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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 SECURITIES EXCHANGEACT OF 1934

For the fiscal year ended March 31, 2004
OR

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

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As of March 31, 2004, 187,484,253 shares of common stock were outstanding, comprised of 183,070,949 Shares and 4,413,304
American Depositary Shares (equivalent to 4,413,304 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 Item18 ⌧* Not for trading, but only in connection with the registration of the American Depositary Shares, each representing one share ofCommon Stock.

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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
H. Documents on Display
I. Subsidiary Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities
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4
6
6
6
6
6
7
7
7
12
12
13
23
27
30
30
51
55
55
56
56
57
57
62
62
65
65
72
72
73
74
74
74
74
74
74
76
76
76
76
76
76
76
76
84
84
84
88
88
88
89
89
92

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PART II
Defaults, Dividend Arrearages and Delinquencies
Item 13.
Material Modification to Rights of Security Holders and Use of Proceeds
Item 14.
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
Financial Statements
Item 17.
Item 18.
Financial Statements
Exhibits
Item 19.
SIGNATURE
INDEX OF EXHIBITS
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93
93
93
93
94
94
94
96
96
97
97
97
98

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Cautionary Statement Regarding Forward-Looking Statements
This annual report on Form 20-F contains “forward-looking statements” within the meaning of Section 21E of the U.S.
Securities and Exchange Act of 1934. To the extent that statements in this Form 20-F do not relate strictly to historical or current
facts, they may constitute forward-looking statements. These forward-looking statements are based upon our current assumptions andbeliefs in the light of the information currently available to us, but involve known and unknown risks, uncertainties and other factors.
Such risks, uncertainties and other factors may cause our actual actions or results to differ materially from those discussed in or
implied by the forward-looking statements. We undertake no obligation to publicly update any forward-looking statement after thedate of this annual report, 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
to introduce 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 such as
Severe Acute Respiratory Syndrome (SARS);

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 2004” refers to Kyocera’s fiscal year ended March 31, 2004, and other fiscal years are referred to in acorresponding manner.

•

Unless otherwise indicated, we have translated the yen amounts for the year ended March 31, 2004 and as of March 31,
2004 presented in this Form 20-F into U.S. dollars solely for your convenience. The rate we used for such translations was¥104.00 = $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, 2004, 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)
2000

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

2004

812,626
92,151¥ 1,285,053
207,200¥ 1,034,574
51,561¥ 1,069,770
83,388¥ 1,140,814
108,962$ 10,969,365
1,047,712

50,34550,345219,529
219,529

33,791
31,95343,421
41,16568,08668,086654,673654,673265.72265.34¥ 1,161.20
1,157.83

265.72265.34

1,161.20
1,157.83

169.02168.88220.91220.86364.79364.78

189,467
189,739

189,053
189,604

189,050
189,204

186,338
186,382

186,643
186,649

60
0.57

¥
$

60
0.51

¥

178.74178.59

¥
$

60
0.49

¥

¥
$

233.02232.97

60
0.49

¥

¥
$

364.79364.78

$

3.51
3.51
3.51
3.51

60
0.55

¥ 1,217,158¥ 1,728,056¥ 1,645,458¥ 1,635,014¥ 1,794,758$ 17,257,288

21,090115,703
798,450
53,54664,73152,306
115,703
1,022,065¥
67,096¥ 105,944

96,856
115,7031,039,478¥
76,252¥
54,63160,736
115,703
1,003,500¥
64,988¥40,61470,608
115,703
1,153,746¥
60,861¥54,937

678,923
1,112,529
11,093,712$
585,202$528,240¥¥* Translated into the U.S. dollars based on the exchange rates at each payment date-6-

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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,
2000
2001
2002
2003
2004

¥124.45125.54134.77133.40120.55¥101.53
104.19115.89115.71104.18¥110.67
110.96125.05121.94112.75¥ 102.73
125.54132.70118.07104.18

Calendar Year 2004
March
April
May
June
July
August112.12110.37114.30111.27111.88111.53104.18103.70108.50107.10108.21109.00108.52
107.66112.20109.43109.49110.23104.18110.37110.18109.43111.39109.00The noon buying rate for Japanese yen on September 15, 2004 was $1.00 = ¥ 110.34
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
In spite of the uncertain situations such as the SARS problem, strained Iraq situation and domestic deflation, after the summer of
2003, Japanese economy has gradually recovered with increased corporate capital expenditures and exports supported by growing
demand for IT-related products in the U. S. and growing demand in China. The current global economic situation, including the U.S.,
does not allow optimism. Kyocera predicts the situation will continue to be unstable considering the yen’s appreciation and the rises
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 since fiscal 2003, these may be adversely affected by sluggish consumer
spending brought by economic 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, 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 thistrend was intense in particularly in PHS markets in China in fiscal 2004. Kyocera predicts that its production prices will continue tobe down over fiscal 2005 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 theprocess of creating a new product that fits its customer’s needs. This requires maintaining close ties with its customers so that
Kyocera can ensure that it is able to meet required specifications and be the first supplier to create and deliver the product. Kyocera’s
gross margins may be reduced if it cannot maintain these important relationships or market share or if it is forced in the future tofurther reduce prices in response to the actions of its competitors.
(4) Kyocera’s products are difficult to manufacture, and small manufacturing defects can adversely affect its production yields
and operating results
The manufacture of the majority of Kyocera’s products is a highly complex and precise process. 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 these products will be materially andadversely affected if Kyocera is unable to obtain a high quality, reliable and timely supply of these components and sub-assemblies.
In addition, any reduction in the precision of these components will result in sub-standard end products and will cause delays andinterruptions in Kyocera’s production cycle.
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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 2004. 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 andbe forced 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 to hedge this risk according to its outlook on future exchange rates; nevertheless,fluctuations in foreign currency exchange rates could have an adverse effect on its business. Fluctuations in foreign currency
exchange rates may affect its results of operations and the value of its foreign assets, which in turn may adversely affect reported
earnings and the comparability of period-to-period results of operations. Changes in currency exchange rates may affect the relative
prices at which Kyocera and foreign competitors sell products in the same market. In addition, changes in the value of the relevant
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.
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(8) Insufficient protection of Kyocera’s trade secrets and patents could have a significant adverse impact on its competitive
position
Kyocera’s success and competitive position depend on protecting its trade secrets and other intellectual property. Kyocera’s strategy
is to rely both on trade secrets and patents to protect its manufacturing and sales processes and products, but reliance on trade secrets
is only an effective business practice insofar as trade secrets remain undisclosed and a proprietary product or process is not reverse
engineered or independently developed. Kyocera takes certain measures to protect its trade secrets, including executing nondisclosureagreements with certain of its employees, joint venture partners, customers and suppliers. If parties breach these agreements or themeasures Kyocera takes are not properly implemented, Kyocera may not have an adequate remedy. Disclosure of its trade secrets orreverse engineering of its proprietary products, processes or devices could materially and adversely affect its business, financial
condition and results of operations.
Kyocera is actively pursuing patents on some of its recent inventions, but these patents may not be issued. Even if these patents areissued, they may be challenged, invalidated or circumvented. In addition, the laws of certain other countries may not protect
Kyocera’s intellectual property to the same extent as Japanese laws.
(9) Kyocera may require licenses to continue to manufacture and sell certain of its products, the expense of which may adversely
affect its results of operations
From time to time Kyocera has received, and may receive in the future, notice of claims of infringement of other parties’ proprietary
rights and licensing offers to commercialize third party patent rights. Although Kyocera is not currently involved in any litigations
relating to its intellectual property except in the ordinary course of its business, Kyocera cannot assure that:•

infringement claims (or claims for indemnification resulting from infringement claims) will not be asserted against
Kyocera,•future assertions against Kyocera will not result in an injunction against the sale of infringing or allegedly infringing
products or otherwise significantly impair its business and results of operations; or•Kyocera will not be required to obtain licenses, the expense of which may adversely affect its results of operations.

(10) Future initiatives and in-process research and development may not produce the desired results
Kyocera intends to expand its product lines to satisfy customer demand in its target markets. Unexpected technical delays incompleting these initiatives could lengthen development schedules and result in lower revenues based on the products or technologies
developed from these initiatives. There can be no assurance that the products derived from Kyocera’s in-process research anddevelopment activities will achieve market acceptance.
(11) Kyocera 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 (Japanese telecommunication service provider), and Japanese financial institutions.
As of March 31, 2004, the aggregate fair value of equity securities included in available-for-sale securities was ¥363,548 million($3,496 million), with gross unrealized gains in the amount of ¥102,568 million ($986 million) and gross unrealized losses in theamount of ¥57 million ($1 million). The aggregate fair value of investment trusts included in available-for-sale securities was ¥16,954
million ($163 million), with gross unrealized gains in the amount of ¥11 million ($0 million) and gross unrealized losses in theamount of ¥3,163 million ($30 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 2004, Kyocera recorded losses on devaluation of investment securities
in the amount of ¥1,030 million ($10 million), mainly due to management’s estimation that certain non-public companies in which
Kyocera invested would need considerable periods to show profitability in their operating activities. For some of the equity securities
Kyocera owns, including the KDDI shares it owns, Kyocera intends to keep its ownership at the current level in light of theimportance of its business relationships with the issuers of these equity securities. For other equity securities in its portfolio, although
Kyocera may dispose of them over time, market conditions may not permit it to do so at the time, speed or price it may wish.
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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.
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Item 4. Information on Kyocera Corporation and its Consolidated Subsidiaries
A. History and Development of Kyocera Corporation and its Consolidated Subsidiaries
Kyocera Corporation is a joint stock corporation that was incorporated under the laws of Japan in 1959 with the name Kyoto Ceramic
Kabushiki Kaisha. Its name was changed to Kyocera Kabushiki Kaisha (or Kyocera Corporation) in 1982. Our corporate headquarters
is at 6 Takeda Tobadono-cho, Fushimi-ku, Kyoto 612-8501, Japan. Our telephone number is +81-75-604-3500.
Our business originally consisted of the manufacture of ceramic parts for electronic equipment. In the 1960’s, we expanded ourbusiness 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 ceramic 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, a communications
equipment manufacturer in which we had made an equity investment three years earlier. We expanded into another new business field
through the acquisition of Yashica Co., Ltd., a camera and camera lens manufacturer. We also played a leading role in theestablishment 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.
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 January1990.
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, consumer-related products, and electronic components
and devices, with the secondary manufacturer mainly in IT industrial fields, and its “Equipment Business,” in which Kyocera
manufactures and sells information and telecommunications equipment and optical instruments, such as mobile handsets, PHS-related
products, copiers, printers, multifunctional products, 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 of 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 parts and materials businesses by pursuing group synergies between fine chemical
technologies and fine ceramic technologies. 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 its Electronic
Device Group. To further enhance its organic circuit board business, 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, wecompleted the transfer of IBM Japan’s SLC business from IBM Japan to a newly-established wholly-owned subsidiary, Kyocera SLC
Technologies Corporation.
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With the aim of becoming more global enterprise and enhancing its profitability, Kyocera has been expanding its production in Chinaby three Chinese production bases located in Shanghai, Dongguan, Guiyang, and established a new production base in Tianjin in
fiscal 2004. In addition, Kyocera established a sales company, Kyocera (Tianjin) Sales and Trading Corporation, in March 2003 tocultivate the Chinese market. We are enhancing our marketing ability for both our products manufactured in China as well as our
products imported into China.
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, 2004, we have 133 subsidiaries
and 9 affiliates outside Japan and 28 subsidiaries and 5 affiliates in Japan. Our customers include individuals, corporations,
governments and governmental agencies. For information on our sales by category of activity and information on our sales bygeographic area and product segment, see Item 5.A “Operating Results” of this Form 20-F.
Business Strategy
Kyocera’s business strategy is to promote “high-value-added diversification” to be a creative company that continues to grow. Basedon the technologies we currently possess and will acquire, we will strive to exploit new markets by advancing and specializing thosetechnologies, or integrating technologies from both within and outside the Kyocera group. The goal of “diversification” is to create acluster of businesses whose technological power allows them to overcome the competition and equal specialist manufactures incompetitiveness. 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.
In order to achieve our growth, Kyocera dedicates management resources to three key areas, which have the potential to expand
dramatically: telecommunications and information processing, environmental protection, and the quality of life.
We assume more than 80% of our revenue for fiscal 2004 was derived from products related to IT markets. These range fromelectronic components, semiconductor parts and fiber-optic components, to telecommunications equipment and informationequipment and IT solution services.
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We believe material technologies have great potential in environmental protection area. Advanced crystal-processing expertise has
made us a leading producer of solar cells and solar electric generation systems. Our pollution-reducing ceramic engine parts, film-lessdigital cameras and cartridge-free printers and copiers further reflect our commitment to the environment and the well-being of future
generations.
To enhance the quality of life, we have developed electronic and structural components for the medical industry. As the average life
expectancy increases in Japan and worldwide, we are striving to improve the quality of life through the manufacture of products suchas medical and dental implants. We also intend to develop and offer products for a higher quality of life, including recrystallized
gemstones, digital still cameras and amusement services.
In the years to come, we will pursue growth using our internal knowledge and resources in materials, components, equipment, IT
solution services and networks. Through ongoing customer-oriented research and development, we will seek to create newtechnologies, products and markets that contribute to growth in our markets. In the near term, we face three major challenges to raise
performance further:•

Pursue maximum operational synergy within Kyocera Group operations, while continuing to develop new customers andmarkets.

•

Expand sales in areas where Kyocera commands a high market share.

•

Generate new business by creating markets for new applications of existing technology.

Having completed a number of performance-enhancing programs in fiscal 2004, we are now ready to target higher rates of growththrough the following ongoing business development efforts.
1) Increased group synergy
We plan to pursue greater group synergy in development, production and sales activities to expand revenues and profits. In ourcomponents businesses, this will include stronger sales connections between AVX Corporation and other parts of the Electronic
Device Group. At the same time, we plan to raise revenue by developing new customers in China and other Asian markets. In quartz
crystal products, we are maximizing synergy between our sales organizations and the development and production capabilities ofKyocera Kinseki Corporation. In addition, with increased production in China contributing to higher profitability, we plan to expand
China-based manufacturing capacity to maximize earnings growth. In the equipment business, our objective is to optimize mobilephone development and production capabilities in Japan, China and the United States. In information equipment, we will continue toseek cost reductions through China-based production.
2) Sales expansion in highly promising areas
Our goal is to increase sales of our products that command a high share of the digital consumer electronics market, which is poisedfor expansion. As the market for camera-equipped mobile phones continues to grow, we will strive to expand sales of ceramic
packages, which are used in imaging elements. Other areas of prospective revenue growth include organic packages and multi-layer
substrates for computer equipment and digital consumer products; fine ceramic components used in semiconductor and liquid crystal
display (“LCD”) fabrication equipment; and sapphire substrates. Elsewhere, we plan to expand our global presence in the solar energy
business, where demand continues to grow, by raising our global capabilities and production capacity.
3) New applications of existing technology
We plan to establish additional profit streams by developing new markets through innovative applications of existing technology. As
just one example, we are supplying new handsets and base stations based on Personal Handy Phones (“PHS”) technology for awireless broadband Internet-access service that began commercial operations in Australia in March 2004. We hope to build on thisachievement by developing products for other markets to enhance our leading position in the PHS industry.
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Operations
Our business is highly diversified with our operations classified into four operating segments: (1) Fine Ceramics Group, (2)Electronic Device Group, (3) Equipment Group and (4) Others. Our principal products and services offered in each segment are
shown below.
(1)

Fine Ceramics Group
Packages for surface mount devices (“SMD”), ceramic multilayer packages and substrates, metallized products, opticalcommunication ceramic packages and components, organic packages and substrates, semiconductor fabrication equipment
components/liquid crystal display (“LCD”) fabrication equipment components, automotive and ITS-related components, cutting
tools, jewelry residential and industrial photovoltaic generating systems, solar cells and modules, orthopedic and dental
implants.

(2)

Electronic Device Group
Ceramic chip capacitors, tantalum capacitors, temperature compensated crystal oscillators (“TCXOs”), voltage controlled
oscillators (“VCOs”), connectors, RF modules, thermal printheads, LCDs, amorphous silicon drums.

(3)

Equipment Group
code division multiple access (“CDMA”) and personal digital communication (“PDC”) handsets, PHS-related products, wireless
local loop (“WLL”) systems, “ECOSYS” printers, copiers, digital multifunctional products, digital still cameras, single-lensreflex (“SLR”) cameras, compact zoom cameras and equipment for optical-related applications.

(4)

OthersTelecommunications networks systems, computer networks systems, consulting, finance and leasing, manufacturing and sales ofelectronic component materials, electrical insulating materials and synthetic resin moldings.

(a)Fine Ceramics Group
Fine Ceramic Parts:
Products in this product line 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, zircon, and silicon nitrides, as well asalumina, utilizing their characteristics of conductivity, corrosion and wear resistance.
Products we manufacture in this product line include alumina substrates, which are thin ceramic bases used by manufacturers forhybrid integrated circuit (“IC”) foundations. We also produce substrates for thermal printheads, slide pads for computer disk
memories, parts for LCD fabrication equipment, sapphire substrates for LCD projectors, parts for semiconductor fabricationequipment, mechanical seals for pumps, engine components for the automobile industry, friction discs and thread guides foryarn texturing machines in the textile industry, rings for fishing rods, nozzles and parts for paper-making machinery.
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Semiconductor Parts:
This product line mostly comprises ceramic IC packages and ceramic packages for other semiconductor products and forelectronic components. 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.
The most common types of the ceramic IC packages we make are multilayer packages, including SMD packages and pin gridarrays. We also produce opto-electronic packages and ceramic parts for fiber-optic communications connectors. SMD packages
are used for surface acoustic wave (“SAW”) filters and oscillators, which are mostly inserted into cellular handsets. Pin gridarrays are sold to manufacturers of MPUs and of other logic ICs, which are principally inserted into information equipment andperipherals. We also produce ceramic packages for charge-coupled-devices (“CCDs”) and complementary metal oxide
semiconductor (“CMOS”) devices, which are mainly used in camera-equipped mobile handsets and digital still cameras. In
addition, we produce organic packages for high-end application specific integrated circuits (“ASICs”). In September 2003, weestablished a wholly-owned subsidiary, Kyocera SLC Technologies Corporation, to expand the production of our organic
packages and substrates for digital consumer equipment.
Consumer-Related Products:
This product line consists of cutting tools, recrystallized jewelry, BIOCERAM, solar systems and applied ceramic products.
We produce cutting tools for metal processing in industrial production, particularly in the automotive industry and carbide
cutting tools for the printed circuit board industry. We already produce cutting tools for the automotive industry in China plantand plan to expand production volume to further improve the profitability in this business.
Recrystallized jewelry comprises 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 introduce
recrystallized jewelry products to meet consumer needs and to cultivate its sales by operating retail shops in Japan.
We manufacture a solar photovoltaic cell system for generating electricity in residential home and public facilities. We expand
our solar cell production capacity in Japan and assembly of solar modules in China, and pursue additional plans to develop a
global manufacturing network for solar energy products. To strengthen its sales channels in Japan, we will increase its solar
product sales outlets by 50%, with new stores under either direct management or franchise.
We produce BIOCERAM dental and orthopedic implants and are developing new products with a wide range of orthopedic anddental applications, including artificial knee joint replacement systems, ceramic materials helping heal hip fractures and asystem for setting dentures magnetically in ceramic-based dental implants. In September 2004, Kyocera established a joint
venture company, Japan Medical Materials Corporation, with Kobe Steel, Ltd. to further expand the medical-related businessthroughout Japan, into Asia and, ultimately, other world markets by pursuing synergy between ceramic and metal medical
materials expertise.
- 16 -

Page 1 of 1(b)Electronic Device GroupOur electronic device group focuses on electronic components and devices for telecommunications and computing equipment.
These fields create demand for miniature timing devices such as temperature compensated crystal oscillators (“TCXOs”) andvoltage-controlled oscillators (“VCOs”), and miniature ceramic capacitors with high capacitance, tantalum capacitors and highfrequency modules, as well as thin-film products such as thermal printheads, amorphous silicon drums and LCDs. We believethat we are one of the leading suppliers of TCXOs in the world.
To raise market share in individual products, we will enhance our development and sales capabilities for advanced components
in order to meet specific market requirements. Examples include miniature high-capacitance and large- and ultra-highcapacitance capacitors; miniature timing devices for digital consumer products; and high-frequency modules for use in next
generation mobile handsets and automotive applications.
We utilize a subsidiary in Shanghai, China, a fast-growing market for our business, to manufacture ceramic capacitors, timing
devices and other electronic components. We are continuing to expand our offshore production of electronic devices, both toimprove earnings and to raise price competitiveness. In addition, we established a sales company, Kyocera (Tianjin) Sales andTrading Corporation, and started marketing of our products made both in China and around the world other areas through thiscompany.
AVX Corporation and its consolidated subsidiaries (AVX), which manufactures and markets ceramic and tantalum capacitorsand other passive components for telecommunications and computing equipment, is an important part of our strategy in theElectronic Device Group. With its global manufacturing and sales network, AVX is a major contributor to our sales worldwide.
We plan to increase sales and profits by strengthening synergies in development, production and sales throughout our global
network. By pursuing synergies with newly established Kyocera Kinseki Corporation, striving to lower unit costs througheconomies of scale, and leveraging our worldwide network to optimize sales and service resource, we plan to strengthen our
position as a leading global producer of quarts crystal components. In addition, through increased synergy with Kyocera
Electronic Device LLC, established as an AVX’s subsidiary during fiscal 2004, we plan to boost net sales of electronic
components outside Japan, including quarts crystal products and connectors.

(c)Equipment Group
Telecommunications Equipment:This product line includes CDMA and PDC handsets and PHS-related products. These products are produced mainly for KDDIand KDDI’s subsidiaries, as well as for other Asian and U.S. telecommunications companies. KDDI is a telecommunications
service company, in which we made an equity investment when it was founded in 1984, when the telecommunications business,
which had previously been monopolized by a national telephone company, was opened to private companies. KDDI andKDDI’s subsidiaries are currently engaged in providing long distance and international telephone services, cellular and PHS
services.
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Page 1 of 1

One of our major areas in the telecommunications equipment business is cellular handset. This technology has become one of
the fastest growing mobile phone protocols. We have already introduced 3G handsets for CDMA 2000 1x EV-DO services inJapanese markets. As we expect the demand of high functional handsets will increase in North America, our U.S. subsidiary,
Kyocera Wireless Corp. plans to launch from entry-level model to premium model in North America. In addition, CDMA
services are expected to spread into new markets in the Asia-Pacific region, Latin America, Africa, the Middle East and Eastern
Europe. We will aim to secure a larger share of the expanding market for CDMA mobile handsets by optimizing our global
development, production and sales network.
With regard to telecommunications equipment, we aim to become a leader in the CDMA market by pursuing a global marketingstrategy with bases in Japan, the United States and China, and to optimize our global product development and production
structure.
The other major area in telecommunications equipment in which we operate is PHS-related business. This business was
expanded by cultivating new markets overseas through our three telecom systems based on PHS technology. Specifically, we
seek to expand sales of mobile PHS systems through the expansion of PHS handsets and base stations in China. We also
promote sales of WLL systems in countries where fixed phone networks are not as yet widespread. Furthermore, we havepromoted wireless Internet systems, which enable Internet services to be used at broadband speed with wireless technology.
We will focus on upgrading our development capabilities through closer links between the R&D center in Yokohama, Japan,
and Kyocera Telecommunications Research Corporation in San Diego, U.S.A. These facilities will concentrate on developing
new commercial products based on improved technologies. We aim to be a market leader in CDMA handsets markets and PHSrelated products through the R&D for cellular phones designed for 3G EV-DO services and wireless broadband data
communication systems based on PHS technology which are major areas of focus.
Information Equipment:
The major products in this product line comprise page printers with a cartridge-free technology marketed under the name
“ECOSYS”, digital copiers and multifunctional products.
In April 2000, Kyocera Mita Corporation became one of our wholly-owned subsidiaries. In April 2002, Kyocera Corporation’s
ECOSYS printer unit was merged into this subsidiary, enabling us to build a unified presence in the document solutions
business. Further efficiencies have resulted from the merger of our printer and copier sales operations with those of Kyocera
Mita Corporation. We have enhanced our product line through the introduction of long-life printers, copiers and color machineswith low running costs, as well as strengthened our sales network. We focus on expanding the line of high-value added models
such as color model and high-speed printing model. In addition, we promote to reduce the cost by standardization of engines
between the printers and MFPs and by expanding production volume in China. We continue to develop a comprehensive line oflong-service-life printers, copiers, multi-function peripherals and color-capable document solutions equipment.
Optical Instruments:
This product line includes compact cameras, digital still cameras and SLR cameras and lenses. These products are sold under thebrand names of “Kyocera” mostly in Japan and “Yashica” overseas, while our “CONTAX” brand for high-end cameras are soldworldwide.
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Page 1 of 1

We focus on extending the lineup of digital still cameras with advanced, high-speed continuous-shooting function. At the sametime, we plan to leverage its expertise in lenses, electronic components, packages and other technologies to expand our presencein the market of DSC modules for mobile phones. In addition, we continue to expand production of digital cameras at our
Dongguan Shilong plant in China, to reduce costs and raise margins.
(d)OthersThis 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 manufacture and sales of electronic
component materials, electric insulators and synthetic resin molded parts.
Kyocera Leasing Co., Ltd., a Japanese wholly-owned subsidiary in Japan, is principally involved in providing credit financing
services and commercial leasing services for copiers, printers and other equipment. It therefore supports the operations of ourEquipment Group.
Kyocera Communication Systems Co., Ltd., a Japanese subsidiary, will concentrate on telecommunications engineering.
Kyocera Communication Systems Co., Ltd. also plans to expand its system integration outsourcing business in the information
technology market. Other areas of potential growth for Kyocera Communication Systems Co., Ltd. include data center services
in Japan and mobile content distribution services. Kyocera Communication Systems Co., Ltd. aims to broaden its customer baseby developing new products featuring network services and security systems.
Kyocera Chemical Corporation, which joined Kyocera in August 2002, mainly produces electronic component materials,
electric insulators and synthetic resin molded parts for the semiconductors and electronics industries. We seek to incorporate
fine chemical technologies in products in our Fine Ceramics Group and 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.
Most of our sales of fine ceramic parts, semiconductor parts and electronic devices worldwide are made directly to manufacturers
who incorporate them into their own products. However, end products manufactured by us, such as ceramic cutting tools,
recrystallized jewelry, solar energy products and various other consumer goods, tend to be sold to distributors and wholesalers.
Jewelry sales are made mainly through direct sales shops and agencies in Japan. Sales of consumer solar energy products are madethrough direct sales shops, as well as through sales distributors. BIOCERAM (orthopedic and dental implants) are supplied in somecases directly to dentists and hospitals. Our domestic sales of telecommunications equipment comprise sales mainly to KDDI and its
subsidiaries. Most of our page printer, copier and digital multifunctional products sales, both in the domestic market and abroad, aremade under our own brand name through distributors and wholesalers. Sales of optical instruments are made mainly to retail shops inJapan and overseas and, to a lesser extent, distributors abroad. Finance revenues are generated from services provided to companies
within and outside our group in Japan. Office renting and other services are provided to companies outside our group mainly in Japan.
Our telecommunication network systems and services support mobile and PHS carriers through the installation and maintenance ofbase stations.
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Domestic sales are made in the yen, while overseas sales are made in a variety of currencies, but predominantly in the U.S. dollars
and the Euro.
Sources and Availability of Raw Materials and Supplies
We purchase a variety of raw materials. The principal ones in terms of volume are alumina (a mineral substance produced frombauxite and from which aluminum is made), zircon, titania, silicon nitride, Tungsten and Tantalum, used for the products of our Fine
Ceramics Group and Electronic Device Group, such as fine ceramic parts, semiconductor parts, cutting tools and electronic
components, and each material is subject to price volatility. In terms of costs, gold, which is primarily used in the production process
for IC packages and is also subject to price volatility, is the most significant raw material. Our policy is to protect ourselves fromfluctuations 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 our Electronic Device Group and 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 the year ended March 31, 2004, 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 be complex, precision components that are sometimes produced only by a limited number of suppliers or asingle supplier that may own intellectual property related to the component or sub-assembly.
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, 2004, 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

PeriodPhilips Electronics N.V.

Netherlands

License under patents regarding
optical disk system

From June 28, 1993 to patent
expiration

Semiconductor Energy LaboratoryCo., Ltd.

Japan

License under patents regarding
amorphous silicon drums anddevices using such drums

From February 15, 1994 to patent
expiration

International Business Machines
Corporation

United States

License under patents regarding
ceramic products, electric/
electronic parts and components

From June 30, 1995 to patent
expiration

License under patents regarding
information processing systems- 20 -

Page 1 of 1

Counterparty

Country

Contents

PeriodQualcomm 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

Ricoh Company, LTDJapan

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

Lucent Technologies GRL
Corporation

United States

License under patents regarding
wireless subscriber equipment

From August 28, 2001 to December
31, 2004

Eastman Kodak Company

United States

License under patents regarding
digital camera

From April 1, 2002 to March 31,
2012

Forgent Networks, Inc./ Compression
Labs, Inc.

United States

License under patents regarding
digital camera

From October 30, 2002 to
September 17, 2007

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Page 1 of 1

Counterparty

Country

Contents

PeriodToshiba 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 IS95 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
cellular phone

From January 1, 2004 to March 31,
2004

Canon IncorporatedJapan

License under patents regarding
electronic photograph

From April 1, 2002
to patent expiration

Competitive Position(a) Fine Ceramics Group
Products in this segment are highly specialized to the needs of our customers, primarily secondary manufactures 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
products. In the semiconductor parts business, 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 of an example. We believe that we can maintain our market leadership in the area of ceramic
packages and satisfy customer needs by applying 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 technology 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 and aim to strengthen our organic material components business.
(b) Electronic Device GroupWe entered this area of production as we increased our capability to produce technologically advanced products for the Fine Ceramics
Group, so we are a unique electronic device manufacturer compared with competitor. 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 wide range ofcomponents. However, the products in this segment are largely standardized, so competition is based largely on price, quality anddelivery time.
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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, LCDs or amorphous silicon drums, are market-leading products inapplications for printer or copier.
In addition, for promoting the advantage of this business, we continue to promote the synergies within Kyocera Group and reduce thecost. We promote to optimize our development, production, and sales throughout our global network, and to maximize our production
and sales operations in China to reduce manufacturing costs and boost price competitiveness.
(c) Equipment GroupIn the Japanese market, our main competitors for cellular handsets are Japanese manufacturers, though foreign manufactures are
increasingly penetrating the Japanese handset market. In the cellular handset market outside Japan, Kyocera competes with the U.S.,
European and Asian manufacturers. We are currently a middle-class supplier in units volume in the global cellular handsets market.
In terms of PHS-related equipment, our main competitors are Japanese manufacturers. We also compete with Japanese and the U.S.
manufacturers producing information equipment such as copiers and printers on a global basis. In the optical instruments field,
Japanese manufacturers are our main competitors.
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 have 175 subsidiaries and affiliates as of March 31, 2004. Our management structure is based on our group segments 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, 2004, with respect to our significant subsidiaries.

Name

Country ofIncorporation

Percentage
held by
KyoceraMain Business

Fine Ceramics Group
Kyocera Solar Corporation
Kyocera America, Inc.

Japan

100.00% Sale of solar energy products

United States- 23 -

100.00% Manufacture and sale of semiconductor parts

Page 1 of 1

Percentage
held by
Kyocera

Name

Country ofIncorporation

Kyocera Industrial Ceramics Corporation

United States

100.00%

Manufacture and sale of fine ceramic products
and sale of electronic devices

Kyocera Solar, Inc.

United States

100.00%

Manufacture and sale of solar energy products

Kyocera Tycom Corporation

United States

100.00%

Manufacture and sale of micro drills

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

Mexico100.00%

Manufacture of fine ceramic products andtelecommunications equipment

Kyocera Asia Pacific Pte. Ltd.

Singapore

100.00%

Sale of fine ceramic-related products andelectronic devices

Shanghai Kyocera Electronics Co., Ltd.

China

90.00%

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

Kyocera Precision Tools Korea Co., Ltd.

Korea

90.00%

Manufacture and sale of cutting tools

Kyocera (Tianjin) Solar Energy Co., Ltd.

China

90.00%

Manufacture and sale of solar energy products

Kyocera SLC Technologies CorporationJapan

100.00%

Manufacture and sale of organic multilayer
printed circuit board

Germany

100.00%

Sale of fine ceramic-related products andelectronic devices

Japan

100.00%

Manufacture and sale of electronic devices

United States

70.10%

Manufacture and sale of electronic devices

Indonesia

100.00%

Manufacture and sale of electronic devices

Korea

100.00%

Manufacture and sale of electronic devices

Kyocera Fineceramics GmbH

Main BusinessElectronic Device Group
Kyocera Elco Corporation
AVX Corporation
P.T. Kyocera Indonesia
Kyocera Elco Korea Co., Ltd.

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Page 1 of 1

Name

Country ofIncorporation

Kyocera Elco Hong Kong Ltd.

Hong Kong

Percentage
held by
KyoceraMain Business100.00% Sale of electronic devices

Shanghai Kyocera Trading Co., Ltd.

China

100.00% Security service of PHS base stations and handsets
Sale on import of electronic parts and materials

Kinseki, Limited

Japan

100.00% Manufacture and sale of electronic device
products

Kyocera Display Institute Co., Ltd.

Japan

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

Kyocera Mita CorporationJapan

100.00% Manufacture and sale of information equipment

Kyocera Mita Japan CorporationJapan

100.00% Sale of information equipment

Kyocera Optec Co., Ltd.

Japan

100.00% Manufacture and sale of optical instruments

Kyocera Wireless Corp.

United States

100.00% Manufacture and sale of telecommunications
equipment

Kyocera Mita America, Inc.

United States

100.00% Sale of information equipment

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

Australia

100.00% Sale of information equipment

Kyocera Mita Australia PTY. LTD.
Kyocera Optics, Inc.

United States- 25 -

100.00% Sale of optical instruments

Page 1 of 1

Name

Country ofIncorporation

Percentage
held by
KyoceraMain Business

Kyocera Yashica do Brasil Indústria e Comércio
Ltda.

Brazil100.00%

Manufacture and sale of optical instruments

Kyocera Zhenhua Communication Equipment Co.,
Ltd.

China

70.00%

Manufacture and sale of telecommunications
equipment

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

Yashica Kyocera GmbHGermany

100.00%

Sale of optical instruments

India

100.00%R&D of telecommunications equipment

United States

100.00%R&D of telecommunications equipment

Kyocera Leasing Co., Ltd.

Japan

100.00%

Various leasing services, property management
and financing services

Kyocera Communication
Systems Co., Ltd.

Japan

76.30%Development and sale of software

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

Hong Kong

100.00%Real estate leasing

China

100.00%Real estate leasing

Kyocera Wireless (India) PVT.Limited
Kyocera Telecommunications Research Corp.
Others

Piazza Investment Co., Ltd.
Shanghai Kyocera Realty Development Co., Ltd.

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Page 1 of 1

In addition to the above consolidated subsidiaries, Kyocera has 109 other consolidated subsidiaries as of March 31, 2004, 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 has interests in two subsidiaries accounted for by the equity method and 14 affiliates accounted for by
the equity method as of March 31, 2004.
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 materials technologies from us into its
ceramic capacitor production. We have been seeking better ways to cooperate in expanding our electronic device businesses.
Currently, seven of our directors are members of AVX’s board of directors and AVX’s chief executive officer is one of our directors.
Within our Electronic Device Group, we have a close relationship with AVX in marketing, manufacturing, and research anddevelopment, and we are seeking and pursuing synergies to be a leading passive component manufacturer. AVX posted a net loss of$107,606 thousand in fiscal 2004, compared to net loss of $12,438 thousand in fiscal 2003. As a result of this net loss, our results ofoperations and financial condition for fiscal 2004 were adversely affected. See Item 5.A “Operating Results” of this Form 20-F.
Newly consolidated subsidiaries in fiscal 2004
In May 2003 we established a 90%-owned subsidiary, Kyocera (Tianjin) Solar Energy Co., Ltd., for the production and sales of solar
modules in China. In August 2003, Kyocera acquired Kinseki, Limited, a major producer of artificial crystal-related products inJapan, and made it a wholly-owned subsidiary through a share exchange. In September 2003, Kyocera established a wholly-owned
subsidiary, Kyocera SLC Technologies Corporation in Yasu, Japan by a completion of the transfer of the SLC business from IBM
Japan.
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, 2004, we had property, plants and equipment with a net book value of ¥254,520 million ($2,447
million). During the five years ended March 31, 2004, we invested a total of ¥320,857 million ($3,085 million) for additions toproperty, plants and equipment. Our property, plants and equipment are not subject to any material encumbrances or environmental
issues.
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Page 1 of 1

The following table sets forth information, as of March 31, 2004, 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 Tanakura Plant
Koriyama Plant
Nagano Okaya Plant

Tanakura, Fukushima
Koriyama, Fukushima
Okaya, Nagano

Owned
Owned
Owned

124
152
422

Kawasaki Plant
Kawaguchi Plant
Ise Plant
Tamaki Plant
Shiga Plant

Kawasaki, Kanagawa
Kawaguchi, Saitama
Ise, Mie
Tamaki, Mie
Gamo and Yokaichi,
Shiga

Owned
Owned
Owned
Owned
Owned

172
497
102
200
1,731

Osaka Hirakata Plant
Kagoshima Sendai Plant

Hirakata, Osaka
Sendai, Kagoshima

Owned
Owned

391
1,504

Kagoshima Kokubu Plant

Kokubu, Kagoshima

Owned

1,941

Kagoshima Hayato Plant
Yamagata Higashine Plant
Shiga Yasu Plant

Hayato, Kagoshima
Higashine, Yamataga
Yasu, Shiga

Owned
Owned
Leased

234
379
146

Owned

134

Owned
Leased
Owned

288
500
137

Owned

559

Electronic components

Owned
Owned

110
206

Electronic components
Electronic components

South Carolina Plant

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

Owned

350

Printers and Copiers

MexicoTijuana Plant

Tijuana

Owned

120

Semiconductor parts,
Electronic components

United States
Vancouver Plant
Balboa Plant
Campus Plant
Mountain Home Plant
Myrtle Plant
Olean Plant
Raleigh Plant- 28 -

2007

2008

Fine ceramic parts,
Communications equipment,
Electronic components
Communications equipment
Electronic parts and materials
Optical instruments,
Electronic components
Electronic parts and materials
Electronic parts and materials
Solar cells
Printers and CopiersFine ceramic parts,
Semiconductor parts,
Electronic components, Solarheat accumulating system,
Solar cells
Printers and Copiers
Semiconductor parts,
Electronic components, Fine
ceramic parts
Semiconductor parts,
Electronic components, Fine
ceramic parts
Electronic components
Electronic parts
Organic multilayer printed
circuit board
Ceramic packages, Mobile
communications
Semiconductor parts
Communications equipment
Fine ceramic parts

Page 1 of 1

Name of Plant

Location

StatusFloor Space

Lease
Expires

Principal Products
Manufactured(in thousandsof square feet)

El Salvador
San Salvador Plant

San Salvador

Owned

285

Electronic components

Paignton, England
Coleraine, Northern
Ireland

Owned

128

Electronic components

Owned

185

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
224

2017

Electronic components
Electronic components
Electronic components

Hong Kong
Hong Kong Plant

Hong Kong

Owned

183

China
Tianjin Plant
Shilong Plant
Shilong Plant

Tianjin, China
Dongguan, Canton
Dongguan, Canton

Owned
LeasedLeased

500
1,450
545

2018
2005

Shanghai Putong Plant

ShanghaiLeased

1,026

2023

Malaysia
Penang Plant

PenangOwned

149

Electronic components

Singapore
Singapore Plant

Singapore

Owned

128

Electronic parts and materials

ThailandThailand Plant

Thailand

Owned

264

Electronic parts

Philippines
Philippines Plant

Philippines

Owned

135

Electronic parts

United Kingdom
Paignton Plant
Coleraine Plant- 29 -

Printers and CopiersElectronic components
Printers and CopiersFine ceramic parts, Electronicparts,
Optical instruments
Fine ceramic parts,
Semiconductor parts
Electronic components

Page 1 of 1

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 annual report. 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
We are a global electronic device and equipment products provider. We were established in 1959 as a manufacturer of ceramic partsfor electronic equipment and have been expanding and diversifying our business mainly through active merger and acquisition
activities, as well as applying our ceramic technologies to the area of electronics, telecommunications, metal processing, medical anddental implants and solar energy. We develop, produce and distribute a variety of parts and device for electronic products such as
computers, mobile phones and automobiles, as well as consumer electronic products such as printers, copiers and digital cameras. We
earn revenues and income and generate cash from sales of these products.
We divide our worldwide operations into four business segments for our financial reporting purposes: Fine Ceramics, Electronic
Device, Equipment and Others. The net sales of these segments (including inter-segment net sales) accounted for 22.4%, 22.5%,
47.9% and 8.8%, respectively, of our total net sales in fiscal 2004. Also, in fiscal 2004, net sales from Japan, the United States, Asia
and Europe accounted for 40.0%, 22.0%, 17.0% and 13.8%, respectively.
We derive a substantial portion of our revenue from sales of products and services in electronics industries, including IT industries.
Approximately 80% of our net sales came from these industries in fiscal 2004, and the growth in these industries increased demandfor our electronic device and equipment products and contributed greatly to an increase in our net sales. For example, the digitalconsumer products market expanded with an increasing demand for notebook PCs, DVD recorders, digital cameras and digital TVs.
The mobile handset market also advanced steadily from the summer of 2003, as rising popularity for models equipped with color
LCD displays and built-in cameras led to increased demand for new products and replacements.
In fiscal 2004, in the field of parts and device for electronics products, which for our financial reporting purposes are covered by theFine Ceramics and the Electronic Device segments, net sales of major product categories, including parts for semiconductor and LCD
manufacturing equipment, mobile phones, digital cameras and PCs, increased. Also, in the field of electronics equipment, which for
our financial reporting purposes is covered by the Equipment segment, we expanded our sales of CDMA handsets by launching new
products in a timely manner in Japan, strengthening products lineup in the United States and expanding sales to new markets such as
South America. Also, the timely introduction of new information equipment products, including long-life color printers with low
running costs, contributed to an increase in net sales.
We have been expanding our business overseas, taking advantage of opportunities for growth in foreign electronics markets, mostnotably China. Despite a temporary production slowdown caused by the outbreak of severe acute respiratory syndrome, or SARS, in
China and a generally sluggish world economy in the first half of fiscal 2004, the world economy began to show signs of recovery inthe second half of fiscal 2004.
In fiscal 2004, our overseas net sales increased by 5.8%. As we further expand our overseas business, our results of operations will be
increasingly affected by foreign exchange fluctuations. Sales in overseas markets are denominated primarily in the U.S. dollars andthe Euros. Compared with fiscal 2003, the overall impact of exchange rate fluctuations on sales 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
negative impact on sales amounted to approximately ¥42,700 million ($411 million) for fiscal 2004. If the foreign exchange rates
prevailing in fiscal 2003 were applied to foreign currency-denominated sales for fiscal 2004, consolidated net sales would haveincreased by 10.6% from fiscal 2003, compared with the increase of 6.6% actually recorded.
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Page 1 of 1

We strive to take opportunities of the growing demand for electronics products both in Japan and overseas and to promote our coremanagement strategy of “high value-added diversification,” providing a diverse range of highly value-added products that satisfy
most sophisticated customers’ needs. In order to achieve this objective and continue to grow our business, we aim to implement thefollowing measures:
Pursue synergies throughout our global network
We seek to increase sales and profits by strengthening synergies in development, production and sales throughout our global network.
For example, by strengthening ties between AVX Corporation, our consolidated subsidiary in the United States, and other parts of theElectronic Device segment, we aim to increase our group-wide sales of electronic components in overseas markets. Also, we seek tofurther strengthen the relationship with Kyocera Kinseki Corporation, which we recently made a wholly-owned subsidiary, to achieve
lower unit costs through economies of scale and become a leader in the crystal components related market. Through these efforts, we
aim to make the best use of Kyocera group’s technological, production and management resources by effectively allocating themwithin the group.
Expand in areas with growth potential
We aim to expand our business in the digital consumer electronics markets, which we believe are likely to grow, through constantly
introducing new products in a timely manner and cultivating new growing markets. For example, as the market for camera-equipped
mobile phones continues to grow, for example, we strive to expand sales of ceramic packages used in imaging devices. Other areas ofprospective growth include organic packages and multi-layer substrates for computer equipment and digital consumer products, fineceramic components used in semiconductor and LCD fabrication equipment and sapphire substrates. We also plan to strengthen our
global presence in the solar energy business, where demand continues to grow, by increasing our global production and sales
capacity.
Expand production in China
We strive to bolster production capabilities in China, especially for semiconductor parts, electronic components, solar modules andinformation equipment in order to increase our productivity, reduce manufacturing costs and boost price competitiveness, thereby
maximize our profitability.
Cultivate new markets through innovative applications of existing technologies
We seek to establish additional profit streams by cultivating new markets through innovative applications of existing technologies.
For example, we are supplying new handsets and base stations based on the existing PHS technology for a wireless broadband
Internet-access service that was launched in Australia in March 2004, and we aim to build on this achievement by developing
products for other markets to strengthen our leading position in the global PHS market.
Net Sales by geographic segments
The following table shows a breakdown of our total consolidated net sales for each of the last three years, 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
Total

2002

2003

2004

2004

¥ 408,561
289,517
148,349
141,493
46,654¥ 423,190
264,755
178,384
144,293
59,148¥ 456,807
251,326
194,302
156,929
81,450$ 4,392,375
2,416,596
1,868,288
1,508,933
783,173¥1,034,574¥1,069,770¥1,140,814$10,969,365

In the above table, the amounts shown by geographical area reflect sales based on the location of our customers.
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Page 1 of 1

Sales in Japan for fiscal 2004, which accounted for 40.0% of total net sales, increased by ¥33,617 million ($323 million), or 7.9%, to¥456,807 million ($4,392 million) compared with ¥423,190 million for fiscal 2003. This was due primarily to higher sales of solar
systems and an increase in sales at Kyocera Communication Systems Co., Ltd. and its consolidated subsidiaries. This also reflectedsales 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 ($360 million), or 5.8%, to ¥684,007 million ($6,577 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 ($411 million). If the foreign exchange rates prevailing in fiscal 2003
were applied to foreign 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 ($363 million) compared with fiscal 2003, and particularly sales from 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 Electronic Device Group and Kyocera’s other components business due to brisk production
activities of mobile phone handsets 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 to higher sales of printers and digital MFPs. The effect of the yen’s depreciation against the Euro also
had a positive impact on sales for fiscal 2004 of approximately ¥9,800 million ($94 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 our Electronic Device Group and telecommunications equipment such as CDMA handsets
and PHS-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.
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Page 1 of 1

Results of Operations
Fiscal 2004 compared with Fiscal 2003
Net sales
In fiscal 2004, Kyocera’s net sales of increased by ¥71,044 million ($683 million), or 6.6%, to ¥1,140,814 million ($10,969 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 Fine Ceramics Group and Electronic Device Group.
Revenues from Equipment Group also rose as Kyocera successfully introduced new mobile phone handsets and digital multifunction
products (MFPs), and developed new markets. The new consolidations 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 Corporation and its
consolidated subsidiaries (KCC), 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-onyear growth in consolidated net sales in fiscal 2004 would have increased by 4.4% compared with 6.6% actually recorded.
A detailed analysis and discussion about Kyocera’s net sales and by operating segments are as follows;
Net sales by operating segment
The following table shows a breakdown of our total consolidated net sales for fiscal 2003 and fiscal 2004 for our four operating
segments: Fine Ceramics Group, Electronic Device Group, Equipment Group and Others.
Years ended March 31,(Yen in millions and U.S. dollars in thousands)
2003

2004

2004

¥ 238,867
227,962
529,784
85,084(11,927)¥ 255,805
256,906
545,811
100,505(18,213)$ 2,459,663
2,470,250
5,248,183
966,394(175,125)¥1,069,770¥1,140,814$10,969,365

Segment net sales :Fine Ceramics GroupElectronic Device Group
Equipment Group
OthersAdjustments and eliminations

Commencing in fiscal 2004, net sales of the Precision Machine Division of Kyocera Corporation, previously included in “Others”
was changed to “Corporate.” Previously published net sales of such operating segments for fiscal 2003 have been reclassified
accordingly.
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Page 1 of 1

Fine Ceramics Group
This segment comprises fine ceramic parts, semiconductor parts and consumer-related products. Sales in this segment increased by¥16,938 million ($163 million), or 7.1 %, to ¥255,805 million ($2,460 million) compared with ¥238,867 million in fiscal 2003.
Sapphire substrates for LCD projectors and LEDs particularly generated year-on-year growth in sales of fine ceramic parts. Sales ofcomponents for semiconductor and LCD fabrication equipment also grew, due mainly to increased demand stemming from theongoing shift toward large-panel LCDs.
In semiconductor parts, demand for ceramic packages increased, especially for image-sensor devices used in camera-equipped mobile
phone handsets and digital still cameras (DSCs). In addition, the new consolidation of KST from September 2003 contributed to anincrease in sales.
Expansion of demand for solar power generation systems contributed to increased sales of consumer-related products. 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 ($278 million), or 12.7%, to ¥256,906 million ($2,470 million) compared with
¥227,962 million in fiscal 2003.
Sales posted by AVX Corporation and its consolidated subsidiaries (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 (KEC) grew steadily, and sales of thin-film devices increased year-on-year due mainly to higher sales ofcolor STN (Super Twisted Nematic) LCDs for mobile handsets and thermal printheads. Other contributions to an increase in sales ofthis segment included increased production at facilities in China of ceramic capacitors and timing devices as a result of rising demandfor electronic equipment such as mobile phones, PCs and digital still cameras.
Equipment Group
This segment comprises telecommunications equipment, information equipment and optical instruments. Sales in this segment
increased by ¥16,027 million ($154 million), or 3.0%, to ¥545,811 million ($5,248 million) compared with ¥529,784 million in fiscal
2003.
Sales of telecommunications equipment increased, primarily reflected higher sales at Kyocera Wireless Corp. and its consolidated
subsidiaries (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
handset phone business, resulting in a year-on-year decline in sales. Sales of high-end CDMA mobile phone handsets in China failed
to generate significant sales growth due to price erosion.
Sales growth of information equipment in fiscal 2004 which was operated by Kyocera Mita Corporation and its subsidiaries (KMC)
was primarily driven by lineup expansion resulting from the launch of color models, notably in Europe. Another factor was the receiptof large volume orders overseas as customers valued the reliability of Kyocera-branded products more highly. Kyocera’s sales of
DSCs increased strongly during fiscal 2004, largely as a result of the launch of 12 new models, including five that feature an “RTUNE” image-processing chip that enables a camera to operate in continuous image-capture mode until the memory capacity limit isreached. However, reduced sales of still film cameras amid falling camera prices and an ongoing contraction in the market offset
growth in sales of DSCs.
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Page 1 of 1

OthersSales in this segment increased by ¥15,421 million ($148 million), or 18.1%, to ¥100,505 million ($966 million) compared with
¥85,084 million in fiscal 2003.
Kyocera Communication Systems Co., Ltd. and its subsidiaries (KCCS) increased its sales from both its business information systems
and telecommunications engineering businesses following the development of new products and services. Sales of KCC also
contributed to this segment due to the fact that its full-year results were reflected in fiscal 2004, whereas only eight months’ sales
were reflected in fiscal 2003.
Cost of sales and gross profit
In fiscal 2004, cost of sales increased by ¥63,966 million ($615 million), or 8.0%, to ¥860,224 million ($8,271 million) from¥796,258 million in fiscal 2003.
Raw material costs increased by ¥74,797 million ($719 million) in fiscal 2004 compared with fiscal 2003. This mainly reflected
increased sales and production activities of telecommunications equipment and higher production levels for digital cameras, a writedown amounted to ¥10,351 million ($100 million) of current inventories of tantalum materials and purchase commitments based onlong-term contracts at AVX, and the effects of the new consolidation of Kinseki and KST.
Subcontractor costs increased by ¥7,452 million ($72 million) in fiscal 2004, principally as a result of increased production activities
of telecommunications 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 ($179 million) in fiscal 2004. This reflected increased royalty payments attributable
to higher sales of telecommunications and information equipment, an increase in reserves for product warranty to take account ofhigher returns with telecommunications equipment in particular and increased purchases of consumables related to higher production
volumes of fine ceramic parts and telecommunications equipment as well as the effects of the consolidation of Kinseki and KST. In
addition, the excess accrual of ¥2,284 million ($22 million) was reversed as a reduction of other cost of sales to account for thedifference between accrued litigation expenses following a settlement of LaPine litigation and the cash settlement.
Depreciation and amortization decreased by ¥2,510 million ($24 million) as a result of lower capital expenditures in recent years andthe 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 ($132
million). Furthermore, the withdrawal from EPF at KCC also resulted in a reduction of labor costs of ¥2,821 million ($27 million).
As a result, gross profit increased by ¥7,078 million ($68 million), or 2.6%, in fiscal 2004 to ¥280,590 million ($2,698 million) from¥273,512 million in fiscal 2003. The gross profit ratio decreased by 1.0 point from 25.6% to 24.6%.
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Page 1 of 1

SG&A expenses and profit from operations
Selling, general and administrative (SG&A) expenses in fiscal 2004 decreased by ¥18,496 million ($178 million), or 9.7%, to¥171,628 million ($1,650 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 ($29 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.
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 ($56 million). In addition, thedifference between accumulated benefit obligation for a substitutional portion of EPF and the related government-specified portion ofplan assets of EPF was recorded as a reduction of SG&A expenses of ¥38,495 million ($370 million). Furthermore, the withdrawal
from EPF at KCC resulted in a deduction of labor costs of ¥3,132 million ($30 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 ($246 million), or 30.7%, to ¥108,962
million ($1,048 million) compared with ¥83,388 million in fiscal 2003.
Interest and dividend income
Interest and dividend income in fiscal 2004 decreased by ¥311 million ($3 million), or 6.0%, to ¥4,883 million ($47 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 ($1 million), or 10.2%, to ¥1,286 million ($12 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-denominated borrowings, 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 Euro
compared with fiscal 2003, respectively. The net effect of foreign currency fluctuations was a loss of ¥1,546 million ($15 million), asa result of the yen being worth 11.7% more against the U.S. dollar at March 31, 2004 compared with at March 31, 2003. This
principally resulted in losses 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.
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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 ($25 million), a fall of ¥517 million ($5 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.
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 ($5 million).
In fiscal 2004, losses on devaluation of investment securities amounted to ¥1,030 million ($10 million), a decrease of ¥1,853 million($18 million) compared with ¥2,883 million in fiscal 2003. Losses recorded in fiscal 2004 was due mainly to management’s
estimation that certain non-public companies in which Kyocera invested would need considerable periods to show profitability intheir operating activities. Losses recorded in fiscal 2003 were attributable mainly to a prolonged decline in the market value ofJapanese bank stock held by Kyocera Corporation.
Income before income taxes
In fiscal 2004, increases in operating profits in Fine Ceramics Group and higher revenues in Equipment Group from sales of
information equipment such as digital MFPs outweighed the negative effects of a decline in operating profit in Electronic Device
Group, primarily due to aforementioned one-time charges related to inventory write-downs and restructuring activities at AVX, andlower operating profits of optical instruments and telecommunications equipment in Equipment Group. Kyocera also recorded asettlement gain of ¥18,917 million ($182 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 ($375 million), or 51.3%, to ¥115,040 million ($1,106 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 ($38 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 operating segments are as
follows;- 37 -

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Operating profit by segment
The following table shows a breakdown of our consolidated income before income taxes, and operating profit for fiscal 2003 andfiscal 2004 for our four operating segments: Fine Ceramics Group, Electronic Device Group, Equipment Group and Others.
Years ended March 31,(Yen in millions and U.S. dollars in thousands)
2003

2004

2004

Segment operating profit :Fine Ceramics GroupElectronic Device Group
Equipment Group
Others¥ 18,797
11,81640,0207,412¥

31,1395,047
31,257
9,683$

299,414
48,529300,548
93,10678,045

77,126

741,597

Corporate(5,619)34,871

335,298

Equity in earnings of affiliates and unconsolidated subsidiaries
Adjustments and eliminations

3,092
519

2,575
468

24,7594,500¥ 76,037¥ 115,040$ 1,106,154

Income 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 operating segments for fiscal 2003
have been reclassified accordingly.
Fine Ceramics GroupOperating profit in this segment increased by ¥12,342 million ($119 million), or 65.7%, to ¥31,139 million ($299 million) comparedwith ¥18,797 million in fiscal 2003. This was due primarily to increased sales across all product divisions combined with reduced
manufacturing costs.
Operating profit from fine ceramic parts increased, due primarily to higher sales of components used in semiconductor and LCD
fabrication equipment and sapphire substrates.
Operating profit margins improved substantially for semiconductor parts, due to expanded production efficiencies of SMD ceramic
packages in China accompanied with stable growth of its demand. Increased sales and higher manufacturing productivity also
improved the profitability of organic material components and of optical communications components and packages, and contributed
to an increase in operating profits.
Operating profit from consumer-related products increased, due primarily to improved production yields with solar systems andreduced manufacturing costs for cutting tools through higher levels of China-based production.
Electronic Device GroupOperating profit in this segment decreased by ¥6,769 million ($65 million), or 57.3%, to ¥5,047 million ($49 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 ($100 million) of current inventories of tantalum materials and purchase commitments based on longterm contracts, and also booked a restructuring charge of ¥2,975 million ($29 million) associated with the closure of its overseas
ferrite manufacturing facilities and headcount reductions. As a result, the operating loss in fiscal 2004 at AVX increased materiallycompared 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 post markedly higher profit margins compared with fiscal 2003.
Equipment GroupOperating profit in this segment decreased by ¥8,763 million ($84 million), or 21.9%, to ¥31,257 million ($301 million) comparedwith ¥40,020 million in fiscal 2003.
Telecommunications equipment recorded lower operating profit compared with fiscal 2003, due primarily to declined sales of mobile
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 feed through into increased profits from the second half of fiscal
2004.
Operating profit from information equipment increased compared with fiscal 2003. This was due primarily to buoyant sales ofprinters and digital MFPs combined with reduced costs arising from increased China-based production and an ongoing shift toward
the use of common engines across printer and digital MFP product ranges.
In optical instruments, poor sales of still film cameras combined with development costs for the “R-TUNE” engine and higher
promotional costs for DSCs resulted in an operating loss.
OthersSegment operating profit increased by ¥2,271 million ($22 million), or 30.6%, to ¥9,683 million ($93 million) compared with ¥7,412
million in fiscal 2003. This was due primarily to increased earnings at KCCS, which was arising 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 operating segment, together with any profit-and-loss items that management judges not to belong within the above
operating segments, such as litigation expenses or losses on devaluation of investment securities. In fiscal 2004, Kyocera recorded
Corporate gain of ¥34,871 million ($335 million). Compared with Corporate loss of ¥5,619 million recorded in fiscal 2003, Corporate
gain improved by ¥40,490 million ($389 million). This was partly due to a decrease in expenses associated with the provision ofmanagement-related services by Kyocera’s head office, and the absence of losses of ¥8,042 million on devaluation of investment inJapanese 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 ($182 million) of a settlement gain for a
substitutional portion of EPF at Kyocera Corporation and KMC, ¥5,953 million ($57 million) of a withdrawal gain of EPF at KCC,
and ¥2,284 million ($22 million) of a gain on reversal of excess accruals resulted from a settlement of LaPine Case.
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Taxes
Current and deferred income taxes in fiscal 2004 increased by ¥17,530 million ($169 million), or 53.5%, to ¥50,310 million ($484
million) compared with ¥32,780 million in fiscal 2003. The effective tax rate of 43.7% in fiscal 2004 was 0.6 point higher than that of
43.1% in fiscal 2003. This was due mainly to that pre-tax losses, recorded at certain foreign subsidiaries taxed at lower rates thanJapanese statutory tax rate of 42.0%, increased, and valuation allowances on deferred tax assets were also recorded at thosesubsidiaries.
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 ($31 million) to ¥3,356 million ($32 million), compared with ¥164 million in
fiscal 2003. This was due to increased losses incurred by one-time charges related to a write-down of inventories and restructuring
activities.
Fiscal 2003 compared with Fiscal 2002:
Net Sales
In fiscal 2003, net sales of Kyocera increased by 3.4% compared with fiscal 2002. This increase in sales was due mainly to increased
sales in our Equipment Business, particularly in telecommunications equipment and information equipment. Despite reduced
component inventory adjustments around the world and resurgence in demand in the mobile handsets market, continuing priceerosion for components has led to a decrease in sales in Kyocera’s Components Business, which consists of the Fine Ceramics Groupand Electronic Device Group.
Sales in overseas markets are denominated primarily in the U.S. dollar and, to a lesser extent, in Euro and the yen. Overseas salesconsist of sales of exports from Japan and sales of locally manufactured products. In fiscal 2003, although the yen appreciated against
the U.S. dollar resulting in a negative impact on our consolidated net sale, the yen depreciated against Euro resulting in a positive
impact on our consolidated net sales. As a result, the net impact of foreign currency fluctuations was a relatively minor impact ofapproximately ¥1,800 million on Kyocera’ consolidated net sales compared with fiscal 2002. If the foreign exchange rates prevailingin each quarter of fiscal 2002 were applied to foreign currency-denominated sales in the corresponding quarter in fiscal 2003, the sumof the quarterly consolidated sales for fiscal 2003 so calculated would have been greater than the actual annual consolidated sales forfiscal 2002 by approximately 3.6%, compared with the increase of 3.4% between the actually recorded annual consolidated sales forthese fiscal years.
A detailed analysis and discussion about Kyocera’s net sales and by operating segments are as follows;- 40 -

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Net Sales by Operating Segment
The following table shows a breakdown of our total consolidated net sales and operating profit for fiscal 2002 and fiscal 2003 for ourfour operating segments: Fine Ceramics Group, Electronic Device Group, Equipment Group and Others.
Years ended March 31,(Yen in millions)
2002

2003

¥ 252,879
234,938
478,293
81,564(13,100)¥ 238,867
227,962
529,784
85,084(11,927)¥1,034,574¥1,069,770

Segment net sales :Fine Ceramics GroupElectronic Device Group
Equipment Group
OthersAdjustments and eliminations

Commencing in fiscal 2004, net sales of the Precision Machine Division of Kyocera Corporation, previously included in “Others”
was changed to “Corporate.” Previously published net sales of such operating segments for fiscal 2002 and fiscal 2003 have been
reclassified accordingly.
Fine Ceramics Group
Sales for this segment in fiscal 2003 decreased by 5.5% compared with fiscal 2002. Decreased revenues from optical communications
components, such as parts for fiber-optic connectors and packages for optical communications devices, were offset by rising sales ofparts for semiconductor and liquid crystal display (LCD) fabrication equipment, sapphire substrates for LCD projectors, ceramic
packages for image sensors and SMD packages for mobile phones, as well as solar energy systems.
Electronic Device Group
Sales for this segment in fiscal 2003 fell by 3.0% compared with fiscal 2002, due mainly to continued severe price erosion withrespect to general passive components. A recovery in demand for mobile phone components, including ceramic capacitors and timing
devices such as TCXOs, after handset manufactures had largely eliminated excess components inventories, led to an increase inshipping volume compared with fiscal 2002, which somewhat compensated for lower prices.
Equipment Group
Sales for this segment increased by 10.8% compared with fiscal 2002, due mainly to an increase in sales of information equipment
such as printers and copiers at KMC and telecommunications equipment such as CDMA handsets and PHS-related products. Sales at
KMC grew sharply by approximately 15% compared with fiscal 2002. This growth reflected the successful introduction of new
copiers, which share common parts or engines with page printers and the enhanced brand name of KMC. In telecommunications
equipment business, a camera equipped CDMA 1x phone in Japan and CDMA 1x phones in the U.S, as well as the introduction ofCDMA handsets to the Chinese market, contributed to an increase in sales. In addition, sales of PHS-related products expanded
strongly overseas, especially in China and Thailand. However, sales of optical instruments decreased, because an increase in sales ofdigital cameras was overwhelmed by shrinking of the still camera market.
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Others
Revenues for this segment in fiscal 2003 increased by 4.3% compared with fiscal 2002. Though finance revenue of KLC and thetelecommunications engineering services and information systems businesses at KCCS each decreased, eight months of sales of KCC
amounting to ¥ 18,158 million, were added to this segment from August 2002.
Cost of sales and gross profit
Gross profit increased by 14.3% in fiscal 2003 to ¥273,512 million. Gross profit ratio increased by 2.5 points from 23.1% to 25.6%.
This is mainly because of an increase in sales in our Equipment Group, in addition to a large decrease in restructuring charges related
to U.S. subsidiaries compared to those recorded in fiscal 2002.
SG&A expenses and profit from operations
Selling, general and administrative (SG&A) expenses in fiscal 2003 increased by 1.2% to ¥190,124 million. Although therestructuring charge included in SG&A expenses in fiscal 2002 in relation to our U.S. subsidiaries decreased, SG&A expenses
increased in fiscal 2003 principally as a result of KCC becoming consolidated subsidiaries and an increase in R&D expenses for new
products at KMC. As a percentage of net sales, SG&A expenses fell by 0.3 points, from 18.1% to 17.8%. Although SG&A expenses
in fiscal 2003 increased, a significant increase in gross profit of 14.3% compared with fiscal 2002 resulted in a substantial rise inprofit from operations, which rose by 61.7% to ¥83,388 million.
Interest and dividend income
Interest and dividend income in fiscal 2003 decreased by 28.9% to ¥5,194 million compared with fiscal 2002. This was due
principally to a decrease in Kyocera Corporation’s interest income received from bank deposits denominated in the U.S. dollar in acomparatively low interest rate environment in the United States recently. This decrease in interest income also reflected Kyocera
Corporation’s fund management policy to minimize financial risks by investing in lower-risk assets that also provide lesser interest
income. Dividend income in fiscal 2003 was flat compared with fiscal 2002 because Kyocera Corporation did not materially purchaseor sell securities.
Interest expense
Interest expense decreased substantially by 46.1% in fiscal 2003, principally as a result of a decrease in interest bearing debts fromthe repayment by Kyocera Mita Corporation in February 2002 of all of the liabilities deferred pursuant to its rehabilitation plan earlier
than had been set forth in its rehabilitation plan. In addition, KMC and Kyocera International Inc. and its consolidated subsidiaries(KII) reduced their borrowings in fiscal 2003.
Foreign currency translation
The foreign exchange rate of the yen against the U.S. dollar appreciated sharply in the first quarter of fiscal 2003 from the previous
depreciatory trend in fiscal 2002. As a result, the average yen-dollar exchange rate was 2.4% lower than in fiscal 2002. Against theEuro, the yen depreciated substantially in the fourth quarter of fiscal 2003 resulting in depreciation of approximately 9.0% during
fiscal 2003. Foreign currency transaction losses, net was ¥5,405 million, principally as a result of the yen being worth 9.8% moreagainst the U.S. dollar at March 31, 2003 compared with at March 31, 2002. This resulted in losses arising from the translation of
cash deposits and trade receivables denominated in foreign currencies.
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Kyocera typically enters into forward exchange contracts to minimize currency exchange risks on foreign currency denominatedreceivables and payables, 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 ofKyocera’s overseas operations. Kyocera confines its use of foreign currency 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
Kyocera’s equity in earnings of affiliates and unconsolidated subsidiaries in fiscal 2003 increased by 98.3%, to ¥3,092 due principally
to a decrease in a loss of Kinseki, Limited. An increase in profit of SK TELETECH CO., LTD. also positively affected equity inearnings. In December 2002, Kyocera acquired additional stakes in Kinseki, Limited, thereby increasing its stake in Kinseki, Limited
from 27.95% to 28.09%. Kyocera made Kinseki, Limited a wholly-owned subsidiary through a share exchange on August 1, 2003.
Detailed information is described in Note 3 to The Consolidated Financial Statements included in this Form 20-F.
In fiscal 2003, Kyocera recognized losses on devaluation of investment securities amounting to ¥2,883 million, which was
attributable mainly to a prolonged decline in the market value of Japanese bank shares held by Kyocera Corporation. Kyocera also
recognized a loss on devaluation of its investment in Kinseki amounting to ¥5,159 million, due to a substantial fall in its market value.
In fiscal 2002, losses recognized on devaluation of investment securities were ¥5,771 million, which were also attributable mainly tothe sharp decline in the market value of Japanese bank shares held by Kyocera Corporation.
A detailed analysis and discussion about Kyocera’s income before income taxes, and operating profit by operating segments are as
follows;
Income before income taxes
The following table shows a breakdown of our consolidated income before income taxes, and operating profit for fiscal 2002 andfiscal 2003 for our four operating segments: Fine Ceramics Group, Electronic Device Group, Equipment Group and Others.
Years ended March 31,(Yen in millions)
2002

2003

¥20,137
4,372
24,413
7,085¥18,797
11,81640,020
7,412

56,00778,045

Corporate(2,086)(5,619)Equity in earnings of affiliates and unconsolidated subsidiaries
Adjustments and eliminations

1,559
(82)

3,092
519

¥55,398¥76,037

Segment operating profit :Fine Ceramics GroupElectronic Device Group
Equipment Group
OthersIncome before income taxes- 43 -

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Commencing in fiscal 2004, operating profit of the Precision Machine Division of Kyocera Corporation, previously included in“Others” was changed to “Corporate.” Previously published operating profits of such operating segments for fiscal 2002 and fiscal
2003 have been reclassified accordingly.
Operating profit for Fine Ceramics Group in fiscal 2003 dropped by 6.7% from fiscal 2002, due mainly to a decline in sales ofcomponents for the optical communications market. Operating profit for Electronic Device Group improved significantly by 170.3%
from fiscal 2002 due principally to improved productivity through expanding production volume in China and a decrease in large
expenses associated with structural reforms at AVX, that were recorded in fiscal 2002. The structural reforms at AVX included theintegration of production bases and personnel reductions coupled with increased efficiency in its production operations in the UnitedStates. Operating profit for Equipment Group grew to 63.9% compared with fiscal 2002, due mainly to sales growth in informationequipment and telecommunications equipment. Operating profit for Others increased by 4.6% compared with fiscal 2002, due
principally to decreases in costs and expenses at Kyocera Corporation and KLC.
Corporate losses in fiscal 2003 were ¥5,619 million, an increase of ¥3,533 million compared with fiscal 2002. In fiscal 2003, Kyocera
recognized losses on devaluation of investment securities amounting to ¥2,883 million, which was attributable mainly to a prolonged
decline in the market value of Japanese bank shares held by Kyocera Corporation, even after the recognition of large losses of ¥5,771
million on investment securities in fiscal 2002. Kyocera also recorded a loss on devaluation of its investment in Kinseki Ltd., which
was accounted for by equity method in fiscal 2003, amounting to ¥5,159 million, due to a substantial fall of its market value.
Taxes
Kyocera’s effective tax rate of 43.1% in fiscal 2003 was higher than that of 38.5% in fiscal 2002. This was due mainly to a decrease
in income of foreign subsidiaries taxed at lower rates than the Japanese statutory tax rate of 42.0% and recognition of a loss ondevaluation of an investment in an affiliate, which was considered a permanent difference for the purpose of tax calculations.
Minority interests
Minority interests were principally related to AVX, which had an approximately 30% minority ownership interest in fiscal 2003.
Lower earnings at AVX resulted in a gain in minority interests in fiscal 2003 from a small loss in fiscal 2002.
Cumulative effect of change in accounting principle
On April 1, 2002, Kyocera adopted the Statement of Financial Accounting Standards Board (SFAS) No. 141, “Business
Combinations,” and No. 142, “Goodwill and Other Intangible Assets.” In the first half of fiscal 2003, Kyocera completed an
impairment review 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 these statements. The impairment loss of ¥3,175 million was recorded as a cumulative effectof change in accounting principle in accordance with the provisions of SFAS No.142. Kyocera also wrote off ¥919 million of
unamortized deferred credit related to an excess over cost arising from an investment in Taito Corporation that was accounted for by
the equity method as a cumulative effect of change in accounting principle in accordance with the provisions of SFAS No.141. On
April 1, 2001, Kyocera adopted 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 SFAS No. 133.”
In accordance with the transition provisions of SFAS No. 133, Kyocera recorded a one-time, non-cash unrealized loss of ¥106
million, net of taxes, in accumulated other comprehensive income to recognize derivatives that are designated as cash flow hedges
and qualify for hedge accounting. Kyocera also recorded a one-time, non-cash realized loss of ¥1,838 million, net of taxes, in the
consolidated statement of income as a cumulative effect of change in accounting principle to record those derivatives that aredesignated as cash flow hedges but not qualified for hedge accounting (loss of ¥1,518 million) and those derivatives that aredesignated as cash flow hedges but for which hedge accounting was not adopted (loss of ¥320 million).
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Business Combinations and Investments
Recent agreements related to new business combinations
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.
On June 21, 2004, the Carlyle Group (Carlyle), Kyocera, KDDI and DDI Pocket, Inc. (DDI Pocket) reached an agreement that a
consortium consisting of Kyocera and Carlyle would acquire the business of DDI Pocket, a subsidiary of KDDI. Under theagreement, the company that succeeds to DDI Pocket’s business will be 30% owned by Kyocera. In cooperation with that company,
Kyocera will endeavor to expand sales in its PHS related business by developing new markets in Japan as well as overseas.
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 board, 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 ($83 million). Kyocera Corporation incorporated a
new successor company, “Kyocera SLC Technologies Corporation”, on August 12, 2003, which commenced operation on September
1, 2003.
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 Fine Ceramics Group, Electronic Device Group, andother divisions of Kyocera. On August 1, 2002, Kyocera Corporation issued 990,990 shares of common stock of Kyocera Corporationin 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.
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Settlement of LaPine CaseOn 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 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 ($341 million) as cash payment in its
consolidated financial statements.
Kyocera had recognized a provision for accrued litigation expenses as cost of sales. The excess accrual of ¥2,284 million ($22
million) was reversed as a reduction of cost of sales to account for the difference between accrued litigation expenses and the cash
settlement.
Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities
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 ($182 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.
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.
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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.
A substantial portion of allowances for doubtful accounts is recorded with respect to finance receivables of KLC, in Others segment,
which provides credit financing and commercial leasing services. Based on the factors discussed above, KLC sets estimated recovery
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 thecorrelation between the allowances so determined and the actual loss experienced, and makes an appropriate modification to theschedule of percentages for determining allowance amounts.
At March 31, 2004, KLC had ¥36,315 million ($349 million) of allowances for doubtful accounts against ¥195,286 million ($1,878
million) of finance receivables, which comprise over 80% 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, slowmoving and obsolete inventory as well as valuation losses required to adjust recorded cost to its market value. Kyocera generally
considers all inventory aged over 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 2004, as a result of continuous strict controls and adjustments on inventories, Kyocera
recognized inventory write-downs of ¥14,013 million ($135 million). The amounts of these inventory write-downs by operating
segments appear in Note 18 to The Consolidated Financial Statements included in this Form 20-F. A substantial portion of theseinventory write-downs was AVX’s write-down amounted to ¥10,351 million ($100 million) of current inventories of tantalum
materials and purchase commitments based on long-term contracts. Inventories of mobile handsets, information equipment andoptical instruments were also written down. These products were subject to a decrease in demand and a decline in price, or turned tobe obsolete because of their short product lives.
The majority of Kyocera’s inventories are produced for the IT industry. Each of these products generally has a short product life, andis susceptible to market demand and price fluctuations. In light of the impacts by segments, inventory write-downs primarily affectFine Ceramics Group, Electronic Device Group and Equipment Group. If market conditions and demand in the information
technology industry are less favorable than Kyocera’s projections, additional write-downs may be required.
Impairment of securities and investments
Kyocera records impairment charges for debt and equity securities and investments in affiliates and unconsolidated subsidiaries
accounted for 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.
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In fiscal 2004, Kyocera recognized losses on devaluation of investment securities amounting to ¥1,030 million ($10 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, 2004, the unrealized gain on KDDI shares held by Kyocera Corporation was ¥87,125 million($838 million). The market price of the KDDI shares rose significantly during fiscal 2004, and ¥48,598 million of an unrealized loss
position at March 31, 2003 turned into an unrealized gain position. As the operating results of KDDI recently grew steadily, theperformance 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 SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” by the U.S. Financial
Accounting Standards Board (FASB). Kyocera reviews its long-lived assets and intangible assets with definite useful lives for
impairment at least annually, and in some cases more often if events or changes in circumstances so require.
Long-lived assets and intangible assets with definite useful lives are considered to be impaired when the expected undiscounted cash
flow from the asset is less than its carrying value. A loss on impairment is recognized based on the amount by which the carrying
value exceeds the fair value of the long-lived assets and intangible assets with definite useful lives.
In fiscal 2004, 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 Fine Ceramics Group related to theacquisition of KTC, an U.S. subsidiary, which manufactures and sells micro drills for the information technology industry. A
consolidated impairment loss of ¥3,175 million was booked as a cumulative effect of change in accounting principle. With theassistance of a third-party appraiser, Kyocera arrived at the implied fair value of goodwill using a discounted cash flow methodology,
taking into account sluggishness in KTC’s markets.
Kyocera also undertook a review for impairment of goodwill and other intangible assets in fiscal 2004. 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, 2004, deferred tax assets wereamounted to ¥49,432 million ($475 million), which Kyocera considers will reasonably be realized in the future compared with theamounts of taxable income and income taxes in fiscal 2004. There were no material discrepancies between expected and actual
taxable income in terms of deferred tax assets calculation in recent years.
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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 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 Japanese and global financial markets stagnates, Kyocera may be required to decrease its assumptions of the discount rate and the
expected long-term rate of return on plan assets and, a decrease in such assumptions will lead to an increase in projected benefit
obligations and net periodic pension costs. Particularly, an increase in projected benefit obligations may negatively affect Kyocera’s
accrued pension and severance costs in the consolidated balance sheet and labor costs included in cost of sales and selling, generaland administrative 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 ($182 million) of a settlement gain for thesubstitutional portion of EPF. As a result of this settlement, Kyocera’s projected benefit obligation decreased by ¥71,243 million($685 million) and plan assets decreased by ¥29,493 million ($284 million), respectively. This decrease in projected benefit
obligation is particularly considered to lead a reduction of a potential negative impact on Kyocera’s financial conditions and results ofoperations. 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.
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
Effect on pre-tax income
for the year ending
March 31, 2005

Effect on PBO
as of March 31, 2004

(782)
774

9,705
(8,774)

(462)
462

—
—

Discount rates
0.5% decrease
0.5% increase
Expected rate of return on plan assets
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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 recognizes sales, when there is evidence of an agreement, title and risks have passed to customers, the sales prices are fixed
or determinable, and collectibility of the resulting receivable is reasonably assured.
Revenue from Fine Ceramics Group, Electronic Device Group and Equipment Group are recognized principally upon delivery tocustomers. Revenue from direct financing leases is recognized over the term of the leases 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 nolonger accrued at the time the collection of the interest is past due 1 year or more, or the collection of the principal is past due 6months or more. The interest received from cash payments on impaired loans are recorded as income, unless the collectibility of theremaining investments is doubtful, in which case the cash receipt is recorded as collection of the principal.
New Accounting Standards
In June 2001, FASB issued SFAS No. 143 “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires full recognition ofasset retirement obligations on the balance sheet from the point in time at which a legal obligation exists. The obligation is required tobe measured at fair value. The carrying value of the asset or assets to which the retirement obligation relates would be increased by anamount equal to the liability recognized. This amount would then be included in the depreciable base of the asset and charged toincome over its life as depreciation. This statement is effective for fiscal years beginning after June 15, 2002. The adoption of thisstatement did not have a material impact on Kyocera’s consolidated results of operations and financial position.
In November 2002, the FASB’s EITF reached a consensus on EITF No. 00-21, “Revenue Arrangements with Multiple Deliverables.”EITF Issue No.00- 21 provides guidance on how to account for arrangement that involve the delivery or performance of multiple
products, services and/or right to use assets. EITF No. 00-21 is effective for fiscal periods beginning after June 15, 2003. The
adoption of this statement did not have a material impact on Kyocera’s consolidated results of operations and financial position.
In January 2003, FASB issued Interpretation (FIN) No. 46, “Consolidation of Variable Interest Entities.” Variable interest entities
often are created for a single specified purpose, for example, to facilitate securitization, leasing, hedging, research and development,or other transactions or arrangements. This interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial
Statements,” defines what these variable interest entities are and provides guidelines on how to identity them and also on how anenterprise should assess its interests in a variable interest entity to decide whether to consolidate that entity. Generally, FIN No. 46
applies to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains aninterest after that date. For existing variable interest entities in which an enterprise holds a variable interest that it acquired before
February 1, 2003, the provision of this interpretation will apply no later than the beginning of the first interim or annual reporting
period beginning after June 15, 2003. In December 2003, the FASB completed deliberations of proposed modifications to FIN No.46(Revised interpretations) resulting in multiple effective dates based on the nature and the creation date of the variable interest entity.
Currently, Kyocera does not have any material variable interest entities and the adoption of FIN No.46-R did not have a material
impact on Kyocera’s consolidated results of operations and financial position.
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In December 2003, FASB revised SFAS No. 132, “Employers’ Disclosures about Pensions and Other Post Retirement Benefits.” Therevised SFAS No. 132 retains the disclosures required by the original SFAS No. 132 and requires additional disclosures to those in
the original SFAS No. 132 about the assets, obligations, cash flows, and net periodic cost of defined benefit pension plans and otherdefined benefit postretirement plans. The revised SFAS No. 132 is generally effective for fiscal years ending after December 15, 2003
and Kyocera adopted it for its disclosure of domestic benefit plans in financial statements for fiscal 2004. As this revision does not
require the employers to change the measurement or recognition of the benefit plan, the adoption of the revised SFAS No. 132 did nothave any impact on Kyocera’s consolidated results of operations and financial position.
In April 2003, FASB issued SFAS No. 149, “Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities.”
SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities.” Kyocera adopted SFAS No. 149 for contracts entered into or
modified after June 30, 2003 except for certain items related to the implementation provisions of SFAS No. 133. The adoption of thisstatement did not have a material impact on Kyocera’s consolidated results of operations and financial position.
In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities
and Equity.” SFAS No. 150 requires certain financial instruments with characteristics of both liabilities and equity to be classified as
a liability (or an asset in some circumstances). SFAS No. 150 is effective for financial instruments entered into or modified after May
31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of thisstatement did not have a material impact on Kyocera’s consolidated results of operations and financial position.
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 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 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 No. 03-01 were effective December 31, 2003. The accounting
guidance of EITF No. 03-01 is effective in reporting periods beginning after June 15, 2004. The adoption of this statement is notexpected to have a material impact on Kyocera’s consolidated results of operations and financial position.
B. Liquidity and Capital Resources
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 ($5,356 million), an increase of ¥100,209 million ($964
million) from ¥456,848 million at March 31, 2003. This was due mainly to increases in trade accounts receivables of ¥27,833 million($268 million) and in inventories of ¥14,038 million ($135 million) associated with higher levels of orders and net sales. Short-term
finance receivables also increased by ¥39,299 million ($378 million) due to transfers from long-term finance receivables. Kyocera
strives to maintain high liquidity and increase operating cash flows by reducing inventories through shorter lead-times and byenhancing 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 and other obligations.
Capital expenditures in fiscal 2004 increased by ¥14,323 million ($138 million) to ¥54,937 million ($528 million) from ¥40,614
million in fiscal 2003. Research and development (R&D) expenditures decreased by ¥638 million ($6 million) to ¥46,630 million($448 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.
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During fiscal 2005, Kyocera expects cash demands for working capital and funds for capital expenditures required for the expansionof operations and projects total capital expenditures to be approximately ¥62,000 million ($596 million). Since capacity utilization isalready high in Fine Ceramics and Electronic Device Group operations, capital spending plans in fiscal 2005 include investments inadditional production capacity to respond to projected demand growth trends. In 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.
For fiscal 2005 Kyocera projects total R&D expenditures to be approximately ¥51,000 million ($490 million). Details are given in thefollowing section, under “Research and Development, Patent and Licenses, and etc.”
Kyocera Corporation undertakes 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 ($107 million). Kyocera Corporation received
approval at the general meeting of shareholders held on June 25, 2004 for the payment of year-end dividends totaling ¥5,624 million($54 million) on June 28, 2004 to all stockholders of record on March 31, 2004.
Management believes cash in hand and operating cash flow will be sufficient to fund all cash disbursement needs outlined above atleast through fiscal 2005. Consequently, Management does not currently intend to use any other external financing sources that might
affect credit agency ratings of Kyocera. If cash generated by operations were insufficient for funding purposes, Kyocera retains otherfinancing options, including external sources such as short-term or long-term borrowings as well as financing directly from capital
markets through issuance of debt or equity securities. As evidenced by an equity ratio to assets of 64.3% at March 31, 2004, Kyocera
maintains a strong financial position, which leads Management to believe that any capital requirements could be secured fromexternal sources at relatively low cost. Kyocera also maintains good business relationships with several major Japanese financial
institutions.
Kyocera’s ability to generate cash from operations is highly dependent on the results of each of Kyocera’s three business segments.
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.
Cash flow
Fiscal 2004 compared with Fiscal 2003
Years ended March 31,(Yen in millions and U.S. dollars in thousands)
2003

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

2004

2004

¥ 160,754 ¥ 62,575 $
601,683(58,512)29,581
284,432(74,662)(20,422)(196,365)
298,310361,132
3,472,423

Net cash provided by operating activities in fiscal 2004 decreased by ¥98,179 million ($944 million) to ¥62,575 million ($602
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 ($341 million) in December 2003 related to the settlement of the LaPine case.
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Net cash provided by investing activities in fiscal 2004 amounted to ¥29,581 million ($284 million) compared with net cash used ininvesting 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 ($745 million) (a rise of ¥43,137 million ($415 million) compared with a corresponding cash inflow of¥34,350 million in fiscal 2003) and the settlement of the LaPine case, which resulted in a release of restricted cash totaling ¥52,983
million ($509 million). Such increase was offset partly by payments for purchases of property, plant and equipment totaling ¥58,869
million ($566 million) included capital expenditures within Kyocera’s solar energy and information equipment businesses andinvestments to raise manufacturing productivity for fine ceramic parts and electronic components.
Net cash used in financing activities in fiscal 2004 decreased by ¥54,240 million ($522 million) to ¥20,422 million ($196 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 ($0 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 ($86 million).
At March 31, 2004, cash and cash equivalents totaled ¥361,132 million ($3,472 million). This represented an increase of ¥62,822
million ($604 million) from ¥298,310 million at March 31, 2003.
Fiscal 2003 compared with Fiscal 2002
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

2002

2003

¥140,929(51,138)(18,396)
280,899¥160,754(58,512)(74,662)
298,310

Net cash provided by operating activities in fiscal 2003 increased by ¥19,825 million to ¥160,754 million from ¥140,929 million in
fiscal 2002, due primarily to an increase in notes and accounts payable which resulted from an increase in purchases within ourEquipment Group and a decrease in payments for income taxes, reflecting a decrease in taxable income in fiscal 2002, which waspartly offset by an increase in receivables and diminution in the effect of losses on and a decrease in inventories
Net cash used in investing activities in fiscal 2003 increased by ¥7,374 million to ¥58,512 million from ¥51,138 million in fiscal
2002. This was due primarily to a decrease in proceeds from maturities of securities, despite a continuous decrease in capital
expenditures mainly within our Fine Ceramics Group.
Net cash used in financing activities in fiscal 2003 increased by ¥56,266 million to ¥74,662 million from ¥18,396 million in fiscal
2002. This was due mainly to a significant increase in purchases of treasury stock.
At March 31, 2003, the yen’s appreciation against the U.S. dollar had a negative impact on cash and cash equivalents in the amount of¥10,169 million.
Cash and cash equivalents increased in fiscal 2003 by ¥17,411 million from ¥280,899 million to ¥298,310 million.
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Assets, liabilities and stockholders’ equity
Kyocera’s total assets at March 31, 2004 increased by ¥159,744 million ($1,536 million) to ¥1,794,758 million ($17,257 million),compared with ¥1,635,014 million at March 31, 2003. Cash and cash equivalents increased by ¥62,822 million ($604 million) to¥361,132 million ($3,472 million). Following the agreement on a settlement of the LaPine case on December 22, 2003, the restrictedcash that had been deposited by Kyocera Corporation with a financial institution to reduce the cost of the issuance of a letter of credit
in connection with legal proceeding was released. See Note 21 to The Consolidated Financial Statements in this Form 20-F.
Short-term investments decreased by ¥10,796 million ($104 million) to ¥3,855 million ($37 million), principally due to theredemption of convertible bonds.
Trade accounts receivables increased by ¥27,833 million ($268 million) to ¥207,583 million ($1,996 million), principally as a resultof the consolidation of Kinseki and an increase in net sales at KWC. Short-term and long-term finance receivables increased by¥2,083 million ($20 million) to ¥159,065 million ($1,529 million), due mainly to higher operating advances by KLC as part of thefinancing of real estate development projects. Short-term and long-term finance receivables also included finance lease receivables.
Inventories increased by ¥14,038 million ($135 million) to ¥197,194 million ($1,896 million). This was due mainly to the effect of
the new consolidation of Kinseki and to an increase in inventories held at March 31, 2004 by KMC associated with large orders
mainly in Europe.
Securities and other investments increased by ¥121,959 million ($1,173 million) to ¥430,096 million ($4,136 million), due mainly to
an increase in market value at March 31, 2004 of KDDI stock and other equity securities compared with March 31, 2003.
Total property, plant and equipment at cost, net of accumulated depreciation, increased by ¥5,015 million ($48 million) to ¥254,520
million ($2,447 million) due primarily to the new consolidation of Kinseki Ltd, which was partly offset by depreciation expenses.
Kyocera’s total liabilities at March 31, 2004 increased by ¥17,820 million ($171 million) to ¥587,774 million ($5,652 million),compared with ¥569,954 million at March 31, 2003 due primarily to an increase in deferred income tax liabilities associated withincrease in net unrealized gain on securities and the effect of the consolidation of Kinseki Ltd, which was partly offset by a decreasein accrued litigation expenses following the LaPine legal settlement and a reduction in accrued pension and severance costs reflecting
the transfer of the substitutional portion of EPF.
Total debt, comprised of short-term borrowings and long-term debt including due within one year, increased by ¥1,125 million ($11
million) to ¥199,945 million ($1,923 million), due primarily to the consolidation of Kinseki, which was partly offset by debt
repayments by various Kyocera Group companies, notably KLC, KCC, Shanghai Kyocera Electronics Co., Ltd. and Kyocera
International, Inc. Kyocera’s short-term borrowings consist of unsecured and secured loans with weighted-average interest rate of
0.66%. Kyocera’s long-term debt consists of unsecured and secured loans with interest rates ranging from 0.39% to 7.50%.
Information regarding expected maturity dates of these short-term borrowings and long-term debt are given in the following section,
under “Tabular Disclosure of Contractual Obligations.” There are no material seasonal variations in Kyocera’s borrowing
requirements.
Minority interests in subsidiaries, principally AVX, decreased by ¥8,322 million ($80 million) to ¥53,238 million ($512 million),compared with ¥61,560 million at March 31, 2003. This was principally due to the appreciation of the yen against the U.S. dollar andto the loss posted by AVX for fiscal 2004.
Total stockholders’ equity at March 31, 2004 increased by ¥150,246 million ($1,445 million) to ¥1,153,746 million ($11,094
million), compared with ¥1,003,500 million at March 31, 2003. The decrease due to cash dividend payments of ¥11,174 million($107 million) was mitigated by increases in stockholders’ equity due to net income for fiscal 2004 of ¥68,086 million ($655 million),
an increase in accumulated other comprehensive income of ¥78,240 million ($752 million), and a decrease in treasury stock of¥20,678 million ($199 million).
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Accumulated other comprehensive income included net unrealized gains on securities at March 31, 2004 of ¥59,241 million ($570
million). This represented an increase of ¥89,196 million ($858 million) compared with March 31, 2003 due to a rise in market valueof Kyocera’s investments. Due to the appreciation of the yen against the U.S. dollar, foreign currency translation adjustments
decreased by ¥20,693 million ($199 million) to ¥(35,670 million) ($(343 million)), compared with March 31, 2003. In addition, theminimum pension liability adjustment increased by ¥9,454 million ($91 million) to ¥(1,477 million)($(14 million)), compared with
March 31, 2003.
The decrease in treasury stock was principally due to the allotment and distribution of shares of treasury stock associated with theexchange of shares conducted to make Kinseki, Ltd. into a wholly owned subsidiary of Kyocera.
The stockholders’ equity ratio at March 31, 2004 was 64.3%, an increase of 2.9 points compared with 61.4% at March 31, 2003.
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.
Research and development expenses for the years ended March 31, 2002, 2003 and 2004 amounted to ¥40,399 million, ¥47,268
million and ¥46,630 million ($448 million), respectively.
For fiscal 2005 Kyocera projects total R&D expenditures to be approximately ¥51,000 million ($490 million). Major areas of focus in
Fine Ceramics Group R&D include the development of components for digital consumer products and automotive applications, andof photovoltaic modules for the environmental industry. Major Electronic Device Group R&D projects include the development ofvarious electronic devices for the digital consumer equipment market. Major Equipment Group R&D projects include thedevelopment of digital MFPs and printers, together with work on associated telecommunications and mobile-phone technologies.
Management believes Kyocera needs to invest its resources continuously in the development of new business areas and improved
technology in order to create new products, commercialize advanced technologies and thereby secure future earnings streams.
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 20F.
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.
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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, 2004
With respect to our first quarterly financial results, which cover the three months period ended June 30, 2004, please refer to ourreport on Form 6-K submitted on July 29, 2004.
Market Trends
In the telecommunications and information processing markets, key areas for us, rising popularity of advanced handsets featuringcolor LCDs and built-in cameras combined with further permeation in the Chinese market is expected to propel demand for mobile
phones. In addition, stable growth is predicted to continue in PC-related markets, while strong growth in demands for digital cameras,
DVD recorders and digital TVs is anticipated. We expect these growths will have favorable impact on our business.
We believe that the steps we have already taken, including structural reforms and other initiatives to reinforce our operational bases,
as well as preparatory moves targeted at future expansion, will drive our growth in fiscal 2005 and beyond. They lay the path tocontinued “high-value-added diversification,” which is the cornerstone for achieving our strategic objective to grow in sales andprofits 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.
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.
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, 2004. 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)Obligations for the acquisition or construction of property, plant andequipment¥ 84,815
44,522
7,614—
61,473
5,098

—
6,649
—

—
2,486
—

¥ 84,815
115,130
12,712

12,058———12,058

Total Contractual Obligations¥149,009¥66,571¥ 6,649¥ 2,486¥224,715- 56 -

Total

Page 1 of 1

Contractual obligations(U.S. dollars in thousands)
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)Obligations for the acquisition or construction of property, plantand equipment$ 815,529
428,096
73,212—591,086
49,019—63,933——23,904—$ 815,529
1,107,019
122,231

115,942———

115,942

Total Contractual Obligations$1,432,779$640,105$63,933$ 23,904$2,106,721(A) At March 31, 2004, Kyocera’s contractual obligations mainly comprised of short-term borrowings and long-term debt including
due within one year, which amounted to ¥84,815 million ($816 million) and ¥115,130 million ($1,107 million), respectively. Over
80% of those debts were attributable to KMC and KLC. KLC provides financial services such as credit financing and leasing. Due tothe nature of its operation, KLC had ¥58,227 million ($560 million) of short-term borrowings and ¥86,638 million ($833 million) of
long-term debt from banks and other financial institutions at March 31, 2004 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.
Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management
The following table shows Kyocera’s Directors and Corporate Auditors as of July 1, 2004.
Name

Date of Birth

Position

Since

Kazuo Inamori

January 30, 1932

Chairman Emeritus andDirector

1959

Kensuke Itoh

December 17,
1937

Chairman of the Board andRepresentative Director

1975

Yasuo Nishiguchi

October 9, 1943

Representative Director andPresident, Executive Officer

1987(President
since 1999)

Masahiro Umemura

August 8, 1943

Representative Director andExecutive Vice President,
Executive Officer (General
Manager of Corporate
Development Division)

1991

Michihisa Yamamoto

November 13,
1942

Representative Director andExecutive Vice President,
Executive Officer (General
Manager of Corporate General
Affairs Division)

1987- 57 -

Page 1 of 1

Name

Date of Birth

Position

Since

Yuzo Yamamura

December 4, 1941

Director (President andRepresentative Director of
KYOCERA ELCOCORPORATION)

2003

Naoyuki Morita

April 8, 1942

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

2003

Koji Seki

December 8, 1937

Director (Chairman of theBoard and Representative
Director of KYOCERAMITA CORPORATION)

1989

Noboru Nakamura

October 6, 1944

Director (Vice President andRepresentative Director of
KYOCERA CHEMICALCORPORATION)

1991

Isao Kishimoto

November 30,
1943

Director (President andRepresentative Director of
KINSEKI, LIMITED)

1993

Hisao Hisaki

July 2, 1946

Director and Managing
Executive Officer (Executive
Vice President of KYOCERA(TIANJIN) SALES AND
TRADE CORPORATION)

1991

Rodney N.
Lanthorne

February 5, 1945

Director (President of
KYOCERAINTERNATIONAL, INC.)

1989

John S. Gilbertson

December 4, 1943

Director (CEO and Presidentof AVX CORPORATION)

1995

Atsushi Mori

September 9, 1937

Full-time Corporate Auditor

2002

Yasuo Akashi

May 29, 1944

Full-time Corporate Auditor

2003

Osamu Nishieda

January 10, 1943

Corporate Auditor

1993

Shinji Kurihara

July 19, 1932

Corporate Auditor

2003- 58 -

Page 1 of 1

Kazuo Inamori has served as the Chairman Emeritus and Director of Kyocera Corporation since 1997. He became a Director when hefounded the Kyocera Corporation in 1959, a Managing Director in 1962, and a Senior Managing Director in 1964.
Kensuke Itoh has served as the Chairman of the Board and Representative Director of Kyocera Corporation since 1999. He became a
Director in 1975, a Managing Director in 1979, and a Senior Managing Director in 1981. He joined Kyocera Corporation in 1959 andhas served as Representative Director of Kyocera Realty Development Co., Ltd., Representative Director of Hotel Kyocera Co., Ltd
and Representative Director of Hotel Princess Kyoto Co., Ltd.
Yasuo Nishiguchi has served as the President and Representative Director of Kyocera Corporation since 1999. He became a Director
in 1987, a Managing Director in 1989 and a Senior Managing and Representative Director in 1992. He joined Kyocera Corporation in1975 and has served as the Representative Director of Kyocera Mita Corporation, 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 ofKyocera (Tianjin) Sales and Trading Corporation, Chairman of the Board of Directors of Kyocera (Tjianjin) Solar Energy Co., Ltd.,
Representative Director of Kyocera Optec Co., Ltd., Representative Director of Kyocera SLC Technologies Corporation,
Representative Director of Kyocera Display Institute Co., Ltd. and Representative Director of Kyocera Kinseki Corporation.
Masahiro Umemura has served as an Executive Vice President and Representative Director of Kyocera Corporation since 1999. He
became a Director in 1991, a Managing Director in 1993 and a Senior Managing and Representative Director in 1997. He joined
Kyocera Corporation in 1966 and has served as General Manager of the Corporate Development Division 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.
Michihisa Yamamoto has served as an Executive Vice President and Representative Director of Kyocera Corporation since 1999. He
became a Director in 1987, a Managing Director in 1989 and a Senior Managing and Representative Director in 1992. He joined
Kyocera Corporation in 1970 and has served as a General Manager of the Corporate General Affairs Division of Kyocera
Corporation.
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 and Kyocera Mita Japan Corporation.
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 an Executive Vice President and Representative Director of Kyocera
Chemical Corporation.
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Page 1 of 1

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
an Executive Vice President 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.
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.
Atsushi Mori has served as a Full-time Corporate Auditor of Kyocera Corporation since 2002. He served as a Director from 1989 until
becoming a Corporate Auditor. He became a Managing Director in 1995 and a Senior Managing and Representative Director of
Kyocera Corporation in 1997. He joined Kyocera Corporation in 1989.
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
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.
Kyocera adopts 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, 2004.
Name

Position

Yasuo Nishiguchi

Representative Director and President

Masahiro Umemura

Representative Director and Executive Vice President, (General Manager ofCorporate Development Division)

Michihisa Yamamoto

Representative Director and Executive Vice President, (General Manager ofCorporate General Affairs Division)

Hisao Hisaki

Managing Executive Officer and Member, Board of Directors (Deputy
General Manager of Kyocera (Tianjin) Sales & Trading Corporation)

Isao Yukawa

Managing Executive Officer (General Manager of Corporate Solar Energy
Division)

Hisashi Sakumi

Managing Executive Officer (Deputy General Manager of Corporate General
Affairs Division, Officers in charge of Environment Affairs)- 60 -

Page 1 of 1

Name

Position

Hideki Ishida

Managing Executive Officer (General Manager of Corporate Finance
Division)

Tsutomu Yamori

Managing Executive Officer (Deputy General Manager of Corporate General
Affairs Division)

Eiichi Toriyama

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

Makoto Kawamura

Managing Executive Officer (General Manager of Corporate Cutting Tool
Division)

Tatsumi Maeda

Managing Executive Officer (General Manager of Corporate Business
Strategy Division)

Akiyoshi Okamoto

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

Takashi Itoh

Senior Executive Officer (General Manager of Corporate Purchasing
Division)

Yoshihiko Nishikawa

Senior Executive Officer (General Manager of Corporate R&D Division For
Components and Devices)

Susumu Ohshima

Senior Executive Officer (Deputy General Manager of Corporate Purchasing
Division)

Tetsuo Kuba

Executive Officer (General Manager of Corporate Fine Ceramics Division)

Osamu Nomoto

Executive Officer (General Manager of Ceramic Packages Division)

Gen Takayasu

Executive Officer (General Manager of Communication Devices Division)

Nobuhiro Ochiai

Executive Officer (General Manager of Corporate Capacitor Division)

Yasuyuki Yamamoto

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

Junichi Jinno

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

Keijiro Minami

Executive Officer (General Manager of Corporate Legal and Intellectual
Property Division)

Goro Yamaguchi

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

Junzo Katsuki

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

Yukihiro Takarabe

Executive Officer (Deputy General Manager of Corporate Cutting Tool
Division)Takashi Naruko

Executive Officer (General Manager of Jewelry and Application Products
Division)- 61 -

Page 1 of 1

Name

Position

Masakazu Mitsuda

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

Yoshihito Ota

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

Yasushi Matsumura

Executive Officer (General Manager of Liquid Crystal Display Division)Toshimi Gejima

Executive Officer (General Manager of Automotive Components Division)

Michiaki Furuhashi

Executive Officer (General Manager of General Affairs Division)

B. Compensation
The aggregate amount of compensation, including bonuses, paid by Kyocera Corporation and its certain subsidiaries in the fiscal year
ended March 31, 2004 to all Directors, Executive Officers and Corporate Auditors of Kyocera Corporation and its certain subsidiaries
was ¥954 million ($9 million). The aggregate amount includes compensation and bonuses paid during the three months ended June30, 2003 to 16 Directors and one Corporate Auditor who retired on June 25, 2003, and it excludes the lump sum retirement allowancepaid to such Directors. The number of Directors, Executive Officers and Corporate Auditors to whom the above aggregate amountrelates differs from the number of Directors, Executive Officers and Corporate Auditors as of the filing date of this annual report.
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 the year ended March 31, 2004 were ¥123
million ($1 million).
We have neither disclosed to our shareholders nor otherwise made public any of the information specified in this item for individually
named Directors, Officers or Corporate Auditors.
C. Board Practices
In accordance with the requirements of the 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 the fiscal
year ending on March 31, 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 administration of our affairs by the Directors, to examine our financial statements and business reports to besubmitted 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 of the Board of Directors and to express their opinions, but they are not entitled to vote.
Corporate Auditors also have a statutory duty to provide their report on the audit report prepared by our independent certified public
accountants to the Board of Corporate Auditors, which must submit its audit report to the Board of Directors. The Board of Corporate
Auditors will also determine matters relating to the duties of the Corporate Auditors, such as audit policy and methods ofinvestigation of our affairs.
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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.
NYSE Corporate Governance Standards
Companies listed on the NYSE must comply with certain standards regarding corporate governance under Section 303A of the NYSE
Listed Company Manual.
However, listed companies that are foreign private issuers, such as Kyocera Corporation, are permitted to follow home country
practice in lieu of certain provisions of Section 303A.
The following table shows the significant differences between the corporate governance practices followed by U.S. listed companies
under Section 303A of the NYSE Listed Company Manual and those followed by Kyocera Corporation.
Corporate Governance
Practices Followed by
NYSE-listed U.S. Companies

Corporate Governance
Practices Followed by
Kyocera Corporation

A NYSE-listed U.S. company musthave a majority of directors meeting
the independence requirements under
Section 303A of the NYSE Listed
Company Manual.

For large Japanese companies, including Kyocera Corporation, which employ a corporate
governance system based on a board of corporate auditors (the “corporate auditor system”),
Japan’s company law has no independence requirement with respect to directors. The task ofoverseeing management and accounting firms is assigned to the corporate auditors, who areseparate from Kyocera Corporation’s management.
Large Japanese companies, including Kyocera Corporation, are required to have at least one“outside” corporate auditor who must meet independence requirements under Japan’s
company law. An “outside” corporate auditor means a corporate auditor who has not served
as a director, manager or any other employee of Kyocera Corporation or any of its
subsidiaries for the last five years prior to the appointment.
Currently, Kyocera Corporation has 2 outside corporate auditors. Starting on the date of theordinary general meeting of shareholders of Kyocera Corporation relating to the fiscal year
ending March 31, 2006, at least 50% of Kyocera Corporation’s corporate auditors will be
required to be outside corporate auditors. Also, starting on the same date, the independence
requirements for outside corporate auditors will be strengthened by extending the five-year
period referred to above to any time prior to the appointment.
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A NYSE-listed U.S. company musthave an audit committee composed
entirely of independent directors, andthe audit committee must have atleast three members.

Like a majority of Japanese companies, Kyocera Corporation employs the corporate auditor
system as described above. Under this system, the board of corporate auditors is a legally
separate and independent body from the board of directors. The function of the board ofcorporate auditors is similar to that of members of the audit committee, of a U.S. company: tomonitor the performance of the directors, and review and express opinion on the method ofauditing by Kyocera Corporation’s accounting firm and on such accounting firm’s audit
reports, for the protection of Kyocera Corporation’s shareholders.
Large Japanese companies, including Kyocera Corporation, are required to have at least three
corporate auditors. Currently, Kyocera Corporation has 4 corporate auditors. Each corporate
auditor has a four-year term. In contrast, the term of each director of Kyocera Corporation is
two years.
Starting on July 31, 2005, when the requirements of Rule 10A-3 under the U.S. Securities
Exchange Act of 1934 relating to listed company audit committees become applicable toforeign private issuers, Kyocera Corporation expects to rely on an exemption under that rule
which is available to foreign private issuers with boards of corporate auditors meeting certain
criteria. Kyocera Corporation expects to make a disclosure regarding such reliance in its
annual reports on Form 20-F for the fiscal year ending March 31, 2006 and thereafter.

A NYSE-listed U.S. company musthave a nominating/corporate
governance committee composed
entirely of independent directors.

Kyocera Corporation’s directors are elected at a general meeting of shareholders. Its board of
directors does not have the power to fill vacancies thereon.

A NYSE-listed U.S. company musthave a compensation committee
composed entirely of independent
directors.

The total amount of compensation for Kyocera Corporation directors and the total amount ofcompensation for Kyocera Corporation corporate auditors are proposed to, and voted at, ageneral meeting of shareholders. Once the proposals for each of such total amounts ofcompensation are approved at the general meeting of shareholders, each of the board of
directors and board of corporate auditors allocate the respective total amounts among theirrespective members.

A NYSE-listed U.S. company must
generally obtain shareholder
approval with respect to any equity
compensation plan.

Japanese companies, including Kyocera Corporation, generally issue “stock acquisitionrights” (granting the holder thereof the right to acquire from the issuer shares of its common
stock at a prescribed price) for stock option purposes. Typically, when stock acquisitionrights are used for such purposes, they are issued under terms and conditions which are
specially favorable to the recipients thereof, and because of that, such issuance is subject toapproval at a general meeting of shareholders under Japan’s company law. Kyocera
Corporation obtains approval at a general meeting of shareholders with respect to its issuanceof stock acquisition rights for stock option purposes.

Kyocera Corporation’s corporate auditors are also elected at a general meeting ofshareholders. A proposal by Kyocera Corporation’s board of directors to elect a corporate
auditor must be approved by a resolution of its board of corporate auditors. The board ofcorporate Auditors is empowered to adopt a resolution requesting that Kyocera Corporation’s
directors submit a proposal for election of a corporate auditor to a general meeting ofshareholders. The corporate auditors have the right to state their opinion concerning electionof a corporate auditor at the general meeting of shareholders.

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Page 1 of 1

D. Employees
At March 31, 2004, Kyocera had 57,870 employees, of whom 13,798 work in the Fine Ceramics Group, 22,643 work in theElectronic Device Group, 17,359 work in the Equipment Group, 3,058 work for Others and 1,012 work in Corporate. Kyocera’s
number of employees at March 31, 2004 increased by 8,450 compared with the number of employees of 49,420 at March 31, 2003,
due mainly to that Kinseki, Limited and its consolidated subsidiaries became Kyocera Corporation’s wholly-owned subsidiaries andthe number of employees of the subsidiaries in China increased.
Kyocera’s number of employees of 49,420 at March 31, 2003 increased by 5,185 compared with the number of employees of 44,235
at March 31, 2002, due mainly to an increase in the number of employees at the subsidiaries in China.
As of March 31, 2004, Kyocera Corporation had 13,604 employees, and their average age and average service years were 37.3 and
14.6, respectively.
Most regular employees of Kyocera Corporation, other than management, become members of the Kyocera Union. Over 90% of
Kyocera Corporation’s regular employees are members of this union. The Kyocera Union is only open to Kyocera Corporation
employees, not to our Japanese or overseas subsidiaries. The employees at three of our subsidiaries in Japan are unionized, otherwise
employees at our Japanese subsidiaries are not unionized. In the United States our employees are generally unionized and 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, 2004, Kyocera’s Directors, Corporate Auditors and Executive Officers owned 8,572,864 shares of Kyocera
Corporation in total (8,553,861 shares of common stock of Kyocera Corporation and 19,003 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.
Name

Kazuo Inamori

Title

Chairman Emeritus andDirector- 65 -

Number of Shares

6,806,165

Page 1 of 1

Name

Title

Number of Shares

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

3,398 (ADR)John S. Gilbertson

Director

15,605 (ADR)

Atsushi Mori

Corporate Auditor

10,000

Yasuo Akashi

Corporate Auditor

6,323

Osamu Nishieda

Corporate Auditor

1,000,137

Shinji Kurihara

Corporate Auditor

500

Isao Yukawa

Managing Executive Officer

1,200

Hisashi Sakumi

Managing Executive Officer

9,000

Hideki Ishida

Managing Executive Officer

1,000

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- 66 -

Page 1 of 1

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

Susumu Ohshima

Senior Executive Officer

1,000

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—

Toshimi Gejima

Executive Officer

1,300

Michiaki Furuhashi

Executive Officer

7,267

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).
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As of August 31, 2004, the amount of common stock to be issued upon the exercise of all outstanding options of Plan 2003 issued to
Directors, Corporate Auditors and Executive Officers is set forth in further detail in the following table. Note, however, that there canbe no assurances that the options described above will be exercised in whole or in part.
Title

Option Holder

Total Options
Outstanding

Kazuo Inamori

Chairman Emeritus andDirector

8,000

Kensuke Itoh

Chairman of the Board andRepresentative Director

8,000

Yasuo Nishiguchi

President and Representative
Director

8,000

Masahiro Umemura

Executive Vice President andRepresentative Director

6,000Michihisa Yamamoto

Executive Vice President andRepresentative Director

6,000

Yuzo Yamamura

Director

6,000

Naoyuki Morita

Director

6,000

Koji Seki

Director

6,000

Noboru Nakamura

Director

6,000

Isao Kishimoto

Director

5,500

Hisao Hisaki

Director

5,000

Rodney N. Lanthorne

Director

4,500

John S. Gilbertson

Director

4,500

Atsushi Mori

Corporate Auditor

3,000

Yasuo Akashi

Corporate Auditor

3,000

Osamu Nishieda

Corporate Auditor—

Shinji Kurihara

Corporate Auditor—- 68 -

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Option Holder

Title

Total Options
Outstanding

Isao Yukawa

Managing Executive Officer

4,000

Hisashi Sakumi

Managing Executive Officer

4,000

Hideki Ishida

Managing Executive Officer

4,000

Tsutomu Yamori

Managing Executive Officer

4,000

Eiichi Toriyama

Managing Executive Officer

4,000

Makoto Kawamura

Managing Executive Officer

4,000

Tatsumi Maeda

Managing Executive Officer

4,000

Akiyoshi Okamoto

Senior Executive Officer

3,000

Takashi Itoh

Senior Executive Officer

3,000

Yoshihiko Nishikawa

Senior Executive Officer

3,000

Susumu Ohshima

Senior Executive Officer

3,000

Tetsuo Kuba

Executive Officer

2,500

Osamu Nomoto

Executive Officer

2,500

Gen Takayasu

Executive Officer

2,500

Nobuhiro Ochiai

Executive Officer

2,500

Yasuyuki Yamamoto

Executive Officer

2,500

Junichi Jinno

Executive Officer

2,500

Keijiro Minami

Executive Officer

2,500

Goro Yamaguchi

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- 69 -

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Title

Option Holder

Total Options
Outstanding

Yoshihito Ota

Executive Officer

2,500

Yasushi Matsumura

Executive Officer

600

Toshimi Gejima

Executive Officer

600

Michiaki Furuhashi

Executive Officer

600

Total

159,800

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).
The following table shows the options of Plan 2004 issued to Directors, Corporate Auditors and Executive Officers as of September
1, 2004.
Title

Option Holder

Total Options
IssuedKazuo Inamori

Chairman Emeritus andDirector

8,000

Kensuke Itoh

Chairman of the Board andRepresentative Director

8,000

Yasuo Nishiguchi

President and Representative
Director

8,000

Masahiro Umemura

Executive Vice President andRepresentative Director

6,000Michihisa Yamamoto

Executive Vice President andRepresentative Director

6,000

Yuzo Yamamura

Director

6,000

Naoyuki Morita

Director

6,000

Koji Seki

Director

6,000

Noboru Nakamura

Director

6,000- 70 -

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Title

Option Holder

Total Options
IssuedIsao Kishimoto

Director

5,500

Hisao Hisaki

Director

5,000

Rodney N. Lanthorne

Director

4,500

John S. Gilbertson

Director

4,500

Atsushi Mori

Corporate Auditor

3,000

Yasuo Akashi

Corporate Auditor

3,000

Osamu Nishieda

Corporate Auditor—

Shinji Kurihara

Corporate Auditor—

Isao Yukawa

Managing Executive Officer

4,000

Hisashi Sakumi

Managing Executive Officer

4,000

Hideki Ishida

Managing Executive Officer

4,000

Tsutomu Yamori

Managing Executive Officer

4,000

Eiichi Toriyama

Managing Executive Officer

4,000

Makoto Kawamura

Managing Executive Officer

4,000

Tatsumi Maeda

Managing Executive Officer

4,000

Akiyoshi Okamoto

Senior Executive Officer

3,000

Takashi Itoh

Senior Executive Officer

3,000

Yoshihiko Nishikawa

Senior Executive Officer

3,000

Susumu Ohshima

Senior Executive Officer

3,000

Tetsuo Kuba

Executive Officer

2,500

Osamu Nomoto

Executive Officer

2,500

Gen Takayasu

Executive Officer

2,500

Nobuhiro Ochiai

Executive Officer

2,500- 71 -

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Title

Option Holder

Total Options
IssuedYasuyuki Yamamoto

Executive Officer

2,500

Junichi Jinno

Executive Officer

2,500

Keijiro Minami

Executive Officer

2,500

Goro Yamaguchi

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

Yoshihito Ota

Executive Officer

2,500

Yasushi Matsumura

Executive Officer

2,500

Toshimi Gejima

Executive Officer

2,500Michiaki Furuhashi

Executive Officer

2,500

Total

165,500

Item 7. Major Shareholders and Related Party Transactions
A. Major Shareholders
As far as is known to us, it 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. According to such reports filed with Kyocera Corporation to date, currently there are no 5% or greater
beneficial shareholders of Kyocera Corporation.
According to Citibank N.A., depositary for Kyocera’s ADSs, as of March 31, 2004, 4,399,369 shares of Kyocera’s common stock
were held in the form of ADSs and there were 884 ADS holders of record in the United States. According to Kyocera’s register ofshareholders, as of March 31, 2004, there were 86,493 holders of Kyocera’s common stock of record worldwide. As of March 31,
2004, there were 129 record holders of Kyocera’s common stock with addresses in the United States, holding 18,873,049 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.
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B. Related Party Transactions
Significant customer
Kyocera Corporation made an equity investment in KDDI when it was founded and currently, a director of Kyocera Corporation is amember of the board of directors of KDDI. At March 31, 2004, Kyocera Corporation’s equity interest in KDDI is 13.5%. Kyocera
serves KDDI as an independent vendor in terms of price determination, remittance condition and product distribution. All of theagreements and ongoing contractual commitments between Kyocera and KDDI have been made on an arm’s-length basis.
At March 31, 2004, the unrealized gain on KDDI shares held by Kyocera Corporation was ¥87,125 million ($838 million). The
market price of the KDDI shares rose significantly during fiscal 2004, and ¥48,598 million of an unrealized loss position at March 31,
2003 turned into an unrealized gain position. As the operating results of KDDI recently grew steadily, the performance of KDDI
shares is considered to be stable.
Kyocera’s sales to KDDI and KDDI’s consolidated subsidiaries for fiscal 2002, 2003 and 2004 comprised of approximately 10.2%,
10.8% and 10.2% of its consolidated net sales, respectively. KDDI provides telecommunication services, and Kyocera sells mainly
telecommunication equipment to KDDI. Kyocera expects that KDDI will remain to be its significant customer in the future.
On June 21, 2004, the Carlyle Group (Carlyle), Kyocera Corporation, KDDI and DDI Pocket, Inc. (DDI Pocket) reached anagreement whereby a consortium consisting of Carlyle and Kyocera Corporation would acquire the business of DDI Pocket, a
subsidiary of KDDI. The entire business of DDI Pocket will be separated from it and merged into a special purpose company held by
the consortium, in which Carlyle, Kyocera Corporation and KDDI will invest, in exchange for which the consortium will pay¥220,000 million ($2,115 million) in cash. (The amount could be varied due to adjustments based on valuation of the business.)
Under the agreement, the company that succeeds to DDI Pocket’s business will be owned 60% by Carlyle, 30% by Kyocera
Corporation and 10% by KDDI. Kyocera, which currently owns approximately 13.25% of DDI Pocket, will make the 30% investment
to expand its focus on PHS related products business. Carlyle will become the controlling shareholder. The corporate split of DDI
Pocket’s business was approved at the general meeting of DDI Pocket shareholders in August, 2004, and the transaction is expected
to close on or around October 1, 2004.
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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 its public offering, we have endeavored to increase dividends per share in line with improvements in performance. We havealso boosted share dividends by actively applying free-share distributions and stock splits. In the coming years, we will work tofurther improve earnings per share and cash flow, and on the basis of the results, will share its success in the form of dividends inaccordance with holistic judgments.
B. Significant Changes
Except as disclosed in this annual report, there have been no significant changes since March 31, 2004.
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.
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Tokyo Stock Exchange

New York Stock Exchange

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

Years ended March 31

High

Low

High

Low

2000
2001
2002
2003
2004

28,00019,50012,90010,070
8,970

6,200
9,000
7,000
5,630
5,570

280.94186.60105.72
80.27
84.66

50.75
73.82
53.77
47.96
47.25

Most Recent 6 months

High

Low

High

Low

March, 2004
April, 2004
May, 2004
June, 2004
July, 2004
August, 2004

8,970
9,630
9,310
9,280
9,380
8,570

8,060
8,710
8,110
8,500
8,120
7,370

84.66
90.90
84.69
86.25
86.20
77.00

73.45
81.82
71.10
77.72
73.92
67.81

* 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.
The following table shows the information about high and low sales prices for each quarterly period in fiscal 2003 and 2004 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
2003

Common Stock:Market price per share (A)

1st

2nd

3rd

4th

— High— Low¥10,070
7,800
30.00

¥9,1307,700—¥8,4106,520
30.00¥7,1405,630—— High— Low$ 80.2762.21
0.25$75.9364.35—$67.1755.22
0.24$59.63
47.96—

Cash dividends paid per share
American Depositary Share:
Market price per share (B)Cash dividends paid per share (C)- 75 -

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2004

Common Stock:Market price per share (A)

—
High
—
Low

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

—
High
—
Low

Cash dividends paid per share (C)

1st

2nd

3rd

4th

¥7,320¥8,150¥7,280¥8,970

5,570
30.00

6,400
—

6,180
30.00

7,140
—

$61.34$69.30$67.56$84.66

47.25
0.25

54.50
—

57.40
0.27

66.25
—

(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.
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
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.
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Objects and Purposes
The objects of Kyocera Corporation are set forth in Article 2 of its Articles of Incorporation, as follows:(1)

Manufacture and sale of and research on fine ceramics and various kinds of products utilizing fine ceramics;(2)

Manufacture and sale of and research on single crystal materials and various kinds of products utilizing single crystal materials;(3)

Manufacture and sale of and research on composite materials;(4)

Manufacture and sale of and research on specialty plastics;(5)

Manufacture and sale of and research on measurement instruments for electronics;(6)

Manufacture and sale of and research on electronic and electric instruments and parts thereof;(7)

Manufacture and sale of and research on component parts of automobiles;(8)

Manufacture and sale of and research on precious metals, precious stones and semiprecious stones and various kinds of products
utilizing precious metals, precious stones and semiprecious stones;(9)

Manufacture and sale of and research on accessories and interior and exterior decorations and ornaments;(10) Wholesales and retail sale of health foods;(11) Manufacture and sale of and research on material and equipment for medical use;(12) Manufacture and sale of and research on equipment utilizing solar energy;(13) Manufacture and sale of and research on optical machinery and instruments and precision machinery and instruments and parts
hereof;(14) Manufacture and sale of and research on machinery and equipment for business use and machinery and equipment for industrial
use and parts thereof;(15) Manufacture and sale of and research on photosensitive materials for photographic use;(16) Design, control and contract of construction relating to public works, building, electric equipment and piping construction;(17) Sale, purchase, lease, maintenance and brokerage of real estate;(18) Lease, maintenance and management of facilities relating to sports, recreation, medical care, hotels and restaurants, and thetravel agency business;(19) Road freight handling and warehousing;(20) Business relating to non-life insurance agency and life insurance canvassing, and general leasing, factoring and finance business;(21) Sale and purchase of various kinds of plants and technology related thereto;- 77 -

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(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.
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 to acquire or dispose ofmaterial assets; to borrow substantial amounts of money; to employ or discharge from employment important employees, such as
executive officers; and to establish, change or abolish a material corporate organization such as a branch office. The Regulations of
the Board of Directors of Kyocera Corporation require a resolution of the Board of Directors for Kyocera Corporation’s borrowing,lending or contributing a significant amount of money, giving a guarantee of a significant amount of debt or waiving the right toreceive a significant amount of money. The Regulations of the Board of Directors of Kyocera Corporation defines a “significant
amount” as five billion yen or more with respect to borrowing and one hundred million yen or more with respect to other matters. The
Regulations of the Board of Directors of Kyocera Corporation also require a resolution of the Board of Directors to approve anytransaction between a Director and Kyocera Corporation, allocation of the remuneration and bonuses of Directors as previously
determined or approved by the general meeting of shareholders and determination of the amount and manner of payment of
retirement allowances or condolence money payable to Directors, the determination of which has been previously entrusted to theBoard of Directors by the general meeting of shareholders.
Capital Stock
Authorized capital
Article 5 of the Articles of Incorporation of Kyocera Corporation provides that the total number of shares authorized for issuance byKyocera Corporation is 600,000,000 shares. If shares of common stock are retired, the number of shares so retired shall be deductedfrom the total number of shares authorized to be issued by Kyocera Corporation.
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Dividends
The Articles of Incorporation of Kyocera Corporation provides 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 to the Corporate Auditors of Kyocera Corporation and to independent certified public
accountants and then submitted for approval to the ordinary general meeting of shareholders, which is normally held in June eachyear. In addition to provisions for dividends, if any, and for the legal reserve and other reserves, the allocation of profits customarily
includes a bonus to Directors and Corporate Auditors. 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 end of each September 30, without shareholders’ approval, but subject to thelimitation described below.
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 over the aggregate of:(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.
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.
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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.
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.
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. Except as otherwise
provided by law or by the Articles of Incorporation of Kyocera Corporation, a resolution can be adopted at a general meeting ofshareholders by a majority of the total number of voting rights. Under the Commercial Code and Kyocera Corporation’s Articles ofIncorporation, however, the quorum for the election of Directors and Corporate Auditors is one-third of the total number of voting
rights. Kyocera Corporation’s shareholders are not entitled to cumulative voting in the election of Directors. Shareholders may
exercise their voting rights through proxies, provided that the proxies are also shareholders holding voting rights. Kyocera
Corporation’s shareholders also may cast their votes in writing. Holders of shares who do not attend a general meeting ofshareholders may also exercise their voting rights by electronic means if the Board of Directors approves such method of exercising
voting rights.
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 offer to persons other than theshareholders of bonds with stock acquisition rights subject to “specially favorable” conditions.
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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.
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, morethan five days prior to the relevant shareholders’ meeting, that Kyocera Corporation acquire the shares held by this 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” 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 nonconsolidated 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” above, Kyocera Corporation may not purchase these shares.
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Page 1 of 1

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 a unit may not exceed 1,000 shares or
one-two hundredths (1/200) of the number of all issued shares, whichever is smaller.
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.
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 requires any person who has become, beneficially and solely or jointly, a holder of morethan five percent of the total issued voting shares of Kyocera Corporation to file a report concerning such shareholdings with the
Director of the relevant Local Finance Bureau of the Ministry of Finance within five business days.
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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.
On September 15, 2004, the closing price of our shares of Common Stock on the Tokyo Stock Exchange was ¥8,190 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- 83 -¥ 5,000¥10,000¥20,000

¥
¥
¥

500
1,000
2,000

Page 1 of 1

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.

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.
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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.
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.
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Page 1 of 1

For purposes of this discussion, a “U.S. holder” is a beneficial owner of shares or ADSs that is:•a citizen or resident of the United States,•

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

This discussion addresses only United States federal income taxation. An investor should consult 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 ADSs,
and ADSs 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.”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 taxation. If the investor is a non-corporate U.S. holder, dividends paid before January 1, 2009 that
constitute qualified dividend income will be taxable at a maximum rate of 15% provided that the shares or ADSs are held for morethan 60 days during the 120-day period beginning 60 days before the ex-dividend date and meet other 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, receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received
deduction.
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 from sources within the United States forforeign 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 return of capital to the extent of the investor’s basis in the shares or ADSs and thereafter as capital gain.
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Page 1 of 1

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, but generally will be “passive income” or “financial services
income.” Passive income or financial services income must be treated separately from other types of income for purposes ofcomputing 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 on or after May 6, 2003 and before January 1, 2009 is generally taxed at a maximum rate of 15% where the holder has aholding period greater than one year. Additionally, gain or loss will generally be from sources within the United States for foreign tax
credit limitation purposes.
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 the shares or ADSs during the three preceding taxable years or, if shorter, the investor’s holding period for theshares or ADSs.)- 87 -

Page 1 of 1

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, and the investor will recognize the additional gain, if any, on sale or otherdisposition of his shares or ADSs as ordinary income for that taxable year. The investor will also be allowed to take an ordinary loss
in respect 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.
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 450 Fifth Street, N.W., 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 informationon the operation of the Securities and Exchange public reference room by calling the Securities and Exchange Commission in the
United States at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a web site at www.sec.gov that contains
reports, proxy statements and other information regarding registrants 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 thefurnishing and content of proxy statements to shareholders.
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Page 1 of 1

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, 2004, when compared to March 31, 2003.
In the normal course of business, Kyocera also faces risks that are either nonfinancial or nonquantifiable. Such risks principally
include country risk, credit risk, and legal risk, and are not represented in the following tables.
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, 2004, setting
forth the contract amounts and weighted average exchange rates related to the U.S. dollar, the Euro and the STG, which account for
Kyocera’s foreign currency forward transactions. The contract amounts are generally used to calculate the contractual payments to beexchanged under the contracts.
Yen in millions (Pay/Receive)(Except average contractual rates)
Forward exchange contracts to sell foreign currencies

US$/Yen

US$/STG

Euro/Yen

Contract amounts
Fair value
Weighted average contractual rates¥ 40,487959
108.15¥ 16,748
(434)
1.849

¥ 30,644
832
131.90

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

Forward exchange contracts to purchase foreign currencies

Contract amounts
Fair value
Weighted average contractual rates¥

Yen/ STG

9,328
(97)
106.652¥875
17
195.578

U.S. dollars in thousands(Pay/Receive)
Forward exchange contracts to sell foreign currencies

US$/Yen

US$/STG

Euro/Yen

Contract amounts
Fair value$389,298 $161,038 $294,654
9,221(4,173)
8,000
U.S. dollars in thousands(Receive/Pay)

Forward exchange contracts to purchase foreign currencies

Contract amounts
Fair value

US$/Yen

Yen/STG$ 89,692(933)$ 8,413
163

Kyocera also enters into foreign currency swap agreements to hedge against exposures to foreign currency fluctuations of certain
assets, principally those denominated in the U.S. dollar and Thailand baht (THB).
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Page 1 of 1

The table below presents contract amounts and weighted average exchange rates by expected (contracted) maturity date. The contract
amounts are generally used to calculate the contractual payments to be exchanged under the contracts.
Yen in millions

Foreign currency swaps

Contract
amount

¥
¥

541
582

Expected maturity date

Weighted
average pay rate
(US$/Yen)

2005

108.20(US$/Yen)
0.362(THB/Yen)

¥
¥

541
582

2006

2007

2008

2009

Thereafter

—
—

—
—

—
—

—
—

—
—

Total

¥
¥

Fair value

541
582

$
$

5,202
5,596

19
43

U.S dollars in thousands

Foreign currency swaps

Contract
amount¥¥Expected maturity date

Weighted
average pay rate
(US$/Yen)

2005

2006

2007

2008

2009

Thereafter

108.20(US$/Yen)
0.362(THB/Yen)$ 5,202$ 5,596

—
—

—
—

—
—

—
—

—
—

Total

$
$

Fair value

5,202
5,596

$
$

183
413

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 amounts and weighted
average interest rates by expected (contracted) maturity dates. Notional amounts are used to calculate the contractual payments to beexchanged under the contracts.
Yen in millions

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

Averageinterest
rate

Other finance receivables

3.61%

¥

2005

2006

2007

2008

2009

Thereafter

Total

Fair value

67,15838,168

2,246

2,374

472

40,994¥151,412¥152,402
Yen in millions

Long term debt (including due within one year)
Expected maturity date
Averagepay rate

Loans, principally from
banks

1.22%

¥

2005

2006

2007

2008

2009

Thereafter

44,52256,080

5,393

2,927

3,722

2,486

- 90 -

Total

Fair value¥115,130¥115,581

Page 1 of 1

Interest rate swap

Yen in millions

Averagereceive
rate

Notional
principal
amountExpected maturity date
Averagepay rate

2005

2006

2007

2008

2009

Thereafter¥ 41,578

13,944——13,000Total

Fair value¥ 68,522¥ (1,276)(Variable
to Fixed)¥ 68,522

0.62%

1.61%

—

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

Averageinterest
rate

Other financereceivables

3.61%

U.S dollars in thousands

2005

2006

2007

2008

2009

Thereafter

Total

Fair value$ 645,750

367,000

21,59622,8274,539

394,173$ 1,455,885$ 1,465,404

U.S dollars in thousands

Long term debt (including due within one year)
Expected maturity date
Averagepay rate

Loans, principally from
banks

1.22%

$

2005

2006

428,096539,231 51,856 28,144 35,788

2007

2008

2009

Thereafter

Total

Fair value

23,904$ 1,107,019$ 1,111,356

U.S dollars in thousands

Interest rate swap
Notional
principal
amountAveragereceive
rate

Expected maturity date
Averagepay rate

2005

2006

2007

2008

2009

$ 399,788

134,077——

125,000

Thereafter

Total

Fair value(Variable
to Fixed)$ 658,865

0.62%

1.61%

—

$

658,865$(12,269)

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 ¥102,568 million ($986 million), included ¥87,125 million ($838
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-thantemporary. 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.
- 91 -

Page 1 of 1

Other-than-temporary loss on debt and equity securities with readily determinable fair values for the years ended March 31, 2002,
2003 and 2004 amounted to ¥5,061 million, ¥2,717 million and ¥695 million ($7 million), respectively. At March 31, 2004, Kyocera
held the following available-for-sale marketable equity and debt securities.
Yen in millions and U.S. dollars in thousands
March 31, 2004

Due within 1 year
Due after 1 year to 5 years
Due after 5 years
Investment trust
Equity securities
Total
Item 12. Description of Securities Other Than Equity Securities
Not Applicable.
- 92 -

Cost

Fair Value

Cost

Fair Value¥ 14,761
13,094100
20,106
261,037¥ 14,666
12,963
101
16,954
363,548$ 141,932
125,904
962
193,327
2,509,971$ 141,020
124,644971
163,019
3,495,654¥309,098¥408,232$2,972,096$3,925,308

Page 1 of 1

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 Rules 13a-15(e) under the U.S. Securities Exchange Act of 1934) as of March 31,
2004.
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 issuer, has considered issues described below with respect to AVX
Corporation’s own disclosure controls and procedures, as reported in its annual report on Form 10-K filed with the SEC on June 14,
2004. The issues identified by AVX Corporation’s management and the actions that have been taken or will be taken by AVX
Corporation with regard to such issues, as reported in its annual report on Form 10-K, are as follows:In making the evaluation of its disclosure controls and procedures, AVX Corporation has considered three “reportable conditions” (asdefined under standards established by the American Institute of Certified Public Accountants) that were identified andcommunicated to its audit committee and management by PricewaterhouseCoopers LLP, AVX Corporation’s independent registeredpublic accounting firm. Reportable conditions are matters coming to the attention of an issuer’s independent registered public
accounting firm that, in their judgment, relate to a condition which could adversely affect the issuer’s ability to initiate, record,
process and report financial data consistent with the assertions of management in the financial statements. PricewaterhouseCoopers
LLP and AVX Corporation’s management reported to its audit committee that none of the reportable conditions, individually or whentaken together, is believed to be a “material weakness” (as defined under standards established by the American Institute of Certified
Public Accountants).
The reportable conditions relate to:•limitations in AVX Corporation’s ability to address the assertions embodied in the financial statements in a timely manneras a result of the lack of timely and adequate formal review of its financial information by individuals sufficiently
competent in U.S. GAAP matters, coupled with the fact that, in some instances, its policies and procedures are not formally
documented;•

limitations in AVX Corporation’s information systems, principally due to the disparity in the systems on a global basis andlimited staff in its information system department, which limit its ability to access and analyze relevant data in a timely
manner; and•limitations in both the number of AVX Corporation’s finance personnel and the understanding by some personnel of U.S.
GAAP, which impose restrictions on its ability to gather, analyze and report information relative to its financial statement
assertions in a timely manner.

These reportable conditions caused AVX Corporation’s management to devote additional resources to resolving matters that arose
during its fiscal year end audit. AVX Corporation’s management is actively working to correct these reportable conditions. In
conjunction with its compliance efforts related to requirements of the Sarbanes-Oxley Act of 2002, AVX Corporation will be
evaluating its global financial resources and abilities, evaluating global financial policies and procedures for compliance with U.S.
GAAP and reviewing its information systems capabilities. As part of this process, AVX Corporation expects to remediate thereportable conditions identified above prior to the issuance of its results for the fiscal year ending March 31, 2005. However, suchconditions, if uncorrected in fiscal year ending March 31, 2005, may rise to the level of a material weakness.
- 93 -

Page 1 of 1

With regard to the reportable conditions described above, Kyocera’s management has been and will be monitoring closely the actions
taken by AVX Corporation. As and when necessary, Kyocera’s management has given since the reportable conditions were known toKyocera management and will give directions to AVX Corporation’s management to take actions that Kyocera’s management
considers must be taken with regard to the reportable conditions in order to ensure the effectiveness of Kyocera’s disclosure controls
and procedures and internal control over financial reporting.
Based on the evaluation by Kyocera’s management described above, Kyocera’s principal executive and principle financial officers
concluded that Kyocera ‘s disclosure controls and procedures were effective as of March 31, 2004.
During the last quarter of the fiscal year ended March 31, 2004, AVX Corporation increased its internal audit staff, in part, to improveits disclosure controls and procedures. Kyocera’s management reviewed this action and concluded that it was appropriate andsufficient for that purpose.
Except as noted above, no change in Kyocera’s internal control over financial reporting (as defined in Rules 13a-15(f) under the U.S.
Securities Exchange Act of 1934) occurred during the year ended March 31, 2004 that has materially affected, or is reasonably likely
to materially affect, Kyocera’s internal control over financial reporting.
Item 16A. Audit Committee Financial Expert
The Board of Corporate Auditors of Kyocera has determined that Kyocera does not have an “audit committee financial expert” asdefined in Item 16A of Form 20-F serving on the Board of Corporate Auditors. Kyocera believes that the combined knowledge, skills
and experience of the Board of Corporate Auditors enables them, as a group, to act effectively in the fulfillment of their tasks andresponsibilities, including those under the Sarbanes-Oxley Act of 2002. In addition, the Corporate Auditors have the power andauthority to engage outside experts as they deem appropriate to provide them with advice on matters related to their responsibilities.
Item 16B. Code of Ethics
Kyocera has adopted a code of ethics that applies to Chief Executive Officer, Chief Financial Officer and the members of Kyocera
Disclosure Committee. Kyocera’s code of ethics has been attached as Exhibit 11.1 to this Form 20-F and is incorporated herein byreference.
Item 16C. Principal Accountant Fees and Services
Principal Independent Registered Public Accounting Firm Fees
ChuoAoyama PricewaterhouseCoopers has served as our independent registered public accounting firm for each of the financial years
in the three-year period ended March 31, 2004, 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 2003 and fiscal 2004.
- 94 -

Page 1 of 1

Years ended March 31,(Yen in millions and U.S. dollars in thousands)
2003

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

¥

Total

503
22
243
4

2004

¥

772

652
43
223
—
918

2004

$

6,269
414
2,144
—
8,827

1) Amounts represent fees for the annual audit of Kyocera for the fiscal years ended March 31, 2003 and March 31, 2004, reviews ofKyocera’s financial statements for interim periods and other regulatory filings in fiscal 2003 and fiscal 2004.
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 2003 and fiscal 2004.
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 2003 and fiscal 2004.
4) Amounts represent fees for other non-financial system consulting services in fiscal 2003.
Kyocera’s Board of Corporate Auditors determined that the provision of non-audit services by ChuoAoyama PricewaterhouseCoopers
to Kyocera during fiscal 2003 and fiscal 2004 was compatible with maintaining the independent registered public accounting firm’s
independence.
Policies and Procedures of the Board of Corporate Auditors
In accordance with the regulations of the Securities and Exchange Commission issued pursuant to Sections 202 and 208 of the
Sarbanes-Oxley Act of 2002, our Board of Corporate Auditors has adopted a pre-approval policy regarding non-audit work performedby 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.
- 95 -

Page 1 of 1

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.
Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
Not Applicable.
- 96 -

Page 1 of 1

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, 2003 and 2004

F-1
F-2 & F-3

(3) Consolidated Statements of Income for the years ended March 31, 2002, 2003 and 2004

F-4

(4) Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2002, 2003 and
2004

F-5

(5) Consolidated Statements of Cash Flows for the years ended March 31, 2002, 2003 and 2004

F-6

(6) Notes to the Consolidated Financial Statements

F-7 to F-38

(7) SCHEDULE II. Valuation and Qualifying Accounts for the years ended March 31, 2002, 2003
and 2004- 97 -

F-39

Page 1 of 1

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,
2004)

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)

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.
-98-

Page 1 of 1

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, 2003 and 2004, and the results of theiroperations and their cash flows for each of the three years in the period ended March 31, 2004 in conformity with accounting
principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules 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 schedules are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedules
based 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 derivative instruments
and hedging activities in the year ended March 31, 2002. Also, as discussed in Note 1 to the consolidated financial statements,
Kyocera changed its method of accounting for business combination and goodwill and other intangible assets in the year ended March
31, 2003.
/s/ ChuoAoyama PricewaterhouseCoopers
Osaka, Japan
June 25, 2004.
F-1

Page 1 of 1

Financial Section
Consolidated Balance Sheets
Kyocera Corporation and Consolidated Subsidiaries
March 31, 2003 and 2004
(Yen in millions and U.S. dollars and shares in thousands-Note 2)
ASSETS

2003

2004

2004

¥ 298,310
56,36814,651¥ 361,132—
3,855$ 3,472,423—
37,06735,446
179,750
31,25433,801
207,583
70,553325,010
1,995,990
678,394

246,450(7,703)311,937(8,468)2,999,394(81,423)

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

238,747
183,156
52,136
19,054

303,469
197,194
34,95733,0892,917,971
1,896,096
336,125
318,164

Total current assets

862,422933,696

8,977,846

24,398308,137

24,054430,096

231,288
4,135,539

332,535
125,728454,150
88,512

4,366,827
851,077

53,973203,387
587,076
5,483

54,867217,216
622,721
10,384

527,567
2,088,616
5,987,702
99,846

849,919(600,414)

905,188(650,668)

8,703,731(6,256,423)

249,505
25,70315,06824,053

254,520
25,254
16,64521,981

2,447,308
242,827
160,048
211,355¥1,635,014¥1,794,758$17,257,288

Current assets:
Cash and cash equivalents (Note 13)
Restricted cash (Notes 13 and 21)
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

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

Page 1 of 1

LIABILITIES AND STOCKHOLDERS’ EQUITY

2003

Current 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
Litigation expenses (Note 21)
Other
Other current liabilities¥ 107,886
30,198

2004¥

84,81544,522

2004$

815,529
428,096

98,10528,428110,759
38,115

1,064,991
366,490

33,05928,06041,862
23,387
14,58934,161
19,054—
28,665
16,548328,471
183,212—275,625
159,115

405,574

376,6393,621,529

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

60,73674,90622,8795,859

70,60838,62095,498
6,409

678,923
371,346918,250
61,625

Total liabilities

569,954587,774

5,651,673

Minority interests in subsidiaries

61,56053,238511,903

115,703
167,675
828,350(56,194)

115,703
162,091885,262
22,046

1,112,529
1,558,567
8,512,135
211,981(52,034)(31,356)(301,500)

1,003,500

1,153,746

11,093,712¥1,635,014¥1,794,758$17,257,288

Total current liabilities

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):
6,345 shares at March 31, 2003 and 3,825 shares at March 31, 2004
Total stockholders’ equity

F-3

Page 1 of 2

Financial Section
Consolidated Statements of Income
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2004
(Yen in millions and U.S. dollars and shares in thousands, except per share amounts-Note 2)
2002

2003

2004

2004

¥1,034,574
795,201¥1,069,770
796,258¥1,140,814
860,224$10,969,365
8,271,384

Gross profit
Selling, general and administrative expenses

239,373
187,812273,512190,124

280,590
171,628

2,697,981
1,650,269

Profit from operations
Other income (expenses):
Interest and dividend income
Interest expense (Note 12)
Foreign currency transaction gains (losses), net (Note 12)
Equity in earnings of affiliates and unconsolidated subsidiaries(Note 7)
Loss on devaluation of investment in an affiliate
Losses on devaluation of investment securities (Note 4)
Other, net

51,561

83,388108,962

1,047,712

7,304(2,655)
5,238

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

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

46,952(12,365)(14,865)

1,559—(5,771)(1,838)

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

2,575
—
(1,030)2,482

24,759—(9,904)23,865

3,837(7,351)

6,078

58,44255,39876,037

115,040

1,106,154

34,187(12,879)

33,665(885)

29,576
20,734284,385
199,365

21,30832,78050,310483,750

34,090(299)

43,257164

64,7303,356

622,404
32,26933,791

43,421

68,086654,673(1,838)(2,256)——

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
DeferredIncome before minority interests and cumulative effect ofchange in accounting principle
Minority interests
Income before cumulative effect of change in accounting
principle
Cumulative effect of change in accounting principle-net of taxes of ¥233
for the year ended March 31, 2002 (Notes 1, 7 and 8)
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:¥

31,953¥

41,165¥68,086$654,673¥

178.74178.59¥233.02232.97¥364.79364.78

$

3.51
3.51

(9.72)(9.71)(12.11)(12.11)————169.02168.88220.91220.86364.79364.78

3.51
3.51

60.00

60.00

60.00

0.58

Page 2 of 2

Basic
Diluted

189,050
189,204

186,338
186,382

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

186,643
186,649

Page 1 of 3

Consolidated Statements of Stockholders’ Equity
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2004
(Yen in millions and U.S. dollars and shares in thousands –Note 2)
CommonStock

Balance, March 31, 2001
(189,057)
Net income for the year
Foreign currencytranslation adjustments
Net unrealized losses on
securities - net oftaxes of ¥16,575 (Note 4)
Reclassification
adjustments for net
losseson securities - net of taxesof ¥0 (Note 4)
Cumulative effect ofchange in accounting
principle forderivative financial
instruments (Note 1)
Net unrealized losses onderivative financial
instruments (Note 12)
Reclassification
adjustments for net
losseson derivative financial
instruments (Note 12)¥ 115,703

Additional
Paid-in Capital¥

158,183

Retained
Earnings(Note 15)

¥ 777,797
31,953

Accumulated Other
Comprehensive Income(Note 15)

Treasury Stock(Note 11)¥¥

(19,673)(9,945)¥

Balance, March 31, 2002
(189,042)
Net income for the year
Foreign currencytranslation adjustments
Minimum pension liability
adjustment- net of taxes of ¥6,702(Note 10)
Net unrealized losses on
securities - net of taxesof ¥1,599 (Note 4)
Reclassification
adjustments for net
losses on securities

31,953

20,44520,445(23,102)(23,102)

5

5

(106)

(106)

(379)

(379)

60

60

Total comprehensive
income for the year
Cash dividends
Purchase of treasury stock(83)
Reissuance of treasury
stock (68)Comprehensive
Income¥28,876¥

41,165(11,343)(628)
45115,703

158,228

463
798,407
41,165(22,750)(10,110)(20,578)(20,578)(10,931)(10,931)(2,238)(2,238)

Page 2 of 3

- net of taxes of ¥150 (Note4)
Net unrealized losses onderivative financial
instruments (Note 12)
Reclassification
adjustments for net
losseson derivative financial
instruments (Note 12)

209

209

(146)

(146)

240

240

Total comprehensive
income for the year
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 (Note 11)
Balance, March 31, 2003
(184,964)
Net income for the year
Foreign currencytranslation adjustments
Minimum pension liability
adjustment- net of taxes of ¥5,419(Note 10)
Net unrealized gains on
securities—net of taxesof ¥61,421 (Note 4)
Reclassification
adjustments for net
losses on securities- net of taxes of ¥12 (Note4)
Net unrealized gains onderivative financial
instruments (Note 12)
Reclassification
adjustments for net
losseson derivative financial
instruments (Note 12)

7,721

¥

68,086

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

91

66

115,703

167,675

828,350
68,086(56,194)(52,034)(20,693)(20,693)

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¥¥(11,174)
(105)
4

44

146,326

Page 3 of 3

affiliate (2,529)
Stock option plan of a
subsidiary (Note 11)
Balance, March 31, 2004
(187,484)
Balance, March 31, 2003
Net income for the year
Foreign currencytranslation adjustments
Minimum pension liability
adjustment- net of taxes of $ 52,106(Note 10)
Net unrealized gains on
securities—net of taxes
of $590,587 (Note 4)
Reclassification
adjustments for net
losses on securities- net of taxes of $115 (Note4)
Net unrealized gains onderivative financial
instruments (Note 12)
Reclassification
adjustments for net
losseson derivative financial
instruments (Note 12)(5,607)

20,73919¥ 115,703¥

162,091¥ 885,262¥

22,046$1,112,529$ 1,612,260$7,964,904
654,673$(540,327)¥(31,356)$ (500,327)$(198,971)(198,971)

90,90490,904

857,077

857,077

577

577

308

308

2,413

2,413

Total comprehensive
income for the year

$ 1,406,981

Cash dividends
Purchase of treasury stock
Reissuance of treasury
stock
Exchange of stock foracquisition of anaffiliate
Stock option plan of a
subsidiary (Note 11)
Balance, March 31, 2004

654,673(107,442)(1,010)38

423(53,914)

199,414183$1,112,529$ 1,558,567$8,512,135

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

211,981$ (301,500)

Page 1 of 2

Financial Section
Consolidated Statements of Cash Flows
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2004
(Yen in millions and U.S. dollars in thousands–Note 2)
2002

2003

2004

2004

¥ 31,953¥ 41,165¥ 68,086$ 654,673

88,497
3,593
11,872(12,879)299

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

70,2602,387
14,013
20,734(3,356)

675,577
22,952
134,740
199,365(32,269)(1,559)—5,771—(3,092)
5,159
2,883
—

(2,575)—
1,030(24,870)(24,759)—
9,904(239,134)

1,838(6,280)

2,256
5,139

—
1,294

—
12,44255,04740,443
4,683(41,600)(37,923)(4,424)
2,299
—
(701)

(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(333,692)(343,760)(42,327)
199,048(88,433)
90,77926,548(340,904)
20,933

108,976

119,589(5,511)(52,990)

Net cash provided by operating activities

140,929

160,754

62,575

601,683

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
Proceeds from sales of property, plant and equipment
Payments for purchases of intangible assets
Acquisitions of businesses, net of cash acquired (Note 20)
Deposit of restricted cash
Withdrawal of restricted cash
Other, net(47,402)(13,588)(465)
44,934
38,697—(59,031)1,809(10,669)(60)(6,959)—1,596(21,562)(30,682)(1,035)
6,892
27,458—(40,481)
3,122(6,620)4,058(1,477)—
1,815(10,038)(27,943)(7,917)28,954
48,533
5,004(50,712)2,720(8,157)(2,271)(1,994)
52,983
419(96,519)(268,683)(76,125)
278,404
466,663
48,115(487,615)
26,154(78,433)(21,837)(19,173)
509,452
4,029(51,138)(58,512)29,581

284,432(30,345)(3,475)(23,823)(229,067)

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
Losses on inventories
Deferred income taxes
Minority interests
Equity in earnings of affiliates and unconsolidated subsidiaries (Note7)
Loss on devaluation of investment in an affiliate
Losses on devaluation of investment securities (Note 4)
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:
Decrease (increase) in receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets(Decrease) increase in notes and accounts payable(Decrease) increase in accrued income taxes(Decrease) increase in other current liabilities
Increase (decrease) in other non-current liabilities
Settlement regarding LaPine Case (Note 21)
Other, net
Total adjustments

Net cash (used in) provided by investing activities
Cash flows from financing activities:
Decrease in short-term debt

Page 2 of 2

Proceeds from issuance of long-term debt
Payments of long-term debt
Payments of liabilities deferred pursuant to the rehabilitation plan
Dividends paid
Net purchases of treasury stock
Other, net

60,043(9,659)(25,609)(12,773)
(628)
575

1,568
(19,152)—(12,382)(42,010)789

48,975(33,152)—(12,372)(33)(17)

470,913(318,769)—(118,962)
(317)
(163)

(18,396)(74,662)(20,422)(196,365)

8,171(10,169)(8,912)(85,692)

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

79,566201,333

17,411
280,899

62,822
298,310604,058
2,868,365

Cash and cash equivalents at end of year

¥280,899¥298,310¥361,132$3,472,423

Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents

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

Page 1 of 2

Notes to The Consolidated Financial Statements
Kyocera Corporation and Consolidated Subsidiaries(Yen in millions and U.S. dollars in thousands, except shares and per share amounts-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 and its majority-owned subsidiaries (“Kyocera” asa consolidated group). All significant intercompany transactions and accounts 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 earnings or losses of these companies.
Revenue Recognition:
Kyocera recognizes sales when there is evidence of an arrangement, title and risks have passed to customers, the sales prices are fixed
or determinable, and collectibility of the resulting receivable is reasonably assured.
Revenue from Fine Ceramics group, Electronic Device group and Equipment group are recognized principally upon delivery tocustomers. Revenue from direct financing leases is recognized over the term of the leases 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 nolonger accrued at the time the collection of the interest is past due 1 year or more, or the collection of the principal is past due 6months or more. The interest received from cash payments on impaired loans is recorded as income, unless the collectibility of theremaining investments is doubtful, in which case the cash receipt is recorded as collection of the principal.
Cash and Cash Equivalents:
Cash and cash equivalents include time deposits, certificates of deposit and short-term commercial notes with original maturities ofthree 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.
Inventories:
Inventories are stated at the lower of cost or market. Cost is determined by the average method for approximately 51% and 55% of
finished goods and work in process at March 31, 2003 and 2004, 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:
Kyocera provides for depreciation of buildings, machinery and equipment over their estimated useful lives primarily on the decliningbalance method. The principal estimated useful lives used for computing depreciation are as follows:Page 2 of 2

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.
In general, 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.” SFAS No. 141 (1) requires that the purchase
F-7

Page 1 of 2

Financial Section
method of accounting be used for all business combinations initiated after June 30,2001, as well as all purchase method businesscombinations completed after June 30, 2001, (2) provides specific criteria for the initial recognition and measurement of intangible
assets apart from goodwill, and (3) requires that unamortized deferred credit related to an excess over cost be written off immediately
as an extraordinary gain instead of being deferred and amortized. SFAS No. 141 also requires that the unamortized deferred credit
related to an excess over cost arising from an investment that was acquired before July 1,2001, must be written-off immediately andrecognized as the cumulative effect of a change in accounting principle. SFAS No. 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with theprovisions of SFAS No. 142. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over theirrespective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived 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 any 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.
The principal estimated amortization for intangible assets are as follows:
Patent rights
Software2 to 8 years
2 to 5 years

In addition, to the extent an intangible asset was identified as having an indefinite useful life, Kyocera tests the intangible asset
for impairment annually in accordance with the provisions of SFAS No.142.
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:
At least annually, although in some cases more often if events or changes in circumstances require such a review, Kyocera reviews
the recoverability of the carrying value of its long-lived assets and intangible assets with definite useful lives. The carrying value of along-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 is recognized based on the amount by which the carrying value exceeds thefair 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 swaps, foreign currency forward contracts, interest rate swaps
and interest rate options. Kyocera does not hold or issue such derivative financial instruments for trading purposes.
Effective April 1, 2001, Kyocera adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” asamended by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities an Amendment of FASBStatement No. 133.” Upon the adoption of SFAS 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 of derivatives are charged in current earnings. However cash flow hedges
which meet the criteria of SFAS No. 133 may qualify for hedge accounting treatment. Changes in the fair value of the effective
portion of these hedge derivatives are deferred in other comprehensive income and charged to earnings when the underlying
transaction being hedged occurs.
Kyocera designated certain interest rate swaps and interest rate options as cash flow hedges under SFAS No. 133. Foreign
currency swaps and foreign currency forward contracts are entered into as hedges of existing foreign currency denominated assets andliabilities and as such do not qualify for special hedge accounting. Accordingly, Kyocera records changes in fair value of all foreign
currency swaps and foreign currency forward contracts currently in earnings. It is expected that such changes will be offset bycorresponding gains or losses on the underlying assets and liabilities.

Page 2 of 2

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. Kyocera also formally assesses, both at the hedge’s inception and on
an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged
items. When it is determined that a derivative is not 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, the derivative will continue to be
carried on the balance sheet at its fair value, with deferred unrealized gains or losses charged immediately in current earnings.
F-8

Page 1 of 1

Stock-Based Compensation:
In December 2002, FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” whichamends SFAS No.123, “Accounting for Stock-Based Compensation,” and provides alternative methods to transition for a voluntarychange 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 Opinion (APB) No. 25,
Accounting for Stock Issued to Employee and its related interpretations.
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 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,
2002

2003

2004

2004

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¥33,791¥43,421¥68,086$654,673

—

50

25

240

(1,190)(1,559)(4,155)(39,951)

Pro forma income before cumulative effect of change in accounting principle
Cumulative effect of change in accounting principle - net of taxes of ¥233 for the year
ended March 31, 2002

32,601

41,912

63,956614,962(1,838)(2,256)——

Pro forma net income¥30,763¥39,656¥63,956$614,962¥178.74172.45178.59172.38¥233.02224.93232.97224.91¥364.79
342.67364.78342.65$169.02
162.73168.88162.66220.91212.82220.86212.81364.79342.67364.78342.65

Earnings 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

3.51
3.29
3.51
3.29
3.51
3.29
3.51
3.29

Kyocera Corporation
Options granted in 2002, 2003 and 2004 had weighted average fair values of ¥1,835, ¥1,294 and ¥3,176 ($30.54), respectively using
the Black-Scholes option pricing model. The following are weighted-average assumptions used for options during the fiscal years
ended March 31, 2002, 2003 and 2004.
Years ended March 31,
2002

Interest rate
Expected life
Volatility
Expected dividends

2003

2004

0.07% 0.01%
0.75%
2 years 1 year 4.5 years
52.54% 51.97% 51.48%
0.75% 0.74%
0.76%
F-9

Page 1 of 2

Financial Section
AVX Corporation and its consolidated subsidiaries (AVX)
Options granted in 2002, 2003 and 2004 had weighted average fair values of $10.91, $5.00 to $9.18 and $4.22 to $5.13, respectively
using the Black-Scholes option pricing model. The following are weighted-average assumptions used for options during the fiscal
years ended March 31, 2002, 2003 and 2004.
Years ended March 31,
2002

Interest rate
Expected life
Volatility
Expected dividends

2003

2004

6.60% 3.19% 1.43%
4 years 4 years 4 years
59.7% 60.0% 59.8%
0.92% 0.98% 1.27%

Kyocera Wireless Corporation and its consolidated subsidiaries (KWC)
Options granted in 2002, 2003 and 2004 had weighted average fair values of $2.26, $1.68 and $1.03, respectively using the BlackScholes option pricing model. The following are weighted-average assumptions used for options during the fiscal years ended March
31, 2002, 2003 and 2004.
Years ended March 31,
2002

Interest rate
Expected life
Volatility
Expected dividends

2003

2004

4.47% 3.43% 2.99%
5 years 5 years 5 years
45.00% 45.00% 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.
New Accounting Standards:
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143 “Accounting for Asset Retirement
Obligations.” SFAS No. 143 requires full recognition of asset retirement obligations on the balance sheet from the point in time atwhich a legal obligation exists. The obligation is required to be measured at fair value. The carrying value of the asset or assets towhich the retirement obligation relates would be increased by an amount equal to the liability recognized. This amount would then be
included in the depreciable base of the asset and charged to income over its life as depreciation. This statement is effective for fiscal
years beginning after June 15, 2002. The adoption of this statement did not have a material impact on Kyocera’s consolidated resultsof operations and financial position.
In November 2002, the FASB’s Emerging Issues Task Force (EITF) reached a consensus on EITF 00-21, “Revenue
Arrangements with Multiple Deliverables.” EITF Issue No.00- 21 provides guidance on how to account for arrangement that involvethe delivery or performance of multiple products, services and/or right to use assets. EITF 00-21 is effective for fiscal periods
beginning after June 15, 2003. The adoption of this statement did not have a material impact on Kyocera’s consolidated results ofoperations and financial position.

Page 2 of 2

F-10

Page 1 of 1

In January 2003, FASB issued Interpretation (FIN) No. 46, “Consolidation of Variable Interest Entities.” Variable interest
entities often are created for a single specified purpose, for example, to facilitate securitization, leasing, hedging, research anddevelopment, or other transactions or arrangements. This interpretation of Accounting Research Bulletin No. 51, “Consolidated
Financial Statements,” defines what these variable interest entities are and provides guidelines on how to identity them and also on
how an enterprise should assess its interests in a variable interest entity to decide whether to consolidate that entity. Generally, FIN
No. 46 applies to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterpriseobtains an interest after that date. For existing variable interest entities in which an enterprise holds a variable interest that it acquired
before February 1, 2003, the provision of this interpretation will apply no later than the beginning of the first interim or annual
reporting period beginning after June 15, 2003. In December 2003, the FASB completed deliberations of proposed modifications to
FIN No.46 (Revised interpretations) resulting in multiple effective dates based on the nature and the creation date of the variableinterest entity. Currently, Kyocera does not have any material variable interest entities and the adoption of FIN No.46-R did not havea material impact on Kyocera’s consolidated results of operations and financial position.
In December 2003, FASB revised SFAS No. 132, “Employers’ Disclosures about Pensions and Other Post Retirement
Benefits.” The revised SFAS No. 132 retains the disclosures required by the original SFAS No. 132 and requires additional
disclosures to those in the original SFAS No. 132 about the assets, obligations, cash flows, and net periodic cost of defined benefit
pension plans and other defined benefit postretirement plans. The revised SFAS No. 132 is generally effective for fiscal years ending
after December 15, 2003 and Kyocera adopted it for its disclosure of domestic benefit plans in financial statements for fiscal 2004. As
this revision does not require the employers to change the measurement or recognition of the benefit plan, the adoption of the revised
SFAS No. 132 did not have any impact on Kyocera’s consolidated results of operations and financial position.
In April 2003, FASB issued SFAS No. 149, “Amendment of Statement No. 133 on Derivative Instruments and Hedging
Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No.
133, “Accounting for Derivative Instruments and Hedging Activities.” Kyocera adopted SFAS No. 149 for contracts entered into or
modified after June 30, 2003 except for certain items related to the implementation provisions of SFAS No. 133. The adoption of thisstatement did not have a material impact on Kyocera’s consolidated results of operations and financial position.
In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity.” SFAS No. 150 requires certain financial instruments with characteristics of both liabilities and equity to beclassified as a liability (or an asset in some circumstances). SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The
adoption of this statement did not have a material impact on Kyocera’s consolidated results of operations and financial position.
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 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 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 an other-than-temporary impairment has not been recognized.
The disclosure requirements of EITF 03-01 were effective December 31, 2003. The accounting guidance of EITF 03-01 will beeffective in reporting periods beginning after June 15, 2004. The adoption of this statement is not expected to have a material impact
on Kyocera’s consolidated results of operations and financial position.
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 2004 at the rate of ¥104=US$1, the rate prevailing on March 31, 2004.
This translation should not be construed as a representation that the yen amounts shown could be so converted into the U.S. dollar at¥104=US$1 or at any other rate.
F-11

Page 1 of 2

Financial Section
3. BUSINESS COMBINATIONS:
Investments in Kinseki, Limited and Kyocera SLC Technologies Corporation:
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. Condensed balance sheet of Kinseki on August 1, 2003 are as follows:
August 1, 2003

Current assets
Non-current assets¥28,21222,622$271,269
217,519¥50,834$488,788

Current liabilities
Non-current liabilities¥ 7,136
11,782$ 68,615
113,289

Total liabilities

18,918

181,904

Total stockholders’ equity

31,916306,884¥50,834$488,788

On August 1, 2003, the estimated fair value of net assets for Kinseki was ¥31,916 ($306,884), in excess of the purchase price of¥19,759 ($189,990), which was calculated based on the average stock price of Kyocera Corporation during a few days before andafter the date on which Kyocera Corporation and Kinseki, Limited reached an agreement on the acquisition. The excess of the fairvalue of net assets over the purchase price of ¥12,157 ($116,894) was recorded against non-current assets acquired.
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 ($82,635).
Kyocera Corporation incorporated a new successor company, “Kyocera SLC Technologies Corporation” on August 12, 2003
and undertook the operation on September 1, 2003.
The followings 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

2004

¥1,104,623
40,105¥1,153,438
67,636$11,090,750
650,346¥¥212.35212.30360.75 $3.47
360.74
3.47* The number of shares used to compute pro forma basic and diluted net income per share for the respective period includes thePage 2 of 2

2,529,154 shares allocated to Kinseki, Limited’s shareholders as if the share exchange was done at the beginning of the respective
periods.
F-12

Page 1 of 1

Investment in Kyocera Chemical Corporation:
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 Fine Ceramics group, 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 of operations from the date of the acquisition. Condensed balance sheet of Kyocera Chemical Corporation on
August 1, 2002 are as follows:
August 1,
2002

Current assets
Non-current assets¥16,400
18,944¥35,344

Current liabilities
Non-current liabilities¥13,207
9,154

Total liabilities

22,361

Minority interests in subsidiaries

223

Total stockholders’ equity

12,760¥35,344

On August 1, 2002, the estimated fair value of net assets for KCC was ¥12,760, in excess of the purchase price of ¥9,431, which
was calculated based on the average stock price of Kyocera Corporation during a few days before and after the date Kyocera
Corporation and Toshiba Chemical Corporation reached an agreement on the acquisition. The excess of the fair value of net assets
over the purchase price of ¥3,329 was recorded against non-current assets acquired.
The followings are the unaudited pro forma combined results of operations of Kyocera for the years ended March 31, 2002 and2003, as if the investment in Kyocera Chemical Corporation had taken place at the beginning of respective periods.
The results of operations for KCC before the investment, which were included in the pro forma combined results, were preparedin accordance with accounting principles generally accepted in Japan and contained an expense for structural reforms of ¥3,534 and avaluation loss for deferred tax assets of ¥3,635 as one-off charges for the year ended March 31, 2002.
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

2002

2003

¥1,065,535
20,618¥1,079,605
39,201¥¥108.49108.41210.00209.95* The number of shares used to compute pro forma basic and diluted net income per share for the respective period includes the990,990 shares issued to shareholders of Toshiba Chemical Corporation as if the shares were issued at the beginning of therespective periods.
F-13

Page 1 of 2

Financial Section
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, ¥48,598 of gross unrealized loss at March 31, 2003 and ¥87,125 ($837,740) of gross unrealized gain at March 31,
2004 were derived from a fluctuation in the market value of the shares of KDDI Corporation (KDDI) 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,
2002, 2003 and 2004 amounted to ¥5,061, ¥2,717 and ¥695 ($6,683), respectively.
Investments in debt and equity securities at March 31, 2003 and 2004, included in short-term investments (current assets) and insecurities and other investments (non-current assets) are summarized as follows:
March 31,
2003

Cost*

Aggregate
Fair Value

2004
Gross
Unrealized
Gains

Gross
Unrealized
LossesCost*

Aggregate
Fair Value

Gross
Unrealized
Gains

Gross
Unrealized
LossesAvailable-for-sale securities:
Corporate debt securities
Other debt securities
Investment trust
Equity securities¥ 29,754 ¥ 29,610 ¥6 ¥ 150 ¥ 14,961 ¥ 14,891 ¥26 ¥96
16,87016,8734
1
12,994
12,8391
156
20,057
15,6930
4,364
20,106
16,954
11
3,163
259,942 212,902
2,671
49,711 261,037 363,548 102,568
57

Total available-for-sale securities

326,623

275,078

2,681

54,226

309,098

408,232

102,606

3,472

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

19,24025,27619,19025,327

0
51

50
0

—
21,093—
21,165—72——

Total held-to-maturity securities

44,51644,51751

50

21,093

21,16572—

Total investments in debt and equity
securities¥371,139 ¥319,595 ¥ 2,732 ¥54,276 ¥330,191 ¥429,397 ¥102,678 ¥ 3,472
March 31, 2004
Gross
Unrealized
Gains

Gross
Unrealized
Losses

$

$

Cost*

Aggregate
Fair Value

Available-for-sale securities:
Corporate debt securities
Other debt securities
Investment trust
Equity securities$ 143,856
124,942
193,327
2,509,971$ 143,183
123,452
163,019
3,495,654

Total available-for-sale securities

2,972,096

3,925,308

986,597

33,385

Held-to-maturity securities:
Corporate debt securities
Other debt securities—
202,817—
203,509

—
692

—
—

Total held-to-maturity securities

202,817

203,509

692

—

250
10
106
986,231923
1,500
30,414548

Page 2 of 2

Total investments in debt and equity securities$3,174,913$4,128,817$987,289* Cost represents amortized cost for debt securities and acquisition cost for equity 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.
F-14$33,385

Page 1 of 2

At March 31,2004, the contractual maturities of available-for-sale and held-to-maturity securities are summarized as follows:
March 31, 2004
Available-for-SaleCost

Due within 1 year
Due after 1 year to 5 years
Due after 5 years
Investment trust
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¥ 14,761 ¥ 14,666 ¥ 3,181 ¥ 3,181 $ 141,932 $ 141,020 $ 30,587 $ 30,587
13,094
12,963 17,912
17,984125,904
124,644 172,230 172,922
100
101
—
—
962
971
—
—
20,106
16,954——
193,327
163,019——
261,037 363,548——
2,509,971 3,495,654——¥309,098 ¥408,232 ¥21,093 ¥21,165 $2,972,096 $3,925,308 $202,817 $203,509

Proceeds from sales of available-for-sale securities and the related gross realized gains and losses for the years ended March 31,
2002, 2003 and 2004 are as follows:
Years ended March 31,

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

2002

2003

2004

2004

¥8,589
402
198

¥13
4
4

¥3,427219
0$32,9522,1060

For the purpose of computing gains and losses, the cost of those securities is determined by the moving average method.
Kyocera’s available-for-sale securities were classified by its length of an unrealized loss position at March 31, 2004 as follows:
March 31, 2004
within 1 year
Aggregate
Fair
Value

Corporate debt securities
Other debt securities
Investment trust
Equity securities
Total

over 1 year

Unrealized
LossesAggregate
Fair
Value

Unrealized
Losses

Total
Aggregate
Fair
Value

Unrealized
Losses¥ 5,707 ¥——252

5 ¥ 4,959 ¥91 ¥10,666 ¥
96—
12,738156 12,738
156—
16,876
3,163
16,876
3,163
17
527
40
779
57

¥ 5,959 ¥22 ¥35,100 ¥ 3,450 ¥41,059 ¥ 3,472
March 31, 2004

within 1 year
Aggregate
Fair
Value

Corporate debt securities
Other debt securities
Investment trust
Equity securities
Total

over 1 year

Total

Unrealized
LossesAggregate
Fair Value

Unrealized
LossesAggregate
Fair Value

Unrealized
Losses$54,875
—
—
2,423

$

48
—
—
163

$ 47,683
122,481
162,269
5,067

$

875
1,500
30,414385$102,558
122,481
162,269
7,490$$57,298$

211$337,500$ 33,174$394,798$ 33,385

923
1,500
30,414548

Page 2 of 2

At March 31, 2004, Kyocera held 24 individual available-for-sale securities in an unrealized loss position.
A significant amount of available-for-securities with which an unrealized loss position over one year was derived from a decline
in the fair value of a certain investment trust held by Kyocera Corporation. This investment trust mainly owns investments in equity
and debt securities traded at markets mainly in the US, Japan and Europe. The fair value of this investment trust has been in an
unrealized loss position attributable to the downturn of the global stock markets since a sudden sluggishness in IT-business in fiscal
2001.
The fair value of this investment trust has been increasing since the beginning of fiscal 2004 and correspondingly, the amount ofan unrealized loss of this investment trust decreased during fiscal 2004. Moreover, the investment advisor of this investment trust has
forecasted that in fiscal 2005 the global stock markets will show a steady growth with a worldwide expansion of corporate earnings
which is supported by analysts’ reports of other financial institutions. Taking into account the facts relating to this investment trust,
Kyocera has concluded that the decline in the fair value of this investment trust at March 31, 2004 is not an other-than-temporary
impairment. Kyocera also has the ability and intent to hold this investment trust for a reasonable period of time sufficient for a
forecasted recovery of its fair value.
F-15

Page 1 of 2

Financial Section
5. FINANCE RECEIVABLES:
Finance receivables at March 31, 2003 and 2004 consist of the following:
March 31,
2003

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

¥

9,299
(761)

2004

¥

2004

8,611
(674)

$

82,798(6,481)

Less–allowance for doubtful accounts (c)

8,538
(371)

7,937
(378)

76,317(3,635)Less–current portion

8,167(3,579)7,559(3,301)

72,682(31,740)

¥

4,588

¥

4,258

$

40,942Other finance receivables (b)Less–allowance for doubtful accounts (c)197,942(49,207)¥187,349(35,937)$1,801,433(345,548)

Less–current portion

148,735(27,595)

151,412(67,158)

1,455,885(645,750)¥121,140¥ 84,254$ 810,135¥125,728¥ 88,512$ 851,077(a)Investments in financing leases consist primarily of direct financing leases of telecommunication equipment and information
systems. Future minimum lease payments to be received for each of the five fiscal years and thereafter are as follows:

Years ending March 31,

2005
2006
2007
2008
2009
2010 and thereafter¥3,636
2,424
1,400
885
255
11

$34,961
23,30813,461
8,510
2,452
106

¥8,611$82,798(b) Other finance receivables consist primarily of installment loans to affiliates and other parties.

Investments in loans of ¥17,769 and ¥13,981 ($134,433) at March 31, 2003 and 2004 were considered to be impaired, for which
valuation allowances at March 31, 2003 and 2004 were provided of ¥14,128 and ¥11,171 ($107,413), 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 and 2004 were ¥19,174 and ¥16,695($160,529), respectively. The related recognized interest income for the years ended March 31, 2003 and 2004 were ¥83 and ¥52($500), respectively.
The principal amount of the loan on which interest income is no longer accrued at March 31, 2003 and 2004, were ¥46,323 and¥35,667 ($342,952), respectively. The loans, on which the collection of the principal was past due ninety days or more and on whichinterest income was still accrued, at March 31, 2003 were ¥404, and at March 31, 2004 were none.

Page 2 of 2(c) Changes in allowances for doubtful accounts on finance receivables are as follows:

Years ended March 31,
2002

2003

2004

2004

Beginning balance
Provision charged to income
Charge-offs¥53,635
1,096(2,941)¥51,790927(3,139)¥ 49,578
500(13,763)$ 476,712
4,808(132,337)

Ending balance¥51,790¥49,578¥ 36,315$ 349,183

F-16

Page 1 of 2

6. INVENTORIES:
Inventories at March 31, 2003 and 2004 are as follows:

Finished goods
Work in process
Raw materials and supplies

2003

2004

2004

¥ 83,163
41,89958,094¥ 90,725
46,40260,067$ 872,356
446,173
577,567¥183,156¥197,194$1,896,096

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 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. For detailed information of this businesscombination, see Note 3.
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. As a result, Kyocera Corporation recorded the gain of ¥491 ($4,721).
On December 4, 2003, KMC paid ¥6,632 ($63,769) 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 of underlying equity
in net assets totaling ¥6,285 ($60,433). KMC applies the equity method of accounting for this investment.
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 first half of fiscal 2003. On March 31, 2004, Taito and TA are listed companies.
Summarized financial information concerning affiliates, accounted for by the equity method is as follows:
March 31,
2003

2004

2004

Current assets
Non-current assets¥ 87,420
64,239¥ 83,755
50,907$ 805,337
489,490

Total assets¥151,659¥134,662$1,294,827

Current liabilities
Non-current liabilities¥ 38,400
14,226¥ 45,280
28,517$ 435,385
274,202

Total liabilities¥ 52,626¥ 73,797$ 709,587¥ 24,285
832¥ 23,942
623$ 230,212
5,990

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

2002

2003

2004

2004

¥135,332
4,898
82
1,284
2,387

¥163,024
13,983
8,360
2,833
3,080

¥162,484
9,893
6,624
2,323
2,009

$1,562,346
95,12563,692
22,337
19,317

The aggregate market value of investments in those listed affiliates at March 31, 2003 and 2004 was ¥15,206 and ¥23,637($227,279), respectively.

Page 2 of 2

F-17

Page 1 of 2

Financial Section
8. GOODWILL AND OTHER INTANGIBLE ASSETS:
On April 1, 2002, Kyocera adopted SFAS No. 142, “Goodwill and Other Intangible Assets” (See Note 1 regarding the procedure of
SFAS No. 142).
Intangible assets subject to amortization are summarized as follows:
March, 31
2003
Gross
Carrying
Amount2004

Accumulated
Amortization

Gross
Carrying
Amount2004

Accumulated
Amortization

Gross
Carrying
AmountAccumulated
Amortization

Patent rights
SoftwareOther¥24,044
8,652
3,111

¥

13,114
6,008
1,891¥25,903
11,5496,250¥

17,682
8,336
1,222$249,068
111,048
60,096$ 170,019
80,154
11,750Total¥35,807¥

21,013¥43,702¥27,240$420,212$ 261,923

The carrying amount of intangible assets having an indefinite life at March 31, 2003 and 2004 was ¥274 and ¥183 ($1,759),
respectively.
Intangible assets acquired during the year ended March 31, 2004 totaled ¥10,046 ($96,596) and primarily consist of patent rightsof ¥3,392 ($32,615), technical know-how of ¥3,251 ($31,260) and software of ¥2,624 ($25,231).
The weighted average amortization period for patent rights and software are 5 years and 4 years, respectively.
Total amortization of intangible assets during fiscal 2004 amounted to ¥9,201 ($88,471).
The estimated aggregate amortization expense for intangible assets for the next five years is as follows:
Years ending March 31,

2005
2006
2007
2008
2009

¥5,772
3,616
2,414
1,613
1,063

$55,500
34,76923,212
15,510
10,221

The changes in the carrying amounts of goodwill by operating segment for the years ended March 31, 2003 and 2004 are as follows:
Fine
Ceramics
Group

Balance at March 31, 2002
Goodwill acquired during year
Impairment of goodwill
Translation adjustments and reclassification to other accounts
Balance at March 31, 2003
Goodwill acquired during year
Translation adjustments and reclassification to other accounts

Electronic
DeviceGroup¥11,183 ¥ 18,542——(3,175)
—
(933)
(768)
7,075
—
(842)

17,774—(791)

Balance at March 31, 2004

¥ 6,233¥ 16,983

Balance at March 31, 2003
Goodwill acquired during year
Translation adjustments and reclassification to other accounts
Balance at March 31, 2004

Equipment
Group¥

Others

840 ¥
115
—
(298)

Total

192 ¥ 30,757
5
120—(3,175)—(1,999)

657
—
(77)

197
1,261
—

25,703
1,261(1,710)580¥ 1,458¥ 25,254$68,029 $170,904——(8,096)(7,606)$ 6,317 $ 1,894—
12,125(740)—$247,144
12,125(16,442)$59,933$ 5,577$242,827$163,298¥$14,019

Page 2 of 2

In fiscal 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 these statements. The impairment loss of ¥3,175 was recorded as acumulative effect of change in accounting principle. Kyocera, with the assistance of a third party appraiser, arrived at the implied fairvalue 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 the fourth quarter of fiscal 2004 and no impairment loss was recognized.
F-18

Page 1 of 2

Prior to the adoption of SFAS No. 142, accumulated amortization for goodwill at March 31, 2002 amounted to ¥22,276.
Amounts previously reported for income before cumulative effect of change in accounting principle and net income and basic anddiluted earnings per share (EPS) for the year ended March 31,2002 was reconciled to amounts adjusted to exclude the amortization
expense related to goodwill and deferred credit under the equity method as follows:Year ended March 31,
2002

Reported income before cumulative effect of change in accounting principle
Adjustment:
Goodwill amortization
Amortization of deferred credit under the equity method¥

33,791

Adjusted income before cumulative effect of change in accounting principle¥

36,256

Reported net income
Adjustment:
Goodwill amortization
Amortization of deferred credit under the equity method¥

31,953Adjusted net income¥

34,418¥178.74

2,728
(263)

2,728
(263)

Per share data:
Income before cumulative effect of change in accounting principle:
Reported basic EPS
Adjustment:
Goodwill amortization
Amortization of deferred credit under the equity method

14.43(1.39)

Adjusted basic EPS¥

191.78

Reported diluted EPS
Adjustment:
Goodwill amortization
Amortization of deferred credit under the equity method¥

178.59Adjusted diluted EPS¥

191.62¥169.0214.42(1.39)Net income:
Reported basic EPS
Adjustment:
Goodwill amortization
Amortization of deferred credit under the equity method

14.43(1.39)

Adjusted basic EPS¥

182.06

Reported diluted EPS
Adjustment:
Goodwill amortization
Amortization of deferred credit under the equity method¥

168.88Adjusted diluted EPS

¥

14.42
(1.39)
181.91

9. SHORT-TERM BORROWINGS AND LONG-TERM DEBT:
Short-term borrowings at March 31, 2003 and 2004 are comprised of the following:
Loans, principally from banks with average interest rate of 0.94% and 0.66% at March 31, 2003 and 2004, respectively.
2003

2004

2004

Page 2 of 2

SecuredUnsecured

¥

F-19

5,800
102,086¥500
84,315$ 4,808
810,721¥107,886¥84,815$815,529

Page 1 of 2

Financial Section
Long-term debt at March 31, 2003 and 2004 are comprised of the following:
Loans, principally from banks with interest ranging from 0.55% to 7.50% and from 0.39% to 7.50% at March 31, 2003 and 2004,
respectively.
2003

2004

2004

SecuredUnsecured¥ 14,814
76,120Less, portion due within one year

90,934(30,198)

115,130(44,522)

1,107,019(428,096)¥ 60,736¥ 70,608$ 678,923¥

6,115
109,015$

58,7981,048,221

Aggregate maturities of long-term debt at March 31, 2004 are as follows:
Years ending March 31,

2006
2007
2008
2009
2010 and thereafter¥56,080
5,393
2,927
3,722
2,486

$539,231
51,85628,14435,78823,904¥70,608$678,923

Kyocera’s assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2003 and 2004, aresummarized as follows:

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

2003

2004

2004

¥ 7,716
23,5889,254
12,444
5,958¥ 7,703
628
9,460
10,952
4,794$ 74,067
6,038
90,962
105,308
46,096¥58,960¥33,537$322,471

10. BENEFIT PLANS:
Domestic:
Kyocera Corporation and KMC had adopted Employee Pension Fund (“EPF”), which was established pursuant to the Japanese
Welfare Pension Insurance Law (“JWPIL”). In accordance with the JWPIL, a portion of the government’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).
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 fiscal 2003, and also approved for the transfer to the government of thebenefit 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 portionof plan assets of EPF in fiscal 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 the

Page 2 of 2

accumulated 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. Details of the accounting for this settlement process is shown below.
After the approval of the transfer of a substitutional portion of EPF, Kyocera Corporation established its own defined benefit
pension plans for its employees, which replaced from a corporate portion of EPF. Kyocera Corporation decided to adopt a variable
expected interest
F-20

Page 1 of 2

rate for benefit paid for pensioners, which is linked with the long-term interest rate prevailing in Japan instead of a fixed expectedinterest rate for benefit paid for pensioners, effective April 2004. This amendment reduced the projected benefit obligation of thepension plans for Kyocera Corporation. This effect of the reduction in the projected benefit obligation has been reflected as a priorservice cost not yet recognized.
After the approval of the transfer of a substitutional portion of EPF, KMC continues to have a corporate portion of EPF as its
own defined benefit pension plans for its employees.
KCC withdrew from the EPF sponsored by Toshiba Corporation, in which KCC had participated, in fiscal 2004. The accounting
for this withdrawal was in accordance with SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits.” After its withdrawal from the EPF, KCC continues to sponsor its own unfunded
retirement and severance plan.
Kinseki, which newly became a consolidated subsidiary in fiscal 2004, has its own unfunded retirement and severance plan.
Benefits under the plans at each company generally are based on the current rate of base salary, employee’s position, length ofservice and conditions at the time of retirement.
Kyocera, with respect to directors and corporate auditors, provides for lump-sum severance benefits. While Kyocera has no legal
obligation, it is a customary practice in Japan to make lump-sum payments to a director or a corporate auditor upon retirement. An
annual provision is made in the accounts for the estimated cost of this termination plan, which is not funded.
March 31,
2003

2004

2004

¥159,504
18,372
9,450
4,294
974
(76)
21,895(3,444)——¥210,969
2,768
7,094
4,140
59
(10,024)(5,291)(4,319)(71,243)(16,923)$2,028,548
26,615
68,21239,808567(96,385)(50,875)(41,529)(685,029)(162,721)

210,969

117,230

1,127,211

100,675
9,289(1,716)
13,732974(3,197)

119,757
26
3,222
10,96859(3,913)

1,151,510
250
30,981
105,462567(37,625)——(29,493)(8,269)(283,587)(79,510)

119,757

92,357

888,048

Funded status
Unrecognized net loss
Prior service cost not yet recognized
Unrecognized net transition obligation(91,212)70,544(32,406)
1,959(24,873)
35,243(40,517)
1,016(239,163)
338,875(389,587)
9,769

Net amount recognized¥ (51,115)¥ (29,131)$ (280,106)

Amounts recognized in the statements of financial position consist of:
Accrued benefit liability
Accumulated other comprehensive income¥ (65,853)
14,738¥ (29,131)—$ (280,106)—

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

Page 2 of 2

Net amount recognized¥ (51,115)¥ (29,131)$ (280,106)

Accumulated benefit obligation at end of year

¥186,097¥102,314$ 983,788

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

¥210,969
186,097
119,757¥ 21,117
18,4874,651$ 203,048
177,760
44,721

F-21

Page 1 of 1

Financial Section
Years ended March 31,

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

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

2002

2003

2004

2004

¥10,233
4,933(4,393)943(1,441)
2,016—¥ 9,450
4,294(1,763)943(1,882)
1,287—¥ 7,094
4,140(1,087)943(1,913)
2,343
22,833$ 68,212
39,808(10,452)
9,067(18,394)
22,528219,548————(3,255)(5,953)(31,298)(57,240)¥12,291¥12,329¥25,145$241,779

December 31
March 31

Assumptions used to determine benefit obligations at measurement dates are:March 31,
2003

2004

2.0%
3.0%

2.0%
3.0%

Discount rate
Rate of increase in compensation levels:
Assumptions used to determine net periodic pension costs for the years at measurement dates are:

Years ended March 31,
2002

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

2003

2004

2.5%
2.0%
2.0%
3.0%
3.0%
3.0%
3.5%-4.5% 1.3%-4.0% 0.6%-4.0%

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.
Kyocera’s plan assets categories are:
Years ended March 31,

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

F-22

2003

2004

88.1%
6.4%
4.6%
0.2%
0.7%

79.6%
1.7%
0.9%
17.6%
0.2%

100.0%

100.0%

Page 1 of 1

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 most appropriate to accomplish the target. Kyocera also makes an effort to maintain its portfolios within reasonable allocations ofplan assets. Kyocera evaluates its categories of plan assets allocations and can change its portfolios when it is needed.
Kyocera Corporation and KMC forecasts to contribute ¥16,470 ($158,365) to the defined benefit pension plans in the year
ending March 31,2005.
The accounting for the settlement for a substitutional portion of EPF at Kyocera Corporation and KMC in accordance with EITF
Issue No. 03-02 was described as follows:
2004

2004

¥ 67,988
29,493$ 653,731
283,587

Subsidy

38,495370,144

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)(219,548)

3,255

31,298Periodic pension costs related to the settlement for a substitutional portion of EPF(19,578)(188,250)

Net settlement gain for a substitutional portion of EPF¥ 18,917$ 181,894

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

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($132,067) into cost of sales and ¥5,843 ($56,183) into SG&A expenses in the Consolidated
Statements of Income.
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 United States, of which benefits are based on
years of service and the employees’ average compensation. AVX sponsors various defined benefit pension plans covering certain
employees. Pension benefits provided to certain U.S. employees covered under collective bargaining agreements are based on a flat
benefit formula. Effective December 31,1995, AVX froze benefit accruals under its domestic non-contributory defined benefit
pension plan for a significant portion of the employees covered under collective bargaining agreements. AVX’s pension plans forcertain 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-23

Page 1 of 2

Financial Section
The following table sets forth the funded status of the KII and AVX plans:
March 31,
2003

2004

2004

¥17,436
560
1,081
80
1,856
(698)
(1,457)¥18,858
642
1,163
81
1,289
(807)
(1,117)$181,327
6,173
11,183779
12,394(7,760)(10,740)

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

18,858

20,109193,356

16,468(2,134)
995
80
(612)
(88)
(1,296)

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

128,971
24,875
1,827
779(7,750)(750)(8,577)

Fair value of plan assets at end of year
Funded status
Unrecognized net loss
Prior service cost not yet recognized

13,413(5,445)5,011
40

14,495(5,614)
4,419
30

139,375(53,981)
42,490289

Net amount recognized¥ (394)¥ (1,165)$ (11,202)

Amounts recognized in the statements of financial position consist of:
Accrued benefit liability
Intangible assets
Accumulated other comprehensive income¥ (4,031)
49
3,588¥ (4,624)37
3,422$ (44,462)
356
32,904

Net amount recognized¥ (394)¥ (1,165)$ (11,202)

Change in benefit obligations:Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Actuarial loss
Benefits paid
Foreign exchange adjustment

Years ended March 31,
2002

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 gain
Net periodic pension cost
Assumptions used in the accounting:
Discount rate
Rate of increase in compensation levels
Expected long-term rate of return on plan assets
b. Savings plans

2003

2004

2004

¥

594
1,022
(1,306)
(4)
(1)
(58)

¥

560
1,081
(1,179)
—
7
60

¥

642
1,163
(1,031)—
22
212$ 6,173
11,183(9,913)
—
211
2,038

¥

247

¥

529

¥

1,008

$ 9,692

6.00%-7.30%
3.00%-4.50%
7.00%-9.00%

5.75%-6.75%
1.50%-4.50%
7.50%-8.50%

5.25%-6.00%
1.25%-4.50%
7.00%-8.50%

Page 2 of 2

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, 2002, 2003 and 2004 were ¥1,255, ¥1,099 and ¥889 ($8,548),
respectively.
F-24

Page 1 of 2

11. STOCK OPTIONS PLANS:
Domestic:
Kyocera Corporation provides all directors and certain key employees of Kyocera Corporation with stock option plans. Under theplans, they were granted options to purchase Kyocera Corporation’s shares of common stock at a price determined by the higher of(1)multiplying by 1.1 the average market price 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 granted in fiscal 2004 vest and are
exercisable. As of March 31,2004, Kyocera Corporation reserved 1,041,000 shares of its common stock for the plans.
The following table summarizes information on stock option plans for the years ended March 31, 2002, 2003 and 2004:
Number of
Options

Weighted Average
Exercise Price

Balance, March 31, 2001
GrantedExercised
Expired and cancelled

1,248,600
59,200(29,400)(26,100)¥ 8,698
9,470
8,029
8,029

Balance, 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, 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

$75.9675.96
84.76

Balance, March 31, 2004

1,041,000

7,900

75.96

Weighted average contractual life 4.5 years

1,041,000¥ 7,900$75.96

842,600
38,400¥ 8,080
18,900881,000

8,551

1,267,000
56,7008,230
18,900Total options

1,323,700

8,687

March 31, 2004
Exercise price ¥7,900

1,041,000

7,900$75.96

Total options

1,041,000

7,900

75.96

Exercisable options:
March 31, 2002
Exercise price ¥8,029 and ¥9,470
Exercise price ¥18,900
Total options
March 31, 2003
Exercise price ¥8,029,¥9,470 and ¥9,290
Exercise price ¥18,900

The fair value of options at the date of grant for the years ended 2002,2003 and 2004 were calculated using the Black Scholesmodel with the following assumptions:Years ended March 31,

Fair value
Interest rate
Expected life
Volatility

2002

2003

¥ 1,835
0.07%
2 years
52.54%¥ 1,2940.01%
1 year
51.97%

¥

2004

2004

3,176
0.75%
4.5 years
51.48%$30.54

Page 2 of 2

Expected dividends

0.75%
F-25

0.74%

0.76%

Page 1 of 1

Financial Section
Foreign:
AVX has two stock 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 to non-employee directors for the purchase of up to an aggregate of 650,000 shares of common
stock. Under both 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 with a maximum term of 10 years. The options granted under the 1995 stock option plan vest as to 25% annually and options
granted under the 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, 2002, 2003 and2004:
Weighted
Average
Exercise Price

Number of
Options

Balance, March 31, 2001
GrantedExercised
Expired and cancelled

4,050,394
120,000(562,794)(87,000)

$

14.22
22.23
9.10
18.47

Balance, March 31, 2002
GrantedExercised
Expired and cancelled

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

15.20
15.86
9.01
20.70

Balance, 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, March 31, 2004

4,594,017

15.15

Price range $15.44 to $29.30 (weighted average contractual life 6.8 years)
Price range $7.50 to $13.00 (weighted average contractual life 5.5 years)
Exercisable options:
March 31, 2002
March 31, 2003
March 31, 2004

1,887,150
2,706,867

$

22.18
10.24

1,888,825
2,459,650
3,064,771

$

12.31
13.65
14.72

The calculated for fair value at the date of grant for each option granted during the years ended March 31, 2002, 2003 and 2004
was $10.91, $5.00 to $9.18 and $4.22 to $5.13, 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,

Interest rate
Expected life
Volatility
Expected dividends

2002

2003

2004

6.60%
4 years
59.7%
0.92%

3.19%
4 years
60.0%
0.98%

1.43%
4 years
59.8%
1.27%

KWC provides all 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, theKWC Board 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. For the year ended March 31, 2003 and 2004,
KWC recognized compensation expense of ¥50 and ¥25 ($240) - net of taxes of ¥35 and ¥18 ($173) for its variable stock option plan,under APB No. 25, “Accounting for Stock Issued to Employees.”
F-26

Page 1 of 1

The following table summarizes information on the stock option plan for the years ended March 31, 2002, 2003 and 2004:
Number of
Options

Weighted
Average
Exercise Price

Balance, March 31, 2001
GrantedExercised
Expired and cancelled

413,450
464,400—(45,807)

$

2.18
2.97
—
2.39

Balance, March 31, 2002
GrantedExercised
Expired and cancelled

832,0432,555,875—(58,815)

2.61
2.41
—
2.67

Balance, March 31, 2003
GrantedExercised
Expired and cancelled

3,329,103
651,828—(638,570)

2.46
2.61
—
2.46

Balance, March 31, 2004

3,342,361

2.49

Price range $2.18 to $3.45 (weighted average contractual life 8.6 years)
Exercisable options:
March 31, 2002
March 31, 2003
March 31, 2004

3,342,361$

2.49

210,939
1,767,183
2,118,490

$

2.32
2.31
2.36

The fair value of options at the date of grant for the years ended 2002, 2003 and 2004 were calculated using the Black Scholesmodel with the following weighted average assumptions:Years ended March 31,
2002

Fair value
Interest rate
Expected life
Volatility
Expected dividends

$

F-27

2.26
4.47%
5 years
45.00%
—

2003

$

1.68
3.43%
5 years
45.00%
—

2004

$

1.03
2.99%
5 years
45.00%—

Page 1 of 2

Financial Section
Pro forma fair value information:
SFAS No. 123 “Accounting for Stock-Based Compensation” allows a company to record compensation expense for stock-based
compensation plans at fair value or provide pro forma disclosures. Kyocera has chosen to continue to account for stock-based
compensation using the method, APB No. 25, under which no compensation expense for fixed stock options granted at or above fairmarket value is recognized.
Accordingly, no compensation expense has been recognized by the Company and AVX. For the year ended March 31, 2003 and2004, KWC recognized ¥50 and ¥25 ($240) - net of taxes of ¥35 and ¥18 ($173) in the Consolidated Statements of Income, as
compensation expense under APB No. 25, because KWC has a variable stock option plan. Had compensation expense for Kyocera’s
stock options been recognized based on the grant dates under the methodology prescribed by SFAS No. 123, Kyocera’s net income
and earnings per share for the years ended March 31, 2002, 2003 and 2004 would have been impacted as shown in the following
table:
Years ended March 31,
2002

2003

2004

2004

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¥33,791¥43,421¥68,086$654,673

—

50

25

240

(1,190)(1,559)(4,155)(39,951)

Pro forma income before cumulative effect of change in accounting principle
Cumulative effect of change in accounting principle - net of taxes of ¥233 for the year
ended March 31, 2002

32,601

41,912

63,956614,962(1,838)(2,256)——

Pro forma net income¥30,763¥39,656¥63,956$614,962¥178.74172.45178.59172.38¥233.02224.93232.97224.91¥364.79
342.67364.78342.65$169.02
162.73168.88162.66220.91212.82220.86212.81364.79342.67364.78342.65

Earnings 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

3.51
3.29
3.51
3.29
3.51
3.29
3.51
3.29

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, swaps and options, 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, sinceexchange rates changes may affect the profitability, cash flows, and business and/or pricing strategies of non Japan-based
competitors. These movements affect cross-border transactions 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 and options, to minimize significant, unanticipated cash flow fluctuations caused by interest rate volatility.

Page 2 of 2

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 and options mainly to convert a portion of its variable rate debt to fixed rates. Kyocera charged
deferred net losses of ¥240 and ¥251 ($2,413) from accumulated other comprehensive income to interest expense in the consolidated
statement of income for the years ended 2003 and 2004, as a result of the execution of the hedged transactions. At March 31,2004,¥48 ($462), net of tax, was recorded as unrealized losses on derivative instruments accumulated in other comprehensive income,which represented changes in fair value of the effective portion of cash flow hedges which qualify and have been designated forhedge accounting treatment. These deferred losses are anticipated to be charged to earnings during the next six months as theunderlying transactions occur.
F-28

Page 1 of 2

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 swaps and forward contracts with terms
normally lasting less than three months to protect against the adverse effects that exchange-rate fluctuations may have on foreigncurrency-denominated trade receivables and payables.
Kyocera does not adopt hedge accounting for such derivatives. The gains and losses on both the derivatives and the foreigncurrency-denominated trade receivables and payables are recorded as foreign currency transaction (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,

Currency swaps
Foreign currency forward contracts to sell
Foreign currency forward contracts to purchase
Interest rate swaps

¥

2003

2004

2004

587
63,074
7,289
38,792¥ 1,123
98,396
12,27427,444$ 10,798
946,115
118,019
263,885

13. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The fair values of financial instruments at March 31,2003 and 2004 and the methods and assumptions used to estimate the fair value
are as follows:
March 31,2003

Non-derivatives:
Assets:Cash and cash equivalents (a)Restricted cash (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)

2004

2004

Carrying
AmountFair Value

Carrying
AmountFair Value

Carrying
AmountFair Value¥ 298,310
56,36814,651
27,595308,137
121,140¥ 298,310
56,368
14,63327,600308,155
123,441¥ 361,132—
3,855
67,158430,096
84,254¥ 361,132—
3,855
67,789430,168
84,613$ 3,472,423—
37,067645,750
4,135,539
810,135$ 3,472,423—
37,067
651,817
4,136,231
813,587¥ 826,201¥ 828,507¥ 946,495¥ 947,557$ 9,100,914$ 9,111,125¥(107,886) ¥(107,886) ¥ (84,815) ¥ (84,815) $ (815,529) $ (815,529)(30,198)(30,244)(44,522)(44,525)(428,096)(428,125)(60,736)(61,487)(70,608)(71,056)(678,923)(683,231)¥(198,820) ¥(199,617) ¥(199,945) ¥(200,396) $(1,922,548) $(1,926,885)

Derivatives:
Currency swaps (d)Foreign currency forward contracts tosell(d)Foreign currency forward contracts topurchase (d)Interest rate swaps (d)¥(10) ¥(10) ¥

62

¥

62

$

596

$

596

(1,142)(1,142)

1,443

1,443

13,875

13,875108(2,243)108(2,243)(75)(1,276)(75)(1,276)(721)(12,269)(721)(12,269)

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

Page 2 of 2(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 is 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. The
aggregated carrying amounts of these
F-29

Page 1 of 1

Financial Section
investments included in the table at March 31,2003 and 2004 were ¥2,377 and ¥2,915 ($28,029), 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.

14. COMMITMENTS AND CONTINGENCIES:At March 31, 2004, Kyocera had contractual obligations for the acquisition or construction of property, plant and equipment
aggregating approximately ¥12,058 ($115,942) principally due within one year.
Kyocera Corporation guarantees the debt of an unconsolidated subsidiary aggregating ¥550 ($5,288) at March 31, 2004. The
financial guarantees are made in the form of commitments and letters of awareness issued to financial institutions and generally
obligate Kyocera Corporation to make payments in the event of default by the borrowers. Kyocera Corporation knows no event ofdefault.
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 31,2004, the foreign subsidiary purchased ¥15,647 ($150,452) and is obligated to purchase¥12,712 ($122,231) in total for next two fiscal years.
Kyocera rents certain office space, stores and other premises under cancelable leases, which are customarily renewed. However,total rental expense is not significant in relation to total operating expenses.
Kyocera is subject to various lawsuits and claims, which arise, in the ordinary course of business. Kyocera consults with legal
counsel and assesses the likelihood of adverse outcomes of these contingencies. Kyocera records liabilities for these contingencies
when the likelihood of an adverse outcome is probable and the amount is reasonably estimable.
Kyocera is involved in and disputes the litigation, however, based on the information available, management believes thatdamages, if any, resulting from these actions will not have a significant effect on Kyocera’s consolidated results of operations andfinancial 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, 2004
included in retained earnings was ¥18,206 ($175,058).
The Code provides certain restrictions on payment of dividends in connection with the repurchased treasury stock. At March 31,
2004, Kyocera Corporation reserved ¥31,356 ($301,500) 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, 2004 was ¥523,293 ($5,031,663).
Kyocera Corporation’s Board of Directors, with subsequent approval by the stockholders, has declared annual appropriations ofretained earnings for various purposes, totaling ¥491,129 ($4,722,394) at March 31, 2004. 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 ¥9,260 ($89,038) at March 31, 2004 was included in retained earnings.
F-30

Page 1 of 2

Changes in accumulated other comprehensive income are as follows:
Foreign
Currency
Translation
Adjustments

Minimum
PensionLiability
Adjustments

Net Unrealized
Gains (Losses)
on Securities

Net Unrealized Gains(Losses) on Derivative
Financial Instruments

Total
Accumulated
Comprehensive
IncomeBalance, March 31, 2001
Net change for the year

¥ (14,844)
20,445¥¥¥¥

Balance, March 31, 2002
Net change for the year

5,601
(20,578)—(10,931)

Balance, March 31, 2003
Net change for the year

¥ (14,977)(20,693)¥ (10,931)
9,454

¥

(29,955)
89,196

¥

(331)
283

¥

(56,194)
78,240

Balance, March 31, 2004

¥ (35,670)¥¥

59,241¥(48)¥

22,046

Balance, March 31, 2003
Net change for the year$(144,009)(198,971)$(105,106)
90,904$ (288,029)
857,654$(3,183)
2,721

Balance, March 31, 2004$(342,980)$ (14,202)

$

$

(462)

—
—

(1,477)(4,829)(23,097)—(425)(27,926)(2,029)569,625(19,673)(3,077)(425)
94(22,750)(33,444)$ (540,327)
752,308$

211,981

16. INCOME TAXES:
Income before income taxes and income taxes are made up of the following components:
2002

2003

2004

2004

¥ 51,749
3,649¥71,715
4,322¥118,564(3,524)$1,140,038(33,884)¥ 55,398¥76,037¥115,040$1,106,154¥ 30,335
3,852¥32,554
1,111¥ 23,391
6,185$ 224,914
59,471

34,18733,66529,576284,385(9,181)(3,698)

(830)
(55)

22,927(2,193)

220,452(21,087)

Total deferred income taxes(12,879)(885)

20,734

199,365

Total income taxes¥ 21,308¥32,780¥ 50,310$ 483,750

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

In Japan, a company is subject to a number of taxes, based on income, which in the aggregate indicate normal statutory income
tax rates of approximately 42.0%.
Reconciliation between the Japanese statutory income tax rate and Kyocera’s effective tax rate is as follows:

Japanese statutory tax rate
Income of foreign subsidiaries taxed at lower than statutory tax rates
Valuation allowances
Decrease in income taxes resulting from equity in earnings

2002

2003

42.0%
(2.4)
0.3
(1.0)

42.0% 42.0%
(1.0)
(2.5)
(0.8)
4.0
(1.6)
(0.9)

2004

Page 2 of 2

Sale of investment in an affiliate
Devaluation of investment in an affiliate
Tax rate change*
Other

—
—
—
(0.4)

—
2.9
(0.5)
2.1

Effective income tax rate

38.5%

43.1% 43.7%

1.2
—
0.4
(0.5)

* On March 31, 2003, the Japanese National Diet approved various changes to the calculation of the statutory local enterprise tax.
The statutory tax rate for using calculation of deferred tax assets and deferred tax liabilities, of which temporary difference will be
realized after April 1, 2004, was changed from 42.0% to 41.0% or 40.0%, which was determined by the local tax rate ofprefectures, in which Kyocera Corporation and each subsidiary locate. As a result of this change, the amount of deferred tax assets,
net of deferred tax liabilities, decreased by ¥554 ($5,327) and the amount of deferred income tax in fiscal 2004 increased by ¥554($5,327).
F-31

Page 1 of 1

Financial Section
The components of the deferred tax assets and deferred tax liabilities at March 31, 2003 and 2004 are as follows:
2003

Deferred tax assets:
Enterprise tax
Inventories
Allowance for doubtful accounts
Accrued expenses
Employee benefits
Depreciation
Securities
Net operating losses
Other, net¥

Subtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Depreciation
Gain on public stock issuance
Deduction of net losses at foreign subsidiary
Net unrealized gains on securities
Other, net
Total deferred tax liabilities

2,401
13,5608,072
22,61835,89928,23424,60017,768
5,312

2004

¥

1,066
17,3194,754
5,762
22,49525,365
4,448
20,816
6,033

2004

$

10,250166,52945,71255,404
216,298
243,894
42,769200,153
58,010158,464(20,855)

108,058(23,520)

1,039,019(226,154)¥137,609¥ 84,538$ 812,865

¥

¥

429
—
4,261
125,856
267$¥130,813$1,257,817

2,777
86,1482,740—
754¥ 92,419

4,125—
40,971
1,210,154
2,567

At March 31, 2004, Kyocera had net losses carried forward of approximately ¥78,504 ($754,846), which would be available tooffset future taxable income. Approximately 40% of these net losses carried forward will expire within next five fiscal years and theremaining 60% will not expire.
No provisions for income taxes have been made on undistributed earnings of subsidiaries and affiliates as distributions from thedomestic companies would be essentially free from additional taxation, and substantially all of the unremitted earnings of foreignsubsidiaries and affiliates are either permanently reinvested or, if remitted, would result in nominal tax by utilization of available
foreign tax credits. Undistributed earnings of subsidiaries and affiliates were approximately ¥227,855 ($2,190,913) at March 31,
2004.
The net changes in the total valuation allowance for the years ended March 31,2003 and 2004 were an increase of ¥9,846 and anincrease of ¥2,665 ($25,625), respectively.
F-32

Page 1 of 1

17. SUPPLEMENTAL EXPENSE INFORMATION:
Research and development expenses for the years ended March 31, 2002, 2003 and 2004 amounted to ¥40,399, ¥47,268 and ¥46,630($448,365), respectively.
Advertising expenses for the years ended March 31, 2002, 2003 and 2004 amounted to ¥11,211, ¥11,189 and ¥12,281($118,087), respectively.
Shipping and handling costs for the years ended March 31, 2002, 2003 and 2004 amounted to ¥8,993, ¥10,107 and ¥12,400($119,231), respectively, and were included in selling, general and administrative expenses in the Consolidated Statements of Income.
18. SEGMENT REPORTING:
The Fine Ceramics Group consists of fine ceramic parts, semiconductor parts, cutting tools, Jewelry, BIOCERAM, solar energy
products and applied ceramic products. The Electronic Device Group consists of electronic components and thin-film products. The
Equipment Group consists of telecommunications equipment, information equipment and optical instruments. The Others consist of
telecommunication network systems, electric insulators, financial services such as leasing and credit financing, and office renting
services.
Commencing in fiscal 2004, net sales and operating profit of the Precision Machine Division of Kyocera Corporation,
previously included in “Others” were changed to “Corporate.” Financial results for fiscal 2002 and fiscal 2003 have been reclassified
accordingly.
Inter-segment sales, operating revenue and transfers are made with reference to prevailing market price. Transactions between
reportable segments are immaterial and not shown separately.
Segment operating profit represents net sales, less related costs and operating expenses, excluding corporate revenue andexpenses, equity in earnings, income taxes, minority interest and cumulative effect of change in accounting principle.
Segment assets represent those assets associated with a specific operating segment. Corporate assets consist primarily of cash
and cash equivalents, the corporate headquarter’s facilities and various other investments and assets that are not specific to each
operating segment.
Sales to KDDI and its consolidated subsidiaries, which is mainly included in Equipment group, for the years ended 2002, 2003
and 2004 comprised of approximately 10.2%, 10.8% and 10.2% of consolidated net sales, respectively.
Information by operating segments at March 31, 2002, 2003 and 2004 and for each of the years then ended is summarized on thefollowing page:
F-33

Page 1 of 2

Financial Section
Operating segments
2002

Net sales:
Fine Ceramics GroupElectronic Device Group
Equipment Group
OthersAdjustments and eliminations

Operating profit:
Fine Ceramics GroupElectronic Device Group
Equipment Group
Others2004

2004¥ 252,879
234,938
478,293
81,564(13,100)¥ 238,867 ¥ 255,805
227,962
256,906
529,784
545,81185,084
100,505(11,927)(18,213)$ 2,459,663
2,470,250
5,248,183
966,394(175,125)¥1,034,574¥1,069,770¥1,140,814$10,969,365

¥

¥

¥

$

20,137
4,372
24,413
7,085
56,007(2,086)
1,559(82)

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

2003

¥

55,398¥18,797
11,81640,0207,412

31,1395,047
31,257
9,683

299,414
48,529300,548
93,10678,045(5,619)3,092
519

77,12634,871
2,575
468

741,597335,298
24,7594,500

76,037¥ 115,040$ 1,106,154

Assets:Fine Ceramics GroupElectronic Device Group
Equipment Group
Others¥ 201,442
349,322283,778
228,536¥ 179,052
333,392
280,848
250,848¥ 194,073
349,755
315,851
260,818$ 1,866,087
3,363,029
3,037,029
2,507,865

Corporate
Investments in and advances to affiliates and unconsolidated subsidiaries
Adjustments and eliminations

1,063,078
619,819
26,206(63,645)

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

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

10,774,010
6,695,173
231,288(443,183)¥1,645,458¥1,635,014¥1,794,758$17,257,288¥

24,53032,81725,331
3,532
2,287

¥

18,33725,87024,445
4,090
2,578

¥

16,72923,323
22,814
4,838
2,556

$

160,856
224,260
219,365
46,51924,577¥88,497¥75,320¥70,260$675,577

¥

202
396
849
1,219
53

¥

129
21
814
653
164

¥

82
182
936
582
75

$

789
1,750
9,000
5,596
721

¥

2,719

¥

1,781

¥

1,857

$

17,856

¥

2,585

¥

1,973

¥

1,074

$

10,327

Total assets
Depreciation and amortization:
Fine Ceramics GroupElectronic Device Group
Equipment Group
OthersCorporate

Valuation allowance for receivables:
Fine Ceramics GroupElectronic Device Group
Equipment Group
OthersCorporate

Losses on inventories:
Fine Ceramics GroupPage 2 of 2

Electronic Device Group
Equipment Group
OthersCorporate

7,279
1,981
27
—

Capital expenditures:
Fine Ceramics GroupElectronic Device Group
Equipment Group
OthersCorporate

F-34

2,250
2,343
400
—

9,373
3,526
40
—

90,12533,904384—¥

11,872

¥

6,966

¥

14,013$

134,740¥

14,536
16,112
15,009
5,124
3,850

¥

8,095
13,501
13,311
4,053
1,654

¥

13,307
18,612
18,303
1,099
3,616

$

127,952
178,962
175,990
10,56734,769¥54,631¥

40,614¥54,937$528,240

Page 1 of 1

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 31,2002,2003 and 2004 are summarized as follows:
Geographic segments
2002

Net sales:Japan
United States of America
Asia
EuropeOthers

2003

2004

2004

¥ 408,561 ¥ 423,190 ¥ 456,807 $ 4,392,375
289,517
264,755
251,326
2,416,596
148,349
178,384
194,302
1,868,288
141,493
144,293
156,929
1,508,933
46,654
59,14881,450783,173¥1,034,574 ¥1,069,770 ¥1,140,814 $10,969,365

Long-lived assets:
Japan
United States of America
Asia
EuropeOthers¥ 186,403 ¥ 183,778 ¥ 204,437 $ 1,965,741
62,17846,28635,543
341,760
31,55434,20133,324
320,423
30,531
24,342
21,894
210,519
7,563
5,148
4,110
39,519¥ 318,229 ¥ 293,755 ¥ 299,308 $ 2,877,962

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:
2002

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

2003

2004

¥ 33,791 ¥ 43,421 ¥ 68,086(1,838)(2,256)—
31,953
41,16568,086

2004$654,673—
654,673

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

178.74(9.72)
169.02233.02(12.11)220.91364.79—364.79

3.51
—
3.51

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

178.59(9.71)
168.88232.97(12.11)220.86364.78—364.78

3.51
—
3.51

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

189,050154
189,204

186,33844
186,382

186,6436
186,649

F-35

Page 1 of 1

Financial Section
20. SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental information related to the Consolidated Statements of Cash Flows is as follows:

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

2002

2003

2004

2004

¥ 5,299
72,111¥ 3,230
32,012¥ 3,043
38,774$ 29,260
372,827¥¥543 ¥ 32,015 ¥ 56,506 $ 543,327(456) (22,584) (19,804) (190,423)——(4,600)(44,231)—(9,381) (15,132) (145,500)(27)(4,108) (14,699) (141,336)
60¥ (4,058) ¥ 2,271$ 21,837

21. 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 ($340,904) as cash payment in its consolidated
financial statements.
F-36

Page 1 of 1

22. SUBSEQUENT EVENTS:
Subsequent to March 31,2004, Kyocera Corporation’s Board of Directors declared a cash dividend of ¥5,624 ($54,077) payable on
June 28, 2004 to stockholders of record on March 31, 2004. The dividend declared was approved by the stockholders at the meeting
held on June 25, 2004.
On June 25, 2004, 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 kind and the maximum number of shares tobe issued is 1,500,000 shares of common stock of Kyocera Corporation.
On June 21, 2004, the Carlyle Group (Carlyle), Kyocera Corporation, KDDI and DDI Pocket, Inc. (DDI Pocket) reached anagreement whereby a consortium of Carlyle and Kyocera Corporation would acquire the business of DDI Pocket, a subsidiary ofKDDI.
The entire operations of DDI Pocket will be separated and merged into a special purpose company held by the Consortium, inwhich Carlyle, Kyocera Corporation and KDDI invest, in exchange for which the Consortium will pay ¥220,000 ($2,115,385) in cash.
(The amount could be varied due to adjustments based on valuations for the operations.)
Under the agreement, the company that succeeds DDI Pocket’s business would be owned 60% by Carlyle, 30% by Kyocera
Corporation and 10% by KDDI. Kyocera, which currently owns approximately 13.25% of DDI Pocket, would invest in 30% toexpand its focus on PHS related products business. Carlyle would become the controlling shareholder.
Subject to approval of a corporate split at the general meeting of DDI Pocket shareholders and other requirements, thetransaction is expected to close on or around October 1,2004.
F-37

Page 1 of 1

Financial Section
23. SEMIANNUAL FINANCIAL DATA (UNAUDITED):
Six months ended

Net sales
Gross profit
Income before cumulative effect of change inaccounting principle
Cumulative effect of change in accounting principle
Net income
Basic earnings per share:
Income before cumulative effect of change inaccounting principle
Cumulative effect of change in accounting
principle
Net income
Diluted earnings per share:
Income before cumulative effect of change inaccounting principle
Cumulative effect of change in accounting
principle
Net income

Six months ended

September 30, 2002

March 31, 2003

September 30, 2003

March 31, 2004

¥

¥

¥

¥

517,003
125,578
19,383(2,256)
17,127¥103.2724,038—24,038¥(12.02)
91.25¥

103.22(12.01)
91.21

Net sales
Gross profit
Income before cumulative effect of change inaccounting principle
Cumulative effect of change in accounting principle
Net income

552,767
147,934129.9515,754—15,754¥—129.95¥129.9584.79¥—
129.95

$

84.79

¥

$

279.13—279.13¥279.11—
84.79—
279.11

4,984,404
1,160,808$ 5,984,961
1,537,173

151,481—
151,481503,192—
503,192

0.82

$

—
0.82

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

622,436
159,866
52,332—
52,332—
84.79$

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

518,378
120,724

0.82
—
0.82

2.68
—
2.68

$

2.68
—
2.68

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-38

Page 1 of 1

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
For the years ended March 31, 2002, 2003 and 2004
Yen in millions
Column B

Column A

Column C

Column D

Column E

Deductions(B)

Balanceat End ofPeriodAdditions

Description

Balanceat
Beginningof Period

Charged to
Costs andExpenses

Charged(Credited)to otherAccounts(A)¥60,087
5,830
7,490

¥ 2,428
1,185
1,281

¥ 1,103463—¥ (4,953)——¥58,665
7,478
8,771

¥73,407¥ 4,894¥ 1,566¥ (4,953)¥74,914¥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

For the year ended March 31, 2002:
Allowance for doubtful accounts
Allowance for sales returns
Allowance for valuation losses on inventories
Total
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(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 persons 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-39

Page 1 of 1

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/ Hideki Ishida
Hideki Ishida
Managing Executive Officer
General Manager of Corporate Finance Division
September 21, 2004

Page 1 of 1

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, 2004)

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)

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 allowners 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 theRegistrant’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 ofChapter 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

Page 1 of 1

Exhibit 1.4(TRANSLATION)REGULATIONS OF THE BOARD OF CORPORATE AUDITORSKYOCERA CORPORATION
THE BOARD OF CORPORATE AUDITORSPage 1 of 1

REGULATIONS OF THE BOARD OF CORPORATE AUDITORSOFKYOCERA CORPORATION
Article 1. Purpose
All matters relating to the Board of Corporate Auditors of the Company shall be governed by laws and regulations and the
Articles of Incorporation and by these Regulations.
Article 2. Organization
The Board of Corporate Auditors shall consist of all Corporate Auditors.
Article 3. Purpose of the Board of Corporate Auditors
The Board of Corporate Auditors shall receive reports on, discuss and resolve important matters relating to the auditing;provided that each Corporate Auditor shall not be prevented from exercising its powers.
Article 4. Meetings
Meetings of the Board of Corporate Auditors shall, in principle, be held at least four (4) times each fiscal year; provided,
however, that extraordinary meetings may be held whenever necessary.
Article 5. Chairman and Person Convening Meetings
1. The Board of Corporate Auditors shall elect a Chairman of the Board of Corporate Auditors from among the Corporate
Auditors.
2. The Chairman of the Board of Corporate Auditors shall convene and manage the meetings of the Board of Corporate Auditorsand conduct the duties delegated thereto by the Board of Corporate Auditors; provided, however, that each Corporate Auditor shallnot be prevented from exercising its powers.
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Article 6. Convocation Procedure
1. A notice of a meeting of the Board of Corporate Auditors shall be dispatched to each Corporate Auditor at least three (3) days
prior to the date set for such meeting.
2. The convocation procedure for a meeting of the Board of Corporate Auditors may be omitted with the consent of all
Corporate Auditors.
Article 7. Manner of Adopting Resolutions
1. Resolutions of the Board of Corporate Auditors shall be adopted by the majority vote of all Corporate Auditors except forresolutions relating to dismissal provided in the second paragraph of Article 13 and resolutions concerning consents provided in
Article 15.
2. Resolutions shall be adopted following deliberation based on sufficient materials.
Article 8. Resolutions on Auditing Policy
1. Matters such as auditing policy, auditing plan, auditing methods and allocation of duties shall be determined by resolution of
the Board of Corporate Auditors at the commencement of auditing.
2. All matters other than those referred to in the immediately preceding paragraph, which any Corporate Auditor deems
necessary in conducting its duties, such as appointment of staff for Corporate Auditors and budget for auditing expenses, shall be
determined by resolution of the Board of Corporate Auditors.
Article 9. Regular Meetings with Representative Directors etc.
1. The Board of Corporate Auditors shall seek to promote mutual understanding between the Representative Directors and theBoard of Corporate Auditors by, among other things, holding meetings with the Representative Director whenever necessary and byexchanging opinions on issues to be addressed by the Company, improvement of the environment for audit by the Corporate Auditors
and important auditing issues in, etc. as well as by making requests judged to be necessary.
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2. The Board of Corporate Auditors shall explain auditing policy, auditing plan and status of implementation of auditing and theeffect thereof, as appropriate, to the Representative Directors and the Board of Directors.
3. The Board of Corporate Auditors shall receive reports from Directors on matters determined, in consultation with Directors,
to be reported to the Board of Corporate Auditors by the Directors, as well as such matters as maybe provided by law.
Article 10. Reports to the Board of Corporate Auditors
1. A Corporate Auditor shall make a report to the Board of Corporate Auditors on the status of conducting its duties from time totime and whenever requested by the Board of Corporate Auditors.
2. A Corporate Auditor who receives a report from the Accounting Auditors, Directors or an internal auditing department etc.
shall report the same to the Board of Corporate Auditors.
3. The Board of Corporate Auditors shall request the Accounting Auditors, Directors and the internal auditing department etc. tomake a report whenever necessary.
Article 11. Measures for Reports
1. In the case that the Board of Corporate Auditors receives a report from a Director that such Director has discovered a factwhich may be materially prejudicial to the Company or a report from a Accounting Auditor that such Accounting Auditor has
discovered misconduct in connection with a Director’s conduct of duties or a material fact violating laws or regulations or the Articles
of Incorporation, the Board of Corporate Auditors shall take appropriate measures depending on the situation, such as conducting
necessary research and providing advice or recommendations to the Directors, etc.
2. In the case that the Board of Corporate Auditors receives a report from the Directors, etc. on matters that should be reported to
the Board of Corporate Auditors by the Directors, as determined in advance upon consultation with the Directors, the Board of
Corporate Auditors shall take the same measure as referred to in the immediately preceding paragraph to the extent that it shall judge
necessary.
Article 12. Preparation of Audit Report
1. The Board of Corporate Auditors shall receive from the Directors financial statements, etc. and from the Accounting Auditors
Audit Report, etc. The Board of Corporate Auditors may have a Standing Corporate Auditor to receive such documents.
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2. The Board of Corporate Auditors shall receive a report from Corporate Auditors on the matters to be covered by the Audit
Report, etc. and prepare its Audit Report thought discussion among themselves.
3. An opinion of a Corporate Auditor which differs from that of the Board of Corporate Auditors shall be stated in the Audit
Report as a dissent.
4. Each Corporate Auditor shall affix his signature and seal to the Audit Report manually or through electrical method. The
Standing Corporate Auditors shall be named as such in the Audit Report.
Article 13. Resolution on Appointment, Non-Reappointment and Dismissal of Accounting Auditors
1. The following matters relating to the appointment, non-reappointment and dismissal of the Accounting Auditors shall behandled in accordance with the resolution of the Board of Corporate Auditors:(1)

Consent to the proposal relating to the appointment, non-reappointment and dismissal of the Accounting Auditors to theGeneral Meeting of Shareholders;(2)

Request to include in the agenda at the General Meeting of Shareholders of the appointment, non-reappointment anddismissal of Accounting Auditors;(3)

Request of submission of proposal to the General Meeting of Shareholders on the appointment of the Accounting Auditors;
and

(4)

In case of absence in the office of the Accounting Auditors, the appointment of provisional Accounting Auditors.

2. Resolution to dismiss the Corporate Auditors for any of the reasons as provided by law shall be adopted by unanimous vote ata meeting of the Board of Corporate Auditors. In such case, a Corporate Auditor nominated by the Board of Corporate Auditors shallreport such dismissal and the reason therefor at the first General Meeting of Shareholders to be held immediately following suchdismissal.
Article 14. Consent to and Request to Submit Proposal Relating to the Election of the Corporate Auditors
The following matters relating to the nomination of the Corporate Auditors shall be handled by the resolution of the Board of
Corporate Auditors.
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Consent to the proposal relating to the nomination of the Corporate Auditor to be submitted to the General Meeting of
Shareholders;(2)

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

Request to submit the proposal relating to the nomination of Corporate Auditor to the General Meeting of Shareholders.

Article 15 Consent of Board of Corporate Auditors Relating to Exemption of Directors from Liability
The following consents of the Board of Corporate Auditors shall be given pursuant to the unanimous resolution of the Corporate
Auditors.
(1)

Consent to any proposal relating to exemption of Directors from liability, which the Board of Directors intends to submit toa General Meeting of Shareholders(2)

Consent to any proposal relating to amendment of the Articles of Incorporation to make it possible to exempt Directors
from liability pursuant to a resolution of the Board of Directors, which the Board of Directors intends to submit to a
General Meeting of Shareholders(3)

Consent to any proposal relating to amendment of the Articles of Incorporation to make it possible to enter into agreementswith outside Corporate Auditors providing exemption of outside Corporate Auditors from liability, which the Board of
Directors intends to submit to a General Meeting of Shareholders; and(4)Consent to participation by the Company in any shareholder litigation to assist a defendant Director.

Article 16. Consultation concerning Exercising Powers of the Corporate Auditors
The Corporate Auditors may consult at a meeting of the Board of Corporate Auditors about the following matters prior to
exercise of their powers or performance of their duties:(1)

Explanation responding to inquiries posed in writing by a shareholder prior to the General Meeting of Shareholders;-5-Page 1 of 1

(2)

Reporting to the Board of Directors and requests for convocation of a meeting of the Board of Directors;(3)

Providing an opinion as to the proposals and documents to be submitted to the General Meeting of Shareholders;(4)

Request for suspension of improper action by a Director;(5)

Providing an opinion at the General Meeting of Shareholders as to the nomination, dismissal, resignation and remunerationof the Corporate Auditors;(6)

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

Other matters relating to litigation.

Article 17. Consultation concerning Election of Standing Corporate Auditor and Remuneration
The election of Standing Corporate Auditors from among the Corporate Auditors and the remuneration of the Corporate
Auditors may be resolved the Board of Corporate Auditors, subject to the unanimous consent from all Corporate Auditors.
Article 18. Minutes
1. The substance of the proceedings of a meeting of the Board of Corporate Auditors and the results thereof shall be recorded in
the minutes, and the Corporate Auditors present at the meeting shall affix their names and seals to the minutes manually or throughelectrical method. The handling of such minutes shall conform to the handling of minutes of meetings of the Board of Directors.
2. The minutes referred to in the preceding paragraph shall be kept for ten (10) years at the head office of the Company.
Article 19. Secretariat of the Board of Corporate Auditors
Staff for the Board of Corporate Auditors shall handle secretarial business concerning convocation of meetings of the Board of
Corporate Auditors, preparation of the minutes thereof and other affairs concerning the management of the Board of Corporate
Auditors.
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Article 20 Auditing Standards of the Corporate Auditors
Matters concerning the Board of Corporate Auditors and audits by the Corporate Auditors shall be governed by applicable laws
and regulations, the Articles of Incorporation, these Regulations and the auditing standards of the Corporate Auditors determined by
the Board of Corporate Auditors.
Article 21 Amendment to and Abolishment of These Regulations
Amendment to and abolishment of these Regulations shall be made by the Board of Corporate Auditors.
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SUPPLEMENTARY PROVISIONS
These Regulations:- Came into force on June 30, 1994.
- Amended in part on July 29, 1997.
- Amendment in part on May 1, 2002.
- Amended on July 30, 2004.
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Exhibit 11.1
KYOCERA CORPORATION
Code of Ethics for Chief Executive Officer, Chief Financial Officer andMembers of Kyocera Disclosure Committee
Article 1. Purpose
This Code of Ethics (the “Code”) sets forth standards in compliance with the internal regulations of Kyocera Corporation(“Kyocera”) such as Kyocera Philosophy, Kyocera Guidelines for Ethical Conduct and Kyocera Accounting Policies, that Kyocera’s
Chief Executive Officer (the “CEO”), Chief Financial Officer (the “CFO”) and members of Kyocera Disclosure Committee (1)(collectively, “Covered Members”) must follow in performing their duties to;(1)

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

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

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

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

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

deter the occurrence of conflicts of interest;(3)

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

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

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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.

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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.
Article 9. Effective Date
The Code is effective on and from September 17, 2004.

Note:
Kyocera Disclosure Committee consists of eight members including Executive Officers and Senior Managers who are responsible fordisclosure of Kyocera’s information listed below and governs the management of Kyocera’s disclosure control.
- Corporate development- General affairs, stock-related, risk-related and internal audit- Business strategies- Legal affairs and intellectual properties- Business systems administration- Accounting- Financial affairs and investor relations- Tax-related

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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 21, 2004
/s/ Yasuo Nishiguchi
Name: Yasuo Nishiguchi
Title: President and Representative Director(Principal Executive Officer)

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Exhibit 12.2
CERTIFICATION
I, Hideki Ishida, 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 21, 2004/s/ Hideki Ishida
Name: Hideki Ishida
Title: Managing Executive Officer(Principal Financial Officer)

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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, 2004 (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 21, 2004
/s/ Yasuo Nishiguchi
Name: Yasuo Nishiguchi
Title: President and Representative Director(Principal Executive Officer)

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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, 2004 (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 21, 2004/s/ Hideki Ishida
Name: Hideki Ishida
Title: Managing Executive Officer(Principal Financial Officer)

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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 and 333-118678) of our report dated June25, 2004, on our audits of the consolidated financial statements and financial statement schedule of Kyocera Corporation andConsolidated Subsidiaries as of March 31, 2003 and 2004, and for each of the three years in the period ended March 31, 2004, which
report appears in this 2004 Annual Report on Form 20-F.
/s/ ChuoAoyama PricewaterhouseCoopers
ChuoAoyama PricewaterhouseCoopers
Osaka, Japan
September 21, 2004