment
Group (former “Optical Instruments” business) and Others. The net sales of these segments (including inter-segment net sales)
accounted for 6.2%, 10.8%, 8.0%, 22.3%, 21.3%, 20.4%, 3.0% and 10.0%, respectively, of Kyocera’s total net sales for the fiscal
year ended March 31, 2005 (fiscal 2005). Also, in fiscal 2005, net sales to Japan, the United States, Asia, Europe and Other accounted
for 40.0%, 21.0%, 17.3%, 14.9% and 6.8%, respectively.
- 31 -

Kyocera derives a substantial portion of its revenue from sales of products and services in electronic equipment industries, including
IT industries. In fiscal 2005, the business environment surrounding the components business, which includes the Fine Ceramic Parts
Group, the Semiconductor Parts Group and the Electronic Device Group, changed considerably from the first half of fiscal 2005 to
the second half of fiscal 2005. Components demand for mobile phone handsets, computer equipment and digital consumer products,
which showed strong growth in the first half of fiscal 2005, slowed down in the second half of fiscal 2005 as companies engaged in
the manufacture of electronic equipment were forced to make production adjustments in order to reduce their inventories. Pricedeclines of key components also accelerated in the second half of fiscal 2005 in accord with these factors. Similar product sales pricedeclines were also seen in Kyocera’s finished products, particularly CDMA mobile phone handsets, Personal Handyphone System(PHS)-related products, information equipment such as printers and copiers, and digital still cameras.
Kyocera’s electronic equipment-related businesses were therefore faced with an extremely difficult business environment in thesecond half of fiscal 2005. Nevertheless, businesses in non-electronic equipment-related industries made positive contributions to
Kyocera’s consolidated results in fiscal 2005, in particular the Applied Ceramic Products Group. Such areas included solar power
generation systems spurred by rising environmental concerns and cutting tools for which demand increased considerably due torobust production activities at automobile manufacturers.
As a result of favorable market conditions in the first half of fiscal 2005, Kyocera enjoyed year-on-year increases in sales in the Fine
Ceramic Parts Group, the Semiconductor Parts Group and the Electronic Device Group.
Sales in the Applied Ceramic Products Group increased significantly compared with fiscal 2004. Meanwhile, sales in the Information
Equipment Group also increased due to steady growth in sales of monochrome copiers, printers and digital multifunction products(MFPs) in Europe.
Conversely, in the Telecommunications Equipment Group, which develops, manufactures and sells products such as CDMA mobile
phone handsets for Japan and the United States and PHS-related products for China, sales decreased compared with fiscal 2004. The
main reasons for this decrease were intense price competition in these two product areas in Japan and overseas, and inventory
reduction of PHS-related products in China.
In the Optical Equipment Group, which includes digital still cameras and optical modules for camera-equipped mobile phonehandsets as its key products, Kyocera decided to considerably downsize the digital still camera and conventional still camera
businesses in fiscal 2005, which led to a marked decline in sales in the camera business. However, Kyocera also commenced the
manufacture and sale of optical modules in fiscal 2005. Consequently, sales in Optical Equipment Group increased compared withfiscal 2004.
To make the components and equipment businesses highly profitable, our specific business developments aimed at accomplishing the
aforementioned goals are as follows.
(1) Enhance Profitability of Equipment Business
Kyocera intends to improve performance in the Telecommunications Equipment Group and the Optical Equipment Group, which thatwas sluggish in fiscal 2005. In the mobile phone handset business, Kyocera plans to implement additional structural reforms at
Kyocera Wireless Corp. to improve its profitability. With regard to PHS-related products, Kyocera will strive for business expansion
through the introduction of next-generation base stations and handsets in line with the commencement of new high-speed data
communication services in Japan. In addition to creating new markets and launching more cost-competitive products overseas,
Kyocera will also strive to capture new customers for its high speed wireless internet systems. Kyocera seeks to boost profitability inthe optical equipment business by maximizing the positive effects of structural reforms executed in fiscal 2005. Other initiatives
aimed at improving profitability in this business include expanding the business for optical components, especially optical modules
for mobile phone handsets, and increasing productivity at production sites in China.
- 32 -

(2) Enhance Profitability of Components Business
Kyocera will aggressively pursue improvements in productivity through production process reforms implemented up until now. In
fiscal 2006, Kyocera plans to promote, strengthen and reinforce a business foundation that we believe will drive future businessdevelopment. Specifically, investments will be strategically and aggressively channeled into businesses focused on solar energy
products, ceramic components for semiconductor and LCD fabrication equipment, organic packages, cutting tools, LCDs and organic
EL displays to further improve profitability.
Results of Operations
Fiscal 2005 compared with Fiscal 2004
Net sales
In fiscal 2005, Kyocera’s net sales increased by ¥39,841 million ($372 million), or 3.5%, to ¥1,180,655 million ($11,034 million)
compared with ¥1,140,814 million in fiscal 2004.
The increase in net sales was due mainly to growth in demand for major components used in mobile phone handsets, computerrelated equipment and digital consumer products, which boosted revenues from sales in the Fine Ceramic Parts Group, theSemiconductor Parts Group and the Electronic Device Group in the first half of fiscal 2005. The business environment in the second
half of fiscal 2005 changed considerably from the first half of fiscal 2005. Components demand for mobile phone handsets and digitalconsumer products slowed down, due to stagnant demand after the Olympic Games and production adjustment for reducing
inventories by set manufacturers in the second half of fiscal 2005. Total sales from the Fine Ceramic Parts Group, the Semiconductor
Parts Group and the Electronic Device Group amounted to ¥217,810 million ($2,036 million) in the second half of fiscal 2005, a
decrease of ¥29,048 million ($271 million) or 11.8%, compared with ¥246,858 million ($2,307 million) in the first half of fiscal 2005.
Full-year sales of these reporting segments increased by ¥30,220 million ($282 million), or 7.0%, to ¥464,668 million ($4,343
million) compared with ¥434,448 million in fiscal 2004.
Sales in the Applied Ceramic Products Group and the Information Equipment Group rose by boosting sales in new products throughthe year. Sales in the Applied Ceramic Products Group increased by ¥15,592 million ($146 million), or 19.9% and sales in the
Information Equipment Group increase by ¥26,953 million ($252 million), or 12.6%, respectively. Conversely, revenue from the
Telecommunications Equipment Group in fiscal 2005 decreased by ¥51,869 million ($485 million), or 17.1% compared with fiscal
2004, due to a delayed release of new CDMA mobile phone handsets to the North American market and stagnant demand for PHSrelated products caused by inventory reductions in China.
A detailed analysis and discussion about Kyocera’s net sales and by reporting and 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 2004 and fiscal 2005 for Kyocera’s eightreporting segments: the Fine Ceramic Parts Group, the Semiconductor Parts Group, the Applied Ceramic Products Group, theElectronic Device Group, the Telecommunications Equipment Group, the Information Equipment Group, the Optical Equipment
Group and Others.
- 33 -

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

2004

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¥

68,758
108,784
78,287
256,906
302,787
214,192
29,297
100,505(18,702)¥1,140,814¥

73,711
127,960
93,879262,997
250,918
241,145
35,776
118,040(23,771)¥1,180,655

2005

$

688,888
1,195,888
877,374
2,457,916
2,345,028
2,253,692
334,355
1,103,177(222,159)$11,034,159

Fine Ceramic Parts Group
Sales in this segment increased by ¥4,953 million ($46 million), or 7.2%, to ¥73,711 million ($689 million) compared with ¥68,758
million in fiscal 2004. In particular, components demand for semiconductor and LCD fabrication equipment and sapphire substrates
for LEDs grew favorably.
Semiconductor Parts Group
Sales in this segment increased by ¥19,176 million ($179 million), or 17.6%, to ¥127,960 million ($1,196 million) compared with
¥108,784 million in fiscal 2004. Sales of ceramic packages and organic packages used in mobile phone handsets and digital consumer
products rose.
Applied Ceramic Products Group
Sales in this segment increased by ¥15,592 million ($146 million), or 19.9%, to ¥93,879 million ($877 million) compared with
¥78,287 million in fiscal 2004. Sales of solar modules and solar power generation systems expanded in Europe and Japan. Sales of
cutting tools for automotive industry also grew.
Electronic Device Group
Sales in this segment increased by ¥6,091 million ($57 million), or 2.4%, to ¥262,997 million ($2,458 million) compared with
¥256,906 million in fiscal 2004. A full year sales contribution from Kyocera Kinseki resulted in an increase in sales in this segment.
Sales of thin-film devices also expanded considerably, as sales grew for LCDs both in Japan and overseas and for thermal printheads
for digital photo printers. In addition, sales at AVX, which account for approximately 53% of the net sales in this segment, and at
Kyocera Kinseki grew steadily, supported by strong demand for digital consumer products through more active market environment
for the electronic industry in the first half of fiscal 2005.
Telecommunications Equipment Group
Sales in this segment decreased by ¥51,869 million ($485 million), or 17.1%, to ¥250,918 million ($2,345 million) compared with
¥302,787 million in fiscal 2004. Sales of mobile phone handsets decreased both in Japan and overseas. Sales at KWC declined due toa delayed launch of new CDMA handsets in the U.S. and intensified price competition of mobile phone handsets. Sales of mobile
phone handsets in Japan also decreased, due to the delayed introduction of new models and negative impact of inventory reduction by
a PDC carrier. Sales of PHS-related products dropped due to inventory reduction in China.
- 34 -

Information Equipment Group
Sales in this segment increased by ¥26,953 million ($252 million), or 12.6%, to ¥241,145 million ($2,254 million) compared with
¥214,192 million in fiscal 2004. This increase was due to expanded sales of mid- and high-speed digital MFPs and the sales
contribution of new models, such as low- and mid- speed models in Europe.
Optical Equipment Group
Sales in this segment increased by ¥6,479 million ($61 million), or 22.1%, to ¥35,776 million ($334 million) compared with ¥29,297
million in fiscal 2004. In this segment, Kyocera decided to downsize the camera business and focus on the optical components
business. As a result, sales of digital still cameras dropped. However, sales of optical modules used in mobile phone handsets
contributed to sales for the first time, which resulted in year-on-year growth in this segment. Optical modules sales accounted forapproximately 40% of sales in this segment.
OthersSales in this segment increased by ¥17,535 million ($164 million), or 17.4%, to ¥118,040 million ($1,103 million) compared with
¥100,505 million in fiscal 2004.
Sales in Kyocera Communication Systems Co., Ltd. and its consolidated subsidiaries, which accounts for approximately 61% of thissegment net sales, increased due to a growth in sales of telecommunications engineering and data center businesses.
Kyocera Chemical Corporation and its consolidated subsidiaries (Kyocera Chemical) increased sales due to the steady growth offlexible printed circuit boards, molding dies of components for automobiles and casting resin.
Net Sales by geographic segments
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2004 and fiscal 2005, distinguishing
between domestic and overseas sales and, in respect of overseas sales, showing the geographical areas in which such sales were made:Years ended March 31,(Yen in millions and U.S. dollars in thousands)

Japan
United States
Asia
EuropeOthers

2004

2005

2005

¥ 456,807
251,326
194,302
156,929
81,450¥ 472,417
248,333
203,848
175,850
80,207$ 4,415,112
2,320,869
1,905,122
1,643,458
749,598¥1,140,814¥1,180,655$11,034,159

Sales in Japan, which accounted for 40.0% of total net sales, increased by ¥15,610 million ($146 million), or 3.4%, to ¥472,417
million ($4,415 million) compared with ¥456,807 million in fiscal 2004. Kyocera’s sales in overseas markets, which accounted for
60.0% of total net sales, increased by ¥24,231 million ($226 million), or 3.5%, to ¥708,238 million ($6,619 million) compared with
¥684,007 million in fiscal 2004.
- 35 -

Sales in overseas markets are denominated primarily in U.S. dollars and the Euro. Compared with fiscal 2004, the yen appreciatedagainst the U.S. dollar and depreciated against the Euro. In terms of net sales, the negative effects of the rising yen against the U.S.
dollar outweighed the positive impact of the weak yen against the Euro. Accordingly, consolidated net sales after translation into yen
were pushed down by approximately ¥21,200 million ($198 million) compared with fiscal 2004.
Sales in Japan increased due mainly to a full year contribution from Kyocera Kinseki and Kyocera SLC Technologies Corporation,
which became consolidated subsidiaries in fiscal 2004 and contributed to increased sales of semiconductor and LCD fabrication
components, and solar modules and solar power generation systems. In addition, sales of optical modules for camera-equipped mobile
phone handsets contributed to sales for the first time in fiscal 2005, and resulted in a sales increase of the Optical Equipment Group.
The weak yen against the Euro produced a positive impact on sales in Europe, and sales growth in Europe was stronger than in otheroverseas markets. Sales in Europe expanded by ¥18,921 million ($177 million), or 12.1%, to ¥175,850 million ($1,643 million)
compared with ¥156,929 million in fiscal 2004, due to increased sales in the Information Equipment Group and solar energy products
supported by expansion of demand, particularly in Germany. Sales in Asia rose by ¥9,546 million ($89 million), or 4.9%, to ¥203,848
million ($1,905 million) compared with ¥194,302 million in fiscal 2004. In fiscal 2004, Kyocera Corporation acquired 100% of theshares of Kyocera Kinseki and established new sales subsidiaries of AVX Corporation to pursue group synergies within theElectronic Device Group and to expand this business. Synergy effects through these measures were evident in fiscal 2005, as sales ofmobile phone handsets increased in India through active marketing by Kyocera Wireless Corp. and its consolidated subsidiaries(KWC). Sales in the United States decreased by ¥2,993 million ($28 million), or 1.2%, to ¥248,333 million ($2,321 million)
compared with ¥251,326 million in fiscal 2004, due mainly to downturn sales in the Telecommunications Equipment Group.
Cost of sales and gross profit
In fiscal 2005, cost of sales decreased by ¥5,157 million ($48 million), or 0.6%, to ¥855,067 million ($7,991 million) from ¥860,224
million in fiscal 2004. Raw material costs of ¥386,262 million ($3,610 million) accounted for 45.2%, and labor costs of ¥158,427
million ($1,481 million) accounted for 18.5%. The ratio of cost of sales to net sales was 72.4%, a decrease of 3.0 points comparedwith 75.4% in fiscal 2004. In fiscal 2004, cost of sales contained a write-down amounting to ¥10,351 million of current inventories oftantalum materials and purchase commitments based on long-term contracts at AVX, labor costs totaling ¥13,735 million related tothe transfer of the substitutional portion of Employee Pension Funds (EPF) of Kyocera Corporation and Kyocera Mita Corporationand its consolidated subsidiaries (KMC) to the Japanese government, and a reduction of labor costs of ¥2,821 million by thewithdrawal from EPF at Kyocera Chemical. Aside from the special factors stated above, cost of sales in fiscal 2005 substantially
increased due to increases of sales in the Fine Ceramic Parts Group, the Semiconductor Parts Group, the Applied Ceramic ProductsGroup, the Electronic Device Group, the Information Equipment Group, and the Optical Equipment Group.
In fiscal 2005, Kyocera recorded ¥5,421 million ($51 million) as restructuring costs in the Telecommunications Equipment Groupand the Optical Equipment Group. In the Optical Equipment Group, losses of ¥4,918 million ($46 million) related to reduction of
inventories, were recorded to downsize the camera business. In the Telecommunications Equipment Group, restructuring charges of¥503 million ($5 million) were recorded at KWC with the transfer of production to Mexico, where more cost-effective labor ispossible. As a result, gross profit increased by ¥44,998 million ($421 million), or 16.0%, in fiscal 2005 to ¥325,588 million ($3,043
million) from ¥280,590 million in fiscal 2004. The gross profit ratio increased by 3.0 point from 24.6% to 27.6%.
- 36 -

SG&A expenses and profit from operations
Selling, general and administrative (SG&A) expenses in fiscal 2005 increased by ¥52,992 million ($495 million), or 30.9%, to¥224,620 million ($2,099 million) compared with ¥171,628 million in fiscal 2004. Labor cost was ¥111,461 million ($1,042 million),or 49.6% of total SG&A, and sales promotion and advertising cost was ¥39,175 million ($366 million), or 17.4% of total SG&A. The
proportion of SG&A expenses to net sales rose by 4.0 points to 19.0% in fiscal 2005 compared with 15.0% in fiscal 2004. The
transfer of the substitutional portion of EPF of Kyocera Corporation and KMC resulted in the deduction of SG&A expenses of¥32,652 million, while the withdrawal from EPF at Kyocera Chemical resulted in a deduction of ¥3,132 million in fiscal 2004.
Excluding the special items above, the increase in SG&A expenses in fiscal 2005 reflected an increase in costs associated withaggressive R&D activities and an increase in advertising expenses, mainly at KMC. As a result, profit from operations decreased by¥7,994 million ($75 million), or 7.3%, to ¥100,968 million ($944 million) compared with ¥108,962 million in fiscal 2004. The grossmargin fell by 1.0 point to 8.6% in fiscal 2005 compared with 9.6% in fiscal 2004.
Interest and dividend income
Interest and dividend income in fiscal 2005 increased by ¥1,513 million ($14 million), or 31.0%, to ¥6,396 million ($60 million)
compared with ¥4,883 million in fiscal 2004. This was mainly because KDDI Corporation (KDDI) increased its corporate dividend
per share thanks to a favorable business performance, thus increasing dividend income on Kyocera’s investments in KDDI. 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 profitability.
Interest expense
Interest expense in fiscal 2005 decreased by ¥11 million ($0 million), or 0.9%, to ¥1,275 million ($12 million) compared with ¥1,286
million in fiscal 2004. The Japanese financial market was still in a low-interest climate, and therefore there was no material
fluctuation in interest expense.
Foreign currency translation
During fiscal 2005, the yen appreciated by ¥5, or 4.4%, against the U.S. dollar and depreciated by ¥2, or 1.5%, against Euro
compared with fiscal 2004, respectively. At March 31, 2005, the yen depreciated by ¥1, or 0.9%, against the U.S. dollar anddepreciated by ¥10, or 7.8%, against Euro compared with at March 31, 2004, respectively. The net effect of foreign currency
fluctuations was a gain of ¥2,618 million ($24 million).
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 2005, Kyocera’s earnings or losses on equity-method investments resulted in losses of ¥1,678 million ($16 million), a fall of¥4,253 million ($40 million), compared with earnings of ¥2,575 million in fiscal 2004. Kyocera’s equity in earnings or losses ofaffiliates and unconsolidated subsidiaries in fiscal 2005 was derived mainly from interests in WILLCOM, INC. (WILLCOM) andTaito Corporation (Taito).
Kyocera Corporation owned a 13.33% interest in WILLCOM, which was formerly known as DDI Pocket, Inc. (DDI Pocket) andwhich changed its name in February 2005. WILLCOM operates a PHS business. In October 2004, Kyocera purchased an additional
16.67% ownership interest for ¥9,993 million ($93 million) to expand sales in its PHS-related business. Due to its cumulativeownership interest of 30%, Kyocera Corporation accounts for its investment by the equity method. As WILLCOM recorded a net loss
due to an increase in operating costs related to its business expansion in fiscal 2005, Kyocera recorded a loss on its equity-method
investment in WILLCOM.
Kyocera Corporation owns a 36.02% interest in Taito, a major affiliate which operates in electronic amusement business. In fiscal
2005, Taito’s net income decreased compared with fiscal 2004 due to a sluggish sales of home-use game machines, an additional
investment in production facilities for game machines and costs of opening new game arcades, in spite of an increase in sales ofcommercial-use game machines. As a result, Kyocera’s earning on its equity-method investment in Taito decreased.
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In fiscal 2005, losses on impairment of investment securities amounted to ¥132 million ($1 million), a decrease of ¥898 million ($8million), compared with ¥1,030 million in fiscal 2004. Losses recorded in fiscal 2005 and fiscal 2004 were due mainly to
management’s estimation that certain non-public companies in which Kyocera invested would still need considerable time to recoverprofitability in their operating activities.
Income before income taxes
In fiscal 2005, Kyocera recorded an increase in operating profit due to higher sales, especially in the components business, and tovarious cost-reduction activities. In contrast, however, a significant decrease in profits was recorded in the equipment business.
Despite higher revenues from sales of the Information Equipment Group, such as digital MFPs, the Telecommunications Equipment
Group slumped due to repair costs for defective products, and restructuring charges were recorded in line with the policy to downsize
the camera business. Consequently, income before income taxes decreased by ¥7,510 million ($70 million), or 6.5%, to ¥107,530
million ($1,005 million) compared with ¥115,040 million in fiscal 2004. In fiscal 2004 Kyocera also recorded a settlement gain of¥18,917 million for a substitutional portion of EPF and ¥5,953 million of a withdrawal gain of EPF at a subsidiary.
Operating profit by reporting segment
The following table shows a breakdown of Kyocera’s consolidated income before income taxes, and operating profit for fiscal 2004
and fiscal 2005 for Kyocera’s eight reporting segments: the Fine Ceramic Parts Group, the Semiconductor Parts Group, the Applied
Ceramic Products Group, the Electronic Device Group, the Telecommunications Equipment Group, the Information Equipment
Group, the Optical Equipment Group and Others.
Years ended March 31,(Yen in millions and U.S. dollars in thousands)
2004

2005

¥ 10,239
10,603
10,297
5,047
5,082
31,986(5,826)
9,683¥ 11,535
17,55017,12935,406(14,918)
36,186(15,387)
13,01977,111

100,520

939,439

Corporate

34,871

8,683

81,149Equity in earnings (losses) of affiliates and unconsolidated subsidiaries
Adjustments and eliminations

2,575
483

(1,678)
5(15,682)47¥ 115,040¥ 107,530$ 1,004,953

Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersIncome before income taxes

2005

$

107,804
164,019
160,084
330,897(139,421)
338,187(143,804)
121,673

Fine Ceramic Parts GroupOperating profit in this segment increased by ¥1,296 million ($12 million) or 12.7%, to ¥11,535 million ($108 million) comparedwith ¥10,239 million in fiscal 2004. This was due primarily to improvement of manufacturing efficiency by higher sales of fineceramic components used in semiconductor and LCD fabrication equipment and sapphire substrates.
- 38 -

Semiconductor Parts GroupOperating profit in this segment increased by ¥6,947 million ($65 million) or 65.5%, to ¥17,550 million ($164 million) comparedwith ¥10,603 million in fiscal 2004. This was due primarily to improved capacity utilization by higher sales of ceramic packages usedin mobile phone handsets, and due to reduced costs through the utilization of China-based production facilities.
Applied Ceramic Products GroupOperating profit in this segment increased by ¥6,832 million ($64 million) or 66.3%, to ¥17,129 million ($160 million) comparedwith ¥10,297 million in fiscal 2004. Sales in the solar energy business increased steadily supported by a rising global orientation
towards clean energy. Meanwhile, profit in this business also grew as Kyocera reduced costs through the utilization of China-based
production facilities established in fiscal 2004. Brisk markets led to increases in both sales and profits of cutting tools and dental andorthopedic implants.
Electronic Device GroupOperating profit in this segment increased by ¥30,359 million ($284 million) or 601.5%, to ¥35,406 million ($331 million) comparedwith ¥5,047 million in fiscal 2004. In fiscal 2004, AVX wrote down ¥10,351 million of inventories of tantalum materials andpurchase commitments based on long-term contracts, and also booked a restructuring charge of ¥2,975 million associated with theclosure of its overseas ferrite manufacturing facilities and headcount reductions. In fiscal 2005, despite deterioration in the markets
for capacitors and connectors in the second half, the absence of large-scale write-downs and restructuring charges that were evident infiscal 2004, together with improved productivity led to strong growth in profit.
Telecommunications Equipment GroupOperating profit in this segment substantially decreased by ¥20,000 million ($187 million) to a loss of ¥14,918 million ($139 million)
compared with income of ¥5,082 million in fiscal 2004. This decrease was due to significant operating losses recorded at KWC.
KWC recorded significant losses due to decline in market prices, some defective products, and the relocation costs of production
sites. Furthermore, repair costs for defective software and delays in the market introduction of new products in Japan also led tolosses.
Information Equipment GroupOperating profit in this segment increased by ¥4,200 million ($39 million) or 13.1%, to ¥36,186 million ($338 million) comparedwith ¥31,986 million in fiscal 2004. This increase was due primarily to a steady growth in sales of digital MFPs and an increase insales of high-value-added products. Lower costs achieved through a China-based production facility also contributed to the increasein operating profit.
Optical Equipment GroupOperating loss in this segment increased by ¥9,561 million ($89 million) to ¥15,387 million ($144 million) compared with a loss of¥5,826 million in fiscal 2004. This reflected higher-than-expected costs associated with the launch of the optical module business infiscal 2005, and restructuring charges related to the downsizing of the camera business in fiscal 2005.
- 39 -

Others
Operating profit in this segment increased by ¥3,336 million ($31 million) or 34.5%, to ¥13,019 million ($122 million) comparedwith ¥9,683 million in fiscal 2004. This was due primarily to increased earnings in KCCS, arising from improved development
efficiency and lower costs, as well as increased sales in Kyocera Chemical, especially in the businesses related to flexible printed
circuit boards.
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 litigation expenses or losses on impairment of investment securities. In fiscal 2005, Kyocera recorded
Corporate income of ¥8,683 million ($81 million). This represented a decrease of ¥26,188 million ($245 million), or 75.1%,
compared with Corporate income of ¥34,871 million in fiscal 2004. The main contributors in fiscal 2005 were interest and dividends.
The income in fiscal 2004 included ¥18,917 million of a settlement gain for a substitutional portion of EPF, ¥5,953 million of awithdrawal gain of EPF at a subsidiary, and ¥2,284 million of a gain on reversal of excess accruals resulting from a settlement of
litigation in the LaPine Case. As a result, Corporate gain decreased markedly compared with fiscal 2004.
Taxes
Current and deferred income taxes in fiscal 2005 increased by ¥8,170 million ($76 million), or 16.2%, to ¥58,480 million ($547
million) compared with ¥50,310 million in fiscal 2004. The effective tax rate of 54.4% in fiscal 2005 was 10.7 points higher than
43.7% in fiscal 2004. 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 five years from the year ended March 31, 1999 through the year
ended March 31, 2003, and this resulted in additional current income taxes of ¥12,748 million ($119 million). Although the final
resolution of the proposed tax assessment is not certain, management believes the ultimate disposition of this matter will not have amaterial impact on the results of operations.
Minority interests
Minority interests are principally related to AVX, which accounted for an approximately 30% minority ownership interest in fiscal
2005. Minority interests decreased by ¥6,498 million ($61 million) to a loss in minority interests of ¥3,142 million ($29 million),compared with a gain in minority interests of ¥3,356 million in fiscal 2004. This was mainly due to an increase in AVX’s net income
because AVX recorded onetime charges related to a write-down of inventories and restructuring activities in fiscal 2004, and there
were no such costs in fiscal 2005.
Results of Operations
Fiscal 2004 compared with Fiscal 2003
Net sales
In fiscal 2004, Kyocera’s net sales of increased by ¥71,044 million, or 6.6%, to ¥1,140,814 million compared with ¥1,069,770 million
in fiscal 2003.
The increase in net sales was due mainly to growth in demand for components used in mobile phone handsets, digital consumer
products and computer-related equipment, which boosted revenues from the Semiconductor Parts Group and the Electronic Device
Group. Revenues from the Telecommunications Equipment Group and the Information Equipment Group also rose as Kyocera
successfully introduced new mobile phone handsets and digital multifunction products (MFPs), and developed new markets. The newconsolidations of Kinseki, Limited and its consolidated subsidiaries (Kinseki) and Kyocera SLC Technologies Corporation (KST)
during fiscal 2004 also contributed to an increase in net sales. In addition, net sales increased due to that there was a full-year sales
contribution in fiscal 2004 from Kyocera Chemical, of which sales was contributed only for eight months in fiscal 2003 after
becoming a consolidated subsidiary in August 2002. Excluding the contributions to net sales due to the new consolidations of Kinseki
and KST, the year-on-year growth in consolidated net sales in fiscal 2004 would have increased by 4.4% compared with 6.6%
actually recorded.
- 40 -

A detailed analysis and discussion about Kyocera’s net sales and by reporting and 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 2003 and fiscal 2004 for Kyocera’s eightreporting segments: the Fine Ceramic Parts Group, the Semiconductor Parts Group, the Applied Ceramic Products Group, theElectronic Device Group, the Telecommunications Equipment Group, the Information Equipment Group, the Optical Equipment
Group and Others.
Years ended March 31,(Yen in millions)
2004

2003

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¥

64,333
103,60270,932
227,962
292,703
202,02235,05985,084(11,927)¥1,069,770¥

68,758
108,784
78,287
256,906
302,787
214,192
29,297
100,505(18,702)¥1,140,814

Fine Ceramic Parts Group
Sales in this segment increased by ¥ 4,425 million, or 6.9%, to ¥ 68,758 million compared with ¥ 64,333 million in fiscal 2003.
Sapphire substrates for LCD projectors and LEDs particularly generated year-on-year growth. Sales of components for semiconductorand LCD fabrication equipment also grew, due mainly to increased demand stemming from the ongoing shift toward large-panel
LCDs.
Semiconductor Parts Group
Sales in this segment increased by ¥ 5,182 million, or 5.0%, to ¥ 108,784 million compared with ¥ 103,602 million in fiscal 2003.
Demand for ceramic packages increased, especially for image-sensor devices used in camera-equipped mobile phone handsets anddigital still cameras (DSCs). In addition, the new consolidation of KST from September 2003 contributed to an increase in sales.
- 41 -

Applied Ceramic Products Group
Sales in this segment increased by ¥ 7,355 million, or 10.4%, to ¥ 78,287 million compared with ¥ 70,932 million in fiscal 2003.
Expansion of demand for solar power generation systems contributed to increased sales in this segment. Sales of cutting tools also
increased, due mainly to higher demand in Asia associated with increased production activities in the industry.
Electronic Device Group
Sales in this segment increased by ¥28,944 million, or 12.7%, to ¥256,906 million compared with ¥227,962 million in fiscal 2003.
Sales posted by AVX, which accounts for approximately 50% of this segment net sales, were flat at $1,137 million in fiscal 2004 on
its functional currency of the U.S. dollars, but declined year-on-year by ¥10,478 million or 7.6% in yen due to the yen’s appreciation
against the U.S. dollar. The net effect of the consolidation of Kinseki, which became a wholly owned subsidiary in August 2003
largely offset this. Sales of connectors at Kyocera Elco Corporation and its consolidated subsidiaries grew steadily, and sales of thinfilm devices increased year-on-year due mainly to higher sales of color STN (Super Twisted Nematic) LCDs for mobile phonehandsets and thermal printheads. Other contributions to an increase in sales of this segment included increased production at facilities
in China of ceramic capacitors and timing devices as a result of rising demand for electronic equipment such as mobile phonehandsets, PCs and digital still cameras.
Telecommunications Equipment Group
Sales in this segment increased by ¥ 10,084 million, or 3.4%, to ¥ 302,787 million compared with ¥ 292,703 million in fiscal 2003,
primarily reflected higher sales at KWC. KWC generated sales growth in North American and Latin American markets in fiscal 2004
through increased customer numbers and an aggressive launch program for mid-range handset models for the Christmas season. In
Japan, Kyocera missed launch opportunities due to delays in its new model development processes, which had a negative impact on
Kyocera’s mobile phone handset business, resulting in a year-on-year decline in sales. Sales of high-end CDMA mobile phonehandsets in China failed to generate significant sales growth due to price erosion.
Information Equipment Group
Sales in this segment increased by ¥ 12,170 million, or 6.0%, to ¥ 214,192 million compared with ¥ 202,022 million in fiscal 2003.
Sales growth of information equipment in fiscal 2004 which was operated by Kyocera Mita Corporation and its consolidated
subsidiaries was primarily driven by lineup expansion resulting from the launch of color models, notably in Europe. Another factor
was the receipt of large volume orders overseas as customers valued the reliability of Kyocera-branded products more highly.
Optical Equipment Group
Sales in this segment decreased by ¥ 5,762 million, or 16.4%, to ¥ 29,297 million compared with ¥ 35,059 million in fiscal 2003.
Sales of conventional still cameras materially reduced due to declines in their prices and an ongoing contraction in their market. On
the contrary, sales of DSCs increased during fiscal 2004, largely as a result of the launch of 12 new models, including five that feature
an “R-TUNE” image-processing chip that enables a camera to operate in continuous image-capture mode until the memory capacity
limit is reached.
OthersSales in this segment increased by ¥15,421 million, or 18.1%, to ¥100,505 million compared with ¥85,084 million in fiscal 2003.
- 42 -

KCCS increased its sales from both its business information systems and telecommunications engineering businesses following thedevelopment of new products and services. Sales of Kyocera Chemical also contributed to this segment due to the fact that its fullyear results were reflected in fiscal 2004, whereas only eight months’ sales were reflected in fiscal 2003.
Net Sales by geographic segments
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2003 and fiscal 2004, distinguishing
between domestic and overseas sales and, in respect of overseas sales, showing the geographical areas in which such sales were made:Years ended March 31,(Yen in millions)Japan
United States
Asia
EuropeOthers2003

2004¥ 423,190
264,755
178,384
144,293
59,148¥ 456,807
251,326
194,302
156,929
81,450¥1,069,770¥1,140,814

In the above table, the amounts shown by geographical area reflect sales based on the location of Kyocera’s customers.
Sales in Japan for fiscal 2004, which accounted for 40.0% of total net sales, increased by ¥33,617 million, or 7.9%, to ¥456,807
million compared with ¥423,190 million for fiscal 2003. This was due primarily to higher sales of solar systems and an increase insales at KCCS. This also reflected sales from newly consolidated subsidiaries such as Kinseki and KST. Kyocera’s sales in overseas
markets for fiscal 2004, which accounted for 60.0% of total net sales, increased by ¥37,427 million, or 5.8%, to ¥684,007 million
compared with ¥646,580 million for fiscal 2003. Sales in overseas markets are denominated primarily in the U.S. dollars and theEuros. Compared with fiscal 2003, the overall impact of exchange rate fluctuations on sales for fiscal 2004 was negative as the effectof the yen’s appreciation against the U.S. dollar outweighed the effect of the yen’s depreciation against the Euro. The net negative
impact on sales amounted to approximately ¥42,700 million. If the foreign exchange rates prevailing in fiscal 2003 were applied toforeign currency-denominated sales for fiscal 2004, consolidated net sales for fiscal 2004 would have increased by 10.6% from fiscal
2003, compared with the increase of 6.6% actually recorded for fiscal 2004. Kyocera’s sales in the U.S. for fiscal 2004 declined 5.1 %compared with fiscal 2003. The effect of the yen’s appreciation against the U.S. dollar depressed Kyocera’s sales for fiscal 2004 by
approximately ¥37,800 million compared with fiscal 2003, and particularly sales from the Electronic Device Group in the U.S. also
declined. Kyocera’s sales in Asia for fiscal 2004 increased by 8.9% compared with fiscal 2003. This increase reflected high demand
for the Electronic Device Group and Kyocera’s other components business due to brisk production activities of mobile phonehandsets and computer-related equipment. Kyocera’s sales in Europe for fiscal 2004 increased by 8.8% compared with fiscal 2003,
due primarily to growth in demand for photovoltaic modules used in solar power generating systems, particularly in Germany, and tohigher sales of printers and digital MFPs. The effect of the yen’s depreciation against the Euro also had a positive impact on sales forfiscal 2004 of approximately ¥9,800 million.
Sales in Japan for fiscal 2003, which accounted for 39.6% of total sales, increased by 3.6% compared with fiscal 2002. This was due
primarily to growing sales in CDMA mobile handsets with a built-in camera and fine ceramic parts for LCD projectors. Sales inoverseas markets for fiscal 2003, which accounted for 60.4% of total sales, increased by 3.3% compared with fiscal 2002, due mainly
to strong demand for information equipment, such as copiers and printers, and for telecommunications equipment, in particular, PHSrelated products. Sales in the U.S. for fiscal 2003 decreased by 8.6%, due mainly to a decrease in sales of optical communications
components such as ceramic packages and optical fiber connector components. Sales in Asia for fiscal 2003, increased by 20.2%
compared with fiscal 2002. Products of the Electronic Device Group and telecommunications equipment such as CDMA handsets andPHS-related products mainly contributed to expanded sales in this region. Sales in Europe for fiscal 2003 increased by 2.0%, due
mainly to sales growth of information equipment including printers and copiers.
- 43 -

Cost of sales and gross profit
In fiscal 2004, cost of sales increased by ¥63,966 million, or 8.0%, to ¥860,224 million from ¥796,258 million in fiscal 2003.
Raw material costs increased by ¥74,797 million in fiscal 2004 compared with fiscal 2003. This mainly reflected increased sales andproduction activities of telecommunications equipment and higher production levels for digital cameras, a write-down amounted to¥10,351 million of current inventories of tantalum materials and purchase commitments based on long-term contracts at AVX, andthe effects of the new consolidation of Kinseki and KST.
Subcontractor costs increased by ¥7,452 million in fiscal 2004, principally as a result of increased production activities oftelecommunications and information equipment and fine ceramic parts. Subcontractor costs also increased due to an expansion ofoutsourcing processes related to software development programs.
Other cost of sales increased by ¥18,564 million in fiscal 2004. This reflected increased royalty payments attributable to higher salesof telecommunications and information equipment, an increase in reserves for product warranty to take account of higher returns with
telecommunications equipment in particular and increased purchases of consumables related to higher production volumes of fineceramic parts and telecommunications equipment as well as the effects of the consolidation of Kinseki and KST. In addition, theexcess accrual of ¥2,284 million was reversed as a reduction of other cost of sales to account for the difference between accrued
litigation expenses following a settlement of LaPine litigation and the cash settlement.
Depreciation and amortization decreased by ¥2,510 million as a result of lower capital expenditures in recent years and the effects of
the yen’s appreciation against the U.S. dollar.
The transfer of the substitutional portion of Employee Pension Funds (“EPF”) of Kyocera Corporation and KMC to the Japanese
government resulted in a one-time amortization of unrecognized actuarial losses and a recognition of the difference between projected
benefit obligation and accumulated benefit obligation, which represented an increase in labor costs totaling ¥13,735 million.
Furthermore, the withdrawal from EPF at Kyocera Chemical also resulted in a reduction of labor costs of ¥2,821 million.
As a result, gross profit increased by ¥7,078 million, or 2.6%, in fiscal 2004 to ¥280,590 million from ¥273,512 million in fiscal
2003.The gross profit ratio decreased by 1.0 point from 25.6% to 24.6%.
SG&A expenses and profit from operations
Selling, general and administrative (SG&A) expenses in fiscal 2004 decreased by ¥18,496 million, or 9.7%, to ¥171,628 million
compared with ¥190,124 million in fiscal 2003.
This reflected an increase in advertising expenses due to expand sales of telecommunications and information equipment coupledwith higher sales commissions and service expenses associated with increased sales volumes, plus the effects of the consolidation ofKinseki and KST. Restructuring charges at AVX of ¥2,975 million related to the closure of overseas ferrite manufacturing facilities
and headcount reductions also resulted in an increase in SG&A expenses in fiscal 2004.
- 44 -

The transfer of the substitutional portion of EPF of Kyocera Corporation and KMC to the Japanese government resulted in a one-time
amortization of unrecognized actuarial losses and a recognition of the difference between projected benefit obligation andaccumulated benefit obligation, which represented an increase in labor costs totaling ¥5,843 million. In addition, the difference
between accumulated benefit obligation for a substitutional portion of EPF and the related government-specified portion of plan
assets of EPF was recorded as a reduction of SG&A expenses of ¥38,495 million. Furthermore, the withdrawal from EPF at Kyocera
Chemical resulted in a deduction of labor costs of ¥3,132 million.
The substantial reductions associated with the changes in EPF resulted in a significant decrease in SG&A expenses in fiscal 2004,
despite an increase in net sales. A proportion of SG&A expenses to net sales fell by 2.8 points to 15.0% in fiscal 2004 compared withthat of 17.8% in fiscal 2003. As a result, profit from operations increased by ¥25,574 million, or 30.7%, to ¥108,962 million
compared with ¥83,388 million in fiscal 2003.
Interest and dividend income
Interest and dividend income in fiscal 2004 decreased by ¥311 million, or 6.0%, to ¥4,883 million compared with ¥5,194 million in
fiscal 2003. Kyocera has an investment policy ensuring security and liquidity.
Interest expense
Interest expense in fiscal 2004 decreased by ¥146 million, or 10.2%, to ¥1,286 million compared with ¥1,432 million in fiscal 2003.
A decrease in foreign currency-denominated borrowings, which are typically at higher interest rates than yen-denominatedborrowings, was more than offset by higher interest expense due to the consolidation of Kinseki.
Foreign currency translation
During fiscal 2004 the yen appreciated by ¥9, or 7.4%, against the U.S. dollar and depreciated by ¥12, or 9.9%, against the Euro
compared with fiscal 2003, respectively. The net effect of foreign currency fluctuations was a loss of ¥1,546 million, as a result of theyen being worth 11.7% more against the U.S. dollar at March 31, 2004 compared with at March 31, 2003. This principally resulted inlosses of KMC arising from the translation of trade receivables denominated in foreign currencies.
Kyocera typically enters into forward exchange contracts to minimize currency exchange risks on foreign currency denominatedreceivables and payables. (Payables are usually in small amounts.) It has no significant unhedged monetary assets, liabilities or firm
contract-related commitments denominated in foreign currencies other than restricted cash, certain time deposits and the functional
currencies of Kyocera’s overseas operations. Kyocera confines its use of derivative financial instruments to the hedging of its foreignexchange exposures, and does not utilize derivative transactions for trading purposes.
Gains and losses from investments
Kyocera’s equity in earnings of affiliates and unconsolidated subsidiaries in fiscal 2004 was derived mainly from interests in Taito
Corporation (Taito), Kinseki, S.K. TELETECH CO., Ltd. (SKTT). Earnings on equity-method investments amounted to ¥2,575
million, a fall of ¥517 million, or 16.7%, compared with ¥3,092 million in fiscal 2003.
Kyocera Corporation owns a 36.02% interest in Taito, which is the major affiliate and operates in electronic amusement business.
Taito’s sales of game arcades in fiscal 2004 increased compared with fiscal 2003. Sales of coin-operated game machine also increased
due to the launch of new models. Although Taito’s net sales and income before income taxes in fiscal 2004 increased compared tofiscal 2003, the net income decreased compared to fiscal 2003. This is because the effective income tax rate was higher in fiscal 2004
as carryforward losses were utilized in fiscal 2003, and Taito applied the regular effective tax rate in fiscal 2004. As a result,
Kyocera’s equity in earnings of Taito decreased.
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Kyocera Corporation owned a 28.09% interest in Kinseki, Limited. On August 1, 2003, Kyocera Corporation made Kinseki, Limited
a wholly-owned subsidiary through exchange of shares. Kyocera’s equity in earnings of Kinseki, Limited in fiscal 2004 was for fourmonths (from April to July). For detailed information of this business combination, see Note 3 to The Consolidated Financial
Statements included in this Form 20-F.
Kyocera Corporation owned a 27.48% interest in SKTT. Kyocera’s equity in earnings of SKTT decreased compared to fiscal 2003.
On March 26, 2004, Kyocera sold all of its shares of SKTT. As a result, Kyocera recorded the gain of ¥491 million.
In fiscal 2004, losses on devaluation of investment securities amounted to ¥1,030 million, a decrease of ¥1,853 million compared with
¥2,883 million in fiscal 2003. Losses recorded in fiscal 2004 was due mainly to management’s estimation that certain non-publiccompanies in which Kyocera invested would need considerable periods to show profitability in their operating activities. Losses
recorded in fiscal 2003 were attributable mainly to a prolonged decline in the market value of Japanese bank stock held by Kyocera
Corporation.
Income before income taxes
In fiscal 2004, increases in operating profits in the Fine Ceramic Parts Group, the Semiconductor Parts Group, the Applied Ceramic
Products Group and the Information Equipment Group outweighed the negative effects of a decline in operating profit in theElectronic Device Group, primarily due to one-time charges related to inventory write-downs and restructuring activities at AVX, andlower operating profits in the Telecommunications Equipment Group and the Optical Equipment Group. Kyocera also recorded asettlement gain of ¥18,917 million for a substitutional portion of EPF as mentioned in the descriptions of cost of sales and SG&A.
Income before income taxes increased by ¥39,003 million, or 51.3%, to ¥115,040 million compared with ¥76,037 million in fiscal
2003.
As with net sales, the overall impact of exchange rate fluctuations on income before income taxes in fiscal 2004 was negative as theeffect of the yen’s appreciation against the U.S. dollar outweighed the effect of the yen’s depreciation against the Euro. The net
impact on income before income taxes amounted to approximately ¥3,900 million. If the foreign exchange rates prevailing in fiscal
2003 were applied, consolidated income before income taxes would have shown a year-on-year increase of 56.5%, compared with the
51.3% increase actually recorded.
A detailed analysis and discussion about Kyocera’s income before income taxes, and operating profit by reporting segments are as
follows.
Operating profit by segment
The following table shows a breakdown of Kyocera’s consolidated income before income taxes, and operating profit for fiscal 2003
and fiscal 2004 for Kyocera’s eight reporting segments: the Fine Ceramic Parts Group, the Semiconductor Parts Group, the Applied
Ceramic Products Group, the Electronic Device Group, the Telecommunications Equipment Group, the Information Equipment
Group, the Optical Equipment Group and Others.
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Years ended March 31,(Yen in millions)
2003

2004

¥ 9,674
3,738
5,385
11,816
18,31423,351(1,645)
7,412¥ 10,239
10,603
10,297
5,047
5,082
31,986(5,826)
9,683

78,045

77,111

Corporate(5,619)34,871Equity in earnings of affiliates and unconsolidated subsidiaries
Adjustments and eliminations

3,092
519

2,575
483

¥76,037¥115,040

Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersIncome before income taxes

Commencing in fiscal 2004, operating profit of the Precision Machine Division of Kyocera Corporation, previously included in“Others” was changed to “Corporate.” Previously published net sales and operating profits of such reporting segments for fiscal 2003
have been reclassified accordingly.
Fine Ceramic Parts GroupOperating profit in this segment increased by ¥ 565 million, or 5.8%, to ¥ 10,239 million compared with ¥ 9,674 million in fiscal
2003, due primarily to higher sales of components used in semiconductor and LCD fabrication equipment and sapphire substrates.
Semiconductor Parts GroupOperating profit in this segment increased substantially by ¥ 6,865 million, or 183.7%, to ¥ 10,603 million compared with ¥ 3,738
million in 2003, due to expanded production efficiencies of SMD ceramic packages in China accompanied with stable growth indemand. Increased sales and higher manufacturing productivity also improved the profitability of organic material components andoptical communications components and packages.
Applied Ceramic Products GroupOperating profit in this segment increased by ¥ 4,912 million, or 91.2%, to ¥ 10,297 million compared with ¥ 5,385 million in fiscal
2003, due primarily to improved production yields with solar power generation systems and reduced manufacturing costs for cutting
tools through higher levels of China-based production.
Electronic Device GroupOperating profit in this segment decreased by ¥6,769 million, or 57.3%, to ¥5,047 million compared with ¥11,816 million in fiscal
2003. The decline in profits was due primarily to an operating loss recorded at AVX for fiscal 2004. AVX wrote down ¥10,351
million of current inventories of tantalum materials and purchase commitments based on long-term contracts, and also booked a
restructuring charge of ¥2,975 million associated with the closure of its overseas ferrite manufacturing facilities and headcountreductions. As a result, operating loss in fiscal 2004 at AVX increased materially compared with fiscal 2003.
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Elsewhere, in the first half of fiscal 2004, Kyocera Corporation transferred its manufacturing lines for ceramic capacitors from the
Kitami Plant in Hokkaido, Japan to Shanghai, China and to other plants in Japan. However, through internal efforts toward improved
yields and higher productivity of ceramic capacitors contributed to increased profits remarkably in the second half of fiscal 2004.
Other factors contributing to higher segment profits included positive effects from increased sales of connectors and substantially
improved profitability with thin-film products as LCD sector. In addition, increased demand for optical low-pass filters used in DSCs
helped Kinseki Limited post markedly higher profit margins compared with fiscal 2003.
Telecommunications Equipment GroupOperating profit in this segment decreased by ¥ 13,232 million, or 72.3%, to ¥ 5,082 million compared with ¥ 18,314 million in fiscal
2003, due primarily to declined sales of mobile phone handsets in Japan and China and to price erosion of PHS-related products.
Compared with fiscal 2003, KWC reduced its operating loss as improved quality control systems and higher sales started to feedthrough into increased profits from the second half of fiscal 2004.
Information Equipment GroupOperating profit in this segment increased by ¥ 8,635 million, or 37.0%, to ¥ 31,986 million compared with ¥ 23,351 million in fiscal
2003. This was due primarily to strong sales of printers and digital MFPs combined with reduced costs arising from increased Chinabased production and an ongoing shift toward the use of common engines across printer and digital MFP product ranges.
Optical Equipment GroupOperating loss in this segment increased by ¥ 4,181 million to ¥ 5,826 million compared with operating loss of ¥ 1,645 million in
fiscal 2003. Poor sales of conventional still cameras combined with development costs for the “R-TUNE” engine and higher
promotional costs for DSCs resulted in an operating loss.
OthersOperating profit in this segment increased by ¥ 2,271 million, or 30.6%, to ¥ 9,683 million compared with ¥ 7,412 million in fiscal
2003. This was due primarily to increased earnings at KCCS, which arose from improved development efficiency in information
systems operations as well as shortened installation times and cost reductions in the telecommunications engineering business.
Corporate
Corporate gains 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 litigation expenses or losses on devaluation of investment securities. In fiscal 2004, Kyocera recorded
Corporate gain of ¥34,871 million. Compared with Corporate loss of ¥5,619 million recorded in fiscal 2003, Corporate gain improvedby ¥40,490 million. This was partly due to a decrease in expenses associated with the provision of management-related services by
Kyocera’s head office, and the absence of losses of ¥8,042 million on devaluation of investment in Japanese banks and Kinseki
following a recovery of share prices on Japanese stock markets in fiscal 2004. This increase in Corporate gain also included special
items recorded in fiscal 2004, such as ¥18,917 million of a settlement gain for a substitutional portion of EPF at Kyocera Corporation
and KMC, ¥5,953 million of a withdrawal gain of EPF at Kyocera Chemical, and ¥2,284 million of a gain on reversal of excess
accruals resulting from a settlement of the LaPine Case.
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TaxesCurrent and deferred income taxes in fiscal 2004 increased by ¥17,530 million, or 53.5%, to ¥50,310 million compared with ¥32,780
million in fiscal 2003. The effective tax rate of 43.7% in fiscal 2004 was 0.6 points higher than that of 43.1% in fiscal 2003. This wasdue mainly to an increase in pre-tax losses, recorded at certain foreign subsidiaries taxed at lower rates than Japanese statutory tax
rate of 42.0%, increased, and valuation allowances on deferred tax assets were also recorded at those subsidiaries.
Minority interests
Minority interests were principally related to AVX, which accounted for an approximately 30% minority ownership interest in fiscal
2004. Minority interests increased by ¥3,192 million to ¥3,356 million compared with ¥164 million in fiscal 2003. This was due toincreased losses incurred by one-time charges related to a write-down of inventories and restructuring activities.
Business Combinations and Investments
Investment in WILLCOM, INC. in fiscal 2005
On June 21, 2004, the Carlyle Group (Carlyle), Kyocera, KDDI and DDI Pocket reached an agreement that a consortium of Carlyle,
Kyocera and KDDI would acquire the business of DDI Pocket, a subsidiary of KDDI. Under the agreement, the company thatsucceeds DDI Pocket’s business, the name of which was changed to WILLCOM in February 2005, was invested 30% by Kyocera. In
cooperation with WILLCOM, 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. (Kobe Steel) to merge the medical material operations ofboth companies into a successor company, Japan Medical Materials Corporation, which was established on September 1, 2004. As a
dedicated manufacturer of medical materials, the successor company is expected to benefit from the integration of the specialized
expertise of Kyocera and Kobe Steel in material processing technologies, while maximizing synergies by integrating development,
production and marketing divisions. It also seeks to expand its business worldwide.
Investment in Kinseki, Limited in Fiscal 2004
On August 1, 2003, Kyocera Corporation made Kinseki, Limited, which is in the business of manufacturing crystal components andwhich had been a 28.09%-owned subsidiary, its wholly-owned subsidiary through a share exchange. Under the share exchange, a totalof 2,529,154 shares of common stock of Kyocera Corporation were allocated to Kinseki, Limited’s minority shareholders in return for
the remaining 25,291,542 shares (71.91 %) of Kinseki, Limited’s shares not previously owned by Kyocera Corporation. On April 1,
2004, Kinseki changed its name to “Kyocera Kinseki Corporation.”
Investment in Kyocera SLC Technologies Corporation in Fiscal 2004
On June 30, 2003, in order to reinforce the business of organic circuit boards, Kyocera Corporation and IBM Japan, Ltd. reached anagreement for the transfer to Kyocera Corporation from IBM Japan, Ltd. of the SLC (Surface Laminar Circuitry: laminatedhighdensity printed circuit board) business of Yasu Site of IBM Japan, Ltd., and have executed a business transfer agreement.
Kyocera Corporation acquired this business in exchange for cash of ¥8,594 million. Kyocera Corporation incorporated a new
successor company, “Kyocera SLC Technologies Corporation”, on August 12, 2003, which commenced operation on September 1,
2003.
- 49 -

Investment in Kyocera Chemical Corporation in Fiscal 2003
On May 16, 2002, Kyocera Corporation and Toshiba Chemical Corporation, which manufactures and sells electronic parts andmaterials, reached an agreement whereby Kyocera Corporation would make Toshiba Chemical Corporation a wholly-owned
subsidiary of Kyocera Corporation through a share exchange. Kyocera entered into this transaction in order to reinforce the businessof electronic parts and materials held by Toshiba Chemical Corporation and the Electronic Device Group and other divisions ofKyocera. On August 1, 2002, Kyocera Corporation issued 990,990 shares of common stock of Kyocera Corporation in exchange for
45,045,000 shares (100%) of Toshiba Chemical Corporation held by its shareholders. On the same day, Toshiba Chemical
Corporation was renamed as Kyocera Chemical Corporation.
Restructuring Activities
In fiscal 2005, Kyocera recorded ¥7,369 million ($69 million) of restructuring costs which consisted of ¥6,866 million ($64 million)
related to the structural reform of the Optical Equipment Group and ¥503 million ($5 million) related to the reform of theTelecommunications Equipment Group.
Structural reform in the Optical Equipment Group was focused on downsizing the camera business. Since the acquisition of YashicaCo., Ltd. in 1983, Kyocera has advanced its optical instruments 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 instruments business was unable to achieve sufficient cost reductions to counterthe ensuing 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 decided to significantly downsize the Optical Equipment Group in fiscal 2005.
As part of the program to scale back this business, Kyocera decided to close two overseas sales companies, Yashica Kyocera GmbHGroup and Kyocera Optics Inc., during fiscal 2005. Costs associated with the closure of two overseas sales companies amounted to¥3,285 million ($31 million), including expenses mainly related to headcount reductions.
In addition to the closure of overseas sales companies, a further ¥3,581 million ($33 million) in restructuring losses in fiscal 2005 wasspent to downsize the domestic camera business. This included the implementation of sales promotions to reduce inventory.
Kyocera also recorded ¥503 million ($5 million) as restructuring costs in connection with transferring production in the
Telecommunications Equipment Group. This amount was primarily used on the personnel reduction at KWC.
On May 5, 2005 (Japan Time), Kyocera decided to outsource the manufacture of mobile phone handsets of KWC, a U.S. subsidiary,
and to sell KWC’s manufacturing equipment and inventories to Flextronics International Ltd. (Flextronics), a leading provider ofelectronics manufacturing services. KWC intends to reduce its manufacturing costs significantly and to improve its profitability
rapidly by taking cost-down activities upon its procurements of parts and materials through a strong promotion of the outsourcing to
Flextronics, and by making fixed costs related to the manufacturing of mobile phone handsets into variable costs. KWC will alsoenhance its business operation through specializing in the research, development, sales and marketing of mobile phone handsets.
- 50 -

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 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 ($228 million) and that resultant
additional tax, including local taxes, etc., amounted to ¥12,748 million ($119 million). Kyocera recognized this amount of ¥12,748
million ($119 million) as current income taxes in its consolidated statement of income for the year ended March 31, 2005, and madecash payments of ¥8,631 million ($81 million) on March 29, 2005 and ¥4,117 million ($38 million) on April 28, 2005.
On May 24, 2005, Kyocera Corporation filed a complaint against tax assessment based on transfer pricing adjustments with the Osaka
Regional Tax Bureau. Although the final resolution of the proposed tax assessment is not certain, management believes the ultimate
disposition of this matter will not have a material impact on the results of operations.
Settlement of LaPine Case in Fiscal 2004
On September 1, 1994, the International Chamber of Commerce issued its award with respect to the arbitration between Kyocera
Corporation and LaPine Technology Corporation (LTC), Prudential-Bache Trade Corporation (PBTC) (presently renamed PrudentialBache Trade Services, Inc.), et al. for the alleged breach of an agreement by Kyocera Corporation in connection with thereorganization of LTC. The award ordered Kyocera Corporation to pay to LTC and PBTC as damages, approximately $257 million,
including interest, arbitration costs and attorney’s fees. Kyocera Corporation filed a motion to vacate, modify and correct the award in
the U.S. District Court for the Northern District of California pursuant to an agreement between the parties providing for broad
judicial examination of arbitration awards.
With respect to this case, Kyocera Corporation subsequently appealed to the Ninth Circuit Court of Appeals and then to the Supreme
Court of the United States asserting the validity of the provision for broad judicial examination of arbitration awards. On December
22, 2003, Kyocera Corporation reached an agreement with Prudential Securities Group, Inc., Prudential Equity Group, Inc., LaPine
Technology Corporation and LaPine Holding Company to settle all claims in pending litigation between the parties. Kyocera
Corporation has paid $331.5 million pursuant to this settlement and recorded ¥35,454 million as cash payment in its consolidated
financial statements in fiscal 2004.
Kyocera had recognized a provision for accrued litigation expenses as cost of sales in fiscal 2004. The excess accrual of ¥2,284
million was reversed as a reduction of cost of sales to account for the difference between accrued litigation expenses and the cash
settlement in fiscal 2004.
Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities in Fiscal 2004
In fiscal 2004, Kyocera Corporation and KMC transferred to the Japanese government the substitutional portion of EPF liabilities andthe related government-specified portion of plan assets of EPF upon approval by the Ministry of the Health, Labor and Welfare in
Japan.
Kyocera Corporation and KMC adopted Emerging Issues Task Force (EITF) Issue No. 03-02, “Accounting for the Transfer to theJapanese Government of the Substitutional Portion of Employee Pension Fund Liabilities” for the settlement process of thesubstitutional portion of EPF, and recorded ¥18,917 million of a settlement gain for the substitutional portion of EPF. Detailed
information regarding this transfer process of and settlement gain for the substitutional portion of EPF is described in Note 10 to The
Consolidated Financial Statements included in this Form 20-F.
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.
- 51 -

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.
A substantial portion of allowances for doubtful accounts is recorded with respect to finance receivables of KLC in the Others
segment, which provides credit financing and commercial leasing services. Based on the factors discussed above, KLC sets estimatedrecovery percentages that are applied to the amount of receivables to determine future cash flow. On a case-by-case basis,
adjustments are made to the amount of allowances so determined in light of particular customers’ circumstances. KLC continuously
monitors the correlation between the allowances so determined and the actual loss experienced, and makes an appropriate
modification to the schedule of percentages for determining allowance amounts.
At March 31, 2005, KLC had ¥14,919 million ($139 million) of allowances for doubtful accounts against ¥122,084 million ($1,141
million) of finance receivables, which comprise over 70% of Kyocera’s allowances for doubtful accounts.
Inventory valuation
Kyocera estimates the amount of write-downs required to properly value inventory. Write-downs are provided for excess, slow
moving and obsolete inventory as well as valuation losses required to adjust recorded cost to its market value. Kyocera generally
considers all inventory aged over 12 months to be slow-moving or obsolete. Kyocera also records inventory write-downs based on its
projections of future demand, market conditions and related management-led initiatives even though the age of corresponding
inventory is shorter than 12 months.
In fiscal 2005, as a result of continuous strict controls and adjustments on inventories, Kyocera recognized inventory write-downs of¥10,405 million ($97 million). The amounts of these inventory write-downs by reporting segments appear in Note 18 to The
Consolidated Financial Statements included in this Form 20-F. A large portion of these inventory write-downs arose from inventories
of mobile handsets, information equipment and optical instruments. These products were subject to a decrease in demand and a
decline in price, or became obsolete because of their short product lives. In the optical instruments business and thetelecommunications equipment business, Kyocera implemented structural reforms to improve future profitability and recognizedinventory write-downs or losses on disposal based on business plans.
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.
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Impairment of securities and investments
Kyocera records impairment charges for debt and equity securities and investments in affiliates and unconsolidated subsidiaries
accounted for by the equity method when it believes that the decline of 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, theduration 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.
In fiscal 2005, Kyocera recognized losses on impairment of investment securities amounting to ¥132 million ($1 million), which was
attributable mainly to management’s estimation that certain non-public companies in which Kyocera invested would needconsiderable 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, 2005, the unrealized gain of ¥55,056 million ($515 million) on KDDI shares held by Kyocera
Corporation decreased compared with that of ¥87,125 million at March 31, 2004 reflecting a fluctuation of the market price of theKDDI shares during fiscal 2005. 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 Form 20-F.
Impairment of long-lived assets
Kyocera has adopted Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal ofLong-Lived Assets.” This requires Kyocera to review 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 theamount by which the carrying value exceeds the fair value of the long-lived assets and intangible assets with definite useful lives. In
fiscal 2005, Kyocera did not recognize any losses on impairment of long-lived assets or intangible assets with definite useful lives.
Goodwill and other intangible assets
Kyocera has adopted SFAS No.142, “Goodwill and Other Intangible Assets.” This requires that, rather 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. The impairment review of goodwill and other intangible assets conducted by
Kyocera in fiscal 2003 indicated that there was an impairment loss on goodwill within the Applied Ceramic Products Group related tothe acquisition of Kyocera Tycom Corporation and its consolidated subsidiaries (KTC), a U.S. subsidiary, which manufactures andsells micro drills for the information technology industry. A consolidated impairment loss of ¥3,175 million was booked as acumulative effect of change in accounting principle. With the assistance of a third-party appraiser, Kyocera arrived at the implied fairvalue of goodwill using the discounted cash flow methodology, taking into the account sluggishness in KTC’s markets. Kyocera also
undertook a review for impairment of goodwill and other intangible assets in fiscal 2005. The results of this review revealed no
indications of any impairment in the carrying values of such assets.
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, 2005, deferred tax assets
amounted to ¥78,819 million ($737 million), which Kyocera considers will reasonably be realized in the future compared with theamounts of taxable income and income taxes in fiscal 2005. In fiscal 2005, a U.S. subsidiary recorded a valuation allowance for its
deferred tax assets based on expected recoverability of those assets considering current operating conditions.
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Benefit plans
Projected benefit obligations and plan assets are determined on an actuarial basis and are significantly affected by the assumptions
used in their calculation, such as the discount rates, the expected long-term rate of return on plan assets, the rate of increase incompensation levels and other assumptions. Kyocera determines the discount rate by referencing the yield on high quality fixedincome 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 andadministrative expenses in the consolidated statement of income. An increase in accumulated benefit obligations may also require
Kyocera to record additional minimum pension liability in accumulated other comprehensive income.
In fiscal 2004, Kyocera Corporation and KMC transferred to the Japanese government the substitutional portion of EPF liabilities andthe related government-specified portion of plan assets of EPF. Kyocera Corporation and KMC adopted EITF Issue No. 03-02,“Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities” for thesettlement process of the substitutional portion of EPF, and recorded ¥18,917 million of a settlement gain for the substitutional
portion of EPF. As a result of this settlement, Kyocera’s projected benefit obligation decreased by ¥71,243 million and plan assets
decreased by ¥29,493 million, respectively. This decrease in projected benefit obligation is particularly considered to lead to a
reduction of a potential negative impact on Kyocera’s financial conditions and results of operations. Detailed information regarding
this transfer process of and settlement gain for the substitutional portion of EPF is described in Note 10 to The Consolidated Financial
Statements included in this Form 20-F.
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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 Kyocera Corporation’s benefit plan which account for a significant portion of
Kyocera’s projected benefit obligations and net periodic pension costs.
Yen in millions

Discount rates
0.5% decrease
0.5% increase
Expected rate of return on plan assets
0.5% decrease
0.5% increase

Effect on pre-tax income
for the year ending
March 31, 2006

Effect on PBO
as of March 31, 2005

(645)
616

6,929
(6,344)

(505)
505

—
—

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.
Revenue recognition
Kyocera sells various types of products, including fine ceramic parts, semiconductor parts, and telecommunication equipment.
Kyocera recognizes revenue upon completion of the earnings process, which occurs when products are shipped or delivered to thecustomer in accordance with the terms of an agreement of sale, there is a fixed or determinable selling price, title and risk of loss havebeen transferred, and collectibility is reasonably assured. These conditions are satisfied at the time of delivery to customers indomestic 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
At the time of sale, Kyocera accrues a product warranty liability for claims under warranties relating to the products that have beensold. Kyocera records an estimated based on its historical repair experience.
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Revenue from financial services
In addition to the tangible products as discussed above, Kyocera also provides certain services, primarily financial services provided
by KLC, a wholly-owned subsidiary of Kyocera. Revenue from direct financing leases is recognized over the term of the lease, andamortization of unearned lease income is recognized using the interest method. Interest income on installment loans is recognized onan accrual basis.
New Accounting Standards
In March 2004, EITF concluded its discussion of Issue No. 03-01, “The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments.” EITF Issue No. 03-01 provides accounting guidance regarding the determination of when an
impairment (i.e. fair value is less than carrying value) of debt and marketable equity securities and investments accounted for under
the cost method should be considered other-than-temporary and recognized in earnings. EITF Issue No. 03-01 also requires annual
disclosures of certain quantitative and qualitative factors of debt and marketable equity securities classified as available-for-sale orheld-to-maturity that are in an unrealized loss position at the balance sheet date, but for which an other-than-temporary impairment
has not been recognized. The disclosure requirements of EITF Issue No. 03-01 were effective December 31, 2003. The accounting
guidance of EITF Issue No. 03-01 was effective in reporting periods beginning after June 15, 2004. The adoption of this statement did
not have a material impact on Kyocera’s consolidated results of operations and financial position.
In November 2004, the 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 be recognized 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 is effective forinventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 will not have a material
impact on Kyocera’s consolidated results of operations and financial position.
In December 2004, the FASB issued SFAS No. 123 (revised 2004) (SFAS No. 123R), “Share-Based Payments.” This statement is arevision 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 allshare-based payment transactions be recognized in the financial statements. SFAS No. 123R establishes fair value as themeasurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value based
measurement method in accounting for share-based payment transactions with employees except for equity instruments held byemployee 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 Staff postponed implementation of
SFAS No. 123R and Kyocera plans to adopt SFAS No. 123R effective fiscal 2007. Kyocera has not completed its evaluation of theeffect that SFAS No. 123R will have, but believes that the effect will be consistent with the pro forma disclosures. Detailed
information is described in Note 1: “Stock-Based Compensation” included in this Form 20-F.
In December 2004, the FASB issued SFAS No. 153, “Exchanges of Non-monetary Assets - An Amendment of APB Opinion No.
29.” SFAS No. 153 eliminates the exception to fair value accounting for exchanges of similar productive assets contained in APB
Opinion No. 29 and replaces it with a general exception for exchange transactions that do not have commercial substance. The
exception in APB Opinion No. 29 required certain non-monetary asset exchanges to be recorded on a carryover basis with nogain/loss recognition. Under SFAS No. 153, exchange transactions with commercial substance are required to be accounted for at fairvalue with gain/loss recognition on assets surrendered in exchange transactions. Kyocera will be required to adopt SFAS No. 153 on
July 1, 2005, and believes the adoption of SFAS No. 153 will not have a material impact on Kyocera’s consolidated results ofoperations and financial position.
In March 2005, the FASB issued Interpretation (FIN) No. 47, “Accounting for Conditional Asset Retirement Obligations-an
interpretation of SFAS No. 143.” This Interpretation clarifies use of the term conditional asset retirement obligation in SFAS No. 143,
“Accounting for Asset Retirement Obligation.” FIN No. 47 requires recognition of a liability for the fair value of a conditional asset
retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN No. 47 is effective no later than theend of fiscal years ending after December 15, 2005. Kyocera is currently evaluating the impact of FIN No. 47 on its consolidated
results of operations and financial position.
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In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20
and SFAS 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 reporting of 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 requiredthat most voluntary changes in accounting principle be recognized by including in net income of the period of the change thecumulative 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 is effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005. The impact of SFAS No. 154 will depend on the changes, if any, that
Kyocera may identify and record in a future period.
B. Liquidity and Capital Resources
Capital resources
Fiscal 2005 compared with Fiscal 2004
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, 2005, Kyocera’s short-term borrowings and long-term debt including current portion totaled ¥144,164
million ($1,347 million). The ratio to total assets of 8.3% was still at a low level of dependence. Most borrowings were denominatedin yen but certain borrowings were denominated in foreign currencies, such as the U.S. dollar. Details of these borrowings aredescribed in Item 5 F “Tabular Disclosure of Contractual obligations.”
At March 31, 2005, Kyocera’s working capital totaled ¥551,218 million ($5,152 million), a decrease of ¥5,839 million ($55 million),or 1.0%, from ¥557,057 million at March 31, 2004. This was due mainly to decreases in cash and cash equivalents as a result ofpurchases of government bonds and negotiable certificate of deposits in consideration of the current and future financial position inaccordance with our investment policy, and in notes and accounts payable as a result of decreases of orders and production in the
Telecommunications Equipment Group. Cash from operations has generally been sufficient for Kyocera to fund its working capitalrequirements and to fulfill its future capital expenditures, debt repayments and other obligations. Kyocera’s net cash provided byoperating activities in fiscal 2005 was ¥145,523 million ($1,360 million) and cash and cash equivalents at March 31, 2005 was¥310,592 million ($2,903 million). In Kyocera’s opinion, working capital is sufficient for present and predictable future requirements.
Capital expenditures in fiscal 2005 increased by ¥8,239 million ($77 million), or 15.0%, to ¥63,176 million ($590 million) from¥54,937 million in fiscal 2004. R&D expenditures increased by ¥7,768 million ($73 million), or 16.7%, to ¥54,398 million ($508
million) from ¥46,630 million in fiscal 2004. Nearly all capital and R&D expenditures were funded using cash in hand or cash
generated by operations.
During fiscal 2006, Kyocera projects total capital expenditures to be approximately ¥100,000 million ($935 million). Kyocera plans
to invest in new factories and facilities mainly to expand business of organic packages, ceramic parts for LCD fabrication equipment,
solar cells and modules, and LCDs for industrial equipment, and to commercialize the organic electro luminescence display business.
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For fiscal 2006, Kyocera projects total R&D expenditures to be approximately ¥53,000 million ($495 million). Kyocera believes that
Kyocera needs to invest its resources continuously in the development of new business areas and improved technology in order tocreate new products, commercialize advanced technologies and thereby secure future earnings streams.
Kyocera Corporation undertakes purchases of its common stock to facilitate the implementation of flexible capital policies anddevelop its business in a dynamic manner in response to changes in the operating environment.
In fiscal 2005, Kyocera Corporation paid cash dividends totaling ¥11,249 million ($105 million), 60 yen (0.6 dollar) per share.
Kyocera Corporation received approval at the general meeting of shareholders held on June 28, 2005 for the payment of year-end
dividends totaling ¥9,374 million ($88 million), 50 yen (0.5 dollar) per share, on June 29, 2005 to all stockholders of record on March
31, 2005.
Kyocera believes cash in hand and cash from operations will be sufficient to fund all cash requirements outlined above, at least
through fiscal 2006. 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 ratio to assets of 67.3% at March 31, 2005, 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 Japanese 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.
Fiscal 2004 compared with Fiscal 2003
Kyocera’s primary source of short-term liquidity is cash generated by operations. Certain subsidiaries also generate capital in theform of loans from financial institutions. Details of these borrowings are described in Item 5.F “Tabular Disclosure of Contractual
Obligations” of this Form 20-F.
At March 31, 2004, Kyocera’s working capital totaled ¥557,057 million, an increase of ¥100,209 million from ¥456,848 million atMarch 31, 2003. This was due mainly to increases in trade accounts receivables of ¥27,833 million and in inventories of ¥14,038
million associated with higher levels of orders and net sales. Short-term finance receivables also increased by ¥39,299 million due totransfers from long-term finance receivables. Kyocera strives to maintain high liquidity and increase operating cash flows by reducing
inventories through shorter lead-times and by enhancing collection terms of trade receivables. 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.
Capital expenditures in fiscal 2004 increased by ¥14,323 million to ¥54,937 million from ¥40,614 million in fiscal 2003. R&D
expenditures decreased by ¥638 million to ¥46,630 million from ¥47,268 million in fiscal 2003. Nearly all capital and R&D
expenditures were funded using cash in hand or cash generated by operations.
During fiscal 2005, Kyocera expected cash demands for working capital and funds for capital expenditures required for the expansionof operations and projected total capital expenditures to be approximately ¥62,000 million. Since capacity utilization is already highin the Fine Ceramics and the Electronic Device Group operations, capital spending plans in fiscal 2005 include investments inadditional production capacity to respond to projected demand growth trends. In the Equipment Group operations, Kyocera aims toincrease its market share through investments in new mobile communications equipment. Kyocera also anticipates short-term cash
expenditures for the purchase of Kyocera Corporation’s common stock and the payment of dividends to stockholders.
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For fiscal 2005 Kyocera projected total R&D expenditures to be approximately ¥51,000 million. Details are given in the following
section, under “Research and Development, Patent and Licenses, and etc.”
Kyocera Corporation undertook purchases of its common stock to facilitate the implementation of flexible capital policies anddevelop the business in a dynamic manner in response to changes in the operating environment.
In fiscal 2004, Kyocera Corporation paid cash dividends totaling ¥11,174 million. Kyocera Corporation received approval at thegeneral meeting of shareholders held on June 25, 2004 for the payment of year-end dividends totaling ¥5,624 million on June 28,
2004 to all stockholders of record on March 31, 2004.
Cash flow
Fiscal 2005 compared with Fiscal 2004
Years ended March 31,(Yen in millions and U.S. dollars in thousands)

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

2004

2005

2005

¥ 62,575
29,581(20,422)361,132¥ 145,523(132,494)(67,344)
310,592$ 1,360,028(1,238,262)(629,383)
2,902,729

Net cash provided by operating activities in fiscal 2005 increased by ¥82,948 million ($775 million), or 132.6%, to ¥145,523 million($1,360 million) from ¥62,575 million in fiscal 2004. This was due to a significant decrease in receivables by collection, including
short-term finance receivables, although net income decreased by ¥22,178 million ($207 million), or 32.6%, to ¥45,908 million ($429
million) compared with fiscal 2004. KLC, which provides financial services, collected large-lot loans, and these collections resulted
in the decrease in receivables. In addition, due to the settlement regarding the LaPine Case of ¥35,454 million in fiscal 2004, net cash
provided by operating activities in fiscal 2005 increased compared with fiscal 2004. A decrease in notes and accounts payable due todecreases of production in the Telecommunications Equipment Group offset an increase in net cash provided by operating activities.
Net cash used in investing activities in fiscal 2005 increased by ¥162,075 million ($1,515 million) to ¥132,494 million ($1,238
million) from net cash provided by investing activities of ¥29,581 million in fiscal 2004. This was due mainly to increases inpurchases of government bonds and deposits of negotiable certificate of deposits in consideration of market trends and current andfuture financial position according to our investment policy. In addition, in fiscal 2005, there was no cash inflow from withdrawal ofrestricted cash for settlement regarding the LaPine Case.
Net cash used in financing activities in fiscal 2005 increased by ¥46,922 million ($439 million), or 229.8%, to ¥67,344 million ($629
million) from ¥20,422 million in fiscal 2004. This was due mainly to a decrease in proceeds from issuance of long-term debt and anincrease in repayments of long-term debt.
The yen’s depreciation against the U.S. dollar and Euro between March 31, 2004 and 2005 resulted in increases in cash and cash
equivalents of ¥3,775 million ($35 million).
At March 31, 2005, cash and cash equivalents totaled ¥310,592 million ($2,903 million). This represented a decrease of ¥50,540
million ($472 million), or 14.0%, from ¥361,132 million at March 31, 2004. 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 U.S. dollar.
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Fiscal 2004 compared with Fiscal 2003
Years ended March 31,(Yen in millions)

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

2003

2004

¥160,754(58,512)(74,662)
298,310¥ 62,575
29,581(20,422)361,132

Net cash provided by operating activities in fiscal 2004 decreased by ¥98,179 million to ¥62,575 million from ¥160,754 million in
fiscal 2003, due primarily to a net increase in receivables due to higher sales of cellular handsets at KWC and increased inventories at
KMC related to the receipt of large contract orders. In addition, Kyocera made a cash payment totaling ¥35,454 million in December
2003 related to the settlement of the LaPine case.
Net cash provided by investing activities in fiscal 2004 amounted to ¥29,581 million compared with net cash used in investing
activities of ¥58,512 million in fiscal 2003, reflecting increased sale and redemption of securities, which resulted in a cash inflow of¥77,487 million (a rise of ¥43,137 million compared with a corresponding cash inflow of ¥34,350 million in fiscal 2003) and thesettlement of the LaPine case, which resulted in a release of restricted cash totaling ¥52,983 million. Such increase was offset partly
by payments for purchases of property, plant and equipment totaling ¥58,869 million included capital expenditures within Kyocera’s
solar energy and information equipment businesses and investments to raise manufacturing productivity for fine ceramic parts andelectronic components.
Net cash used in financing activities in fiscal 2004 decreased by ¥54,240 million to ¥20,422 million from ¥74,662 million in fiscal
2003. This was due mainly to a significant fall in purchases of treasury stock from ¥42,010 million in fiscal 2003 to ¥33 million in
fiscal 2004.
At March 31, 2004, the yen’s appreciation against the U.S. dollar had a negative impact on cash and cash equivalents in the amount of¥8,912 million.
At March 31, 2004, cash and cash equivalents totaled ¥361,132 million. This represented an increase of ¥62,822 million from¥298,310 million at March 31, 2003.
Assets, liabilities and stockholders’ equity
Kyocera’s total assets at March 31, 2005 decreased by ¥49,239 million ($460 million), or 2.7%, to ¥1,745,519 million ($16,313
million), compared with ¥1,794,758 million at March 31, 2004. Cash and cash equivalents decreased by ¥50,540 million ($472
million), or 14.0%, to ¥310,592 million ($2,903 million), due mainly to purchases of government bonds and deposits with over 3
months original maturities.
Short-term investments increased by ¥31,083 million ($290 million), or 806.3%, to ¥34,938 million ($327 million), due mainly toincreases in deposits with over 3 months original maturities and bonds matured within one year which were reclassified fromsecurities and other investments.
Short-term and long-term finance receivables decreased by ¥51,837 million ($484 million), or 32.6%, to ¥107,228 million ($1,002
million), due mainly to collection of large-lot loans by Kyocera Leasing Co., Ltd. (KLC). Short-term and long-term financereceivables also included finance lease receivables.
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Inventories increased by ¥16,217 million ($152 million), or 8.2%, to ¥213,411 million ($1,994 million). This was due mainly toincreases in inventories held at March 31, 2005 by KMC associated with large orders, mainly in Europe, and by AVX associated withincreased sales.
Securities and other investments increased by ¥341 million ($3 million). An increase by purchases of government bonds was offset bya decrease in market value at March 31, 2005 of KDDI stock and other equity securities compared with March 31, 2004.
Total property, plant and equipment at cost, net of accumulated depreciation, increased by ¥4,477 million ($42 million), or 1.8%, to¥258,997 million ($2,421 million). Capital expenditure in fiscal 2005 was ¥63,176 million ($590 million) and depreciation in fiscal
2005 was ¥58,790 million ($549 million).
Kyocera’s total liabilities at March 31, 2005 decreased by ¥80,881 million ($756 million), or 13.7%, to ¥510,186 million ($4,768
million), compared with ¥591,067 million at March 31, 2004.
Total debt, comprised of short-term borrowings and long-term debt including due within one year, decreased by ¥55,781 million($521 million), or 27.9%, to ¥144,164 million ($1,347 million), due mainly to debt repayments by KLC and KMC.
Trade notes and accounts payable decreased by ¥23,887 million ($223 million), or 21.6%, to ¥86,872 million ($812 million), due
mainly to decreases of orders and production in the Telecommunications Equipment Group in Kyocera Corporation and KWC.
Minority interests in subsidiaries, principally AVX, increased by ¥7,244 million ($68 million), or 13.6%, to ¥60,482 million ($565
million), compared with ¥53,238 million at March 31, 2004. This was due mainly to an establishment of Japan Medical Materials
Corporation on September 1, 2004 by Kyocera Corporation and Kobe Steel, Ltd. and the profit recorded by AVX in fiscal 2005, incontrast to losses recorded in fiscal 2004.
Total stockholders’ equity at March 31, 2005 increased by ¥24,398 million ($228 million), or 2.1%, to ¥1,174,851 million ($10,980
million), compared with ¥1,150,453 million at March 31, 2004. Retained earnings at March 31, 2005 increased by ¥34,659 million($324 million), or 3.9%, due to net income for fiscal 2005 of ¥45,908 million ($429 million) offset by cash dividend payments of¥11,249 million ($105 million).
Accumulated other comprehensive income decreased by ¥10,207 million ($95 million), or 46.3%, to ¥11,839 million ($111 million).
Net unrealized gains on securities decreased by ¥16,780 million ($157 million), or 28.3%, due mainly to a decrease in market value atMarch 31, 2005 of KDDI stock and other equity securities compared with March 31, 2004. Foreign currency translation adjustments
increased by ¥6,704 million ($63 million), or 18.8% due to the depreciation of the yen against Euro.
The stockholders’ equity ratio at March 31, 2005 was 67.3%, an increase of 3.2 points compared with 64.1% at March 31, 2004.
C. Research and Development, Patent and Licenses, and etc.
We are deeply committed to the constant pursuit of technological advancement in order to invent and develop new materials and new
products, to improve and enhance existing products and to identify new applications for them and for the technology related to them.
Basic research and development activities are carried out at three research laboratories: the Kagoshima R&D Center, which
concentrates on ceramic materials and processing technology, the Yokohama R&D Center, which works on technology relating tocommunications equipment, and the Keihanna R&D Center located in Kyoto, which carries out research on electronic and opticaldevices. In addition, each product division which is in charge of a product category or sub-category has its own research anddevelopment department staffed with a number of engineers working on improving existing products and manufacturing processes, aswell as developing new products.
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Kyocera aims to continuously increase sales and boost profitability in each component and equipment business by promoting astrategy of “high-value-added diversification.” In order to realize this goal, we aggressively develop new technologies and new
products by pursuing sophisticated and specialized technical expertise through the integration of component and equipment
technologies.
(1) Fine Ceramic Parts Group
Kyocera is strengthening the development of large fine ceramic components and sapphire substrates for next-generation
semiconductor and LCD fabrication equipment and LEDs by leveraging materials, processing and design technologies for fineceramics. Moving forward, we view the automotive market as one area of prospective growth in the coming years. To this end, we
have placed emphasis on the development of products that meet demand for more environmentally-friendly and safer vehicles withadvanced electronics. One specific area we are working on is fuel-injection systems components for diesel engines.
(2) Semiconductor Parts Group
Kyocera is working to develop smaller, thinner ceramic packages with enhanced internal functional elements for semiconductors andelectronic components used in digital consumer products in response to the rising demand for more sophisticated equipment. In
addition, we are developing organic packages for next-generation MPUs and their peripheral devices.
(3) Applied Ceramic Products GroupIn the environmental protection market, Kyocera is seeking to develop thinner silicon substrates to boost the conversion efficiency ofsolar cells, which are increasing in popularity, and to make effective use of resources. In addition, we are stepping up efforts to enable
the practical home-use of Solid Oxide Fuel Cells (SOFC), expected to be the next-generation distributed power generation system forsmall-scale power sources.
In the cutting tool business, we are working to strengthen our product lineup, especially for the automotive industry, to cover a wider
range of processing applications and to meet demand for long-life and stable processing equipment.
(4) Electronic Device Group
Kyocera promotes the development of various electronic devices for digital consumer products that feature high performance andconsume less power. Capacitors are gradually getting smaller, while being able to hold greater capacity. We are endeavoring to
improve both the size and capacity of our capacitors by exploiting the material characteristics of ceramics, tantalum and niobiumoxide. We are also increasing the development of high-value-added products such as low-inductance capacitors. In addition, we areconcentrating efforts into the development of functional components such as RF modules for next-generation telecommunications andinformation terminals.
In thin-film devices, Kyocera is developing thermal printheads capable of enhanced resolution for the consumer use color printermarket, as well as eco-friendly LCDs for RoHS* Directive compliant industrial equipment and products with LED backlight displays.
Furthermore, we are working to develop the commercial viability of organic EL displays as small to mid-size displays for mobile andindustrial equipment.
* RoHS: Restriction of the use of certain Hazardous Substances in electrical and electronic equipment.
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A European Union (EU) regulation prohibits the use of specific hazardous substances and forms part of EU Directive that makes it
obligatory for automobile and electric equipment manufacturers in EU to implement measures to protect the environment, such as therecycling of products.
(5) Telecommunications Equipment Group
Kyocera promotes the development of CDMA dual-band mobile phones compatible with differing frequencies by making full use ofcomponents and devices throughout the Kyocera Group. We are also developing high-performance PHS base stations and handsets inline with the commencement of new high-speed data communication services in Japan. In addition, we aggressively develop the
Voice over Internet Protocol (VoIP) related equipment.
(6) Information Equipment Group
Kyocera intends to swiftly enhance its range of color machines based on the “ECOSYS” concept of long life and economy, byincorporating a photoreceptor amorphous silicon drum with outstanding resistance to wear.
(7) Optical Equipment Group
Kyocera is developing optical modules for mobile phones with high pixel cameras and zoom capability as well as optical components
for projectors and rear-projection TVs, by utilizing its technologies of optical, electronic devices and semiconductor parts throughout
the Group.
(8) Others
Kyocera Chemical are working to develop precision molding products using magnesium alloys to enable faster recording speeds inimage pickup devices. It also seeks to create synergistic effects with Kyocera’s solar energy business through the development ofsolar cell materials.
KCCS is focusing on the development of authentication and security technologies suitable for the infrastructure of expanding nextgeneration networks as well as new services for positioning systems and VoIP.
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Research and development expenses for the years ended March 31, 2003, 2004 and 2005 amounted to ¥47,268 million, ¥46,630
million and ¥54,398 million ($508 million), respectively. R&D expenses by reporting segments were as follows:(Yen in Millions)
Increase (Decrease) compared with fiscal
2004

Reporting segment
Amount of R&D expensein fiscal 2005

Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersTotal

Amount

%

4,252
2,890
2,747
11,416
14,972
13,270
2,636
2,215

1,262
(424)
303
1,929
828
2,627
(149)
1,392

42.2
(12.8)
12.4
20.3
5.9
24.7
(5.4)
169.1

54,398

7,768

16.7

For fiscal 2006, Kyocera projects total R&D expenditures to be approximately ¥53,000 million ($495 million).
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.
The results for the three months ended June 30, 2005
With respect to our first quarterly financial results, which cover the three months period ended June 30, 2005, please refer to ourreport on Form 6-K submitted on July 28, 2005.
Market Trends
In the telecommunications and information processing market, key area for Kyocera, rising popularity of advanced handsets featuringhigh-pixel color LCDs, built-in cameras and other advanced functions including GPS (global positioning system) and hard disk driveis expected to propel demand for mobile phone handsets. In addition, stable growth is predicted to continue in PC-related and digital
cameras, while strong growth in demands for DVD recorders and flat panel digital TVs is anticipated. Kyocera expects these growths
will produce positive impact on our business.
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Kyocera believes that the measures we have already taken, including structural reforms and other initiatives to improve profitability,
as well as preparatory moves targeted at future expansion, will drive our growth in the medium term. They lay the path to continued“high-value-added diversification,” which is the cornerstone for achieving our strategic objective to expand sales and profits
continuously over the coming years and decades, subject to some uncertainties such as economic conditions in the markets,
fluctuations in exchange rates and our ability to launch innovative products.
Sales of Shares of Taito Corporation
On August 22, 2005, Kyocera’s Board of Directors determined to tender its entire holding of shares of Taito Corporation (Taito)(133,260 shares, approximately 36.02% of outstanding shares), an equity-method affiliate, engaged in the amusement business, in atender offer bid for Taito shares by Square Enix Co., Ltd. (Square Enix), one of the leading companies in the game software industry.
Square Enix has not set a limit on the maximum number of shares to be purchased in this tender offer. A condition to this tender offer,
however, is that if the total number of share certificates tendered in this tender offer From August 23, 2005 through September 21,
2005 amounts to less than the intended amount of shares to be purchased (247,900 shares which account for 67% of the outstanding
shares), this tender offer will not be conducted, so if that condition is not satisfied, there will not be a tender offer.
Currently, the game amusement industry in Japan is facing dramatic changes in industrial structure, along with developments in
information and communication technologies. In order to timely and appropriately respond to such structural changes, it is essential topursue a broad business structure by expanding product and service line-ups.
Under these circumstances, where the industry is experiencing material changes, Kyocera considered ways in which Taito could
create new value and continue to develop.
Both Square Enix and Taito are in the game amusement industry, but they do not overlap in terms of their principle businesses andcategories of game software, and can accordingly supplement each other. Kyocera decided to sell its Taito shares to support thesecompanies’ mutual determination that the best way for them to promote their respective advantages is through operation as
consolidated group companies, thereby creating new value and increasing their respective capacities to be industry leaders andinovators.
E. Off-Balance Sheet Arrangements
We are not a party to any material off-balance sheet arrangements. In addition, we have no unconsolidated special purpose financing
or partnership entities that are likely to create material contingent obligations.
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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, 2005. Kyocera anticipates that funds to be required to fulfill these debt
obligations and commitments will be generated internally from operations.
(Yen in millions)Contractual obligations
Less than
1 year2-3 years

4-5 years

Thereafter

Short-term borrowings (A)Long-term debt (including due within one year) (A)Supply agreement material used in operation (B)Operating Leases
Obligations for the acquisition or construction of property, plant andequipment¥

66,556 ¥— ¥ — ¥
44,051
28,757
2,500
5,904
—
—
6,705
8,981
2,353

Total Contractual Obligations¥ 143,621 ¥ 37,738 ¥ 4,853 ¥

20,405

—

—

Total

— ¥
2,300
—
3,075

66,556
77,608
5,904
21,114—

20,4055,375 ¥

191,587(U.S. dollars in thousands)

Contractual obligations
Less than
1 year2-3 years

4-5 years

Thereafter

Total

Short-term borrowings (A)Long-term debt (including due within one year) (A)Supply agreement material used in operation (B)Operating Leases
Obligations for the acquisition or construction of property, plant andequipment$ 622,019 $— $ — $
— $411,691 268,757 23,365
21,49555,178———62,66383,935 21,991
28,738

Total Contractual Obligations$1,342,252 $352,692 $45,356 $ 50,233 $ 1,790,533

190,701———

622,019
725,308
55,178
197,327
190,701(A) At March 31, 2005, Kyocera’s contractual obligations mainly comprised of short-term borrowings and long-term debt including
those due within one year, which amounted to ¥66,556 million ($622 million) and ¥77,608 million ($725 million), respectively.
Approximately 80% of those debts were attributable to KMC and KLC. KLC provides financial services such as credit financing andleasing. Due to the nature of its operations, KLC had ¥48,913 million ($457 million) of short-term borrowings and ¥47,671 million($446 million) of long-term debt from banks and other financial institutions at March 31, 2005 as the primary source of funding for
operating its business.
(B) AVX has a supply agreement for a significant portion of its anticipated material used in operation in its ordinary course ofbusiness.
- 66 -

Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management
Since June 1, 2005, Kyocera implemented a new executive officer system to enhance Kyocera Group’s management organization
under a global consolidation system, and accordingly, appointed a Chief Executive Officer (CEO), a Chief Financial Officer (CFO)
and a Chief Operating Officer (COO). The CEO takes responsibility for mid and long-term Group management policy and strategy
formulation and execution, while the CFO is responsible for constructing and executing a financial strategy for the Group that ensuresthe effective implementation of these management strategies. The COO is in charge of daily management issues and businessexecution to achieve yearly management plans. At the same time, Kyocera also introduced a new corporate business group system,
headed by the executive officers. These business group leaders are responsible for each product line on a consolidated basis.
The following table shows Kyocera’s Directors and Corporate Auditors as of July 1, 2005.
Name

Date of Birth

Position

Since

Kensuke Itoh

December 17, 1937

Director and Executive
Advisor

1975

Yasuo Nishiguchi

October 9, 1943

Representative Director,
Chairman and Chief
Executive Officer

1987

Masahiro Umemura

August 8, 1943

Representative Director,
Vice Chairman andChief Financial Officer(General Manager ofCorporate Development
Group)

1991

Makoto Kawamura

August 13, 1949

Representative Director,
President and Chief
Operating Officer

2001(President
2005)

Yuzo Yamamura

December 4, 1941

Director (President andRepresentative Directorof KYOCERA ELCOCORPORATION)

2003

Naoyuki Morita

April 8, 1942

Director (President andRepresentative Directorof KYOCERACOMMUNICATIONSYSTEMS CO., LTD.)

2003

Koji Seki

December 8, 1937

Director (Chairman and
Representative Directorof KYOCERA MITACORPORATION)

1989

Michihisa Yamamoto

November 13, 1942

Director (President andRepresentative Directorof KYOCERA OPTEC
CO., LTD., and General
Manager of Corporate
Optical Equipment
Group)

1987- 67 -

Name

Date of Birth

Position

Since

Noboru Nakamura

October 6, 1944

Director (President andRepresentative Director of
KYOCERA CHEMICALCORPORATION)

1991

Isao Kishimoto

November 30, 1943

Director (President andRepresentative Director of
KYOCEA KINSEKICORPORATION)

1993

Hisao Hisaki

July 2, 1946

Director (President of
KYOCERA (TIANJIN)SALES AND TRADINGCORPORATION)

1991

Rodney N. Lanthorne

February 5, 1945

Director (President of
KYOCERAINTERNATIONAL,
INC.)

1989

John S. Gilbertson

December 4, 1943

Director (President andChief Executive Officer,
Director of AVX
CORPORATION)

1995

Yasuo Akashi

May 29, 1944

Full-time Corporate
Auditor2003

Yoshihiko Nishikawa

September 11, 1945

Full-time Corporate
Auditor2005

Osamu Nishieda

January 10, 1943

Corporate Auditor(Attorney At Law)

1993

Shinji Kurihara

July 19, 1932

Corporate Auditor(Chairman of TAKEDA
Hospital Management
Institute)2003

Shigekazu Tamura

February 18, 1950

Corporate Auditor(Certified Public
Accountant)

2005

Kensuke Itoh has served as a Director and the Executive 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 of Kyocera Purple Sanga Ltd. andRepresentative Director of Kyoto Fashion Center Ltd.
Yasuo Nishiguchi has served as a Representative Director, the Chairman and Chief Executive Officer of Kyocera Corporation since2005. He became a Director in 1987, a Managing Director in 1989 and a Senior Managing and Representative Director in 1992 andthe President and Representative Director in 1999. He joined Kyocera Corporation in 1975 and has served as the Representative
Director of Kyocera Leasing Co., Ltd., Representative Director of Kyocera Communication Systems Co., Ltd., Representative
Director of Kyocera ELCO Corporation, Chairman of the Board of Directors of Shanghai Kyocera Electronics Co., Ltd., Chairman of
the Board of Directors of Dongguan Shilong Kyocera Optics Co., Ltd., Chairman of the Board of Directors of Kyocera Zhenhua
Communication Equipment Co., Ltd., Chairman of the Board of Directors of Kyocera Mita Office Equipment (Dongguan) Co., Ltd.,
Chairman of the Board of Directors of Kyocera (Tianjin) Sales and Trading Corporation, Chairman of the Board of Directors ofKyocera (Tjianjin) Solar Energy Co., Ltd., Representative Director of Kyocera SLC Technologies Corporation, Representative
Director of Kyocera Display Institute Co., Ltd., Representative Director of Japan Medical Materials Corporation and Representative
Director of Kyocera Realty Development.
- 68 -

Masahiro Umemura has served as a Representative Director, the Vice Chairman and Chief Financial Officer of Kyocera Corporation
since 2005. He became a Director in 1991, a Managing Director in 1993 and a Senior Managing and Representative Director in 1997
and an Executive Vice President and Representative Director in 1999. He joined Kyocera Corporation in 1966 and has served as
General Manager of the Corporate Development Group of Kyocera Corporation, the Chairman of the Board of Directors of Shanghai
Kyocera Realty Development Co., Ltd. and the Chairman of the Board of Directors of Shanghai Kyocera Trading Co., Ltd.
Makoto Kawamura has served as a Representative Director, the President and Chief Operating Officer of Kyocera Corporation since2005. He became a Director in 2001 and retired in 2003. He rejoined as a Representative Director, the President and Chief Operating
Officer in 2005. He joined Kyocera Corporation in 1973.
Yuzo Yamamura rejoined Kyocera Corporation as a Director in 2003. He first became a Director in 1987, and retired in 1993. He
rejoined Kyocera Corporation as a Senior Managing and Representative Director in 1995 and retired again in 1999. He originallyjoined Kyocera Corporation in 1965 and has served as the President and Representative Director of Kyocera ELCO Corporation.
Naoyuki Morita rejoined Kyocera Corporation as a Director in 2003. He first became a Director in 1987, a Managing Director in 1989
and a Senior Managing and Representative Director in 1995, and he retired in 1999. He originally joined Kyocera Corporation in1967 and has served as the President and Representative Director of Kyocera Communication Systems 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 Chairman of the Board andRepresentative Director of 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 President and Representative Director of Kyocera
Optec Co., Ltd.
Noboru Nakamura has served as a Director of Kyocera Corporation since 2003. He became a Director in 1991, a Managing Director
in 1995, a Senior Managing and Representative Director in 1997 and an Executive Vice President and Representative Director in
1999. He joined Kyocera Corporation in 1967 and has served as the President and Representative Director of Kyocera Chemical
Corporation.
Isao Kishimoto has served as a Director of Kyocera Corporation since 2003. 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 President andRepresentative Director 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 President and Representative Director of Kyocera Tianjin Sales and Trading Corporation.
Rodney N. Lanthorne has served as a Director of Kyocera Corporation since 2003. 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 the President and Director of Kyocera International, Inc.
- 69 -

John S. Gilbertson has served as a Director of Kyocera Corporation since 2003. He became a Director in 1995 and a Managing
Director in 1999. He joined AVX Corporation in 1981 and has served as the President and Chief Executive Officer of AVX
Corporation.
Yasuo Akashi has served as a Full-time Corporate Auditor of Kyocera Corporation since 2003. He served as a Senior Managing andRepresentative Director of Kyocera Corporation from 1997. He became a Director in 1991 and a Managing Director in 1993. He
joined Kyocera Corporation in 1967.
Yoshihiko Nishikawa has served as a Corporate Auditor of Kyocera Corporation since 2005. He became a Director in 1995 and retiredin 2003. He joined Kyocera Corporation in 1970.
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 Representative Directorof Takeda Management Institution.
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 has adopted an “executive officer system” pursuant to the Commercial Code of Japan, of which objectives are to establish
corporate governance appropriate for a global corporation, together with a decision making system responsive to the businessenvironment, and to train the next generation of senior executives.
The following table shows Kyocera’s Executive Officers as of July 1, 2005.
Name

Position

Yasuo Nishiguchi

Chief Executive Officer (Representative Director, Chairman)

Masahiro Umemura

Chief Financial Officer (Representative Director, Vice Chairman, General Manager ofCorporate Development Group)

Makoto Kawamura

Chief Operating Officer (Representative Director, President)

Isao Yukawa

Senior Managing Executive Officer (General Manager of Corporate Solar Energy
Group)

Tatsumi Maeda

Managing Executive Officer (Deputy 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)

Tetsuo Kuba

Managing Executive Officer (General Manager of Corporate Fine Ceramics Groupand Corporate Semiconductor Components Group)

Osamu Nomoto

Managing Executive Officer (General Manager of Corporate Electronic Components
Group)- 70 -

Name

Position

Eiichi Toriyama

Managing Executive Officer (Deputy General Manager of Corporate Electronic
Components Group and General Manager of Corporate Electronic Components
Sales Division)

Akiyoshi Okamoto

Senior Executive Officer (General Manager of SHANGHAI KYOCERAELECTRONICS CO., LTD.)

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)

Yasushi Matsumura

Senior Executive Officer (General Manager of Corporate Thin-Film Devices
Group)

Tetsuo Okada

Senior Executive Officer (Representative Director and President of KYOCERAMITA CORPORATION)

Yoshihito Ota

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

Yasuyuki Yamamoto

Executive Officer (General Manager of Corporate Mobile Communication
Equipment Group)

Junichi Jinno

Executive Officer (General Manager of Corporate Communication Systems
Equipment Group)

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)

Jyunzo Katsuki

Executive Officer (Deputy General Manager of Corporate Electronic Components
Sales Division, Corporate Electronic Components Group)

Yukihiro Takarabe

Executive Officer (General Manager of Corporate Cutting Tool Group)

Takashi Naruko

Executive Officer (General Manager of Jewelry & Application Products Division)

Masakazu Mitsuda

Executive Officer (General Manager of Corporate Business Systems
Administration Group)

Toshimi Gejima

Executive Officer (General Manager of Automotive Components Division)

Michiaki Furuhashi

Executive Officer (General Manager of General Affairs Division, Corporate
General Affairs Human Resources Group)

Mitsuru Imanaka

Executive Officer (Representative Director and President of KYOCERA FINECERAMICS GmbH)- 71 -

Name

Position

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(Deputy General Manager of Corporate Development Group)

Yoichi Yamashita

Executive Officer(General Manager of Corporate Business Strategy Group)

Robert Whisler

Executive Officer(Director and President of KYOCERA AMERICA INC.)

John Rigby

Executive Officer(Director and President of KYOCERA INDUSTRIAL CERAMICS CORPORATION)

B. Compensation
The aggregate amount of compensation, including bonuses, paid by Kyocera Corporation and its certain subsidiaries in the fiscal year
ended March 31, 2005 to all Directors, Executive Officers and Corporate Auditors of Kyocera Corporation and its certain subsidiaries
was ¥1,185 million ($11 million). The aggregate amount includes compensation and bonuses paid during the three months ended June30, 2004 to one Corporate Auditor who retired on June 25, 2004, and excludes the lump sum retirement allowance paid to one
Corporate Auditor. The number of Directors, Executive Officers and Corporate Auditors to whom the above aggregate amount relates
differs from the number of Directors, Executive Officers and Corporate Auditors as of the filing date of this Form 20-F.
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 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 the retirement allowance for
Directors and Corporate Auditors.
The annual provisions and costs charged to income for such retirement allowance for fiscal 2005 were ¥129 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.
- 72 -

C. Board Practices
In accordance with the requirements of the Commercial Code of Japan (the “Commercial Code”), our Articles of Incorporation
provide for not more than five Corporate Auditors. Corporate Auditors are elected at a general meeting of shareholders, and theirnormal term of office is four years. However, Corporate Auditors may serve any number of consecutive terms. One of the Corporate
Auditors must be a person who was not a Director or employee of Kyocera Corporation or its subsidiaries during the five-year periodprior to such Corporate Auditor’s election (and, after the close of the ordinary general meeting of shareholders relating to fiscal 2006,
at least half of them must be persons who have not been Directors or employees of Kyocera Corporation or its subsidiaries).
Corporate Auditors form the Board of Corporate Auditors. Corporate Auditors are under a statutory duty to oversee the administrationof 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 the shareholders. They are obliged to attend meetings ofthe Board of Directors and to express their opinions, but they are not entitled to vote. Corporate Auditors also have a statutory duty toprovide 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 of investigation of our affairs.
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, 2005, Kyocera had 58,559 employees, of whom 2,713 work in the Fine Ceramic Parts Group, 7,539 work in the
Semiconductor Parts Group, 4,306 work in the Applied Ceramic Products Group, 21,091 work in the Electronic Device Group, 5,587
work in the Telecommunications Equipment Group, 10,321 work in the Information Equipment Group, 2,659 work in the Optical
Equipment Group, 3,237 work for Others and 1,106 work in Corporate. Kyocera’s number of employees at March 31, 2005 increased
by 689 compared with the number of employees of 57,870 at March 31, 2004.
Kyocera Corporation had 12,682 employees, and their average age and average service years were 37.9 and 15.1, 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, while in othercountries subsidiaries 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.
E. Share Ownership
As of March 31, 2005, Kyocera’s Directors, Corporate Auditors and Executive Officers owned 8,572,234 shares of Kyocera
Corporation in total (8,552,561 shares of common stock of Kyocera Corporation and 19,673 ADSs of Kyocera Corporation), or 4.6%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.
- 73 -

Name

Title

Number of SharesKazuo Inamori

Chairman Emeritus and Director

Kensuke Itoh

Chairman of the Board andRepresentative Director

557,072

Yasuo Nishiguchi

President and Representative
Director

4,095

Masahiro Umemura

Executive Vice President andRepresentative Director

5,000Michihisa Yamamoto

Executive Vice President andRepresentative Director

9,232

Yuzo Yamamura

Director

82,000

Naoyuki Morita

Director

5,600

Koji Seki

Director

4,318

Noboru Nakamura

Director

3,100

Isao Kishimoto

Director

4,100

Hisao Hisaki

Director

3,171

Rodney N. Lanthorne

Director

3,478 (ADR)John S. Gilbertson

Director

16,195 (ADR)

Atsushi Mori

Corporate Auditor

10,000

Yasuo Akashi

Corporate Auditor

6,323

Osamu Nishieda

Corporate Auditor

1,000,037

Shinji Kurihara

Corporate Auditor

500

Isao Yukawa

Managing Executive Officer

1,200

Hisashi Sakumi

Managing Executive Officer

9,000

Tsutomu Yamori

Managing Executive Officer

2,000

Eiichi Toriyama

Managing Executive Officer

1,000

Makoto Kawamura

Managing Executive Officer

1,000

Tatsumi Maeda

Managing Executive Officer

1,100- 74 -

6,806,165

Name

Title

Number of Shares

Akiyoshi Okamoto

Senior Executive Officer

4,864

Takashi Itoh

Senior Executive Officer

9,000

Yoshihiko Nishikawa

Senior Executive Officer

2,102

Tetsuo Kuba

Executive Officer

1,000

Osamu Nomoto

Executive Officer

1,315

Gen Takayasu

Executive Officer

500

Nobuhiro Ochiai

Executive Officer

1,000

Yasuyuki Yamamoto

Executive Officer—

Junichi Jinno

Executive Officer—

Keijiro Minami

Executive Officer

300

Goro Yamaguchi

Executive Officer

3,600

Junzo Katsuki

Executive Officer

800

Yukihiro Takarabe

Executive Officer

300

Takashi Naruko

Executive Officer

600

Masakazu Mitsuda

Executive Officer

900

Yoshihito Ota

Executive Officer

900

Yasushi Matsumura

Executive Officer

100

Toshimi Gejima

Executive Officer

1,400

Michiaki Furuhashi

Executive Officer

7,867

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. This approval of stock acquisition rights for Plan 2003 is intended to enable the grant of stock options and the kind and the
maximum number of shares to be issued is 1,100,000 shares of common stock of Kyocera Corporation. The stock acquisition rights
for Plan 2003 were issued as of September 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, respectively. Kyocera Corporation will
cover the stock acquisition rights for Plan 2003 by utilizing its holdings of common stock of Kyocera Corporation (treasury stock).
- 75 -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. This approval of stock acquisition rights for Plan 2004 is intended to enable the grant of stock options and the kind and the
maximum number of shares to be issued is 1,500,000 shares of common stock of Kyocera Corporation. The stock acquisition rights
for Plan 2004 were issued as of September 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, respectively. Kyocera Corporation will
cover the stock acquisition rights for Plan 2004 by utilizing its holdings of common stock of Kyocera Corporation (treasury stock).
As of August 31, 2005, 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.
Total Options
Outstanding

Option Holder

Title

Kensuke ItohDirector and Executive Advisor

8,000 (Plan 2003)
8,000 (Plan 2004)

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

Yasuo Nishiguchi

Representative Director,
Chairman and Chief Executive
Officer

8,000 (Plan 2003)
8,000 (Plan 2004)

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

Masahiro Umemura

Representative Director, Vice
Chairman and Chief Financial
Officer

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

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

Makoto Kawamura

Representative Director,
President and Chief Operating
Officer

4,000 (Plan 2003)
4,000 (Plan 2004)

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

Yuzo Yamamura

Director

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

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

Naoyuki Morita

Director

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

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

Koji Seki

Director

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

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

Michihisa Yamamoto

Director

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

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

Noboru Nakamura

Director

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

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

Isao Kishimoto

Director

5,500 (Plan 2003)
5,500 (Plan 2004)

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

Hisao Hisaki

Director

5,000 (Plan 2003)
5,000 (Plan 2004)

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

Rodney N. Lanthorne

Director

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

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

John S. Gilbertson

Director

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

7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)- 76 -

Exercise Price per ShareOption Holder

Title

Total Options
Outstanding

Exercise Price per Share

Yasuo Akashi

Corporate Auditor

3,000 (Plan 2003)
3,000 (Plan 2004)

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

Yoshihiko Nishikawa

Corporate Auditor

3,000 (Plan 2003)
3,000 (Plan 2004)

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

Osamu Nishieda

Corporate Auditor——

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

Shinji Kurihara

Corporate Auditor——

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

Shigekazu Tamura

Corporate Auditor——

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

Isao Yukawa

Senior Managing Executive
Officer

4,000 (Plan 2003)
4,000 (Plan 2004)

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

Tatsumi Maeda

Managing Executive Officer

4,000 (Plan 2003)
4,000 (Plan 2004)

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

Hisashi Sakumi

Managing Executive Officer

4,000 (Plan 2003)
4,000 (Plan 2004)

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

Tsutomu Yamori

Managing Executive Officer

4,000 (Plan 2003)
4,000 (Plan 2004)

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

Takashi ItohManaging Executive Officer

3,000 (Plan 2003)
3,000 (Plan 2004)

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

Tetsuo Kuba

Managing Executive Officer

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

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

Osamu Nomoto

Managing Executive Officer

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

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

Eiichi Toriyama

Managing Executive Officer

4,000 (Plan 2003)
4,000 (Plan 2004)

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

Akiyoshi Okamoto

Senior Executive Officer

3,000 (Plan 2003)
3,000 (Plan 2004)

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

Keijiro Minami

Senior Executive Officer

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

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

Goro Yamaguchi

Senior Executive Officer

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

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

Yasushi Matsumura

Senior Executive Officer

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

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

Tetsuo Okada

Senior Executive Officer

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

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

Yoshihito Ota

Executive Officer

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

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

Yasuyuki Yamamoto

Executive Officer

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

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

Junichi Jinno

Executive Officer

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

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

Gen Takayasu

Executive Officer

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

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

Nobuhiro Ochiai

Executive Officer

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

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

- 77 -

Option Holder

Total Options
Outstanding

Title

Junzo Katsuki

Executive Officer

Yukihiro Takarabe

Executive Officer

Takashi Naruko

Executive Officer

Masakazu Mitsuda

Executive Officer

Toshimi Gejima

Executive Officer

Michiaki Furuhashi

Executive Officer

Mitsuru Imanaka

Executive Officer

Shoichi Aoki

Executive Officer

Hiroshi Togi

Executive Officer

Yoshihiro Kano

Executive Officer

Yoichi Yamashita

Executive Officer

Robert Whisler

Executive Officer

John Rigby

Executive Officer

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

Total

Exercise Price per Share

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

160,900 (Plan 2003)
167,100 (Plan 2004)

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. This approval of stock acquisition rights for Plan 2005 is intended to enable the grant of stock options and the kind and the
maximum number of shares to be issued is 1,500,000 shares of common stock of Kyocera Corporation. The stock acquisition rights
for Plan 2005 were issued as of September 1, 2005 to 1,715 persons to acquire amounts ranging from 600 to 8,000 shares of common
stock each, or to acquire 1,301,900 shares of common stock in the aggregate. The exercise price and the exercisable period of Plan
2005 have been set at ¥8,619 per share, and from October 1, 2005 to September 30, 2008, respectively. Kyocera Corporation will
cover the stock acquisition rights for Plan 2005 by utilizing its holdings of common stock of Kyocera Corporation (treasury stock).
- 78 -

The following table shows the options of Plan 2005 issued to Directors, Corporate Auditors and Executive Officers as of September
1, 2005.
Total Options
IssuedOption Holder

Title

Kensuke ItohDirector and Executive Advisor

8,000

Yasuo Nishiguchi

Representative Director,
Chairman and Chief Executive
Officer

8,000

Masahiro Umemura

Representative Director, Vice
Chairman and Chief
Financial Officer

8,000

Makoto Kawamura

Representative Director,
President and Chief Operating
Officer

8,000

Yuzo Yamamura

Director

6,000

Naoyuki Morita

Director

6,000

Koji Seki

Director

6,000

Michihisa Yamamoto

Director

6,000

Noboru Nakamura

Director

6,000

Isao Kishimoto

Director

6,000

Hisao Hisaki

Director

5,000

Rodney N. Lanthorne

Director

4,500

John S. Gilbertson

Director

4,500

Yasuo Akashi

Corporate Auditor

3,000

Yoshihiko Nishikawa

Corporate Auditor

3,000

Osamu Nishieda

Corporate Auditor—

Shinji Kurihara

Corporate Auditor—

Shigekazu Tamura

Corporate Auditor—

Isao Yukawa

Senior Managing Executive
Officer

4,300

Tatsumi Maeda

Managing Executive Officer

4,000

Hisashi Sakumi

Managing Executive Officer

4,000

Tsutomu Yamori

Managing Executive Officer

4,000- 79 -

Option Holder

Title

Total Options
IssuedTakashi ItohManaging Executive Officer

4,000

Tetsuo Kuba

Managing Executive Officer

4,000

Osamu Nomoto

Managing Executive Officer

4,000

Eiichi Toriyama

Managing Executive Officer

4,000

Akiyoshi Okamoto

Senior Executive Officer

3,000

Keijiro Minami

Senior Executive Officer

3,000

Goro Yamaguchi

Senior Executive Officer

3,000

Yasushi Matsumura

Senior Executive Officer

3,000

Tetsuo Okada

Senior Executive Officer

4,000

Yoshihito Ota

Executive Officer

2,500

Yasuyuki Yamamoto

Executive Officer

2,500

Junichi Jinno

Executive Officer

2,500

Gen Takayasu

Executive Officer

2,500

Nobuhiro Ochiai

Executive Officer

2,500

Junzo Katsuki

Executive Officer

2,500

Yukihiro Takarabe

Executive Officer

2,500

Takashi Naruko

Executive Officer

2,500

Masakazu Mitsuda

Executive Officer

2,500

Toshimi Gejima

Executive Officer

2,500Michiaki Furuhashi

Executive Officer

2,500

Mitsuru Imanaka

Executive Officer

2,500

Shoichi Aoki

Executive Officer

2,500

Hiroshi Togi

Executive Officer

2,500- 80 -

TitleOption Holder

Total Options
IssuedYoshihiro Kano

Executive Officer

2,500

Yoichi Yamashita

Executive Officer

2,500

Robert Whisler

Executive Officer

3,000John Rigby

Executive Officer

3,000

Total

182,300

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.
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.
On April 13, 2005, in accordance with the Securities and Exchange Law of Japan, Morgan Stanley Japan Limited informed Kyocera
Corporation that Morgan Stanley Japan Limited and its related partners became a holder of over 5% of the total issued voting sharesof Kyocera Corporation, and they held shares of Kyocera Corporation as show in the following table as of March 31, 2005. However,they were not included in the above major shareholders as a single major holder because not all partners of Morgan Stanley Japan
Limited were shareholders of record as of March 31, 2005.
According to Citibank N.A., depositary for Kyocera’s ADSs, as of March 31, 2005, 4,240,142 shares of Kyocera’s common stock
were held in the form of ADSs and there were 868 ADS holders of record in the United States. According to Kyocera’s register ofshareholders, as of March 31, 2005, there were 85,356 holders of Kyocera’s common stock of record worldwide. As of March 31,
2005, there were 117 record holders of Kyocera’s common stock with addresses in the United States, holding 21,081,863 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 2005, Kyocera’s sales to KDDI amounted to ¥89,937 million ($841 million), or 7.6% of consolidated net sales. As KDDIsold its PHS business in October 2004, Kyocera’s sales of PHS-related products has not been included in sales to KDDI since then. In
addition, Kyocera’s sales of mobile phone handsets to KDDI decreased. KDDI provides telecommunication services, and Kyocera
sells mainly telecommunications equipment 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 board of directors of KDDI. At March 31, 2005, Kyocera
Corporation’s equity interest in KDDI was 13.5%. Kyocera serves KDDI as an independent vendor in terms of price determination,
remittance conditions and product distribution. All of the agreements and ongoing contractual commitments between Kyocera andKDDI have been made on an arm’s-length basis. Kyocera expects that KDDI will remain a significant customer in the future.
- 81 -

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.
Dividend Policy
Since the listing of its shares, Kyocera Corporation has endeavored to increase dividends per share in line with improvements inperformance. Kyocera Corporation has also boosted dividends by actively undertaking free share distributions and stock splits.
Traditionally, Kyocera Corporation has set dividend amounts with the goal of maintaining stable dividends to shareholders. In theinterest of shareholders, however, Kyocera has decided, commencing with the year-end dividend relating to fiscal 2005, to change
this policy to establish a greater linkage between dividend amounts and the Group’s performance. In particular, Kyocera will
determine dividend amounts based on an overall assessment that will take into consideration capital expenditures necessary for thefurther development of Kyocera Group from a medium to long-term perspective, while also aiming for a payout ratio of
approximately 20 to 25% on a consolidated basis.
Kyocera’s goal of constantly enhancing profitability will ensure greater returns for stockholders to meet their expectations. In order tobe a “creative company that continues to grow in the 21st century”, Kyocera will strive at the same time to be a market leader in thethree strategic areas of “telecommunications and information processing,” “environmental protection” and “quality of life.” To realize
this goal, Kyocera will aggressively strive to cultivate new businesses and markets and to develop new technologies, acquiringexternal management resources when necessary. Kyocera will maintain a healthy and stable financial position and therefore, internal
reserves shall be utilized for this purpose.
Kyocera Corporation decided that the year-end dividend for the year ended March 31, 2005 should be 50 yen per share in the ordinary
general meeting of shareholders on June 28, 2005. When aggregated with the interim dividend 30 yen per share, the total annual
dividend amount was 80 yen per share.
We held board of directors meeting for the interim dividend on October 28, 2004.
B. Significant Changes
Except as disclosed in this Form 20-F, there have been no significant changes since March 31, 2005.
- 82 -

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 Exchange

New York Stock Exchange

Price per Share ofCommon Stock (yen)Price per American
Depositary Share(U.S. dollars)*

High

Low

High

¥ 19,500
12,90010,0708,970
9,630¥ 9,000
7,000
5,630
5,570
7,080

High

Low

Years ended March 31

2001
2002
2003
2004
2005
Most Recent 6 months

March, 2005
April, 2005
May, 2005
June, 2005
July, 2005
August, 2005

¥

8,080
7,820
8,420
8,500
8,670
8,040

¥ 7,540
7,090
7,540
8,140
7,820
7,640

$

186.60105.72
80.27
84.66
90.90

Low

$

High

$

77.55
74.75
77.20
78.45
78.02
72.65

73.82
53.77
47.96
47.25
67.81
Low

$

70.48
67.20
72.68
74.86
70.45
69.01

* 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.
- 83 -

The following table shows the information about high and low sales prices for each quarterly period in fiscal 2004 and 2005 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
2004

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

1st

2nd

3rd

4th

— High— Low¥7,320
5,570
30.00¥8,1506,400—¥7,280
6,180
30.00¥8,9707,140—— High— Low$61.3447.25
0.25$69.3054.50—$67.5657.40
0.27$84.66
66.25—

Cash dividends paid per share (C)2005

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

1st

2nd

3rd

4th

— High— Low¥9,630
8,110
30.00¥9,3807,370—¥8,320
7,080
30.00¥8,0807,120—— High— Low$90.9071.10
0.28$86.2067.81—$77.2368.86
0.29$77.5868.67—(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
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.
- 84 -

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 Commercial Code relating to joint stock corporations (kabushiki kaisha) and certain related
legislation, all as currently in effect, except where references are made to the New Company Law (as defined below).
A law to modernize and make overall amendments to the Commercial Code was promulgated on July 26, 2005. As a result of such
amendments, the provisions governing joint stock corporations, which are currently included in the Commercial Code, will beembodied in a new company law (the “New Company Law”). The New Company Law will come into effect within one and a halfyears after its promulgation and is currently expected to take effect in the spring of 2006. Descriptions of the New Company Law are
made below to the extent necessary or appropriate in the context.
Organization
Kyocera Corporation is a joint stock corporation (kabushiki kaisha) incorporated in Japan under the Commercial Code. It is registeredin 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;(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;- 85 -

(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 ofproducts 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 forindustrial 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 financebusiness;(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.

Directors
Under the Commercial Code, the Board of Directors has the ultimate responsibility for the management of Kyocera Corporation andeach Representative Director, who is elected from among the members of the Board of Directors, has the statutory authority torepresent Kyocera Corporation in all respects. Under both the Commercial Code and the Regulations of the Board of Directors ofKyocera Corporation, the Directors must refrain from engaging in any business competing with Kyocera Corporation unless approvedby 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 Commercial Code and the Articles of Incorporation of Kyocera Corporation providethat remuneration of Directors and Corporate Auditors shall be determined at a general meeting of shareholders.
- 86 -

Except as stated below, neither the Commercial Code 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 a Representative Director (or a Director who is given power by a Representative Director to exercise such powers),
their retirement age or requirement to hold any shares of capital stock of Kyocera Corporation.
The Commercial Code 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. 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 asignificant amount of money; to give a guarantee of a significant amount of debt; or to waive the right to receive a significant amountof money. The Regulations of the Board of Directors of Kyocera Corporation defines a “significant amount” 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 the Board 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 of payment of retirement allowances or condolence money payable to
Directors, determination of which has been previously entrusted to the Board of Directors by the general meeting of shareholders.
Under the New Company Law, a resolution of the Board of Directors will also be specifically required for the establishment of acontrol 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 and regulations and the Articles of Incorporation of Kyocera Corporation.
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.
Dividends
GeneralThe Articles of Incorporation of Kyocera Corporation provide that the fiscal year of Kyocera Corporation shall be a period
commencing on April 1 in each year and ending on March 31 of the following year, and the accounts of each fiscal year shall besettled on March 31 of each year. Correspondingly, the Articles of Incorporation provide that dividends shall be paid to shareholders
or pledgees who are registered on the shareholders register of Kyocera Corporation as of the end of March 31 in each year. After theclose of the fiscal period, the Board of Directors prepares, among other things, a proposed allocation of profits for dividends and otherpurposes; this proposal is submitted for approval to the ordinary general meeting of shareholders, which is normally held in June eachyear. In addition to year-end dividends, Kyocera Corporation may, by resolution of the Board of Directors, distribute cash as interim
dividends, pursuant to Article 293-5 of the Commercial Code (an “interim dividend”) to shareholders or pledgees of record at the endof each September 30, without shareholders’ approval, but subject to the limitation described below.
- 87 -

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.
Under its Articles of Incorporation, Kyocera Corporation is not obligated to pay any dividends that are not collected within three
years from the date when the payment thereof became due.
Under the New Company Law, distribution of dividends will take the form of distribution of Surplus (as defined in “– Restriction on
Dividends”). Kyocera Corporation will be permitted to make distributions of Surplus to its shareholders any number of times per
fiscal year pursuant to resolutions of its general meeting of shareholders, subject to certain limitations described in “– Restriction on
Dividends”. Distribution of Surplus will be required in principle to be authorized by a resolution of a general meeting of shareholders.
Distributions of Surplus will, however, be permitted pursuant to a resolution of the Board of Directors if (a) the Articles ofIncorporation of Kyocera Corporation so provide, (b) the normal term of office of its Directors is one year and (c) its nonconsolidated annual financial statements and certain documents for the latest fiscal year present fairly its assets and profit and loss, as
required by an ordinance of the Ministry of Justice. In an exception to the above rule, even if the requirements described in (a)through (c) are not met, Kyocera Corporation will be permitted to make distributions of Surplus in cash to its shareholders by
resolutions of the Board of Directors once per fiscal year if its Articles of Incorporation so provide. This exception is designed toenable companies to make interim dividend payments substantially in the same manner as they are permitted to do so under theCommercial Code.
Distributions of Surplus may be made in cash or in kind in proportion to the number of shares held by each shareholder. A resolutionof a general meeting of shareholders or the Board of Directors authorizing a distribution of Surplus must specify the kind andaggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders, and the effective date ofthe distribution. If a distribution of Surplus is to be made in kind, Kyocera Corporation may, pursuant to a resolution of a general
meeting of shareholders or (as the case may be) the Board of Directors, grant a right to its shareholders to require Kyocera
Corporation to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the relevant 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”).
Restriction on Dividends
The Commercial Code provides that a company may not make any distribution of profit by way of year-end dividends or interim
dividends for any fiscal period unless it sets aside in its legal reserve an amount equal to at least (A) one-tenth of the amount paid out
by it as appropriation of retained earnings (including any payments of year-end dividend and bonuses to Directors and Corporate
Auditors) for such fiscal period or (B) one-tenth of any interim dividend, as the case may be, until the sum of its legal reserve and its
additional paid-in capital is at least one-quarter of its stated capital.
Under the Commercial Code, Kyocera Corporation is permitted to distribute profits by way of year-end dividends out of the excess of
its net assets, as appearing on its non-consolidated balance sheet as of the end of the last fiscal year, over the aggregate of, asappearing on the same balance sheet where relevant:(i) its stated capital;(ii) its additional paid-in capital;(iii) its accumulated legal reserve;(iv) the legal reserve to be set aside in respect of the fiscal period concerned and any other proposed payment by way of
appropriation of retained earnings; and(v) such other amounts as are set forth in an ordinance of the Ministry of Justice of Japan.
- 88 -

Kyocera Corporation may also pay interim dividends out of the excess of its net assets as appearing on its non-consolidated balance
sheet as of the last day of the immediately preceding fiscal year, over the aggregate of the amounts stated in (i) through (iv) above and(a) the legal reserve to be set aside in respect of the interim dividends concerned, (b) any amount subsequently paid by way of
appropriation of retained earnings, (c) any amount subsequently transferred from retained earnings to stated capital, (d) if Kyocera
Corporation has been authorized by a resolution of an ordinary general meeting of shareholders or the Board of Directors to purchaseshares, the total amount of the purchase price of such shares to be paid by Kyocera Corporation and (e) such other amounts as are set
out in an ordinance of the Ministry of Justice of Japan. Kyocera Corporation may not pay any interim dividends where there is a riskthat at the end of the fiscal year net assets might be less than the aggregate of the amounts referred to in (i) through (v) above.
Under the New Company Law, when Kyocera Corporation makes a distribution of Surplus (except for any such distribution used forbonuses to Directors or Corporate Auditors), it must set aside in its additional paid-in capital or legal reserve an amount equal to onetenth of the amount of Surplus so distributed, as required by an ordinance of the Ministry of Justice. 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 (a) assets and (b) the book value of treasury stock less the total amount of (v) liabilities, (w)stated capital, (x) additional paid-in capital, (y) legal reserve and (z) certain other amounts set forth in an ordinanceof the Ministry of Justice, each such amount being that appearing on Kyocera Corporation’s non-consolidatedbalance 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“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
book value of the Surplus so distributed“G” = certain other amounts set forth in an ordinance of the Ministry of Justice- 89 -

Under the New Company Law, 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 Amountof Kyocera Corporation at any given time shall be 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 otheramounts set forth in an ordinance of the Ministry of Justice. If Kyocera Corporation has prepared interim financial statements as
described below, and if such interim financial statements have been approved by the Board of Directors or (if so required by the New
Company Law) by a general meeting of shareholders, then the Distributable Amount must be adjusted to take into account the amountof profit or loss, and the amount of consideration for any of its treasury stock disposed of by it, during the period in respect of whichsuch interim financial statements have been prepared. Under the New Company Law, Kyocera Corporation will be permitted toprepare non-consolidated interim financial statements consisting of a balance sheet as of any date subsequent to the end 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 such balance sheet.
Interim financial statements so prepared by Kyocera Corporation must be audited by its Corporate Auditors and/or independentcertified public accountants, as required by an ordinance of the Ministry of Justice.
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 Commercial Code, such notice may be given to shareholders by electronic means, subject tothe consent 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 written request to a Representative Director at least eight weeks prior to the date set for such meeting. Under the New
Company Law, any of the minimum percentages, time periods and number of voting rights necessary for exercising the minority
shareholder rights described above may be decreased or shortened if the Articles of Incorporation of Kyocera Corporation so provide.
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, except that neither Kyocera Corporation nor a corporate shareholder of which more than one-quarter of the total voting
rights are directly or indirectly held by Kyocera Corporation, has voting rights in respect of the shares held by it. Under the New
Company Law, any corporate shareholder whose management is substantially under the control of Kyocera Corporation throughshareholding or for any other reason, as further provided in an ordinance of the Ministry of Justice, may not exercise its voting rights
with respects to shares held by it. Except as otherwise provided by law or by the Articles of Incorporation of Kyocera Corporation, aresolution can be adopted at a general meeting of shareholders by a majority of the total number of voting rights represented at themeeting. Under the Commercial Code 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 notentitled to cumulative voting in the election of Directors. Shareholders may exercise their voting rights through proxies, provided thatthe 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 theBoard of Directors approves such method of exercising voting rights.
- 90 -

The Commercial Code provides that certain important matters shall be approved by a “special resolution” of a general meeting ofshareholders, where the quorum 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. Such matters include any amendment to the Articles of Incorporation (except forincreasing the number of the authorized shares in connection with a stock split and reducing the number of shares constituting a fullunit or abolishing the concept of a unit share entirely in connection with the unit share system), the reduction of stated capital, theremoval of a Director or Corporate Auditor, the dissolution, merger or consolidation of Kyocera Corporation, the “share transfer” or“share exchange” (which creates a parent and a wholly-owned subsidiary relationship between Kyocera Corporation and anothercompany pursuant to the Commercial Code), the transfer of the whole or a substantial part of Kyocera Corporation’s business, thetakeover of the entire business of another company, a “corporate split” under the Commercial Code, consolidation of the shares, any
offer to persons other than the shareholders of new shares or existing shares held by Kyocera Corporation at a “specially favorable”
price, any grant to persons other than the shareholders of rights to subscribe for or acquire shares from Kyocera Corporation(shinkabu-yoyakuken; “stock acquisition rights”) subject to “specially favorable” conditions, or any issuance to persons other than theshareholders of bonds with stock acquisition rights subject to “specially favorable” conditions. Under the New Company Law, a
distribution of Surplus in kind will also be subject to a special resolution of a general meeting of shareholders, if shareholders are notgranted the right to require Kyocera Corporation to make such distribution in cash instead of in kind. Under the New Company Law,however, no such special resolution will be required for removal of a Director or for reduction of stated capital, but only if certain
requirements are met.
Under the Commercial Code, 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.
- 91 -

Repurchase by Kyocera Corporation of its capital stock
Kyocera Corporation may acquire shares (i) by way of purchase on any Japanese stock exchange on which shares are listed or by wayof tender offer (in either case pursuant to an ordinary resolution of an ordinary general meeting of shareholders or by resolution of theBoard of Directors), (ii) from a specific shareholder other than Kyocera Corporation’s subsidiaries (pursuant to a special resolution ofan ordinary general meeting of shareholders), or (iii) from any of Kyocera Corporation’s subsidiaries (pursuant to a resolution of theBoard of Directors). In the case of (ii) above, any other shareholder may make a request directly to a Representative Director that
Kyocera Corporation acquire the shares held by such shareholder. Under the New Company Law, 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 then market priceof the shares to be purchased from such shareholder.
Any such acquisition of shares must satisfy certain requirements, including that the total amount of the purchase price may not exceed
the amount of the retained earnings available for year-end dividend payments plus the amount of any reduction of the stated capital,
additional paid-in capital or legal reserve (if this reduction is authorized by a resolution of the relevant general meeting ofshareholders) minus the sum of the amount to be paid by way of appropriation of retained earnings and the amount of retained
earnings to be transferred to the stated capital in respect of the relevant fiscal year pursuant to a resolution of the general meeting ofshareholders. In the case of the purchase by Kyocera Corporation of its own shares pursuant to a resolution of the Board of Directors
mentioned in (i) or (iii) above, however, the total amount of the purchase price of such shares may not exceed the amount
distributable as interim dividends as described in “Capital stock – Dividends – Restriction on Dividends” above, minus the amount of
the interim dividend actually paid by Kyocera Corporation. However, if it is anticipated that the net assets, as stated on Kyocera
Corporation’s non-consolidated balance sheet at the end of the immediately following fiscal year, will be less than the aggregate
amount of the items described in (i) through (v) in “Capital stock – Dividends – Restriction on Dividends” above, Kyocera
Corporation may not purchase these shares. Under the New Company Law, the total amount of the purchase price of shares may notexceed the Distributable Amount, as described in “Capital stock – Dividends – Restriction on Dividends”
The Commercial Code 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 will be 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 sharesor one-two hundredths (1/200) of the number of all issued shares, whichever is smaller. The New Company Law provides no specificprovision for the maximum number of shares constituting one unit, which will be set forth in an ordinance of the Ministry of Justice.
No share certificates may 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 sharesconstituting less than one unit). As the transfer of shares normally requires delivery of the relevant share certificates, any fraction of aunit for which no share certificates are issued will not be transferable.
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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.
Under the unit share system, a shareholder will have one vote for each unit of shares held by it. Shares not constituting a full unit will
carry no voting rights. Except as otherwise described above, holders of shares constituting less than one unit will have all the rights
granted to shareholders under the Commercial Code.
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 theCommercial Code 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.
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.
- 93 -On September 15, 2005, the closing price of our shares of Common Stock on the Tokyo Stock Exchange was ¥7,850 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
Maximum Daily
Price Movement

Previous Day’s Closing Price or Special Quote

Over
Over
Over

¥3,000¥5,000¥10,000

Less thanLess thanLess than¥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,•

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.
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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 ofJapanese withholding tax which may be imposed on dividends paid to an United States resident or corporation nothaving a “permanent establishment” in Japan. A “permanent establishment” in Japan is generally a fixed place ofbusiness for industrial or commercial activity in Japan. Under the Treaty, the maximum withholding rate for mostqualified portfolio shareholders is limited to 10% of the gross amount of the dividends and 5% of the gross amount of
the dividends if the beneficial owner is a qualified company that owns, directly or indirectly, on the date on which
entitlement to the dividend is determined, at least 10% (but not more than 50%) of the voting stock of the issuing
company. The Treaty provides that no Japanese tax will be imposed on dividends paid to a qualified pension fund thatis 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, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The
withholding tax rate is further reduced if investors and Kyocera Corporation have some capital relationship as provided for in an
applicable tax treaty.
In principle, the rate of Japanese withholding tax applicable to dividends paid by Kyocera Corporation to non-residents or nonJapanese corporations is 20%. However, with respect to dividends paid by Kyocera Corporation to any corporate or individual
shareholders who are non-residents of Japan or non-Japanese corporations, except for any individual shareholder who holds 5% ormore of the outstanding total of the shares issued by Kyocera Corporation, the said 20% withholding tax rate is reduced to (i) 7% fordividends due and payable on or before March 31, 2008 and (ii) 15% for dividends due and payable on or after April 1, 2008. Under
Japanese tax law, whichever is the lower of the maximum rate provided in the relevant tax treaty, convention or agreement and theJapanese statutory rate will be applicable.
Gains derived from the sale outside Japan of the shares or ADSs by a non-resident of Japan or a non-Japanese corporation are in
general not subject to Japanese income or corporation taxes. In addition, gains derived 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.
- 95 -

United States Taxation
The following discusses United States federal income tax consequences of the ownership of shares or ADSs. It only applies to holdersof shares who hold their ADSs as capital assets. It does not address special classes of holders, some of whom may be subject tospecial 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,•

U.S. holders (as defined below) 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 his own tax advisor regarding theUnited States federal, state and local and other tax consequences of owning and disposing of shares or ADSs in his 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.
The discussion under the headings “Taxation of Dividends” and “Taxation of Capital Gains” assumes that Kyocera Corporation will
not be treated as a passive foreign investment company (PFIC) for U.S. federal income tax purposes. For a discussion of the rules that
apply if Kyocera is treated as a PFIC, see the discussion under the heading below “PFIC Rules.”- 96 -

Taxation of Dividends
Under the United States federal income tax laws, if the investor is a U.S. holder, the gross amount of any dividend paid by Kyocera
Corporation out of its current or accumulated earnings and profits, as determined for United States federal income tax purposes, issubject 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, 2009 that constitute qualified dividend income will be taxable at a maximum rate of 15% provided thatthe shares or ADSs are held for more than 60 days during the 120-day period beginning 60 days before the ex-dividend date and meetother holding period requirements. Dividends paid with respect to shares or ADSs will be qualified dividend income. The investor
must include any Japanese tax withheld from the dividend payment in this gross amount even though he does not in fact receive it.
The dividend is ordinary income that the investor must include in income when the investor, in the case of shares, or the depositary, inthe case of ADSs, receives the dividend, actually or constructively. The dividend will not be eligible for the dividends-received
deduction generally allowed to United States corporations in respect of dividends received from other United States corporations.
The amount of the dividend distribution that the investor must include in his 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 he 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 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 your circumstances, be “passive” or “general” income, which, in either case, is treated separately from othertypes 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
If the investor is a U.S. holder and the investor sells or otherwise disposes of his shares or ADSs, the investor will recognize capitalgain or loss for United States federal income tax purposes equal to the difference between the U.S. dollar value of the amount that theinvestor realizes and his tax basis, determined in U.S. dollars, in his shares or ADSs. Capital gain of a non-corporate U.S. holder thatis recognized before January 1, 2009 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.
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PFIC Rules
Kyocera believes that shares and ADSs should not be treated as stock of a PFIC for United States federal income tax purposes for its
most recent taxable year. However, this conclusion is a factual determination made annually and thus may be subject to change.
In general, if the investor is a U.S. holder, Kyocera will be a PFIC with respect to the investor if for any of its taxable years in which
the investor held Kyocera Corporation’s ADSs or shares:•

at least 75% of Kyocera’s 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 Kyocera’s assets, are 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 Kyocera is 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 his shares or ADSs and•any “excess distribution” that Kyocera Corporation makes 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 theshares 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.

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 is treated as marketable stock, the investor may make a mark-to-market election. 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 his shares or ADSs at the end of the taxable
year over his adjusted basis in his 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 his shares or ADSs over their fair market value at the end of the taxable year orover their final sale or disposition prices, but only to the extent of the net amount of previously included income as a result of themark-to-market election. The investor’s basis in the shares or ADSs will be adjusted to reflect any such income or loss amounts.
- 98 -

In addition, notwithstanding any election an investor makes with regard to the shares or ADSs, dividends that received from us will
not constitute qualified dividend income to an investor if we are a PFIC either in the taxable year of the distribution or the preceding
taxable year. Moreover, an investor’s shares or ADSs will be treated as stock in a PFIC if Kyocera was a PFIC at any time during theinvestor’s holding period in the shares or ADSs, even if Kyocera is not currently a PFIC. For purposes of this rule, if an investor willbe treated as having a new holding period in the shares or ADSs, the investor will be treated as having a new holding period in theshares or ADSs beginning on the first day of the first taxable year beginning after the last taxable year for which the mark-to-market
election applies. Dividends 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 Kyocera out of accumulated earnings and profits (as determined for United States federal income tax purposes) in theinvestor’s 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 Kyocera is a PFIC he 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.
I. Subsidiary Information
Not Applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Kyocera is exposed to market risk, including changes in foreign exchange rates, interest rates and equity prices. In order to hedge
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 to protect against
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. There are no material quantitative changes inmarket risk exposure at March 31, 2005, when compared to March 31, 2004. In the normal course of business, Kyocera also faces
other risks such as country risk, credit risk, or legal risk, but they are not represented in the following tables.
- 99 -

Foreign Exchange Risk
Kyocera enters into foreign currency forward contracts to hedge certain existing assets and liabilities denominated in foreign
currencies, principally the U.S. dollar and the Euro. All such contracts currently in effect will mature generally within three months.
The tables below provide information about Kyocera’s major foreign currency forward contracts existing at March 31, 2005, setting
forth the contract amounts, fair value, and weighted average exchange rates. The contract amounts are generally used to calculate thecontractual payments to be exchanged under the contracts.
(Yen in millions) (Pay/Receive)(Except average contractual rates)
Forward exchange contracts to sell foreign currencies

Euro/Yen

US$/Yen

US$/STG

Contract amounts
Fair value
Weighted average contractual rates¥ 40,501(585)
136.457¥ 39,233(784)
104.858¥15,462(59)
1.885(Yen in millions) (Receive/Pay)(Except average contractual rates)
Forward exchange contracts to purchase foreign currencies

CZK/STG

Contract amounts
Fair value
Weighted average contractual rates¥

Yen/ US$

2,150
(11)
43.160

¥

1,131
(17)
104.771(U.S. dollars in thousands)(Pay/Receive)
Forward exchange contracts to sell foreign currencies

Euro/Yen

US$/Yen

US$/STG

Contract amounts
Fair value$378,514(5,467)$366,664(7,327)$144,505(551)(U.S. dollars in thousands)(Receive/Pay)
Forward exchange contracts to purchase foreign currencies

CZK/STG

Yen/US$

Contract amounts
Fair value$ 20,093(103)$ 10,570(159)

Interest Rate Risk
Kyocera enters into interest rate swaps and other contracts, which are mainly utilized by a Japanese subsidiary, KLC, to reduce
market risk exposure to changes in interest rates.
The tables below provide information about Kyocera’s derivative financial instruments and other financial instruments that are
sensitive to changes in interest rates. For interest rate swaps, the tables below present notional principal amount, weighted averageinterest rates by expected (contracted) maturity dates, and fair value. Notional amounts are used to calculate the contractual payments
to be exchanged under the contracts.
- 100 -

Other finance receivables (including due within one year)(Yen in millions)
Expected maturity date

Averageinterest
rate

Other finance receivables

2006

2007

2008

2009

3.64% ¥37,863 11,983 1,139

2010

Thereafter

347 1,415

Total

Fair value

48,274 ¥101,021 ¥101,081(Yen in millions)Long term debt (including due within one year)
Expected maturity date
Averagepay rate

Loans, principally from banks

2006

2007

2008

2009

2010

Thereafter

1.10% ¥44,051 17,026 11,731 1,133 1,367

Total

Fair value

2,300 ¥ 77,608 ¥ 77,950(Yen in millions)Interest rate swap
Expected maturity date

Averagereceive
rate

Notional
principal
amountAveragepay rate

2006

2007 200820092010 Thereafter

Total

Fair value(Variable
to Fixed)¥19,496

0.17%

1.94% ¥6,496 ——

13,000 ——(U.S dollars in thousands)

Other finance receivables (including due within one year)
Averageinterest
rate

Other finance receivables¥19,496 ¥ (969)

Expected maturity date
2006

2007

2008

2009

2010

Thereafter

Total

Fair value

3.64% $353,860 111,990 10,645 3,243 13,224 451,159 $ 944,121 $ 944,682

Long term debt (including due within one year)(U.S dollars in thousands)
Expected maturity date
Averagepay rate

Loans, principally from banks

2006

2007

2008

2009

2010

1.10% $411,691 159,121 109,636 10,589 12,776

Thereafter

Fair value

21,495 $ 725,308 $ 728,504(U.S dollars in thousands)

Interest rate swap
Notional
principal
amountTotal

Averagereceive
rate

Expected maturity date
Averagepay rate

2006

2007 200820092010 There-after

Total

Fair value(Variable
to Fixed)$182,206

0.17%

1.94% $60,710 —- 101 -—

121,496 ——$ 182,206 $ (9,056)

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 ¥71,448 million ($668
million), included ¥55,056 million ($515 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 Form 20-F. 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 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, 2003, 2004 and2005 amounted to ¥2,717 million, ¥695 million and ¥1 million ($0 million), respectively. At March 31, 2005, Kyocera held thefollowing available-for-sale marketable equity and debt securities.
Yen in millions and U.S. dollars in thousands
March 31, 2005

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

Cost

Fair Value

Cost

Fair Value¥ 14,606
60,787517
272,006¥ 14,318
60,971
513
343,208$ 136,504
568,103
4,832
2,542,112$ 133,813
569,823
4,794
3,207,551¥347,916¥419,010$3,251,551$3,915,981

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
Kyocera’s management, with the participation of its principal executive and principal financial officers, evaluated the effectiveness of
its disclosure controls and procedures (as defined in Rule 13a-15(e) under the U.S. Securities Exchange Act of 1934) as of March 31,
2005.
- 102 -

In making such evaluation, Kyocera’s management has taken into account the fact that the management of AVX Corporation, a
consolidated subsidiary of Kyocera and an SEC-reporting U.S. issuer, concluded that AVX Corporation’s internal control overfinancial reporting (as defined in Rule 13a-15(f) under the U.S. Securities Exchange Act of 1934) was not effective as of March 31,
2005 due to the existence of several material weaknesses (as defined under Auditing Standard No. 2 – An Audit of Internal Control
Over Financial Reporting Performed in Conjunction with An Audit of Financial Statements, issued by the Public Company
Accounting Oversight Board) that AVX Corporation’s management identified. These material weaknesses, as reported in AVX
Corporation’s annual report on Form 10-K for the year ended March 31, 2005, are as follows:
1.As of March 31, 2005, AVX Corporation did not maintain effective control over the accounting for the accrual of certain
management and employee bonuses. Specifically, AVX Corporation incorrectly accrued certain bonuses that were linked tocontinuing employment through fiscal 2006 that should not have been recognized as expense until employment had been fulfilled.
This control deficiency resulted in an audit adjustment to AVX Corporation’s fiscal 2005 fourth quarter consolidated financial
statements. Additionally, this control deficiency could result in the misstatement of accrued bonuses that would result in a material
misstatement to annual or interim financial statements that would not be prevented or detected. Accordingly, AVX Corporation
management determined that this control deficiency constitutes a material weakness.
2. As of March 31, 2005, AVX Corporation did not maintain effective controls over access to financial application programs anddata. Specifically, certain AVX Corporation personnel had incompatible duties and were permitted unrestricted access to financial
application programs and data beyond that needed to perform their individual job responsibilities. Additionally, there were noteffective controls in place to monitor users for inappropriate use of programs or access to data. These deficiencies existed in North
America, Europe and Asia and in certain systems and processes including cash, accounts receivable, fixed accounts and the related
income statement accountants. This control deficiency did not result in a misstatement to AVX Corporation’s consolidated financial
statements. However, it could result in the misstatement of account balances and disclosures that would result in a material
misstatement to annual or interim financial statements that would not be prevented or detected. Accordingly, AVX Corporation’s
management determined that this control deficiency constitutes a material weakness.
3. As of March 31, 2005, AVX Corporation did not perform supervisory reviews over recurring manual journal entries.
Specifically, AVX Corporation’s controls over the preparation, review and approval of recurring manual journal entries were
ineffective in their design. Recurring manual journal entries are originated in North America, Europe and Asia and in all financial
reporting processes. This control deficiency did not result in a misstatement to AVX Corporation’s consolidated financial statements.
However, it could result in the misstatement of account balances and disclosures that would result in a material misstatement toannual or interim financial statements that would not be prevented or detected. Accordingly, AVX Corporation management
determined that this control deficiency constitutes a material weakness.
AVX Corporation’s management, in particular its chief executive and chief financial officers, with oversight from AVX
Corporation’s audit committee, is addressing the material weaknesses at AVX Corporation described above and is committed toeffectively remediating known weaknesses as expeditiously as possible. Kyocera’s management has been and will be monitoringclosely the actions taken by AVX Corporation. As and when necessary, Kyocera’s management has given (since the time Kyocera’s
management learned of such material weaknesses at AVX Corporation), and will give, directions to AVX Corporation’s management
to take actions that Kyocera’s management considers are necessary to address such material weaknesses at AVX Corporation. Basedon the evaluation by Kyocera’s management of its disclosure controls and procedures, which has taken into account the issues with
AVX Corporation’s internal control over financial reporting described above as well as other relevant factors, Kyocera’s principal
executive and principal financial officers concluded that Kyocera’s disclosure controls and procedures were effective as of March 31,
2005.
No change in Kyocera’s internal control over financial reporting occurred during the year ended March 31, 2005 that has materiallyaffected, or is reasonably likely to materially affect, Kyocera’s internal control over financial reporting.
- 103 -

Item 16A. Audit Committee Financial Expert
Kyocera’s Board of Corporate Auditors has determined that Shigekazu Tamura, a Corporate Auditor of Kyocera, is an “audit
committee financial expert” as such term is defined by Item 16A of Form 20-F.
Item 16B. Code of Ethics
Kyocera has adopted a code of ethics that applies to Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and themembers of Kyocera Disclosure Committee. Kyocera’s code of ethics has been attached as Exhibit 11.1 to this Form 20-F and isincorporated herein by reference.
Item 16C. Principal Accountant Fees and Services
Principal Independent Registered Public Accounting Firm Fees
ChuoAoyama PricewaterhouseCoopers has served as our independent registered public accounting firm for each of the financial years
in the three-year period ended March 31, 2005, 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 2004 and fiscal 2005.
Years ended March 31,(Yen in millions and U.S. dollars in thousands)
2004

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

¥

Total

652
43
223
—
918

2005

¥

1,363
492
228
—
2,083

2005

$

12,738
4,598
2,131
—
19,4671) Amounts represent fees for the annual audit of Kyocera for the fiscal years ended March 31, 2004 and March 31, 2005, reviews ofKyocera’s financial statements for interim periods, other regulatory filings in fiscal 2004 and fiscal 2005 and the statutory audit ofinternal control over financial reporting for the U.S. listed subsidiary for fiscal 2005.
2) Amounts primarily represent fees for the audits of employee benefit plans, due diligence services pertaining to potential businessacquisitions, consultation on internal control, statutory audits of certain foreign locations and other procedures related to documents
filed with the SEC in fiscal 2004 and fiscal 2005.
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 2004 and fiscal 2005.
Kyocera’s Board of Corporate Auditors determined that the provision of non-audit services by ChuoAoyama PricewaterhouseCoopers
to Kyocera during fiscal 2004 and fiscal 2005 was compatible with maintaining the independent registered public accounting firm’s
independence.
- 104 -

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 ChuoAoyama 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
Pre-Approval”.
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”.
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 ChuoAoyama PricewaterhouseCoopers and the related parties since Rule 2-01(c)(7) of Regulation SX became effective were approved by Kyocera’s Board of Corporate Auditors pursuant to the pre-approval policy described above,and none 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.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not Applicable.
- 105 -

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, 2004
May 1 to May 31, 2004
June 1 to June 30, 2004
July 1 to July 31, 2004
August 1 to August 31, 2004
September 1 to September 30, 2004
October 1 to October 31, 2004
November 1 to November 30, 2004
December 1 to December 31, 2004
January 1, to January 31, 2005
February 1, to February 28, 2005
March 1 to March 31, 2005
Total(a) Total
Number of
Shares (orUnits)
Purchased

1,644
1,051
1,044
2,021
1,672
1,107
1,873
2,307
3,666
2,305
952
1,386

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

9,230.23
8,821.64
8,964.33
8,776.88
8,086.37
8,027.09
8,010.85
7,524.35
7,507.01
7,819.07
7,508.63
7,869.13

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

—

—

21,028- 106 -

Note: Under the Commercial Code of Japan, a holder of shares constituting less than one full unit may request Kyocera Corporation
to purchase such shares at their market value (See “Memorandum and Articles of Association—Capital stock—“‘Unit’ share system”
in “Item 10. Additional Information”). All purchases described in the above table were made pursuant to such requests byshareholders.
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, 2004 and 2005

F-1
F-2 & F-3

(3) Consolidated Statements of Income for the years ended March 31, 2003, 2004 and 2005

F-4

(4) Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2003, 2004 and 2005

F-5

(5) Consolidated Statements of Cash Flows for the years ended March 31, 2003, 2004 and 2005

F-6

(6) Notes to the Consolidated Financial Statements

F-7 to F-40

(7) SCHEDULE II. Valuation and Qualifying Accounts for the years ended March 31, 2003, 2004 and 2005
- 107 -

F-41

Item 19. Exhibits
Exhibit
NumberDescription

1.1

Articles of Incorporation (English translation) (incorporated by reference to the Registrant’s Form S-8 filed on August
31, 2005)

1.2

Share Handling Regulations of the Registrant (English translation) (incorporated by reference to the Registrant’s Form
S-8 filed on August 31, 2004)

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 September 19, 2002)

1.4

Regulations of the Board of Corporate Auditors of the Registrant (English translation) (incorporated by reference to theRegistrant’s annual report on Form 20-F filed on September 21, 2004)

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.
- 108 -

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders ofKyocera Corporation
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 at March 31, 2004 and 2005, and the results of theiroperations and their cash flows for each of the three years in the period ended March 31, 2005 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 and financial statement schedule are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedulebased on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit 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 its method of accounting for business combinationand goodwill and other intangible assets in the year ended March 31, 2003.
/s/ ChuoAoyama PricewaterhouseCoopers
ChuoAoyama PricewaterhouseCoopers
Osaka, Japan
June 28, 2005
F-1

Consolidated Balance Sheets
Kyocera Corporation and Consolidated Subsidiaries
March 31, 2004 and 2005
(Yen in millions and U.S. dollars and shares in thousands–Note 2)
ASSETS

2004

2005

2005

¥ 361,132
3,855¥ 310,592
34,938$ 2,902,729
326,523

33,801
207,583
70,55329,552
201,374
40,801

276,187
1,882,000
381,318

311,937(8,468)

271,727(7,981)2,539,505(74,589)

Inventories (Notes 6 and 9)
Deferred income taxes (Note 16)
Other current assets

303,469
197,194
34,95733,089263,746
213,41138,65934,2292,464,916
1,994,496
361,299
319,897

Total current assets

933,696895,575

8,369,860

24,054430,096

30,623
430,437

286,196
4,022,776

454,150
88,512

461,060
66,427

4,308,972
620,81354,867217,216
622,721
10,38455,210225,964
656,780
14,384515,9812,111,813
6,138,131
134,430

905,188(650,668)

952,338(693,341)

8,900,355(6,479,822)

254,520
25,254
16,64521,981

258,997
28,11015,847
19,5032,420,533
262,710148,103
182,271¥1,794,758¥1,745,519$16,313,262

Current assets:
Cash and cash equivalents (Note 13)
Short-term investments (Notes 4 and 13)
Trade receivables (Notes 7 and 9):
Notes
Accounts
Short-term finance receivables (Notes 5, 9 and 13)
Less allowances for doubtful accounts and sales returns

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 5, 9 and 13)
Property, plant and equipment, at cost (Note 9):Land
Buildings
Machinery and equipment
Construction in progress
Less accumulated depreciation
Goodwill (Note 8)
Intangible assets (Note 8)
Other assets

F-2

LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITYCurrent liabilities:
Short-term borrowings (Notes 9 and 13)
Current portion of long-term debt (Notes 9 and 13)
Notes and accounts payable:
Trade
Other
Accrued liabilities:
Payroll and bonus
Income taxes
Other
Other current liabilities

2004

¥

84,81544,522

2005¥

66,55644,051

2005$

622,019
411,691

110,759
38,11586,872
34,690811,888324,206

34,161
19,054
28,665
16,54834,821
31,18028,84917,338

325,430
291,402269,617
162,037

376,639

344,357

3,218,290

Long-term debt (Notes 9 and 13)
Accrued pension and severance liabilities (Note 10)
Deferred income taxes (Note 16)
Other non-current liabilities

70,60838,62098,791
6,409

33,557
31,166
96,345
4,761

313,617291,271
900,42144,495

Total liabilities

591,067

510,186

4,768,094

53,23860,482565,252

115,703
162,091
881,969
22,046

115,703
162,061
916,628
11,8391,081,336
1,514,589
8,566,617
110,645(31,356)(31,380)(293,271)

1,150,453

1,174,851

10,979,916¥1,794,758¥1,745,519$16,313,262

Total current liabilities

Minority interests in subsidiaries
Commitments and contingencies (Note 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): 3,825 shares at March 31, 2004 and
3,828 shares at March 31, 2005
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, 2005
(Yen in millions and U.S. dollars and shares in thousands, except per share amounts–Note 2)
2003

2004

2005

2005

¥1,069,770
796,258¥1,140,814
860,224¥1,180,655
855,067$11,034,159
7,991,280

Gross profit
Selling, general and administrative expenses

273,512190,124

280,590
171,628

325,588
224,620

3,042,879
2,099,253

Profit from operations
Other income (expenses):
Interest and dividend income
Interest expense (Note 12)
Foreign currency transaction (losses) gains, net (Note 12)
Equity in earnings (losses) of affiliates and unconsolidated
subsidiaries (Note 7)
Loss on impairment of investment in an affiliate
Losses on impairment of investment securities
Other, net

83,388108,962

100,968

943,626

5,194(1,432)(5,405)

4,883(1,286)(1,546)

6,396(1,275)2,618

59,776(11,916)
24,467

3,092(5,159)(2,883)
(758)

2,575
—
(1,030)2,482(1,678)
—
(132)
633

(15,682)—(1,234)
5,916(7,351)

6,078

6,562

61,32776,037

115,040

107,530

1,004,953

33,665(885)

29,576
20,73452,872
5,608

494,131
52,41132,78050,31058,480546,542

Income before minority interests and cumulative effect ofchange in accounting principle
Minority interests

43,257164

64,7303,356

49,050(3,142)458,411(29,364)

Income before cumulative effect of change in accounting
principle
Cumulative effect of change in accounting principle (Notes 1, 7 and 8)

43,421(2,256)68,086—45,908—429,047—

Net sales (Note 7)
Cost of sales

Income before income taxes, minority interests and cumulative
effect of change in accounting principle
Income taxes (Note 16):
Current (Note 21)
Deferred

Net income
Earnings per share (Note 19):
Income before cumulative effect of change in accounting principle:
Basic
DilutedCumulative effect of change in accounting principle:
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
Diluted¥41,165¥68,086¥45,908$429,047¥233.02232.97¥364.79364.78¥244.86244.81

$

2.29
2.29

(12.11)(12.11)

—
—

—
—

—
—

220.91220.86364.79364.78244.86244.81

2.29
2.29

60.00

60.00

80.00

0.75

186,338
186,382

186,643
186,649

187,489
187,528

The accompanying notes are an integral part of these statements.
F-4

Consolidated Statements of Stockholders’ Equity
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2005
(Yen in millions and U.S. dollars and shares in thousands – Note 2)
CommonStock

Balance at March 31, 2002
(189,042) as previously
reported
Restatement adjustment
prior to March 31, 2002
(Note 7)
Balance at March 31, 2002
(189,042) as restated
Net income for the year
Foreign currency translation
adjustments
Minimum pension liability
adjustment - net of taxesof ¥6,702 (Note 10)
Net unrealized losses on
securities - net of taxes of¥1,599 (Note 4)
Reclassification adjustments
for net losses on
securities - net of taxes of¥150 (Note 4)
Net unrealized losses onderivative financial
instruments (Note 12)
Reclassification adjustments
for net losses onderivative financial
instruments (Note 12)¥ 115,703

Additional
Paid-in Capital¥

158,228

Retained
Earnings(Note 15)

¥ 798,407

Accumulated Other
Comprehensive Income(Note 15)

Treasury Stock(Note 11)¥¥

(22,750)(10,110)(3,293)
115,703

158,228

795,114
41,165(22,750)(10,110)¥Stock issuance foracquisition of a
subsidiary (991)
Cash dividends
Purchase of treasury stock(5,080)Reissuance of treasury stock(11)
Stock option plan of a
subsidiary

41,165(20,578)(20,578)(10,931)(10,931)(2,238)(2,238)

209

209

(146)

(146)

240

240

Total comprehensive
income for the year

Balance at March 31, 2003
(184,964) as restated
Net income for the year
Foreign currency translation
adjustments
Minimum pension liability
adjustment - net of taxes

Comprehensive
Income

¥

7,721

¥

68,086

9,381(11,222)(42,015)0

91

66
115,703

167,675

825,057
68,086(56,194)(20,693)(52,034)(20,693)

of ¥5,419 (Note 10)
Net unrealized gains on
securities - net of taxes of¥61,421 (Note 4)
Reclassification adjustments
for net losses on
securities - net of taxes of¥12 (Note 4)
Net unrealized gains onderivative financial
instruments (Note 12)
Reclassification adjustments
for net losses onderivative financial
instruments (Note 12)

9,454

9,454

89,136

89,136

60

60

32

32

251

251

Total comprehensive
income for the year
Cash dividends
Purchase of treasury stock(14)
Reissuance of treasury stock(5)
Exchange of stock foracquisition of an affiliate(2,529) (Note 3)
Stock option plan of a
subsidiary
Balance at March 31, 2004
(187,484) as restated
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¥1,234 (Note 4)
Net unrealized losses onderivative financial
instruments (Note 12)
Reclassification adjustments
for net losses onderivative financial
instruments (Note 12)146,326¥

45,908(11,174)
(105)
4

44

(5,607)

20,73919
115,703

162,091

881,969
45,90822,046(31,356)

6,704

6,704

(152)

(152)

(18,441)(18,441)

1,661

1,661

(27)

(27)

48

48

Total comprehensive
income for the year
Cash dividends
Purchase of treasury stock(21)
Reissuance of treasury stock
(18)

¥

¥
(11,249)
(170)
(5)

146

35,701

Stock option plan of a
subsidiary
Balance at March 31, 2005
(187,481)
Balance at March 31, 2004 as
restated
Net income for the year
Foreign currency translation
adjustments
Minimum pension liability
adjustment - net of taxesof $1,168 (Note 10)
Net unrealized losses on
securities-net of taxes of$111,299 (Note 4)
Reclassification adjustments
for net losses on
securities - net of taxes of$11,533 (Note 4)
Net unrealized losses onderivative financial
instruments (Note 12)
Reclassification adjustments
for net losses onderivative financial
instruments (Note 12)(25)¥ 115,703¥

162,061¥ 916,628¥

11,839¥(31,380)$1,081,336$ 1,514,869$8,242,701
429,047$

206,037$ (293,046)$

62,65462,654(1,420)(1,420)(172,346)(172,346)

15,523

15,523

(252)

(252)

449

449

Total comprehensive
income for the year$

Cash dividends
Purchase of treasury stock
Reissuance of treasury stock
Stock option plan of a
subsidiary
Balance at March 31, 2005

(105,131)(1,589)
1,364

(47)
(233)
$1,081,336$ 1,514,589$8,566,617$

110,645

The accompanying notes are an integral part of these statements.
F-5

429,047$ (293,271)

333,655

Consolidated Statements of Cash Flows
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2005
(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
Equity in (earnings) losses of affiliates and unconsolidated
subsidiaries (Note 7)
Loss on impairment of investment in an affiliate
Losses on impairment of investment securities
Gain on settlements of pension plans (Note 10)
Cumulative effect of change in accounting principle (Notes 1, 7 and
8)Foreign currency adjustments
Change in assets and liabilities:(Increase) decrease in receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable
Increase (decrease) in accrued income taxes
Increase (decrease) in other current liabilities(Decrease) increase in other non-current liabilities
Settlement regarding LaPine Case (Note 22)
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
Payments for purchases of property, plant and equipment
Payments for purchases of intangible assets
Proceeds from sales of property, plant and equipment, and intangible
assetsAcquisitions 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
Deposit of restricted cash
Withdrawal of restricted cash
Other, net
Net cash (used in) provided by investing activities
Cash flows from financing activities:

2003

2004

2005

2005

¥ 41,165¥ 68,086¥ 45,908

75,320(2,060)
6,966
(885)
(164)

70,2602,387
14,013
20,734(3,356)65,909(18)
10,405
5,608
3,142

615,972(168)
97,24352,411
29,364(3,092)
5,159
2,883
—

(2,575)—
1,030(24,870)

1,678
—
132
—

15,682
—
1,234
—

2,256
5,139

—
1,294

—
(2,391)—(22,346)(948)
11,067
1,128
13,2474,380
1,319(1,259)—(867)(34,704)(35,751)(4,402)
20,701(9,197)
9,441
2,761(35,454)
2,177

68,558(25,598)
14(31,914)
13,566(1,744)(11,464)—
3,732

640,729(239,233)
131(298,262)
126,785(16,299)(107,140)—
34,878

119,589(5,511)

99,615930,981

160,754

62,575145,523

1,360,028(21,562)(30,682)(1,035)
6,892
27,458—(40,481)(6,620)(10,038)(27,943)(7,917)28,954
48,533
5,004(50,712)(8,157)(81,946)(10,141)(11,858)
40,955
8,719—(59,381)(4,820)(765,850)(94,776)(110,822)
382,757
81,486—(554,963)(45,047)

3,122
4,058
—
93
(1,477)
—
1,722

2,720
(2,271)(674)
79(1,994)
52,9831,014

2,920(2,794)(112,903)
95,220——3,535

27,290(26,112)(1,055,168)
889,906——
33,037(58,512)29,581(132,494)(1,238,262)$

429,047

Decrease in short-term debt
Proceeds from issuance of long-term debt
Payments of long-term debt
Dividends paid
Net purchases of treasury stock
Other, net(3,475)
1,568(19,152)(12,382)(42,010)789(23,823)
48,975(33,152)(12,372)(33)(17)(18,490)
21,077(58,720)(12,614)
(28)
1,431

(172,804)
196,982(548,785)(117,888)(262)
13,374

Net cash used in financing activities(74,662)(20,422)(67,344)(629,383)

Effect of exchange rate changes on cash and cash equivalents(10,169)(8,912)

3,775

35,281

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

17,411
280,899

62,822
298,310(50,540)
361,132(472,336)
3,375,065

Cash and cash equivalents at end of year

¥298,310¥361,132¥ 310,592$ 2,902,729

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

Notes to The Consolidated Financial Statements
Kyocera Corporation and Consolidated Subsidiaries(As used in the following Notes, references to “Kyocera” is to Kyocera Corporation and, except as the context otherwise requires, itsconsolidated subsidiaries. And also, unless other wise indicated and except for shares, per share amounts and exchange rates,
Japanese yen amounts and US dollars amounts without any units are in millions for the Japanese yen and in the thousands for U.S.
dollars -Note 2)
1. ACCOUNTING POLICIES:
Financial 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 Kyocera Corporation’s books of account, have been made to theaccompanying consolidated financial statements in order to present them in conformity with accounting principles generally acceptedin 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.” All significant intercompany transactions andaccounts are eliminated. Investments in 20% to 50% owned companies are accounted for by the equity method, whereby Kyocera
includes in net income its equity in the earnings or losses of these companies.
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.
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 to thecustomer in accordance with the terms of an agreement of sale, there is a fixed or determinable selling price, title and risk of loss havebeen transferred, and collectibility is reasonably assured. These conditions are satisfied at the time of delivery to customers indomestic 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
At the time of sale, Kyocera accrues a product warranty liability for claims under warranties relating to the products that have beensold. Kyocera records an estimated based on its historical repair experience.
Revenue from financial services
In addition to the tangible products as discussed above, Kyocera also provides certain services, primarily financial services provided
by Kyocera Leasing Co., Ltd. (KLC), a wholly-owned subsidiary of Kyocera Corporation. Revenue from direct financing leases isrecognized over the term of the lease, and amortization of unearned lease income is recognized using the interest method. Interest
income on installment loans is recognized on an accrual basis. Interest income is no longer accrued at the time the collection of theinterest is past due 1 year or more, or the collection of the principal is past due 6 months or more. The interest received from cash
payments on impaired loans is recorded as income, unless the collectibility of the remaining investments is doubtful, in which casethe cash receipt is recorded as collection of the principal.
Cash and Cash Equivalents:
Cash and cash equivalents include time deposits and certificates of deposit with original maturities of three months or less.
Translation of Foreign Currencies:
Assets and liabilities of consolidated foreign subsidiaries and affiliates accounted for by the equity method are translated into
Japanese yen at the exchange rates in effect on the respective balance sheet dates. Operating accounts are translated at the average
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.
F-7

Inventories:
Inventories are stated at the lower of cost or market. Cost is determined by the average method for approximately 55% and 52% offinished goods and work in process at March 31, 2004 and 2005, respectively, and by the first-in, first-out method for all otherinventories. Kyocera recognizes estimated write-down of inventories for excess, slow-moving and obsolete inventories.
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:
On April 1, 2002, Kyocera adopted Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” andSFAS No. 142, “Goodwill and Other Intangible Assets.”Upon adoption of SFAS No. 141, Kyocera evaluated its existing intangible assets and goodwill that were acquired in a priorpurchase business combination, and made necessary reclassifications required by SFAS No. 141. Upon the adoption of SFAS No.142,
Kyocera reassessed the useful lives and residual values of all existing intangible assets.
Goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually. Intangible assets withdefinite useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for
impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
The principal estimated amortization for intangible assets are as follows:
Patent rights
Software2 to 8 years
2 to 5 years

In connection with the transitional goodwill impairment evaluation, SFAS No. 142 required Kyocera to perform an assessmentof whether there is an indication that goodwill is impaired as of the date of adoption. To accomplish this, Kyocera identified its
reporting units and determined the carrying value of each reporting unit by assigning the assets and liabilities, including the existing
goodwill and intangible assets, to those reporting units as of the date of adoption. To the extent a reporting unit’s carrying amountexceeded its fair value, an indication existed that the reporting unit’s goodwill was impaired. In the second step, Kyocera compared
the implied fair value of the reporting unit’s goodwill, determined by allocating the reporting unit’s fair value to all of its assets(recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with SFAS No. 141, to
its carrying amount, both of which would be measured as of the date of adoption. The impairment loss is measured based on theamount by which the carrying amount exceeds the implied fair value of goodwill.
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 thecarrying 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 FASB Statement No. 133.”

All derivatives are recorded as either assets or liabilities on the balance sheet and measured at fair value. Changes in the fair value ofderivatives are charged in current earnings. However cash flow hedges which meet the criteria of SFAS No. 133 may qualify forhedge accounting treatment. Changes in the fair value of the effective portion of these hedge derivatives are deferred in othercomprehensive income and charged to earnings when the underlying transaction being hedged occurs.
Kyocera designates certain interest rate swaps and foreign currency forward contracts as cash flow hedges under SFAS No. 133.
Most of Kyocera’s foreign currency forward contracts are entered into as hedges of existing foreign currency denominated assets andliabilities and as such do not qualify for hedge accounting. Accordingly, Kyocera records changes in fair value of these foreign
currency forward contracts currently in earnings. It is expected that such changes will be offset by corresponding gains or losses on
the underlying assets and liabilities.
F-8

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.
Stock-Based Compensation:
In December 2002, the Financial Accounting Standard Board (FASB) issued SFAS No. 148, “Accounting for Stock-Based
Compensation-Transition and Disclosure,” which amends SFAS No. 123, “Accounting for Stock-Based Compensation,” and provides
alternative methods to transition for a voluntary change to the fair value based method of accounting for stock options. As allowed by
SFAS 148, Kyocera measures stock-based compensation expense using the intrinsic value method in accordance with Accounting
Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employee and its related interpretations.” Accordingly, nocompensation expense has been recognized by Kyocera Corporation and AVX. KWC recognized compensation expense in theConsolidated Statements of Income under APB No. 25, because KWC has a variable stock option plan.
The following table illustrates the effect on net income and earnings per share if Kyocera had applied the fair value recognition
provisions of SFAS No. 123. For purposes of this pro forma disclosure, the fair value of the options is estimated using Black-Scholes
option pricing model and amortized ratably to expense over the service period.
Years ended March 31,
2003

2004

2005

2005

Income before cumulative effect of change in accounting principle, as reported
Add : Stock-based employee compensation expense included in reported Income
before cumulative effect of change in accounting principle - net of taxes
Deduct : Total stock - based employee compensation expense determined under fairvalue based method for all awards - net of taxes¥43,421¥68,086¥45,908$429,047

50

25

(25)

(233)

(1,559)(4,155)(2,772)(25,907)

Pro forma income before cumulative effect of change in accounting principle
Cumulative effect of change in accounting principle

41,912(2,256)

63,956—

43,111—

402,907—

Pro forma net income¥39,656¥63,956¥43,111$402,907¥233.02224.93232.97224.91¥364.79
342.67364.78342.65¥244.86229.94244.81229.89$220.91212.82220.86212.81364.79342.67364.78342.65244.86229.94244.81229.89Earnings per share :Income before cumulative effect of change in accounting principle :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

2.29
2.15
2.29
2.15
2.29
2.15
2.29
2.15

Kyocera Corporation
Options granted in the year ended March 31, 2003, 2004 and 2005 had weighted average fair values of ¥1,294, ¥3,176 and ¥1,946($18.19), respectively using the Black-Scholes option pricing model. The following are weighted-average assumptions used for
options during the three years ended March 31, 2005.
Years ended March 31,
2003

Interest rate
Expected life
Volatility
Expected dividends

2004

2005

0.01%
0.75%
0.39%
1 year 4.5 years 3.7 years
51.97% 51.48% 39.09%
0.74%
0.76%
1.00%

AVX Corporation and its consolidated subsidiaries (AVX)
Options granted in the year ended March 31, 2003, 2004 and 2005 had weighted average fair values of $5.00 to $9.18, $4.22 to $5.13
and $5.34 to $6.25, respectively using the Black-Scholes option pricing model. The following are weighted-average assumptions used
for options during the three years ended March 31, 2005.
Years ended March 31,

Interest rate
Expected life
Volatility
Expected dividends

2003

2004

2005

3.19%
4 years
60.0%
0.98%

1.43%
4 years
59.8%
1.27%

3.53%
4 years
56.0%
1.07%

Kyocera Wireless Corporation and its consolidated subsidiaries (KWC)
Options granted in the year ended March 31, 2003, 2004 and 2005 had weighted average fair values of $1.68, $1.03 and $1.48,
respectively using the Black-Scholes option pricing model. The following are weighted-average assumptions used for options during
the three years ended March 31, 2005.
Years ended March 31,
2003

Interest rate
Expected life
Volatility
Expected dividends

2004

3.43% 2.99%
5 years 5 years
45.00% 45.00%
—
—

2005

3.65%
5 years
45.00%—

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 options and warrants were exercised and resulted in the issuance ofcommon stock.
Cash dividends per share are those declared with respect to the earnings for the respective periods for which dividends were
proposed 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:
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.
F-10

New Accounting Standards:
In March 2004, the Emerging Issues Task Force (EITF) concluded its discussion of Issue No. 03-01, “The Meaning of Other-ThanTemporary Impairment and its Application to Certain Investments.” EITF Issue No. 03-01 provides accounting guidance regarding
the determination of when an impairment (i.e. fair value is less than carrying value) of debt and marketable equity securities andinvestments accounted for under the cost method should be considered other-than-temporary and recognized in earnings. EITF Issue
No. 03-01 also requires annual disclosures of certain quantitative and qualitative factors of debt and marketable equity securities
classified as available-for-sale or held-to-maturity that are in an unrealized loss position at the balance sheet date, but for which another-than-temporary impairment has not been recognized. The disclosure requirements of EITF Issue No. 03-01 were effective
December 31, 2003. The accounting guidance of EITF Issue No. 03-01 was effective in reporting periods beginning after June 15,
2004. The adoption of this statement did not have a material impact on Kyocera’s consolidated results of operations and financial
position.
In November 2004, the 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 be recognized 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 is effective forinventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 will not have a material
impact on Kyocera’s consolidated results of operations and financial position.
In December 2004, the FASB issued SFAS No. 123 (revised 2004) (SFAS No. 123R), “Share-Based Payments.” 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 allshare-based payment transactions be recognized in the financial statements. SFAS No. 123R establishes fair value as themeasurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value based
measurement method in accounting for share-based payment transactions with employees except for equity instruments held byemployee 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 Staff postponed implementation of
SFAS No. 123R and Kyocera plans to adopt SFAS No. 123R effective fiscal 2007. Kyocera has not completed its evaluation of theeffect that SFAS No. 123R will have, but believes that the effect will be consistent with the pro forma disclosures. Detailed
information is described in Note1: “Stock-Based Compensation” included in this annual report.
In December 2004, the FASB issued SFAS No. 153, “Exchanges of Non-monetary Assets - An Amendment of APB Opinion
No. 29.” SFAS No. 153 eliminates the exception to fair value accounting for exchanges of similar productive assets contained in APB
Opinion No. 29 and replaces it with a general exception for exchange transactions that do not have commercial substance. The
exception in APB Opinion No. 29 required certain non-monetary asset exchanges to be recorded on a carryover basis with nogain/loss recognition. Under SFAS No. 153, exchange transactions with commercial substance are required to be accounted for at fairvalue with gain/loss recognition on assets surrendered in exchange transactions. Kyocera will be required to adopt SFAS No. 153 on
July 1, 2005, and believes the adoption of SFAS No. 153 will not have a material impact on Kyocera’s consolidated results ofoperations and financial position.
In March 2005, the FASB issued Interpretation (FIN) No. 47, “Accounting for Conditional Asset Retirement Obligations-an
interpretation of SFAS No. 143.” This Interpretation clarifies use of the term conditional asset retirement obligation in SFAS No. 143,
“Accounting for Asset Retirement Obligation.” FIN No. 47 requires recognition of a liability for the fair value of a conditional asset
retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN No. 47 is effective no later than theend of fiscal years ending after December 15, 2005. Kyocera is currently evaluating the impact of FIN No. 47 on its 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 SFAS 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 reporting of a changein accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle. It also applies to changes required byan 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 the period of thechange the cumulative effect of changing to the new accounting principle. SFAS No. 154 requires retrospective application to priorperiods’ financial statements of changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections oferrors made in fiscal years beginning after December 15, 2005. The impact of SFAS No. 154 will depend on the change, if any, that
Kyocera may identify and record in a future period.
Reclassifications:Certain reclassifications of previously reported amounts have been made to the consolidated statements of cash flows and footnote
disclosures for the years ended March 31, 2003 and 2004 to conform the current year presentation. Such reclassifications have noeffect on net assets, net income and cash flows.

F-11

2. U.S. DOLLAR AMOUNTS:
The consolidated financial statements presented herein are expressed in the Japanese yen, and, solely for the convenience of thereaders, have been translated into the U.S. dollar for 2005 at the rate of ¥107 for US$1, the rate prevailing on March 31, 2005.
This translation should not be construed as a representation that the yen amounts shown could be so converted into the U.S. dollar at¥107 for US$1 or at any other rate.
3. BUSINESS COMBINATIONS:
Investments in Kinseki, Limited and Kyocera SLC Technologies Corporation in the year ended March 31, 2004:
On May 21, 2003, in order to reinforce the business of crystal components, Kyocera Corporation and Kinseki, Limited, at themeetings of their respective Boards of Directors, resolved that Kyocera Corporation would make Kinseki, Limited a wholly-owned
subsidiary through a share exchange.
The agreement was approved at the ordinary general shareholders meeting of Kinseki, Limited held on June 27, 2003, and theshare exchange was effective on August 1, 2003, allocating a total of 2,529,154 shares of common stock of Kyocera Corporation to
Kinseki, Limited’s shareholders in return for the remaining 25,291,542 shares (71.91%) of Kinseki, Limited’s shares not previously
owned by Kyocera Corporation. Operating results of Kinseki, Limited and its subsidiaries (Kinseki) until the date of the shareexchange had been included as equity in earnings of affiliates, and those from the date of the acquisition have been included in
Kyocera’s consolidated results of operations.
The following table summarizes the purchase price allocation of Kinseki’s assets acquired and liabilities assumed for the
71.91% additional interest acquired:
August 1, 2003

Assets:Cash and cash equivalents
Trade receivables
Inventories
Property, plant and equipment
Investments and other¥

13,711
8,494
5,066
19,534
4,029

Total assets

50,834

Liabilities:
Trade payables
Retirement benefit obligation
Long-term borrowings
Other liabilities

2,466
2,963
8,686
4,803

Total liabilities

18,918

Net assets
Proportion of net assets acquired (71.91%)

31,916
22,950Consideration paid

(15,159)

Excess of net assets acquired over consideration given

¥

7,791

On August 1, 2003, the estimated fair value of the acquired net assets for Kinseki was ¥22,950, in excess of the purchase price of¥15,159, which was calculated based on the average stock price of Kyocera Corporation during a few days before and after the dateon which Kyocera Corporation and Kinseki, Limited reached an agreement on the acquisition. The excess of net assets acquired overconsideration of ¥7,791 was charged against property, plant and equipment.
Kyocera Corporation acquired Kinseki, Limited through a statutory share exchange under Japanese law. The exchange ratio wasdetermined by third party appraisers. The market value of the shares exchanged was lower than the fair value of net assets acquired.
F-12

On June 30, 2003, in order to reinforce the business of organic circuit board, Kyocera Corporation and IBM Japan, Ltd. reached
an agreement for the transfer to Kyocera Corporation from IBM Japan, Ltd. of the SLC (Surface Laminar Circuitry: laminated highdensity printed circuit board) business of Yasu Site of IBM Japan, Ltd., and have executed a business transfer agreement. Kyocera
Corporation acquired this business in exchange for cash of ¥8,594.
Kyocera Corporation incorporated a new successor company, “Kyocera SLC Technologies Corporation” on August 12, 2003
and undertook the operation on September 1, 2003.
The following are the unaudited pro forma combined results of operations of Kyocera for the years ended March 31, 2003 and2004, as if these business combinations had taken place at the beginning of respective periods.
The unaudited pro forma combined results of operations are presented for comparative purposes only and are not necessarily
indicative of the results of operations that may occur in the future or that would have occurred had the acquisitions been in effect on
the dates indicated.
Years ended March 31,

Pro forma net sales
Pro forma net income
Pro forma net income per share: *basic
diluted

2003

2004

¥1,104,623
40,105¥1,153,438
67,636¥¥212.35212.30360.75360.74* The number of shares used to compute pro forma basic and diluted net income per share for the respective period includes the2,529,154 shares allocated to Kinseki, Limited’s shareholders as if the share exchange was done at the beginning of the respective
periods.
Investment in Kyocera Chemical Corporation in the year ended March 31, 2003:
On May 16, 2002, the Board of Directors of Kyocera Corporation and Toshiba Chemical Corporation, which manufactures and sells
electronic parts and materials, decided that Kyocera Corporation would make Toshiba Chemical Corporation a wholly-owned
subsidiary of Kyocera Corporation through a share exchange in order to reinforce the business of electronic parts and materials heldby Toshiba Chemical Corporation and Electronic Device Group and other divisions of Kyocera. On August 1, 2002, Kyocera
Corporation issued 990,990 shares of common stock of Kyocera Corporation in exchange for 45,045,000 shares (100%) of Toshiba
Chemical Corporation. On the same day, Toshiba Chemical Corporation was renamed as Kyocera Chemical Corporation. Operating
results of Kyocera Chemical Corporation and its consolidated subsidiaries (KCC) were included in Kyocera’s consolidated results ofoperations from the date of the acquisition.
F-13

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, ¥87,125 of gross unrealized gain at March 31, 2004 and ¥55,056 ($514,542) of gross unrealized gain at March 31,
2005 were derived from a fluctuation in the market value of the shares of KDDI Corporation held by Kyocera Corporation.
Kyocera evaluates whether the declines in fair value of debt and equity securities with readily determinable fair values are otherthan-temporary. Other-than-temporary declines in fair value are recorded as a realized loss with a new cost basis. This evaluation isbased mainly on the duration and the extent to which the fair value is less than cost, and the anticipated recoverability in fair value.
Other-than-temporary loss on debt and equity securities with readily determinable fair values for the years ended March 31, 2003,
2004 and 2005 amounted to ¥2,717, ¥695 and ¥1 ($9), respectively.
Investments in debt and equity securities at March 31, 2004 and 2005, included in short-term investments (current assets) and insecurities and other investments (non-current assets) are summarized as follows:
March 31,
2004

Cost*

Aggregate
Fair Value

2005

Gross
Unrealized
Gains

Gross
Unrealized
LossesCost*

Aggregate
Fair Value

Gross
Unrealized
Gains

Gross
Unrealized
LossesAvailable-for-sale securities:
Corporate debt securities
Other debt securities
Equity securities¥ 14,961 ¥ 14,891 ¥26 ¥96 ¥ 2,024 ¥ 2,029 ¥13 ¥12,994
12,8391
156
73,88673,773
199
281,143 380,502 102,579
3,220 272,006 343,208
71,4488
312
246

Total available-for-sale securities

309,098

408,232

102,606

3,472

347,916

419,010

71,660566

Held-to-maturity securities:
Other debt securities

21,093

21,16572—

22,90022,545—355

Total held-to-maturity securities

21,093

21,16572—

22,90022,545—355

Total investments in debt and equity
securities¥330,191 ¥429,397 ¥102,678 ¥ 3,472 ¥370,816 ¥441,555 ¥ 71,660 ¥921

March 31, 2005

Cost*

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

Total available-for-sale securities

Aggregate
Fair Value

Gross
Unrealized
Gains

Gross
Unrealized
Losses

18,916 $ 18,963 $122 $75
690,523
689,467
1,860
2,916
2,542,112 3,207,551 667,738
2,299
3,251,551

3,915,981

669,720

5,290

Held-to-maturity securities:
Other debt securities

214,019

210,701—

3,318

Total held-to-maturity securities

214,019

210,701—

3,318

Total investments in debt and equity securities$3,465,570 $4,126,682 $669,720 $ 8,608
F-14

At March 31, 2005, the contractual maturities of available-for-sale and held-to-maturity securities are summarized as follows:
March 31, 2005
Available-for-SaleCost*

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

Aggregate
Fair Value

Held-to-Maturity

Cost*

Available-for-Sale

Aggregate
Fair
Value

Held-to-Maturity

Aggregate
Fair Value

Cost*

Aggregate
Fair Value

Cost*¥ 14,606 ¥ 14,318 ¥ 2,142 ¥ 2,123 $ 136,504 $ 133,813 $ 20,019 $ 19,841
60,78760,971 20,758
20,422
568,103569,823 194,000 190,860
517
513
—
—
4,832
4,794
—
—
272,006 343,208——
2,542,112 3,207,551——¥347,916 ¥419,010 ¥22,900 ¥22,545 $3,251,551 $3,915,981 $214,019 $210,701* 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, 2003,
2004 and 2005 are as follows:
Years ended March 31,

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

2003

2004

2005

2005

¥13
4
4

¥3,427219
0¥22,701
2,046
4,224

$212,159
19,121
39,477For 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, 2004 and 2005 asfollows:
March 31, 2004
within 1 year
Aggregate
Fair
Value

Corporate debt securities
Other debt securities
Equity securities
Total

over 1 year

Unrealized
LossesAggregate
Fair
Value

Total

Unrealized
LossesAggregate
Fair
Value

Unrealized
Losses¥5,707 ¥—
252

5 ¥ 4,959 ¥91 ¥ 10,666 ¥
96—
12,738156
12,738156
17
17,403
3,203
17,655
3,220

¥

5,959

22 ¥ 35,100 ¥ 3,450 ¥ 41,059 ¥ 3,472¥

March 31, 2005
within 1 year
Aggregate
Fair Value

Corporate debt securities
Other debt securities
Equity securities
Total

¥

over 1 year

Unrealized
LossesAggregate
Fair Value

Total

Unrealized
LossesAggregate
Fair Value

Unrealized
Losses

773 ¥
9,364
5,514

8 ¥
— ¥
24
12,606
238
98

— ¥
773 ¥
288
21,970
8
5,612

8
312
246

¥ 15,651 ¥270 ¥ 12,704 ¥296 ¥ 28,355 ¥566

March 31, 2005
within 1 year
Aggregate
Fair
Value

Corporate debt securities
Other debt securities
Equity securities
Total

$

Unrealized
Lossesover 1 year
Aggregate
Fair
Value

Unrealized
Losses

Total
Aggregate
Fair
Value

Unrealized
Losses7,224 $75 $— $— $ 7,224 $75
87,514224 117,813
2,692 205,327
2,916
51,533
2,224
916
75
52,4492,299$146,271 $ 2,523 $118,729 $ 2,767 $265,000 $ 5,290

At March 31, 2004 and 2005, the number of individual available-for-sale securities in an unrealized loss position held byKyocera were 24 and 38, respectively.
F-15

5. FINANCE RECEIVABLES:
Finance receivables at March 31, 2004 and 2005 consist of the following:
March 31,
2004

Investments in financing leases (a):Minimum lease payments receivable
Unearned lease income

¥

8,611
(674)

2005

¥

2005

7,311
(591)

$

68,327(5,523)Less–allowance for doubtful accounts (c)

7,937
(378)

6,720
(576)

62,804(5,383)Less–current portion

7,559(3,301)

6,144(2,875)57,421(26,869)

¥

4,258

¥

3,269

$

30,552Other finance receivables (b)Less–allowance for doubtful accounts (c)¥187,349(35,937)¥115,364(14,343)$1,078,168(134,047)

Less–current portion

151,412(67,158)

101,021(37,863)944,121(353,860)¥ 84,254¥ 63,158$ 590,261¥ 88,512¥ 66,427$ 620,813(a) Investments in financing leases consist primarily of direct financing leases of telecommunications equipment and informationequipment. Future minimum lease payments to be received for each of the five fiscal years and thereafter are as follows:
Years ending March 31,

2006
2007
2008
2009
2010
2011 and thereafter¥3,218
1,821
1,321
684
237
30

$30,075
17,01912,346
6,392
2,215
280

¥7,311$68,327(b) Other finance receivables consist primarily of installment loans to unrelated third parties.

Investments in loans of ¥13,981 and ¥6,871 ($64,215) at March 31, 2004 and 2005 were considered to be impaired, for which
valuation allowances at March 31, 2004 and 2005 were provided of ¥11,171 and ¥4,610 ($43,084), respectively, calculated under
SFAS No. 114, “Accounting by Creditors for Impairment Loan” and included in allowances for doubtful accounts.
The average recorded investments in impaired loans for the years ended March 31, 2003, 2004 and 2005 were ¥19,174, ¥16,695
and ¥9,567 ($89,411), respectively. The related recognized interest income for the years ended March 31, 2003, 2004 and 2005 were
¥83, ¥52 and ¥43 ($402), respectively.
The principal amount of the loan on which interest income was no longer accrued at March 31, 2004 and 2005 were ¥35,667 and¥14,143 ($132,178), respectively. The loans, on which the collection of the principal was past due ninety days or more and on whichinterest income was still accrued, were ¥385 ($3,598) at March 31, 2005. There were no such loans at March 31, 2004.
(c) Changes in allowances for doubtful accounts on finance receivables are as follows:

Years ended March 31,

2003

2004

2005

2005

Beginning balance
Provision charged to income
Charge-offs¥51,790 ¥ 49,578 ¥ 36,315 $ 339,393
927
500
508
4,747
(3,139) (13,763) (21,904) (204,710)

Ending balance¥49,578
F-16¥ 36,315¥ 14,919$ 139,430

6. INVENTORIES:
Inventories at March 31, 2004 and 2005 are as follows:
March 31,

Finished goods
Work in process
Raw materials and supplies

2004

2005

2005

¥ 90,725
46,40260,067¥102,538
42,26768,606$ 958,299
395,019
641,178¥197,194¥213,411$1,994,496

7. INVESTMENTS IN AND ADVANCES TO AFFILIATES:
Kyocera Corporation owns a 36.02% interest in Taito Corporation (Taito), which operates in electronic amusement business.
Kyocera Corporation owned a 13.33% interest in DDI Pocket, Inc. (DDI Pocket) which operates a Personal Handyphone System(PHS) business. In October 2004, Kyocera purchased an additional 16.67% ownership interest for ¥9,993 ($93,393) to expand sales in
its PHS-related business. Due to its cumulative ownership interest of 30%, Kyocera accounts for its investment by the equity method.
DDI Pocket changed its name to WILLCOM, INC. (WILLCOM) in February 2005.
Kyocera has treated this transaction as a change in reporting entity and has restated the prior years’ financial statements, as if theequity method had been utilized at inception, in accordance with APB Opinion No. 18, “The Equity Method of Accounting forInvestments in Common Stock.” The 13.33% cost method investment in DDI Pocket had been recorded at zero for the years ended
March 31, 2003 and 2004 in the prior years’ financial statements. For the restated years ended March 31, 2003 and 2004, Kyocera did
not recognize equity in earnings of DDI Pocket because the carrying amount of the investment under the equity method was also zero.
On the other hand, Kyocera reduced the earning ¥3,293 for the year ended March 31, 2001, which was a reversal of deferred tax
assets of ¥3,293 for a temporary difference on the cost method investment in DDI Pocket, resulting in an increase of net deferred tax
liabilities on balance sheet.
A portion of the difference of ¥18,660 ($174,393) between the purchase price for the additional 16.67% ownership interest andKyocera’s proportionate share of DDI Pocket’s net stockholders’ deficit at time of the purchase was allocated to property, plant andequipment and intangible assets mainly composed of customer lists, which are amortized into equity earnings over the estimateduseful lives. The remaining excess purchase price was treated as goodwill that will not be amortized but tested for impairment.
Kyocera’s investment in WILLCOM, which was ¥5,696 ($53,234) at March 31, 2005 accounted for by the equity method, ispledged as collateral for loans from financial institutions of WILLCOM.
On December 4, 2003, Kyocera Mita Corporation paid ¥6,632 to acquire a 25% ownership interest of Triumph-Adler AG Group(TA), a distributor of office equipment, which resulted in a difference between the cost of the investment and the amount ofunderlying equity in net assets totaling ¥6,285. Kyocera Mita Corporation applies the equity method of accounting for thisinvestment.
Kyocera Corporation owned a 28.09% interest in Kinseki, Limited. On August 1, 2003, Kyocera Corporation made Kinseki,
Limited a wholly-owned subsidiary (100% owned subsidiary) through exchange of shares. Detailed information of this businesscombination appears in the Note 3 to the Consolidated Financial Statements.
Kyocera Corporation had owned a 27.48% interest in SK TELETECH CO., LTD. (SKTT). On March 26, 2004, Kyocera
Corporation sold all of its shares of SKTT and recorded its gain of ¥491.
At March 31, 2002, the unamortized excess of Kyocera Corporation’s equity in the underlying net assets of Taito over its
investments was ¥919. Upon adoption of SFAS No. 141, Kyocera wrote off ¥919 of unamortized deferred credit related to an excess
over cost arising from its investment in Taito that was accounted for by the equity method as a cumulative effect of change inaccounting principle in the six months ended September 30, 2002.
F-17

Summarized financial information concerning the affiliates, accounted for by the equity method is as follows:
March 31,
2004

2005

2005

Current assets
Non-current assets¥118,281
147,446¥108,903
152,228$1,017,785
1,422,692

Total assets¥265,727¥261,131$2,440,477

Current liabilities
Non-current liabilities¥125,980
104,655¥ 70,396
204,334$ 657,906
1,909,664

Total liabilities¥230,635¥274,730$2,567,570¥ 23,942
1,319¥ 30,471
6,363$ 284,776
59,467

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

Years ended March 31,

Net sales
Profit from operations
Net income
Kyocera’s equity in earnings of affiliates
Kyocera’s sales to affiliates

2003

2004

2005

2005

¥360,601
32,101
23,241
2,833
7,506¥346,500
36,57331,2752,323
5,686¥318,868
24,528(6,247)(1,712)
21,320$2,980,075
229,234(58,383)(16,000)
199,252

On March 31, 2005, Taito and TA are listed companies. The aggregate market values of investments in those listed affiliates at March
31, 2004 and 2005 were ¥23,637 and ¥21,740 ($203,178), respectively.
8. GOODWILL AND OTHER INTANGIBLE ASSETS:
Intangible assets subject to amortization are summarized as follows:
March 31,
2004
Gross
Carrying
Amount2005

Accumulated
Amortization

Gross
Carrying
Amount2005

Accumulated
Amortization

Gross
Carrying
AmountAccumulated
Amortization

Patent rights
SoftwareOther¥25,903
11,5496,250¥

17,682
8,336
1,222¥24,747
16,4586,814¥

20,045
9,957
2,355$231,281
153,813
63,682$ 187,337
93,05622,009

Total¥43,702¥27,240¥48,019¥

32,357$448,776$ 302,402

The carrying amounts of intangible assets having an indefinite life at March 31, 2004 and 2005 were ¥183 and ¥185 ($1,729),
respectively.
Intangible assets acquired during the year ended March 31, 2005 totaled ¥6,473 ($60,495) and primarily consist of patent rightsof ¥265 ($2,477) and software of ¥6,006 ($56,131).
The weighted average amortization periods for patent rights and software are 5 years and 4 years, respectively.
Total amortization of intangible assets during fiscal 2003, 2004 and 2005 amounted to ¥10,332, ¥9,201 and ¥7,016 ($65,570).
The estimated aggregate amortization expenses for intangible assets for the next five years are as follows:
Years ending March 31,

2006¥4,978$46,523

2007
2008
2009
2010

3,767
2,718
2,059
702
F-18

35,20625,402
19,243
6,561

The changes in the carrying amounts of goodwill by reporting segment for the years ended March 31, 2004 and 2005 are as follows:
Applied Ceramic
Products Group

Balance at March 31, 2003
Goodwill acquired during the year
Translation adjustments and reclassification to otheraccounts¥

Balance at March 31, 2004
Goodwill acquired during the year
Translation adjustments and reclassification toother accounts

Electronic
DeviceGroup

Information
Equipment Group

¥

657
—

¥

Others

Total

197
1,261

¥ 25,703
1,261

7,075
—

¥ 17,774
—

(842)

(791)

(77)

—

(1,710)6,233—

16,983
—

580
—

1,458
2,674

25,254
2,674

60

116

6

—

182

Balance at March 31, 2005

¥

6,293

¥ 17,099¥

586¥ 4,132¥ 28,110

Balance at March 31, 2004
Goodwill acquired during the year
Translation adjustments and reclassification toother accounts$

58,252—$158,720
—

$

5,421
—

$13,626
24,990$236,019
24,990

561

1,084

56

—

1,701

Balance at March 31, 2005$

58,813$159,804

5,477$38,616$262,710$

In the year ended March 31, 2003, Kyocera completed an impairment test of its goodwill, which indicated that there was an
impairment loss on goodwill related to the acquisition of Kyocera Tycom Corporation and its consolidated subsidiaries (KTC), which
manufactures and supplies micro drills for the IT industry, from the initial application of SFAS No. 142 “Goodwill and Other
Intangible Assets.” The impairment loss of ¥3,175 was recorded as a cumulative effect of change in accounting principle. Kyocera,with the assistance of a third party appraiser, arrived at the implied fair value of goodwill using a discounted cash flow methodology
taking into account sluggishness in KTC’s markets. Kyocera also tested goodwill and other intangible assets for impairment in thethree months ended March 31, 2005 and no impairment loss was recognized.
9. SHORT-TERM BORROWINGS AND LONG-TERM DEBT:
Short-term borrowings at March 31, 2004 and 2005 are comprised of the following:
Loans, principally from banks with average interest rate of 0.66% and 1.01% at March 31, 2004 and 2005, respectively.
March 31,2004

SecuredUnsecured

¥

2005

2005

500
84,315¥—66,556$—
622,019¥84,815¥66,556$622,019

Long-term debt at March 31, 2004 and 2005 are comprised of the following:
Loans, principally from banks with interest ranging from 0.39% to 7.50% and from 0.15% to 5.85% at March 31, 2004 and 2005,
respectively.
March 31,

SecuredUnsecuredLess, portion due within one year

¥

2004

2005

2005

6,115
109,015¥ 4,850
72,758$ 45,327
679,981

115,130(44,522)

77,608(44,051)

725,308(411,691)

¥ 70,608
F-19¥ 33,557$ 313,617

Aggregate maturities of long-term debt at March 31, 2005 are as follows:
Years ending March 31,

2007
2008
2009
2010
2011 and thereafter¥17,026
11,731
1,133
1,367
2,300

$159,121
109,636
10,58912,776
21,495¥33,557$313,617

Kyocera’s assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2004 and 2005, aresummarized as follows:
March 31,

Trade receivables
Finance receivables
Inventories
Property and equipment, net of accumulated depreciation
Others

2004

2005

2005

¥ 7,703
628
9,460
10,952
4,794

¥ —
—
—
4,920
—

$

¥33,537¥4,920$45,981———
45,981—

10. BENEFIT PLANS:
Domestic:
At March 31, 2005, Kyocera Corporation and Kyocera Mita Corporation and its consolidated subsidiaries (KMC) sponsor their own
defined benefit pension plans for their employees. KCC and Kyocera Kinseki Corporation and its consolidated subsidiaries (KKC)
have their own 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, benefits under the plan are calculated according to(i) accumulated “points” that are earned based on employee’s position, extent of contribution and length of service period during
employment, and (ii) conditions at the time of retirement. In addition, employees were provided an option to receive lifetime pension
payments for the full amount of their retirement payment, while after April 2005, employees 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 has been reflected as a prior service cost not yet recognized.
Benefits under the plans at KMC, KCC and KKC generally are based on the current rate of base salary, employee’s position,
length of service period and conditions at the time of retirement.
Kyocera Corporation and its domestic certain subsidiaries, with respect to directors and corporate auditors, provide for lumpsum severance benefits. 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.
Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities and Withdrawal
from Employee Pension Fund
Kyocera Corporation, KMC and KCC had adopted Employee Pension Fund (“EPF”), which was established pursuant to the Japanese
Welfare Pension Insurance Law (“JWPIL”) until the year ended March 31, 2004. In accordance with the JWPIL, a portion of thegovernment’s social security pension program, under which the employer and employee contribute an equal amount, was contracted
out to the employer (substitutional portion). Kyocera Corporation and KMC added it to its own non-contributory pension plan
(corporate portion).

F-20

As a result of enactment of the “Defined Benefit Corporate Pension Plan Law,” Kyocera Corporation and KMC were approvedby the Ministry of the Health, Labor and Welfare in Japan for an exemption from the obligation for benefits related to future
employee service under the substitutional portion of EPF in the year ended March 31, 2003, and also approved for the transfer to thegovernment of the benefit obligation related to past employee service under the substitutional portion of EPF. Upon these approvals,
Kyocera Corporation and KMC transferred to the government the substitutional portion of EPF and the related government-specified
portion of plan assets of EPF in the year ended March 31, 2004.
Kyocera Corporation and KMC adopted EITF Issue No. 03-02, “Accounting for the Transfer to the Japanese Government of the
Substitutional Portion of Employee Pension Fund Liabilities” for the settlement process of the substitutional portion of EPF. EITF
Issue No. 03-02 requires employers to account for the entire separation process of a substitutional portion from an entire plan(including a corporate portion) upon completion of the transfer to the government of a substitutional portion of EPF and related plan
assets as the culmination of a series of steps in a single settlement transaction. Under this approach, the difference between theaccumulated benefit obligation and the assets required to be transferred to the government was accounted for and separately disclosed
as a subsidy. And a proportionate amount of net unrecognized gain or loss related to the entire EPF and difference between projected
benefit obligations and accumulated benefit obligations for a substitutional portion of EPF were recognized as a settlement gain or
loss. Defined Benefit plans for employees at Kyocera Corporation and KMC were established instead of a corporate portion of EPF.
Details of the accounting for the settlement for a substitutional portion of EPF at Kyocera Corporation and KMC in accordance with
EITF Issue No. 03-02 in the year ended March 31, 2004 were as follows:Year ended
March 31, 2004

Accumulated benefit obligations for a substitutional portion of EPF
Related government-specified portion of plan assets of EPF transferred to thegovernment¥

67,98829,493

Subsidy

38,495

Proportionate amount of net unrecognized loss related to the entire EPF
Difference between projected benefit obligations and accumulated benefit obligations
for a substitutional portion of EPF(22,833)

Periodic pension costs related to the settlement for a substitutional portion of EPF(19,578)

Net settlement gain for a substitutional portion of EPF

3,255

¥

18,917

Subsidy was all included as a reduction of SG&A expenses, and periodic pension costs related to the settlement for a substitutional
portion of EPF was allocated ¥13,735 into cost of sales and ¥5,843 into SG&A expenses in the Consolidated Statement of Income forthe year ended March 31, 2004.
KCC withdrew from the EPF sponsored by Toshiba Corporation, in which KCC had participated, in the year ended March 31,
2004. The accounting for this withdrawal was in accordance with SFAS No. 88 “Employers’ Accounting for Settlements andCurtailments of Defined Benefit Pension Plans and for Termination Benefits.”
F-21

The following table sets forth the funded status of the benefit plans at Kyocera Corporation, KMC, KCC and KKC at March 31,
2004 and 2005.
March 31,
2004

2005

2005

¥210,969
2,768
7,094
4,140
59
(10,024)(5,291)(4,319)(71,243)(16,923)¥117,230
—
6,012
2,338
—
(21,095)
154(4,432)——$1,095,607—
56,187
21,850—(197,149)
1,439(41,420)——

117,230

100,207936,514

119,757
26
3,222
10,96859(3,913)92,357—
2,747
13,743—(3,977)863,149—
25,673
128,439—(37,168)(29,493)(8,269)————92,357

104,870980,093

Funded status
Unrecognized net loss
Prior service cost not yet recognized
Unrecognized net transition obligation(24,873)
35,243(40,517)
1,016

4,663
33,199(59,100)
790

43,579310,271(552,336)
7,383

Net amount recognized¥ (29,131)¥ (20,448)$ (191,103)

Amounts recognized in the statements of financial position consist of:
Accrued benefit liability¥ (29,131)¥ (20,448)$ (191,103)

Net amount recognized¥ (29,131)¥ (20,448)$ (191,103)

Accumulated benefit obligation at end of year

¥102,314¥ 96,951$ 906,084

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

¥ 21,117
18,487
4,651¥ 20,591
17,764
4,743$ 192,439
166,019
44,327

Change in projected benefit obligations:
Projected benefit obligation at beginning of year
Increase by acquisition of subsidiaries
Service cost
Interest cost
Plan participants’ contributions
Amendment
Actuarial (gain) loss
Benefits paid
Settlement for a substitutional portion of EPF
Settlement for a withdrawal from EPF
Projected benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Increase by acquisition of subsidiaries
Actual return on plan assets
Employer contribution
Plan participants’ contributions
Benefits paid
The related government-specified portion of plan assets of EPF transferred to thegovernment
Plan asset paid related to withdrawal from EPF
Fair value of plan assets at end of year

F-22

Years ended March 31,
2004

2003

Net pension cost includes the following components:
Service cost
Interest cost
Expected return on plan assets
Amortization of transition obligation
Amortization of prior service cost
Recognized actuarial loss
Proportionate amount of net unrecognized loss related to the entire EPF
Difference between projected benefit obligations and accumulated benefit
obligations for a substitutional portion of EPF
Settlement gain for a withdrawal from EPF
Net periodic pension cost

¥ 9,450 ¥ 7,094
4,294
4,140
(1,763)(1,087)943
943(1,882)(1,913)
1,287
2,343
—
22,833

2005

2005¥ 6,0122,337(1,754)226(2,512)
1,205—$ 56,187
21,841(16,392)
2,112(23,477)
11,262———(3,255)(5,953)————¥12,329¥25,145¥ 5,514$ 51,533

Measurement date of the benefit plan:
Kyocera Corporation, KCC and KKC
KMC

December 31
March 31

Assumptions used to determine benefit obligations at measurement dates are as follows:
March 31,

Discount rate
Rate of increase in compensation level

2004

2005

2.0%
3.0%

2.0%
— %

Rate of increase in compensation levels was not used in the calculation of benefit obligations for the year ended March 31, 2005 as aresult of introduction of the “point system.”
Assumptions used to determine net periodic pension costs at measurement dates for the years are as follows:
Years ended March 31,

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

2003

2004

2.0%
3.0%
1.3%-4.0%

2.0%
3.0%
0.6%-4.0%

2005

2.0%
3.0%
2.0%

Kyocera determines its expected long-term rate of return on plan assets based on the defined yields of life insurance company generalaccount, which occupies major part of plan assets categories, and its consideration of the current expectations for future returns andthe historical returns of other plan assets categories in which it invests.
F-23

Plan assets categories at measurement dates are as follows:
March 31,

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

2004

2005

79.6%
1.7%
0.9%
17.6%
0.2%

66.9%
16.1%
14.6%
2.4%
0.0%

100.0%

100.0%

Kyocera manages and operates its plan assets with a target of obtaining better performance more than earnings from the expected rateof return on plan assets to ensure the sources of funds sufficient to cover the pension benefits paid to participants and beneficiaries
into the future. In terms of the plan assets management, Kyocera makes appropriate investment choices and optimal portfolios with aconsideration of its performances, expected returns and risks, and entrusts its plan assets to the fund trustees which can be expected tobe the most appropriate to accomplish the target. Kyocera also makes an effort to maintain its portfolios within reasonable allocationsof plan assets. Kyocera evaluates its categories of plan assets allocations and can change its portfolios when it is needed.
Kyocera Corporation and KMC forecast to contribute ¥8,571 ($80,103) to the defined benefit pension plans in the year ending
March 31, 2006.
Estimated future benefit payments are as follows:
Years ending March 31,

2006
2007
2008
2009
2010
2011 to 2015

¥ 2,631
3,119
3,534
4,352
4,354
23,966$ 24,589
29,15033,02840,67340,692
223,981

Foreign:a. Pension plans
Kyocera International, Inc. and its consolidated subsidiaries (KII) and AVX, which are both consolidated U.S. subsidiaries ofKyocera 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 ofservice 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-24

The following table sets forth the funded status of the KII’s and AVX’s plans at March 31, 2004 and 2005:
March 31,
2004

2005

2005

¥18,858
642
1,163
81
1,289
(807)
—
(1,117)¥20,109
845
1,186
94
861
(817)
(698)
562

$187,935
7,897
11,084879
8,047(7,636)(6,523)5,252

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

20,10922,142206,935

13,413
2,587
190
81
(806)
(78)
(892)

14,495
1,520
1,278
94
(817)
(48)
371

135,467
14,206
11,944879(7,635)
(449)
3,467

Fair value of plan assets at end of year

14,495

16,893

157,879

Funded status
Unrecognized net loss
Prior service cost not yet recognized(5,614)
4,419
30(5,249)4,223
22(49,056)
39,467206

Net amount recognized¥ (1,165)¥ (1,004)$ (9,383)

Amounts recognized in the statements of financial position consist of:
Accrued benefit liability
Intangible assets
Accumulated other comprehensive income¥ (4,624)37
3,422¥ (4,789)29
3,756$ (44,757)
271
35,103

Net amount recognized¥ (1,165)¥ (1,004)$ (9,383)

Accumulated benefit obligation at end of year

¥18,473¥20,752$193,944

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

¥13,006
12,9108,931¥14,478
14,328
9,982$135,308
133,907
93,290Change in benefit obligations:Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Actuarial loss
Benefits paid
Curtailment
Foreign exchange adjustment

Years ended March 31,
2004

2003

Net pension cost includes the following components:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial gain
Net periodic pension cost

¥

560
1,081
(1,179)
7
60

¥

529

2005

2005

¥

642
1,163
(1,031)
22
212

¥

845
1,186
(1,118)13
166$ 7,897
11,084(10,448)122
1,551¥ 1,008¥ 1,092$ 10,206

Measurement dates of benefit plans for AVX and KII are December 31.
F-25

Assumptions used to determine benefit obligations at measurement dates are as follows:
March 31,
2004

Discount rate
Rate of increase in compensation levels

2005

5.25%-6.00% 4.50%-6.00%
1.25%-4.50% 1.25%-4.50%

Assumptions used to determine net periodic pension costs at measurement dates for the years are as follows:
Years ended March 31,
2003

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

2004

2005

6.00%-7.30% 5.75%-6.75% 5.25%-6.00%
3.00%-4.50% 1.50%-4.50% 1.25%-4.50%
7.50%-9.00% 7.00%-8.50% 7.00%-8.50%

AVX and KII determine their expected long-term rate of return on plan assets based on the consideration of the current expectations
for future returns and the historical returns of other plan assets categories in which they invest.
AVX’s and KII’s plan assets categories are at measurement dates as follows:
March 31,

Equity securities
Debt securities
Cash and cash equivalents
Other

2004

2005

70.4%
27.0%
0.9%
1.7%

63.6%
34.2%
1.6%
0.6%

100.0%

100.0%

KII’s long-term strategy is for target allocation of 65%-75% equity securities and 20%-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 ¥492 ($4,598) to the defined benefit pension plans in the year ending March 31, 2006.
AVX’s and KII’s estimated future benefit payments are as follows:
Years ending March 31,

2006
2007
2008
2009
2010
2011 to 2015

¥ 719
756
792
838
902
5,528

$ 6,720
7,065
7,402
7,832
8,430
51,664b. 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 a non-qualified deferred compensation program which permits key employees to annually elect to defer a portionof their compensation until retirement.
Contributions to the plans for the years ended March 31, 2003, 2004 and 2005 were ¥1,099, ¥889 and ¥853 ($7,972), respectively.
F-26

11. STOCK OPTIONS PLANS:
Domestic:
Kyocera Corporation provides directors, corporate auditors, corporate executive officers and certain key employees of Kyocera withstock option plans. Under the plans, they were granted options to purchase Kyocera Corporation’s shares of common stock at a pricedetermined by the higher of (1)multiplying by 1.1 the average market price of Kyocera Corporation’s common stock in previous
month of the date of the grant or (2) the market price of Kyocera Corporation’s common stock at the date of the grant. The options
vest and are exercisable.
On June 25, 2004, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approval of the issuanceof stock acquisition rights (Plan 2004) to directors, corporate auditors, corporate executive officers and certain key employees ofKyocera. The stock acquisition rights for Plan 2004 were granted on September 1, 2004 and fully vested on October 1, 2004 to 1,644
persons to acquire common stock ranging from 600 to 8,000 shares 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, respectively. Kyocera Corporation covers the stock acquisition rights for Plan 2004 by utilizing common stock held byKyocera Corporation (treasury stock).
At March 31, 2005, Kyocera Corporation reserved 2,187,800 shares of its common stock for the plans.
The following table summarizes information on stock option plans for the years ended March 31, 2003, 2004 and 2005:
Numberof Options

Weighted Average
Exercise Price

Balance at March 31, 2002
GrantedExercised
Expired and cancelled

1,252,300
143,600(10,700)(42,600)¥ 8,764
9,290
8,029
8,598

Balance at March 31, 2003
GrantedExercised
Expired and cancelled*

1,342,600
1,068,900(3,600)(1,366,900)

8,831
7,900
7,900
8,815

Balance at March 31, 2004
GrantedExercised
Expired and cancelled

1,041,000
1,243,300(15,200)(81,300)

7,900
8,725
7,900
8,290

$81.54
73.83
77.48

Balance at March 31, 2005

2,187,800

8,354

78.07

Weighted average contractual life 3.5 years

2,187,800¥ 8,354$78.07

Exercisable options:
At March 31, 2003
Exercise price ¥8,029,¥9,470 and ¥9,290
Exercise price ¥18,900

1,267,000
56,700¥ 8,230
18,900Total options

1,323,700

8,687

At March 31, 2004
Exercise price ¥7,900

1,041,000

7,900

Total options

1,041,000

7,900

At March 31, 2005
Exercise price ¥7,900
Exercise price ¥8,725

982,900
1,204,900

7,900
8,725

$73.83
81.54

Total options

2,187,800

8,354

78.07

* 1,291,300 options were expired.
F-27

The fair value of options at the date of grant during the years ended 2003, 2004 and 2005 were calculated using the Black
Scholes model with the following assumptions:Years ended March 31,
2003

Fair value
Interest rate
Expected life
Volatility
Expected dividends¥ 1,2940.01%
1 year
51.97%
0.74%

2004

¥

2005

3,176
0.75%
4.5 years
51.48%
0.76%

2005

¥

1,946
0.39%
3.7 years
39.09%
1.00%$18.19Foreign:
AVX has four fixed option plans. Under the 1995 stock option plan, as amended, AVX may grant options to employees for thepurchase of up to an aggregate of 9,300,000 shares of common stock. Under the Non-Employee Directors’ stock option plan, as
amended, AVX may grant options for the purchase of up to an aggregate of 650,000 shares of common stock. This two plans will
have no awards after August 1, 2005. Under the 2004 stock option plan, AVX may grant options to officers and key employees forthe purchase of up to 10,000,000 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 1,000,000 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. The
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.
The following table summarizes the transactions of AVX’s stock option plans for the years ended March 31, 2003, 2004 and 2005:
Number of
Options

Weighted Average
Exercise Price

Balance at March 31, 2002
GrantedExercised
Expired and cancelled

3,520,600
915,655(141,700)(54,700)$

Balance at March 31, 2003
GrantedExercised
Expired and cancelled

4,239,855
546,400(121,838)(70,400)

15.48
11.87
8.08
22.03

Balance at March 31, 2004
GrantedExercised
Expired and cancelled

4,594,017
620,000(31,559)(274,582)

15.15
14.03
9.23
16.41

Balance at March 31, 2005

4,907,876

15.01

Price range $15.44 to $29.30 (weighted average contractual life 5.8 years)
Price range $7.50 to $14.50 (weighted average contractual life 5.2 years)

1,758,400
3,149,476

$

22.10
10.99

Exercisable options:
At March 31, 2003
At March 31, 2004
At March 31, 2005

2,459,650
3,064,771
3,515,221

$

13.65
14.72
15.36

F-28

15.20
15.86
9.01
20.70

The calculated fair value at the date of grant for each option granted during the years ended March 31, 2003, 2004 and 2005 was$5.00 to $9.18, $4.22 to $5.13 and $5.34 to $6.25, respectively. The fair value of options at the date of grant was calculated using theBlack Scholes model with the following weighted average assumptions:Years ended March 31,
2003

Interest rate
Expected life
Volatility
Expected dividends

2004

2005

3.19%
1.43%
3.53%
4 years
4 years
4 years
60.0%
59.8%
56.0%
0.98%
1.27%
1.07%

KWC provides key employees with stock options. The options become vested gradually over a four-year period provided
participants remain a KWC employee. The exercise price shall not be less than 85% of the fair market value of the common stock at
the time the option is granted, and the grant has a maximum term of 10 years. Since KWC is not traded on any stock exchange, theBoard of directors at KWC is responsible for determining the fair market value using reasonable means. KWC may grant options to
all key employees for the purchase of up to an aggregate of 3,800,000 shares of common stock.
The following table summarizes information on the stock option plan for the years ended March 31, 2003, 2004 and 2005:
Numberof Options

Weighted Average
Exercise Price

Balance at March 31, 2002
GrantedExercised
Expired and cancelled

832,0432,555,875—(58,815)$

Balance at March 31, 2003
GrantedExercised
Expired and cancelled

3,329,103
651,828—(638,570)

2.46
2.61
—
2.46

Balance at March 31, 2004
GrantedExercised
Expired and cancelled

3,342,361
446,575(12,341)(683,311)

2.49
3.11
2.25
2.65

Balance at March 31, 2005

3,093,284

2.54

Price range $2.18 to $3.45 (weighted average contractual life 7.96 years)
Exercisable options:
March 31, 2003
March 31, 2004
March 31, 2005

3,093,284$

2.54

1,767,183
2,118,490
2,070,369

$

2.31
2.36
2.39

F-29

2.61
2.41
—
2.67

The fair value of options at the date of grant for the years ended 2003, 2004 and 2005 were calculated using the Black Scholes modelwith the following weighted average assumptions:Years ended March 31,
2004

2003

Fair value
Interest rate
Expected life
Volatility
Expected dividends

$

1.68
3.43%
5 years
45.00%
—

$

1.03
2.99%
5 years
45.00%
—

2005

$

1.48
3.65%
5 years
45.00%—

12. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES:
Kyocera’s activities expose it to a variety of market risks, including the effects of changes in foreign currency exchange rates andinterest rates. Approximately sixty percent of Kyocera’s revenues are generated from overseas customers, which exposes it 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 uses 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 exposes
itself to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contracts. When the fairvalue of a derivative contract is positive, the counterparty owes Kyocera, which creates repayment risk for Kyocera. When the fairvalue of a derivative contract is negative, Kyocera owes the counterparty and, therefore, it does not possess repayment risk. Kyocera
minimizes the credit (or repayment) risk in derivative financial instruments by (1) entering into transactions with creditworthy
counterparties, (2) limiting the amount of exposure to each counterparty, and (3) monitoring the financial condition of its
counterparties.
Cash Flow Hedges
Kyocera uses interest rate swaps mainly to convert a portion of its variable rate debt to fixed rates. Kyocera charged deferred net
losses of ¥240, ¥251 and ¥78 ($729) from accumulated other comprehensive income to interest expense in the consolidated statementof income for the years ended March 31, 2003, 2004 and 2005, as a result of the execution of the hedged transactions.
Also, Kyocera uses certain foreign currency forward contracts designated as cash flow hedges to protect against foreign
currency exchange rate risks inherent in its forecasted transactions related to purchase commitments and sales. Kyocera charged
deferred net gains of ¥30 ($280) from accumulated other comprehensive income to foreign currency transaction gains, net in the
consolidated statement of income for the year ended March 31, 2005, as a result of the execution of the hedged transactions.
Net unrealized losses on derivative financial instruments in accumulated other comprehensive income at March 31, 2004 and2005, were ¥48 and ¥27 ($252), respectively.
F-30

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 (losses) gains in the consolidated statements of income.
The aggregate contract amounts of derivative financial instruments to which hedge accounting is not applied are as follows:
March 31,
2004

Currency swaps
Foreign currency forward contracts to sell
Foreign currency forward contracts to purchase
Interest rate swaps¥ 1,123
98,396
12,27427,444

¥

2005

2005

—
99,1592,487
19,496$—926,720
23,243
182,206

13. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The fair values of financial instruments at March 31, 2004 and 2005 and the methods and assumptions used to estimate fair value areas follows:
March 31,2004

Non-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)

2005

2005

Carrying
AmountFair Value

Carrying
AmountFair Value

Carrying
AmountFair Value¥ 361,132
3,855
67,158430,096
84,254¥ 361,132
3,855
67,789430,168
84,613¥ 310,592
34,93837,863
430,437
63,158¥ 310,592
34,91937,923430,092
63,158$ 2,902,729
326,523
353,860
4,022,776
590,261$ 2,902,729
326,346
354,421
4,019,551
590,261¥ 946,495¥ 947,557¥ 876,988¥ 876,684$ 8,196,149$ 8,193,308¥ (84,815) ¥ (84,815) ¥ (66,556) ¥ (66,556) $ (622,019) $ (622,019)(44,522)(44,525)(44,051)(44,106)(411,691)(412,205)(70,608)(71,056)(33,557)(33,844)(313,617)(316,299)¥(199,945) ¥(200,396) ¥(144,164) ¥(144,506) $(1,347,327) $(1,350,523)

Derivatives:
Currency swaps (d)Foreign currency forward contracts tosell (d)Foreign currency forward contracts topurchase (d)Interest rate swaps (d)

¥

62

¥

62

¥

—

¥

—

$

—

$

—

1,443

1,443

(1,504)(1,504)(14,056)(14,056)(75)(1,276)(75)(1,276)

(37)
(969)

(37)
(969)

(346)
(9,056)(346)(9,056)

Both short-term finance receivables and long-term finance receivables in the above do not include investments in direct financing
leases.
(a)

The carrying amount approximates fair value because of the short maturity of these instruments.

(b)

The fair value is based on quoted market prices. It was not practicable to estimate the fair value of investments in unlistedcommon stock because of the lack of the market price and difficulty in estimating fair value without incurring excessive cost,
and Kyocera did not identify any events or changes 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, 2004 and 2005 were
¥2,767 and ¥2,584 ($24,150), respectively.
(c)

The fair value is estimated by discounting cash flows, using current interest rates for instruments with similar terms andremaining maturities.

(d)

The fair value is estimated based on quotes from financial institutions.
F-31

14. COMMITMENTS AND CONTINGENCIES:At March 31, 2005, Kyocera had contractual obligations for the acquisition or construction of property, plant and equipment
aggregating ¥20,405 ($190,701) principally due within one year.
Kyocera Corporation guarantees the debt of employees, customers and an unconsolidated subsidiary. Each amount of theseguarantees was ¥234 ($2,187), ¥430 ($4,019) and ¥550 ($5,140) at March 31, 2005. The financial guarantees are made in the form ofcommitments and letters of awareness issued to financial institutions and generally obligate Kyocera Corporation to make paymentsin the event of default by the borrowers. Kyocera Corporation knows no event of default in the year ended March 31, 2005.
AVX has a material supply agreement for a significant portion of its anticipated material used in its operations. Under theagreement, during the year ended March 31, 2005, AVX purchased ¥5,663 ($52,925) and is obligated to purchase ¥5,904 ($55,178) inthe year ending March 31, 2006.
Kyocera is a lessee under long-term operating leases primarily for office space and equipment. Rental expenses for operatingleases were ¥10,151, ¥9,899 and ¥10,680 ($99,813) for the years ended March 31, 2003, 2004 and 2005, respectively.
Future minimum lease commitments under non-cancelable operating leases at March 31, 2005 are as follows:
Years ending March 31,

2006
2007
2008
2009
2010
2011 and thereafter¥ 6,705
5,272
3,709
1,518
835
3,075

$ 62,663
49,271
34,664
14,187
7,804
28,738¥21,114$197,327

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. 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.
15. STOCKHOLDERS’ EQUITY:
Under the Commercial Code of Japan (the “Code”), the entire amount of the issue price of new shares issued is 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 issue price of the new shares as additional paid-in capital.
The Code requires a domestic company to appropriate as a legal reserve an amount equal to at least 10% of the amount paid out
by it as appropriation of retained earnings (including any payment by way of annual dividend and bonuses to Directors and Corporate
Auditors) for the period or equal to 10% of any interim dividend until the sum of the legal reserve and the additional paid-in capitalequals 25% of its stated capital. The legal reserve and additional paid-in capital may be transferred to stated capital through suitabledirector actions or used to reduce a deficit through suitable stockholder actions. The appropriated legal reserve at March 31, 2005
included in retained earnings was ¥18,369 ($171,673).
F-32

The Code provides certain restrictions on payment of dividends in connection with the repurchased treasury stock. At March 31,
2005, Kyocera Corporation reserved ¥31,380 ($293,271) 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 ofdividends to stockholders at March 31, 2005 was ¥547,084 ($5,112,935).
Kyocera Corporation’s Board of Directors, with subsequent approval by the stockholders, has declared annual appropriations ofretained earnings for various purposes, totaling ¥539,136 ($5,038,654) at March 31, 2005. Any disposition of such appropriations
shall be at the discretion of the Board of Directors and stockholders. Such appropriations have not been segregated from retained
earnings in the accompanying consolidated financial statements.
Kyocera’s equity in retained earnings or deficits of affiliates and unconsolidated subsidiaries accounted for by the equity methodof accounting aggregating ¥ (4,730) ($(44,206)) at March 31, 2005 was included in retained earnings.
Changes in accumulated other comprehensive income are as follows:

Balance at March 31, 2002
Net change for the year

Foreign Currency
Translation
Adjustments

Minimum Pension
Liability
Adjustments

Net Unrealized
Gains (Losses)
on Securities

Net Unrealized Gains(Losses) on
Derivative Financial
Instruments

Total Accumulated
Comprehensive
Income

¥

¥

¥

¥

¥

Balance at March 31, 2003
Net change for the year

5,601
(20,578)(14,977)(20,693)—(10,931)(10,931)9,454(27,926)(2,029)(425)
94(29,955)
89,196(331)
283(22,750)(33,444)(56,194)
78,240

Balance at March 31, 2004
Net change for the year¥

(35,670)6,704¥(1,477)(152)¥

59,241(16,780)

¥

(48)
21

¥

22,046(10,207)

Balance at March 31, 2005¥

(28,966)¥(1,629)¥42,461¥(27)¥

11,839Balance at March 31, 2004
Net change for the year$

(333,364)
62,654$(13,804)(1,420)$553,654(156,823)

$

(449)
197

$

206,037(95,392)

Balance at March 31, 2005$

(270,710)$(15,224)$

396,831

$

(252)

$

110,645

16. INCOME TAXES:
Income before income taxes and income taxes for the year ended March 31, 2003, 2004 and 2005 are made up of the following
components:
Years ended March 31,

Income before income taxes:
Domestic
Foreign
Total income before income taxes
Income taxes:
Current income taxes:
Domestic
Foreign
Total current income taxes
Deferred income taxes:
Domestic
Foreign
Total deferred income taxes

2003

2004

2005

2005

¥71,715
4,322¥118,564(3,524)¥ 93,190
14,340$ 870,934
134,019¥76,037¥115,040¥107,530$1,004,953¥32,554
1,111¥ 23,391
6,185¥ 47,666
5,206$ 445,477
48,65433,66529,57652,872

494,131

(830)
(55)

22,927(2,193)

(723)
6,331

(6,757)
59,168(885)

20,734

5,608

52,411

Total income taxes¥32,780
F-33¥ 50,310¥ 58,480$ 546,542

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 year ended 2003, 2004 and 2005 of approximately 42.0%, 42.0% and 41.0%, respectively.
Reconciliation between the Japanese statutory income tax rate and Kyocera’s effective tax rate for the years ended March 31,
2003, 2004 and 2005 is as follows:
Years ended March 31,

Japanese statutory tax rate
Income of foreign subsidiaries taxed at lower than statutory tax rates
Valuation allowances
Sale of investment in an affiliate
Impairment of investment in an affiliate
Tax rate change
Adjustments of transfer pricing (See Note 21)
Liquidation of a foreign subsidiary
Other
Effective income tax rate

2003

2004

2005

42.0%
(1.0)
(0.8)
—
2.9
(0.5)
—
—
0.5

42.0%
(2.5)
4.0
1.2
—
0.4
—
—
(1.4)

41.0%
(4.0)
8.4
—
—
—
11.9
(3.1)
0.2

43.1%

43.7%

54.4%

The components of the deferred tax assets and deferred tax liabilities at March 31, 2004 and 2005 are as follows:
March 31,2004

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

¥

Subtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Depreciation
Deduction of foreign branch losses
Net unrealized gains on securities
Other
Total deferred tax liabilities

1,066
17,3194,754
5,762
22,49525,365
1,155
25,832
—
6,033

2005

¥

2,579
19,587
3,883
5,324
17,266
26,233822
25,213
3,544
6,476

2005

$

24,103
183,056
36,29049,757
161,364
245,168
7,682
235,636
33,12260,523

109,781(28,536)

110,927(32,108)

1,036,701(300,075)¥ 81,245¥ 78,819$ 736,626

¥

429
4,261
125,856
267

¥

825
4,763
115,2883,278$¥130,813¥124,154$1,160,318

7,710
44,514
1,077,458
30,636At March 31, 2005, Kyocera had net operating losses carried forward of approximately ¥ 70,665 ($660,421), which would beavailable to offset future taxable income. Of these net operating losses carried forward, the amount of ¥21,567 ($201,561) recorded atdomestic subsidiaries will expire within next seven years, and the amount of ¥13,421 ($ 125,430) recorded at US subsidiaries will
expire in various periods from the year ending March 31, 2008 through the year ending March 31, 2022. Certain subsidiaries in
Brazil, China, France, Korea, Germany, Israel, Hong Kong, Taiwan and United Kingdom had net operating losses carried forward
totaling approximately ¥34,377 ($321,280) of which most had no expiration date.
Kyocera intends to reinvest certain undistributed earnings of foreign subsidiaries for an indefinite period of time. Therefore, nodeferred income taxes have been provided on undistributed earnings of these subsidiaries, which are not expected to be remitted in theforeseeable future totaling ¥116,465 ($1,088,458) at March 31, 2005. Kyocera estimates an additional tax provision of ¥ 47,485 ($443,785) would be required at such time if the full amount of these accumulated earnings became subject to Japanese taxes.
The net changes in the total valuation allowance for the years ended March 31, 2004 and 2005 were increases of ¥7,681 and of¥3,572 ($33,383), respectively.
F-34

17. SUPPLEMENTAL EXPENSE INFORMATION:
Research and development expenses for the years ended March 31, 2003, 2004 and 2005 amounted to ¥47,268, ¥46,630 and ¥54,398($508,393), respectively.
Advertising expenses for the years ended March 31, 2003, 2004 and 2005 amounted to ¥11,189, ¥12,281 and ¥13,915($130,047), respectively.
Shipping and handling costs for the years ended March 31, 2003, 2004 and 2005 amounted to ¥10,107, ¥12,400 and ¥12,919($120,738 ), respectively, and were included in selling, general and administrative expenses in the Consolidated Statements ofIncome.
18. SEGMENT REPORTING:
Kyocera had previously classified its operations into four reporting segments, namely, “Fine Ceramics Group”, “Electronic Device
Group ”, “Equipment Group” and “Others”. However, taking into consideration of changes in the size of operations of each businessdivision of Kyocera and changes in its management structure, the management has changed its reporting segments for the year ended
March 31, 2005. Kyocera now has eight reporting segments as follows: “Fine Ceramic Parts Group”, “Semiconductor Parts Group”,“Applied Ceramic Products Group”, “Electronic Device Group”, “Telecommunications Equipment Group”, “Information Equipment
Group”, “Optical Equipment Group” and “Others.”
Segment information for the years ended March 31, 2003 and 2004 has been restated to conform to the current year presentation.
Main products or businesses of each reporting segment are as follows;(Fine Ceramic Parts Group)
Semiconductor Process Equipment Components
LCD Process Equipment Components
Sapphire Substrates
Automotive & ITS related Components(Semiconductor Parts Group)
Ceramic Packages for Surface Mount Devices (SMD)
Ceramic Multilayer Packages/Multilayer Substrates
Metallized Products
Organic Packages/Substrates(Applied Ceramic Products Group)
Solar Cells & Modules
Cutting Tools
Dental & Orthopedic Implants
Jewelry(Electronic Device Group)
Passive Components (Ceramic Chip Capacitors, Tantalum Capacitors)
Timing Devices (Temperature Compensated Crystal Oscillators (TCXO), Connectors
Thin-Film Products (Thermal Printheads, Liquid Crystal Displays)(Telecommunications Equipment Group)
CDMA Mobile Handsets
PDC Mobile Handsets
PHS Related Products(Information Equipment Group)
ECOSYS Non-cartridge Printers
Copiers
Digital Network Multifunction Products

(Optical Equipment Group)
Digital Still Cameras
Optical Modules(Others)
Telecommunications Network Systems Business
Chemical Materials for Electronic Components
Leasing Business
Realty Develop Business
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, minority
interest, and cumulative effect of change in accounting principle. Assets for each reporting segment represent those assets associatedwith a specific reporting segment. Corporate assets consist primarily of cash and cash equivalents, the facilities of corporate
headquarters and various other investments and assets that are not specific to each reporting segment.
Kyocera’s sales to KDDI Corporation and its consolidated subsidiaries, which is mainly recorded at Telecommunications
Equipment group, for the years ended 2003, 2004 and 2005 comprised of 10.8%, 10.2% and 7.6% of consolidated net sales,
respectively.
Information by reporting segments at March 31, 2003, 2004 and 2005 and for each of the years then ended is summarized on thefollowing page:
F-35

Reporting segments
2003

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
Others¥Assets:Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
Others¥¥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

9,674
3,738
5,385
11,816
18,31423,351(1,645)
7,412

2005

68,758 ¥ 73,711
108,784
127,960
78,287
93,879256,906
262,997
302,787
250,918
214,192
241,145
29,29735,776
100,505
118,040(18,702)(23,771)¥1,140,814¥1,180,655

10,239 ¥ 11,535
10,603
17,550
10,297
17,1295,047
35,406
5,082(14,918)
31,98636,186(5,826)(15,387)
9,683
13,0192005$

688,888
1,195,888
877,374
2,457,916
2,345,028
2,253,692
334,355
1,103,177(222,159)$11,034,159$

107,804
164,019
160,084
330,897(139,421)
338,187(143,804)
121,673

78,045(5,619)3,092
519

77,111
34,871
2,575
483

100,520
8,683(1,678)5

939,439
81,149(15,682)
47¥

76,037¥ 115,040¥ 107,530$ 1,004,953¥

45,08175,451
58,520333,392
108,506
141,897
30,445
250,848¥¥$

44,98886,372
62,713349,755
117,462
159,189
39,200260,818

43,41479,711
85,595
357,797
98,877
178,596
31,338216,178405,738
744,963
799,953
3,343,897
924,084
1,669,122
292,879
2,020,355

1,044,140
602,046
24,398(35,570)

1,120,497
696,298
24,054(46,091)

1,091,506
684,970
30,623(61,580)

10,200,991
6,401,589
286,196(575,514)¥1,635,014¥1,794,758¥1,745,519$16,313,262

¥

¥

¥

$

Corporate
Investments in and advances to affiliates and unconsolidated subsidiaries
Adjustments and eliminations
Total assets¥¥1,069,770

Corporate
Equity in earnings (losses) of affiliates and unconsolidated subsidiaries
Adjustments and eliminations
Income before income taxes

64,333
103,60270,932
227,962
292,703
202,02235,05985,084(11,927)

2004

4,272
9,707
4,358
25,87012,559
9,716
2,170
4,090
2,578

4,105
8,721
3,903
23,323
11,263
9,371
2,180
4,838
2,556

4,320
8,922
4,645
21,723
8,101
8,953
2,909
4,070
2,266

40,374
83,38343,411203,01975,71083,673
27,18738,037
21,178

¥F-36

75,320¥70,260¥65,909$615,972

Reporting segments
2003

Valuation allowance for receivables:
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersCorporate

¥

12 ¥
40
77
21
0
744
70
653
164

¥ 1,781
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

F-37

2004

2005

39 ¥
6
37
182
(6)
879
63
582
75

2005

10
82
23
(73)
41
51
96
648
(62)

$

93
766
215
(682)
383
477
897
6,056
(579)

¥ 1,857

¥

816

$

7,626

149 ¥
24
1,434
100
390
950
2,250
9,373
919
1,785
0
619
1,424
1,122
400
40
—
—

¥

14
45
312
598
4,053
1,583
3,793
7
—

$

131
421
2,916
5,589
37,878
14,79435,44965—¥ 6,966¥14,013¥10,405$ 97,243¥ 2,756
3,122
2,217
13,501
4,788
6,338
2,185
4,053
1,654

¥ 4,472
3,856
4,979
18,612
5,913
9,972
2,418
1,099
3,616

¥ 4,394
7,111
7,584
19,453
5,170
11,751
2,248
2,279
3,186

$ 41,065
66,45870,879
181,804
48,318109,82221,00921,29929,776¥40,614¥54,937¥63,176$590,430

Information for revenue from external customers by product shipment destination and long-lived assets based on physicallocation as of and for the years ended March 31, 2003, 2004 and 2005 are summarized as follows:
Geographic segments
2003

Net sales:Japan
United States of America
Asia
EuropeOthers

2004

2005

2005

¥ 423,190 ¥ 456,807 ¥ 472,417 $ 4,415,112
264,755
251,326
248,333
2,320,869
178,384
194,302203,848
1,905,122
144,293
156,929
175,850
1,643,458
59,14881,45080,207
749,598¥1,069,770 ¥1,140,814 ¥1,180,655 $11,034,159

Long-lived assets:
Japan
United States of America
Asia
EuropeOthers¥ 183,778 ¥ 204,437 ¥ 212,291 $ 1,984,028
46,28635,54335,712
333,757
34,20133,32431,070290,374
24,342
21,89423,269217,467
5,148
4,110
3,294
30,785¥ 293,755 ¥ 299,308 ¥ 305,636 $ 2,856,411

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 (EPS) computations is as follows:
Years ended March 31,
2003

2004

2005

2005

¥ 43,421(2,256)
41,165¥ 68,086—
68,086¥ 45,908—
45,908$429,047—
429,047

Basic earnings per share:
Income before cumulative effect of change in accounting principle
Cumulative effect of change in accounting principle
Net income

233.02(12.11)220.91364.79—364.79244.86—244.86

2.29
—
2.29

Diluted earnings per share:
Income before cumulative effect of change in accounting principle
Cumulative effect of change in accounting principle
Net income

232.97(12.11)220.86364.78—364.78244.81—
244.81

2.29
—
2.29

Basic weighted average number of shares outstanding (shares in thousands):
Dilutive effect of stock options
Diluted weighted average number of shares outstanding

186,33844
186,382

186,6436
186,649

187,48939
187,528

Income before cumulative effect of change in accounting principle
Cumulative effect of change in accounting principle
Net income

F-38

20. SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental information related to the Consolidated Statements of Cash Flows is as follows:
Years ended March 31,

Cash paid during the year:
Interest
Income taxes
Acquisitions of business:
Fair value of assets acquired
Fair value of liabilities assumed
Minority Interests
Investments accounted for by the equity method
Stock issuance for acquisition
Cash acquired

2003

2004

2005

2005

¥ 3,230
32,012¥ 3,043
38,774¥ 2,33140,055$ 21,785
374,346¥ 32,015(22,584)——(9,381)(4,108)¥ 56,506(19,804)—(4,600)(15,132)(14,699)¥ 8,478(2,683)(2,440)——(561)$ 79,234(25,075)(22,804)——(5,243)¥ (4,058)¥ 2,271¥ 2,794$ 26,112

21. RECEIPT OF A NOTICE OF TAX ASSESSMENT BASED ON TRANSFER PRICING ADJUSTMENTS AND FILINGCOMPLAINT 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 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 ($227,981) and that resultant additionaltax, including local taxes, etc., amounted to ¥12,748 ($119,140).
Kyocera recognized this amount of ¥12,748 ($119,140) as current income taxes in its consolidated statement of income for theyear ended March 31, 2005, and made cash payments of ¥8,631 ($80,663) on March 29, 2005 and ¥4,117 ($38,477) on April 28,
2005.
On May 24, 2005, Kyocera Corporation filed a complaint against tax assessment based on transfer pricing adjustments with the
Osaka Regional Tax Bureau. Although the final resolution of the proposed tax assessment is not certain, management believes theultimate disposition of this matter will not have a material impact on the results of operations.
22. SETTLEMENT REGARDING LaPine CASE:
On September 1, 1994, the International Chamber of Commerce issued its award with respect to the arbitration between Kyocera
Corporation and LaPine Technology Corporation (LTC), Prudential-Bache Trade Corporation (PBTC) (presently renamed PrudentialBache Trade Services, Inc.), et al. for the alleged breach of an agreement by Kyocera Corporation in connection with thereorganization of LTC. The award ordered Kyocera Corporation to pay to LTC and PBTC as damages, approximately $257,000,
including interest, arbitration costs and attorneys’ fees. Kyocera Corporation filed a motion to vacate, modify and correct the award in
the U.S. District Court for the Northern District of California pursuant to an agreement between the parties providing for broad
judicial examination of arbitration awards.
With respect to this case, Kyocera Corporation subsequently appealed to the Ninth Circuit Court of Appeals and then to theSupreme Court of the United States asserting the validity of the provision for broad judicial examination of arbitration awards. On
December 22, 2003, Kyocera Corporation reached agreement with Prudential Securities Group, Inc., Prudential Equity Group, Inc.,
LaPine Technology Corporation and LaPine Holding Company to settle all claims in pending litigation between the parties. Kyocera
Corporation has paid $331,500 pursuant to this settlement and recorded ¥35,454 as cash payment in its consolidated financial
statements in the year ended March 31, 2004.
F-39

23. SUBSEQUENT EVENTS:
Subsequent to March 31, 2005, Kyocera Corporation’s Board of Directors declared a cash dividend of ¥9,374 ($87,607) payable on
June 29, 2005 to stockholders of record on March 31, 2005. The dividend declared was approved by the stockholders at the meeting
held on June 28, 2005.
On June 28, 2005, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approval of the issuanceof stock acquisition rights to directors, corporate auditors, corporate executive officers and certain key employees of Kyocera. Thisissuance of stock acquisition rights is intended to enable the grant of stock options and the maximum number of shares to be issued is
1,500,000 shares of common stock of Kyocera Corporation.
24. SEMIANNUAL FINANCIAL DATA (UNAUDITED):
Six months ended
September 30,
2003

March 31,2004

September 30,
2004

March 31,2005

Net sales
Gross profit
Net income¥ 518,378
120,724
15,754¥622,436
159,866
52,332¥ 600,562
170,919
42,549¥ 580,093
154,669
3,359

Basic earnings per share:
Net income

¥

84.79

¥ 279.13¥

226.94¥

17.92

Diluted earnings per share:
Net income

¥

84.79

¥ 279.11¥

226.85¥

17.92

Net sales
Gross profit
Net income$ 5,612,729
1,597,374
397,654$5,421,430
1,445,505
31,393

Basic earnings per share:
Net income

$

2.12

$

0.17

Diluted earnings per share:
Net income

$

2.12

$

0.17

Earnings per share are computed on the weighted average number of shares outstanding during each six-month period. The sum of thesix months’ earnings per share does not equal the year-to-date earnings per share due to changes in average share calculations.
F-40

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
For the years ended March 31, 2003, 2004 and 2005
Yen in millions
Column B

Column A

Column C

Column D

Column E

Deductions(B)

Balanceat End ofPeriodAdditions

Charged to
Costs andExpenses

Charged(Credited)to otherAccounts(A)¥58,665
7,478
8,771

¥

596
(2,656)
1,441

¥

(157)
(615)
—

¥ (3,114)——¥55,990
4,207
10,212¥74,914

¥

(619)

¥

(772)

¥ (3,114)¥70,409¥55,990
4,207
10,212¥ 1,938
632
1,790

¥

(173)
(431)
—

¥(14,963)—(2,786)¥42,792
4,408
9,216

¥70,409¥ 4,360¥(604)¥(17,749)¥56,416¥42,792
4,408
9,216

¥

548
8,473
5,452

¥

109
58
—

¥(22,410)(9,040)(4,936)¥21,039
3,899
9,732

¥56,416¥ 14,473¥

167¥(36,386)¥34,670

Balanceat
Beginningof Period

Description

For the year ended March 31, 2003:
Allowance for doubtful accounts
Allowance for sales returns
Allowance for valuation losses on inventories
Total
For the year ended March 31, 2004:
Allowance for doubtful accounts
Allowance for sales returns
Allowance for valuation losses on inventories
Total
For the year ended March 31, 2005:
Allowance for doubtful accounts
Allowance for sales returns
Allowance for valuation losses on inventories
Total(A) Foreign currency translation adjustments and beginning balance of newly consolidated subsidiaries(B) Charge-offs
Schedules other than that above are omitted for the reason that they are not required or are not applicable, or the required
information is shown in the financial statements or notes thereto.
Financial statements of unconsolidated subsidiaries and 50% or less owned companies accounted for by the equity method
have been omitted because they are in the aggregate not significant and the conditions for inclusion otherwise are notpresent.
F-41

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 of Corporate Financial &Accounting Group
September 16, 2005

INDEX OF EXHIBITS
Exhibit
NumberDescription

1.1

Articles of Incorporation (English translation) (incorporated by reference to the Registrant’s Form S-8 filed on August 31,
2005)

1.2

Share Handling Regulations of the Registrant (English translation) (incorporated by reference to the Registrant’s Form S-8
filed on August 31, 2004)

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 September 19, 2002)

1.4

Regulations of the Board of Corporate Auditors of the Registrant (English translation) (incorporated by reference to theRegistrant’s annual report on Form 20-F filed on September 21, 2004)

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 andholders 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 this Form
20-F

Exhibit 11.1
KYOCERA CORPORATION
Code of Ethics for Chief Executive Officer, Chief Financial Officer, Chief Operating Officer andMembers of Kyocera Disclosure Committee(Amended on June 1, 2005)
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”), Chief Operating Officer (the “COO”), and members ofKyocera 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 June 1, 2005.
(Established) September 10, 2004
(Amended)June 1, 2005

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, Yasuo Nishiguchi, 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)) 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)[omitted in accordance with the guidance of SEC Release No. 33-8238](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: September 16, 2005
/s/ Yasuo Nishiguchi
Name: Yasuo Nishiguchi
Title: Chairman and Representative Director(Principal Executive Officer)-1-

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)) 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)[omitted in accordance with the guidance of SEC Release No. 33-8238](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: September 16, 2005
/s/ Masahiro Umemura
Name: Masahiro Umemura
Title: Vice Chairman
and Representative Director(Principal Financial Officer)-1-

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, 2005 (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: September 16, 2005
/s/ Yasuo Nishiguchi
Name: Yasuo Nishiguchi
Title: Chairman and Representative Director(Principal Executive Officer)-1-

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, 2005 (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: September 16, 2005
/s/ Masahiro Umemura
Name: Masahiro Umemura
Title: Vice Chairman
and Representative Director(Principal Financial Officer)-1-

Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the registration statements of Kyocera Corporation on Form S-8 (File Nos.33-84904,
33-98132, 33-99134, 33-99140, 33-99150, 33-99154, 333-10934, 333-100248, 333-109200, 333-118678, and 333-127976) of ourreport dated June 28, 2005, on our audits of the consolidated financial statements and financial statement schedule of Kyocera
Corporation and Consolidated Subsidiaries as of March 31, 2004 and 2005, and for each of the three years in the period ended March
31, 2005, which report appears in this 2005 Annual Report on Form 20-F.
/s/ ChuoAoyama PricewaterhouseCoopers
ChuoAoyama PricewaterhouseCoopers
Osaka, Japan
September 16, 2005