SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

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

⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2006
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of event requiring this shell company report
For the transition period fromtoCommission file number: 1-7952

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

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

Japan

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

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

Name of Each Exchange On Which Registered

Common Stock (“Shares”)*

New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of theperiod covered by the annual report.
As of March 31, 2006, 187,754,750 shares of common stock were outstanding, comprised of 182,786,746 Shares and 4,968,004
American Depositary Shares (equivalent to 4,968,004 Shares).

⌧

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
No



⌧

If this report is an annual transition report, indicate by check mark if the registrant is not required to file reports pursuant toNoSection 13 or 15(d) of the Securities Exchange Act of 1934. Yes
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to fileNosuch reports), and (2) has been subject to such filing requirements for the past 90 days. Yes⌧Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer
Accelerated filer
Non-accelerated filer

⌧





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



Item 17 Item 18 ⌧⌧If this is an annual report, indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
No* Not for trading, but only in connection with the registration of the American Depositary Shares, each representing one share ofCommon Stock.

TABLE OF CONTENTS
Page

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

Identity of Directors, Senior Management and Advisers
Offer Statistics and Expected Timetable
Key Information
A. Selected Financial Data
B. Capitalization and Indebtedness
C. Reasons for the Offer and Use of Proceeds
D. Risk Factors
Item 4. Information on Kyocera Corporation and its Consolidated Subsidiaries
A. History and Development of Kyocera Corporation and its Consolidated Subsidiaries
B. Business Overview
C. Organizational Structure
D. Property, Plants and Equipment
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
A. Operating Results
B. Liquidity and Capital Resources
C. Research and development activities
D. Trend Information
E. Off-Balance Sheet Arrangements
F. Tabular Disclosure of Contractual Obligations
Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management
B. Compensation
C. Board Practices
D. Employees
E. Share Ownership
Item 7. Major Shareholders and Related Party Transactions
A. Major Shareholders
B. Related Party Transactions
C. Interests of Experts and Counsel
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information
B. Significant Changes
Item 9. The Offer and Listing
A. Offering and Listing Details
B. Plan of Distribution
C. Markets
D. Selling Shareholders
E. Dilution
F. Expenses of the Issue
Item 10. Additional Information
A. Share Capital
B. Memorandum and Articles of Association
C. Material Contracts
D. Exchange Controls
E. Taxation
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
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12
14
24
28
30
30
30
56
61
63
64
64
65
65
70
71
71
72
78
78
79
79
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80
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82
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82
82
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82
91
91
91
96
96
96
97
97
99

PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modification to Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemption from the Listing Standards for Audit Committees
Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
PART IV
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
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100
100
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101
101
101
103
104
105
105
105
106

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

general economic conditions in our markets, which are primarily Japan, North America, Europe, and Asia, including inparticular China;•

the effect of foreign exchange fluctuations on our results of operations, particularly between the yen and each of the U.S.
dollar and Euro, in which we make significant sales;•

our ability to launch innovative products and otherwise meet the advancing technical requirements of our customers,
particularly in the highly competitive markets for ceramics, semiconductors and electronic components;•

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

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

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

declining prices for our products and services;•

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

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

an increase in the incidence of product returns;•

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

and other risks discussed under Item 3.D “Risk Factors” and elsewhere in this Form 20-F.
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Presentation of Certain information
As used in this Form 20-F, references to “Kyocera,” “we,” “our” and “us” are to Kyocera Corporation and, except as thecontext otherwise requires, its consolidated subsidiaries.
Also, as used in this Form 20-F:•“U.S. dollar” or “$” means the lawful currency of the United States of America, “yen” or “¥” means the lawful currency ofJapan and “Euro” means the lawful currency of the European Union.

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

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

•“fiscal 2006” refers to Kyocera’s fiscal year ended March 31, 2006, and other fiscal years are referred to in a corresponding
manner.

•Unless otherwise indicated, we have translated the yen amounts for the year ended March 31, 2006, as of March 31, 2006
and thereafter presented in this Form 20-F into U.S. dollars solely for your convenience. The rate we used for suchtranslations was ¥117.00 = $1.00, which was the noon buying rate in New York City for cable transfers in foreign currencies
as certified for customs purposes by the Federal Reserve Bank of New York on March 31, 2006, rounded to the nearest yen.
These translations 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.
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)
2002

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

2003

2004

2005

2006

¥1,034,574 ¥1,069,770 ¥1,140,814 ¥1,180,655
51,561
83,388108,962
100,968

¥

¥

2006

¥1,181,489 $10,098,197
103,207882,11133,791
31,95343,421
41,16568,08668,08645,90845,90869,696
69,696178.74 ¥178.59233.02 ¥232.97364.79 ¥364.78244.86 ¥244.81371.68 $371.433.18
3.17

169.02168.88220.91220.86364.79364.78244.86244.81371.68371.433.18
3.17

189,050
189,204

186,338
186,382

186,643
186,649

187,489
187,528

187,514
187,640

60 ¥

60 ¥

60 ¥

80 ¥

100 $

595,692595,692

0.85¥1,645,458 ¥1,635,014 ¥1,794,758 ¥1,745,519 ¥ 1,931,522 $16,508,735
96,856
60,73670,60833,55733,360285,128
115,703
115,703
115,703
115,703
115,703
988,915
1,036,185 1,000,207 1,150,453 1,174,851
1,289,077 11,017,752¥ 76,252 ¥ 64,988 ¥ 60,861 ¥ 58,790 ¥
63,018 $ 538,615¥ 54,631 ¥ 40,614 ¥ 54,937 ¥ 63,176 ¥90,271 $ 771,547-6-

The following table shows the exchange rates for Japanese yen per $1.00 based upon the noon buying rate in New York City for cashtransfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York:
High

Low

Average Period-end

Years ended March 31,
2002
2003
2004
2005
2006

134.77 115.89 125.05
133.40 115.71 121.94
120.55 104.18 112.75
114.30 102.26 107.49
120.93 104.41 113.15

132.70118.07104.18107.22117.48

Most Recent 6 months
December, 2005
January, 2006
February, 2006
March, 2006
April, 2006
May, 2006

120.93 115.78 118.46
117.55 113.96 115.48
118.95 115.82 117.86
119.07 115.89 117.28
118.66 113.79 117.07
113.46 110.07 111.73

117.88116.88115.82117.48113.79112.26

The noon buying rate for Japanese yen on June 26, 2006 was $1.00 = ¥ 116.38
B. Capitalization and Indebtedness
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
D. Risk Factors
You should carefully read the risks described below before making an investment decision.
(1) The Japanese or global economy may significantly reduce demand for Kyocera’s products
The Japanese economy showed stable growth due mainly to an expanded market for digital consumer equipment from the second halfof fiscal 2006. However, the economic outlook has been uncertain and has been negatively affected by inventory reductions in the ITrelated industries. Though the current global economic outlook, including for the U.S., also remains to grow, there may continue to beinstability in light of the appreciation of the yen and the rise in prices of oil and certain raw materials. Kyocera is substantiallydependent for its growth on the markets for semiconductors, mobile phone handsets and PC-related equipment. These markets may be
adversely affected by demand in electronics industry and by sluggish consumer spending brought by economic recession.
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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 IT-related products, including electronic components, mobile phone handsets,
personal computers (PCs) and PC peripherals will continue to grow continuously, Kyocera has been making substantial investments
in new production and marketing facilities in China. Kyocera now has four principal production facilities located in Shanghai,
Dongguan, Guiyang, and Tianjin, and plans to make additional investments to increase production capacity at these sites and toincrease its marketing and distribution 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 ofthe country, may adversely affect its IT-related markets in which Kyocera seeks to sell its products. In addition, China is in theprocess of developing a comprehensive system of laws and regulations dealing with economic matters, such as currency controls, andforeign corporations currently active in the country, such as Kyocera, face risks and uncertainties including enforcement ofcontractual terms, administrative intrusion by local governments and difficulty with expatriation of profits.
(3) Kyocera sells a diverse variety of products, and in each of its businesses Kyocera is subject to intense competitive pressures,
including in terms of price, technological change, product development, quality and speed of delivery, and these pressures arelikely to increase in the near term
Kyocera sells a wide variety of products and therefore faces a broad range of competitors from large international companies torelatively small, rapidly growing and highly specialized companies. Kyocera has a variety of businesses in different industries while
many of its competitors specialize in one or more of these business areas. As a result, Kyocera may not fund or invest in certain of its
businesses to the same degree as its competitors, or these competitors may have greater financial, technical, and marketing resources
available to them than the portion of its business against which they compete. While some of the factors that drive competition varyby product area, price and speed of delivery are factors in all areas of Kyocera’s business. Price pressure has been intense, and thus
Kyocera predicts that its production prices will continue to be lower over fiscal 2007 partly depending on the demand and competition
situation. In production businesses in which Kyocera develops, produces and distributes specialized parts for its customers’ products,
its competitive position depends significantly on being involved early in the process of creating a new product that fits its customers’
needs. This requires maintaining close ties with customers so that Kyocera can ensure that it is able to meet required specifications
and be the first supplier to create and deliver the product. Kyocera’s gross margins may be reduced if it cannot maintain theseimportant relationships or market share or if it is forced in the future to further reduce prices in response to the actions of its
competitors.
(4) Small manufacturing delays or defects resulting from outsourcing or internal manufacturing processes can adversely affectKyocera’s production yields and operating results
Kyocera ordinarily outsources the fabrication of certain components and sub-assemblies of its products, often to sole source suppliers
or a limited number of suppliers. Kyocera has experienced occasional delays in obtaining components and sub-assemblies because the
manufacturing process for these items is very complex and requires a long lead-time. Kyocera’s revenues derived from sales of theseproducts will be materially and adversely affected if Kyocera is unable to obtain a high quality, reliable and timely supply of thesecomponents and sub-assemblies. In addition, any reduction in the precision of these components will result in sub-standard end
products and will cause delays and interruptions in Kyocera’s production cycle.
Within Kyocera’s manufacturing facilities, minute impurities, difficulties in the production process or other factors can cause asubstantial percentage of its products to be rejected or non-functional. These factors can result in lower than expected production
yields, which delay product shipments and may materially and adversely affect Kyocera’s operating results. Because the majority ofKyocera’s costs of manufacture are relatively fixed, production yield and capacity utilization rate are critical to its financial results.
-8-(5) Since a significant percentage of Kyocera’s revenues has been derived from foreign sales in recent years, various export risks
may disproportionately affect its revenues
Kyocera’s sales to customers located outside Japan accounted for 59.8% of its total revenues in fiscal 2006. Kyocera believes thatoverseas sales will continue to account for a significant percentage of its revenues. Therefore, the following export risks may
disproportionately affect Kyocera’s revenues:•

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

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

Kyocera may experience difficulties in the timeliness of collection of accounts receivable due from foreign customers and beforced to write off those receivables;•

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

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

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

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

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

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

(10) Future initiatives and in-process research and development may not produce the desired results
Kyocera intends to expand its product lines to satisfy customer demand in its target markets. Unexpected technical delays incompleting these initiatives could lengthen development schedules and result in lower revenues based on the products or technologies
developed from these initiatives. There can be no assurance that the products derived from Kyocera’s in-process research anddevelopment activities will achieve market acceptance.
(11) Kyocera’s markets or supply chains may be adversely affected by terrorism, plague, wars or similar events
Kyocera as a global company has been expanding its business worldwide. At the same time, we will be exposed to risks of our getting
involved in terrorism, plague, war and other similar events. In the case that those events occur, Kyocera’s operating activities would
be suspended. Furthermore, there would be delay, disorder or suspension in Kyocera’s R&D, manufacturing, sales and services. If
such delay or disruption occurs and continues for a long period of time, Kyocera’s business, financial condition and results ofoperations may be adversely affected.
(12) Kyocera’s headquarters and major facilities are subject to devastating effects of earthquakes and other natural disasters
Kyocera’s headquarters and major facilities including plants, sales offices and R&D centre are located not only in Japan but also all
over the world. It might be inevitable that Kyocera would suffer from natural disasters such as earthquake, typhoon, and floods and soon. For instance, if a strong earthquake occurs, Kyocera’s R&D or manufacturing facilities will be damaged devastatingly. In thiscase, Kyocera’s operating activities would be suspended and manufacturing and shipment would be delayed. Due to this, Kyocera
would lose its sales and profits. Furthermore, Kyocera may incur a great amount of expenses, for example, medical care expenses forinjured employees and damage expenses for the damaged machines or facilities will be incurred. As a consequence, Kyocera’s
operating result and financial condition may be adversely affected.
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(13) Kyocera may have to incur impairment losses on its investments in equity securities
Kyocera holds investments in equity securities of companies not affiliated with itself, which Kyocera generally holds on a long-termbasis for business relationship purposes. A substantial portion of these investments consists of shares of common stock of publiccompanies in Japan, including KDDI Corporation (a Japanese telecommunication service provider), and Japanese financial
institutions. As of March 31, 2006, the aggregate fair value of equity securities included in available-for-sale securities was ¥415,950
million ($3,555 million), with gross unrealized gains in the amount of ¥141,059 million ($1,206 million) and gross unrealized losses
in the amount of ¥94million ($1 million). If there is a decline in the fair value, i.e., the market price, of the shares Kyocera holds inthose companies over a period of time, and it determines that the decline is other-than-temporary, Kyocera will need to record an
impairment loss for the applicable fiscal period. During fiscal 2006, Kyocera recorded losses on impairment of investment securities
in the amount of ¥385 million ($3 million), mainly due to management’s estimation that certain non-public companies in which
Kyocera invested would need considerable time to show profitability in their operating activities. For some of the equity securities
Kyocera owns, including the shares of KDDI Corporation, Kyocera intends to keep its ownership at the current level in light of theimportance of its business relationships with the issuers of these equity securities. For other equity securities in its portfolio, although
Kyocera may dispose of them over time, market conditions may not permit it to do so at the time, speed or price it may wish.
(14) As a holder of ADSs, you will have fewer rights than a shareholder has and you will have to act through the depositary to
exercise those rights
The rights of shareholders under Japanese law to take various actions, including voting their shares, receiving dividends anddistributions, bringing derivative actions, examining a company’s accounting books and records and exercising appraisal rights, areavailable only to holders of record. Because the depositary, through its custodian agents, is the record holder of the Shares underlying
the ADSs, only the depositary can exercise those rights in connection with the deposited Shares. The depositary will make efforts tovote the Shares underlying your ADSs as instructed by you and will pay to you the dividends and distributions collected from us.
However, in your capacity as an ADS holder, you will not be able to bring a derivative action, examine our accounting books andrecords or exercise appraisal rights through the depositary.
(15) Rights of shareholders under Japanese law may be more limited than under the law of other jurisdictions
Our Articles of Incorporation, Regulations of the Board of Directors, Regulations of the Board of Corporate Auditors and 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.
(16) Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell your shares of our
Common Stock at a particular price on any particular trading day, or at all
Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. Theseexchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility,
these exchanges set daily upward and downward price fluctuation limits for each stock, based on the previous day’s closing price.
Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, notransactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily
limit may not be able to sell his or her shares at such price on a particular trading day, or at all.
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(17) Foreign exchange fluctuations may affect the dollar value of our ADSs and dividends payable to holders of our ADSs
Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In addition, the U.S. dollar amount ofcash dividends and other cash payments made to holders of our ADSs would be reduced if the value of the yen declines against the
U.S. dollar.
Item 4. Information on Kyocera Corporation and its Consolidated Subsidiaries
A. History and Development of Kyocera Corporation and its Consolidated Subsidiaries
Kyocera Corporation is a joint stock corporation that was incorporated under the laws of Japan in 1959 with the name Kyoto Ceramic
Kabushiki Kaisha. Its name was changed to Kyocera Kabushiki Kaisha (or Kyocera Corporation) in 1982. Our corporate headquarters
is at 6 Takeda Tobadono-cho, Fushimi-ku, Kyoto 612-8501, Japan. Our telephone number is +81-75-604-3500.
Our business originally consisted of the manufacture of ceramic parts for electronic equipment. In the 1960’s, we expanded ourbusiness and technology horizontally into the design and production of fine ceramic parts, ceramic integrated circuit (“IC”) packages
and electronic components. In the 1970’s, we began to produce consumer-related products, including cutting tools, ceramics for
medical and dental uses, jewelry and solar energy products.
In the 1980’s, we diversified into new strategic fields. In 1982, we merged with Cybernet Electronics Corporation, atelecommunications equipment manufacturer in which we had made an equity investment three years earlier. We expanded intoanother new business through the acquisition of Yashica Co., Ltd., a camera and camera lens manufacturer. We also played a leadingrole in the establishment of DDI Corporation (currently KDDI Corporation), which has become one of Japan’s leading providers of
telecommunications services. In 1989, we gained a presence in the electronic connector market through our acquisition of Elco
International Corporation (currently Kyocera Elco Corporation).
In the 1990’s, we strengthened our position as an internationally integrated electronic components manufacturer through ouracquisition of AVX Corporation, a maker of capacitors and other passive electronic components, in January 1990.
In the middle of the 1990’s, Kyocera developed two main business categories, “the components business,” in which Kyocera provides
parts and devices such as fine ceramics parts, semiconductor parts, electronic components and devices and applied ceramic products
to mainly electronic equipment manufacturers in IT industrial fields, and “the equipment business,” in which Kyocera manufacturesand sells telecommunications and information equipment and optical instruments, such as mobile handsets, PHS-related products,
copiers, multifunctional products, printers, and digital still cameras to distributors or directly to customers.
Since 2000, we have further enhanced our position as a market leader in telecommunications and information equipment. In February
2000, we acquired the code division multiple access (“CDMA”) mobile phone handset business from QUALCOMM Inc. to create our
U.S. subsidiary, Kyocera Wireless Corp. In April 2000, we invested in Kyocera Mita Corporation, a manufacturer of copiers andother 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 pursuing group synergies.
- 12 -

In addition, we also strengthened the components business resources to become a leading company in IT-related applications. In
August 2002, we made Toshiba Chemical Corporation (currently Kyocera Chemical Corporation) a wholly-owned subsidiary througha share exchange in order to reinforce its electronic components and materials businesses by pursuing group synergies between finechemical technologies and fine ceramic technologies.
With the aim of becoming a more global enterprise and enhancing its profitability, Kyocera has been expanding its production in
China through three Chinese production bases located in Shanghai, Dongguan and Guiyang. Kyocera also established a sales
company, Kyocera (Tianjin) Sales and Trading Corporation, in March 2003 to cultivate the Chinese market. We are enhancing ourmarketing ability for both our products manufactured in China as well as our products imported into China. In addition, weestablished a subsidiary, Kyocera (Tianjin) Solar Energy Co., Ltd. to assemble solar modules, production of which commenced in
November 2003, and to respond to market needs swiftly.
In August 2003, we made Kinseki, Limited (currently Kyocera Kinseki Corporation), a major producer of artificial crystal-related
products, a wholly-owned subsidiary through a share exchange to strengthen our Electronic Device Group. In addition, to further
enhance our organic circuit board business by pursuing group synergies, we also made an agreement with IBM Corporation and IBM
Japan, Ltd. for the transfer from IBM Japan to Kyocera of its Surface Laminar Circuitry (“SLC”) business and we completed thetransfer of IBM Japan’s SLC business from IBM Japan to a newly-established wholly-owned subsidiary, Kyocera SLC Technologies
Corporation in August 2003. In April 2004, Kyocera integrated the organic material components business into Kyocera SLC
Technologies Corporation and the marketing division of Kyocera Kinseki Corporation was merged into the marketing division of theelectronic components of Kyocera Corporation and the manufacturing division of crystal related components of Kyocera Corporation
was transferred to Kyocera Kinseki Corporation through corporate splits. In organic circuit board business, Kyocera SLC
Technologies Corporation established Kyocera SLC Components Corporation as a manufacturing company of build-up substrates in
Ayabe, Kyoto Prefecture in August 2004.
In September 2004, Kyocera and Kobe Steel, Ltd. established Japan Medical Materials Corporation (JMM)” and Kyocera
Corporation transferred its medical materials business to Japan Medical Materials Corporation through corporate splits. The
shareholding ratios of Kyocera and Kobe Steel in Japan Medical Materials Corporation are 77% and 23%, respectively.
In October 2004, Kyocera Corporation invested in WILLCOM, Inc. which succeeded PHS business provided by DDI Pocket Inc. toenhance PHS-related business.
To meet with strong demand of solar energy products, Kyocera established Kyocera Solar Europe S.R.O. for assembling of solar
modules in the Czech Republic in April 2005.
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.
- 13 -

B. Business Overview
Overview
Kyocera is engaged in numerous high-tech fields, from fine ceramic components to electronics devices, equipment, services andnetworks. Our manufacturing and distribution operations are conducted worldwide. As of March 31, 2006, we had 138 subsidiaries
and 5 affiliates outside Japan and 32 subsidiaries and 7 affiliates in Japan. Our customers include individuals, corporations,
governments and governmental agencies. For information on our sales by category of activity and information on our sales bygeographic area and product segment, see Item 5.A “Operating Results” of this Form 20-F.
Business Strategy
Kyocera aims to be a company respected by society from the perspective of corporate ethics, while maintaining continuous sales
growth and high profitability. To achieve this management vision, Kyocera’s management policy is to further drive businessexpansion to be “a creative company that continues to grow.” Kyocera promotes efficient resource management and emphasizes
consolidated group management and intends to increase corporate value (aggregate market value of its shares) through improvementof business performance.
Management Strategies
Kyocera promotes “high-value-added diversification” as its management strategy to realize its management policy. By making eachindividual business highly profitable and maximizing group synergies, Kyocera seeks to propel continuous corporate growth even in a
tough, rapidly changing business environment.
In particular, Kyocera aims to: (1) exploit competitive advantages; (2) strengthen existing businesses; and (3) create new businesses.
(1) Exploit competitive advantages
The “Kyocera Philosophy,” a corporate philosophy of Kyocera that is run with faith in the human spirit, and the so-called “amoeba”
management system, which has been a unique management system of Kyocera based on small business units and has been a driving
force for corporate growth since Kyocera Corporation was founded, as well as its strong financial basis have been Kyocera’s
particular competitive advantages in promoting its diversification strategy. Leveraging off this base, Kyocera will focus its energies
into two high-growth-potential areas going forward, namely the markets for telecommunications and information processing and forenvironmental preservation. By establishing further competitive advantages in technology, and sales and marketing, Kyocera intends
to improve business performance through its diversification strategy.
(2) Strengthen existing businesses
Kyocera plans to improve the profitability of each existing business on a daily basis and improve profitability of each reporting
segment on a consolidated business by deepening the ties between Kyocera Group companies and each Corporate Business Group of
Kyocera Corporation to pursue maximization of synergies. Kyocera will also employ a global strategy in each business and integrategroup-wide management resources to establish a structure well-suited to undertake research and development, production and sales at
optimal locations. As a result, Kyocera plans to enhance the competitive edge of each of its existing businesses. Kyocera also
regularly reviews those businesses that have lost market competitiveness or where significant performance improvement is notexpected in the future.
- 14 -

(3) Create new businesses
Kyocera will create new core businesses to spur growth over the medium to long term by integrating group-wide management
resources and developing new technologies, products and markets. Special emphasis will be placed on generating new businessdomains in the markets for telecommunications and information processing and for environmental preservation.
Challenges
Kyocera promotes “high-value-added diversification” as its management strategy, and aims to be a creative company that continues togrow. To achieve this management policy, Kyocera seeks to improve the profitability of its component and equipment businesses, andis working to rapidly attain a pre-tax income ratio of over 15% or more on a group-wide basis. Toward this goal, Kyocera will strive
to further strengthen its business foundation.
The following outlines specific measures being undertaken to accomplish this goal.
(1) Further strengthen “amoeba” management system
Kyocera’s aims to further strengthen its management system, in which small business units called “amoeba” independently develop
their operations, has been a driving force for corporate growth since Kyocera’s foundation. As Kyocera believes its management
system offers a superior competitive advantage over rival companies, Kyocera aims to further strengthen this management system.
Kyocera will further seek to thoroughly implement this management system and enhance it in its development, manufacturing, sales
and marketing departments, to in turn improve the ability to achieve objectives. In particular, Kyocera is working to strengthen its
capabilities in manufacturing, which is the profit center of Kyocera.
(2) Translate results of strategic investments and structural reforms into improved performance
Kyocera aims to ensure that strategic investment during fiscal 2006 will translate into improved performance in fiscal 2007 andbeyond. Concrete initiatives include launching new businesses and improving profitability in the components business, especially theFine Ceramic Parts Group (ceramic parts for LCD fabrication equipment), the Semiconductor Parts Group (ceramic packages andorganic packages) and the Applied Ceramic Products Group (solar energy products and cutting tools). Kyocera also expects structuralreforms implemented in fiscal 2006 to lead to increased sales and profit.
(3) Promote commercialization of strategic businesses from a medium term perspective
Kyocera plans to promote the commercialization of new businesses that will be key growth drivers for Kyocera in the medium term.
In addition to pursuing business expansion in prospective markets including ceramic parts for diesel engines, Kyocera aims to realize
practical application of next-generation solar cells and solid oxide fuel cells (SOFCs), and to ensure that these businesses contribute toits business performance in a timely manner.
Operations
Kyocera classified its operations into eight reporting segments: (1) Fine Ceramic Parts Group, (2) Semiconductor Parts Group,(3) Applied Ceramic Products Group, (4) Electronic Device Group, (5) Telecommunications Equipment Group, (6) Information
Equipment Group, (7) Optical Equipment Group, and (8) Others.
- 15 -

Our principal products and services offered in each reporting segment are shown below.
(1) Fine Ceramic Parts Group:
Information & Telecommunication Components,
Sapphire Substrates,
Semiconductor Process Equipment Components,
LCD Process Equipment Components,
Automotive & ITS related Components,
General Industrial Ceramic Components(2) Semiconductor Parts Group:
Ceramic Packages for Surface Mount Devices,
Ceramic Multilayer Package / Multilayer Substrates,
Metallized Products,
Optical Communication Ceramic Packages / Components,
Organic Multilayer Packages / Substrates(3) Applied Ceramic Products Group:
Residential & Industrial Photovoltaic Generating Systems,
Solar Cells / Modules,
Cutting Tools, Micro Drills,
Dental & Orthopedic Implants,
Jewelry & Applied Ceramic Related Products(4) Electronic Device Group:
Ceramic Chip Capacitors,
Tantalum Capacitors,
Timing Devices (Temperature Compensated Crystal Oscillators (TCXOs),
Voltage Controlled Oscillators (VCOs)),
RF Modules,
Ceramic Resonators / Filters,
Thermal Printheads,
LED Printheads,
Amorphous Silicon Drums,
Liquid Crystal Displays,
Connectors(5) Telecommunications Equipment Group:
CDMA Mobile Phone Handsets,
PHS Related Products (PHS handsets, PHS Base Stations, High Speed Wireless Data Transfer Systems)(6) Information Equipment Group:
ECOSYS Non-cartridge Printers and Copiers,
Digital Network Multi-function Products(7) Optical Equipment Group:
Optical Modules,
Lenses(8) Others:
Chemical Materials for Electronic Components,
Insulators, Resin Products,
Telecommunications Network Systems Business,
Computer Network System Business,
IT solutions Services Business,
Consulting Business,
Leasing Business,
Hotel Business,
Realty Develop Business,
Insurance Agent and Travel Agent Business- 16 -

(1) Fine Ceramic Parts Group
Products in this reporting segment are widely used in the computing, telecommunications, automotive and various industrial sectors.
These products are made from a variety of ceramic materials, such as silicon carbide, silicon nitrides and zirconia as well as alumina,
utilizing their characteristics of heat resistance, corrosion resistance and wear resistance.
Products Kyocera develops, manufactures and sells in this reporting segment include substrates, which are thin ceramic bases used bymanufacturers for hybrid integrated circuit (“IC”) foundations. Kyocera also produces substrates for thermal printheads,
ceramic/alumina tape substrates for thin film chip resistors, substrate for HDD thin film magnetic heads, parts for LCD fabricationequipment, sapphire substrates for LCD projectors and LEDs, parts for semiconductor fabrication equipment, mechanical seals forpumps, engine components for the automobile industry, friction tight discs and thread guides for yarn texturing machines in the textile
industry, rings for fishing rods, nozzles and parts for paper-making machinery.
(2) Semiconductor Parts Group
Kyocera develops, manufactures and sells inorganic (ceramic) and organic packages in this reporting segment. Ceramic packages
have the characteristics of being air and water tight and corrosion resistance and also having the ability to dissipate heat efficiently. In
addition, they have a superior capacity for use in high frequency and embedded passive components. Kyocera develops, produces andsells ceramic packages for ICs or other semiconductors and electronic components.
The most common types of the ceramic IC packages Kyocera develops, makes and sales are multilayer packages, including surface
mount device (“SMD”) packages and pin grid arrays. Kyocera also develops, produces and sells opto-electronic packages andceramic parts for fiber-optic communications connectors. SMD packages are used for surface acoustic wave (“SAW”) filters andoscillators, which are mostly inserted into mobile handsets. Pin grid arrays are sold to manufacturers of MPUs and of other logic ICs,
which are principally inserted into information equipment and peripherals. Kyocera also produces ceramic packages for chargecoupled-devices (“CCDs”) and complementary metal oxide semiconductor (“CMOS”) devices, which are mainly used in cameraequipped mobile phone handsets.
In the organic package business, Kyocera established a specialized high density organic circuit board manufacturer, Kyocera SLC
Technologies Corporation, which develops, produces and sells system in a package (“SiP”) used in miniature and high functional
electronic equipment such as mobile handsets, digital still cameras and mobile music players and organic packages for high-end
application specific integrated circuits (“ASICs”). It also produces and sells organic package for next generation micro processor units(“MPUs”) and its peripheral devices for digital consumer equipment.
(3) Applied Ceramic Products Group
This reporting segment consists of four product lines: 1) Solar Energy Products, 2) Cutting Tools, 3) Dental and Orthopedic Implants,
4) Jewelry and Applied Ceramic Related Products.
- 17 -

1) Solar Energy Products
Kyocera develops, manufactures and sells a solar cell and module, applied solar cell products and solar photovoltaic systems forgenerating electricity in residential homes and public facilities. We are expanding our solar cell production capacity in Japan andcommenced assembly of solar modules by Kyocera (Tianjin) Solar Energy Co., Ltd in China, which was established as our
manufacture and sales subsidiary of solar modules in May 2003. In addition, Kyocera constructed a solar module assemble facility,
Kyocera Solar, Inc. Mexico Plant in Tijuana, Mexico, for the U.S market in October 2004. To increase sales in Europe, Kyocera
established a new plant for solar modules in the Czech Republic in April 2005.
2) Cutting Tools
Kyocera produces cutting tools for metal processing in industrial production, particularly in the automotive industry. To expand its
cutting tools business, Kyocera Corporation acquired Tycom Corporation (currently Kyocera Tycom Corporation, a consolidated
subsidiary), which was a U.S. major manufacturer of carbide cutting tools for the printed circuit board industry in January 2001.
Kyocera aims to be a market leader in cutting tools business by pursuing synergies between Kyocera Tycom Corporation andKyocera Corporation in worldwide manufacturing and sales channels.
3) Dental and Orthopedic Implants
Kyocera established Japan Medical Materials Corporation with Kobe Steel, Ltd. by integrating the medical material businesses in
September 2004. Japan Medical Materials Corporation produces a wide range of orthopedic and dental applications such as dental
and orthopedic implants, artificial knee joint replacement systems, and ceramic materials helping heal hip fractures by combinationsof materials, processing technologies of ceramics and titanium alloys and integrating business resources such as development,
manufacturing, marketing and sales channels with Kyocera and Kobe Steel, Ltd.
4) Jewelry and Applied Ceramic Related Products
Recrystallized jewelry comprises mainly synthetic emeralds, alexandrines and rubies. These stones are manufactured using a single
crystal growth technology developed by us, and are chemically and physically equivalent to natural stones. We introduced
recrystallized jewelry products to meet consumer needs and to cultivate our sales network. Kyocera also produces applied ceramic
related products such as kitchen knives utilizing ceramic characteristics of wear resistance and corrosion resistance from acid andalkalinity.
(4) Electronic Device Group
Kyocera develops, manufactures and sells high quality and cost competitive electronic components and devices for thetelecommunications and information processing industry. This field creates demand for miniaturization, low voltage, high frequency
and low energy consumption, and we produce high-value-added products such as miniature ceramic capacitors with high capacitancecapacitors, tantalum capacitors, miniature timing devices like a temperature compensated crystal oscillators (“TCXOs”) or voltagecontrolled oscillators (“VCOs”), and high frequency modules for mobile phone handsets and PCs. We also produce thin-film products
such as thermal printheads, amorphous silicon drums and LCDs for audio visual electronic equipment, office automation equipment
and industrial equipment.
We are strengthening our manufacturing and sales in China with enhance price competition and cultivation of new markets. We
established a new manufacturing subsidiary and commenced production of ceramic capacitors and timing devices in Shanghai infiscal 2001. In fiscal 2004, we established a sales company in Tianjin and started marketing our products made both in China andaround the world through this company with expanded sales in China.
- 18 -

To expand this reporting segment business, we are pursuing the synergies with subsidiaries. AVX Corporation, which produces andmarkets ceramic capacitors, tantalum capacitors and other passive components for telecommunications and information equipment,
has a global manufacturing and sales network. AVX Corporation is a major contributor to our Electronic Device Group sales andpursues synergies with development and manufacturing in our ceramic capacitor business. In our timing device business, Kyocera
Corporation acquired Kinseki, Limited (currently Kyocera Kinseki Corporation, a consolidated subsidiary) through a share exchange
in August 2003. The marketing division of Kyocera Kinseki Corporation was merged into the marketing division of the electronic
components of Kyocera Corporation and the manufacturing division of crystal related components of Kyocera Corporation wastransferred to Kyocera Kinseki Corporation through corporate splits to pursue synergies in development, manufacture and sales in
April 2004.
(5) Telecommunications Equipment Group
This reporting segment includes CDMA mobile phone handsets, PDC mobile phone handsets and PHS-related products such as PHS
handsets and base stations. These products are produced and distributed mainly for KDDI Corporation and WILLCOM, Inc., as well
as for other Asian and U.S. telecommunication service providers. KDDI Corporation is a telecommunications service company, inwhich 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 Corporation and its subsidiaries are
currently engaged in providing domestic and international telephone services and cellular services. WILLCOM, Inc., former DDI
Pocket Inc., was established in February 2005, and provides PHS services. Our shareholder ratio in WILLCOM, Inc. is 30%.
One of our major areas in the Telecommunications Equipment Group is cellular handsets, and we focus on the CDMA mobile phonehandsets. This technology has become one of the fastest growing mobile phone protocols. We acquired CDMA mobile phone handset
business of Qualcomm Inc. and established Kyocera Wireless Corp., a wholly-owned subsidiary in February 2000.
In addition, we established a joint venture, Kyocera Zhenhua Communication Equipment Co., Ltd., which develops, manufactures,
sells and provides after servicing for CDMA mobile phone handsets in Guiyang City in China in December 2001. It commenced
production of CDMA mobile phone handsets for China in January 2002. We established Kyocera Wireless (INDIA) PVT. LTD., asubsidiary of developing software for CDMA mobile phone handsets in June 2003.
In May 2005, we decided to outsource the manufacturing division of Kyocera Wireless Corp. to Flextronics International Ltd., aleading provider of electronics manufacturing services. With regard to telecommunications equipment, we aim to become a leader in
the CDMA market by pursuing a global marketing strategy with bases in Japan, the United States and China, and to optimize our
global product development and production structure.
The other major area in the Telecommunications Equipment Group is the PHS-related business. We are expanding this business bycultivating new markets overseas. Specifically, we seek to expand sales of mobile PHS systems through the expansion of PHS mobile
handsets and base stations in China. We are spreading this PHS system to other Asian countries as well as promoting new PHS
mobile phone handsets and base stations which meet the high speed data transmission services offered in Japan. We also promote
wireless Internet systems, which enable internet services to be used at broadband speed with wireless technology. By promoting thesebusinesses in the appropriate markets, we expect to increase sales of PHS related products.
(6) Information Equipment GroupThe major products in this reporting segment comprise page printers, digital copiers and multifunction products. Our products aremarketed under the name of “ECOSYS” and have a long life cycle and cartridge-free technology utilizing our thin film products,
amorphous silicon drums.
- 19 -

In April 2000, Kyocera Mita Corporation became our wholly-owned subsidiariy. Kyocera Corporation’s ECOSYS printer unit wasmerged into this subsidiary, enabling us to build a unified presence in the document solutions business. Further efficiencies haveresulted from the merger of our printer and copier sales operations with those of Kyocera Mita Corporation. We have enhanced our
product line through the standardization of engines between the printers and MFPs. We established a new plant, Kyocera Mita Office
Equipment (Dongguan) Co., Ltd in Dongguan, China mainly to strengthen price competitiveness.
We expect strong demand for color printers, copiers and MFPs. We are focused on expanding our comprehensive color-capableproduct line up of printers, copiers and MFPs with more inexpensive running cost, as well as monochrome products.
(7) Optical Equipment GroupThe major products in this reporting segment include optical modules and lenses. We plan to expand application of optical modules
for projectors and bar code readers.
(8) Others
This reporting segment includes revenues from telecommunication network systems, financial services such as leasing and credit
financing, office leasing, and other services in Japan and Asia. This segment also develops, manufactures and sells electronic
component materials, electric insulators and synthetic resin molded parts.
Kyocera Leasing Co., Ltd. is principally involved in providing credit financing services and commercial leasing services for copiers,
MFPs and other equipment.
Kyocera Communication Systems Co., Ltd. operates total telecommunications network system business, from system development todesign, construction and maintenance services. Kyocera Communication Systems Co., Ltd. is also expanding its data center services
for mobile content distribution services and IT solutions services for business users by developing new products featuring network
services as well as system integration services.
Kyocera Chemical Corporation, which joined Kyocera in August 2002, mainly produces electronic component materials. We willdevelop new products by pursuing the synergies with fine chemical technologies and our components technologies such as theElectronic Device Group.
Sales and Distribution
Our products are marketed worldwide by our sales personnel, as well as through sales companies within our group, compensatedsolely on a commission basis, and by independent distributors. We have regional sales and design application personnel in strategic
locations to provide technical and sales support for independent manufacturers’ representatives and independent distributors. We
believe that this combination of distribution channels leads to a high level of market penetration and efficient coverage of ourcustomers on a cost-effective basis.
Most of all our sales of the Fine Ceramic Parts Group, the Semiconductor Parts Group and the Electronic Device Group are madedirectly to manufacturers worldwide who incorporate them into their own products. However, cutting tools are sold to distributors andwholesalers. Jewelry sales are made mainly through direct sales shops and agencies in Japan. Sales of consumer solar energy products
are made through direct sales shops, as well as through sales distributors. BIOCERAM (orthopedic and dental implants) are supplied
through the distributors to dental clinics and hospitals. In the Telecommunications Equipment Group, our domestic sales of mobile
handsets include sales to KDDI Corporation and PHS handsets to WILLCOM, Inc., and in addition we sell our mobile phonehandsets to telecommunication providers directly in overseas markets. The Information Equipment Group markets products such as
page printers, copiers and digital multifunctional products both in Japan and abroad under our brand name through distributors andwholesalers. In the Optical Equipment Group, optical modules for mobile phone handsets are marketed directly to mobile phonehandset manufacturers. Financing and leasing services which are included in Others are provided to companies and individuals inJapan. Office renting and other services are provided to companies, mainly in Japan. Our telecommunication network engineering anddata center services are provided directly to customers and users.
- 20 -Domestic sales are made in the yen, while overseas sales are made in a variety of currencies, but predominantly in the U.S. dollars
and Euro.
Sources and Availability of Raw Materials and Supplies
We purchase a variety of raw materials. The principal ones in terms of volume are alumina (a mineral substance produced frombauxite and from which aluminum is made), zircon, titania, silicon nitride, tungsten and tantalum, used for the products of the Fine
Ceramic Parts Group, the Semiconductor Parts Group, the Applied Fine Ceramics Group and the Electronic Device Group. Each ofthese materials is subject to price volatility. In terms of costs, gold, which is primarily used in the production process for IC packagesin the Semiconductor Parts Group is also subject to price volatility, and is the most significant raw material. Our policy is to protect
ourselves from fluctuations in the price of gold by keeping a small gold inventory and by pricing products generally on a “gold adder”
system so that customers pay for the gold contained in semiconductor parts at a rate which approximates our cost. Our main supplies
are ICs, Liquid Crystals and Printed Circuit Board, used for the products of the Electronic Device Group, the Telecommunications
Equipment Group and the Information Equipment Group, such as thin-film devices, mobile handsets, printers, copiers and optical
instruments.
As we typically receive our supply of these raw materials and supplies from several large companies which we believe are reliable
sources, we have not generally experienced, and we do not anticipate experiencing in the near future, any difficulty in obtaining raw
materials or supplies, or in meeting fuel requirements. Although oil prices have risen recently, the increases have not materiallyaffected our purchase price of certain oil-related supplies.
During fiscal 2006, no single supplier accounted for a significant portion of our consolidated purchases of raw materials and supplies.
However, a number of components and sub-assemblies used in our products are sourced to sole source suppliers. These tend to becomplex, precision components that are sometimes produced only by a limited number of suppliers or a single supplier that may own
intellectual property related to the component or sub-assembly.
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, 2006, with respect to oursignificant patents and license agreements.
(a)License permitted to produce products

Counterparty

Country

Contents

PeriodQualcomm Incorporated

United States License under patents regarding
mobile phone

From August 31, 1996 to patent
expiration

Interdigital Group

United States License under patents regarding
mobile phone

From July 1, 2004 to June 30,
2009

Openwave Systems Inc.

United States Master Browser License regarding
mobile phones using CDMA

From September 27, 2005 to
September 27, 2006

Monotype Imaging

Japan

From June 1, 2001 to May 31,
2006

License under patents regarding
font software- 21 -

(b) License – cross agreements
Counterparty

Country

Contents

PeriodMotorola, Inc.

United States License under patents regarding
mobile phone

From July 1, 2004 to June 30, 2009

Lucent Technologies International Sales
LimitedUnited States License under patents regarding
mobile phone

From September 26, 2005 to
December 31, 2009

Nokia Corporation

FinlandLicense under patents regarding
mobile phone

From October 1, 2005 to September
30, 2008

Canon IncorporatedJapan

License under patents regarding
electric photo printerFrom April 1, 2002 to patent
expiration

Competitive Position(1) Fine Ceramic Parts Group
Products in this reporting segment are highly customized, and major customers are primarily secondary manufacturers who
incorporate our products in their own products. Therefore, our competitive position largely depend on maintaining close contacts
with, and being the first to meet the needs of, secondary manufacturers. We compete with different ceramic manufacturers dependingon the product.
(2) Semiconductor Parts GroupIn this reporting segment, our goal is to further strengthen our competitive position in both of ceramic and organic materials package
business in the world market. To meet with latest technologies, 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, surface mount device
packages for electronic components are one 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 relatively a late comer and compete with plastic electronic device manufacturers. To strengthen
our technological expertise and expand our business, we acquired the Surface Laminar Circuitry business of IBM Japan in September
2003 and established Kyocera SLC Technologies Corporation (KST). We integrated our management resources into KST in April
2004, and Kyocera SLC Components Corporation, a wholly owned subsidiary of KST established a new plant in Kyoto, Japan in June
2005. We aim to strengthen our organic material components business going forward by fully utilizing this new plant.
(3) Applied Ceramic Products GroupThe awareness of the importance of environmental protection is evident worldwide. We are the third largest manufacturer of solar
cells and modules in the world. To be a market leader in the solar energy business, we expanded out solar cell production line with
20MW capacity per month and established a new production plant of solar modules in Czech Republic during fiscal 2006. We are themajor supplier of cutting tools, and our major application of cutting tools is for the automotive industry. Although we have a lot of
global competitors, we introduced new facilities to handle new material processing and started a vertically integrated production. We
intend to expand our market share on a global basis by utilizing its vertically integrated production line.
- 22 -

(4) Electronic Device GroupWe are a unique electronic device manufacturer compared with our competitors which specialize in passive components. We produce
not only passive components but also crystal related products, connectors and thin-film devices. In this reporting segment, one of ouradvantages is that we can supply a variety of components. However, the products in this reporting segment are largely standardized,
so competition is based largely on price, quality and delivery time.
Kyocera is one of the major manufacturers of capacitors and timing devices. Most of our competitors in this reporting segment are
Japanese manufacturers. However, AVX Corporation, a U.S. subsidiary, competes with overseas manufacturers in producing
tantalum capacitors. Our thin-film products, such as thermal printheads, or amorphous silicon drums, are market-leading products inapplications for printers and copiers.
We are also continuing to seek synergies within Kyocera and reduce costs in order to expand this business. We strive to optimize ourdevelopment, production, and sales throughout our global network, to reduce manufacturing costs, and to enhance pricecompetitiveness. Specifically, these goals can be achieved by maximizing our production capability of Chinese production bases.
(5) Telecommunications Equipment GroupIn the Japanese market, our main competitors for mobile phone handsets are Japanese manufacturers despite overseas manufacturers
just entered into the market. In the mobile phone handsets market outside Japan, Kyocera competes with U.S., European and Asian
manufacturers. We are currently a middle-class supplier in terms of sales volume on a global CDMA handsets market. During fiscal
2006, Kyocera outsourced its CDMA handset production at Kyocera Wireless Corp. to Flextronics International Ltd. to reduce
manufacturing costs and improve profitability. In terms of PHS-related products in Japan, our main competitors are Japanesemanufacturers, and we directly compete with local manufacturers in China.
(6) Information Equipment GroupWe compete with both Japanese and overseas manufacturers in the information equipment such as copiers, printers and multifunction
products (MFPs). Our products are based on unique “ECOSYS” concept that provide longer lifecycle of engine and inexpensive
operating costs, and realize non-cartridge systems by utilizing own highly durable amorphous silicon photoconductive drums.
ECOSYS concept is widely used in our printers, copiers and MFPs as well as monochrome and color, low speed to high speed
models.
(7) Optical Equipment Group
Japanese manufacturers are our main competitors for our camera modules for mobile phone handsets. We focus on introducing highvalue-added smaller optical modules for mobile phone handsets with higher pixels by integrating our in-house lens design andtechnologies in production, electronic device as well as in semiconductor parts.
- 23 -Government Regulation
There are some governmental regulations specifically applicable to industries in which Kyocera operates. However, we do not believethat such governmental regulations currently have material effects on Kyocera’s business.
C. Organizational Structure
We had 182 subsidiaries and affiliates as of March 31, 2006. Our management structure is based on a business segment structure.
Therefore, the management of each segment is conducted uniformly regardless of whether our operations are conducted by the parent
company or by one of our subsidiaries.
The following table sets forth information, as of March 31, 2006, with respect to our significant subsidiaries.

Name(1) Fine Ceramic Parts Group
Kyocera Industrial Ceramics
Corporation
Kyocera Asia Pacific Pte. Ltd.
Kyocera Fineceramics GmbH
(2) Semiconductor Parts Group
Kyocera SLC Technologies
Corporation
Kyocera SLC Components
Corporation
Kyocera America, Inc.
Kyocera Mexicana, S.A. de C.V.
Shanghai Kyocera Electronics Co.,Ltd.

Country ofIncorporation

United States
Singapore
Germany

Percentage
held by
KyoceraMain Business100.00% Manufacture and sale of fine ceramic-related products and saleof electronic devices
100.00% Sale of fine ceramic-related products and electronic devices
100.00% Sale of fine ceramic-related products, thin-film devices andsolar energy productsJapan

100.00% Manufacture and sale of organic multilayer printed circuit board

Japan

100.00% Manufacture of organic multilayer printed circuit board

United States
MexicoChina

100.00% Manufacture and sale of semiconductor parts
100.00% Manufacture of ceramic-related products and solar modules
100.00% Manufacture and sale of semiconductor parts and electronic
devices- 24 -Name(3) Applied Ceramic Products Group
Kyocera Solar Corporation
Japan Medical Materials Corporation
Kyocera Solar, Inc.
Kyocera Tycom Corporation
Kyocera (Tianjin) Solar Energy Co.,Ltd.
Kyocera Precision Tools Korea Co.,Ltd.
Kyocera Solar Europe S.R.O.
(4) Electronic Device Group
Kyocera Kinseki Corporation
Kyocera Elco Corporation
Kyocera Display Institute Co., Ltd.
AVX Corporation
Kyocera Elco Korea Co., Ltd.
Kyocera Elco Hong Kong Ltd.
Kyocera (Tianjin) Sales & Trading
Corporation

Country ofIncorporation

Japan
Japan
United States
United States
China

Percentage
held by
KyoceraMain Business100.00% Sale of solar energy products
77.00% Development, manufacture and sale of medical materials andequipment
100.00% Manufacture and sale of solar energy products
100.00% Manufacture and sale of micro drills
90.00% Manufacture of solar energy products

Korea

90.00% Manufacture and sale of cutting tools

Czech

100.00% Manufacture of solar energy products

Japan
Japan
Japan
United States
Korea
Hong Kong
China

100.00% Manufacture and sale of electronic devices
100.00% Manufacture and sale of electronic devices
100.00% R&D of organic electro luminescence display
70.73% Manufacture and sale of electronic devices
100.00% Manufacture and sale of electronic devices
100.00% Sale of electronic devices
90.00% Sale of electronic devices, semiconductor parts and informationequipment- 25 -Name(5) Telecommunications Equipment
Group
Kyocera Wireless Corp.
Kyocera Wireless (India) PVT. Ltd.
Kyocera Telecommunications
Research Corporation
Kyocera Zhenhua Communication
Equipment Co., Ltd.
(6) Information Equipment Group
Kyocera Mita Corporation
Kyocera Mita Japan Corporation
Kyocera Mita America, Inc.
Kyocera Mita Office Equipment(Dongguan) Co., Ltd.
Kyocera Mita Europe B.V.
Kyocera Mita Deutschland GmbHCountry ofIncorporation

Percentage
held by
KyoceraMain Business

United States
India
United States

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

China70.00% Manufacture and sale of telecommunications equipment

Japan
Japan
United States
China

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

Netherlands
Germany

100.00% Sale of information equipment
100.00% Sale of information equipment- 26 -Name(7) Optical Equipment Group
Kyocera Optec Co., Ltd.
Kyocera Yashica do Brasil Indústria e Comércio Ltda.
Yashica Hong Kong, Co., Limited
Universal Optical Industries, Ltd.

Country ofIncorporation

Japan
BrazilHong Kong
Hong Kong

Dongguan Shilong Kyocera Optics Co., Ltd.

China

(8) Others
Kyocera Leasing Company Limited

Japan

Kyocera Communication Systems Co., Ltd.
Kyocera Realty Development Co., Ltd.
Hotel Kyocera Co., Ltd.
Hotel Princess Kyoto Co., Ltd.
Kyocera International Co., Ltd.
Kyocera Chemical Corporation
Piazza Investment Co., Ltd.
Shanghai Kyocera Realty Development Co., Ltd.

Percentage
held by
Kyocera

Japan
Japan
Japan
Japan
Japan
Japan
Hong Kong
China

Main Business100.00% Manufacture and sale of optical equipment
100.00% Manufacture and sale of optical equipment andcutting tools
100.00% Intermediary services as to sale of optical equipment
100.00% Manufacture and sale of optical equipment, cutting
tools and thin-film devices
90.00% Manufacture and sale of optical equipment, cutting
tools and thin-film devices
100.00% Various leasing services, property management andfinancing services
76.30% Provision of IT services
100.00% Real estate services
100.00% Hotel management and operations
100.00% Hotel management and operations
100.00% Insurance and travel agency
100.00% Manufacture and sale of electronic materials
100.00% Real estate leasing
100.00% Real estate leasing

In addition to the above consolidated subsidiaries, Kyocera had 122 other consolidated subsidiaries as of March 31, 2006, including
Kyocera International Inc., a wholly-owned U.S. subsidiary which is a holding company established to own Kyocera’s subsidiaries inNorth America. Kyocera also had interests in two subsidiaries accounted for by the equity method and 12 affiliates accounted for by
the equity method as of March 31, 2006.
AVX Corporation, in our Electronic Device Group, is one of our most significant subsidiaries. Most of the electronic devices we
produce for overseas sales are distributed by AVX Corporation by utilizing AVX Corporation’s wide range of marketing channels. In
addition, we market passive components produced by AVX Corporation in the Japanese market. We also utilize AVX Corporation’s
manufacturing process for ceramic capacitors to improve productivity and to enhance our competitiveness. In addition, AVX
Corporation introduced our materials technologies into its ceramic capacitor production. We have been seeking better ways tocooperate in expanding our electronic device businesses. Currently, four of our directors are members of AVX Corporation’s board of
directors and AVX Corporation’s chief executive officer is one of our directors. Within the Electronic Device Group, we have a close
relationship with AVX Corporation in marketing, manufacturing, and research and development, and we are seeking and pursuingsynergies to be a leading passive component manufacturer. AVX Corporation posted net income of $81,752 thousand in fiscal 2006,
compared to $55,732 thousand in fiscal 2005, and its strong performance contributed significantly to Kyocera’s results of operations
and financial condition for fiscal 2005 and 2006. See Item 5.A “Operating Results” of this Form 20-F.
- 27 -

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, Israel, Thailand and Philippines. As of
March 31, 2006, we had property, plants and equipment with a net book value of ¥285,346 million ($2,439 million). During the five
years ended March 31, 2006, we invested a total of ¥303,629 million ($2,595 million) for additions to property, plants and equipment.
Our property, plants and equipment are not subject to any material encumbrances or environmental issues.
The following table sets forth information, as of March 31, 2006, 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

295

Owned

126

Koriyama Plant

Higashi-Shirakawa,
Fukushima
Koriyama, Fukushima

Owned

192

Nagano Okaya Plant

Okaya, Nagano

Owned

384

Kawasaki Plant

Kawasaki, Kanagawa

Owned

163

Kawaguchi Plant

Kawaguchi, Saitama

Owned

298

Ise Plant
Tamaki Plant

Ise, Mie
Watarai, Mie

Owned
Owned

102
200

Shiga Gamo Plant

Higashi-Ohmi, Shiga

Owned

724

Shiga Yokaichi Plant

Higashi-Ohmi, Shiga

Owned

1,417

Hirakata Plant

Hirakata, Osaka

Owned

446

Kagoshima Sendai Plant

Satsuma-Sendai, Kagoshima

Owned

1,522

Kagoshima Kokubu Plant

Kirishima, Kagoshima

Owned

2,090

Kagoshima Hayato Plant
Yamagata Higashine Plant
Shiga Yasu Plant

Kirishima, Kagoshima
Higashine, Yamagata
Yasu, Shiga

Owned
Owned
Owned

278
379
146

Ayabe Plant

Ayabe, Kyoto

Owned

291

Fukushima Tanagura Plant- 28 -

Fine ceramic parts, mobile
phone handsets
Telecommunications
equipment
Electronic parts andmaterials
Fine ceramic parts,
Electronic components
Electronic parts andmaterials
Electronic parts andmaterials
Solar modules
Non-cartridge printers andcopiers, digital network
multi function equipment
Fine ceramic parts,
Semiconductor parts
Fine ceramic parts,
Electronic components,
Solar cells, Cutting tools
Non-cartridge printers andcopiers, digital network
multi function equipment
Fine ceramic parts,
Semiconductor parts,
Electronic components
Fine ceramic parts,
Semiconductor parts,
Electronic components
Electronic components
Electronic components
Organic multilayer printed
circuit boards
Organic multilayer printed
circuit boards

Name of Plant

Location

StatusFloor Space

Lease
Expires

Principal Products Manufactured(in thousandsof square feet)

United States
Balboa Plant
Mountain Home Plant

Owned
Owned

300
134

Semiconductor parts
Cutting tools

Myrtle Plant
Olean Plant
Raleigh Plant
South Carolina Plant

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

Owned
Owned
Owned
Owned

628
110
206
300

Electronic components
Electronic components
Electronic components
Non-cartridge printers andcopiers, digital network multifunction equipment

MexicoTijuana Plant

Tijuana

Owned

117

Semiconductor parts, Solar
modules

El Salvador
San Salvador Plant

San Salvador

Owned

306

Electronic components

United Kingdom
Paignton Plant
Coleraine Plant

Paignton, England
Coleraine, Northern Ireland

Owned
Owned

128
185

Electronic components
Electronic components

Germany
Betzdorf Plant

Betzdorf

Owned

102

Electronic components

FranceSaint-Apollinaire Plant

Saint-Apollinaire

Leased321

2010

Electronic components

Czech Republic
Lanskroun Plant
Lanskroun Plant
Uherske Hradiste Plant

Lanskroun
Lanskroun
Uherske Hradiste

Leased
Owned
Owned

239
281
319

2017

Electronic components
Electronic components
Electronic components

Hong Kong
Hong Kong Plant

Hong Kong

Leased183

2008

Non-cartridge printers andcopiers, digital network multifunction equipment- 29 -Name of Plant

Location

StatusFloor Space

Lease
Expires

Principal Products Manufactured(in thousandsof square feet)

China
Tianjin Plant
Shilong Plant

TianjinDongguan, Canton

Owned
Leased

507
2,331

2020

Shilong Plant

Dongguan, Canton

Leased156

2008

Shilong Plant

Dongguan, Canton

Leased776

2016

Shanghai Pudong Plant

ShanghaiLeased863

2026

Malaysia
Penang Plant

PenangOwned

161

Electronic components

Singapore
Singapore Plant

Singapore

Owned

128

Electronic parts andmaterials

ThailandThailand Plant

Thailand

Owned

264

Electronic components

Philippines
Philippines Plant

Philippines

Owned

135

Electronic components

Electronic components
Non-cartridge printers andcopiers, digital network
multi function equipment
Non-cartridge printers andcopiers, digital network
multi function equipment
Optical Equipment,
Cutting tools
Semiconductor parts,
Electronic components

Item 4A. Unresolved Staff Comments
We are a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934. There are no written comments
which have been provided by the staff of the Securities and Exchange Commission regarding our periodic reports under that Act notless than 180 days before the end of the fiscal year ended March 31, 2006 and which remain unresolved as of the date of the filing of
this Form 20-F with the Commission.
Item 5. Operating and Financial Review and Prospects
A. Operating Results
You should read the discussion of our financial condition and results of operations together with our consolidated financial
statements and information included in this Form 20-F. This discussion and analysis contains forward-looking statements thatinvolve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including, but not limited to, those set forth under Item 3.D “Risk Factor” and elsewhere inthis Form 20-F.
- 30 -

Overview
Kyocera develops, produces and distributes various kinds of products globally for the telecommunications and information processing
and environmental protection markets. Kyocera Corporation was established in 1959 as a manufacturer of ceramic parts for electronicequipment and has been expanding and diversifying its business mainly through active merger and acquisition activities, as well as
applying its ceramic technologies to the areas of semiconductor parts, electronic components, telecommunication, metal processing,
medical and dental implants and solar energy fields. Kyocera develops, produces and distributes a variety of parts and devices forelectronic equipment such as computers, auto-mobiles, printers and copiers as well as consumer electronic products such as mobile
phone handsets. Kyocera earns revenue and income and generates cash from sales of these products.
Kyocera divides its worldwide operations into eight reporting segments for its financial reporting purposes: the Fine Ceramic Parts
Group, the Semiconductor Parts Group, the Applied Ceramic Products Group, the Electronic Device Group, the Telecommunications
Equipment Group, the Information Equipment Group, the Optical Equipment Group and Others. Kyocera categorizes the Fine
Ceramic Parts Group, the Semiconductor Parts Group, the Applied Ceramic Products Group and the Electronic Device Group into
one main business referred to “the components business,” and also categorizes the Telecommunications Equipment Group, theInformation Equipment Group and the Optical Equipment Group into another main business referred to “the equipment business.”
Kyocera’s revenue and profits mostly come through sales of products and providing services in the telecommunications andinformation processing markets. In the first quarter of fiscal 2006, the business environment was severe in the electronics industry,
which is a key market for Kyocera, as recovery in demand was moderate while components prices declined significantly.
Nonetheless, the business environment made an about-turn last summer. Not only has production of core digital consumer products
such as mobile phone handsets, PCs and digital home appliances expanded remarkably, but demand for related electronic components
also maintained an upward trend until the end of the fourth quarter of fiscal 2006.
In this market condition, consolidated net sales in fiscal 2006 remained roughly the same as in fiscal 2005, while profits increased due
to a substantial improvement in the equipment business as a result of the positive effects of structural reforms.
- 31 -

Results of Operations
Fiscal 2006 compared with Fiscal 2005
The following table shows a summary of Kyocera’s results of operations for fiscal 2005 and fiscal 2006:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005

Increase(Decrease)

2006

Amount%¥1,180,655
855,067

100.0
72.4

¥1,181,489
838,295$10,098,197
7,164,915

100.0
71.0

0.1
(2.0)

Gross profit
Selling, general and administrative expenses

325,588
224,62027.6
19.0

343,194
239,987

2,933,282
2,051,171

29.0
20.3

5.4
6.8

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

100,968
6,396(1,275)2,618(1,678)
—
—
—
501

8.6
0.5
(0.1)
0.2
(0.1)
—
—
—
0.0

103,207
8,968(1,301)(316)(1,216)(3,492)
6,931
5,294
3,313

882,11176,650(11,120)(2,701)(10,393)(29,846)
59,23945,24828,316

8.7
0.8
(0.1)
(0.0)
(0.1)
(0.3)
0.6
0.4
0.3

2.2
40.2
—
—
—
—
—
—
561.3

6,562

0.5

18,181

155,393

1.6

177.1

Income before income taxes and minority interests
Income taxes

107,530
58,4809.1
4.9

121,38847,303

1,037,504
404,299

10.3
4.0

12.9
(19.1)

Income before minority interests
Minority interests

49,050(3,142)4.2(0.3)

74,085(4,389)633,205(37,513)

6.3
(0.4)

51.0
—

45,9083.9595,692

5.9

51.8

Net sales
Cost of sales

Net income¥

Amount¥69,696$%%

Net sales
Consolidated net sales in fiscal 2006 increased by ¥834 million ($7 million), or 0.1%, to ¥1,181,489 million ($10,098 million)
compared with ¥1,180,655 million in fiscal 2005.
In the component business, demand for electronic equipment only showed a slight recovery in the first quarter of fiscal 2006, andperformance was affected negatively by a considerable decline in component prices. In the equipment business, structural reforms ofthe mobile phone handset business at Kyocera Wireless Corp., a U.S. subsidiary, were conducted in the first half of fiscal 2006. At thesame time, the camera business of the Optical Equipment Group was considerably reduced. As a result, consolidated net sales in thefirst half amounted to ¥545,258 million ($4,660 million).
- 32 -

On the other hand, production activities for core digital consumer equipment such as mobile phone handsets, PCs and digital home
appliances expanded markedly from last summer. Furthermore, demand for electronic components remained high into the fourth
quarter. In addition, the introduction of new mobile phone handsets and PHS-related products coupled with aggressive efforts in
expanding sales of printers and digital- multifunction products led to a substantial increase in sales in the equipment business in thesecond half. Consequently, consolidated net sales in the second half were ¥636,231 million ($5,438 million), which showed asignificant increase of ¥90,973 million ($778 million), or 16.7%, compared with the first half.
Consolidated net sales in the components business in fiscal 2006 increased by ¥23,272 million ($199 million), or 4.2%, comparedwith fiscal 2005. In particular, sales in the Applied Ceramic Products Group were strong throughout the year, notably solar energy
products and cutting tools. Sales in the Applied Ceramic Products Group resulted in an increase of ¥23,676 million ($202 million), or
25.2%, compared with fiscal 2005.
Consolidated net sales in the equipment business decreased by ¥34,476 million ($295 million), or 6.5%, compared with fiscal 2005.
Sales in the Telecommunications Equipment Group and the Optical Equipment Group declined by ¥21,883 million ($187 million) and¥20,829 million ($178 million), or 8.7% and 58.2%, respectively, compared with fiscal 2005, due to continued structural reforms.
A detailed analysis and discussion of Kyocera’s net sales by the reporting and the geographic segments are as follows:
Net sales by reporting segment
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2005 and fiscal 2006 by the eightreporting segments:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005

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

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

Increase(Decrease)

2006
Amount%%6.2 ¥ 69,373 $ 592,932
10.8
135,299
1,156,402
8.0
117,555
1,004,744
22.3
259,592
2,218,735
21.3
229,035
1,957,564
20.4
249,381
2,131,461
3.0
14,947
127,752
10.0
124,974
1,068,154(2.0)(18,667)(159,547)

5.9
11.4
9.9
22.0
19.4
21.1
1.3
10.6
(1.6)

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

100.0

100.0

0.1

¥1,181,489$10,098,197(1) Fine Ceramic Parts Group
Sales in this reporting segment in fiscal 2006 decreased by ¥4,338 million ($37 million), or 5.9%, to ¥69,373 million ($593 million)
compared with ¥73,711 million in fiscal 2005. This decrease was due to less demand for ceramic parts used in semiconductor
fabrication equipment than in fiscal 2005, and to decreased sales of sapphire products for LCD projectors resulting from intensified
market competition with other substitute materials.
- 33 -

(2) Semiconductor Parts Group
Sales in this reporting segment increased by ¥7,339 million ($63 million), or 5.7%, to ¥135,299 million ($1,156 million) comparedwith ¥127,960 million in fiscal 2005. Demand for ceramic packages for digital consumer products such as mobile phone handsets anddigital cameras recovered in the second half. Furthermore, sales of organic packages for servers and digital consumer products
increased. Approximately 85% of sales in this reporting segment were sales of ceramic packages.
(3) Applied Ceramic Products Group
Sales in this reporting segment increased by ¥23,676 million ($202 million), or 25.2%, to ¥117,555 million ($1,005 million)
compared with ¥93,879 million in fiscal 2005. This increase was due to strong sales growth recorded in the solar energy businessamid an expanding global market spurred by rising environmental awareness. Sales of cutting tools also grew due to healthy
production activity in the automobile industry.
(4) Electronic Device Group
Sales in this reporting segment decreased by ¥3,405 million ($29 million), or 1.3%, to ¥259,592 million ($2,219 million) comparedwith ¥262,997 million in fiscal 2005. Components demand for digital consumer products such as mobile phone handsets started torecover last summer. However, this was insufficient to compensate for a decline in sales in the first half of fiscal 2006, mainly due toslow sales of thin-film devices resulting from decreased demand for LCDs for mobile phone handsets and crystal related components
for digital still cameras and mobile phone handsets. However sales at AVX Corporation, a key subsidiary in this reporting segment,
grew steadily, especially in the digital consumer equipment and telecommunications equipment markets.
(5) Telecommunications Equipment Group
Sales in this reporting segment decreased by ¥21,883 million ($187 million), or 8.7%, to ¥229,035 million ($1,958 million) comparedwith ¥250,918 million in fiscal 2005. Although domestic sales of new mobile phone handsets and PHS handsets were strong, overseas
sales of mobile phone handsets decreased as Kyocera Wireless Corp. was in the process of executing structural reforms in the firsthalf of fiscal 2006. Slow overseas sales of PHS-related products also contributed to the decrease.
(6) Information Equipment Group
Sales in this reporting segment increased by ¥8,236 million ($70 million), or 3.4%, to ¥249,381 million ($2,131 million) comparedwith ¥241,145 million in fiscal 2005. This increase reflected the introduction of new printers and digital multifunction products andencouraged sales activities, which contributed to higher sales volume.
(7) Optical Equipment Group
Sales in this reporting segment decreased by ¥20,829 million ($178 million), or 58.2%, to ¥14,947 million ($128 million) comparedwith ¥35,776 million in fiscal 2005. The main reason for the considerable decrease was the withdrawal from the digital still camera
business as a result of the structural reform of Kyocera’s camera business in fiscal 2005.
(8)

OthersSales in this reporting segment increased by ¥6,934 million ($59 million), or 5.9%, to ¥124,974 million ($1,068 million) comparedwith ¥118,040 million in fiscal 2005. The increase was due in part to strong sales recorded in the telecommunications engineeringbusiness of Kyocera Communication Systems Co., Ltd. Sales at a subsidiary of Kyocera Communication Systems Co., Ltd., which
was newly consolidated in fiscal 2005, also contributed to the overall increase in sales. However, sales of Kyocera Chemical
Corporation decreased compared with fiscal 2005 due to slow sales of molding products and flexible print boards.
- 34 -

Net Sales by geographic segment
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2005 and fiscal 2006, distinguishing
between domestic and overseas sales and, in respect of overseas sales, showing the geographical areas in which such sales were made:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005
AmountJapan
United States of America
Asia
EuropeOthersIncrease(Decrease)

2006%

Amount%%¥ 472,417
248,333
203,848
175,850
80,20740.0 ¥ 474,980
21.0
253,69617.3
198,73114.9
184,351
6.8
69,731$ 4,059,658
2,168,342
1,698,556
1,575,650
595,991

40.2
21.5
16.8
15.6
5.9

0.5
2.2
(2.5)
4.8
(13.1)¥1,180,655

100.0$10,098,197

100.0

0.1

¥1,181,489

Sales in Japan, which comprised 40.2% of consolidated net sales, increased by ¥2,563 million ($22 million), or 0.5%, to ¥474,980
million ($4,060 million) compared with ¥472,417 million in fiscal 2005 due to sales growth in solar energy products, mobile phonehandsets and PHS-related products. Overseas sales, which comprised 59.8% of consolidated net sales, decreased by ¥1,729 million($15 million), or 0.2%, to ¥706,509 million ($6,039 million) compared with ¥708,238 million in fiscal 2005 due primarily todecreased sales in the Telecommunications Equipment Group.
Since almost all overseas sales were denominated in the U.S. dollars or Euro, the depreciation of the yen against these currencies
during fiscal 2006 increased consolidated net sales by approximately ¥32.2 billion ($275 million) compared with fiscal 2005 after
translation into the yen.
An increase in sales in Japan was attributed to the strong growth in solar energy products, mobile phone handsets and PHS-related
products, combined with steady sales growth in the telecommunications engineering business of Kyocera Communication Systems
Co., Ltd., which is based in Japan.
Sales in the United States increased by ¥5,363 million ($46 million), or 2.2%, to ¥253,696 million ($2,168 million) compared with
¥248,333 million in fiscal 2005. Although sales in the Telecommunications Equipment Group in the United States declined due tocontinued structural reforms at Kyocera Wireless Corp., sales in the Electronic Device Group, the solar energy business and theInformation Equipment Group increased.
- 35 -

Sales in Asia decreased by ¥5,117 million ($44 million), or 2.5%, to ¥198,731 million ($1,699 million) compared with ¥203,848
million in fiscal 2005. Although sales in solar energy business and cutting tools business in the Applied Ceramic Products Group andsales in the Electronic Group grew, sales in the Telecommunications Equipment Group, especially mobile phone handsets, decreased.
Sales in Europe increased by ¥8,501 million ($73 million), or 4.8%, to ¥184,351 million ($1,576 million) compared with ¥175,850
million in fiscal 2005 due mainly to growth in the solar energy business amid continued market expansion.
Sales in Others decreased by ¥10,476 million ($90 million), or 13.1%, to ¥69,731 million ($596 million) compared with ¥80,207
million in fiscal 2005 due to decreased sales of the Telecommunications Equipment Group in Latin America, particularly mobile
phone handsets.
Cost of sales and gross profit
In fiscal 2006, cost of sales decreased by ¥16,772 million ($143 million), or 2.0%, to ¥838,295 million ($7,165 million) from¥855,067 million in fiscal 2005. Raw material costs of ¥345,309 million ($2,951 million) accounted for 41.2%, and labor costs of¥156,363 million ($1,336 million) accounted for 18.7% of this total. The ratio of cost of sales to net sales was 71.0%, a decrease of
1.4 points compared with 72.4% in fiscal 2005. In fiscal 2005, Kyocera recorded ¥5,421 million of one time expenses in line withstructural reforms in the Telecommunications Equipment Group and the Optical Equipment Group. Cost of sales in fiscal 2006
decreased due mainly to outsourcing the manufacture of mobile phone handsets at Kyocera Wireless Corp. to Flextronics
International Ltd., a leading provider of electronics manufacturing services, in the Telecommunications Equipment Group and to
significantly downsizing of the camera business in the Optical Equipment Group.
As a result, gross profit increased by ¥17,606 million ($150 million), or 5.4%, in fiscal 2006 to ¥343,194 million ($2,933 million)
from ¥325,588 million in fiscal 2005. The gross profit ratio increased by 1.4 points from 27.6% to 29.0%.
SG&A expenses and profit from operations
Selling, general and administrative (SG&A) expenses in fiscal 2006 increased by ¥15,367 million ($131 million), or 6.8%, to¥239,987 million ($2,051 million) compared with ¥224,620 million in fiscal 2005. Labor cost was ¥115,370 million ($986 million),or 48.1% of total SG&A expenses, and sales promotion and advertising cost was ¥38,274 million ($327 million), or 15.9% of total
SG&A expenses. The proportion of SG&A expenses to net sales rose by 1.3 points to 20.3% in fiscal 2006 compared with 19.0% infiscal 2005. The increase in SG&A expenses in fiscal 2006 reflected an increase in costs associated with aggressive R&D activities
for new businesses and new products. As a result, profit from operations increased by ¥2,239 million ($19 million), or 2.2%, to¥103,207 million ($882 million) compared with ¥100,968 million in fiscal 2005. The operating margin rose by 0.1 point to 8.7% in
fiscal 2006 compared with 8.6% in fiscal 2005.
Interest and dividend income
Interest and dividend income in fiscal 2006 increased by ¥2,572 million ($22 million), or 40.2%, to ¥8,968 million ($77 million)
compared with ¥6,396 million in fiscal 2005. This was mainly due to an increase in dividend income from KDDI Corporation andfavorable fund management results at AVX Corporation. Kyocera has an investment policy aimed at low risk, stability and liquidity,
and does not typically invest in high-risk financial instruments only for pursuing profits.
Interest expense
Interest expense in fiscal 2006 increased by ¥26 million ($0 million), or 2.0%, to ¥1,301 million ($11 million) compared with ¥1,275
million in fiscal 2005. Though interest rates in the Japanese financial market were on a slight upward trend, there was not material
impact on interest expense.
- 36 -

Foreign currency translation
During fiscal 2006, the yen depreciated by ¥5, or 4.6%, against the U.S. dollar and depreciated by ¥3, or 2.2%, against Euro
compared with fiscal 2005, respectively. At March 31, 2006, the yen depreciated by ¥10, or 9.3%, against the U.S. dollar anddepreciated by ¥4, or 2.9%, against Euro compared with at March 31, 2005, respectively. Kyocera recorded foreign currencytransaction losses of ¥316 million ($3 million) in fiscal 2006.
Kyocera typically enters into forward exchange contracts to minimize currency exchange risks on foreign currency denominatedreceivables and payables. Kyocera confines its use of derivative financial instruments to the hedging of its foreign exchange
exposures, and does not utilize derivative transactions for trading purposes.
Gains and losses from investments
In fiscal 2006, Kyocera’s earnings or losses on equity method investments resulted in losses of ¥1,216 million ($10 million), a
decrease of ¥462 million ($4 million) compared with losses of ¥1,678 million in fiscal 2005.
Kyocera’s equity in earnings or losses of affiliates and unconsolidated subsidiaries in fiscal 2006 was derived mainly from interests in
WILLCOM, Inc. Kyocera Corporation owns a 30% interest in WILLCOM, Inc., which operates a PHS service. Kyocera Corporationaccounted for this investment using the equity method. Net losses at WILLCOM, Inc. decreased compared with fiscal 2005 due to
one time expenses related to the business acquisition in fiscal 2005. As a result, Kyocera’s loss on its equity method investment
decreased.
Kyocera Corporation owned a 36.02% interest in Taito Corporation, a major affiliate which operates in the electric amusementbusiness and accounted for by the equity method. On September 28, 2005, Kyocera Corporation sold its entire holding of shares of
Taito Corporation in a tender offer bid for the shares of Taito Corporation by Square Enix Co., Ltd., a Japanese game softwaredeveloper. As a result of this sale of the shares of Taito Corporation, Kyocera recorded a gain on sales of investment in an affiliate of¥6,931 million ($59 million).
Kyocera Mita Corporation owns a 30% interest in Triumph-Adler AG Group, a distributor of office equipment and accounted for its
investment by the equity method. Kyocera recognized loss on impairment of investment in an affiliate of ¥3,492 million ($30 million)
due to an extended decline in its market value in fiscal 2006.
Following the merger of Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., on October 1, 2005, Kyocera’s shares of
UFJ Holdings, Inc. were exchanged for the shares of the new company, Mitsubishi UFJ Financial Group, Inc. As a result of this shareexchange, Kyocera recorded a gain of ¥5,281 million ($45 million) in the third quarter of fiscal 2006.
Income before income taxes
The Applied Ceramic Products Group, especially the solar energy business, recorded higher sales, although sales in the Electronics
Device Group significantly declined in the first half. As a result, operating profit in the components business decreased comparedwith fiscal 2005. In contrast, operating profit in the equipment business increased compared with fiscal 2005. The increase inoperating profit reflected benefits of structural reforms in the Optical Equipment Group and the Telecommunication Equipment
Group in fiscal 2005. Consequently, income before income taxes increased by ¥13,858 million ($118 million), or 12.9%, to ¥121,388
million ($1,038 million) compared with ¥107,530 million in fiscal 2005.
- 37 -

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

2006

Increase(Decrease)

AmountAmount%Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
Others¥ 11,535 ¥ 11,014 $ 94,137
17,55017,742
151,641
17,12921,876
186,974
35,40627,170232,222(14,918)(1,706)(14,581)
36,186
26,412
225,744(15,387)(5,774)(49,350)
13,01912,560107,350

(4.5)
1.1
27.7
(23.3)—(27.0)—(3.5)

Corporate
Equity in losses of affiliates and unconsolidated subsidiaries
Adjustments and eliminations

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

109,294
13,358(1,216)(48)

934,137
114,171(10,393)
(411)

8.7
53.8
—
—

¥107,530¥121,388$1,037,504

12.9

Income before income taxes(1) Fine Ceramic Parts GroupOperating profit in this reporting segment decreased by ¥521 million ($4 million), or 4.5%, to ¥11,014 million ($94 million)
compared with ¥11,535 million in fiscal 2005. This was primarily due to the decrease in sales of parts for semiconductor fabricationequipment and sapphire products for LCD projectors, the core products in this reporting segment.
(2) Semiconductor Parts GroupOperating profit in this reporting segment increased by ¥192 million ($2 million), or 1.1%, to ¥17,742 million ($152 million)
compared with ¥17,550 million in fiscal 2005. Operating profit was impacted by an increase in depreciation costs combined withcapital expenditures of ¥24,136 million ($206 million) geared towards business expansion, including the construction of a new plantfor organic packages. Profit from increased sales of ceramic packages, however, led to a slight increase in overall operating profit inthis reporting segment.
(3) Applied Ceramic Products GroupOperating profit in this reporting segment increased by ¥4,747 million ($41 million), or 27.7%, to ¥21,876 million ($187 million)
compared with ¥17,129 million in fiscal 2005. Increased sales and enhanced productivity of solar energy business and cutting tools
business, core areas in this reporting segment, led to an increase in operating profit. In particular, effective utilization of four
production bases located globally enhanced productivity and led to a significant increase in profit in the solar energy business, despite
a trend of increases in raw material costs.
- 38 -

(4) Electronic Device GroupOperating profit in this reporting segment decreased by ¥8,236 million ($70 million), or 23.3%, to ¥27,170 million ($232 million)
compared with ¥35,406 million in fiscal 2005. Component demand for digital consumer products began to recover last summer,
which contributed to a marked improvement in operating profit in the second half. Nonetheless, a decline in demand for thin-film
devices combined with stagnant demand and declining unit prices, especially in components for mobile phone handsets in the firsthalf which contributed to the decrease in operating profit.
(5) Telecommunications Equipment GroupOperating loss in this reporting segment improved significantly by ¥13,212 million ($113 million) to ¥1,706 million ($15 million)
compared with ¥14,918 million in fiscal 2005. Despite a one time expense of approximately ¥3.1 billion ($26 million) recorded infiscal 2006 in line with structural reforms at Kyocera Wireless Corp. that included the transfer of mobile phone handsets
manufacturing operations to Flextronics International Ltd., operating profits from sales of mobile phone handsets and PHS handsets
in the domestic market increased.
(6) Information Equipment GroupOperating profit in this reporting segment decreased by ¥9,774 million ($ 84 million), or 27.0%, to ¥26,412 million ($226 million)
compared with ¥36,186 million in fiscal 2005. This was due mainly to a decline in product prices amid intensified global market
competition and increased development costs for color printers and digital multifunction products equipped with solutions forbusiness expansion. R&D expenses in this reporting segment increased by ¥3,146 million ($27 million) compared with fiscal 2005.
(7) Optical Equipment GroupOperating loss in this reporting segment improved by ¥9,613 million ($82 million) to ¥5,774 million ($49 million) compared with
¥15,387 million in fiscal 2005. The downsizing of the camera business, which included the withdrawal of the digital camera business,
led to the reduction in operating loss.
(8) Others
Operating profit in this reporting segment decreased by ¥459 million ($4 million), or 3.5%, to ¥12,560 million ($107 million)
compared with ¥13,019 million in fiscal 2005. This was due mainly to a decline in sales at Kyocera Chemical Corporation.
(9) Corporate
Corporate income and losses constitute income and expenses related to the provision of management-related services by Kyocera’shead office to each reporting segment, together with any profit-and-loss items that management judges not to belong within the above
reporting segments, such as gains or losses on valuation of investment securities. Corporate income increased by ¥4,675 million ($40
million), or 53.8%, to ¥13,358 million ($114 million) compared with ¥8,683 million in fiscal 2005. Interest and dividends were themain contributors. In addition, income in fiscal 2006 included a gain of ¥6,931 million ($59 million) through the sale of all ofKyocera’s shares of Taito Corporation, a gain of ¥5,281 million ($45 million) on shares of UFJ Holdings, Inc. in connection with theexchange of shares for the shares of Mitsubishi UFJ Financial Group, Inc. and a loss of ¥3,492 million ($30 million) on impairment of
the investment in Triumph-Adler AG Group, an affiliate of Kyocera Mita Corporation. As a result, corporate gain increased comparedwith fiscal 2005.
- 39 -

TaxesCurrent and deferred income taxes in fiscal 2006 decreased by ¥11,177 million ($96 million), or 19.1%, to ¥47,303 million ($404
million) compared with ¥58,480 million in fiscal 2005. The effective tax rate of 39.0% in fiscal 2006 was 15.4 points lower than
54.4% in fiscal 2005. The amount of income taxes in fiscal 2005 included the additional income taxes of ¥12,748 million by receivinga notice of tax assessment based on transfer pricing adjustments from the Osaka Regional Tax Bureau stating that, in the Bureau’s
judgment, allocation of profit earned from transfers of products between Kyocera Corporation and its overseas subsidiaries was not
appropriate from fiscal 1999 to fiscal 2003.
Minority interests
Kyocera’s minority interests are principally related to AVX Corporation, which accounted for approximately 30% of all minority
ownership interests. Minority interests increased by ¥1,247 million ($11 million) to ¥4,389 million ($38 million) in fiscal 2006
compared with ¥3,142 million in fiscal 2005. This was mainly due to a large increase in net income at AVX Corporation.
Structural reforms
In the Telecommunications Equipment Group, Kyocera transferred production location of Kyocera Wireless Corp. to Mexico in fiscal
2005. The purpose of this move is to reduce costs in response to cost competition from rival companies. Kyocera recorded ¥503
million as headcount reduction costs related to this transfer of production.
In fiscal 2006, Kyocera outsourced the manufacture of mobile phone handsets of Kyocera Wireless Corp., and sold its manufacturing
equipment and inventories to Flextronics International Ltd, a leading provider of electronics manufacturing services. Kyocera
Wireless Corp. reduced its manufacturing costs significantly and improved its profitability by taking cost-down activities upon its
procurements of parts and materials through a strong promotion of the outsourcing to Flextronics International Ltd., and by making
fixed costs related to the manufacturing of mobile phone handsets into variable costs. Kyocera Wireless Corp. also focused its
business operation on specializing in the research, development, sales and marketing of mobile phone handsets.
In the Optical Equipment Group, structural reform was focused on downsizing the camera business. Since the acquisition of YashicaCo., Ltd. in 1983, Kyocera advanced its optical equipment business centered on the camera business under the CONTAX,KYOCERA and YASHICA brands. With the shift from still to digital cameras in the camera market in 2004, Kyocera pushed ahead
with the production and sale of digital cameras best suited to consumer needs. The digital camera market has expanded considerably
on a global scale, however, and because the optical equipment business was unable to achieve sufficient cost reductions to counter theensuing intense cost competition with competitors, it was forced into a difficult business situation. As a result of extensive
investigation into how to effectively utilize management resources under the policies of “business selection and concentration” and“high-value-added diversification,” Kyocera started to downsize the Optical Equipment Group in fiscal 2005. As part of the programto scale back this business, Kyocera closed two overseas sales companies, Yashica Kyocera GmbH Group and Kyocera Optics Inc.,
during fiscal 2005. Costs associated with the closure of two overseas sales companies amounted to ¥3,285 million, including expenses
mainly related to headcount reductions. In addition to the closure of overseas sales companies, a further ¥3,581 million of one time
charge in fiscal 2005 was spent to downsize the domestic camera business. This included the implementation of sales promotions to
reduce inventory. During fiscal 2006, Kyocera completed its downsizing of the digital camera business.
- 40 -

Receipt of a notice of tax assessment based on transfer pricing adjustments and filing complaint against it
On March 28, 2005, Kyocera Corporation received a notice of tax assessment based on transfer pricing adjustments from the Osaka
Regional Tax Bureau stating that, in the Bureau’s judgment, allocation of profit earned from the transfer of products between Kyocera
Corporation and its overseas subsidiaries was not appropriate for the five years from fiscal 1999 through fiscal 2003. The noticeindicated that income should be adjusted upwards by ¥24,394 million and that resultant additional tax, including local taxes, etc.,
amounted to ¥12,748 million. On May 24, 2005, Kyocera Corporation filed a complaint against the tax assessment based on transfer
pricing adjustments with the Osaka Regional Tax Bureau. Although the final resolution of the proposed tax assessment is not certain,
management believes the ultimate disposition of this matter will not have a material impact on the results of operations.
Investment in WILLCOM, Inc. in fiscal 2005
On June 21, 2004, the Carlyle Group, Kyocera, KDDI Corporation and DDI Pocket Inc. reached an agreement that a consortium of
the Carlyle Group, Kyocera and KDDI Corporation would acquire the business of DDI Pocket Inc., a subsidiary of KDDI
Corporation. Under the agreement, the company that succeeds DDI Pocket’s business, the name of which was changed to
WILLCOM, Inc. in February 2005, was invested 30% by Kyocera. In cooperation with WILLCOM, Inc., Kyocera will endeavor to
expand sales in its PHS-related business by carving out new markets in Japan as well as overseas.
Establishment of Japan Medical Materials Corporation in fiscal 2005
On May 21, 2004, Kyocera reached an agreement with Kobe Steel, Ltd. to merge the medical material operations of both companies
into a successor company, Japan Medical Materials Corporation, which was established on September 1, 2004. As a dedicatedmanufacturer of medical materials, the successor company is expected to benefit from the integration of the specialized expertise of
Kyocera and Kobe Steel, Ltd in material processing technologies, while maximizing synergies by integrating development,
production and marketing divisions. It also seeks to expand its business worldwide.
- 41 -

Fiscal 2005 compared with Fiscal 2004
The following table shows a summery of Kyocera’s results of operations for fiscal 2004 and fiscal 2005:(Yen in millions)Years ended March 31,
Increase(Decrease)

2005

2004
Amount%Amount%¥1,140,814
860,224

100.0
75.4

¥1,180,655
855,067

100.0
72.4

3.5
(0.6)

Gross profit
Selling, general and administrative expenses

280,590
171,62824.6
15.0

325,588
224,620

27.6
19.0

16.0
30.9

Profit from operations
Interest and dividend income
Interest expense
Foreign currency transaction (losses) gains, net
Equity in earnings (losses) of affiliates and unconsolidated subsidiaries
Losses on impairment of investment securities
Other, net

108,962
4,883(1,286)(1,546)
2,575(1,030)
2,482

9.6
0.4
(0.1)
(0.1)
0.2
(0.1)
0.2

100,968
6,396(1,275)2,618(1,678)
(132)
633

8.6
0.5
(0.1)
0.2
(0.1)
(0.0)
0.0

(7.3)
31.0
—
—
—
—
(74.5)

6,078

0.5

6,562

0.5

8.0

Income before income taxes and minority interests
Income taxes

115,040
50,310

10.1
4.4

107,530
58,480

9.1
4.9

(6.5)
16.2

Income before minority interests
Minority interests

64,730
3,356

5.7
0.3

49,050(3,142)4.2(0.3)(24.2)—

68,0866.0

45,9083.9(32.6)Net sales
Cost of sales

Net income

¥

¥

%

Net sales
In fiscal 2005, Kyocera’s net sales increased by ¥39,841 million, or 3.5%, to ¥1,180,655 million compared with ¥1,140,814 million in
fiscal 2004.
The increase in net sales was due mainly to growth in demand for major components used in mobile phone handsets, computerrelated equipment and digital consumer products, which boosted revenues from sales in the Fine Ceramic Parts Group, theSemiconductor Parts Group and the Electronic Device Group in the first half of fiscal 2005. The business environment in the second
half of fiscal 2005 changed considerably from the first half of fiscal 2005. Components demand for mobile phone handsets and digitalconsumer products slowed down, due to stagnant demand after the Olympic Games and production adjustment for reducing
inventories by set manufacturers in the second half of fiscal 2005. Total sales in the Fine Ceramic Parts Group, the Semiconductor
Parts Group and the Electronic Device Group amounted to ¥217,810 million in the second half of fiscal 2005, a decrease of ¥29,048
million or 11.8%, compared with ¥246,858 million in the first half of fiscal 2005. Full-year sales of these reporting segments
increased by ¥30,220 million, or 7.0%, to ¥464,668 million compared with ¥434,448 million in fiscal 2004.
- 42 -

Sales in the Applied Ceramic Products Group and the Information Equipment Group rose by contributions of new products throughthe year. Sales in the Applied Ceramic Products Group increased by ¥15,592 million, or 19.9% and sales in the Information
Equipment Group increase by ¥26,953 million, or 12.6%, respectively. Conversely, revenue from the Telecommunications Equipment
Group in fiscal 2005 decreased by ¥51,869 million, or 17.1% compared with fiscal 2004, due to a delayed release of new CDMA
mobile phone handsets to the North American market and stagnant demand for PHS-related products caused by inventory reductionsin China.
A detailed analysis and discussion of Kyocera’s net sales by the reporting and the geographic segments are as follows:
Net sales by reporting segment
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2004 and fiscal 2005 by the eightreporting segments:(Yen in millions)Years ended March 31,

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

Amount

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

6.0
9.5
6.9
22.5
26.5
18.8
2.6
8.8
(1.6)

¥

¥1,140,814

100.0

¥

Increase(Decrease)

2005

2004

Amount%%73,711
127,960
93,879262,997
250,918
241,145
35,776
118,040(23,771)

6.2
10.8
8.0
22.3
21.3
20.4
3.0
10.0
(2.0)

7.2
17.6
19.9
2.4
(17.1)
12.6
22.1
17.4
—

¥1,180,655

100.0

3.5

(1) Fine Ceramic Parts Group
Sales in this reporting segment increased by ¥4,953 million, or 7.2%, to ¥73,711 million compared with ¥68,758 million in fiscal
2004. In particular, components demand for semiconductor and LCD fabrication equipment and sapphire substrates for LEDs grewfavorably.
(2) Semiconductor Parts Group
Sales in this reporting segment increased by ¥19,176 million, or 17.6%, to ¥127,960 million compared with ¥108,784 million in fiscal
2004. Sales of ceramic packages and organic packages used in mobile phone handsets and digital consumer products rose.
(3) Applied Ceramic Products Group
Sales in this reporting segment increased by ¥15,592 million, or 19.9%, to ¥93,879 million compared with ¥78,287 million in fiscal
2004. Sales of solar modules and solar power generation systems expanded in Europe and Japan. Sales of cutting tools for automotive
industry also grew.
- 43 -

(4) Electronic Device Group
Sales in this reporting segment increased by ¥6,091 million, or 2.4%, to ¥262,997 million compared with ¥256,906 million in fiscal
2004. A full year sales contribution from Kyocera Kinseki Corporation resulted in an increase in sales in this reporting segment. Salesof thin-film devices also expanded considerably, as sales grew for LCDs both in Japan and overseas and for thermal printheads for
digital photo printers. In addition, sales at AVX Corporation, which account for approximately 53% of the net sales in this reporting
segment, and at Kyocera Kinseki Corporation, grew steadily, supported by strong demand for digital consumer products through more
active market environment for the electronic industry in the first half of fiscal 2005.
(5) Telecommunications Equipment Group
Sales in this reporting segment decreased by ¥51,869 million, or 17.1%, to ¥250,918 million compared with ¥302,787 million in
fiscal 2004. Sales of mobile phone handsets decreased both in Japan and overseas. Sales at Kyocera Wireless Corp. declined due to adelayed launch of new CDMA handsets in the United States and intensified price competition of mobile phone handsets. Sales ofmobile phone handsets in Japan also decreased, due to the delayed introduction of new models and negative impact of inventory
reduction by a PDC carrier. Sales of PHS-related products dropped due to inventory reduction in China.
(6) Information Equipment Group
Sales in this reporting segment increased by ¥26,953 million, or 12.6%, to ¥241,145 million compared with ¥214,192 million in fiscal
2004. This increase was due to expanded sales of mid- and high-speed digital MFPs and the sales contribution of new models, such as
low- and mid- speed models in Europe.
(7) Optical Equipment Group
Sales in this reporting segment increased by ¥6,479 million, or 22.1%, to ¥35,776 million compared with ¥29,297 million in fiscal
2004. In this reporting segment, Kyocera decided to downsize the camera business and focus on the optical components business. As
a result, sales of digital still cameras dropped. However, sales of optical modules used in mobile phone handsets contributed to sales
for the first time, which resulted in year-on-year growth in this reporting segment. Optical modules sales accounted for approximately
40% of sales in this reporting segment.
(8) Others
Sales in this reporting segment increased by ¥17,535 million, or 17.4%, to ¥118,040 million compared with ¥100,505 million in fiscal
2004.
Sales in Kyocera Communication Systems Co., Ltd. which accounts for approximately 61% of this reporting segment net sales,
increased due to a growth in sales of telecommunications engineering and data center businesses.
Kyocera Chemical Corporation increased sales due to the steady growth of flexible printed circuit boards, molding dies ofcomponents for automobiles and casting resin.
- 44 -

Net Sales by geographic segments
The following table shows a breakdown of Kyocera’s total consolidated net sales for fiscal 2004 and fiscal 2005, distinguishing
between domestic and overseas sales and, in respect of overseas sales, showing the geographical areas in which such sales were made:(Yen in millions)Years ended March 31,
2004

Japan
United States of America
Asia
EuropeOthersIncrease(Decrease)2005

Amount%Amount%%¥ 456,807
251,326
194,302
156,929
81,450

40.0
22.0
17.0
13.8
7.2

¥ 472,417
248,333
203,848
175,850
80,207

40.0
21.0
17.3
14.9
6.8

3.4
(1.2)
4.9
12.1
(1.5)

¥1,140,814

100.0¥1,180,655

100.0

3.5

Sales in Japan, which accounted for 40.0% of total net sales, increased by ¥15,610 million, or 3.4%, to ¥472,417 million comparedwith ¥456,807 million in fiscal 2004. Kyocera’s sales in overseas markets, which accounted for 60.0% of total net sales, increased by¥24,231 million, or 3.5%, to ¥708,238 million compared with ¥684,007 million in fiscal 2004.
Sales in overseas markets are denominated primarily in the U.S. dollars and Euro. Compared with fiscal 2004, the yen appreciatedagainst the U.S. dollar and depreciated against Euro. In terms of net sales, the negative effects of the rising yen against the U.S. dollar
outweighed the positive impact of the weak yen against Euro. Accordingly, consolidated net sales after translation into yen decreased
approximately ¥21.2 billion compared with fiscal 2004.
Sales in Japan increased due mainly to a full year contribution from Kyocera Kinseki Corporation and Kyocera SLC Technologies
Corporation, which became consolidated subsidiaries in fiscal 2004 and contributed to increased sales of semiconductor and LCD
fabrication components, and solar modules and solar power generation systems. In addition, sales of optical modules for cameraequipped mobile phone handsets contributed to sales for the first time in fiscal 2005, and resulted in a sales increase of the Optical
Equipment Group.
The weak yen against Euro produced a positive impact on sales in Europe, and sales growth in Europe was stronger than in otheroverseas markets. Sales in Europe expanded by ¥18,921 million, or 12.1%, to ¥175,850 million compared with ¥156,929 million in
fiscal 2004, due to increased sales in the Information Equipment Group and solar energy products supported by expansion of demand,
particularly in Germany. Sales in Asia rose by ¥9,546 million, or 4.9%, to ¥203,848 million compared with ¥194,302 million in fiscal
2004. In fiscal 2004, Kyocera Corporation acquired 100% of the shares of Kyocera Kinseki Corporation and established new sales
subsidiaries of AVX Corporation to pursue group synergies within the Electronic Device Group and to expand this business. Synergy
effects through these measures were evident in fiscal 2005, as sales of mobile phone handsets increased in India through active
marketing by Kyocera Wireless Corp. Sales in the United States decreased by ¥2,993 million, or 1.2%, to ¥248,333 million comparedwith ¥251,326 million in fiscal 2004, due mainly to downturn sales in the Telecommunications Equipment Group.
- 45 -

Cost of sales and gross profit
In fiscal 2005, cost of sales decreased by ¥5,157 million, or 0.6%, to ¥855,067 million from ¥860,224 million in fiscal 2004. Raw
material costs of ¥386,262 million accounted for 45.2%, and labor costs of ¥158,427 million accounted for 18.5%. The ratio of cost of
sales to net sales was 72.4%, a decrease of 3.0 points compared with 75.4% in fiscal 2004. In fiscal 2004, cost of sales contained awrite-down amounting to ¥10,351 million of current inventories of tantalum materials and purchase commitments based on long-term
contracts at AVX Corporation, labor costs totaling ¥13,735 million related to the transfer of the substitutional portion of Employee
Pension Funds of Kyocera Corporation and Kyocera Mita Corporation to the Japanese government, and a reduction of labor costs of¥2,821 million by the withdrawal from Employee Pension Funds at Kyocera Chemical Corporation. Aside from the special factors
stated above, cost of sales in fiscal 2005 substantially increased due to increases of sales in the Fine Ceramic Parts Group, theSemiconductor Parts Group, the Applied Ceramic Products Group, the Electronic Device Group, the Information Equipment Group,and the Optical Equipment Group.
In fiscal 2005, Kyocera recorded ¥5,421 million of one time charges related to structural reforms in the Telecommunications
Equipment Group and the Optical Equipment Group. In the Optical Equipment Group, losses of ¥4,918 million related to reduction of
inventories, were recorded to downsize the camera business. In the Telecommunications Equipment Group, one time charges of ¥503
million were recorded at Kyocera Wireless Corp. with the transfer of production to Mexico, where more cost-effective labor ispossible. As a result, gross profit increased by ¥44,998 million, or 16.0%, in fiscal 2005 to ¥325,588 million from ¥280,590 million in
fiscal 2004. The gross profit ratio increased by 3.0 point from 24.6% to 27.6%.
SG&A expenses and profit from operations
Selling, general and administrative (SG&A) expenses in fiscal 2005 increased by ¥52,992 million, or 30.9%, to ¥224,620 million
compared with ¥171,628 million in fiscal 2004. Labor cost was ¥111,461 million, or 49.6% of total SG&A, and sales promotion andadvertising cost was ¥39,175 million, or 17.4% of total SG&A. The proportion of SG&A expenses to net sales rose by 4.0 points to
19.0% in fiscal 2005 compared with 15.0% in fiscal 2004. The transfer of the substitutional portion of Employee Pension Funds ofKyocera Corporation and Kyocera Mita Corporation resulted in the deduction of SG&A expenses of ¥32,652 million, while thewithdrawal from Employee Pension Funds at Kyocera Chemical Corporation resulted in a deduction of ¥3,132 million in fiscal 2004.
Excluding the special items above, the increase in SG&A expenses in fiscal 2005 reflected an increase in costs associated withaggressive R&D activities and an increase in advertising expenses, mainly at Kyocera Mita Corporation. As a result, profit fromoperations decreased by ¥7,994 million, or 7.3%, to ¥100,968 million compared with ¥108,962 million in fiscal 2004. The grossmargin fell by 1.0 point to 8.6% in fiscal 2005 compared with 9.6% in fiscal 2004.
Interest and dividend income
Interest and dividend income in fiscal 2005 increased by ¥1,513 million, or 31.0%, to ¥6,396 million compared with ¥4,883 million in
fiscal 2004. This was mainly because KDDI Corporation increased its corporate dividend per share thanks to a favorable businessperformance, thus increasing dividend income on Kyocera’s investments in KDDI Corporation. Kyocera has an investment policy
aimed at low risk, stability and liquidity, and does not typically invest in high-risk financial instruments only for pursuing profits.
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Interest expense
Interest expense in fiscal 2005 decreased by ¥11 million, or 0.9%, to ¥1,275 million compared with ¥1,286 million in fiscal 2004. The
Japanese financial market was still in a low-interest climate, and therefore there was no material fluctuation in interest expense.
Foreign currency translation
During fiscal 2005, the yen appreciated by ¥5, or 4.4%, against the U.S. dollar and depreciated by ¥2, or 1.5%, against Euro
compared with fiscal 2004, respectively. At March 31, 2005, the yen depreciated by ¥1, or 0.9%, against the U.S. dollar anddepreciated by ¥10, or 7.8%, against Euro compared with at March 31, 2004, respectively. The net effect of foreign currency
fluctuations was a gain of ¥2,618 million.
Kyocera typically enters into forward exchange contracts to minimize currency exchange risks on foreign currency denominatedreceivables and payables. Kyocera confines its use of derivative financial instruments to the hedging of its foreign exchange
exposures, and does not utilize derivative transactions for trading purposes.
Gains and losses from investments
In fiscal 2005, Kyocera’s earnings or losses on equity method investments resulted in losses of ¥1,678 million, a fall of ¥4,253
million, compared with earnings of ¥2,575 million in fiscal 2004. Kyocera’s equity in earnings or losses of affiliates andunconsolidated subsidiaries in fiscal 2005 was derived mainly from interests in WILLCOM, Inc. and Taito Corporation.
Kyocera Corporation owned a 13.33% interest in WILLCOM, Inc., which was formerly known as DDI Pocket, Inc. and whichchanged its name in February 2005. WILLCOM, Inc. operates a PHS business. In October 2004, Kyocera purchased an additional
16.67% ownership interest for ¥9,993 million to expand sales in its PHS-related business. Due to its cumulative ownership interest of
30%, Kyocera Corporation accounts for its investment by the equity method. As WILLCOM, Inc. recorded a net loss due to anincrease in operating costs related to its business expansion in fiscal 2005, Kyocera recorded a loss on its equity-method investment in
WILLCOM, Inc.
Kyocera Corporation owns a 36.02% interest in Taito Corporation, a major affiliate which operates in electronic amusement business.
In fiscal 2005, Taito’s net income decreased compared with fiscal 2004 due to a sluggish sales of home-use game machines, anadditional investment in production facilities for game machines and costs of opening new game arcades, in spite of an increase insales of commercial-use game machines. As a result, Kyocera’s earning on its equity-method investment in Taito Corporation
decreased.
In fiscal 2005, losses on impairment of investment securities amounted to ¥132 million, a decrease of ¥898 million, compared with
¥1,030 million in fiscal 2004. Losses recorded in fiscal 2005 and fiscal 2004 were due mainly to management’s estimation that certain
non-public companies in which Kyocera invested would still need considerable time to recover profitability in their operating
activities.
Income before income taxes
In fiscal 2005, Kyocera recorded an increase in operating profit due to higher sales, especially in the components business, and tovarious cost-reduction activities. In contrast, however, a significant decrease in profits was recorded in the equipment business.
Despite higher revenues from sales of the Information Equipment Group, such as digital MFPs, the Telecommunications Equipment
Group slumped due to repair costs for defective products, and one time charges were recorded in line with the policy to downsize thecamera business. Consequently, income before income taxes decreased by ¥7,510 million, or 6.5%, to ¥107,530 million comparedwith ¥115,040 million in fiscal 2004. In fiscal 2004 Kyocera also recorded a settlement gain of ¥18,917 million for a substitutional
portion of Employee Pension Funds and ¥5,953 million of a withdrawal gain of Employee Pension Funds at a subsidiary.
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Operating profit by reporting segment
The following table shows a breakdown of Kyocera’s consolidated income before income taxes, and operating profit for fiscal 2004
and fiscal 2005 by the eight reporting segments:(Yen in millions)Years ended March 31,

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

2004

2005

Increase(Decrease)

AmountAmount%¥ 10,239
10,603
10,297
5,047
5,082
31,986(5,826)
9,683¥ 11,535
17,55017,12935,406(14,918)
36,186(15,387)
13,019

12.7
65.5
66.3
601.5
—
13.1
—
34.5

77,111
34,871
2,575
483

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

30.4(75.1)—(99.0)¥115,040¥107,530(6.5)(1) Fine Ceramic Parts GroupOperating profit in this reporting segment increased by ¥1,296 million or 12.7%, to ¥11,535 million compared with ¥10,239 million
in fiscal 2004. This was due primarily to improvement of manufacturing efficiency by higher sales of fine ceramic components usedin semiconductor and LCD fabrication equipment and sapphire substrates.
(2) Semiconductor Parts GroupOperating profit in this reporting segment increased by ¥6,947 million or 65.5%, to ¥17,550 million compared with ¥10,603 million
in fiscal 2004. This was due primarily to improved capacity utilization by higher sales of ceramic packages used in mobile phonehandsets, and due to reduced costs through the utilization of China-based production facilities.
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(3) Applied Ceramic Products GroupOperating profit in this reporting segment increased by ¥6,832 million or 66.3%, to ¥17,129 million compared with ¥10,297 million
in fiscal 2004. Sales in the solar energy business increased steadily supported by a rising global orientation towards clean energy.
Meanwhile, profit in this business also grew as Kyocera reduced costs through the utilization of China-based production facilities
established in fiscal 2004. Brisk markets led to increases in both sales and profits of cutting tools and dental and orthopedic implants.
(4) Electronic Device GroupOperating profit in this reporting segment increased by ¥30,359 million or 601.5%, to ¥35,406 million compared with ¥5,047 million
in fiscal 2004. In fiscal 2004, AVX Corporation wrote down ¥10,351 million of inventories of tantalum materials and purchasecommitments based on long-term contracts, and also booked a restructuring charge of ¥2,975 million associated with the closure of its
overseas ferrite manufacturing facilities and headcount reductions. In fiscal 2005, despite deterioration in the markets for capacitorsand connectors in the second half, the absence of large-scale write-downs and restructuring charges that were evident in fiscal 2004,
together with improved productivity led to strong growth in profit.
(5) Telecommunications Equipment GroupOperating profit in this reporting segment substantially decreased by ¥20,000 million to a loss of ¥14,918 million compared withincome of ¥5,082 million in fiscal 2004. This decrease was due to significant operating losses recorded at Kyocera Wireless Corp. It
recorded significant losses due to decline in market prices, some defective products, and the relocation costs of production sites.
Furthermore, repair costs for defective software and delays in the market introduction of new products in Japan also led to losses.
(6) Information Equipment GroupOperating profit in this reporting segment increased by ¥4,200 million or 13.1%, to ¥36,186 million compared with ¥31,986 million
in fiscal 2004. This increase was due primarily to a steady growth in sales of digital MFPs and an increase in sales of high-valueadded products. Lower costs achieved through a China-based production facility also contributed to the increase in operating profit.
(7) Optical Equipment GroupOperating loss in this reporting segment increased by ¥9,561 million to ¥15,387 million compared with a loss of ¥5,826 million in
fiscal 2004. This reflected higher-than-expected costs associated with the launch of the optical module business in fiscal 2005, andone time charges related to the downsizing of the camera business in fiscal 2005.
(8) Others
Operating profit in this reporting segment increased by ¥3,336 million or 34.5%, to ¥13,019 million compared with ¥9,683 million in
fiscal 2004. This was due primarily to increased earnings in Kyocera Communication Systems Co., Ltd., arising from improved
development efficiency and lower costs, as well as increased sales in Kyocera Chemical Corporation, especially in the businesses
related to flexible printed circuit boards.
(9) Corporate
Corporate income and losses constitute income and expenses related to the provision of management-related services by Kyocera’shead office to each reporting segment, together with any profit-and-loss items that management judges not to belong within the above
reporting segments, such as litigation expenses or losses on impairment of investment securities. In fiscal 2005, Kyocera recorded
Corporate income of ¥8,683 million. This represented a decrease of ¥26,188 million, or 75.1%, compared with Corporate income of¥34,871 million in fiscal 2004. The main contributors in fiscal 2005 were interest and dividends. The income in fiscal 2004 included¥18,917 million of a settlement gain for a substitutional portion of Employee Pension Funds, ¥5,953 million of a withdrawal gain of
Employee Pension Funds at a subsidiary, and ¥2,284 million of a gain on reversal of excess accruals resulting from a settlement of
litigation in the LaPine Case. As a result, Corporate gain decreased markedly compared with fiscal 2004.
- 49 -

TaxesCurrent and deferred income taxes in fiscal 2005 increased by ¥8,170 million, or 16.2%, to ¥58,480 million compared with ¥50,310
million in fiscal 2004. The effective tax rate of 54.4% in fiscal 2005 was 10.7 points higher than 43.7% in fiscal 2004. Kyocera
Corporation received a notice of tax assessment based on transfer pricing adjustments from the Osaka Regional Tax Bureau stating
that, in the Bureau’s judgment, allocation of profit earned from transfers of products between Kyocera Corporation and its overseas
subsidiaries was not appropriate for five years from fiscal 1999 through fiscal 2003, and this resulted in additional current income
taxes of ¥12,748 million. Although the final resolution of the proposed tax assessment is not certain, management believes theultimate disposition of this matter will not have a material impact on the results of operations.
Minority interests
Minority interests are principally related to AVX Corporation, which accounted for an approximately 30% minority ownershipinterest in fiscal 2005. Minority interests decreased by ¥6,498 million to a loss in minority interests of ¥3,142 million, compared witha gain in minority interests of ¥3,356 million in fiscal 2004. This was mainly due to an increase in net income at AVX Corporation
because it recorded one time charges related to a write-down of inventories and restructuring activities in fiscal 2004, and there wereno such costs in fiscal 2005.
Settlement of LaPine Case in Fiscal 2004
On September 1, 1994, the International Chamber of Commerce issued its award with respect to the arbitration between Kyocera
Corporation and LaPine Technology Corporation (LTC), Prudential-Bache Trade Corporation (PBTC) (presently renamed PrudentialBache Trade Services, Inc.), et al. for the alleged breach of an agreement by Kyocera Corporation in connection with thereorganization of LTC. The award ordered Kyocera Corporation to pay to LTC and PBTC as damages, approximately $257 million,
including interest, arbitration costs and attorney’s fees. Kyocera Corporation filed a motion to vacate, modify and correct the award in
the U.S. District Court for the Northern District of California pursuant to an agreement between the parties providing for broad
judicial examination of arbitration awards.
With respect to this case, Kyocera Corporation subsequently appealed to the Ninth Circuit Court of Appeals and then to the Supreme
Court of the United States asserting the validity of the provision for broad judicial examination of arbitration awards. On
December 22, 2003, Kyocera Corporation reached an agreement with Prudential Securities Group, Inc., Prudential Equity Group,
Inc., LaPine Technology Corporation and LaPine Holding Company to settle all claims in pending litigation between the parties.
Kyocera Corporation has paid $331.5 million pursuant to this settlement and recorded ¥35,454 million as cash payment in its
consolidated financial statements in fiscal 2004.
Kyocera had recognized a provision for accrued litigation expenses as cost of sales in fiscal 2004. The excess accrual of ¥2,284
million was reversed as a reduction of cost of sales to account for the difference between accrued litigation expenses and the cash
settlement in fiscal 2004.
- 50 -

Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities in Fiscal 2004
In fiscal 2004, Kyocera Corporation and Kyocera Mita Corporation transferred to the Japanese government the substitutional portionof Employee Pension Funds liabilities and the related government-specified portion of plan assets of Employee Pension Funds upon
approval by the Ministry of the Health, Labor and Welfare in Japan.
Kyocera Corporation and Kyocera Mita Corporation adopted Emerging Issues Task Force Issue No. 03-02, “Accounting for theTransfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities” for the settlement processof the substitutional portion of Employee Pension Funds, and recorded ¥18,917 million of a settlement gain for the substitutional
portion of Employee Pension Funds. Detailed information regarding this transfer process of and settlement gain for the substitutional
portion of Employee Pension Funds is described in Note 9 to The Consolidated Financial Statements included in this Form 20-F.
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 affiliate, 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, Limited changed its name to “Kyocera Kinseki Corporation.”
Investment in Kyocera SLC Technologies Corporation in Fiscal 2004
On June 30, 2003, in order to reinforce the business of organic circuit boards, Kyocera Corporation and IBM Japan, Ltd. reached anagreement for the transfer to Kyocera Corporation from IBM Japan, Ltd. of the SLC (Surface Laminar Circuitry: 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 million. Kyocera Corporation incorporated a new successor
company, “Kyocera SLC Technologies Corporation”, on August 12, 2003, which commenced operation on September 1, 2003.
Critical Accounting Policies and Estimates
Kyocera’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the UnitedStates of America. The preparation of these consolidated financial statements requires the use of estimates, judgments, andassumptions that affect the reported amounts of assets and liabilities at the date of consolidated financial statements and the reported
amounts of revenues and expenses during the periods presented. Actual results may differ from these estimates, judgments andassumptions.
An accounting estimate in Kyocera’s consolidated financial statements is a critical accounting estimate if it requires Kyocera to makeassumptions about matters that are highly uncertain at the time the accounting estimate is made, and either different estimates that
Kyocera reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely to occur
from period to period, would have a material impact on the presentation of Kyocera’s financial condition, changes in financial
condition or results of operations. Kyocera has identified the following critical accounting policies with respect to its financial
presentation.
Allowances for doubtful accounts
Kyocera maintains allowances for doubtful accounts related to both trade and finance receivables for estimated losses resulting from
customers’ inability to make timely payments, including interest on finance receivables. Kyocera’s estimates are based on various
factors including the length of past due payments, historical experience and current business environments. In circumstances where itis aware of a specific customer’s inability to meet its financial obligations, a specific allowance against these amounts is provided
considering the fair value of assets pledged by the customer as collateral.
- 51 -

A substantial portion of allowances for doubtful accounts is recorded with respect to the finance receivables of Kyocera Leasing Co.,
Ltd. in the Others segment, which provides credit financing and commercial leasing services. Based on the factors discussed above,
Kyocera Leasing Co., Ltd. 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. Kyocera Leasing Co., Ltd. continuously monitors the correlation between the allowances so determined and the actual
loss experienced, and makes an appropriate modification to the schedule of percentages for determining allowance amounts.
At March 31, 2006, Kyocera Leasing Co., Ltd. had ¥6,332 million ($54 million) of allowances for doubtful accounts against ¥126,741
million ($1,083 million) of finance receivables, which comprise over 50% 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 if the age of corresponding inventory is
shorter than 12 months.
In fiscal 2006, as a result of continuous strict controls and adjustments on inventories, Kyocera recognized inventory write-downs of¥8,446 million ($72 million). The amounts of these inventory write-downs by reporting segments appear in Note 17 to The
Consolidated Financial Statements included in this Form 20-F. A large portion of these inventory write-downs arose from inventories
of telecommunication equipment and information equipment. These products were subject to a decrease in demand and a decline inprice, or turned out to be obsolete because of their short product lives. In the telecommunications equipment business, Kyocera
implemented structural reforms to improve future profitability following the previous year and recognized inventory write-downs orlosses on disposal based on business plans.
The majority of Kyocera’s inventories are produced for the IT industry. Each of these products generally has a short product life, andis susceptible to market demand and price fluctuations. Inventory write-downs generally affect all segments except Others. If market
conditions and demand in the information technology industry are less favorable than Kyocera’s projections, additional write-downs
may be required.
Impairment of securities and investments
Kyocera records impairment charges for debt and equity securities and investments in affiliates and unconsolidated subsidiaries
accounted for 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.
The impairment losses are recorded as Corporate losses.
In fiscal 2006, Kyocera recognized losses on impairment of investment securities amounting to ¥385 million ($3 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.
- 52 -

Kyocera Corporation is currently a major shareholder of KDDI Corporation. The price fluctuation of the shares of KDDI Corporation
may affect Kyocera’s financial conditions. At March 31, 2006, the unrealized gain of ¥111,178 million ($950 million) on the sharesof KDDI Corporation held by Kyocera Corporation increased compared with that of ¥55,056 million at March 31, 2005, reflecting afluctuation of the market price of the share of KDDI Corporation during fiscal 2006. As the operating results of KDDI Corporation
recently grew steadily, the performance of the share of KDDI Corporation is considered to be stable. For detailed information on the
gross unrealized gain or loss, see Note 3 to The Consolidated Financial Statements in this Form 20-F.
Kyocera Mita Corporation owns a 30% interest in Triumph-Adler AG Group, a distributor of office equipment and accounted for by
the equity method. Kyocera recognized loss on impairment of investment in affiliate of ¥3,492 million ($30 million) due to an
extended decline in its market value in fiscal 2006.
Impairment of long-lived assets
Kyocera reviews its long-lived assets and intangible assets with definite useful lives for impairment periodically. Long-lived assets
and intangible assets with definite useful lives are considered to be impaired when the expected undiscounted cash flow from the asset
is less than its carrying value. A loss on impairment is recognized based on the amount by which the carrying value exceeds the fairvalue of the long-lived assets and intangible assets with definite useful lives. In fiscal 2006, Kyocera recognized loss on impairmentof long-lived assets in a foreign subsidiary. However this loss on impairment did not have a material impact on Kyocera’s
consolidated results of operations and financial position.
Goodwill and other intangible assets
Goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually, rather than being amortized,
and also following any events or changes in circumstances that might lead to impairment. Intangible assets with definite useful lives
are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment whenever
events or changes in circumstances indicate that their carrying amount may not be recoverable.
Kyocera undertook a review for impairment of goodwill and other intangible assets in fiscal 2006. The results of this review revealed
no 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, 2006, deferred tax assets
amounted to ¥82,342 million ($704 million), which Kyocera considers will reasonably be realized in the future compared with theamounts of taxable income and income taxes in fiscal 2006.
- 53 -

Benefit plans
Projected benefit obligations and plan assets are determined on an actuarial basis and are significantly affected by the assumptions
used in their calculation, such as the discount rates, the expected long-term rate of return on plan assets, the rate of increase incompensation levels and other assumptions. Kyocera determines the discount rate by referencing the yield on high quality fixedincome securities such as Japanese Government Bonds. The expected return on plan assets is determined based on the rate ofhistorical earnings and Kyocera’s expectation of future performance of the funds in which plan assets are invested. The rate ofincrease in compensation levels is determined based mainly on results of operations and inflation. Kyocera annually reviews theassumptions underlying its actuarial calculations, making adjustments based on current market conditions, if necessary. If Japaneseand global financial markets stagnate, Kyocera may be required to decrease its assumptions of the discount rate and the expectedlong-term rate of return on plan assets, and a decrease in such assumptions will lead to an increase in projected benefit obligations andnet periodic pension costs. Particularly, an increase in projected benefit obligations may negatively affect Kyocera’s accrued pension
and severance liabilities in the consolidated balance sheet and labor costs included in cost of sales and selling, general andadministrative expenses in the consolidated statement of income. An increase in accumulated benefit obligations may also require
Kyocera to record additional minimum pension liability in accumulated other comprehensive income. In fiscal 2004, Kyocera
Corporation and Kyocera Mita Corporation transferred to the Japanese government the substitutional portion of Employee Pension
Funds liabilities and the related government-specified portion of plan assets of Employee Pension Funds. Kyocera Corporation andKyocera Mita Corporation adopted Emerging Issues Task Force 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 Employee Pension Funds, and recorded ¥18,917 million of a settlement gain for the substitutional portion of Employee
Pension Funds. As a result of this settlement, Kyocera’s projected benefit obligation decreased by ¥71,243 million and plan assets
decreased by ¥29,493 million, respectively. This decrease in projected benefit obligation is particularly considered to lead to a
reduction of a potential negative impact on Kyocera’s financial conditions and results of operations. Detailed information regarding
this transfer process of and settlement gain for the substitutional portion of Employee Pension Funds is described in Note 9 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, assuming
all other assumptions consistent, for benefit plans at Kyocera Corporation and certain domestic subsidiaries which account for asignificant portion of Kyocera’s projected benefit obligations and net periodic pension costs.
(Yen in millions)
Effect on projected benefit obligation
as of March 31, 2006

Discount rates:
0.5% decrease
0.5% increase

¥

8,011
(7,316)

Effect on income before income taxes
for the year ending March 31, 2007

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

¥

(284)
286
(556)
556

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.
- 54 -

Revenue recognition
Kyocera sells various types of products, including fine ceramic parts, semi-conductor parts, and telecommunications equipment.
Kyocera recognizes revenue upon completion of the earnings process, which occurs when products are shipped or delivered to thecustomer in accordance with the terms of an agreement of sale, there is a fixed or determinable selling price, title and risk of loss havebeen transferred, and collectibility is reasonably assured. Most of these conditions are satisfied at the time of delivery to customers indomestic sales (FOB destination) and at the time of shipment (FOB shipping) for export sales.
Sales returns
Kyocera records an estimated sales return allowance at the time of sales based on its historical returns experience.
Products warranty
At the time of sale, Kyocera accrues a product warranty liability for claims under warranties relating to the products that have beensold. Kyocera records an estimated product warranty reserve based on its historical repair experience.
Revenue from financial services
In addition to the tangible products as discussed above, Kyocera also provides certain services, primarily financial services. Revenue
from direct financing leases is recognized over the term of the lease, and amortization of unearned lease income is recognized using
the interest method. Interest income on installment loans is recognized on an accrual basis.
New Accounting Standards
In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 151, “Inventory Costs an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 requires that all abnormal idle facility expense,
freight, handling costs, and spoilage be recognized as current-period charges regardless of whether they meet the criterion of “soabnormal.” In addition, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on
the normal capacity of the production facilities. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning
after June 15, 2005. The adoption of SFAS No. 151 will not have a material impact on Kyocera’s consolidated results of operations
and financial position.
In December 2004, the FASB issued SFAS No. 123 (revised 2004) (SFAS No. 123R), “Share-Based Payments.” This statement is arevision of SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 123R supersedes Accounting Principles Board(APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related interpretations. SFAS No. 123R requires that thecost resulting from all share-based payment transactions be recognized in the financial statements. SFAS No. 123R establishes fairvalue as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value
based measurement method in accounting for share-based payment transactions with employees except for equity instruments held byemployee share ownership plans. SFAS No. 123R was announced to be effective as of the beginning of the first fiscal year that would
begin after June 15, 2005, however, on April 14, 2005, the Securities and Exchange Commission Staff postponed implementation of
SFAS No. 123R. Kyocera will adopt SFAS No. 123R effective on April 1 2006, and estimates that the impact of SFAS No. 123R will
be approximately ¥400 million ($3 million) on Kyocera’s consolidated results of operations for fiscal 2007.
In March 2005, the FASB issued Interpretation (FIN) No. 47, “Accounting for Conditional Asset Retirement Obligations - aninterpretation of SFAS No. 143.” This Interpretation clarifies use of the term conditional asset retirement obligation in SFAS No. 143,
“Accounting for Asset Retirement Obligation.” FIN No. 47 requires recognition of a liability for the fair value of a conditional asset
retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN No. 47 is effective no later than theend of fiscal years ended after December 15, 2005. The adoption of FIN No. 47 did not have a material impact on Kyocera’s
consolidated results of operations and financial position.
- 55 -

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20
and SFAS No. 3.” SFAS No. 154 replaces APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting
Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting
principle. SFAS No. 154 applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting
pronouncement when the pronouncement does not include specific transition provisions. APB Opinion No. 20 previously requiredthat most voluntary changes in accounting principle be recognized by including in net income of the period of the change thecumulative effect of changing to the new accounting principle. SFAS No. 154 requires retrospective application to prior periods’
financial statements of changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005. The impact of SFAS No. 154 will depend on the changes, if any, that
Kyocera may identify and record in a future period.
In November 2005, the FASB issued FASB Staff Position 115-1 and 124-1, “The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments” (FSP FAS 115-1 and FAS 124-1). FSP FAS 115-1 and FAS 124-1 explains thedetermination as to when an investment is considered impaired, whether that impairment is other than temporary, and themeasurement of an impairment loss. In addition, it also addresses accounting considerations subsequent to the recognition of an otherthan-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-thantemporary impairment. FSP FAS 115-1 and FAS 124-1 is effective in reporting periods beginning after December 15, 2005. The
adoption of FSP FAS 115-1 and FAS 124-1 did not have a material impact on Kyocera’s consolidated results of operations andfinancial position.
B. Liquidity and Capital Resources
Capital resources
Fiscal 2006 compared with Fiscal 2005
In the short term, Kyocera expects cash demands for working capital and funds for capital expenditures required for the expansion ofoperations, purchases of Kyocera Corporation’s common stock, and payments of dividends to stockholders. Kyocera’s primary sourceof short-term liquidity is cash generated by operations. Certain subsidiaries also generate capital in the form of loans from financial
institutions. At March 31, 2006, Kyocera’s short-term borrowings and long-term debt including current portion totaled ¥140,572
million ($1,201 million). The ratio to total assets of 7.3% still reflected a low level of dependence. Most borrowings weredenominated in the yen but certain borrowings were denominated in foreign currencies, such as the U.S. dollar. And there is nomaterial seasonality in Kyocera’s borrowing requirement. Details of these borrowings are described in Item 5F “Tabular Disclosure ofContractual obligations,” which also includes the information regarding obligations for the acquisition or construction of property,
plant and equipment.
Capital expenditures in fiscal 2006 increased by ¥27,095 million ($232 million), or 42.9%, to ¥90,271 million ($772 million)
compared with ¥63,176 million in fiscal 2005. In fiscal 2006, capital expenditures for business expansion increased significantly,
especially in the solar energy business and organic package business, compared with fiscal 2005. R&D expenditures increased by¥3,038 million ($26 million), or 5.6%, to ¥57,436 million ($491 million) compared with ¥54,398 million in fiscal 2005. Nearly all
capital and R&D expenditures were funded using cash in hand or cash generated by operations.
During fiscal 2007, Kyocera expects total capital expenditures to be approximately ¥72,000 million ($615 million), and total R&D
expenditures to be approximately ¥63,000 million ($538 million). Kyocera believes that Kyocera needs to invest its resources
continuously in the development of new business areas and improved technology in order to create new products, commercialize
advanced technologies and thereby secure future earnings streams.
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At March 31, 2006, Kyocera’s working capital totaled ¥542,045 million ($4,633 million), a decrease of ¥9,173 million ($78 million),or 1.7%, from ¥551,218 million at March 31, 2005. This was due to the effect of a decrease in inventories, mainly in the
Telecommunications Equipment Group and the Information Equipment Group, and an increase in notes and accounts payable which
exceeded the effect of an increase in short-term investments including negotiable certificate of deposits. Kyocera plans to continue toimprove capital efficiency by shortening manufacturing lead-time and reducing inventory level. Cash from operations has generally
been sufficient for Kyocera to fund its working capital requirements and to fulfill its future capital expenditures, debt repayments andother obligations. Kyocera’s net cash provided by operating activities in fiscal 2006 was ¥171,077 million ($1,462 million) and cash
and cash equivalents at March 31, 2006 were ¥300,809 million ($2,571 million). Kyocera believes that its working capital issufficient for present and predictable future requirements.
Kyocera Corporation undertakes purchases of its common stock to facilitate the implementation of flexible capital policies and todevelop its business in a dynamic manner in response to changes in the operating environment.
In fiscal 2006, Kyocera Corporation paid cash dividends totaling ¥18,748 million ($160 million), at ¥100 ($0.9) per share. Kyocera
Corporation received approval at the general meeting of shareholders held on June 23, 2006 for the payment of year-end dividends
totaling ¥9,387 million ($80 million), at ¥50 ($0.4) per share, on June 26, 2006 to all stockholders of record on March 31, 2006.
Kyocera believes cash in hand and cash from operations will be sufficient to fund all cash requirements outlined above, at least
through fiscal 2007. Consequently, Kyocera does not currently intend to use any other external financing sources that might affect its
credit agency ratings. If cash generated by operations are insufficient for funding purposes, Kyocera retains other financing options,
including external sources, such as short-term or long-term borrowings, as well as financing directly in the capital markets throughissuances of debt or equity securities. As evidenced by equity to assets ratio of 66.7% at March 31, 2006, Kyocera maintains a strong
financial position, which leads Kyocera to believe that any capital requirements could be secured from external sources at a relatively
low cost. Kyocera also maintains good business relationships with several major Japanese financial institutions.
Any future significant deterioration in market demand for Kyocera’s products, or a slump in product prices to levels substantiallybelow those projected by Kyocera, could adversely affect Kyocera’s operating results and financial position, possibly resulting in
reduced liquidity.
Fiscal 2005 compared with Fiscal 2004
In the short term, Kyocera expects cash demands for working capital and funds for capital expenditures required for the expansion ofoperations, purchases of Kyocera Corporation’s common stock, and payments of dividends to stockholders. Kyocera’s primary sourceof short-term liquidity is cash generated by operations. Certain subsidiaries also generate capital in the form of loans from financial
institutions. At March 31, 2005, Kyocera’s short-term borrowings and long-term debt including current portion totaled ¥144,164
million. The ratio to total assets of 8.3% was still at a low level of dependence. Most borrowings were denominated in yen but certain
borrowings were denominated in foreign currencies, such as the U.S. dollar.
At March 31, 2005, Kyocera’s working capital totaled ¥551,218 million, a decrease of ¥5,839 million, or 1.0%, from ¥557,057
million at March 31, 2004. This was due mainly to decreases in cash and cash equivalents as a result of purchases of government
bonds and negotiable certificate of deposits in consideration of the current and future financial position in accordance with ourinvestment policy, and in notes and accounts payable as a result of decreases of orders and production in the Telecommunications
Equipment Group. Cash from operations has generally been sufficient for Kyocera to fund its working capital requirements and tofulfill its future capital expenditures, debt repayments and other obligations. Kyocera’s net cash provided by operating activities infiscal 2005 was ¥145,523 million and cash and cash equivalents at March 31, 2005 were ¥310,592 million. In Kyocera’s opinion,
working capital is sufficient for present and predictable future requirements.
- 57 -

Capital expenditures in fiscal 2005 increased by ¥8,239 million, or 15.0%, to ¥63,176 million compared with ¥54,937 million in fiscal
2004. R&D expenditures increased by ¥7,768 million, or 16.7%, to ¥54,398 million from ¥46,630 million in fiscal 2004. Nearly all
capital and R&D expenditures were funded using cash in hand or cash generated by operations.
Kyocera Corporation undertakes purchases of its common stock to facilitate the implementation of flexible capital policies anddevelop its business in a dynamic manner in response to changes in the operating environment.
In fiscal 2005, Kyocera Corporation paid cash dividends totaling ¥11,249 million, ¥60 per share. Kyocera Corporation received
approval at the general meeting of shareholders held on June 28, 2005 for the payment of year-end dividends totaling ¥9,374 million,¥50 per share, on June 29, 2005 to all stockholders of record on March 31, 2005.
Kyocera believes cash in hand and cash from operations will be sufficient to fund all cash requirements outlined above, at least
through fiscal 2006. Consequently, Kyocera does not currently intend to use any other external financing sources that might affect its
credit agency ratings. If cash generated by operations are insufficient for funding purposes, Kyocera retains other financing options,
including external sources, such as short-term or long-term borrowings as well as financing directly in the capital markets throughissuances of debt or equity securities. As evidenced by an equity ratio to assets of 67.3% at March 31, 2005, Kyocera maintains astrong financial position, which leads Kyocera to believe that any capital requirements could be secured from external sources at a
relatively low cost. Kyocera also maintains good business relationships with several major Japanese financial institutions.
Any future significant deterioration in market demand for Kyocera’s products, or a slump in product prices to levels substantiallybelow those projected by Kyocera, could adversely affect Kyocera’s operating results and financial position, possibly resulting in
reduced liquidity.
Cash flows
Fiscal 2006 compared with Fiscal 2005
The following table shows a summary of Kyocera’s cash flows for fiscal 2005 and fiscal 2006:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,

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

2005

2006

Increase(Decrease)

AmountAmount%¥ 145,523(132,494)(67,344)
310,592¥ 171,077(165,467)(23,289)
300,809$ 1,462,197(1,414,248)(199,051)
2,571,017

17.6
24.9
(65.4)(3.1)

Net cash provided by operating activities in fiscal 2006 increased by ¥25,554 million ($218 million), or 17.6%, to ¥171,077 million($1,462 million) from ¥145,523 million in fiscal 2005. This was due to an increase in net income by ¥23,788 million ($203 million),or 51.8%, to ¥69,696 million ($596 million) from ¥45,908 million in fiscal 2005, coupled with a decrease in inventory as a result of
inventory normalization and an increase in notes and account payable in line with an increase in orders and production.
- 58 -

Net cash used in investing activities in fiscal 2006 increased by ¥32,973 million ($282 million), or 24.9%, to ¥165,467 million($1,414 million) from net cash used in investing activities of ¥132,494 million in fiscal 2005. In fiscal 2006, proceeds from sales of
Taito Corporation shares and a decrease in payment for purchase of investments and advances compared with fiscal 2005 provided
cash inflow in investing activities. Nonetheless, payment for purchases of property, plant and equipment increased owing toaggressive capital expenditure, payment for purchase of securities increased in line with fund management, and deposits of negotiablecertificates of deposits and time deposits increased compared with fiscal 2005. As a result, net cash used in investing activities infiscal 2006 increased compared with fiscal 2005.
Net cash used in financing activities in fiscal 2006 decreased by ¥44,055 million ($377 million), or 65.4%, to ¥23,289 million ($199
million) from ¥67,344 million in fiscal 2005. Although dividend payments increased in fiscal 2006 compared with fiscal 2005, anincrease in short-term debt caused net cash used in financing activities to decrease compared with fiscal 2005.
The yen’s depreciation against the U.S. dollar and Euro between March 31, 2005 and 2006 resulted in an increase in cash and cash
equivalents of ¥7,896 million ($67 million).
At March 31, 2006, cash and cash equivalents totaled ¥300,809 million ($2,571 million). This represented a decrease of ¥9,783
million ($84 million), or 3.1%, from ¥310,592 million at March 31, 2005. Most of Kyocera’s cash and cash equivalents weredenominated in the yen but certain cash and cash equivalents, mainly in overseas subsidiaries, were denominated in foreign
currencies, such as the U.S. dollar.
Fiscal 2005 compared with Fiscal 2004
(Yen in millions)Years ended March 31,

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

2004

2005

Increase(Decrease)

AmountAmount%¥ 62,575
29,581(20,422)361,132¥ 145,523(132,494)(67,344)
310,592132.6—(229.8)(14.0)Net cash provided by operating activities in fiscal 2005 increased by ¥82,948 million, or 132.6%, to ¥145,523 million from ¥62,575
million in fiscal 2004. This was due to a significant decrease in receivables by collection, including short-term finance receivables,
although net income decreased by ¥22,178 million, or 32.6%, to ¥45,908 million compared with fiscal 2004. Kyocera Leasing Co.,
Ltd., which provides financial services, collected large-lot loans, and these collections resulted in the decrease in receivables. In
addition, due to the settlement regarding the LaPine Case of ¥35,454 million in fiscal 2004, net cash provided by operating activities
in fiscal 2005 increased compared with fiscal 2004. A decrease in notes and accounts payable due to decreases of production in the
Telecommunications Equipment Group offset an increase in net cash provided by operating activities.
Net cash used in investing activities in fiscal 2005 increased by ¥162,075 million to ¥132,494 million from net cash provided byinvesting activities of ¥29,581 million in fiscal 2004. This was due mainly to increases in purchases of government bonds anddeposits of negotiable certificate of deposits in consideration of market trends and current and future financial position according to
our investment policy. In addition, in fiscal 2005, there was no cash inflow from withdrawal of restricted cash for settlement
regarding the LaPine Case.
- 59 -

Net cash used in financing activities in fiscal 2005 increased by ¥46,922 million, or 229.8%, to ¥67,344 million from ¥20,422 million
in fiscal 2004. This was due mainly to a decrease in proceeds from issuance of long-term debt and an increase in repayments of longterm debt.
The yen’s depreciation against the U.S. dollar and Euro between March 31, 2004 and 2005 resulted in increases in cash and cash
equivalents of ¥3,775 million.
At March 31, 2005, cash and cash equivalents totaled ¥310,592 million. This represented a decrease of ¥50,540 million, or 14.0%,
from ¥361,132 million at March 31, 2004. Most of Kyocera’s cash and cash equivalents were denominated in yen but certain cash andcash equivalents, mainly in overseas subsidiaries, were denominated in foreign currencies, such as the U.S. dollar.
Assets, liabilities and stockholders’ equity
Kyocera’s total assets at March 31, 2006 increased by ¥186,003 million ($1,590 million), or 10.7%, to ¥1,931,522 million ($16,509
million), compared with ¥1,745,519 million at March 31, 2005.
Cash and cash equivalents decreased by ¥9,783 million ($84 million), or 3.1%, to ¥300,809 million ($2,571 million). This was due
mainly to the effect of purchases of government bonds and deposits with over 3 months original maturities aiming for higher interest
from investments, exceeding cash gained by the sale of all of Kyocera’s shares of Taito Corporation.
Short-term investments increased by ¥53,004 million ($453 million), or 151.7%, to ¥87,942 million ($752 million), due mainly toincreases in deposits with over 3 months original maturities and bonds maturing within one year, which were reclassified fromsecurities and other investments. Short-term and long-term finance receivables increased by ¥13,247 million ($113 million), or
12.4%, to ¥120,475 million ($1,030 million), due mainly to an increase of loan assets by Kyocera Leasing Co., Ltd. Short-term andlong-term finance receivables also included finance lease receivables.
Inventories decreased by ¥22,847 million ($195 million), or 10.7%, to ¥190,564 million ($1,629 million). This was due mainly to a
reduction of inventories in the Telecommunications Equipment Group in Kyocera Corporation and in Kyocera Mita Corporation, as
well as sales of inventories following the outsourcing of the manufacture of mobile phone handsets of Kyocera Wireless Corp.
Investments in and advances to affiliates and unconsolidated subsidiaries decreased by ¥23,268 million ($199 million), or 76.0%, to¥7,355 million ($63 million), due mainly to the sale of all of Kyocera’s shares of Taito Corporation and loss on impairment ofinvestment in Triumph-Adler AG Group, an affiliate of Kyocera Mita Corporation.
Securities and other investments increased by ¥122,940 million ($1,051 million), or 28.6%, to ¥553,377 million ($4,730 million), due
mainly to an increase in market value at March 31, 2006 of the shares of KDDI Corporation and other equity securities comparedwith March 31, 2005, and purchases of government bonds. Total property, plant and equipment at cost, net of accumulated
depreciation, increased by ¥26,349 million ($225 million), or 10.2%, to ¥285,346 million ($2,439 million). In fiscal 2006, aggressive
capital expenditures were executed in the solar energy business and organic package business. Capital expenditure in fiscal 2006 was¥90,271 million ($772 million) and depreciation was ¥63,018 million ($539 million).
Intangible assets increased by ¥15,380 million ($131 million), or 97.1%, to ¥31,227 million ($267 million), due mainly to an increaseof patent rights in the Telecommunications Equipment Group. Kyocera’s total liabilities at March 31, 2006 increased by ¥67,317
million ($575 million), or 13.2%, to ¥577,503 million ($4,936 million), compared with ¥510,186 million at March 31, 2005.
- 60 -

Total debt, comprised of short-term borrowings and long-term debt including debt due within one year, decreased by ¥3,592 million($31 million), or 2.5%, to ¥140,572 million ($1,201 million), as repayments of loans exceeded borrowings from banks. Trade notes
and accounts payable increased by ¥16,631 million ($142 million), or 19.1%, to ¥103,503 million ($885 million), due mainly toincreases of purchases with strong demand for components.
Other notes and accounts payable increased by ¥17,307 million ($148 million), or 49.9%, to ¥51,997 million ($444 million), due
mainly to an increase in purchases of government bonds and accounts payable related to patent right contracts. Deferred income taxes
increased by ¥29,341 million ($251 million), or 30.5%, to ¥125,686 million ($1,074 million), due mainly to an increase in market
value at March 31, 2006 of the shares of KDDI Corporation and other equity securities compared with March 31, 2005.
Minority interests in subsidiaries, principally AVX Corporation, increased by ¥4,460 million ($38 million), or 7.4%, to ¥64,942
million ($555 million), compared with ¥60,482 million at March 31, 2005, due mainly to strong performance at AVX Corporation.
Total stockholders’ equity at March 31, 2006 increased by ¥114,226 million ($976 million), or 9.7%, to ¥1,289,077 million ($11,018
million), compared with ¥1,174,851 million at March 31, 2005. Retained earnings at March 31, 2006 increased by ¥50,948 million($435 million), or 5.6%, due to net income for fiscal 2006 of ¥69,696 million ($596 million) and cash dividend payments of ¥18,748
million ($160 million).
Accumulated other comprehensive income increased by ¥61,108 million ($522 million), or 516.2%, to ¥72,947 million ($623
million). Net unrealized gains on securities increased by ¥40,188 million ($343 million), or 94.6%, due mainly to an increase inmarket value at March 31, 2006 of the shares of KDDI Corporation and other equity securities compared with March 31, 2005.
Foreign currency translation adjustments increased by ¥21,396 million ($183 million), or 73.9% due to the depreciation of the yen
against the U.S. dollar and Euro. The stockholders’ equity ratio at March 31, 2006 was 66.7%, a decrease of 0.6 points compared with
67.3% at March 31, 2005.
C. Research and development activities
Kyocera promotes a strategy of “high-value-added diversification,” which aims continuously at expanding sales and boosting
profitability in its components and equipment businesses. To achieve these objectives, Kyocera seeks to enhance existing businesses
and to create new businesses by integrating group-wide management resources while advancing, focusing and integrating
technological capabilities. Kyocera will channel its energies into two high-growth-potential areas; the markets fortelecommunications and information processing and for environmental preservation. R&D activities are conducted in all of thesemarkets in the realms of materials, components, devices and equipment. Specific initiatives in each reporting segment follow.
(1) Fine Ceramic Parts GroupBy making effective use of fine ceramic materials technology, processing technology and design technology, Kyocera is seeking tostrengthen the development of large-sized fine ceramic parts for next-generation semi-conductor and large LCD fabricationequipment and of high-quality, cost-competitive sapphire products for LEDs, applicability of which is increasing. In the growing
automotive market, efforts are being undertaken to develop products that meet the need for advanced electronics and growing
concerns with safety and the environment. Specific projects include the development of glow plugs by fully utilizing the hightemperature durability of ceramics and piezo actuators that enable precision control for the fuel injection of diesel engine cars, which
are becoming more widespread in Europe.
(2) Semiconductor Parts Group
Kyocera is advancing the development of new ceramic and organic packages for digital consumer products, where demand is
expected to expand. In the ceramic packages business, efforts are being made to develop smaller, thinner and more highlysophisticated ceramic packages with a variety of built-in functions in order to meet rapid advancements in mobile phone handsets.
Kyocera is also developing ceramic packages for different types of sensors for use in the automotive market. Elsewhere, Kyocera isdeveloping organic packages for next-generation MPUs and their peripheral devices.
- 61 -

(3) Applied Ceramic Products Group
While striving to further increase the conversion efficiency of solar cells for the environmental preservation market, Kyocera isdeveloping a variety of next-generation solar cells. Kyocera is also working toward the practical application of solid oxide fuel cells(SOFCs) for residential use, which are expected to be the next-generation distributed power generation system for small-scale powersources.
(4) Electronic Device Group
Kyocera develops various electronic components for the high-growth digital consumer products and automotive markets. In thedigital consumer products, Kyocera is working to develop components for the hard-disk-drive market, in which demand is growing inline with increasing product sophistication. Specifically, Kyocera develops small, high-capacitance ceramic capacitors, ultra small,
low frequency crystal units, ceramic resonators and shock sensors products. Global Positioning System (GPS) modules and otherproducts are being developed in accordance with the spreading of a network society.
In thin-film devices, Kyocera is developing thermal printheads for digital photo printers capable of handling high-pixel photos, andindustrial-use LCDs equipped with LED backlights to meet the need for environmentally-friendly products. In addition, Kyocera is
working on the commercial application of organic EL displays, which are especially superior in moving images in mobile equipment
while preserving a low-energy consumption feature.
(5) Telecommunications Equipment GroupBy making effective use of component, device and software technologies within the group, Kyocera is seeking to develop
sophisticated CDMA handsets with terrestrial digital TV and IP video phone functionality to meet needs in the mobile
telecommunications equipment market, in which functions are becoming increasingly advanced. In the domestic PHS market,
Kyocera is developing handsets compatible with high-performance PHS base stations to ensure faster data transmission rates and theprovision of diverse services. Kyocera is also strengthening the development of equipment for wireless broadband systems such as
iBurstTM and VoIP (Voice over Internet Protocol) that enable stable, high-speed and high-data rate communication. (iBurstTM is atrade mark of ArrayComm, Inc.)(6) Information Equipment Group
Kyocera is promoting the development of more color-based and solutions-oriented products based on the ECOSYS concept, which isrealized through the incorporation of a long-lasting amorphous silicon drum. Apart from bolstering the lineup for both black andwhite and color machines, Kyocera is advancing the development of document solutions products that can handle the integrated
management of documents and digital information.
(7) Optical Equipment Group
Kyocera is developing optical components such as lenses and optical modules for mobile phone handsets by integrating opticaltechnologies with electronic devices and semiconductor parts technologies amassed within the group. In particular, Kyocera focuseson the development of optical modules for small, low-profile mobile phone handsets with high-resolution displays and zoom
capability. Kyocera is also developing the projector and barcode reader markets for further growth.
(8) Others
Kyocera Chemical Corporation is currently strengthening the development of semiconductor and crystal-related materials. Focused
efforts include the development of photo-sensitive, heat-resistant resin as a protective coating for the surface of semiconductors andof photo spacers for LCDs. The development of materials for different capacitors and materials for solar cells creates positivesynergistic effects with Kyocera’s other businesses. Kyocera Communication Systems Co., Ltd. is promoting development in the areaof fixed mobile convergence (FMC) and optimization by anticipating the needs for next-generation mobile handsets and other mobile
communication equipment. In addition, Kyocera Communication Systems Co., Ltd. continues to develop authentication and security
technologies, which seek to meet the need for fast changing next-generation networks.
- 62 -

The following table shows a breakdown of Kyocera’s total consolidated research and development expenses for fiscal 2004, fiscal
2005 and fiscal 2006 by the eight reporting segments:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,

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

2004

2005

2006

Increase (Decrease)
Fiscal 2006 comparedwith Fiscal 2005

AmountAmountAmount%¥ 2,990
3,314
2,444
9,487
14,144
10,643
2,785
823¥ 4,252
2,890
2,747
11,416
14,972
13,2702,636
2,215¥ 3,107
3,549
3,923
10,94015,313
16,416
1,079
3,109$ 26,556
30,33333,53093,504130,880
140,308
9,222
26,573(26.9)
22.8
42.8
(4.2)
2.3
23.7
(59.1)
40.4¥46,630¥54,398¥57,436$490,906

5.6

We have a variety of patents in Japan and other countries, and hold licenses for the use of patents from others. Details are set forth in
Item 4 B “Patents and Licenses” in this Form 20-F.
D. Trend Information
The following statements contain forward- looking statements. They are based on estimates and assumptions of our management
about the future and are subject to significant uncertainty. You should read these statement in conjunction with the Item 3.D “Risk
Factors” in this Form 20-F, which describe factors that may contribute to actual events or our results of operations differing fromthat stated in the forward looking statements below, including changes in the Japanese or world economies and demand for our
products.
The information below should be read in conjunction with other sections within Item 5 “Operating and Financial Review andProspects” of this Form 20-F, which contains some of the trend information required by this item.
Market Trends
In the telecommunications and information processing market, a key area for Kyocera, the rising popularity of advanced handsetsfeaturing high-pixel color LCDs, built-in cameras and other advanced functions including GPS (global positioning system), terrestrial
TV broadcasting and hard disk drives, enabling music download, is expected to propel demand for mobile phone handsets. In
addition, stable growth is predicted to continue in PC-related and digital cameras, while strong growth in demands for DVD recorders
and flat panel digital TVs is anticipated. Kyocera expects these areas of growth will produce a positive impact on both thecomponents and equipment businesses.
In the information equipment industry, demand for high-speed multifunctional products equipped with printers, copiers and facsimile,
is expected to grow. To seize this opportunity by meeting with such needs, we aim at expanding our product lines ranging frommonochrome to color models.
In the environmental preservation market, which is another key area for Kyocera, solar energy market is growing rapidly on a global
basis due to rising environmental awareness. Demand for solar energy is expanding, especially in Japan and Europe supported bygovernmental subsidy systems. As these subsidy systems are penetrating in the United States and other Asian countries, solar energy
market is expected to expand in the future. In addition, ceramic components for automobiles, which are complied with current
environmental regulations, are also expected to grow in the future.
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E. Off-Balance Sheet Arrangements
Refer to Note 13 in The Consolidated Financial Statements included in this Form 20-F.
As a part of its ongoing business, we have no unconsolidated special purpose financing or partnership entities that are likely to creatematerial contingent obligations.
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, 2006. 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 year

90,865644
16,347
377
2,482
7,785

2-3 years

4-5 years

Thereafter

¥

¥

¥

—
—
25,617
361
8,831
8,955

—
—
4,824
133
10,078
3,191

—
—
2,919
102
20,697
5,437

Total

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

90,865644
49,707973
42,08825,36813,236———

13,236

Total Contractual Obligations¥ 131,736¥ 43,764¥ 18,226¥ 29,155¥ 222,881(U.S. dollars in thousands)

Contractual obligations
Less than
1 year2-3 years

4-5 years

Thereafter

$

$

$

Short-term borrowings*
Interest payments for short-term borrowings*
Long-term debt (including due within one year)*Interest payments for long-term debt*
Supply agreement material used in operation
Operating Leases
Obligations for the acquisition or construction of property, plant andequipment$ 776,624
5,505
139,718
3,222
21,214
66,538113,128—

Total Contractual Obligations$1,125,949$374,051- 64 -——
218,948
3,085
75,47976,539——41,231
1,137
86,13627,274

Total——
24,949872
176,897
46,470$ 776,624
5,505
424,8468,316
359,726
216,821——113,128$155,778$249,188$1,904,966

* At March 31, 2006, Kyocera’s contractual obligations were mainly comprised of short-term borrowings and long-term debt
including those due within one year, which amounted to ¥90,865 million ($777 million) and ¥49,707 million ($425 million),
respectively. Over 80% of those debts were attributable to Kyocera Mita Corporation and Kyocera Leasing Co., Ltd. Kyocera
Leasing Co., Ltd. provides financial services such as credit financing and leasing. Due to the nature of its operations, Kyocera
Leasing Co., Ltd. had ¥80,351 million ($687 million) of short-term borrowings and ¥25,857 million ($221 million) of long-term
debt from banks and other financial institutions at March 31, 2006 as the primary source of funding for operating its business. For
Kyocera’s variable interest rate of borrowings and debt, Kyocera utilized the rates in effect as of March 31, 2006 when estimatingschedule of interest payments.
In addition to contractual obligations shown in the above tables, Kyocera forecasts to contribute ¥9,058 million ($77 million) to its
defined benefit pension plans in fiscal 2007.
Item 6.

Directors, Senior Management and Employees

A. Directors and Senior Management
Since April 1, 2006, Kyocera implemented a new management system. In June 2005, Kyocera initiated a management system withthe roles of the Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and the Chief Operating Officer (COO).
Subsequently, however, Kyocera decided that its traditional management system, which had been in place for many years, enables
faster decision-making across-the-board through the use of a top management system comprising the chairman, the deputy chairman
and the president. With this setup, the chairman takes on the position as the head of the board of directors, providing guidance to thepresident, while the president has total responsibility for daily business execution. It is also believed that more accurate management
decisions can be made with the traditional system as the chairman, the deputy chairman and the president can provide diverse
perspectives on critical issues.
The following table shows Kyocera’s Directors and Corporate Auditors as of June 26, 2006.
Name

Date of Birth

Position

Since

Kensuke Itoh

December 17, 1937

Director and Advisor

1975

Yasuo Nishiguchi

October 9, 1943

Director and Advisor

1987

Noboru Nakamura

October 6, 1944

Representative Director and Chairman(Representative Director and President of JAPANMEDICAL MATERIALS CORPORATION and
Representative Director and Chairman of KYOCERACHEMICAL CORPORATION )- 65 -

1991(Chairman
2006)

Name

Date of Birth

Position

Since

Masahiro Umemura

August 8, 1943

Representative Director and Vice Chairman

1991

Yuzo Yamamura

December 4, 1941

Representative Director and Vice Chairman(Representative Director and President of KYOCERA ELCOCORPORATION)

2003

Naoyuki Morita

April 8, 1942

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

2003

Makoto Kawamura

August 13, 1949

Representative Director and President

Koji Seki

December 8, 1937

Director(Representative Director and Chairman and President of
KYOCERA MITA CORPORATION)

2003

Michihisa Yamamoto

November 13, 1942

Director (Representative Director and President of
KYOCERA OPTEC CO., LTD., and General Manager ofCorporate Optical Equipment Group)

1987

Isao Kishimoto

November 30, 1943

Director(Representative
Director and President of KYOCEA KINSEKICORPORATION)

1993

Hisao Hisaki

July 2, 1946

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

1991

Rodney N. Lanthorne

February 5, 1945

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

1989

John S. Gilbertson

December 4, 1943

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

1995

Yasuo Akashi

May 29, 1944

Full-time Corporate Auditor

2003

Yoshihiko Nishikawa

September 11, 1945

Full-time Corporate Auditor

2005

Osamu Nishieda

January 10, 1943

Corporate Auditor(Lawyer)

1993

Shinji Kurihara

July 19, 1932

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

Shigekazu Tamura

February 18, 1950

Corporate Auditor(Registered Public Accountant)

2005- 66 -

2005(President 2005)

Kensuke Itoh has served as a Director and the Advisor of Kyocera Corporation since 2005. He became a Director in 1975, aManaging Director in 1979, and a Senior Managing Director in 1981 and the Chairman of the Board and Representative Director in
1999. He joined Kyocera Corporation in 1959 and has served as Representative Director and Chairman of Kyoto Purple Sanga Ltd.
Yasuo Nishiguchi has served as a Director and the Advisor of Kyocera Corporation since 2006. He became a Director in 1987, aManaging Director in 1989 and a Senior Managing and Representative Director in 1992 and the Chairman of the Board andRepresentative Director in 2005. He joined Kyocera Corporation in 1975 and has served as the Representative Director and Chairmanof Kyocera Leasing Co., Ltd., Chairman of the Board of Directors of Shanghai Kyocera Electronics Co., Ltd., Chairman of the Boardof Directors of Dongguan Shilong Kyocera Optics Co., Ltd., Chairman of the Board of Directors of Kyocera Zhenhua
Communication Equipment Co., Ltd., Chairman of the Board of Directors of Kyocera Mita Office Equipment (Dongguan) Co., Ltd.,
Chairman of the Board of Directors of Kyocera (Tianjin) Sales and Trading Corporation and Chairman of the Board of Directors ofKyocera (Tjianjin) Solar Energy Co., Ltd..
Noboru Nakamura has served as a Representative Director and Chairman of Kyocera Corporation since 2006. He became a Director
in 1991, a Managing Director in 1995, a Senior Managing and Representative Director in 1997 and an Executive Vice President andRepresentative Director in 1999. He joined Kyocera Corporation in 1967 and has served as the Representative Director and Chairmanof Kyocera Chemical Corporation, Representative Director and President of Japan Medical Materials Corporation, Representative
Director and Chairman of Kyocera Solar Corporation, Representative Director and Chairman of Kyocera SLC Technologies
Corporation, and Representative Director and Chairman of Kyocera Display Institute Co., Ltd., Representative Director and Chairmanof Kyocera International Co., Ltd., and Representative Director and President of Kyoto Fashion Center Ltd.
Masahiro Umemura has served as a Representative Director and Vice Chairman since 2005. He became a Director in 1991, aManaging Director in 1993 and a Senior Managing and Representative Director in 1997 and an Executive Vice President andRepresentative Director in 1999. He joined Kyocera Corporation in 1966 and is in charge of Finance and Corporate Development
Group and has served as the Chairman of the Board of Directors of Shanghai Kyocera Realty Development Co., Ltd. and the
Chairman of the Board of Directors of Shanghai Kyocera Trading Co., Ltd.
Yuzo Yamamura has served as a Representative Director and Vice Chairman since 2006. He rejoined Kyocera Corporation as a
Director in 2003. He first became a Director in 1987, and retired in 1993. He rejoined Kyocera Corporation as a Senior Managing andRepresentative Director in 1995 and retired again in 1999. He originally joined Kyocera Corporation in 1965 and has served as the
President and Representative Director of Kyocera ELCO Corporation.
- 67 -Naoyuki Morita has served as a Representative Director and Vice Chairman since 2006. He rejoined Kyocera Corporation as a
Director in 2003. He first became a Director in 1987, a Managing Director in 1989 and a Senior Managing and Representative
Director in 1995, and retired in 1999. He originally joined Kyocera Corporation in 1967 and has served as the Representative Director
and Chairman and President of Kyocera Communication Systems Co., Ltd., and Representative Director and Chairman and Presidentof IT Marketing Humans Inc.
Makoto Kawamura has served as a Representative Director and President of Kyocera Corporation since 2005. He became a Director
in 2001 and retired in 2003. He rejoined as a Representative Director, and President in 2005. He has served as Representative Director
and Chairman and President in Kyocera Korea Co., Ltd. since 2006. He joined Kyocera Corporation in 1973.
Koji Seki rejoined Kyocera Corporation as a Director in 2003. He first became a Director in 1989 and a Managing Director in 1999,
and he retired in 2001. He originally joined Kyocera Corporation in 1982 and has served as the Representative Director and Chairman
and President of Kyocera Mita Corporation.
Michihisa Yamamoto has served as a Director of Kyocera Corporation since 1987. He became a Director in 1987, and a Managing
Director in 1989 and a Senior Managing and Representative Director in 1992 and an Executive Vice President and a Representative
Director in 1999. He joined Kyocera Corporation in 1970 and has served as Representative Director and President of Kyocera Optec
Co., Ltd.
Isao Kishimoto has served as a Director of Kyocera Corporation since 1993. He became a Director in 1993, a Managing Director in1997 and a Senior Managing Director in 2001. He joined Kyocera Corporation in 1967 and has served as Representative Director andPresident 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
Representative Director and President of Kyocera Tianjin Sales and Trading Corporation.
Rodney N. Lanthorne has served as a Director of Kyocera Corporation since 1989. He became a Director in 1989, a Managing
Director in 1990 and a Senior Managing and Representative Director in 1999. He joined Kyocera International, Inc. in 1979 and has
served as Director and President of Kyocera International, Inc.
John S. Gilbertson has served as a Director of Kyocera Corporation since 1995. He became a Director in 1995 and a Managing
Director in 1999. He joined AVX Corporation in 1981 and has served as Director, President and Chief Executive Officer of AVX
Corporation.
Yasuo Akashi has served as a Full-time Corporate Auditor of Kyocera Corporation since 2003. He became a Director in 1991, aManaging Director in 1993 and a Senior Managing and Representative Director in 1997. He joined Kyocera Corporation in 1967.
Yoshihiko Nishikawa has served as a Full-time Corporate Auditor of Kyocera Corporation since 2005. He became a Director in 1995
and retired in 2003. He joined Kyocera Corporation in 1970.
Osamu Nishieda has served as a Corporate Auditor of Kyocera Corporation since 1993. He has served as an In-House Council ofKyocera Corporation.
Shinji Kurihara has served as a Corporate Auditor of Kyocera Corporation since 2003. He has served as the Representative Directorof Takeda Management Institution.
Shigekazu Tamura has served as a Corporate Auditor of Kyocera Corporation since 2005. He is registered as the Certified Public
Accountant defined by the Certified Public Accountant Law of Japan.
- 68 -

Kyocera adopts an “executive officer system,” of which objectives are to establish corporate governance appropriate for a global
corporation, together with a decision making system responsive to the business environment, and to train the next generation of senior
executives.
The following table shows Kyocera’s Executive Officers as of June 26, 2006.
Name

Position

Makoto Kawamura

Executive Officer and President

Isao Yukawa

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

Tatsumi Maeda

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

Hisashi Sakumi

Managing Executive Officer (General Manager ofCorporate Environment and Education Group)

Tsutomu Yamori

Managing Executive Officer (General Manager ofCorporate General Affairs Human Resources Group)

Takashi ItohManaging Executive Officer (General Manager ofCorporate Purchasing Group)

Tetsuo Kuba

Managing Executive Officer (General Manager ofCorporate Fine Ceramics Group and Corporate
Semiconductor Components Group)

Osamu Nomoto

Managing Executive Officer (General Manager ofCorporate Electronic Components Group)

Eiichi Toriyama

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

Akiyoshi Okamoto

Managing Executive Officer (General Manager ofSHANGHAI KYOCERA ELECTRONICS CO.,LTD.)

Keijiro Minami

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

Goro Yamaguchi

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

Yasushi Matsumura

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

Yoshihito Ota

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

Yasuyuki Yamamoto

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

Jyunichi Jinno

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

Gen Takayasu

Executive Officer (General Manager of Corporate
Communication Devices Division, Corporate
Semiconductor Components Group)- 69 -

Name

Position

Nobuhiro Ochiai

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

Jyunzo Katsuki

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

Yukihiro Takarabe

Executive Officer (General Manager of Corporate
Cutting Tool Group)

Masakazu Mitsuda

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

Toshimi Gejima

Executive Officer (General Manager of Automotive
Components Division)

Michiaki Furuhashi

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

Mitsuru Imanaka

Executive Officer (Director and President of
KYOCERA FINE CERAMICS GmbH)

Shoichi Aoki

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

Hiroshi Togi

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

Yoshihiro Kano

Executive Officer (General Manager of Corporate
Development Group)

Yoichi Yamashita

Executive Officer (General Manager of Corporate
Production Technology and Development Group)

Robert Whisler

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

John Rigby

Executive Officer (Director and President of
KYOCERA INDUSTRIAL CERAMICSCORPORATION)

B. Compensation
The aggregate amount of compensation, including bonuses, paid by Kyocera Corporation and its certain subsidiaries in the fiscal year
ended March 31, 2006 to all Directors, Executive Officers and Corporate Auditors of Kyocera Corporation and its certain subsidiaries
was ¥1,272 million ($11 million). The aggregate amount includes compensation and bonuses paid during the three months ended
June 30, 2006 to one Director and one Corporate Auditor who retired on June 28, 2005, and excludes the lump sum retirement
allowance paid to them. 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 Form 20-F.
In accordance with customary Japanese business practice, when a Director or Corporate Auditor retires, a proposal to pay a lump sum
retirement allowance is submitted to the ordinary general meeting of shareholders for approval. After such approval, the amount to be
paid to each Director or Corporate Auditor is consulted with and fixed by the Board of Directors in accordance with Kyocera
Corporation’s internal regulations. Annual provisions are made in the accounts of Kyocera Corporation for the estimated cost of theretirement allowance for Directors and Corporate Auditors.
- 70 -

The annual provisions and costs charged to income for such retirement allowance for fiscal 2006 were ¥1,444 million ($12 million).
We have neither disclosed to our shareholders nor otherwise made public any of the information specified in this item for individually
named Directors, Officers or Corporate Auditors.
C. Board Practices
In accordance with the requirements of the Company Law of Japan which came into effect on May 1, 2006 (the “Company Law”),
our Articles of Incorporation provide for not more than five Corporate Auditors. Corporate Auditors are elected at a general meetingof shareholders, and their normal term of office is four years. However, Corporate Auditors may serve any number of consecutive
terms. At least half of the Corporate Auditors must be persons who have not been Directors or employees of Kyocera Corporation orits subsidiaries (“Outside Corporate Auditors”). Corporate Auditors form the Board of Corporate Auditors. Corporate Auditors areunder a statutory duty to oversee the administration of our affairs by the Directors, to examine our financial statements and business
reports to be submitted by the Board of Directors to the general meetings of shareholders and to report their opinions thereon to theshareholders. They are obliged to attend meetings of the Board of Directors and to express their opinions, but they are not entitled tovote. Corporate Auditors also have a statutory duty to provide their report on the audit report prepared by our independent certified
public accountants to the Board of Corporate Auditors, which must submit its audit report to the Board of Directors. The Board of
Corporate Auditors will also determine matters relating to the duties of the Corporate Auditors, such as audit policy and methods ofinvestigation of our affairs.
Under the Company Law, the Directors and Corporate Auditors are liable for any damages suffered by us as a result of their violationof laws or regulations or any failure to perform their duties. Under our Articles of Incorporation, any such liabilities incurred by theOutside Corporate Auditors may, except in the case of willful misconduct or gross negligence or in certain other cases, be limited by aliability limitation agreement entered into between the Outside Corporate Auditors and us, up to an amount to be calculated inaccordance with the relevant provisions of the Company Law with reference to annual remuneration, retirement allowance and profits
received upon exercise or transfer of stock options, if any.
Kyocera Corporation has no remuneration committee. Matters of remuneration are decided by top management as a group. None of
our Directors have contracts with us providing for benefits upon termination. It is customary to provide lump-sum severance benefits
to Directors and Corporate Auditors upon retirement and we provide such benefits in accordance with our internal regulations.
There is no arrangement or understanding between any Director or Corporate Auditor and any other person pursuant to which he waselected as a Director or a Corporate Auditor.
There is no family relationship between any Director or Corporate Auditor and any other Director or Corporate Auditor.
The rights of ADR holders, including their rights relating to corporate governance practice, are provided in the Amended andRestated Deposit Agreement and an amendment thereto which are included in an exhibit to this Form 20-F. See also Item 10.B
“Memorandum and Articles of Association” of this Form 20-F.
D. Employees
At March 31, 2006, Kyocera had 61,468 employees, of whom 2,640 worked in the Fine Ceramic Parts Group, 9,690 worked in the
Semiconductor Parts Group, 5,105 worked in the Applied Ceramic Products Group, 21,686 worked in the Electronic Device Group,
3,245 worked in the Telecommunications Equipment Group, 12,364 worked in the Information Equipment Group, 1,542 worked in
the Optical Equipment Group, 3,611 worked for Others and 1,585 worked in Corporate. Kyocera’s number of employees at March 31,
2006 increased by 2,909 compared with the number of employees of 58,559 at March 31, 2005.
- 71 -

Kyocera Corporation had 12,457 employees, and their average age and average service years were 38.3 and 15.5, respectively.
Most regular employees of Kyocera Corporation, other than management, are members of the Kyocera Union. Over 90% of Kyocera
Corporation’s regular employees are members of this union. The Kyocera Union is only open to Kyocera Corporation employees, notto our Japanese or overseas subsidiaries. The employees at three of our subsidiaries in Japan are unionized. Employees at ourJapanese subsidiaries are not otherwise unionized. In the United States, our employees are generally unionized, subsidiaries in othercountries are unionized on a case-by-case basis. Employees of our overseas subsidiaries belong to labor unions organized by industry,
as opposed to a company specific union like the Kyocera Union. There is no material item to be specifically addressed regarding
relationships between labor and management.
E. Share Ownership
As of March 31, 2006, Kyocera’s Directors, Corporate Auditors and Executive Officers owned 1,760,654 shares of Kyocera
Corporation in total (1,737,896 shares of common stock of Kyocera Corporation and 22,758 ADRs of Kyocera Corporation), or 1.0%of the outstanding shares of Kyocera Corporation. The numbers of shares owned by each Directors, Corporate Auditors and Executive
Officers are shown in the following table.
Title

Name

Number of Shares

Kensuke ItohDirector and Advisor

557,072

Yasuo Nishiguchi

Director and Advisor

4,095

Noboru Nakamura

Representative Director andChairman

3,100

Masahiro Umemura

Representative Director and Vice
Chairman

5,000

Yuzo Yamamura

Representative Director and Vice
Chairman82,000

Naoyuki Morita

Representative Director and Vice
Chairman

5,600

Makoto Kawamura

Representative Director andPresident

2,000

Koji Seki

Director

2,318

Michihisa Yamamoto

Director

9,232

Isao Kishimoto

Director

4,100

Hisao Hisaki

Director

3,171- 72 -

Name

Title

Number of Shares

Rodney N. Lanthorne

Director

3,533 (ADR)John S. Gilbertson

Director

16,656 (ADR)

Yasuo Akashi

Corporate Auditor

6,323

Yoshihiko Nishikawa

Corporate Auditor

2,102

Osamu Nishieda

Corporate Auditor

1,000,037

Shinji Kurihara

Corporate Auditor

500

Shigekazu Tamura

Corporate Auditor—

Isao Yukawa

Senior Managing Executive Officer

1,200

Tatsumi Maeda

Managing Executive Officer

1,100

Hisashi Sakumi

Managing Executive Officer

9,000

Tsutomu Yamori

Managing Executive Officer

2,000

Takashi ItohManaging Executive Officer

9,000

Tetsuo Kuba

Managing Executive Officer

2,000

Osamu Nomoto

Managing Executive Officer

1,315

Eiichi Toriyama

Managing Executive Officer

1,500

Akiyoshi Okamoto

Managing Executive Officer

4,864

Keijiro Minami

Senior Executive Officer

600

Goro Yamaguchi

Senior Executive Officer

3,700

Yasushi Matsumura

Senior Executive Officer

100

Yoshihito Ota

Executive Officer

900

Yasuyuki Yamamoto

Executive Officer—

Jyunichi Jinno

Executive Officer—

Gen Takayasu

Executive Officer

500- 73 -

Name

Title

Number of Shares

Nobuhiro Ochiai

Executive Officer

1,000

Jyunzo Katsuki

Executive Officer

800

Yukihiro Takarabe

Executive Officer

300

Masakazu Mitsuda

Executive Officer

500

Toshimi Gejima

Executive Officer

1,400

Michiaki Furuhashi

Executive Officer

7,867

Mitsuru Imanaka

Executive Officer

1,100

Shoichi Aoki

Executive Officer

200

Hiroshi Togi

Executive Officer

300

Yoshihiro Kano

Executive Officer—

Yoichi Yamashita

Executive Officer—

Robert Whisler

Executive Officer

1,429(ADR)John Rigby

Executive Officer

1,140(ADR)

Stock Option Plans
On June 25, 2003, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approval of the issuance ofstock acquisition rights (Plan 2003) to directors, corporate auditors, corporate executive officers and certain key employees ofKyocera. Plan 2003 were granted on September 1, 2003 and fully vested on October 1, 2003 to 1,390 persons to acquire amounts
ranging from 600 to 8,000 shares of common stock each, or to acquire 1,070,100 shares of common stock in the aggregate. The
exercise price and the exercisable period of Plan 2003 have been set at ¥7,900 per share, and from October 1, 2003 to September 30,
2008.
On June 25, 2004, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approval of the issuance ofstock acquisition rights (Plan 2004) to directors, corporate auditors, corporate executive officers and certain key employees ofKyocera. Plan 2004 were granted on September 1, 2004 and fully vested on October 1, 2004 to 1,644 persons to acquire amounts
ranging from 600 to 8,000 shares of common stock each, or to acquire 1,243,300 shares of common stock in the aggregate. The
exercise price and the exercisable period of Plan 2004 have been set at ¥8,725 per share, and from October 1, 2004 to September 30,
2008.
On June 28, 2005, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approval of the issuance ofstock acquisition rights (Plan 2005) to directors, corporate auditors, corporate executive officers and certain key employees ofKyocera. Plan 2005 were granted on September 1, 2005 and fully vested on October 1, 2005 to 1,715 persons to acquire common
stock ranging from 600 to 8,000 shares or to acquire 1,301,900 shares of common stock in the aggregate. The exercise price and theexercisable period of Plan 2005 have been set at ¥8,619 per share, and from October 1, 2005 to September 30, 2008.
Kyocera Corporation covers Plan 2003, Plan 2004 and Plan 2005 by utilizing common stock held by Kyocera Corporation (treasury
stock).
- 74 -

Towards fiscal 2007, Kyocera Corporation decided not to issue nor grant new stock options utilizing shares of common stock ofKyocera Corporation.
As of May 31, 2006, the amount of common stock to be issued upon the exercise of all outstanding options issued to Directors,
Corporate Auditors and Executive Officers is set forth in further detail in the following table. Note, however, that there can be noassurances that the options described above will be exercised in whole or in part.
Total Options
Outstanding

Title

Option Holder

Exercise Price per Share

Kensuke ItohDirector and Advisor

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

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

Yasuo Nishiguchi

Director and Advisor——

Noboru Nakamura

Representative Director andChairman

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

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

Masahiro Umemura

Representative Director andVice Chairman

6,000 (Plan 2003)
6,000 (Plan 2004)
8,000 (Plan 2005)

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

Yuzo Yamamura

Representative Director andVice Chairman

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

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

Naoyuki Morita

Representative Director andVice Chairman

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

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

Makoto Kawamura

Representative Director andPresident

3,000 (Plan 2003)
4,000 (Plan 2004)
8,000 (Plan 2005)

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

Koji Seki

Director

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

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

Michihisa Yamamoto

Director

4,500 (Plan 2003)
6,000 (Plan 2004)
6,000 (Plan 2005)

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

Isao Kishimoto

Director

4,000 (Plan 2003)
5,500 (Plan 2004)
6,000 (Plan 2005)

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

Hisao Hisaki

Director

2,500 (Plan 2003)
5,000 (Plan 2004)
5,000 (Plan 2005)

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

Rodney N. Lanthorne

Director

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

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

John S. Gilbertson

Director

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

7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)- 75 -

Option Holder

Total Options
Outstanding

Title

Exercise Price per Share

Yasuo Akashi

Corporate Auditor

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

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

Yoshihiko Nishikawa

Corporate Auditor

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

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

Osamu Nishieda

Corporate Auditor——

Shinji Kurihara

Corporate Auditor——

Shigekazu Tamura

Corporate Auditor——

Isao Yukawa

Senior Managing Executive
Officer

4,000 (Plan 2003)
4,000 (Plan 2004)
4,300 (Plan 2005)

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

Tatsumi Maeda

Managing Executive Officer

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

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

Hisashi Sakumi

Managing Executive Officer

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

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

Tsutomu Yamori

Managing Executive Officer

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

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

Takashi ItohManaging Executive Officer

3,000 (Plan 2003)
3,000 (Plan 2004)
4,000 (Plan 2005)

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

Tetsuo Kuba

Managing Executive Officer

1,000 (Plan 2003)
2,500 (Plan 2004)
4,000 (Plan 2005)

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

Osamu Nomoto

Managing Executive Officer

1,000 (Plan 2003)
2,500 (Plan 2004)
4,000 (Plan 2005)

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

Eiichi Toriyama

Managing Executive Officer

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

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

Akiyoshi Okamoto

Managing Executive Officer

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

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

Keijiro Minami

Senior Executive Officer

1,000 (Plan 2003)
2,500 (Plan 2004)
3,000 (Plan 2005)

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

Goro Yamaguchi

Senior Executive Officer

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

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

Yasushi Matsumura

Senior Executive Officer

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

7,900 YEN (Plan 2003)
8,725 YEN (Plan 2004)
8,619 YEN (Plan 2005)- 76 -

Option Holder

Title

Total Options
Outstanding

Exercise Price per Share

Yoshihito Ota

Executive Officer

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

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

Yasuyuki Yamamoto

Executive Officer

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

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

Jyunichi Jinno

Executive Officer

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

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

Gen Takayasu

Executive Officer

1,900 (Plan 2003)
2,500 (Plan 2004)
2,500 (Plan 2005)

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

Nobuhiro Ochiai

Executive Officer

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

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

Jyunzo Katsuki

Executive Officer

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

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

Yukihiro Takarabe

Executive Officer

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

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

Masakazu Mitsuda

Executive Officer

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

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

Toshimi Gejima

Executive Officer

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

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

Michiaki Furuhashi

Executive Officer

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

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

Mitsuru Imanaka

Executive Officer

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

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

Shoichi Aoki

Executive Officer

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

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

Hiroshi Togi

Executive Officer

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

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

Yoshihiro Kano

Executive Officer

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

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

Yoichi Yamashita

Executive Officer

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

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

Robert Whisler

Executive Officer

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

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

John Rigby

Executive Officer

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

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

Total
105,600 (Plan 2003)
145,600 (Plan 2004)

167,800 (Plan 2005)- 77 -

Item 7. Major Shareholders and Related Party Transactions
A. Major Shareholders
As far as is known to us, Kyocera is not, directly or indirectly, owned or controlled by any other corporation or by the Japanese or any
foreign government, and there is no arrangement which may at a subsequent date result in a change in control of Kyocera.
The following table shows the ten largest stockholders of record of Kyocera Corporation at March 31, 2006.
Name

Japan Trustee Services Bank, Ltd.
(Trust Account)
The Master Trust Bank of Japan, Ltd.
(Trust Account)
The Bank of Kyoto, Ltd.
Kazuo Inamori
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Inamori Foundation
Keiai Kosan K.K.
Nats Cumuco(Standing proxy: Sumitomo Mitsui Banking Corporation)
The Dai-ichi Mutual Life Insurance Company
Nippon Life Insurance Company
Total

Shares owned(in thousands)

Ownership (%)

13,1706.88

12,902

6.74

7,218
6,806
5,076
4,680
3,550
3,375

3.77
3.56
2.65
2.45
1.86
1.76

2,748
2,397
61,922

1.44
1.25
32.37

None of the above shareholders has voting rights that are different from those of other shareholders.
Under the Securities and Exchange Law of Japan, any person that becomes a holder (together with its related persons) of 5% of thetotal issued voting shares of a company listed on any Japanese stock exchange (including ADSs representing such shares) must file areport with the Director of the relevant Local Finance Bureau and send a copy of such report to the company. A similar report mustalso be filed if the percentage holding of a holder of more than 5% of the total issued voting shares of a company increases ordecreases by 1% or more.
- 78 -

In accordance with the Securities and Exchange Law of Japan, the financial institutions below informed us that they and their related
partners became a holder of over 5% of the total issued voting shares of Kyocera Corporation. However, they were not included in theabove major shareholders as a single major holder because not all partners of them were shareholders of record as of March 31, 2006.

January 5, 2006
January 16, 2006
February 15, 2006

Shares owned(in thousands)

Name

Filing Date

Morgan Stanley Japan Limited and its
related partners
Barclays Global Investors Japan Trust &Banking Co., Ltd. and its related partners
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
and its related partners

Holding 8,888 thousand shares as ofDecember 31, 2005
Holding 8,571 thousand shares as of
October 31, 2005
Holding 10,083 thousand shares as ofJanuary 31, 2006

Ownership (%)

4.65
4.48
5.27

None of the above shareholders has voting rights that are different from those of other shareholders.
According to Citibank N.A., depositary for Kyocera’s ADSs, as of March 31, 2006, 4,965,034 shares of Kyocera’s common stock
were held in the form of ADSs and there were 838 ADS holders of record in the United States. According to Kyocera’s register ofshareholders, as of March 31, 2006, there were 73,703 holders of Kyocera’s common stock of record worldwide. As of March 31,
2006, there were 109 record holders of Kyocera’s common stock with addresses in the United States, holding 20,600,709 shares ofthe outstanding common stock on that date. Because some of these shares were held by brokers or other nominees, the number ofrecord holders with addresses in the United States might not fully show the number of beneficial owners in the United States.
B. Related Party Transactions
Significant customer
In fiscal 2006, Kyocera’s sales to KDDI Corporation amounted to ¥97,177 million ($831 million), or 8.2% of consolidated net sales.
KDDI Corporation provides telecommunication services, and Kyocera sells mainly telecommunication equipments to KDDI
Corporation. Kyocera Corporation made an equity investment in KDDI Corporation when it was founded and currently, a director of
Kyocera Corporation is a member of the board of directors of KDDI Corporation. At March 31, 2006, Kyocera Corporation’s equity
interest in KDDI Corporation was 12.93%. Kyocera serves KDDI Corporation as an independent vendor in terms of pricedetermination, remittance condition and product distribution. All of the agreements and ongoing contractual commitments between
Kyocera and KDDI Corporation have been made on an arm’s-length basis. Kyocera expects that KDDI Corporation will remain asignificant customer in the future.
C. Interests of Experts and Counsel
Not Applicable.
Item 8. Financial Information- 79 -

A. Consolidated Statements and Other Financial Information
Financial Statements
The information required by this item is set forth beginning on page F-2 of this Form 20-F.
Dividend Policy
Since the listing of its shares, Kyocera Corporation has endeavored to increase dividends per share in line with improvements inperformance. Kyocera Corporation has also boosted dividends by actively undertaking free share distributions and stock splits.
Traditionally, Kyocera Corporation has set dividend amounts with the goal of maintaining stable dividends to shareholders. In theinterest of shareholders, however, Kyocera has decided, commencing with the year-end dividend relating to fiscal 2005, to change
this policy to establish a greater linkage between dividend amounts and its performance. In particular, Kyocera will determine
dividend amounts based on an overall assessment that will take into consideration capital expenditures necessary for the further
development of itself from a medium to long-term perspective, while also aiming for a payout ratio of approximately 20 to 25% on aconsolidated basis.
Based on this policy, Kyocera Corporation decided that the year-end dividend for fiscal 2006 should be ¥50 per share in the ordinary
general meeting of shareholders on June 23, 2006. When aggregated with the interim dividend ¥50 per share, the total annual
dividend amount was ¥100 per share.
We held board of directors meeting for the interim dividend on October 27, 2005.
B. Significant Changes
Except as disclosed in this Form 20-F, there have been no significant changes since March 31, 2006.
Item 9. The Offer and Listing
A. Offering and Listing Details
Price Range of Shares
The principal non-United States market on which the shares of Common Stock of Kyocera Corporation are traded is the Tokyo Stock
Exchange, the largest stock exchange in Japan. The American Depositary Shares of Kyocera Corporation, each representing one shareof Common Stock of Kyocera Corporation, are traded on the New York Stock Exchange. Citibank, N.A. acts as the Depositary inrespect of the American Depositary Shares. Common Stock of Kyocera Corporation is also listed on the Osaka Securities Exchange inJapan.
Tokyo Stock Exchange

New York Stock Exchange

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

Years ended March 31

High

Low

High

Low

2002
2003
2004
2005
2006

12,90010,0708,970
9,630
10,830

7,000
5,630
5,570
7,080
7,090

105.72
80.27
84.66
90.90
91.59

53.77
47.96
47.25
67.81
62.58

Most Recent 6 months

High

Low

High

Low

December, 2005
January, 2006
February, 2006
March, 2006
April, 2006
May, 2006

8,860
10,49010,83010,61011,59010,820

7,980
8,510
9,960
9,690
10,370
9,200

74.27
89.00
91.59
89.65
98.01
96.86

68.73
73.33
85.05
82.41
88.60
83.15

* 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.
- 80 -

The following table shows the information about high and low sales prices for each quarterly period in fiscal 2005 and 2006 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
2005

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

1st

2nd

3rd

4th

—High
—Low

¥9,630
8,110
30.00¥9,3807,370—¥8,3207,080
30.00¥ 8,080
7,120
—

—High
—Low

$90.9071.10
0.28$86.2067.81—$77.2368.86
0.29$ 77.58
68.67—

Cash dividends paid per share (C)2006

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

1st

2nd

3rd

4th

—High
—Low

¥8,500
7,090
50.00¥8,6707,640—¥8,8607,220
50.00¥10,830
8,510
—

—High
—Low

$78.4567.20
0.45$78.02
69.01—$74.2762.58
0.41$ 91.59
73.33—

Cash dividends paid per share (C)(A) Price on the Tokyo Stock Exchange(B) Price on the New York Stock Exchange(C) Translated into U.S. dollars based on the exchange rates at each respective payment date
- 81 -

B. Plan of Distribution
Not Applicable.
C. Markets
See Item 9.A. of this Form 20-F for information on the markets on which our common stock is listed or quoted.
D. Selling Shareholders
Not Applicable.
E. Dilution
Not Applicable.
F. Expenses of the Issue
Not Applicable.
Item 10. Additional Information
A. Share Capital
Not Applicable.
B. Memorandum and Articles of Association
GeneralSet out below is certain information regarding the organization and shares of Kyocera Corporation, including brief summaries ofcertain provisions of the Articles of Incorporation, the Share Handling Regulations and the Regulations of the Board of Directors ofKyocera Corporation and of the Company Law relating to joint stock corporations (kabushiki kaisha) and certain related legislation,
all as currently in effect.
Organization
Kyocera Corporation is a joint stock corporation (kabushiki kaisha) incorporated in Japan under the Company Law. It is registered in
the Commercial Register maintained by the Kyoto Local Registry Office of the Ministry of Justice.
Objects and Purposes
The objects of Kyocera Corporation are set forth in Article 2 of its Articles of Incorporation, as follows:(1)

Manufacture and sale of and research on fine ceramics and various kinds of products utilizing fine ceramics;- 82 -

(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;(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.
- 83 -

Directors
Under the Company Law, the Board of Directors has the ultimate responsibility for the management of Kyocera Corporation and each
Representative Director, who is elected from among the members of the Board of Directors, has the statutory authority to represent
Kyocera Corporation in all respects. Under both the Company Law and the Regulations of the Board of Directors of Kyocera
Corporation, the Directors must refrain from engaging in any business competing with Kyocera Corporation unless approved by the
Board of Directors and any Director who has a material interest in the subject matter of a resolution to be taken by the Board of
Directors cannot vote in such resolution. The Company Law and the Articles of Incorporation of Kyocera Corporation provide that
remuneration of Directors and Corporate Auditors shall be determined at a general meeting of shareholders.
Except as stated below, neither the Company Law nor Kyocera Corporation’s Articles of Incorporation make any special provision as
to a Director’s or Corporate Auditor’s power to vote in connection with their compensation; or the borrowing powers exercisable by aRepresentative Director (or a Director who is given power by a Representative Director to exercise such powers), their retirement age
or requirement to hold any shares of capital stock of Kyocera Corporation.
The Company Law specifically requires a resolution of the Board of Directors for a joint stock corporation, among other things, toacquire or dispose of material assets; to borrow substantial amounts of money; to employ or discharge from employment important
employees, such as executive officers; to establish, change or abolish a material corporate organization such as a branch office; or toissue bonds. A resolution of the Board of Directors is also specifically required for the establishment of a control system to ensure
adequacy of Kyocera Corporation’s affairs, such as a control system to ensure the exercise of Directors’ duty to comply with laws andregulations and the Articles of Incorporation of Kyocera Corporation. The Regulations of the Board of Directors of Kyocera
Corporation require a resolution of the Board of Directors for Kyocera Corporation, among other things, to issue of bonds or bonds
with stock acquisition rights; to borrow, lend or contribute a significant amount of money; to give a guarantee of a significant amountof debt; or to waive the right to receive a significant amount of money. The Regulations of the Board of Directors of Kyocera
Corporation defines a “significant amount” as five billion yen or more with respect to borrowing and one hundred million yen or
more with respect to other matters. The Regulations of the Board of Directors of Kyocera Corporation also require a resolution of theBoard of Directors to approve any transaction between a Director and Kyocera Corporation; allocate remuneration and bonuses of
Directors as previously determined or approved by the general meeting of shareholders ; or determine the amount and manner ofpayment of retirement allowances or condolence money payable to Directors, determination of which has been previously entrusted to
the Board of Directors by the general meeting of shareholders.
Capital Stock
Authorized capital
Article 5 of the Articles of Incorporation of Kyocera Corporation provides that the total number of shares authorized for issuance byKyocera Corporation is 600,000,000 shares. If shares of common stock are retired, the number of shares so retired shall be deductedfrom the total number of shares authorized to be issued by Kyocera Corporation.
Distributions of Surplus
GeneralUnder the Company Law, distributions of cash or other assets by joint stock corporations to their shareholders, so called “dividends”,
are referred to as “distributions of Surplus” (“Surplus” is defined in “– Restriction on distributions of Surplus”). Kyocera Corporation
may make distributions of Surplus to its shareholders any number of times per fiscal year, subject to certain limitations described in“– Restriction on distributions of Surplus”. Distributions of Surplus are required in principle to be authorized by a resolution of ageneral meeting of shareholders, but may also be made pursuant to a resolution of the Board of Directors if all the requirements
described in (a) through (c) are met:(a)Kyocera Corporation’s Articles of Incorporation provide that the Board of Directors has the authority to decide to make
distributions of Surplus;- 84 -

(b)the normal term of office of Kyocera Corporation’s Directors is not longer than one year; and(c)

Kyocera Corporation’s non-consolidated annual financial statements and certain documents for the latest fiscal year
present fairly its assets and profit or loss, as required by ordinances of the Ministry of Justice.

In the case of Kyocera Corporation, at present, the requirements in (a) and (b) above are not met. Nevertheless, Kyocera Corporation
may make distributions of Surplus in cash as an interim dividend (an “interim dividend”) to its shareholders by resolutions of theBoard of Directors once per fiscal year under Kyocera Corporation’s Articles of Incorporation and the Company Law.
Under Kyocera Corporation’s Articles of Incorporation, a year-end dividend may be distributed to shareholders of record as ofMarch 31 of each year pursuant to a resolution of a general meeting of shareholders, and an interim dividend may be distributed toshareholders of record as of September 30 of each year pursuant to a resolution of the Board of Directors. In addition, under theCompany Law, Kyocera Corporation may make further distributions of Surplus by resolution of general meetings of shareholders.
Kyocera Corporation is not obliged to pay any dividends unclaimed for a period of three years after the date on which they firstbecame payable.
Distributions of Surplus, other than interim dividends, may be made in cash or in kind in proportion to the number of shares held by
each shareholder. A resolution of a general meeting of shareholders or the Board of Directors authorizing a distribution of Surplus
must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders,
and the effective date of the distribution. If a distribution of Surplus is to be made in kind, Kyocera Corporation may, pursuant to a
resolution of a general meeting of shareholders or (as the case may be) the Board of Directors, grant a right to its shareholders torequire Kyocera Corporation to make such distribution in cash instead of in kind. If no such right is granted to shareholders, therelevant distribution of Surplus must be approved by a special resolution of a general meeting of shareholders (see “Voting rights”
with respect to a “special resolution”).
In Japan the “ex-dividend” date and the record date for dividends precede the date of determination of the amount of the dividend tobe paid. The market price of shares generally goes ex-dividend on the third business day prior to the record date.
Restriction on distributions of Surplus
When Kyocera Corporation makes a distribution of Surplus, it must, until the sum of its additional paid-in capital and legal reserve
reaches one-quarter of its stated capital, set aside in its additional paid-in capital and/or legal reserve an amount equal to one-tenth of
the amount of Surplus so distributed.
The amount of Surplus at any given time must be calculated in accordance with the following formula:
A + B + C + D - (E + F + G)
In the above formula:- 85 -

“A”=

the total amount of other capital surplus and other retained earnings, each such amount being that appearing on
Kyocera Corporation’s non-consolidated balance sheet as of the end of the last fiscal year

“B”=

(if Kyocera Corporation has disposed of its treasury stock after the end of the last fiscal year) the amount of theconsideration for such treasury stock received by Kyocera Corporation less the book value thereof“C”=(if Kyocera Corporation has reduced its stated capital after the end of the last fiscal year) the amount of such
reduction less the portion thereof that has been transferred to additional paid-in capital or legal reserve (if any)

“D”=

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

(if Kyocera Corporation has cancelled its treasury stock after the end of the last fiscal year) the book value of suchtreasury stock“F”=(if Kyocera Corporation has distributed Surplus to its shareholders after the end of the last fiscal year) the total bookvalue of the Surplus so distributed“G”=

certain other amounts set forth in ordinances of the Ministry of Justice , including (if Kyocera Corporation has
reduced Surplus and increased its stated capital, additional paid-in capital or legal reserve after the end of the last
fiscal year) the amount of such reduction and (if Kyocera Corporation has distributed Surplus to its shareholders after
the end of the last fiscal year) the amount set aside in its additional paid-in capital or legal reserve (if any) as requiredby ordinances of the Ministry of Justice

The aggregate book value of Surplus distributed by Kyocera Corporation may not exceed a prescribed distributable amount (the“Distributable Amount”), as calculated on the effective date of such distribution. The Distributable Amount at any given time shall beequal to the amount of Surplus less the aggregate of (a) the book value of its treasury stock, (b) the amount of consideration for any of
its treasury stock disposed of by it after the end of the last fiscal year and (c) certain other amounts set forth in ordinances of the
Ministry of Justice, including (if the sum of one-half of goodwill and the deferred assets exceeds the total of stated capital, additional
paid-in capital and legal reserve, each such amount being that appearing on Kyocera Corporation’s non-consolidated balance sheet asof the end of the last fiscal year) all or certain part of such exceeding amount as calculated in accordance with the ordinances of the
Ministry of Justice.
If Kyocera Corporation has become at its option a company with respect to which consolidated balance sheets should also be taken
into consideration in the calculation of the Distributable Amount (renketsu haito kisei tekiyo kaisha), it will be required to further
deduct from the amount of Surplus the excess amount, if any, of (x) the total amount of shareholders’ equity appearing on its nonconsolidated balance sheet as of the end of the last fiscal year and certain other amounts set forth by an ordinance of the Ministry ofJustice over (y) the total amount of shareholders’ equity and certain other amounts set forth by an ordinance of the Ministry of Justiceappearing on its consolidated balance sheet as of the end of the last fiscal year.
If Kyocera Corporation has prepared interim financial statements as described below, and if such interim financial statements havebeen approved by the Board of Directors or (if so required by the Company Law) by a general meeting of shareholders, then theDistributable Amount must be adjusted to take into account the amount of profit or loss, and the amount of consideration for any of its
treasury stock disposed of by it, during the period in respect of which such interim financial statements have been prepared. Kyocera
Corporation may prepare non-consolidated interim financial statements consisting of a balance sheet as of any date subsequent to theend of the last fiscal year and an income statement for the period from the first day of the current fiscal year to the date of suchbalance sheet. Interim financial statements so prepared by Kyocera Corporation must be audited by its Corporate Auditors andindependent certified public accountants, as required by ordinances of the Ministry of Justice.
- 86 -

General Meeting of Shareholders
Pursuant to the Articles of Incorporation of Kyocera Corporation, an ordinary general meeting of shareholders of Kyocera
Corporation shall be convened within three months after the last day of each fiscal year, either in Kyoto City or at the Shiga Factoryof Kyocera Corporation. In addition, Kyocera Corporation may hold an extraordinary general meeting of shareholders whenevernecessary.
Notice of a shareholders’ meeting, setting forth the place, time and purpose thereof, must be mailed to each shareholder having voting
rights (or, in the case of a non-resident shareholder, to the resident proxy or mailing address thereof in Japan) at least two weeks prior
to the date set for the meeting. Under the Company Law, such notice may be given to shareholders by electronic means, subject to theconsent by the relevant shareholders.
Any shareholder or group of shareholders holding at least 300 voting rights (see “‘Unit’ share system” below) or one percent of thetotal number of voting rights for six months or more may propose a matter to be considered at a general meeting of shareholders bysubmitting a written request to a Representative Director at least eight weeks prior to the date set for such meeting. If Kyocera
Corporation’s Articles of Incorporation so provide, any of the minimum percentages, time periods and number of voting rights
necessary for exercising the minority shareholder rights described above may be decreased or shortened.
Voting rights
A holder of shares constituting one or more whole units (see “‘Unit’ share system” below) is entitled to one vote for each whole unitof shares. However, in general, neither Kyocera Corporation nor any corporate shareholder or certain other entity one-quarter or moreof the total voting rights of which are directly or indirectly held by Kyocera Corporation, has voting rights in respect of the shares
held by Kyocera Corporation or such entity.
Except as otherwise provided by law or by the Articles of Incorporation of Kyocera Corporation, a resolution can be adopted at a
general meeting of shareholders by a majority of the total number of voting rights represented at the meeting. Under the Company
Law and Kyocera Corporation’s Articles of Incorporation, however, the quorum for the election of Directors and Corporate Auditors
is one-third of the total number of voting rights. Kyocera Corporation’s shareholders are not entitled to cumulative voting in theelection of Directors. Shareholders may exercise their voting rights through proxies, provided that the proxies are also shareholders
holding voting rights. Kyocera Corporation’s shareholders also may cast their votes in writing. Holders of shares who do not attend a
general meeting of shareholders may also exercise their voting rights by electronic means if the Board of Directors approves suchmethod of exercising voting rights.
The Company Law provides that certain important matters shall be approved by a “special resolution” of a general meeting ofshareholders. Under Kyocera Corporation’s Articles of Incorporation, the quorum for a special resolution is one-third of the total
number of voting rights and the approval of at least two-thirds of the voting rights represented at the meeting is required for adopting
a special resolution. Such important matters include:(i)purchase of shares by Kyocera Corporation from a specific shareholder other than Kyocera Corporation’s subsidiary;- 87 -

(ii) consolidation of shares;(iii) issuance or transfer of new shares or existing shares held by Kyocera Corporation as treasury stock to persons other than
the shareholders at a “specially favorable” price;(iv) issuance of stock acquisition rights (including those incorporated in bonds with stock acquisition rights) to persons otherthan the shareholders under “specially favorable” conditions;(v)removal of Kyocera Corporation’s Corporate Auditor;(vi) exemption from a portion of liability of Kyocera Corporation’s Directors, Corporate Auditors or independent auditors;(vii) reduction of stated capital (subject to certain exceptions);(viii) distribution of Surplus in kind with respect to which shareholders are not granted the right to require Kyocera Corporation
to make distribution in cash instead of in kind;(ix) any amendment to Kyocera Corporation’s Articles of Incorporation (except for such amendments that may be madewithout approval by shareholders under the Company Law);(x)transfer of the whole or a substantial part of Kyocera Corporation’s business;(xi) taking over of the whole of the business of another company requiring shareholders’ approval;(xii) dissolution, merger or consolidation requiring shareholders’ approval;(xiii) corporate split requiring shareholders’ approval; and(xiv) establishment of a parent and wholly-owned subsidiary relationship by way of a share transfer (kabushiki-iten) or shareexchange (kabushiki-kokan) requiring shareholders’ approval.
Under the Company Law , Kyocera Corporation’s shareholders will possess various rights, such as the right to review and makecopies of its Articles of Incorporation and the register of shareholders, to convene a general meeting of shareholders, to propose amatter to be considered at a general meeting of shareholders, and to bring derivative actions, depending upon the number of shares
held by them and the duration of their shareholding.
Subscription rights
Holders of Kyocera Corporation’s shares of capital stock have no pre-emptive rights under its Articles of Incorporation. Authorized
but unissued shares may be issued at such times and upon such terms as the Board of Directors determines, subject to the limitations
as to the offering of new shares at a “specially favorable” price mentioned under “Voting rights” above. The Board of Directors may,
however, determine that shareholders of a particular class of stock shall be given subscription rights regarding a particular issue of
new shares of that class, in which case such rights must be given on uniform terms to all shareholders of that class of stock as at arecord date of which not less than two weeks’ prior public notice must be given. Each of the shareholders to whom such rights are
given must also be given notice of the expiry thereof at least two weeks’ prior to the date on which such rights expire.
Liquidation rights
In the event of a liquidation of Kyocera Corporation, the assets remaining after payment of all debts and liquidation expenses andtaxes will be distributed among the holders of our shares of common stock in proportion to the respective numbers of shares held by
each holder.
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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.
Acquisition by Kyocera Corporation of its capital stock
Kyocera Corporation may acquire shares (i) by soliciting all its shareholders to offer to sell shares held by them (in this case, certain
terms of such acquisition, such as the total number of shares to be purchased and the total amount of consideration, shall be set by an
ordinary resolution of a general meeting of shareholders in advance, and acquisition shall be effected pursuant to a resolution of theBoard of Directors), (ii) from a specific shareholder other than any of Kyocera Corporation’s subsidiaries (pursuant to a special
resolution of a general meeting of shareholders), (iii) from any of Kyocera Corporation’s subsidiaries (pursuant to a resolution of theBoard of Directors), or (iv) by way of purchase on any Japanese stock exchange on which the shares are listed or by way of tender
offer (in either case pursuant to an ordinary resolution of a general meeting of shareholders or a resolution of the Board of Directors).
In the case of (ii) above, any other shareholder may make a request to Kyocera Corporation’s Representative Director that such othershareholder be included as a seller in the proposed purchase, provided that no such right will be available if the purchase price or any
other consideration to be received by the relevant specific shareholder will not exceed the last trading price of the shares on therelevant stock exchange on the day immediately preceding the date on which the resolution mentioned in (ii) above was adopted (or,if there is no trading in the shares on the stock exchange or if the stock exchange is not open on such day, the price at which theshares are first traded on such stock exchange thereafter).
The total amount of the purchase price of shares may not exceed the Distributable Amount, as described in “Distributions of Surplus –Restriction on distributions of Surplus”.
The Company Law permits Kyocera Corporation to hold shares acquired by it as treasury stock. Treasury stock may be held byKyocera Corporation for any time period and may be cancelled by resolution of its Board of Directors. Kyocera Corporation may alsotransfer to any person shares held by it as treasury stock, subject to a resolution of its Board of Directors, and subject also to otherrequirements similar to those applicable to the issuance of new shares. Kyocera Corporation may also utilize its treasury stock for the
purpose of transfer to any person upon exercise of stock acquisition rights or for the purpose of acquiring another company by way ofmerger, share exchange or corporate split through exchange of treasury stock for shares or assets of the acquired company. No
specific approval by the Board of Directors or shareholders at a shareholders meeting is required for this utilization of treasury stock,
although the grant of the relevant stock acquisition rights or the relevant merger, share exchange or corporate split must be approved,
as the case may be, by the Board of Directors or shareholders at Kyocera Corporation’s shareholders’ meeting.
“Unit” share system
Under Kyocera Corporation’s Articles of Incorporation, 100 shares constitute one “unit”. The Board of Directors is permitted toreduce the number of shares constituting a unit or to abolish the unit share system in its entirety by amending Kyocera Corporation’s
Articles of Incorporation without approval by shareholders. The number of shares constituting one unit may not exceed 1,000.
Kyocera Corporation’s Articles of Incorporation and Share Handling Regulations provide that no share certificates shall, in general,
be issued with respect to any shares constituting less than one unit. Consequently, no certificates for shares other than a full unit or an
integral multiple thereof will be issued (except for the purpose of protection of the holders of shares constituting less than one unit).
As the transfer of shares normally requires delivery of the relevant share certificates, any fraction of a unit for which no sharecertificates are issued will not be transferable.
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Under the unit share system, a shareholder has one vote for each unit of shares held by it. Shares not constituting a full unit will carryno voting rights and be excluded for the purposes of calculating the quorum for voting purposes. Moreover, holders of sharesconstituting less than one unit will have no other shareholder rights if Kyocera Corporation’s Articles of Incorporation so provide,except that such holders may not be deprived of certain rights specified in the Company Law or an ordinance of the Ministry ofJustice, including the right to receive distribution of Surplus.
A holder of shares constituting less than one unit may require Kyocera Corporation to purchase such shares at their market value. The
Articles of Incorporation and the Share Handling Regulations of Kyocera Corporation provide that a holder of shares constituting lessthan one unit has the right to require Kyocera Corporation to sell to such holder shares constituting less than one unit which, when
added to shares constituting less than one unit currently owned by such holder, shall constitute a full one unit. The request of such
purchase or sale may not be withdrawn without Kyocera Corporation’s consent.
A holder who owns ADRs evidencing less than 100 ADSs will indirectly own less than a whole unit. Although, as discussed above,
under the unit share system holders of less than a unit have the right to require Kyocera Corporation to purchase their shares, holders
of ADRs evidencing ADSs that represent other than integral multiples of whole units are unable to withdraw the underlying shares ofcapital stock representing less than a unit and, therefore, are unable, as a practical matter, to exercise the rights to require Kyocera
Corporation to purchase such underlying shares. As a result, access to the Japanese markets by holders of ADRs through thewithdrawal mechanism will not be available for dispositions of shares in lots of less than a unit. The unit share system does not affectthe transferability of ADSs, which may be transferred in lots of any size.
Miscellaneous
The Securities and Exchange Law of Japan and related regulations require any person who has become, beneficially and solely or
jointly, a holder of more than five percent of the total issued voting shares of Kyocera Corporation to file a report concerning suchshareholdings with the Director of the relevant Local Finance Bureau of the Ministry of Finance within five business days.
For this purpose, shares to be issued or transferred to these persons upon the exercise of stock acquisition rights are included indetermining both the size of the holding and Kyocera Corporation’s total issued voting share capital.
A similar report must also be filed in respect of any subsequent change of one percent or more in any such holding, with certain
exceptions. (For this purpose, any shares of Kyocera Corporation issuable to such person upon conversion of convertible securities or
exercise of stock acquisition rights, of which none are currently outstanding, would be taken into account in determining both thenumber of shares held by such holder and Kyocera Corporation’s total issued share capital.) Copies of such report must also be
furnished to Kyocera Corporation and to all Japanese stock exchanges on which the shares of Kyocera Corporation are listed.
Except for the general limitation under Japanese anti-trust and anti-monopoly regulations against holding of shares of capital stock ofa Japanese corporation which leads or may lead to a restraint of trade or monopoly, and except for general limitations under theCompany Law or Kyocera Corporation’s Articles of Incorporation on the rights of shareholders applicable regardless of residence or
nationality, there is no limitation under Japanese laws and regulations applicable to Kyocera Corporation or under its Articles ofIncorporation on the rights of non-resident or foreign shareholders to hold or exercise voting rights on the shares of capital stock ofKyocera Corporation.
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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 June 26, 2006, the closing price of our shares of Common Stock on the Tokyo Stock Exchange was ¥ 8,830 per share. The
following table shows the daily price limit for a stock on the Tokyo Stock Exchange with a closing price of between ¥5,000 and¥10,000 per share, as well as the daily price limit if our per share price were to rise to between ¥10,000 and ¥20,000, or fall to
between ¥3,000 and ¥5,000. Other daily price limits would apply if our per share price moved to other ranges.
Selected Daily Price Limits
Maximum Daily Price Movement

Previous Day’s Closing Price or Special Quote

Over
Over
Over

¥ 3,000¥ 5,000¥10,000

Less thanLess thanLess than¥ 5,000¥10,000¥20,000

¥
¥
¥

500
1,000
2,000

For a history of the trading price of our shares of Common Stock on the Tokyo Stock Exchange, see Item 9.A “Offering and Listing
Details” of this Form 20-F.
C. Material Contracts
During the preceding two years we have not entered into any material contracts, other than in the ordinary course of business.
D. Exchange Controls
There is no foreign exchange control in Japan that may materially affect the import or export of capital, including the availability of
cash and cash equivalents for use by Kyocera Corporation, or the remittance of dividends or other payments to nonresident holders ofKyocera Corporation’s shares or of ADRs evidencing ADSs.
E. Taxation
Japanese Taxation
The following is a discussion summarizing material Japanese tax consequences to an owner of shares or ADSs who is a non-residentof Japan or a non-Japanese corporation without a permanent establishment in Japan to which the relevant income is attributable. The
statements regarding Japanese tax laws set forth below are based on the laws in force and as interpreted by the Japanese taxation
authorities as at the date hereof. These statements are subject to changes in the applicable Japanese laws or double taxation
conventions occurring after that date. This summary is not exhaustive of all possible tax considerations which may apply to aparticular investor. Potential investors should satisfy themselves as to:•the overall tax consequences of the ownership and disposition of shares or ADSs, including specifically the tax
consequences under Japanese law,
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•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 the Preventionof Fiscal Evasion with Respect to Taxes on Income (the “Treaty”), establishes the maximum rate of Japanese withholding
tax which may be imposed on dividends paid to an United States resident or corporation not having a “permanentestablishment” in Japan. A “permanent establishment” in Japan is generally a fixed place of business for industrial orcommercial activity in Japan. Under the Treaty, the maximum withholding rate for most qualified portfolio shareholders islimited to 10% of the gross amount of the dividends and 5% of the gross amount of the dividends if the beneficial owner is aqualified 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 that is a United States resident, if such dividends are not derived fromthe carrying on of a business, directly or indirectly, by such pension fund.

For purposes of the Treaty and Japanese tax law, U.S. holders of ADRs will be treated as the owners of the shares underlying the
ADSs evidenced by the ADRs.
Japan has income tax treaties, conventions or agreements, which generally provide that the rate of withholding tax may not exceed
15% for portfolio investors, with, among others, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The income
tax treaty between Japan and the United Kingdom has recently been amended to reduce the maximum withholding tax rate to 10%,with such amendment to take effect following completion of required procedures. 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.
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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.
For purposes of this discussion, a “U.S. holder” is a beneficial owner of shares or ADSs that is:•a citizen or resident of the United States,•

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

This discussion addresses only United States federal income taxation. An investor should consult its own tax advisor regarding theUnited States federal, state and local and other tax consequences of owning and disposing of shares or ADSs in its particular
circumstances.
In general, and taking into account the earlier assumptions, for United States federal income tax purposes, if the investor holds ADRs
evidencing ADSs, the investor will be treated as the owner of the shares represented by those ADSs. Exchanges of shares for ADRs,
and ADRs for shares, generally will not be subject to United States federal income tax.
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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 income taxation. If the investor is a non-corporate U.S. holder, dividends paid in taxable years
beginning before January 1, 2011 that constitute qualified dividend income will be taxable at a maximum rate of 15% provided thatthe shares or ADSs are held for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meetother holding period requirements. Dividends paid with respect to shares or ADSs generally will be qualified dividend income. The
investor must include any Japanese tax withheld from the dividend payment in this gross amount even though he does not in fact
receive it.
The dividend is ordinary income that the investor must include in income when the investor, in the case of shares, or the depositary, inthe case of ADSs, receives the dividend, actually or constructively. The dividend will not be eligible for the dividends-received
deduction generally allowed to United States corporations in respect of dividends received from other United States corporations.
The amount of the dividend distribution that the investor must include in his income as a U.S. holder will be the U.S. dollar value of
the Japanese yen payments made, determined at the spot Japanese yen/U.S. dollar rate on the date the dividend distribution is
includible in the investor’s income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain orloss resulting from currency exchange fluctuations during the period from the date the investor includes the dividend payment inincome to the date he converts the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the
special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the
United States for foreign tax credit limitation purposes.
Distributions in excess of current and accumulated earnings and profits, as determined for United States federal income tax purposes,
will be treated as a non-taxable return of capital to the extent of the investor’s basis in the shares or ADSs and thereafter as capitalgain.
Subject to certain limitations, the Japanese tax withheld in accordance with the Treaty and paid over to Japan will be creditableagainst the investor’s United States federal income tax liability. Special rules apply in determining the foreign tax credit limitation
with respect to dividends that are subject to the maximum 15% tax rate. To the extent a refund of the tax withheld is available to theinvestor under Japanese law or under the Treaty, the amount of tax withheld that is refundable will not be eligible for credit against
the investor’s United States federal income tax liability. Please see “Japanese Taxation,” above, for the procedures for obtaining a tax
refund.
Dividends will likely constitute income from sources outside the United States. Dividends paid in taxable years beginning before
January 1, 2007 generally will be “passive” or “financial services” income, and dividends paid in taxable years beginning after
December 31, 2006 will, depending on your circumstances, be “passive” or “general” income, which, in either case, is treatedseparately from other types of income for purposes of computing the foreign tax credit allowable to the investor.
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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 in taxable years beginning before January 1, 2011 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 income or loss 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, is attributable to assets that
produce or are held for the production of passive income.

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

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

Under these rules:•

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

the amount allocated to the taxable year in which the investor realized the gain or excess distribution will be taxed asordinary income,•the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year,
and•the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to eachsuch year.
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Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.
If the investor owns shares or ADSs in a PFIC that is treated as marketable stock, the investor may make a mark-to-market election. If
the investor makes this election, the investor will not be subject to the PFIC rules described above. Instead, in general, the investor
will include as ordinary income each year the excess, if any, of the fair market value of his shares or ADSs at the end of the taxable
year over his adjusted basis in his shares or ADSs. These amounts of ordinary income will not be eligible for the favorable tax rates
applicable to qualified dividend income or long-term capital gains. The investor will also be allowed to take an ordinary loss inrespect of the excess, if any, of the adjusted basis of his shares or ADSs over their fair market value at the end of the taxable year orover their final sale or disposition prices, but only to the extent of the net amount of previously included income as a result of themark-to-market election. The investor’s basis in the shares or ADSs will be adjusted to reflect any such income or loss amounts.
In addition, notwithstanding any election an investor makes with regard to the shares or ADSs, dividends that it received from us will
not constitute qualified dividend income to an investor if we are a PFIC either in the taxable year of the distribution or the preceding
taxable year. Moreover, an investor’s shares or ADSs will be treated as stock in a PFIC if Kyocera was a PFIC at any time during theinvestor’s holding period in the shares or ADSs, even if Kyocera is not currently a PFIC. For purposes of this rule, if an investor
makes a mark-to-market election with respect to its shares or ADSs, the investor will be treated as having a new holding period in theshares or ADSs beginning on the first day of the first taxable year beginning after the last taxable year for which the mark-to-market
election applies. Dividends the investor receives that do not constitute qualified dividend income are not eligible for taxation at the
15% maximum rate applicable to qualified dividend income. Instead, the investor must include the gross amount of any such dividend
paid by Kyocera out of its accumulated earnings and profits (as determined for United States federal income tax purposes) in theinvestor’s gross income, and it will be subject to tax at rates applicable to ordinary income.
If the investor owns shares or ADSs during any year that Kyocera is a PFIC, it must file Internal Revenue Service Form 8621.
F. Dividends and Paying Agents
Not Applicable.
G. Statement by Experts
Not Applicable.
H. Documents on Display
We are subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, we will fileannual reports on Form 20-F within six months of our fiscal year-end and other reports and information on Form 6-K with the
Securities and Exchange Commission. These reports and other information can be inspected at the public reference room at the
Securities and Exchange Commission at 100 F Street, N.E., Washington, D.C. 20549. You can also obtain copies of such material by
mail from the public reference room of the Securities and Exchange Commission at prescribed fees. You may obtain information on
the operation of the Securities and Exchange public reference room by calling the Securities and Exchange Commission in the UnitedStates at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a web site at www.sec.gov that contains reports,
proxy statements and other information regarding registrants that file electronically with the Securities and Exchange Commission.
As a foreign private issuer, we are exempt from the rules under the Securities Exchange Act of 1934 prescribing the furnishing andcontent of proxy statements to shareholders.
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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, 2006, when compared to March 31, 2005. In the normal course of business, Kyocera also faces
other risks such as country risk, credit risk, or legal risk, but they are not represented in the following tables.
Foreign Currency Exchange Risk
Kyocera enters into foreign currency forward contracts to hedge certain existing assets and liabilities denominated in foreign
currencies, principally the U.S. dollar and Euro. All such contracts currently in effect will mature generally within three months. The
tables below provide information about Kyocera’s major foreign currency forward contracts existing at March 31, 2006, setting forth
the contract amounts, fair value, and weighted average exchange rates. The contract amounts are generally used to calculate thecontractual payments to be exchanged under the contracts.
(Yen in millions) (Pay/Receive)(Except average contractual rates)
Forward exchange contracts to sell foreign currencies

US$/Yen

Euro/Yen

US$/STG

Contract amounts
Fair value
Weighted average contractual rates¥50,398 ¥48,297 ¥17,375(348) (1,022)
83
0.009
0.007
1.288
(Yen in millions) (Receive/Pay)(Except average contractual rates)
CZK/STG

Forward exchange contracts to purchase foreign currencies

Contract amounts
Fair value
Weighted average contractual rates¥5,775(17)41.539Yen/ US$¥4,107(29)
116.560(U.S. dollars in thousands)(Pay/Receive)
Forward exchange contracts to sell foreign currencies

US$/Yen

Euro/Yen

US$/STG

Contract amounts
Fair value$430,752(2,974)$412,795(8,735)$148,504
709(U.S. dollars in thousands)(Receive/Pay)
Forward exchange contracts to purchase foreign currencies

CZK/STG

Yen/US$

Contract amounts
Fair value$ 49,359(145)$ 35,103(248)- 97 -

Interest Rate Risk
Kyocera enters into interest rate swaps and other contracts, which are mainly utilized by a Japanese subsidiary, Kyocera Leasing Co.,
Ltd., to reduce market risk exposure to changes in interest rates. The following tables 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 weighted average interest rates by expected (contracted) maturity dates, and fair value.
Notional amounts are used to calculate the contractual payments to be exchanged under the contracts.
Other finance receivables (including due within one year)(Yen in millions)
Expected maturity date

Averageinterest
rate

Other finance receivables

2007

2008

2009

2010

2011

Thereafter

3.87% ¥36,940 21,031 1,166 1,291 1,596

Total

Fair value

52,056 ¥114,080 ¥114,110

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

Loans, principally from banks

2007

2008

2009

2010

2011

Thereafter

0.90% ¥16,347 12,609 13,008 2,596 2,228

Total

Fair value

2,919 ¥ 49,707 ¥ 49,837

Interest rate swap

(Yen in millions)
Expected maturity date

Notional
principal
amountAveragereceiverate

Averagepay rate

2007

2008

2009

2010

2011

Thereafter

Total

Fair
value

(Variable toFixed)¥28,8500.22%

1.73% ¥200 200 23,200 200 5,050—

Other finance receivables (including due within one year)¥28,850 ¥(511)(U.S dollars in thousands)
Averageinterest
rate

Other finance receivables

Expected maturity date
2007

2008

2009

2010

2011

Thereafter

Total

Fair value

3.87% $315,726 179,752 9,966 11,034 13,641 444,923 $ 975,042 $ 975,299

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

Loans, principally from banks

2008

2007

2009

2010

2011

0.90% $139,718 107,769 111,179 22,188 19,043

Thereafter

Total

Fair value

24,949 $ 424,846 $ 425,957

Interest rate swap

(U.S dollars in thousands)
Expected maturity date

Notional
principal
amountAveragereceiverate

Averagepay rate

2007

2008

2009

2010

2011

Thereafter

Total

Fair value(Variable toFixed)$246,581

0.22%

1.73% $1,709 1,709 198,291 1,709 43,163- 98 -—$ 246,581 $ (4,368)

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 ¥141,059 million ($1,206
million), included ¥111,178 million ($950 million) derived from a rise in the market price of the shares of KDDI Corporation held byKyocera Corporation. Detailed information appears in Note 3 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 the anticipated recoverability of fair value in the
future. Other-than-temporary loss on debt and equity securities with readily determinable fair values for the years ended March 31,
2004, 2005 and 2006 amounted to ¥695 million, ¥1 million and ¥113 million ($1 million), respectively. At March 31, 2006, Kyocera
held the following available-for-sale marketable equity and debt securities.
(Yen in millions and U.S. dollars in thousands)
March 31, 2006

Due within 1 year
Due after 1 year to 5 years
Due after 5 years
Equity securities
Total
Item 12. Description of Securities Other Than Equity Securities
Not Applicable.
- 99 -

Cost

Fair Value

Cost

Fair Value¥ 19,312
117,674517
274,985¥ 19,331
116,690547
415,950$ 165,060
1,005,760
4,419
2,350,299$ 165,222
997,351
4,675
3,555,128¥412,488¥552,518$3,525,538$4,722,376

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 ofKyocera’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the U.S. Securities Exchange Act of 1934) as ofMarch 31, 2006. Based on that evaluation, Kyocera’s principal executive and principal financial officers concluded that the disclosure
controls and procedures were effective as of that date.
Except as described below, no change in Kyocera’s internal control over financial reporting occurred during the year ended March 31,
2006 that has materially affected, or is reasonably likely to materially affect, Kyocera’s internal control over financial reporting.
AVX Corporation, a consolidated subsidiary of Kyocera and an SEC-reporting issuer, reported in its annual report on Form 10-K forthe year ended March 31, 2006 that it had taken actions to remediate the material weaknesses in internal control over financial
reporting that it had reported in its annual report on Form 10-K for the year ended March 31, 2005 and which are summarized below.
1. AVX Corporation did not maintain effective control over the accounting for the accrual of certain management and employee
bonuses. Specifically, AVX Corporation incorrectly accrued certain bonuses that were linked to continuing employment through 2006
that should not have been recognized as expense until employment had been fulfilled. This control deficiency resulted in an audit
adjustment to the consolidated financial statements of AVX Corporation for the quarter ended March 31, 2005. AVX Corporation has
taken the following actions to remediate this material weakness:•

Revised, implemented and communicated a financial policy to properly account for the accrual of certain management andemployee bonuses;•

Implemented a review control for the accrual of certain management and employee bonuses based on the revised financial
policy.

2. AVX Corporation did not maintain effective controls over access to financial application programs and data. Specifically,certain AVX Corporation personnel had incompatible duties and were permitted unrestricted access to financial application programsand data beyond that needed to perform their individual job responsibilities. Additionally, there were not effective controls in place tomonitor users for inappropriate use of programs or access to data. These deficiencies existed in North America, Europe and Asia andin certain systems and processes including cash, accounts receivable, fixed assets, other assets, accounts payable, accrued liabilities,
payroll accounts, inventory accounts and the related income statement accounts. This control deficiency did not result in a
misstatement to the consolidated financial statements of AVX Corporation. AVX Corporation has taken the following actions toremediate this material weakness:•

Improved system access controls related to the system user set-up process and annual user recertification to restrict certain
employees’ access to financial application programs and data to only that needed to perform their individual job
responsibilities;•

Implemented additional system access monitoring controls over applicable systems for employees with access in theinformation systems department.
- 100 -

3. AVX Corporation did not perform supervisory reviews over manual journal entries. Specifically, AVX Corporation’s controls
over the preparation, review and approval of manual journal entries were ineffective in their design. Manual journal entries are
originated in North America, Europe and Asia and in all financial reporting processes. This control deficiency did not result in a
misstatement to the consolidated financial statements of AVX Corporation. AVX Corporation has taken the following actions toremediate this material weakness:•

Implemented a policy and controls for the approval and review of non-recurring manual journal entries;•

Implemented a review control over a sample of manual journal entries using an audit tool to query certain journal entry
types based on specific parameters designed to detect potential errors.

In its annual report on Form 10-K for the year ended March 31, 2006, AVX Corporation reported further that management had
evaluated the design of these new procedures, placed them in operation for a sufficient period of time and subjected them toappropriate tests in order to conclude that they are operating effectively. Management concluded that the performance of these actions
had resulted in full remediation of the material weaknesses described above.
Item 16A. Audit Committee Financial Expert
Our Board of Corporate Auditors has determined that Shigekazu Tamura, a Corporate Auditor of Kyocera Corporation, is an “audit
committee financial expert” as such term is defined by Item 16A of Form 20-F. He was elected as one of Kyocera Corporation’s
corporate auditors at the general meeting of shareholders held on June 28, 2005. See Item 6.A. for additional information regarding
Mr. Tamura. Mr. Tamura meets the independence requirements imposed on corporate auditors under the Company Law.
Item 16B. Code of Ethics
Kyocera has adopted a code of ethics that applies to Chief Executive Officer, Chief Financial Officer and the members of Kyocera
Disclosure Committee. Kyocera’s code of ethics has been attached as Exhibit 11.1 to this Form 20-F and is incorporated herein byreference.
Item 16C. Principal Accountant Fees and Services
Principal Independent Registered Public Accounting Firm Fees
ChuoAoyama PricewaterhouseCoopers has served as our independent registered public accounting firm for fiscal 2004, fiscal 2005,
and fiscal 2006 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 2005 and fiscal 2006.
(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005

Audit Fees (1)Audit-related Fees (2)Tax Fees (3)All Other Fees (4)Total- 101 -

2006

2006

¥

1,363
492
228
—

¥

1,335
299
353
38

$

11,410
2,556
3,017
325

¥

2,083

¥

2,025

$

17,308

1) Amounts represent fees for the annual audit of Kyocera for fiscal 2005 and fiscal 2006, reviews of Kyocera’s financial statements
for interim periods, other regulatory filings in fiscal 2005 and fiscal 2006 and the statutory audit of internal control over financial
reporting for the U.S. listed subsidiary for fiscal 2006.
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 2005 and fiscal 2006.
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 2005 and fiscal 2006.
4) All other fees mainly represent fees for advisory assurance services of the preparation of Kyocera’s sustainability report.
Kyocera’s Board of Corporate Auditors determined that the provision of non-audit services by ChuoAoyama PricewaterhouseCoopers
to Kyocera during fiscal 2005 and fiscal 2006 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”. In addition, our Board of Corporate Auditors is notified of each such service actuallyrendered.
Under the pre-approval procedure for “Specific Pre-Approval”, if any proposed services are not on the General Pre-Approved List,
each of Kyocera group companies must submit an application to Kyocera’s Board of Corporate Auditors for such services. After
reviewing the details and estimated fee levels for each engagement, Kyocera’s Board of Corporate Auditors may make a specific preapproval decision on these services. Also, if any approved services in the General Pre-Approved List exceed the fee levels prescribedon the List, each of Kyocera group companies must submit an application to Kyocera’s Board of Corporate Auditors for new fee
levels for such services. Kyocera’s Board of Corporate Auditors may make a pre-approval decision after reviewing the details of theservices and the estimated fee levels for each engagement.
- 102 -

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. Exemption from the Listing Standards for Audit Committees
With respect to the requirements of Rule 10A-3 under the Securities Exchange Act of 1934 relating to listed company audit
committees, which apply to us through Section 303A.06 of the New York Stock Exchange’s Listed Company Manual, we rely on an
exemption provided by paragraph (c)(3) of that Rule available to foreign private issuers with boards of corporate auditors meetingcertain requirements. For a New York Stock Exchange-listed Japanese company with a board of corporate auditors, the requirements
for relying on paragraph (c)(3) of Rule 10A-3 are as follows:(a)

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

(b)Japanese law must and does require the board of corporate auditors to be separate from the board of directors.

(c)None of the members of the board of corporate auditors is elected by management, and none of the listed company’s
executive officers is a member of the board of corporate auditors.

(d)Japanese law must and does set forth standards for the independence of the members of the board of corporate auditorsfrom the listed company or its management.

(e)

The board of corporate auditors, in accordance with Japanese law or the listed company’s governing documents, must be
responsible, to the extent permitted by Japanese law, for the appointment, retention and oversight of the work of any
registered public accounting firm engaged (including, to the extent permitted by Japanese law, the resolution ofdisagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing
an audit report or performing other audit, review or attest services for the listed company, including its principal accountant
which audits its consolidated financial statements included in its annual reports on Form 20-F.

(f)

To the extent permitted by Japanese law:•

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

the board of corporate auditors must have the authority to engage independent counsel and other advisers, as it determines
necessary to carry out its duties; and•the listed company must provide for appropriate funding, as determined by its board of corporate auditors, for payment of(i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for us, (ii) compensation to any advisers employed by the board ofcorporate auditors, and (iii) ordinary administrative expenses of the board of corporate auditors that are necessary or
appropriate in carrying out its duties.
- 103 -

In our assessment, our Board of Corporate Auditors, which meets the requirements for reliance on the exemption in paragraph (c)(3)of Rule 10A-3 described above, is not materially less effective than an audit committee meeting all the requirements of paragraph(b) of Rule 10A-3 (without relying on any exemption provided by that Rule) at acting independently of management and performing
the functions of an audit committee as contemplated therein.
Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
The following table sets forth certain information with respect to purchases of our own shares by us and our affiliated purchasers.

PeriodApril 1 to April 30, 2005
May 1 to May 31, 2005
June 1 to June 30, 2005
July 1 to July 31, 2005
August 1 to August 31, 2005
September 1 to September 30, 2005
October 1 to October 31, 2005
November 1 to November 30, 2005
December 1 to December 31, 2005
January 1 to January 31, 2006
February 1 to February 28, 2006
March 1 to March 31, 2006
Total(a) Total
Number of
Shares (orUnits)
Purchased(b) Average
Price Paid
per Share(or Unit)(c) Total Number of
Shares (or Units)
Purchased as Partof Publicly Announced
Plans or Programs(d) Maximum Number(or Approximate Dollar Value)of Shares (or Units) that May
Yet Be Purchased Under thePlans or Programs

1,492
1,160
1,175
3,147
1,344
1,294
1,675
673
2,386
1,496
2,652
1,364

7,615.14
7,907.12
8,310.44
8,404.33
7,904.84
7,806.64
7,639.34
7,680.47
8,338.39
9,158.61
10,282.84
10,077.76

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

19,8588,563.34——

Note: Under the Company Law, a holder of shares constituting less than one full unit may request Kyocera Corporation to purchasesuch shares at their market value (See “Memorandum and Articles of Association - Capital stock - “‘Unit’ share system” in “Item 10.
Additional Information”). All purchases described in the above table were made pursuant to such requests by shareholders.
- 104 -

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, 2005 and 2006

F-1
F-2 & F-3

(3) Consolidated Statements of Income for the years ended March 31, 2004, 2005 and 2006

F-4

(4) Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2004, 2005 and 2006

F-5

(5) Consolidated Statements of Cash Flows for the years ended March 31, 2004, 2005 and 2006

F-6

(6) Notes to the Consolidated Financial Statements

F-7 to F-36

(7) SCHEDULE II. Valuation and Qualifying Accounts for the years ended March 31, 2004, 2005 and2006- 105 -

F-37

Item 19. Exhibits
Exhibit
NumberDescription

1.1

Articles of Incorporation (English translation)

1.2

Share Handling Regulations of the Registrant (English translation)

1.3

Regulations of the Board of Directors of the Registrant (English translation)

1.4

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

2.1

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

2.2

Deposit Agreement, dated as of June 29, 1998 among Kyocera Corporation, Citibank N.A. as Depositary and 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 (incorporated by reference to the Registrant’s annual report on Form 20-F filed on September 16, 2005)

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 ofChapter 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.
- 106 -

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, 2005 and 2006, and the results of theiroperations and their cash flows for each of the three years in the period ended March 31, 2006 in conformity with accounting
principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in
the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with therelated consolidated financial statements. These financial statements and financial statement schedule are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedulebased on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
/s/ ChuoAoyama PricewaterhouseCoopers
Osaka, Japan
June 26, 2006
F-1

Consolidated Balance Sheets
Kyocera Corporation and Consolidated Subsidiaries
March 31, 2005 and 2006
2005

2006

2006

¥ 310,592
34,938¥ 300,809
87,942$ 2,571,017
751,641

29,552
201,374
40,801

24,597
210,393
39,505210,231
1,798,231
337,650

271,727(7,981)

274,495(7,425)2,346,112(63,462)

Inventories (Note 5)
Deferred income taxes (Note 15)
Other current assets

263,746
213,41138,65934,229267,070
190,564
40,41133,8722,282,650
1,628,752
345,393289,504

Total current assets

895,575

920,668

7,868,957

30,623
430,437

7,355
553,377

62,863
4,729,718

461,060
66,427560,732
80,9704,792,581
692,051

55,210225,964
656,780
14,38458,286
249,506
697,383
13,473

498,171
2,132,530
5,960,538
115,154952,338(693,341)

1,018,648(733,302)

8,706,393(6,267,538)

258,997
28,11015,847
19,503285,346
31,351
31,227
21,2282,438,855
267,957
266,898
181,436¥1,745,519¥1,931,522$16,508,735

ASSETS

Current assets:
Cash and cash equivalents (Note 12)
Short-term investments (Notes 3 and 12)
Trade receivables (Note 6):
Notes
Accounts
Short-term finance receivables (Notes 4 and 12)
Less allowances for doubtful accounts and sales returns

Investments and advances:
Investments in and advances to affiliates and unconsolidated subsidiaries (Note 6)
Securities and other investments (Notes 3 and 12)Long-term finance receivables (Notes 4 and 12)
Property, plant and equipment, at cost (Note 8):Land
Buildings
Machinery and equipment
Construction in progress
Less accumulated depreciation
Goodwill (Note 7)
Intangible assets (Note 7)
Other assets

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

(Yen in millions and U.S. dollars and shares in thousands—Note 2)
2005

LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITYCurrent liabilities:
Short-term borrowings (Notes 8 and 12)
Current portion of long-term debt (Notes 8 and 12)
Notes and accounts payable:
Trade
Other
Accrued liabilities:
Payroll and bonus
Income taxes
Other
Other current liabilities¥

66,55644,051

2006¥

90,865
16,347

2006$

776,624
139,718

86,872
34,690103,503
51,997884,641
444,419

34,821
31,18028,84917,33837,99827,65831,414
18,841

324,769
236,393
268,496
161,034

344,357

378,6233,236,094

Long-term debt (Notes 8 and 12)
Accrued pension and severance liabilities (Note 9)
Deferred income taxes (Note 15)
Other non-current liabilities

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

33,36027,092
125,686
12,742

285,128
231,556
1,074,239
108,906

Total liabilities

510,186

577,5034,935,923

60,48264,942555,060

115,703
162,061
916,628
11,839115,703
161,994
967,576
72,947

988,915
1,384,564
8,269,880
623,479(31,380)(29,143)(249,086)

1,174,851

1,289,077

11,017,752¥1,745,519¥1,931,522$16,508,735

Total current liabilities

Minority interests in subsidiaries
Commitments and contingencies (Note 13)
Stockholders’ equity (Note 14):
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 10): 3,828 shares at March 31, 2005 and3,554 shares at March 31, 2006
Total stockholders’ equity

F-3

Consolidated Statements of Income
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2006
(Yen in millions and U.S. dollars and shares in thousands, except per share amounts–Note 2)
2004

2005

2006

2006

¥1,140,814
860,224¥1,180,655
855,067¥1,181,489
838,295$10,098,197
7,164,915

Gross profit
Selling, general and administrative expenses

280,590
171,628

325,588
224,620

343,194
239,987

2,933,282
2,051,171

Profit from operations
Other income (expenses):
Interest and dividend income
Interest expense (Note 11)
Foreign currency transaction (losses) gains, net (Note 11)
Equity in earnings (losses) of affiliates and unconsolidated
subsidiaries (Note 6)
Loss on impairment of investment in an affiliate (Note 6)
Gain on sale of investment in an affiliate (Note 6)
Gains on exchange for the shares (Note 3)
Other, net

108,962

100,968

103,207882,111

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

6,396(1,275)
2,618

8,968
(1,301)(316)

76,650(11,120)(2,701)

2,575
—
491
—
961

(1,678)———501(1,216)(3,492)
6,931
5,294
3,313

(10,393)(29,846)
59,23945,24828,316

6,078

6,562

18,181

155,393

115,040

107,530

121,388

1,037,504

29,576
20,73452,872
5,608

47,521(218)

406,162(1,863)50,31058,48047,303404,299

64,7303,356

49,050(3,142)

74,085(4,389)633,205(37,513)

Net sales (Note 6)
Cost of sales

Income before income taxes and minority interests
Income taxes (Note 15):
Current (Note 20)
DeferredIncome before minority interests
Minority interests
Net income
Earnings per share (Note 18):
Net income:
Basic
DilutedCash dividends declared per share:
Per share of common stock
Weighted average number of shares of common stock outstanding:
Basic
Diluted¥68,086¥45,908¥69,696$595,692¥364.79364.78¥244.86244.81¥371.68371.43

$

3.18
3.17

60.00

80.00

100.00186,643
186,649

187,489
187,528

187,514
187,640

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

0.85

Consolidated Statements of Stockholders’ Equity
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2006
(Yen in millions and U.S. dollars and shares in thousands – Note 2)

Balance, March 31, 2003 (184,964)
Net income for the year
Foreign currency translation adjustments
Minimum pension liability adjustment - net of taxesof ¥5,419 (Note 9)
Net unrealized gains on securities - net of taxes of¥61,421 (Note 3)
Reclassification adjustments for net losses on
securities - net of taxes of ¥12 (Note 3)
Net unrealized gains on derivative financial
instruments (Note 11)
Reclassification adjustments for net losses onderivative financial instruments (Note 11)

CommonStock

Additional
Paid-in
CapitalRetained
Earnings(Note 14)

¥115,703¥ 167,675¥ 825,057
68,086

Accumulated Other
Comprehensive Income(Note 14)

Treasury Stock(Note 10)¥¥(56,194)(52,034)(20,693)¥

68,086(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 for acquisition of an affiliate(2,529) (Note 21)
Stock option plan of a subsidiary
Balance, March 31, 2004 (187,484)
Net income for the year
Foreign currency translation adjustments
Minimum pension liability adjustment - net of taxesof ¥125 (Note 9)
Net unrealized losses on securities - net of taxes of¥11,909 (Note 3)
Reclassification adjustments for net losses on
securities - net of taxes of ¥1,234 (Note 3)
Net unrealized losses on derivative financial
instruments (Note 11)
Reclassification adjustments for net losses onderivative financial instruments (Note 11)
Total comprehensive income for the year

Comprehensive
Income¥146,326¥
6,704

45,908
6,704

(152)

(152)

(18,441)(18,441)

1,661

1,661

(27)

(27)

48

48

(11,174)
(105)
44

4
(5,607)
19
115,703

162,091

20,739881,969
45,90822,046(31,356)¥

35,701Cash dividends
Purchase of treasury stock (21)Reissuance of treasury stock (18)Stock option plan of a subsidiary
Balance, March 31, 2005 (187,481)
Net income for the year
Foreign currency translation adjustments
Minimum pension liability adjustment - net of taxesof ¥322 (Note 9)
Net unrealized gains on securities - net of taxes of¥29,400 (Note 3)
Reclassification adjustments for net gains on
securities - net of taxes of ¥1,206 (Note 3)
Net unrealized losses on derivative financial
instruments (Note 11)
Reclassification adjustments for net losses onderivative financial instruments (Note 11)(11,249)
(170)
146

(5)
(25)
115,703

162,061

916,628
69,696

11,839(31,380)

21,396¥

69,696
21,396

(428)

(428)

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

(75)

(75)

27

27

Total comprehensive income for the year
Cash dividends
Purchase of treasury stock (20)Reissuance of treasury stock (294)¥

130,804$
182,872595,692
182,872(3,658)(3,658)359,436

359,436(15,949)(15,949)

(641)

(641)

231

231

(18,748)
(170)
2,407

(67)

Balance, March 31, 2006 (187,755)¥115,703¥ 161,994¥ 967,576¥

72,947¥(29,143)

Balance, March 31, 2005
Net income for the year
Foreign currency translation adjustments
Minimum pension liability adjustment - net of taxesof $2,752 (Note 9)
Net unrealized gains on securities - net of taxes of$251,282 (Note 3)
Reclassification adjustments for net gains on
securities - net of taxes of $10,308 (Note 3)
Net unrealized losses on derivative financial
instruments (Note 11)
Reclassification adjustments for net losses onderivative financial instruments (Note 11)$988,915$1,385,137$7,834,427
595,692$

101,188$ (268,205)

Total comprehensive income for the year

$ 1,117,983

Cash dividends
Purchase of treasury stock
Reissuance of treasury stock
Balance, March 31, 2006

(160,239)(1,453)
20,572(573)$988,915$1,384,564$8,269,880$

623,479$ (249,086)

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

Consolidated Statements of Cash Flows
Kyocera Corporation and Consolidated Subsidiaries
For the three years ended March 31, 2006
(Yen in millions and U.S. dollars in thousands – Note 2)

Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Provision for doubtful accounts
Write-down of inventories
Gain on sale of investment in an affiliate (Note 6)
Gains on exchange for the shares (Note 3)
Deferred income taxes
Minority interests
Equity in (earnings) losses of affiliates and unconsolidated
subsidiaries (Note 6)
Loss on impairment of investment in an affiliate (Note 6)
Gain on settlements of pension plans (Note 9)
Foreign currency adjustments
Change in assets and liabilities:(Increase) decrease in receivables(Increase) decrease in inventories(Increase) decrease in other current assets
Increase (decrease) in notes and accounts payable(Decrease) increase in accrued income taxes
Increase (decrease) in other current liabilities
Increase (decrease) in other non-current liabilities
Settlement regarding LaPine Case (Note 22)
Other, net
Total adjustments
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of available-for-sale securities
Payments for purchases of held-to-maturity securities
Payments for purchases of investments and advances
Sales and maturities of available-for-sale securities
Maturities of held-to-maturity securities
Proceeds from sales of investment in an affiliate
Payments for purchases of property, plant and equipment
Payments for purchases of intangible assets
Proceeds from sales of property, plant and equipment, and intangible
assetsAcquisition of businesses, net of cash acquired (Note 19)
Acquisitions of minority interests
Deposit of negotiable certificate of deposits and time deposits
Withdrawal of negotiable certificate of deposits and time deposits
Deposit of restricted cash
Withdrawal of restricted cash
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:

2004

2005

2006

2006

¥ 68,086¥ 45,908¥ 69,696

70,2602,387
14,013(491)—
20,734(3,356)65,909(18)
10,405
—
—
5,608
3,142

73,186(466)
8,446(6,931)(5,294)
(218)
4,389

625,521(3,983)72,188(59,239)(45,248)(1,863)37,513(2,575)—(24,870)
1,294

1,678
—
—
(2,391)

1,216
3,492
—
272

10,39329,846—
2,325(34,704)(35,751)(4,402)
20,701(9,197)
9,441
2,761(35,454)
3,698

68,558(25,598)
14(31,914)
13,566(1,744)(11,464)—
3,864(9,237)
21,263(3,331)
14,390(4,720)
3,284
(118)
—
1,758

(78,949)
181,735(28,470)
122,992(40,342)
28,068(1,008)—15,026(5,511)

99,615

101,381866,505

62,575145,523

171,077

1,462,197(10,038)(27,943)(7,917)28,954
48,533
5,004(50,712)(8,157)(81,946)(10,141)(11,858)
40,955
8,719—(59,381)(4,820)(98,219)(11,070)(224)
50,0902,340
24,133(91,436)(10,589)(839,479)(94,615)(1,915)428,120
20,000206,265(781,504)(90,504)

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

2,920(2,794)(5)(112,903)
95,220
—
—
3,540

3,350
3
(3,575)(132,286)
100,923——
1,093

28,632
26(30,556)(1,130,650)
862,590——
9,342

29,581(132,494)(165,467)(1,414,248)$

595,692

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

23,363
19,876(48,458)(20,473)
2,169
234

199,684
169,880(414,171)(174,983)
18,5392,000

Net cash used in financing activities(20,422)(67,344)(23,289)(199,051)

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

3,775

7,896

67,487

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

62,822
298,310(50,540)
361,132(9,783)
310,592(83,615)
2,654,632

Cash and cash equivalents at end of year

¥361,132¥ 310,592¥ 300,809$ 2,571,017

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

Notes to The Consolidated Financial Statements
Kyocera Corporation and Consolidated Subsidiaries
1. ACCOUNTING POLICIESFinancial Statements Presentation:
The accounts of Kyocera Corporation and its Japanese subsidiaries are generally maintained in accordance with accounting principles
generally accepted in Japan. Adjustments, which are not recorded in Kyocera Corporation’s books of account, have been made to theaccompanying consolidated financial statements in order to present them in conformity with accounting principles generally acceptedin the United States of America.
Basis of Consolidation and Accounting for Investments in Affiliated Companies:
The consolidated financial statements include the accounts of Kyocera Corporation, its majority-owned subsidiaries and a variableinterest entity for which Kyocera Corporation is a primarily beneficiary under the Financial Accounting Standard Board Interpretation
No. 46 (revised December 2003), “Consolidation of Variable Interest Entities.” The consolidated variable interest entity for which
Kyocera Corporation is the primary beneficiary does not have a material effect on Kyocera’s financial position and result of
operations. All significant intercompany transactions and accounts are eliminated. Investments in 20% to 50% owned companies areaccounted for by the equity method, whereby Kyocera includes in net income its equity in the earnings or losses of these companies.
Revenue Recognition:
Kyocera sells various types of products, including fine ceramic parts, semiconductor parts, and telecommunications equipment.
Kyocera recognizes revenue upon completion of the earnings process, which occurs when products are shipped or delivered to thecustomer in accordance with the terms of an agreement of sale, there is a fixed or determinable selling price, title and risk of loss havebeen transferred, and collectibility is reasonably assured. Most of these conditions are satisfied at the time of delivery to customers indomestic sales (FOB destination) and at the time of shipment (FOB shipping) for export sales.
Sales returns
Kyocera records an estimated sales return allowance at the time of sales based on its historical returns experience.
Products warranty
At the time of sale, Kyocera accrues a product warranty liability for claims under warranties relating to the products that have beensold. Kyocera records an estimated product warranty liability based on its historical repair experience.
Revenue from financial services
In addition to the tangible products as discussed above, Kyocera also provides certain services, primarily financial services provided
by Kyocera Leasing Co., Ltd. (KLC), a wholly-owned subsidiary of Kyocera Corporation. Revenue from direct financing leases isrecognized over the term of the lease, and amortization of unearned lease income is recognized using the interest method. Interest
income on installment loans is recognized on an accrual basis. Interest income is no longer accrued at the time the collection of theinterest is past due 1 year or more, or the collection of the principal is past due 6 months or more. The interest received from cash
payments on impaired loans is recorded as income, unless the collectibility of the remaining investments is doubtful, in which casethe cash receipt is recorded as collection of the principal.
Cash and Cash Equivalents:
Cash and cash equivalents include time deposits and certificates of deposit with original maturities of three months or less.
Translation of Foreign Currencies:
Assets and liabilities of consolidated foreign subsidiaries and affiliates accounted for by the equity method are translated into
Japanese yen at the exchange rates in effect on the respective balance sheet dates. Operating accounts are translated at the average
rates of exchange for the respective years. Translation adjustments result from the process of translating foreign currency financial
statements into Japanese yen. These translation adjustments, which are not included in the determination of net income, are reported
in other comprehensive income.
Assets and liabilities denominated in foreign currencies are translated at the exchange rates in effect at the respective balance
sheet dates, and resulting transaction gains or losses are included in the determination of net income.
Allowances for Doubtful Accounts:
Kyocera maintains allowances for doubtful accounts related to both trade and finance receivables for estimated losses resulting from
customers’ inability to make timely payments, including interest on finance receivables. Kyocera’s estimates are based on various
factors including the length of past due payments, historical experience and current business environments. In circumstances where itis aware of specific customer’s inability to meet its financial obligations, a specific allowance against these amounts is provided

considering the fair value of assets pledged by the customer as collateral.
Inventories:
Inventories are stated at the lower of cost or market. Cost is determined by the average method for approximately 52% and 57% of
finished goods and work in process at March 31, 2005 and 2006, respectively, and by the first-in, first-out method for all otherinventories. Kyocera recognizes estimated write-down of inventories for excess, slow-moving and obsolete inventories.
Property, Plant and Equipment and Depreciation:
Property, Plant and Equipment are recorded at cost less accumulated depreciation. Kyocera provides for depreciation of buildings,
machinery and equipment over their estimated useful lives primarily on the declining balance method. The principal estimated useful
lives used for computing depreciation are as follows:
Buildings
Machinery and equipment

2 to 50 years
2 to 20 years
F-7

The cost of maintenance, repairs and minor renewals is charged to expense in the year incurred; major renewals and betterments
are capitalized.
When assets are sold or otherwise disposed of, the profits or losses thereon, computed on the basis of the difference between
depreciated costs and proceeds, are credited or charged to income in the year of disposal, and costs and accumulated depreciation are
removed from the accounts.
Goodwill and Other Intangible Assets:
Kyocera has adopted Statement of Financial Accounting Standards (SFAS) No.142, “Goodwill and Other Intangible Assets.” Thisrequires 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 or changes in circumstances that might lead to impairment. Intangible assets with definite
useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment
whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
The principal estimated amortization for intangible assets are as follows:
Patent rights
Software2 to 8 years
2 to 5 years

Impairment of Long-Lived Assets:
Pursuant to SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” Kyocera reviews its long-lived assets
and intangible assets with definite useful lives for impairment periodically.
Long-lived assets and intangible assets with definite useful lives are considered to be impaired when the expected undiscounted
cash flow from the asset group is less than its carrying value. A loss on impairment is recognized based on the amount by which thecarrying value exceeds the fair value of the long-lived assets and intangible assets with definite useful lives.
Derivative Financial Instruments:
Kyocera utilizes derivative financial instruments to manage its exposure resulting from fluctuations of foreign currencies and interest
rates. These derivative financial instruments include foreign currency forward contracts and interest rate swaps. Kyocera does nothold or issue such derivative financial instruments for trading purposes.
Kyocera applies SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS
No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities an Amendment of FASB Statement
No. 133.” All derivatives are recorded as either assets or liabilities on the balance sheet and measured at fair value. Changes in the fairvalue 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 othercomprehensive income and charged to earnings when the underlying transaction being hedged occurs.
Kyocera designates certain interest rate swaps and foreign currency forward contracts as cash flow hedges under SFAS No. 133.
Most of Kyocera’s foreign currency forward contracts are entered into as hedges of existing foreign currency denominated assets andliabilities and as such do not qualify for hedge accounting. Accordingly, Kyocera records changes in fair value of these foreign
currency forward contracts currently in earnings. It is expected that such changes will be offset by corresponding gains or losses on
the underlying assets and liabilities.
Kyocera formally documents all relationships between hedging instruments and hedged items, as well as its risk management
objective and strategy for undertaking various hedge transactions. This process includes all derivatives designated as cash flow hedge
are linked to specific assets and liabilities on the balance sheet or forecasted transactions. Kyocera also formally assesses, both at thehedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective inoffsetting cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to
be a highly effective hedge, Kyocera discontinues hedge accounting prospectively. When hedge accounting is discontinued, thederivative will continue to be carried on the balance sheet at its fair value, with deferred unrealized gains or losses charged
immediately in current earnings.
Stock-Based Compensation:
As allowed by SFAS 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” Kyocera measures stock-based
compensation expense using the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion No. 25,“Accounting for Stock Issued to Employee and its related interpretations.” Accordingly, no compensation expense has beenrecognized by Kyocera Corporation and AVX Corporation. KWC recognized compensation expense in the Consolidated Statementsof Income under APB Opinion No. 25, because KWC has a variable stock option plan.

The following table illustrates the effect on net income and earnings per share if Kyocera had applied the fair value recognition
provisions of SFAS No. 123. For purposes of this pro forma disclosure, the fair value of the options is estimated using Black-Scholes
option pricing model and amortized ratably to expense over the service period.
F-8

(Yen in millions and U.S. dollars in thousands
except per share amounts)
Years ended March 31,
2004

2005

2006

2006

Net income, as reported:
Add: Stock-based employee compensation expense included in reported net income net of taxes
Deduct: Total stock -based employee compensation expense determined under fairvalue based method for all awards - net of taxes¥68,086¥45,908¥69,696$595,692

25

(25)

—

—

(4,155)(2,772)(1,550)(13,248)

Pro forma net income¥63,956¥43,111¥68,146$582,444

Earnings per share:
Net income:Basic, as reported
Basic, pro forma
Diluted, as reported
Diluted, pro forma¥364.79
342.67364.78342.65¥244.86229.94244.81229.89¥371.68
363.42371.43363.17

$

3.18
3.11
3.17
3.10

Kyocera Corporation
Options granted in the year ended March 31, 2004, 2005 and 2006 had weighted average fair values of ¥3,176, ¥1,946 and ¥959($8.20), respectively using the Black-Scholes option pricing model. The following are weighted-average assumptions used for options
during the three years ended March 31, 2006.
Years ended March 31,
2004

Interest rate
Expected life
Volatility
Expected dividends

2005

2006

0.75%
0.39%
0.20%
4.5 years 3.7 years 2.7 years
51.48% 39.09% 28.00%
0.76%
1.00%
1.30%

AVX Corporation
Options granted in the year ended March 31, 2004, 2005 and 2006 had weighted average fair values of $5.05, $6.07 and $4.91,
respectively using the Black-Scholes option pricing model. The following are weighted-average assumptions used for options during
the three years ended March 31, 2006.
Years ended March 31,

Interest rate
Expected life
Volatility
Expected dividends

2004

2005

2006

1.43%
4 years
59.8%
1.27%

3.53%
4 years
56.0%
1.07%

4.00%
4 years
55.7%
1.31%

Kyocera Wireless Corp.
Options granted in the year ended March 31, 2004, 2005 and 2006 had weighted average fair values of $1.03, $1.48 and $1.01,
respectively using the Black-Scholes option pricing model. The following are weighted-average assumptions used for options during
the three years ended March 31, 2006.
Years ended March 31,

Interest rate
Expected life
Volatility
Expected dividends

2004

2005

2006

2.99%
5 years
45.00%—

3.65%
5 years
45.00%—

4.21%
5 years
45.00%—

F-9

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 were exercised and resulted in the issuance of common stock.
Cash dividends per share are those declared with respect to the earnings for the respective periods for which dividends 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 November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, “Inventory Costs an amendment of
ARB No. 43, Chapter 4.” SFAS No. 151 requires that all abnormal idle facility expense, freight, handling costs, and spoilage berecognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151
requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production
facilities. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of
SFAS No. 151 will not have a material impact on Kyocera’s consolidated results of operations and financial position.
In December 2004, the FASB issued SFAS No. 123 (revised 2004) (SFAS No. 123R), “Share-Based Payments.” This statement
is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 123R supersedes APB Opinion No. 25,“Accounting for Stock Issued to Employees,” and its related interpretations. SFAS No. 123R requires that the cost resulting from allshare-based payment transactions be recognized in the financial statements. SFAS No. 123R establishes fair value as themeasurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value based
measurement method in accounting for share-based payment transactions with employees except for equity instruments held byemployee share ownership plans. SFAS No. 123R was announced to be effective as of the beginning of the first fiscal year that would
begin after June 15, 2005, however, on April 14, 2005, the Securities and Exchange Commission Staff postponed implementation of
SFAS No. 123R. Kyocera will adopt SFAS No. 123R effective on April 1 2006, and estimates that the impact of SFAS No. 123R will
be approximately ¥400 million ($3,419 thousand) on Kyocera’s consolidated results of operations for fiscal 2007.
In March 2005, the FASB issued Interpretation (FIN) No. 47, “Accounting for Conditional Asset Retirement Obligations-an
interpretation of SFAS No. 143.” This Interpretation clarifies use of the term conditional asset retirement obligation in SFAS No. 143,
“Accounting for Asset Retirement Obligation.” FIN No. 47 requires recognition of a liability for the fair value of a conditional asset
retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN No. 47 is effective no later than theend of fiscal years ended after December 15, 2005. The adoption of FIN No.47 did not have a material impact on Kyocera’s
consolidated results of operations and financial position.
In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections-a replacement of APB Opinion
No. 20 and SFAS No. 3.” SFAS No. 154 replaces APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting
Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a changein accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle. It also applies to changes required byan accounting pronouncement when the pronouncement does not include specific transition provisions. APB Opinion No. 20
previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of thechange the cumulative effect of changing to the new accounting principle. SFAS No. 154 requires retrospective application to priorperiods’ financial statements of changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections oferrors made in fiscal years beginning after December 15, 2005. The impact of SFAS No. 154 will depend on the changes, if any, that
Kyocera may identify and record in a future period.
In November 2005, the FASB issued FASB Staff Position 115-1 and 124-1, “The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments” (FSP FAS 115-1 and FAS 124-1). FSP FAS 115-1 and FAS 124-1 explains
the determination as to when an investment is considered impaired, whether that impairment is other than temporary, and themeasurement of an impairment loss. In addition, it also addresses accounting considerations subsequent to the recognition of an otherthan-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-thantemporary impairment. FSP FAS 115-1 and FAS 124-1 is effective in reporting periods beginning after December 15, 2005. The
adoption of FSP FAS 115-1 and FAS 124-1 did not have a material impact on Kyocera’s consolidated results of operations andfinancial position.

Reclassifications:Certain reclassifications of previously reported amounts have been made to the consolidated statements of income, cash flows andcorresponding footnote disclosures for the year ended March 31, 2004 and 2005 to conform to the current year presentation. Such
reclassifications have no effect on net assets, net income and cash flows.
F-10

2. U.S. DOLLAR AMOUNTS
The consolidated financial statements as of and for the year ended March 31, 2006 presented herein are expressed in the Japaneseyen, and, solely for the convenience of the readers, have been translated into the U.S. dollar at the rate of ¥117 for US$1, the rate
prevailing on March 31, 2006.
This translation should not be construed as a representation that the yen amounts shown could be so converted into the U.S.
dollar at ¥117 for US$1 or at any other rate.
3. 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, ¥55,056 million of gross unrealized gain at March 31, 2005 and ¥111,178 million ($950,239 thousand) of grossunrealized gain at March 31, 2006 were derived from a fluctuation in the market value of the shares of KDDI Corporation held byKyocera 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, 2004,
2005 and 2006 amounted to ¥695 million, ¥1 million and ¥113 million ($966 thousand), respectively.
Due to the merger of Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., on October 1, 2005, Kyocera’s holding
shares in UFJ Holdings, Inc. were exchanged for shares of the new company, Mitsubishi UFJ Financial Group, Inc. As a result of thisshare exchange, Kyocera recognized a gain in the amount of ¥5,281 million ($45,137 thousand) for the year ended March 31, 2006 in
accordance with Emerging Issues Task Force (EITF) 91-5, “Nonmonetary Exchange of Cost-Method Investments”.
Investments in debt and equity securities classified as availabe-for-sale securities and held-to-maturity securities at March 31,
2005 and 2006, included in short-term investments (current assets) and in securities and other investments (non-current assets) aresummarized as follows:(Yen in millions)
March 31,
2005

Cost*

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

Aggregate
Fair Value

2006

Gross
Unrealized
Gains

Gross
Unrealized
LossesCost*

Aggregate
Fair Value

Gross
Unrealized
Gains

Gross
Unrealized
Losses2,024 ¥ 2,029 ¥13 ¥73,88673,773
199
272,006 343,208
71,4488 ¥ 3,745 ¥ 3,908 ¥184 ¥21
312 133,758 132,660
29
1,127
246 274,985 415,950 141,059
94

Total available-for-sale securities

347,916

419,010

71,660566

412,488552,518

141,272

1,242

Held-to-maturity securities:
Other debt securities

22,90022,545—355

34,39834,015—383

Total held-to-maturity securities

22,90022,545—355

34,39834,015—383¥370,816 ¥441,555 ¥ 71,660 ¥F-11

921 ¥446,886 ¥586,533 ¥141,272 ¥ 1,625

(U.S. dollars in thousands)
March 31, 2006

Aggregate
Fair Value

Cost*

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

Total available-for-sale securities

32,0081,143,231
2,350,299$

33,402
1,133,846
3,555,128

Gross
Unrealized
Gains

Gross
Unrealized
Losses

$

$

1,573
248
1,205,632

179
9,633
803

3,525,538

4,722,376

1,207,453

10,615

Held-to-maturity securities:
Other debt securities

294,000

290,726—

3,274

Total held-to-maturity securities

294,000

290,726—

3,274$3,819,538$5,013,102$1,207,453$ 13,889

At March 31, 2006, the contractual maturities of available-for-sale and held-to-maturity securities are summarized as follows:(Yen in millions and U.S. dollars in thousands)
March 31, 2006
Available-for-SaleCost*

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

Aggregate
Fair Value

Held-to-Maturity

Cost*

Aggregate
Fair Value

Available-for-Sale
Aggregate
Fair Value

Cost*

Held-to-Maturity

Cost*

Aggregate
Fair Value¥ 19,312 ¥ 19,331 ¥18,602 ¥ 18,451 $ 165,060 $ 165,222 $158,991 $157,701
117,674 116,690 15,796 15,564 1,005,760
997,351 135,009 133,025
517
547
—
—
4,419
4,675
—
—
274,985 415,950——
2,350,299 3,555,128——¥412,488 ¥552,518 ¥34,398 ¥ 34,015 $3,525,538 $4,722,376 $294,000 $290,726* Cost represents amortized cost for held-to-maturity securities and acquisition cost for available-for-sale securities. The cost basis of
the individual securities is written down to fair value as a new cost basis when other-than-temporary impairment is recognized.
Proceeds from sales of available-for-sale securities and the related gross realized gains and losses for the years ended March 31, 2004,
2005 and 2006 are as follows:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,

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

2004

2005

2006

2006

¥3,427219
0¥22,701
2,046
4,224

¥46,925
2,155
2,393

$401,068
18,41920,453For 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, 2005 and 2006 as
follows:(Yen in millions)

March 31, 2005

within 1 year

Corporate debt securities
Other debt securities
Equity securities

over 1 year

Total

Aggregate
Fair Value

Unrealized
LossesAggregate
Fair Value

Unrealized
LossesAggregate
Fair Value

Unrealized
Losses

¥

773
9,364
5,514

¥

8
24
238

¥

—
12,606
98

¥

—
288
8

¥

773
21,970
5,612

¥

8
312
246

¥ 15,651¥

270¥ 12,704¥

296¥ 28,355

¥

566

F-12

(Yen in millions)
March 31, 2006
within 1 year
Aggregate
Fair Value

Corporate debt securities
Other debt securities
Equity securities¥

Unrealized
Lossesover 1 year
Aggregate
Fair Value

Total

Unrealized
Losses1,012 ¥
21 ¥
131,942
1,127
1,252
87

— ¥
—
25

¥ 134,206 ¥ 1,235 ¥25 ¥Aggregate
Fair Value——¥

Unrealized
Losses1,012 ¥
21
131,942
1,127
1,277
94

7

7 ¥ 134,231 ¥ 1,242(U.S. dollars in thousands)
March 31, 2006
within 1 year
Aggregate
Fair Value

Corporate debt securities
Other debt securities
Equity securities$

Unrealized
Lossesover 1 year
Aggregate
Fair Value

Total

Unrealized
LossesAggregate
Fair Value

Unrealized
Losses8,650 $
179 $
1,127,709
9,633
10,701
743

— $
—
214

— $
8,650 $
179—
1,127,709
9,633
60
10,915803$1,147,060 $ 10,555 $214 $60 $1,147,274 $ 10,615

At March 31, 2005 and 2006, the number of individual available-for-sale securities in an unrealized loss position held byKyocera were 38 and 33, respectively.
4. FINANCE RECEIVABLES
Finance receivables at March 31, 2005 and 2006 consist of the following:(Yen in millions and U.S. dollars in thousands)
March 31,
2006

2005

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

¥

2006

7,311 ¥
(591)

7,469 $
(639)

63,838(5,462)Less-allowance for doubtful accounts (c)

6,720
(576)

6,830
(501)

58,376(4,282)Less-current portion

6,144(2,875)

6,329(2,499)54,094(21,359)¥
Other finance receivables (b)Less-allowance for doubtful accounts (c)

3,269

¥

3,830

$

32,735¥ 115,364 ¥ 119,911 $ 1,024,880(14,343)(5,831)(49,838)
101,021(37,863)Less–current portion¥

63,158114,080(36,940)¥

77,140975,042(315,726)$

659,316

¥
F-13

66,427¥80,970$692,051

(a)Investments in financing leases consist primarily of direct financing leases of telecommunications equipment and informationequipment. Future minimum lease payments to be received for each of the five fiscal years and thereafter are as follows:(Yen in millions and U.S. dollars in thousands)

Years ending March 31,

2007
2008
2009
2010
2011
2012 and thereafter

(b)

¥

2,854
1,928
1,314
870
409
94

$

24,393
16,47911,231
7,436
3,496
803

¥

7,469

$

63,838Other finance receivables consist primarily of installment loans to unrelated third parties.

Investments in loans of ¥6,871 million and ¥5,146 million ($43,983 thousand) at March 31, 2005 and 2006 were considered to
be impaired, for which valuation allowances at March 31, 2005 and 2006 were provided of ¥4,610 million and ¥3,567 million($30,487 thousand), respectively, calculated under SFAS No.114, “Accounting by Creditors for Impairment Loan” and included inallowances for doubtful accounts.
The average recorded investments in impaired loans for the years ended March 31, 2004, 2005 and 2006 were ¥16,695 million,¥9,567 million and ¥6,179 million ($52,812 thousand), respectively. The related recognized interest income for the years ended
March 31, 2004, 2005 and 2006 were ¥52 million, ¥43 million and ¥34 million ($291 thousand), respectively.
The principal amount of the loan on which interest income was no longer accrued at March 31, 2005 and 2006 were ¥14,143
million and ¥6,207 million ($53,051 thousand), respectively. The loans, on which the collection of the principal was past due ninety
days or more and on which interest income were still accrued, at March 31, 2005 were ¥385 million, and at March 31, 2006 were
none.
(c)

Changes in allowances for doubtful accounts on finance receivables are as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2004

2005

2006

2006

Beginning balance
Provision charged to income
Charge-offs¥ 49,578
500(13,763)¥ 36,315
508(21,904)¥14,919326(8,913)$127,513
2,786(76,179)

Ending balance¥ 36,315¥ 14,919¥ 6,332$ 54,120

5. INVENTORIESInventories at March 31, 2005 and 2006 are as follows:(Yen in millions and U.S. dollars in thousands)
March 31,2005

Finished goods
Work in process
Raw materials and supplies

6. INVESTMENTS IN AND ADVANCES TO AFFILIATES

2006¥ 102,538
42,26768,606¥¥ 213,411¥ 190,564

95,492
38,42556,647

2006$

816,171
328,419484,162$ 1,628,752

Kyocera Corporation owned a 36.02% interest in Taito Corporation, a major affiliate which operates in the electric amusementbusiness and accounted for its investment by the equity method. On September 28, 2005, Kyocera Corporation sold its entire holdingof shares of Taito Corporation in a tender offer bid for Taito shares by Square Enix Co., Ltd., a Japanese game software developer. As
a result of this sale of Taito Corporation shares, Kyocera Corporation recorded a gain of ¥6,931 million ($59,239 thousand).
F-14

Kyocera Mita Corporation owns a 30% interest in Triumph-Adler AG Group (TA), a distributor of office equipment andaccounted for its investment by the equity method. Kyocera recognized loss on impairment of investment in an affiliate of ¥3,492
million ($29,846 thousand) due to an extended decline in its market value for the year ended March 31, 2006.
Kyocera Corporation owned a 13.33% interest in DDI Pocket, Inc. (DDI Pocket) which operates a Personal Handyphone System(PHS) business. In October 2004, Kyocera Corporation purchased an additional 16.67% ownership interest for ¥9,993 million to
expand sales in its PHS-related business. Due to its cumulative ownership interest of 30%, Kyocera accounts for its investment by theequity method. DDI Pocket changed its name to WILLCOM, INC. (WILLCOM) in February 2005.
Kyocera’s investment in WILLCOM, which was ¥3,571 million ($30,521 thousand) at March 31, 2006 accounted for by theequity method, is pledged as collateral for loans from financial institutions of WILLCOM.
Kyocera Corporation had owned a 27.48% interest in SK TELETECH CO., LTD (SKTT). On March 26, 2004, Kyocera
Corporation sold all of its shares of SKTT and recorded its gain of ¥491 million.
On March 31, 2005, Taito Corporation and TA were listed companies and on March 31, 2006, TA was a listed company. The
market values of investments in those listed affiliates at March 31, 2005 and 2006 were ¥21,740 million and ¥2,669 million ($22,812
thousand), respectively.
Related party transactions with the affiliates, accounted for by the equity method is as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2005

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

¥

2006

30,471
6,363

¥

2006

7,107
15,851$60,744135,479(Yen in millions and U.S. dollars in thousands)
Years ended March 31,

Kyocera’s equity in earnings of affiliates
Kyocera’s sales to affiliates

2004

2005

2006

2006

¥2,3235,686¥ (1,712)
21,320¥ (1,311)
43,330$(11,205)
370,342

7. GOODWILL AND OTHER INTANGIBLE ASSETS
Intangible assets subject to amortization are summarized as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2005

2006

2006

Gross Carrying
AmountAccumulated
Amortization

Gross Carrying
AmountAccumulated
Amortization

Gross Carrying
AmountAccumulated
Amortization

Patent rights
SoftwareOther¥

24,747
16,4586,814¥

20,045
9,957
2,355

¥

31,75524,314
6,754¥

15,546
13,0193,031$

271,410
207,81257,727$ 132,872
111,273
25,906

Total¥

48,019¥32,357¥62,823¥31,596$536,949$ 270,051

The carrying amounts of intangible assets having an indefinite life at March 31, 2005 was ¥185 million, and there was no suchintangible assets having an indefinite life at March 31, 2006.
Intangible assets acquired during the year ended March 31, 2006 totaled ¥25,483 million ($217,803 thousand) and primarily
consist of patent rights of ¥16,980 million ($145,128 thousand) and software of ¥7,674 million ($65,590 thousand).
The weighted average amortization periods for patent rights and software are 5 years and 4 years, respectively.

Total amortization of intangible assets during the years ended March 31, 2004, 2005 and 2006 amounted to ¥9,201 million,¥7,016 million and ¥10,077 million ($86,128 thousand), respectively.
The estimated aggregate amortization expenses for intangible assets for the next five years are as follows:(Yen in millions and U.S. dollars in thousands)

Years ending March 31,

2007
2008
2009
2010
2011

¥

F-15

9,501
7,886
6,651
4,194
1,256

$

81,20567,402
56,84635,846
10,735

The changes in the carrying amounts of goodwill by reporting segment for the years ended March 31, 2005 and 2006 are as follows:(Yen in millions and U.S. dollars in thousands)

Balance at March 31, 2004
Goodwill acquired during the year
Translation adjustments

Fine Ceramic
Parts Group

Semiconductor
Parts Group

Applied Ceramic
Products GroupElectronic
Device Group

Information
Equipment Group

¥

¥

¥

¥

¥

Balance at March 31, 2005
Goodwill acquired during theyear
Translation adjustments

—
—
—

—
—
—

6,233
—
60

16,983—116

Others

Total

580
—
6

¥ 1,458
2,674—¥ 25,254
2,674
182

—

—

6,293

17,099586

4,132

28,110

100
—

912
—

150
603

754
619

44
54

5
—

1,965
1,276

Balance at March 31, 2006

¥

100

¥

912

¥

7,046

¥

18,472¥684¥ 4,137¥ 31,351

Balance at March 31, 2005
Goodwill acquired during theyear
Translation adjustments

$

—

$

—

$

53,786$ 146,145

$

5,009

$35,316$240,256

1,282
5,154

6,444
5,291

376
461

43
—

16,795
10,906

Balance at March 31, 2006$

60,222$ 157,880

5,846$35,359$267,957

855
—
855

7,795
—
$

7,795

$

$

Kyocera tested goodwill and other intangible assets for impairment in the three months ended March 31, 2006 and no impairment loss
was recognized.
8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2005 and 2006 are comprised of the following:
Loans, principally from banks with average interest rate of 1.01% and 0.71% at March 31, 2005 and 2006, respectively.
(Yen in millions and U.S. dollars in thousands)
March 31,2005

Unsecured¥

66,556

2006¥

90,865

2006$

776,624

Long-term debt at March 31, 2005 and 2006 are comprised of the following:
Loans, principally from banks with interest ranging from 0.15% to 5.85% and from 0.15% to 5.45% at March 31, 2005 and 2006,
respectively.
(Yen in millions and U.S. dollars in thousands)
March 31,
2006

2005

SecuredUnsecured¥¥

77,608(44,051)

Less, portion due within one year¥
Aggregate maturities of long-term debt at March 31, 2006 are as follows:

4,850
72,75833,557

4,149
45,558

2006$

49,707(16,347)¥

33,36035,461
389,385
424,846(139,718)$

285,128

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

2008
2009
2010
2011
2012 and thereafter¥

12,60913,008
2,596
2,228
2,919

$

107,769
111,179
22,18819,04324,949¥33,360$285,128

Kyocera’s assets pledged as collateral of property, plant and equipment, net of accumulated depreciation for long-term debt at
March 31, 2005 and 2006 were ¥4,920 million and ¥5,692 million ($48,650 thousand), respectively.
F-16

9. BENEFIT PLANS
Domestic:a. Defined benefit plans
At March 31, 2006, Kyocera Corporation and its major domestic subsidiaries sponsor funded defined benefit pension plans or
unfunded retirement and severance plans for their employees.
Kyocera Corporation adopted a variable expected interest rate for benefits paid for pensioners, which is linked with the longterm interest rate prevailing in Japan instead of a fixed expected interest rate, effective April 2004.
Benefits under the plan of Kyocera Corporation were previously calculated based on base salary, employee’s position, length ofservice period and conditions at the time of retirement. However, after April 2005, benefits under the plan are calculated according to(i) accumulated “points” that are earned based on employee’s position, extent of contribution and length of service period during
employment, and (ii) conditions at the time of retirement. In addition, employees were provided an option to receive lifetime pension
payments for the full amount of their retirement payment, while after April 2005, employees are provided an option to receive
lifetime pension payments for 50% of their retirement payment and 50% of pension payments for 20 years in maximum. These
amendments reduced the projected benefit obligation of the pension plan for Kyocera Corporation. This effect of the reduction in the
projected benefit obligation has been reflected as a prior service cost not yet recognized.
Benefits under the plans at the domestic major subsidiaries generally are based on the current rate of the base salary, employee’s
position, length of service period and conditions at the time of retirement.
The following table sets forth the funded status of the benefit plans at Kyocera Corporation and its major domestic subsidiaries
at March 31, 2005 and 2006:(Yen in millions and U.S. dollars in thousands)
March 31,2005

Change in projected benefit obligations:
Projected benefit obligation at beginning of year
Increase by acquisition of subsidiaries
Service cost
Interest cost
Amendment
Actuarial loss
Benefits paid

2006

¥ 120,076 ¥ 104,484 $
1,032
—
6,494
6,661
2,385
2,045
(21,095)
(832)
152
1,464
(4,560)(3,292)

2006

893,026—
56,931
17,479(7,111)
12,513(28,137)

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
Benefits paid

104,484

110,530

944,701

93,774222
2,799
14,531(4,061)

107,265
—
6,482
9,043
(2,870)916,795—
55,402
77,290(24,530)

Fair value of plan assets at end of year

107,265

119,920

1,024,957

2,781
32,686(58,665)
743

9,390
28,557(55,051)522

80,256
244,077(470,521)
4,461

Funded status
Unrecognized net loss
Prior service cost not yet recognized
Unrecognized net transition obligation
Net amount recognized¥ (22,455) ¥ (16,582) $(141,727)

Amounts recognized in the statements of financial position consist of:Prepaid benefit costAccrued benefit liability

¥

—
¥
657 $
(22,455)(17,239)5,615(147,342)

Net amount recognized¥ (22,455) ¥ (16,582) $(141,727)

Accumulated benefit obligation at end of year
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
F-17

¥ 101,229¥ 106,963$

914,214¥¥$219,923
192,11173,957

24,86922,041
6,702

25,731
22,4778,653

(Yen in millions and U.S. dollars in thousands)
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 Employee
Pension Fund*
Difference between projected benefit obligations and accumulated benefit
obligations for a substitutional portion of Employee Pension Fund*
Settlement gain for a withdrawal from Employee Pension Fund*Net periodic pension cost

2004

2005

2006

2006

¥ 7,094
4,140(1,087)943(1,913)
2,343¥ 6,494
2,385(1,789)221(2,283)
1,243¥ 6,661
2,045(2,159)221(4,445)1,350$ 56,931
17,479(18,453)
1,889(37,991)
11,53822,833———(3,255)(5,953)

—
—

—
—

—
—

¥25,145¥ 6,271¥ 3,673$ 31,393

Kyocera Corporation and domestic subsidiaries use a December 31 measurement date for their plans. Certain domestic subsidiaries
use a March 31 measurement date for their plans.
Assumptions used to determine benefit obligations at measurement dates are as follows:
March 31,2005

Discount rate

2006

2.0%

1.75%-2.0%

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

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

2004

2005

2006

2.0%
3.0%
0.6%-4.0%

2.0%
3.0%
2.0%-2.5%

2.0%—
2.0%-2.5%

Rate of increase in compensation levels for the year ended March 31, 2006 was not used in the calculation of net periodic pension
costs under the “point system.”
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.
Plan assets categories at the measurement date are as follows:
March 31,

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

2005

2006

66.6%
15.8%
14.3%
2.4%
0.9%

65.1%
21.9%
9.5%
2.2%
1.3%

100.0%

100.0%

Kyocera manages and operates its plan assets with a target of obtaining better performance more than earnings from the expected rateof return on plan assets to ensure the sources of funds sufficient to cover the pension benefits paid to participants and beneficiaries
into the future. In terms of the plan assets management, Kyocera makes appropriate investment choices and optimal portfolios with aconsideration of its performances, expected returns and risks, and entrusts its plan assets to the fund trustees which can be expected tobe the most appropriate to accomplish the target. Kyocera
F-18

also makes an effort to maintain its portfolios within reasonable allocations of plan assets. Kyocera evaluates its categories of plan
assets allocations and can change its portfolios when it is needed.
Kyocera Corporation and its major domestic subsidiaries forecast to contribute ¥8,613 million ($73,615 thousand) to the defined
benefit pension plans in the year ending March 31, 2007.
Estimated future benefit payments are as follows:(Yen in millions and U.S. dollars in thousands)

Years ending March 31,

2007
2008
2009
2010
2011
2012 to 2016

¥

3,019
3,481
4,150
4,282
4,291
25,441$25,80329,75235,47036,59836,675
217,444* Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities and Withdrawal from
Employee Pension Fund
Kyocera Corporation, Kyocera Mita Corporation (KMC) and Kyocera Chemical Corporation (KCC) had adopted Employee Pension
Fund (EPF), which was established pursuant to the Japanese Welfare Pension Insurance Law (JWPIL) until the year ended March 31,
2004. In accordance with the JWPIL, a portion of the government’s social security pension program, under which the employer andemployee 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 the year ended March 31, 2003, and also approved for the transfer to thegovernment of the benefit obligation related to past employee service under the substitutional portion of EPF. Upon these approvals,
Kyocera Corporation and KMC transferred to the government the substitutional portion of EPF and the related government-specified
portion of plan assets of EPF in the year ended March 31, 2004.
Kyocera Corporation and KMC adopted EITF Issue No. 03-02, “Accounting for the Transfer to the Japanese Government of the
Substitutional Portion of Employee Pension Fund Liabilities” for the settlement process of the substitutional portion of EPF. EITF
Issue No. 03-02 requires employers to account for the entire separation process of a substitutional portion from an entire plan(including a corporate portion) upon completion of the transfer to the government of a substitutional portion of EPF and related plan
assets as the culmination of a series of steps in a single settlement transaction. Under this approach, the difference between theaccumulated benefit obligation and the assets required to be transferred to the government was accounted for and separately disclosed
as a subsidy. And a proportionate amount of net unrecognized gain or loss related to the entire EPF and difference between projected
benefit obligations and accumulated benefit obligations for a substitutional portion of EPF were recognized as a settlement gain or
loss. Defined Benefit plans for employees at Kyocera Corporation and KMC were established instead of a corporate portion of EPF.
Details of the accounting for the settlement for a substitutional portion of EPF at Kyocera Corporation and KMC in accordance with
EITF Issue No. 03-02 in the year ended March 31, 2004 were as follows:(Yen in millions)Year ended March 31, 2004

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

67,98829,493

Subsidy

38,495

Proportionate amount of net unrecognized loss related to the entire EPF
Difference between projected benefit obligations and accumulated benefit
obligations for a substitutional portion of EPF(22,833)
3,255

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

18,917

Subsidy was all included as a reduction of SG&A expenses, and periodic pension costs related to the settlement for a substitutional
portion of EPF was allocated ¥13,735 million into cost of sales and ¥5,843 million into SG&A expenses in the Consolidated
Statement of Income for the year ended March 31, 2004.
KCC withdrew from the EPF sponsored by Toshiba Corporation, in which KCC had participated, in the year ended March 31, 2004.
The accounting for this withdrawal was in accordance with SFAS No. 88 “Employers’ Accounting for Settlements and Curtailmentsof Defined Benefit Pension Plans and for Termination Benefits.”
F-19

b. Other plan
Kyocera Corporation and its major domestic subsidiaries also provide for lump- sum severance benefits with respect to directors andcorporate auditors. To reserve future payments of lump-sum severance benefits to directors and corporate auditors, annual provisions
are made in the accounts for the estimated cost of this termination plan, which is not funded.
Foreign:a. Pension plans
Kyocera International, Inc. and its consolidated subsidiaries (KII) and AVX Corporation and its consolidated subsidiaries (AVX),
which are both consolidated U.S. subsidiaries of Kyocera Corporation, maintain non-contributory defined benefit pension plans in the
United States and contributory defined benefit pension plans outside the United States. 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 U.S. non-contributory defined benefit pension plan for a significant portion of the employees covered undercollective bargaining agreements. AVX’s pension plans for certain European employees provide for benefits based on a percentage offinal pay. AVX’s funding policy is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee
benefit and tax laws.
The following table sets forth the funded status of the KII’s and AVX’s plans at March 31, 2005 and 2006:(Yen in millions and U.S. dollars in thousands)
March 31,
2006

2005

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

20,109
845
1,186
94
861
(817)
(698)
562

¥

22,142
433
1,252
90
2,590
(979)
—
1,272

2006

$

189,248
3,701
10,701769
22,137(8,368)—
10,872

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

22,14226,800229,060

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

16,893
2,079
630
90
(979)
(621)
1,589

144,385
17,7695,385
769(8,368)(5,307)
13,581

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

16,893(5,249)4,223
22

19,681(7,119)6,124
15

168,214(60,846)
52,342
128

Net amount recognized¥(1,004)

¥

(980)

$

(8,376)¥(4,789)
29
3,756

¥

(5,615)
21
4,614

$

(47,991)
179
39,436

Net amount recognized¥(1,004)

¥

(980)

$

(8,376)

Accumulated benefit obligation at end of year¥

20,752¥

25,054$

214,137

Amounts recognized in the statements of financial position consist of:
Accrued benefit liability
Intangible assets
Accumulated other comprehensive income

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
F-20¥

14,47814,328
9,982¥

26,80025,054
19,681$

229,060
214,137
168,214

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

2004

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

¥

2006

2006

642
1,163
(1,031)
22
212

¥

845
1,186
(1,118)
13
166

¥

433
1,252
(1,283)13163$ 3,701
10,701(10,966)
111
1,393¥ 1,008¥ 1,092¥$ 4,940

578

AVX and KII use a December 31 measurement date for their plans.
Assumptions used to determine benefit obligations at measurement dates are as follows:
March 31,2005

Discount rate
Rate of increase in compensation levels

2006

4.50%-6.00% 4.25%-5.50%
1.25%-4.50% 2.00%-4.50%

Assumptions used to determine net periodic pension costs at measurement dates for the years are as follows:
Years ended March 31,
2004

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

2005

2006

5.75%-6.75% 5.25%-6.00% 4.50%-6.00%
1.50%-4.50% 1.25%-4.50% 1.25%-4.50%
7.00%-8.50% 7.00%-8.50% 6.30%-8.50%

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

Equity securities
Debt securities
Cash and cash equivalents
Other

2005

2006

63.6%
34.2%
1.6%
0.6%

65.9%
33.2%
0.9%
—

100.0% 100.0%
KII’s long-term strategy is for target allocation of 65%-75% equity securities and 20%-35% debt securities for its defined benefit
plans. AVX’s long-term strategy is for target allocation of 40% equity and 60% fixed income for its U.S. defined benefit plans and
60% equity and 40% fixed income for its non-U.S. defined benefit plans.
AVX forecasts to contribute ¥445 million ($3,803 thousand) to the defined benefit pension plans in the year ending March 31, 2007.
AVX’s and KII’s estimated future benefit payments are as follows:
Years ending March 31,

2007(Yen in millions and U.S. dollars in thousands)

¥

838

$

7,162

882
933
999
1,014
6,418

2008
2009
2010
2011
2012 to 2016
F-21

7,538
7,974
8,538
8,667
54,855

b. Savings plans
KII and AVX maintain retirement savings plans which allow eligible U.S. employees to defer part of their annual compensation.
AVX also maintains a non-qualified deferred compensation program which permits key employees to annually elect to defer a
portion of their compensation until retirement.
Contributions to the plans for the years ended March 31, 2004, 2005 and 2006 were ¥889 million, ¥853 million and ¥928 million($7,932 thousand), respectively.
10. STOCK OPTIONS PLANS
Domestic:
Kyocera Corporation provides directors, corporate auditors, corporate executive officers and certain key employees of Kyocera withstock option plans. Under the plans, they were granted options to purchase Kyocera Corporation’s shares of common stock at a pricedetermined by the higher of (1) multiplying by 1.1 the average market price of Kyocera Corporation’s common stock in previous
month of the date of the grant or (2) the market price of Kyocera Corporation’s common stock at the date of the grant. The options
vest and are exercisable.
On June 28, 2005, the stockholders approved Kyocera Corporation’s Board of Directors resolution for approval of the issuanceof stock acquisition rights (Plan 2005) to directors, corporate auditors, corporate executive officers and certain key employees ofKyocera. Plan 2005 were granted on September 1, 2005 and fully vested on October 1, 2005 to 1,715 persons to acquire common
stock ranging from 600 to 8,000 shares or to acquire 1,301,900 shares of common stock in the aggregate. The exercise price and theexercisable period of Plan 2005 have been set at ¥8,619 per share, and from October 1, 2005 to September 30, 2008, respectively.
Kyocera Corporation covers Plan 2005 by utilizing common stock held by Kyocera Corporation (treasury stock).
At March 31, 2006, Kyocera Corporation reserved 3,086,800 shares of its common stock for the plans.
The following table summarizes information on stock option plans for the years ended March 31, 2004, 2005 and 2006:
Number of Options

Weighted Average Exercise Price

Balance at March 31, 2003
GrantedExercised
Expired and cancelled*

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

Balance at March 31, 2004
GrantedExercised
Expired and cancelled

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

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

Balance at March 31, 2005
GrantedExercised
Expired and cancelled

2,187,800
1,301,900(292,600)(110,300)

8,354
8,619
7,970
8,467

Balance at March 31, 2006

3,086,800

8,498

Weighted average contractual life 2.5 years

3,086,800

¥

8,498

Exercisable options:
At March 31, 2004
Exercise price ¥7,900

1,041,000

¥

7,900

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

2,187,800

8,354

At March 31, 2006
Exercise price ¥7,900, ¥8,725 and ¥8,619

3,086,800

8,498* 1,291,300 options were expired.

¥

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

$

73.67
68.12
72.37
72.63

$

72.63

$

72.63

F-22

The fair value of options at the date of grant during the years ended 2004, 2005 and 2006 were calculated using the Black Scholesmodel with the following assumptions:Years ended March 31,
2004

Fair value
Interest rate
Expected life
Volatility
Expected dividends

¥

3,176
0.75%
4.5 years
51.48%
0.76%

2005

¥

2006

1,946
0.39%
3.7 years
39.09%
1.00%

¥

2006

959
0.20%
2.7 years
28.00%
1.30%

$8.20

Foreign:
AVX has four fixed option plans. Under the 1995 stock option plan, as amended, AVX could 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 could grant options for the purchase of up to an aggregate of 650,000 shares of common stock. No awards were madeunder these two plans after August 1, 2005. Under the 2004 stock option plan AVX may grant options to officers and key employees
for the purchase of up to an aggregate of 10,000,000 shares of common stock. Under the 2004 Non- Employee Directors’ stock option
plan, AVX may grant options for the purchase of up to an aggregate of 1,000,000 shares of common stock. Under all plans, theexercise price of each option shall not be less than the market price of AVX’s stock on the date of grant and an option’s maximum
term is 10 years. Options granted under the 1995 stock option plan and the 2004 stock option plan vest as to 25% annually andoptions granted under the Non-Employee Directors’ stock option plan and the 2004 Non-Employee Directors’ stock option plan vest
as to one third annually.
The following table summarizes the transactions of AVX’s stock option plans for the years ended March 31, 2004, 2005 and 2006:
Numberof Options

Weighted Average
Exercise Price

Balance at March 31, 2003
GrantedExercised
Expired and cancelled

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

Balance at March 31, 2004
GrantedExercised
Expired and cancelled

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

15.15
14.03
9.23
16.41

Balance at March 31, 2005
GrantedExercised
Expired and cancelled

4,907,876
525,000(501,330)(126,931)

15.01
11.43
11.48
23.90

Balance at March 31, 2006

4,804,615

14.72

Price range $29.30 (weighted average contractual life 4.2 years)
Price range $17.00 to $25.50 (weighted average contractual life 5.4 years)
Price range $11.29 to $16.94 (weighted average contractual life 7.7 years)
Price range $7.50 to $11.25 (weighted average contractual life 2.1 years)

547,000
1,029,250
2,032,615
1,195,750

$

29.30
18.51
12.44
8.68

Exercisable options:
At March 31, 2004
At March 31, 2005
At March 31, 2006

3,064,771
3,515,221
3,422,716

$

14.72
15.36
15.43

F-23

15.48
11.87
8.08
22.03

The fair value of options at the date of grant for the years ended March 31, 2004, 2005 and 2006 were calculated using the Black
Scholes model with the following weighted average assumptions:Year ended March 31,
2004

Fair value
Interest rate
Expected life
Volatility
Expected dividends

$

2005

5.05
1.43%
4 years
59.8%
1.27%

$

2006

6.07
3.53%
4 years
56.0%
1.07%

$

4.91
4.00%
4 years
55.7%
1.31%

KWC provides key employees with stock options. The options become vested gradually over a four-year period provided participantsremain a KWC employee. The exercise price shall not be less than 85% of the fair market value of the common stock at the time theoption is granted, and the grant has a maximum term of 10 years. Since KWC is not traded on any stock exchange, the Board of
directors at KWC is responsible for determining the fair market value using reasonable means. KWC may grant options to all key
employees for the purchase of up to an aggregate of 3,800,000 shares of common stock.
The following table summarizes information on the stock option plan for the years ended March 31, 2004, 2005 and 2006:
Numberof Options

Weighted Average
Exercise Price

Balance at March 31, 2003
GrantedExercised
Expired and cancelled

3,329,103
651,828—(638,570)$

Balance at March 31, 2004
GrantedExercised
Expired and cancelled

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

2.49
3.11
2.25
2.65

Balance at March 31, 2005
GrantedExercised
Expired and cancelled

3,093,284
409,425—(1,324,193)

2.54
1.41
—
2.48

Balance, March 31, 2006

2,178,516

2.37

Price range $1.41 to $3.45 (weighted average contractual life 6.14 years)

2,178,516$

2.37

Exercisable options:
At March 31, 2004
At March 31, 2005
At March 31, 2006

2,118,490
2,070,369
1,797,675

$

2.36
2.39
2.46

2.46
2.61
—
2.46

The fair value of options at the date of grant for the years ended March 31, 2004, 2005 and 2006 were calculated using the Black
Scholes model with the following weighted average assumptions:Years ended March 31,
2005

2004

Fair value
Interest rate
Expected life
Volatility
Expected dividends

$

F-24

1.03
2.99%
5 years
45.00%
—

$

1.48
3.65%
5 years
45.00%
—

2006

$

1.01
4.21%
5 years
45.00%—

11. 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 60% of Kyocera’s revenues are generated from overseas customers, which exposes it to foreign
currency exchange rates fluctuations. These financial exposures are monitored and managed by Kyocera as an integral part of its
overall risk management program. Kyocera’s risk management program focuses on the unpredictability of financial markets andseeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.
Kyocera maintains a foreign currency risk management strategy that uses derivative financial instruments, such as foreign
currency forward contracts, to minimize the volatility in its cash flows caused by changes in foreign currency exchange rates.
Movements in foreign currency exchange rates pose a risk to Kyocera’s operations and competitive position, since exchange rates
changes may affect the profitability, cash flows, and business and/or pricing strategies of non Japan-based competitors. Thesemovements affect cross-border transactions that involve, but not limited to, direct export sales made in foreign currencies and raw
material purchases incurred in foreign currencies.
Kyocera maintains an interest rate risk management strategy that uses derivative financial instruments, such as interest rate
swaps, to minimize significant, unanticipated cash flow fluctuations caused by interest rate volatility.
By using derivative financial instruments to hedge exposures to changes in exchange rates and interest rates, Kyocera exposes
itself to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contracts. When the fairvalue of a derivative contract is positive, the counterparty owes Kyocera, which creates repayment risk for Kyocera. When the fairvalue of a derivative contract is negative, Kyocera owes the counterparty and, therefore, it does not possess repayment risk. Kyocera
minimizes the credit (or repayment) risk in derivative financial instruments by (1) entering into transactions with creditworthy
counterparties, (2) limiting the amount of exposure to each counterparty, and (3) monitoring the financial condition of its
counterparties.
Cash Flow Hedges
Kyocera uses interest rate swaps mainly to convert a portion of its variable rate debt to fixed rates. Kyocera charged deferred net
losses of ¥251 million and ¥78 million from accumulated other comprehensive income to interest expense in the consolidated
statement of income for the years ended March 31, 2004 and 2005, as a result of the execution of the hedged transactions.
Also, Kyocera uses certain foreign currency forward contracts designated as cash flow hedges to protect against foreign
currency exchange rate risks inherent in its forecasted transactions related to purchase commitments and sales. Kyocera charged
deferred net gains of ¥30 million and deferred net losses of ¥27 million ($231 thousand) from accumulated other comprehensive
income to foreign currency transaction (losses) gains, net in the consolidated statement of income for the years ended March 31, 2005
and 2006, as a result of the execution of the hedged transactions.
Net unrealized losses on derivative financial instruments in accumulated other comprehensive income at March 31, 2005 and2006, were ¥27 million and ¥75 million ($641 thousand), respectively.
Other Derivatives
Kyocera’s main direct foreign export sales and some import purchases are denominated in the customers’ and suppliers’ local
currency, principally the U.S. dollar, Euro and STG. Kyocera purchases foreign currency forward contracts with terms normallylasting less than three months to protect against the adverse effects that exchange-rate fluctuations may have on foreign-currencydenominated trade receivables and payables. Kyocera does not adopt hedge accounting for such derivatives. The gains and losses onboth the derivatives and the foreign-currency-denominated trade receivables and payables are recorded as foreign currencytransaction (losses) gains, net in the consolidated statements of income.
The aggregate contract amounts of derivative financial instruments to which hedge accounting is not applied are as follows:
March 31,

Foreign currency forward contracts to sell
Foreign currency forward contracts to purchase
Interest rate swaps
F-25

2005

2006

2006

¥99,159
2,487
19,496¥118,911
8,572
13,000$1,016,333
73,265111,11112. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of financial instruments at March 31, 2005 and 2006 and the methods and assumptions used to estimate the fair value
are as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2006

2005

Non-derivatives:
Assets:Cash and cash equivalents (a)Short-term investments (b)Short-term finance receivables (c)Securities and other investments (b)Long-term finance receivables (c)Liabilities:
Short-term borrowings (a)Current portion of long-term debt (c)Long-term debt (c)2006Carrying
AmountFair Value

Carrying
AmountFair Value

Carrying
AmountFair Value¥ 310,592
34,93837,863
430,437
63,158¥ 310,592
34,91937,923430,092
63,158¥ 300,809
87,942
36,940553,377
77,140¥ 300,809
87,791
36,946553,144
77,164$ 2,571,017
751,641
315,726
4,729,718
659,316$ 2,571,017
750,350
315,778
4,727,727
659,521¥ 876,988¥ 876,684¥1,056,208¥1,055,854$ 9,027,418$ 9,024,393¥ (66,556) ¥ (66,556) ¥ (90,865) ¥ (90,865) $ (776,624) $ (776,624)(44,051)(44,106)(16,347)(16,367)(139,718)(139,889)(33,557)(33,844)(33,360)(33,470)(285,128)(286,068)¥(144,164) ¥(144,506) ¥ (140,572) ¥ (140,702) $(1,201,470) $(1,202,581)

Derivatives:
Foreign currency forward contracts
to sell (d)Foreign currency forward contracts
to purchase (d)Interest rate swaps (d)¥(1,504) ¥(1,504) ¥(1,271) ¥(1,271) $(10,863) $(10,863)

(37)
(969)

(37)
(969)

(27)
(511)

(27)
(511)

(231)
(4,368)(231)(4,368)Both short-term finance receivables and long-term finance receivables in the above do not include investments in direct financing
leases.
(a)

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

(b)

The fair value is based on quoted market prices. It was not practicable to estimate the fair value of investments in unlistedcommon stock because of the lack of the market price and difficulty in estimating fair value without incurring excessive cost,
and Kyocera did not identify any events or changes in circumstances that may have had a significant adverse effect on theseinvestments. The aggregated carrying amounts of these investments included in the table at March 31, 2005 and 2006 were
¥2,584 million and ¥2,258 million ($19,299 thousand), 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.

13. COMMITMENTS AND CONTINGENCIESAt March 31, 2006, Kyocera had contractual obligations for the acquisition or construction of property, plant and equipment
aggregating ¥13,236 million ($113,128 thousand) principally due within one year.
Kyocera is lessee under long-term operating leases primarily for office space and equipment. Rental expenses for operatingleases were ¥9,899 million, ¥10,680 million and ¥10,719 million ($91,615 thousand) for the years ended March 31, 2004, 2005 and2006, respectively.
Future minimum lease commitments under non-cancelable operating leases at March 31, 2006 are as follows:Years ending March 31,(Yen in millions and U.S. dollars in thousands)

2007
2008
2009
2010
2011
2012 and thereafter

¥

7,785
6,012
2,943
1,837
1,354
5,437

$

66,53851,38525,154
15,701
11,573
46,470¥25,368$

216,821F-26

Kyocera has purchase agreements for a part of its anticipated amount of a certain material. Under the agreements, during the year
ended March 31, 2006, Kyocera purchased ¥827 million ($7,068 thousand) and is obligated to purchase ¥42,088 million ($359,726
thousand) in total by the end of December 2015.
Kyocera guarantees the debt of employees, customers and an unconsolidated subsidiary. At March 31, 2006, each amount ofthese guarantees was ¥185 million ($1,581 thousand), ¥363 million ($3,103 thousand) and ¥550 million ($4,701 thousand). The
financial guarantees are made in the form of commitments and letters of awareness issued to financial institutions and generally
obligate Kyocera to make payments in the event of default by the borrowers. Kyocera also guarantees the leasing debts of customersof the Information Equipment Group. At March 31, 2006, the amount of such guarantee was ¥510 million ($4,359 thousand).
Kyocera is subject to various lawsuits and claims, which arise, in the ordinary course of business. Kyocera consults with legal
counsel and assesses the likelihood of adverse outcome of these contingencies. Kyocera records liabilities for these contingencies
when the likelihood of an adverse outcome is probable and the amount is reasonably estimated. However, based on the information
available, management believes that damages, if any, resulting from these actions will not have a significant effect on Kyocera’s
consolidated results of operations and financial position.
14. 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, 2006
included in retained earnings was ¥18,724 million ($160,034 thousand).
The Code provides certain restrictions on payment of dividends in connection with the repurchased treasury stock. At March 31,
2006, Kyocera Corporation reserved ¥29,143 million ($249,086 thousand) of treasury stock repurchased mainly for stock options,which are restricted as to the payment of cash dividends. The amount of statutory retained earnings of Kyocera Corporation available
for the payment of dividends to stockholders at March 31, 2006 was ¥599,041 million ($5,120,009 thousand).
Kyocera Corporation’s Board of Directors, with subsequent approval by the stockholders, has declared annual appropriations ofretained earnings for various purposes, totaling ¥557,137 million ($4,761,855 thousand) at March 31, 2006. Any disposition of suchappropriations shall be at the discretion of the Board of Directors and stockholders. Such appropriations have not been segregatedfrom retained earnings in the accompanying consolidated financial statements.
Kyocera’s equity in retained earnings or deficits of affiliates and unconsolidated subsidiaries accounted for by the equity methodof accounting aggregating ¥ (15,996 million) ($(136,718 thousand)) at March 31, 2006 was included in retaining earnings.
Changes in accumulated other comprehensive income are as follows:(Yen in millions and U.S. dollars in thousands)

Balance at March 31, 2003
Net change for the year

Foreign Currency
Translation
Adjustments

Minimum Pension
Liability
Adjustments

Net Unrealized
Gains (Losses)
on Securities

Net Unrealized Gains(Losses) on
Derivative Financial
Instruments

Total Accumulated
Comprehensive
Income

¥

¥

¥

¥

¥

Balance at March 31, 2004
Net change for the year

(14,977)(20,693)(35,670)6,704(10,931)9,454(1,477)(152)(29,955)
89,19659,241(16,780)

(331)
283
(48)
21

(56,194)
78,24022,046(10,207)

Balance at March 31, 2005
Net change for the year¥

(28,966)
21,396¥(1,629)(428)¥

42,46140,188

¥

(27)
(48)

¥

11,83961,108

Balance at March 31, 2006¥

(7,570)¥(2,057)¥82,649¥(75)¥

72,947

Balance at March 31, 2005
Net change for the year$

(247,573)
182,872$(13,923)(3,658)$362,915
343,487

$

(231)
(410)

$

101,188522,291

Balance at March 31, 2006$

(64,701)$(17,581)F-27$

706,402

$

(641)

$

623,47915. INCOME TAXES
Income before income taxes and income taxes for the years ended March 31, 2004, 2005 and 2006 are made up of the following
components:(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2004

2005

2006

2006

¥118,564(3,524)¥ 93,190
14,340¥ 97,229
24,159$ 831,017
206,487¥115,040¥107,530¥121,388$1,037,504¥ 23,391
6,185¥ 47,666
5,206¥ 40,306
7,215$ 344,496
61,666

29,57652,87247,521

406,162

22,927(2,193)

(723)
6,331

(1,940)
1,722(16,581)
14,718

Total deferred income taxes

20,734

5,608

(218)

(1,863)

Total income taxes¥ 50,310¥ 58,480¥ 47,303$ 404,299

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 for the years ended 2004, 2005 and 2006 of approximately 42.0%, 41.0% and 41.0%, respectively.
Reconciliations between the Japanese statutory income tax rate and Kyocera’s effective tax rate for the years ended March 31,
2004, 2005 and 2006 are as follows:
Years ended March 31,

Japanese statutory tax rate
Difference in statutory tax rates of foreign subsidiaries
Change in valuation allowance
Tax credit for research and development expenses
Adjustments of transfer pricing (Note 20)
Tax rate change
Other
Effective income tax rate
F-28

2004

2005

2006

42.0%
(2.5)
4.0
(0.9)
—
0.4
0.7

41.0%
(4.0)
8.4
(2.2)
11.9
—
(0.7)

41.0%
(2.7)
4.7
(3.5)
—
—
(0.5)

43.7%

54.4%

39.0%

The components of the deferred tax assets and deferred tax liabilities at March 31, 2005 and 2006 are as follows:(Yen in millions and U.S. dollars in thousands)
March 31,
2006

2005

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

¥

Subtotal
Valuation allowance

2,579
19,587
3,883
5,324
17,266
27,697822
25,213
3,544
6,189

¥

112,104(31,821)

Total deferred tax assets
Deferred tax liabilities:
Depreciation
Deduction of foreign branch losses
Securities
Other
Total deferred tax liabilities

2,152
18,7502,689
7,127
19,422
27,2092,252
31,083
3,479
5,895

2006

$

120,058(37,716)

18,393
160,256
22,98360,914
166,000
232,556
19,248
265,667
29,73550,385
1,026,137(322,359)¥

80,283¥82,342$

703,778

¥

2,289
4,763
115,288
3,278

¥

3,496
5,670
143,734
1,242$

29,88048,462
1,228,496
10,615¥ 125,618¥ 154,142$ 1,317,453

At March 31, 2006, Kyocera had net operating losses carried forward of approximately ¥93,900 million ($802,564 thousand), which
would be available to offset future taxable income. Of these net operating losses carried forward, the amount of ¥13,972 million($119,419 thousand) recorded at domestic subsidiaries will expire within next seven years, and the amount of approximately ¥32,190
million ($275,128 thousand) recorded at US subsidiaries will expire in various periods through the year ending March 31, 2026.
Certain subsidiaries in Brazil, China, France, Korea, Germany, Sweden, Austria, Israel, Taiwan and United Kingdom had net
operating losses carried forward totaling approximately ¥44,749 million ($382,470 thousand) of which most had no expiration date.
Kyocera intends to reinvest certain undistributed earnings of foreign subsidiaries for an indefinite period of time. Therefore, nodeferred tax liabilities have been provided on undistributed earnings of these subsidiaries, which are not expected to be remitted in theforeseeable future. Kyocera estimates this unrecognized deferred tax liabilities are ¥16,542 million ($141,385 thousand) at March 31,
2006. The undistributed earnings of these subsidiaries are ¥155,802 million ($1,331,641 thousand) at March 31, 2006.
The net changes in the total valuation allowance for the years ended March 31, 2005 and 2006 increased by ¥3,572 million and¥5,895 million ($50,385 thousand), respectively.
16. SUPPLEMENTAL EXPENSE INFORMATION
Research and development expenses for the years ended March 31, 2004, 2005 and 2006 amounted to ¥46,630 million, ¥54,398
million and ¥57,436 million ($490,906 thousand), respectively.
Advertising expenses for the years ended March 31, 2004, 2005 and 2006 amounted to ¥12,281 million, ¥13,915 million and¥10,840 million ($92,650 thousand), respectively.
Shipping and handling costs for the years ended March 31, 2004, 2005 and 2006 amounted to ¥12,400 million, ¥12,919 millionand ¥13,986 million ($119,538 thousand), respectively, and were included in selling, general and administrative expenses in theConsolidated Statements of Income.
F-29

17. SEGMENT REPORTING
Main products or businesses of each reporting segment are as follows:(Fine Ceramic Parts Group)
Information & Telecommunication Components
Sapphire Substrates
Semiconductor Process Equipment Components
LCD Process Equipment Components
General Industrial Ceramic Components
Automotive & ITS Related Components(Semiconductor Parts Group)
Ceramic Packages for Surface Mount Devices (SMD)
Ceramic Multilayer Packages/Multilayer Substrates
Metallized Products
Organic Multilayer Packages/Substrates(Applied Ceramic Products Group)
Solar Cells & Modules
Cutting Tools
Dental & Orthopedic Implants
Jewelry & Applied Ceramic Related Products(Electronic Device Group)
Passive Components (Ceramic Chip Capacitors, Tantalum Capacitors)
Timing Devices (Temperature Compensated Crystal Oscillators (TCXO))
Connectors
Thin-Film Products (Thermal Printheads, Liquid Crystal Displays)(Telecommunications Equipment Group)
CDMA Mobile Phone Handsets
PHS Related Products(Information Equipment Group)
ECOSYS Non-cartridge Printers
Copiers
Digital Network Multifunction Products(Optical Equipment Group)
Optical Modules
Lenses(Others)
Telecommunications Network Systems Business
Chemical Materials for Electronic Components
Leasing Business
Realty Develop Business
Inter-segment sales, operating revenue and transfers are made with reference to prevailing market prices. Transactions between
reportable segments are immaterial and not shown separately. Operating profit for each reporting segment represents net sales, lessrelated costs and operating expenses, excluding corporate revenue and expenses, equity in earnings (losses), income taxes andminority interest. Assets for each reporting segment represent those assets associated with a specific reporting segment. Corporateassets consist primarily of cash and cash equivalents, the facilities of corporate headquarters and various other investments and assetsthat are not specific to each reporting segment.
Kyocera’s sales to KDDI Corporation and its consolidated subsidiaries, which is mainly recorded at the Telecommunications
Equipment Group, for the years ended March 31, 2004, 2005 and 2006 comprised of 10.2%, 7.6% and 8.2% of consolidated net sales,
respectively.
F-30

Information by the reporting segment at and for the years ended March 31, 2004, 2005 and 2006 is summarized on the following
pages:
Reporting segments(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2005

2004

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

Operating profit:
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
Others¥Depreciation and amortization:
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersCorporate

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

¥¥1,180,655¥¥

10,23910,603
10,297
5,047
5,082
31,986(5,826)
9,683

2006

73,711 ¥ 69,373
127,960
135,299
93,879117,555
262,997259,592
250,918
229,035
241,145249,381
35,776
14,947118,040
124,974(23,771)(18,667)¥1,140,814¥1,181,489$

592,932
1,156,402
1,004,744
2,218,735
1,957,564
2,131,461
127,752
1,068,154(159,547)$10,098,197

11,535 ¥17,55017,12935,406(14,918)
36,186(15,387)
13,01911,014
17,742
21,87627,170(1,706)
26,412(5,774)
12,56077,111
34,871
2,575
483

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

109,294
13,358(1,216)(48)

934,137
114,171(10,393)(411)¥ 115,040¥ 107,530¥ 121,388$ 1,037,504

¥

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

¥

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

¥

4,126
10,623
7,167
21,202
8,692
12,641
1,635
3,794
3,306

$

35,26590,79561,256
181,214
74,291
108,043
13,97432,42728,256¥70,260¥65,909¥73,186$

625,521

¥

39
6
37
182
(6)
879

¥

10 ¥
82
23
(73)
41
51

21
26
42
4
0
84

$

180
222
359
34
0
718

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

68,758
108,784
78,287
256,906
302,787
214,192
29,297
100,505(18,702)2006$

94,137
151,641
186,974
232,222(14,581)
225,744(49,350)
107,350

Optical Equipment Group
OthersCorporate

63
582
75
¥
F-31

1,857

96
648
(62)
¥

816

47
289
(12)
¥

501

402
2,470
(103)
$

4,282

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

2004

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

Capital expenditures:
Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
OthersCorporate

2006

2006

¥

24
100
950
9,373
1,785
619
1,122
40
—

¥

14
45
312
598
4,053
1,583
3,793
7
—

¥

14
382
1,176
385
4,184
2,079
194
32
—

$

120
3,265
10,051
3,291
35,761
17,769
1,658
273
—

¥

14,013¥

10,405

¥

8,446

$

72,188

¥

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

¥

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

¥

4,182
24,136
14,545
21,562
2,639
12,389
199
6,576
4,043

$

35,744
206,291
124,316
184,291
22,555
105,889
1,701
56,20534,555¥54,937¥

63,176¥90,271$

771,547(Yen in millions and U.S. dollars in thousands)
March 31,
2004

Assets:Fine Ceramic Parts Group
Semiconductor Parts Group
Applied Ceramic Products GroupElectronic Device Group
Telecommunications Equipment Group
Information Equipment Group
Optical Equipment Group
Others¥Corporate
Investments in and advances to affiliates and unconsolidated subsidiaries
Adjustments and eliminations
Total assets
F-32

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

2005¥

43,41479,711
85,595
357,797
98,877
178,596
31,338216,178

2006¥

43,822
103,302112,422
383,150
87,343
185,362
16,211
241,1422006$

374,547
882,923
960,872
3,274,786
746,521
1,584,291
138,555
2,061,043

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

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

1,172,754
817,857
7,355(66,444)

10,023,538
6,990,231
62,863(567,897)¥1,794,758¥1,745,519¥1,931,522$16,508,735

Information for revenue from external customers by product shipment destination and long-lived assets based on physical location asof and for the years ended March 31, 2004, 2005 and 2006 are summarized as follows:
Geographic segments(Yen in millions and U.S. dollars in thousands)
Years ended March 31,
2004

Net sales:Japan
United States of America
Asia
EuropeOthers

2005

2006

2006

¥ 456,807 ¥ 472,417 ¥ 474,980 $ 4,059,658
251,326
248,333
253,696
2,168,342
194,302203,848
198,731
1,698,556
156,929
175,850
184,351
1,575,650
81,45080,207
69,731595,991¥1,140,814 ¥1,180,655 ¥1,181,489 $10,098,197(Yen in millions and U.S. dollars in thousands)
March 31,
2004

Long-lived assets:
Japan
United States of America
Asia
EuropeOthers

2005

2006

2006

¥ 204,437 ¥ 212,291 ¥ 251,555 $ 2,150,043
35,54335,712
36,248309,81233,32431,07037,308318,872
21,89423,26922,344
190,974
4,110
3,294
3,711
31,718¥ 299,308 ¥ 305,636 ¥ 351,166 $ 3,001,419

There are no individual countries of which proportion of sales and long-lived assets to Kyocera’s consolidated amounts are materialin “Asia”, “Europe” and “Others”.
18. EARNINGS PER SHARE
A reconciliation of the numerators and the denominators of basic and diluted earnings per share computations is as follows:(Yen in millions and U.S. dollars in thousands except per share amount)
Years ended March 31,
2004

Net income

¥

2005

2006

68,086 ¥45,908 ¥69,696 $364.79364.78244.86244.81371.68371.43

Basic weighted average number of shares outstanding (shares inthousands):
Dilutive effect of stock options

186,6436

187,48939

187,514126

Diluted weighted average number of shares outstanding

186,649

187,528

187,640

Basic earnings per share
Diluted earnings per share

F-33

2006

595,692
3.18
3.17

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

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

2004

2005

2006

2006

¥ 3,043
38,774¥ 2,33140,055¥ 1,933
53,037$ 16,521
453,308¥ 56,506(19,804)—(4,600)(15,132)(14,699)¥ 8,478(2,683)(2,440)
—
—
(561)

¥

65
(45)
(8)
—
—
(15)

$

555
(385)
(68)
—
—
(128)

¥ 2,271¥ 2,794

¥

(3)

$

(26)

20. RECEIPT OF A NOTICE OF TAX ASSESSMENT BASED ON TRANSFER PRICING ADJUSTMENTS AND FILINGCOMPLAINT AGAINST IT
On March 28, 2005, Kyocera Corporation received a notice of tax assessment based on transfer pricing adjustments from the Osaka
Regional Tax Bureau stating that, in the Bureau’s judgment, allocation of profit earned from transfers of products between Kyocera
Corporation and its overseas subsidiaries was not appropriate for the five years from the year ended March 31, 1999 through the year
ended March 31, 2003. The notice indicated that income should be adjusted upwards ¥24,394 million and that resultant additional tax,
including local taxes, etc., amounted to ¥12,748 million. On May 24, 2005, Kyocera Corporation filed a complaint against tax
assessment based on transfer pricing adjustments with the Osaka Regional Tax Bureau. Although the final resolution of the proposed
tax assessment is not certain, management believes the ultimate disposition of this matter will not have a material impact on the
results of operations.
F-34

21. BUSINESS COMBINATIONSInvestments in Kinseki, Limited and Kyocera SLC Technologies Corporation in the year ended March 31, 2004:
On May 21, 2003, in order to reinforce the business of crystal components, Kyocera Corporation and Kinseki, Limited, at themeetings of their respective Boards of Directors, resolved that Kyocera Corporation would make Kinseki, Limited a wholly-owned
subsidiary through a share exchange.
The agreement was approved at the ordinary general shareholders meeting of Kinseki, Limited held on June 27, 2003, and theshare exchange was effective on August 1, 2003, allocating a total of 2,529,154 shares of common stock of Kyocera Corporation to
Kinseki, Limited’s shareholders in return for the remaining 25,291,542 shares (71.91%) of Kinseki, Limited’s shares not previously
owned by Kyocera Corporation. Operating results of Kinseki, Limited and its subsidiaries (Kinseki) until the date of the shareexchange had been included as equity in earnings of affiliates, and those from the date of the acquisition have been included in
Kyocera’s consolidated results of operations.
The following table summarizes the purchase price allocation of Kinseki’s assets acquired and liabilities assumed for the
71.91% additional interest acquired:(Yen in millions)
August 1, 2003

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

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

Total assets

50,834

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

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

Total liabilities

18,918

Net assets
Proportion of net assets acquired (71.91%)

31,916
22,950Consideration paid

(15,159)

Excess of net assets acquired over consideration given

¥

7,791

On August 1, 2003, the estimated fair value of the acquired net assets for Kinseki was ¥22,950 million, in excess of the purchase priceof ¥15,159 million, which was calculated based on the average stock price of Kyocera Corporation during a few days before and after
the date on which Kyocera Corporation and Kinseki, Limited reached an agreement on the acquisition. The excess of net assets
acquired over consideration of ¥7,791 million was charged against property, plant and equipment.
Kyocera Corporation acquired Kinseki, Limited through a statutory share exchange under Japanese law. The exchange ratio wasdetermined by third party appraisers. The market value of the shares exchanged was lower than the fair value of net assets acquired.
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 million.
Kyocera Corporation incorporated a new successor company, “Kyocera SLC Technologies Corporation” on August 12, 2003
and undertook the operation on September 1, 2003.
F-35

22. SETTLEMENT REGARDING LaPine CASE
On September 1, 1994, the International Chamber of Commerce issued its award with respect to the arbitration between Kyocera
Corporation and LaPine Technology Corporation (LTC), Prudential-Bache Trade Corporation (PBTC) (presently renamed PrudentialBache Trade Services, Inc.), et al. for the alleged breach of an agreement by Kyocera Corporation in connection with thereorganization of LTC. The award ordered Kyocera Corporation to pay to LTC and PBTC as damages, approximately $257,000
thousand, 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 forbroad 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 thousand pursuant to this settlement and recorded ¥35,454 million as cash payment in its consolidated
financial statements in the year ended March 31, 2004.
23. SUBSEQUENT EVENTS
Subsequent to March 31, 2006, Kyocera Corporation’s Board of Directors declared a cash dividend of ¥9,387 million ($80,231
thousand) payable on June 26, 2006 to stockholders of record on March 31, 2006. The dividend declared was approved by thestockholders at the meeting held on June 23, 2006.
F-36

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
For the years ended March 31, 2004, 2005 and 2006
Yen in millions
Column B

Column A

Column C

Column D

Column E

Deductions(B)

Balanceat End ofPeriodAdditions
Charged(Credited)to otherAccounts(A)

Description

Balanceat
Beginningof Period

Charged to
Costs andExpenses

For the year ended March 31, 2004:
Allowance for doubtful accounts
Allowance for sales returns
Allowance for valuation losses on inventories¥55,990
4,207
10,212¥ 1,938
632
1,790

¥

(173) ¥(14,963)
(431)
—
—
(2,786)¥42,792
4,408
9,216

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

¥

548
8,473
8,127

¥

109
58
—

¥(22,410)(9,040)(4,936)¥21,039
3,899
12,407¥56,416¥ 17,148¥

167¥(36,386)¥37,345¥21,039
3,899
12,407

¥

¥

388
364
260

¥ (9,939)(7,590)(4,771)¥12,184
3,712
11,787¥37,345¥ 11,626¥ 1,012¥(22,300)¥27,683

Total
For the year ended March 31, 2005:
Allowance for doubtful accounts
Allowance for sales returns
Allowance for valuation losses on inventories
Total
For the year ended March 31, 2006:
Allowance for doubtful accounts
Allowance for sales returns
Allowance for valuation losses on inventories
Total

696
7,039
3,891

(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-37

SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, Kyocera certifies that it meets all of therequirements for filing on Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Kyocera Corporation(Company)
By /s/ Shoichi Aoki
Shoichi Aoki
Executive Officer
General Manager ofCorporate Financial & Accounting Group
June 29, 2006

INDEX OF EXHIBITS
Exhibit
NumberDescription

1.1

Articles of Incorporation (English translation)

1.2

Share Handling Regulations of the Registrant (English translation)

1.3

Regulations of the Board of Directors of the Registrant (English translation)

1.4

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

2.1

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

2.2

Deposit Agreement, dated as of June 29, 1998 among Kyocera Corporation, Citibank N.A. as Depositary and 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 (incorporated by reference to the Registrant’s annual report on Form 20-F filed on September 16, 2005)

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 ofChapter 63 of Title 18 of the United States Code

15.1

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

Exhibit 1.1(TRANSLATION)
ARTICLES OF INCORPORATION
June 23, 2006
KYOCERA CORPORATION

(TRANSLATION)
ARTICLES OF INCORPORATIONOFKYOCERA CORPORATIONCHAPTER I
GENERAL PROVISIONS
Article 1. Trade Name
The name of the Company shall be “KYOCERA KABUSHIKI KAISHA” (in English “KYOCERA CORPORATION”).
Article 2. Objects
The objects of the Company shall be to engage in the following businesses:(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 ofproducts utilizing precious metals, precious stones and semiprecious stones;(9)

Manufacture and sale of and research on accessories and interior and exterior decorations and ornaments;(10) Wholesales and retail sale of health foods;(11) Manufacture and sale of and research on material and equipment for medical use;(12) Manufacture and sale of and research on equipment utilizing solar energy;(13) Manufacture and sale of and research on optical machinery and instruments and precision machinery and instruments andparts hereof;(14) Manufacture and sale of and research on machinery and equipment for business use and machinery and equipment forindustrial use and parts thereof;(15) Manufacture and sale of and research on photosensitive materials for photographic use;(16) Design, control and contract of construction relating to public works, building, electric equipment and piping construction;—1—

(17) Sale, purchase, lease, maintenance and brokerage of real estate;(18) Lease, maintenance and management of facilities relating to sports, recreation, medical care, hotels and restaurants, and thetravel agency business;(19) Road freight handling and warehousing;(20) Business relating to non-life insurance agency and life insurance canvassing, and general leasing, factoring and financebusiness;(21) Sale and purchase of various kinds of plants and technology related thereto;(22) Design and sale of software relating to computers;(23) Disposition through sale and the like and acquisition through purchase and the like of patents and other industrial property
rights and know-how appertaining to the preceding items and acting as intermediary in such transactions;(24) Businesses relating to import and export of any of the foregoing items; and(25) All commercial activities relating or incidental to any of the foregoing.
Article 3. Location of Principal Office
The principal office of the Company shall be located in Kyoto City.
Article 4. Organizations
The Company shall have the following organizations other than the General Meeting of Shareholders and Directors.
(1)

Board of Directors(2)

Corporate Auditors(3)

Board of Corporate Auditors(4)

Accounting Auditors

Article 5. Public Notices
Method to give public notices by the Company shall be electronic public notice, provided, however, that if, due to accident orother unavoidable reason, the use of the electronic public notice becomes impossible, public notices by the Company shall appear in
The Nihon Keizai Shimbun.
CHAPTER IISHARES
Article 6. Total Number of Shares Possible to be Issued
The total number of shares possible to be issued by the Company shall be 600,000,000.
Article 7. Issuance of Share Certificates
The Company shall issue share certificates representing its shares.
—2—

Article 8. Acquisition of its Own Shares by the Company
The Company may, under the provisions of Article 165, Paragraph 2 of the Corporation Act, acquire its own shares throughmarket, etc., pursuant to a resolution of the Board of Directors.
Article 9. Number of Shares Constituting a Share Unit and Non-Issuance of the Share Certificates for Shares not Constituting
a Full Share Unit
1. The number of shares constituting a single share unit of the Company shall be 100.
2. Regardless of the provision of Article 7, the Company shall not issue any share certificates representing the shares notconstituting a full share unit, except for the cases provided for in the Share Handling Regulations of the Company.
Article 10. Rights Relating to Shares not Constituting a Full Share Unit
Shareholders (which shall hereinafter include beneficial owners) of the Company cannot exercise their rights relating to shares
not constituting a full share unit that they own except for the followings:(1)

The right provided for in the provisions of Article 189, Paragraph 2, of the Corporation Act;(2)

The right to make a request provided for in the provisions of Article 166, Paragraph 1 of the Corporation Act;(3)

The right to receive allocation of offered shares and offered stock acquisition rights pursuant to the number of shares thatthe shareholders own; and(4)

The right to make a request provided for in the immediately following Article.

Article 11. Request to Sell Shares by Shareholders Holding Shares not Constituting a Full Share Unit
Shareholders of the Company may, in accordance with the provisions of the Share Handling Regulations of the Company,
require the Company to sell such number of shares as will, when aggregated with the shares not constituting a full share unit ownedby them, constitute a full share unit.
Article 12. Manager of Shareholders Register
1. The Company shall have a Manager of the Shareholders Register.
2. The Manager of the Shareholders Register and its management office shall be determined by a resolution of the Board of
Directors and public notice thereof shall be given.
3. The preparation and keeping of the Shareholders Register (which shall hereinafter include the register of beneficial owners),
the Register of Stock Acquisition Rights and the Register of Lost Share Certificates of the Company and other matters relating to theshare handling of the Shareholders Register, the Register of Stock Acquisition Rights and the Register of Lost Share Certificate shallbe entrusted with the Manager of the Shareholders Register, and the Company shall not handle them.
—3—Article 13. Share Handling Regulations
The matters relating to the share handling and fees relating to the shares of the Company shall be provided for in the Share
Handling Regulations of the Company established by the Board of Directors in addition to the laws and regulations and these Articles
of Incorporation.
CHAPTER III
GENERAL MEETING OF SHAREHOLDERS
Article 14. Convocation of General Meeting of Shareholders
An Ordinary General Meeting of Shareholders of the Company shall be convened within three months after the last day of eachbusiness year and Extraordinary General Meeting of Shareholders shall be convened whenever necessary.
Article 15. Record Date of Ordinary General Meeting of Shareholders
The record date of the voting rights at the Ordinary General Meeting of Shareholders of the Company shall be March 31 in eachyear.
Article 16. Person to Convene General Meeting of Shareholders and the Chairman
1. A General Meeting of Shareholders shall be convened by the President, and the President shall take the chair.
2. Should the President be unable to so act, one of the other Directors in the order determined in advance by the Board of
Directors shall convene the General Meeting of Shareholders and take the chair.
Article 17. Internet Disclosure and Deemed Provision of Reference Documents for General Meeting of Shareholders, etc.
The Company may, by disclosing the information relating to the matters that shall be described or indicated in reference
documents for the General Meeting of Shareholders, business report, financial statements and consolidated financial statements
through Internet in accordance with the Ministerial Ordinance of the Ministry of Justice, in connection with the convocation of theGeneral Meeting of Shareholders, deem that it has provided the same to the shareholders.
Article 18. Method of Resolutions
1. Unless otherwise provided for by the laws and regulations or these Articles of Incorporation, resolutions of a General Meetingof Shareholders shall be adopted by a majority of the voting rights of the shareholders who are entitled to exercise the voting rights,
present at the meeting.
—4—2. Resolutions pursuant to Article 309, Paragraph 2 of the Corporation Act shall be adopted by two-thirds or more of the voting
rights of the shareholders, who are entitled to exercise the voting rights, present at the meeting, at which the shareholders holding onethird or more of the voting rights of all shareholders who are entitled to exercise the voting rights must present.
Article 19. Exercise of Voting Rights by Proxy
1. A shareholder of the Company may exercise his voting rights at a General Meeting of Shareholders by proxy who shall be
another shareholder of the Company possessing voting rights.
2. In case of the preceding paragraph, a shareholder or proxy shall submit to the Company a document evidencing his proxyright at each General Meeting of Shareholders.
CHAPTER IV
DIRECTORS AND BOARD OF DIRECTORS
Article 20. Number of Directors
The Company shall have not more than twenty Directors.
Article 21. Method of Election of Directors
1. Directors shall be elected at a General Meeting of Shareholders.
2. The election of Directors shall be made by a majority of voting rights of shareholders, who are entitled to exercise the voting
rights present at the meeting, at which the shareholders holding one-third or more of the voting rights of all shareholders who areentitled to exercise the voting rights must present.
3. For the election of Directors, no cumulative voting shall be used.
Article 22. Term of Office of Directors
1. The term of office of a Director shall end at the adjournment of the Ordinary General Meeting of Shareholders for the lastbusiness year ending within two years after assumption of office.
2. The term of office of the Director elected to increase the number of the Directors or to fill a vacancy shall terminate when theterm of office of the other Directors in office shall expire.
Article 23. Representative Director, Executive Directors, Chairman Emeritus, Advisors and Counsellors
1. The Board of Directors shall appoint, by resolution, Representative Directors.
2. The Board of Directors may appoint, by resolution, a Chairman of the Board of Directors and a President and Director, one ormore Vice-Chairmen and Directors, Executive Vice-Presidents and Directors, Senior Managing Directors, Managing Directors andAdvisors and Directors.
—5—

3. The Board of Directors may appoint, by resolution, a Chairman Emeritus.
4. The Board of Directors may appoint, by resolution, Advisors and Counsellors.
Article 24. Remuneration, etc. of Directors
Remunerations, bonuses and any other financial benefits received by Directors from the Company as compensation forundertaking their functions (hereinafter referred to as the “Remuneration, etc.”) shall be determined by resolution at a General
Meeting of Shareholders.
Article 25. Person to Convene the Board of Directors and the Chairman
1. Unless otherwise provided for by the laws and regulations, the Chairman of Board of Directors shall convene the meeting of
the Board of Directors and take the chair.
2. Should there be a vacancy for the Chairman of Board of Directors or should the Chairman of the Board of Directors be unable
to so act, the President shall, and should the President be unable to so act, one of the other Directors in the order determined inadvance by the Board of Directors shall convene the Board of Directors and take the chair.
Article 26. Convocation Notice of Meetings of Board of Directors
1. Convocation notice of meetings of the Board of Directors shall be dispatched to each Director and Corporate Auditor at least
three days prior to the date set for such meetings; provided, however, that such period may be shortened in case of emergency.
2. Board of Directors may be held without taking convocation procedures if unanimous consent is obtained from all Directors
and the Corporate Auditors.
Article 27. Omission of Resolution in Board of Directors
The Company may deem that the resolution at the meeting of Board of Directors to approve the matter that requires theresolution at the meeting of Board of Directors has been adopted, when all Directors who are able to participate in a resolution of suchmatter have given their consents thereto in writing or through electronic record, except for the case where any of the Corporate
Auditors raise objection against it.
Article 28. Board of Directors Regulations
Unless otherwise provided for by the laws and regulations or these Articles of Incorporation, matters concerning the Board of
Directors shall be provided for in the Board of Directors Regulations established by the Board of Directors.
—6—

CHAPTER VCORPORATE AUDITORS AND BOARD OF CORPORATE AUDITORS
Article 29. Number of Corporate Auditors
The Company shall have not more than five Corporate Auditors.
Article 30. Method of Election of Corporate Auditors
1. Corporate Auditors shall be elected at a General Meeting of Shareholders.
2. The election of Corporate Auditors shall be made by a majority of voting rights of shareholders, who are entitled to exercise
the voting rights present at the meeting, at which the shareholders holding one-third or more of the voting rights of all shareholders
who are entitled to exercise the voting rights must present.
Article 31. Term of Office of Corporate Auditors
1. The term of office of a Corporate Auditor shall end at the adjournment of the Ordinary General Meeting of Shareholders forthe last business year ending within four years after assumption of office.
2. The term of office of the Corporate Auditor elected to fill a vacancy shall terminate when the term of office of the other
Corporate Auditors in office shall expire.
Article 32. Full-time Corporate Auditor(s)The Board of Corporate Auditors shall elect, by resolution, full-time Corporate Auditor(s).
Article 33. Remuneration etc. of Corporate Auditors
Remuneration etc. of Corporate Auditors shall be determined by resolution at a General Meeting of Shareholders.
Article 34. Convocation Notice of Meetings of Board of Corporate Auditors
1. Convocation notice of meetings of the Board of Corporate Auditors shall be dispatched to each Corporate Auditor at least
three days prior to the date set for such meetings; provided, however, that such period may be shortened in case of emergency.
2. Board of Corporate Auditors may be held without taking the convocation procedures if unanimous consent is obtained fromall Corporate Auditors.
Article 35. Regulations of Board of Corporate Auditors
Unless otherwise provided for by the laws and regulations or these Articles of Incorporation, matters concerning the Board of
Corporate Auditors shall be provided for in the Regulations of the Board of Corporate Auditors established by the Board of Corporate
Auditors.
Article 36. Exemption from Liability of Outside Corporate Auditor
The Company may, under the provisions of Article 427, Paragraph 1 of the Corporation Act, enter into a contract with theOutside Corporate Auditor, to limit the liability for damages caused by his dereliction of duty, provided, that the maximum amount ofliability pursuant to such contract shall not exceed the minimum amount of liability provided for in the Article 425, Paragraph 1 of the
Corporation Act.
—7—

CHAPTER VI
ACCOUNTS
Article 37. Business YearThe business year of the Company shall be a one-year period commencing on April 1 in each year and ending on March 31 of
the following year.
Article 38. Record Date of Dividends of Distributable Amount
1. Record date of the year-end dividends of the Company shall be March 31 in each year.
2. In addition to the preceding paragraph, the Company may distribute the dividends of distributable amount by setting record
dates.
Article 39. Interim Dividends
The Company may distribute interim dividends, by a resolution of the Board of Directors by setting a record date as of
September 30 in each year.
Article 40. Period of Limitation for Dividends
If assets distributed as dividends are not collected within three years from the date when the distribution thereof becomes due,
the Company shall be exempt from its obligation to distribute such dividends.
—8—

Exhibit 1.2(TRANSLATION)SHARE HANDLING REGULATIONS
Amended June 23, 2006
KYOCERA CORPORATIONSHARE HANDLING REGULATIONSOFKYOCERA CORPORATIONCHAPTER I
GENERAL PROVISIONS
Article 1. Purpose
The matters relating to the share handling of the Company and fees relating thereto shall be governed by these Regulations
based upon Article 13 of the Articles of Incorporation; provided, however, that handling of beneficial owners shall be governed by therules provided by the Japan Securities Depositary Center (hereinafter referred to as “JASDEC”) in addition to these Regulations.
Article 2. Manager of Shareholders Register
The Manager of the Shareholders Register of the Company, its management office and its intermediary offices shall be as
follows:
Manager of the
Shareholders
Register:

Daiko Clearing Services Corporation
4-6, Kitahama 2-chome, Chuo-ku, Osaka

Management office:Stock Transfer Department in the Principal Officeof Daiko Clearing Services Corporation
4-6, Kitahama 2-chome, Chuo-ku, Osaka

Intermediary offices:

Each branch office of
Daiko Clearing Services Corporation

Article 3. Denomination of Share Certificates
1. Share certificates to be issued by the Company shall be in denominations of any number of those shares less than 100 shares,
and 100 shares, 500 shares, 1,000 shares and 10,000 shares.
2. Except as provided in Article 13 (Application for Delivery of Non-Possession Share Certificates), Article 21 (Re-issuance due
to Stain or Mutilation) or Article 22 (Re-issuance due to Full Capacity of Share Certificate) hereof, shareholders can not require there-issuance of the share certificates provided in the immediately preceding subsection representing a number of shares notconstituting a full unit.
Article 4. Form of Request, Notification or Application, etc.
1. The procedures in respect of any request, notification or application to be made in connection with the business entrusted to
the Manager of the Shareholders Register by the Company shall be taken through the Manager of the Shareholders Register.
12. Any request, notification, application or petition under these Regulations shall be in a form prescribed by the Company withthe seal mentioned in Article 14 hereof.
3. In case any request, notification, application or petition set forth in the immediately preceding subsection is made by proxy,such proxy shall present a document evidencing his power, and if the consent of an assistant is required, such proxy shall also present
a document evidencing such consent.
CHAPTER IIREGISTRATION OR RECORD IN THE SHAREHOLDERS REGISTER, ETC.
Article 5. Registration of Transfer
1. In case of application for registration or record in the shareholders register (hereinafter referred to as “registration oftransfer”), an application therefor accompanied by the share certificates, with indication of the name of applicant, shall be submitted.
2. In case of application for registration of transfer of shares acquired by reason other than assignment, the applicant shall submit
a document evidencing the transfer in addition to taking the procedure set forth in the immediately preceding subsection.
Article 6. Registration of Transfer Subject to Special Provisions of the Laws and Regulations
In case any special procedure is required by the laws and regulations for transfer of shares, a document evidencing thecompletion of such procedure shall be submitted together with the application therefor and the share certificates, with indication of
the name of applicant.
Article 7. Registration in Register of Beneficial Owners
Registration or record shall be made in the Register of Beneficial Owners based upon the notice from JASDEC concerning thebeneficial owners and the beneficial ownership card.
Article 8. Certificate of Beneficial Ownership
Each beneficial owner shall, through a participant, submit the beneficial ownership card to the Company.
Article 9. Aggregation
When the Company recognizes that a shareholder registered or recorded in the Shareholders’ Register and a shareholder
registered or recorded in the Register of Beneficial Owners is identical based on the address and the name of such shareholder, thenumber of shares held by such shareholder shall be aggregated for the purpose of exercising shareholders’ rights.
2

CHAPTER III
REGISTRATION OF PLEDGE AND INDICATION OF TRUSTArticle 10. Registration or Cancellation of Pledge
In case of application for registration, alteration or cancellation of a pledge on shares, an application therefor shall be submitted
under the joint signatures of the pledgor and the pledgee together with the share certificates, with indication of the name of pledgee.
Article 11. Indication or Cancellation of Trust Property
In case of application for indication or cancellation of trust property on share certificates, the trustor or the trustee shall submit
an application therefor together with the share certificates.
CHAPTER IV
NON-POSSESSION OF SHARE CERTIFICATES
Article 12. Application for Non-Possession of Share CertificatesIn case of application for non-possession of share certificates, an application therefor shall be submitted together with the sharecertificates; provided that if the share certificates have not been issued it is not necessary to submit the share certificates.
Article 13. Application for Delivery of Non-Possession Share CertificatesIn case the shareholder having made application for non-possession of share certificates requests issuance of the sharecertificates, he shall submit an application therefor.
CHAPTER V
VARIOUS NOTIFICATIONSArticle 14. Notification of Names, Addresses and Seal Impressions of Shareholders, etc.
1. Shareholders, beneficial owners and registered pledgees or their legal representatives shall make notification of their names,
addresses and seal impressions; provided, however, that foreigners who customarily use signatures may substitute their specimen
signatures for their seal impressions.
2. The same procedure shall apply when there is any change in the items notified under the immediately preceding subsection.
3

Article 15. Notification of Addresses Where Non-Resident Shareholders, etc. Will Receive Notices
1. In addition to the requirements provided in the immediately preceding Article, shareholders, beneficial owners and registeredpledgees or their legal representatives residing abroad shall appoint their resident standing proxies in Japan or designate theiraddresses in Japan where they will receive notices, and shall make notification of such matters.
2. The immediately preceding Article shall apply mutatis mutandis to resident standing proxies.
Article 16. Representative of a Corporation Shareholder
1. A shareholder or a beneficial owner, who is a juridical person, shall make notification of its representative.
2. When it changes its representative, notification thereof shall be submitted together with certificates regarding the mattersregistered in the commercial register.
Article 17. Representative of Co-owners of Shares
1. Shareholders or beneficial owners who own shares jointly shall appoint their representative and make notification thereof.
2. The same procedure shall apply in case of a change of such representative.
Article 18. Change in Shareholders’ Register, Register of Beneficial Owners and Share Certificates
When a person desires to change the description in the Shareholders’ Register, the Register of Beneficial Owners or on sharecertificates for any of the following reasons, a notification thereof shall be submitted together with the share certificates and adocument evidencing the reason therefor; provided, however, that it is not necessary to submit the share certificates if such sharecertificates have not been issued and in case of change in the description in the Register of Beneficial Owners.
(1)

Change of surname or given name;(2)

Appointment, change or discharge of legal representative such as a person with parental authority or a guardian;(3)

Change of trade name or name of juridical person; and(4)

Change of organization of juridical person.

Article 19. Exception in respect of Various Notifications by Beneficial Owner
In case of notification by a beneficial owner set forth in this Chapter, such notification shall be made through a participant;provided, however, that in case of a change in the seal impression of the beneficial owner, notification thereof need not be madethrough a participant.
4

CHAPTER VI
RE-ISSUANCE OF SHARE CERTIFICATES
Article 20. Re-issuance due to Division or Consolidation
1. In case of application for issuance of new share certificates by reason of division or consolidation of share certificates, anapplication therefor shall be submitted together with the share certificates.
2. An application for issuance of share certificates representing shares not constituting a full unit by reason of division orconsolidation of share certificates may not be made.
Article 21. Re-issuance due to Stain or Mutilation
In case of application for issuance of new share certificates by reason of stain or mutilation of share certificates, an application
therefor shall be submitted together with the share certificates; provided, however, that if it is difficult to ascertain the genuineness ofthe share certificates, the provisions in Chapter VII shall apply.
Article 22. Re-issuance due to Full Capacity of Share Certificate
In case the shareholders column on a share certificate becomes full, the Company shall recall such share certificate and issue a
new share certificate in its place.
Article 23. Automatic Consolidation of Share Certificates Representing Shares Not Constituting a Full Unit
In case the total number of shares represented by share certificates representing shares not constituting a full unit submitted forregistration of transfer of shares constitutes a full unit, such share certificates shall be consolidated into a share certificate representing
shares constituting a full unit unless otherwise specifically requested by the applicant for registration of transfer of shares.
CHAPTER VII
REGISTRATION OF LOST SHARE CERTIFICATES, ETC.
Article 24. Application for the Registration of Lost Share Certificates
Any person applying for registration of a lost share certificate shall submit a written application therefor accompanied bydocuments proving receipt of such share certificate, documents proving the loss of such share certificate and documents verifying theidentity of such applicant; provided, however, that if the applicant is the registered shareholder, only documents proving the loss ofsuch share certificate will be required.
5

Article 25. Application for the De-registration by Loser of the Share CertificatesIn case any person recorded in the register of lost share certificates applies for de-registration provided in the immediately
preceding Article, such person shall submit a written application therefor.
Article 26. Application for the De-registration by a Party Possessing Share CertificatesIn case any person who possess the share certificates registered as lost share certificates requires the de-registration of theregistration of lost share certificates, such person shall submit a written application therefor accompanied by documents verifying theidentity of such person, provided, however, that if such person is a shareholder or registered pledgee, such documents verifying
identity will not be required.
Article 27. Application of Provisions relating to the Various Notification
If any the person recorded in the register of lost share certificates, but who is not a shareholder or registered pledgee, requires
any change in the matters registered or recorded therein, the provisions of Article 14 through Article 18 shall apply mutatis mutandis.
CHAPTER VIII
PURCHASE OF SHARES NOT CONSTITUTING A FULL UNIT
Article 28. Method of Request for Purchase
1. In case of request for purchase of shares not constituting a full unit, a request therefor shall be submitted to a management
office or intermediary office as mentioned in Article 2 together with the share certificates; provided, however, that share certificatesneed not be submitted for which no share certificates have been issued.
2. In case the request mentioned in the immediately preceding subsection is made by a beneficial owner, such request shall bemade through a participant and JASDEC.
Article 29. Determination of Purchase Price
1. The purchase price per share of shares for which application for purchase is made shall be the closing price of the shares of
the Company on the market opened by the Tokyo Stock Exchange on the day on which the documents of application for purchase set
forth in the immediately preceding Article arrive at the management office or intermediary office as provided for in the immediately
preceding Article; provided, however, that in case no transaction in the shares of the Company takes place on said Stock Exchange onsuch day, the price shall be the closing price of the shares of the Company on the Osaka Securities Exchange on the same day.
6

2. In case no transaction in the shares of the Company takes place on any Stock Exchange set forth in the immediately preceding
subsection or in case such day is not a business day for said Stock Exchanges, the price per share of the Company shall be the price ofthe shares of the Company effected at the first transaction in the shares of the Company taking place on the market opened by the
Tokyo Stock Exchange on the next day, and if no transaction in the shares of the Company takes place on the said Stock Exchange onsuch next day, the price shall be the price effected at the first transaction in the shares of the Company taking place on the Osaka
Securities Exchange on the same day.
3. In case no transaction in the shares of the Company takes place on any Stock Exchange as set forth in the immediately
preceding subsection, the same method shall apply on the next day and so on in like manner thereafter.
Article 30. Payment of Purchase Price
1. The purchase price payable upon application for purchase of shares not constituting a full unit shall be the purchase price pershare determined pursuant to the immediately preceding Article multiplied by the number of shares for which application for purchaseis made. The purchase price shall be payable at the place where the application for purchase is received on a day specified by theCompany within six business days following the day when the purchase price is determined.
2. The person making application for purchase may request that the purchase price be paid to him to an account at a bankdesignated by him or by cash by means of mail transfer.
3. The fees set forth in subsection 2 of Article 41 shall be deducted from the purchase price as set forth in the immediately
preceding subsection at the time of payment thereof.
Article 31. Transfer of Shares Purchased
The shares not constituting a full unit for which an application for purchase is made shall be transferred to the Company on the
day on which the payment or the procedure for payment of the purchase price is consummated pursuant to the immediately preceding
Article.
CHAPTER IX
PURCHASE TO INCREASE NUMBER OF SHARESNOT CONSTITUTING A FULL UNIT
Article 32. Method of Requesting Purchase to Increase Number of Shares
1. Any shareholder or beneficial owner of shares of the Company, who holds shares not constituting a full unit and who requires
the Company to sell such number of shares as will, when aggregated with the shares not constituting a full share unit owned by suchshareholder, constitute a full share unit (hereinafter referred to as a “Request for Purchase”), shall submit a written request to such
effect together with share certificates and the approximate amount of the purchase price, as provided for in the immediately following
Article, to the management office or an intermediary office as provided for in Article 2 hereof; provided, however, that if no sharecertificate has been issued, submission of a share certificate shall not be required.
7

2. When a beneficial owner makes a request as provided in the immediately preceding subsection, such request shall be
submitted through JASDEC or a participant therein.
Article 33. Approximate Amount of Purchase Price
1. The approximate amount of the purchase price shall be the closing price per share of the Company on the market opened by
the Tokyo Stock Exchange on the day on which the written request provided for in the immediately preceding Article arrives at the
management office or an intermediary office (in the event that no transaction in the shares of the Company takes place on such stock
exchange on such day, the price shall be the most recent closing price per share of the Company on such stock exchange) multipliedby the number of shares requested to be purchased and multiplied, further, by 1.3. Any amount less than 1,000 yen resulting fromsuch calculation shall be rounded upward to the nearest 1,000 yen. In the event that a beneficial owner of shares of the Company
makes a Request for Purchase, the approximate amount of the purchase price shall be determined by JASDEC.
2. The Company shall not accept any Request for Purchase if the approximate amount of the purchase price submitted pursuant
to the immediately preceding Article is short of the amount provided in the immediately preceding subsection.
Article 34. Request for Purchase Shares the Number of which Exceeds the Number of Shares of the Company Held by theCompany
When the aggregate number of shares requested to be purchased on a particular day exceeds the number of shares held by theCompany for sale, all Requests for Purchase submitted on such day shall be ineffective.
Article 35. Effective Date of Request for Purchase
The effective date of a Request for Purchase shall be the day on which the written request provided for in Article 32 and theapproximate amount of the purchase price provided for in Article 33 arrive at the management office or an intermediary office.
Article 36. Suspension of Acceptance of Requests for Purchase1. The Company will suspend acceptance of Requests for Purchase for one month in each of March and September every year.
2. Notwithstanding the immediately preceding subsection, if the Company deems it necessary, the Company may set a period
during which the acceptance of Requests for Purchase shall be suspended.
Article 37. Decision as to Purchase Price
1. The purchase price per share of shares for which a Request for Purchase is made shall be the closing price of the shares of theCompany on the market opened by the Tokyo Stock Exchange on the day on which the Request for Purchase becomes effective;
provided, however, that in the event that no transaction in the shares of the Company takes place on such stock exchange on such day,the price shall be the closing price of the shares of the Company on the market opened by the Osaka Securities Exchange on the sameday.
8

2. In the event that no transaction in the shares of the Company takes place on any stock exchange as provided for in theimmediately preceding subsection, or in the event that such day is not a business day for said stock exchanges, the purchase price pershare of the Company shall be the price of the shares of the Company in the first transaction in such shares taking place on the market
opened by the Tokyo Stock Exchange on the following day, and if no transaction in such shares takes place on such stock exchange
on such following day, the purchase price shall be the price in the first transaction in such shares taking place on the market openedby the Osaka Securities Exchange on the same day.
3. In case no transaction in the shares of the Company takes place on any stock exchange as set forth in the immediately
preceding subsection, the same method shall apply on the following day and so on in like manner thereafter.
4. The total purchase price shall be the price per share obtainable pursuant to the provisions in the three preceding subsections
multiplied by the number of the shares requested to be purchased.
5. When the approximate amount of the purchase price as provided for in Article 33 is less than total of the purchase price asprovided in the immediately preceding subsection and the amount of fees as provided in subsection 2 of Article 41 (hereinafterreferred to the “Purchase Price”), the deficiency shall be charged to the person submitting the Request for Purchase. In such event, if
such deficiency is not paid within five business days from the date immediately following the date when the deficiency is charged, theRequest for Purchase shall be nullified.
Article 38. Receipt of Purchase Price
1. The Company shall, within six business days after the date when the Purchase Price has been decided, or upon payment ofany deficit as provided for in subsection 5 of the immediately preceding Article, receive the Purchase Price out of the approximate
amount of the purchase price; provided, however, when such Purchase Price reflects rights, including, without limitation, dividends of
distributable amount or stock splits, the receipt of the Purchase Price shall take place prior to the record date relating to such rights.
2. The balance after deducting the Purchase Price from the approximate amount of the purchase price shall be returned to theshareholder requesting the purchase by transfer to the bank account specified by such shareholder or by payment in cash throughpostal saving account.
Article 39. Transfer of Shares Purchased
The shares purchased shall be transferred to the shareholder or beneficial owner on the date on which the receipt of the Purchase
Price is completed.
9Article 40. Delivery of Share Certificate
When, as a result of a Request for Purchase, shares come to constitute a full unit, a share certificate representing such sharesshall be delivered to the shareholder requesting the purchase without delay; except in the case of a Request for Purchase by abeneficial owner.
CHAPTER X
FEES
Article 41. Fees
1. The fees for application of registration of lost share certificates pursuant to Article 24 (Application for the Registration of
Lost Share Certificates) shall be as follows:
Per application:
Per share certificate in addition to the first certificate covered by the application:¥9,000¥600

2. The fees for the purchase of shares pursuant to Article 28 (Method of Application for Purchase) hereof and fees for thepurchase of shares to increase the number of shareholding pursuant to Article 32 (Method of Requesting Purchase to Increase Numberof Shares) shall be the brokerage commission for the purchase and sale of a full unit of shares of the Company calculated pursuant to
the following method which is proportionate to the number of shares not constituting a full unit purchased by the Company from theapplying shareholder or purchased by the applying shareholder from the Company.
(Method) From the total amount obtained by multiplying the purchase price for one share determined in Article 29 or Purchase Priceper share as determined in Article 37 hereof by the number of shares constituting full units:
Amount of ¥1,000,000 or less
Amount exceeding ¥1,000,000 up to ¥5,000,000
Amount exceeding ¥5,000,000 up to ¥10,000,000(amounts less than ¥1.00 are rounded downward)

1.150%
0.900%
0.700%

Provided, however, that in case the amount calculated for one unit of shares is less than ¥2,500, the fee shall be ¥2,500.
SUPPLEMENTARY PROVISIONS
1. These Regulations may be amended by a resolution of the Board of Directors.
10Exhibit 1.3(TRANSLATION)REGULATIONS OF THE BOARD OF DIRECTORS
Amended June 23, 2006
KYOCERA CORPORATIONREGULATIONS OF THE BOARD OF DIRECTORSOFKYOCERA CORPORATIONCHAPTER 1. GENERAL PROVISIONS
Article 1. Purpose
All matters relating to the Board of Directors of the Company shall be governed by these Regulations in addition to laws andregulations and the Articles of Incorporation.
Article 2. Organization
1. The Board of Directors shall consist of all Directors.
2. The Corporate Auditors shall attend meetings of the Board of Directors and, when necessary, express their opinions thereat.
Article 3. Meetings
Meetings of the Board of Directors shall, in principle, be held once a month; provided, however, that extraordinary meetings
may be held whenever necessary.
CHAPTER 2. CONVOCATION
Article 4. Persons Authorized to Convene Meetings
1. Unless otherwise provided for by the laws and regulations, the Chairman of Board of Directors shall convene the meeting of
the Board of Directors and take the chair.
2. Should there be a vacancy for the Chairman of Board of Directors or should the Chairman of the Board of Directors be unable
to so act, the President shall, and should the President be unable to so act, one of the other Directors in the order determined inadvance by the Board of Directors shall convene the Board of Directors and take the chair.
Article 5. Convocation Procedure
1. Convocation notice of meetings of the Board of Directors shall be dispatched to each Director and Corporate Auditor at least
three days prior to the date set for such meetings; provided, however, that such period may be shortened in case of emergency.
2. Meetings of the Board of Directors may be held without taking convocation procedures if unanimous consent is obtained fromall Directors and the Corporate Auditors.
1

CHAPTER 3. PROCEEDINGS
Article 6. Chairman
The Chairman of the Board of Directors shall preside over meetings of the Board of Directors. Should the office of the
Chairman of the Board of Directors be vacant or should the Chairman of the Board of Directors be unable to act in this capacity, thePresident shall act in his capacity, and further, should the President be unable to act in this capacity, one of the other Directors, in anorder fixed in advance by the Board of Directors, shall act in his capacity.
Article 7. Matters to be Submitted
Matters which must be submitted to meetings of the Board of Directors shall be set forth in Appendix 1 attached hereto.
Article 8. Method of Resolutions
1. Resolutions of the Board of Directors shall be adopted by a majority of the Directors present, the quorum being a majority of
the Directors.
2. A Director who has a special interest in any matter to be acted upon by the Board of Directors shall not be entitled to vote onsuch matter, in which case such Director shall not be counted for the purpose of establishing a quorum.
3. The Company may deem that the resolution at the meeting of Board of Directors to approve the matter that requires theresolution at the meeting of Board of Directors has been adopted, when all Directors who are able to participate in a resolution of suchmatter have given their consents thereto in writing or through electronic record, except for the case where any of the Corporate
Auditors raise objection against it.
Article 9. Ratification
1. Should it prove impossible to submit any particular matter to a meeting of the Board of Directors due to an emergency orother unavoidable reason, a Representative Director may, notwithstanding the provisions of the preceding Article to the contrary, deal
with the matter in such manner as he deems proper.
2. In the case set forth in the preceding paragraph, the Representative Director shall report the disposition of such matter to theBoard of Directors without delay and obtain its approval.
Article 10. Attendance by Third Parties
The Board of Directors may, when it deems necessary, cause any person other than the Directors and Corporate Auditors attend
a meeting of the Board of Directors and seek his opinion or explanation thereat.
Article 11. Matters to be Reported
1. The President shall report on the conditions of the execution of the affairs of the Company to the Board of Directors at least
once every three (3) months.
2. Matters other than those provided in the preceding subparagraph which must be reported to meetings of the Board of
Directors shall be set forth in Appendix 2 attached hereto.
2

Article 12. Minutes
1. The substance of the proceedings of a meeting of the Board of Directors and the results thereof and other matters as requiredby the laws and regulations shall be recorded in the minutes, and the Directors and Corporate Auditors present at the meeting shallaffix their names and seals to the minutes.
2. Such minutes shall be kept for ten (10) years at the head office of the Company.
CHAPTER 4. MISCELLANEOUS PROVISIONS
Article 13. Other Matters
Matters relating to the management of the Board of Directors which are not prescribed by laws and regulations, the Articles ofIncorporation or these Regulations, shall, in the case of matters relating to the convocation of a meeting of the Board of Directors, bedetermined by the person authorized to convene the meeting and, in all other cases, be determined by the Chairman of the meeting.
Article 14. Procedure of Amendment
Amendment of these Regulations shall be approved by a resolution of the Board of Directors.
SUPPLEMENTARY PROVISIONS
These Regulations shall take effect on June 23, 2006
(Established)(Amended)(Amended)(Amended)(Amended)(Amended)(Amended)(Amended)(Amended)

March 30, 1959
July 1, 1971
May 15, 1987
June 26, 1992
August 23, 1993
June 27, 1997
March 19, 2001
July 29, 2002
June 23, 20063

Appendix 1
Matters to Be Submitted to Meetingsof the Board of Directors
Items 1 through 11 hereinbelow constitute those matters which must be submitted to meetings of the Board of Directors in accordancewith Article 7 of the Regulations of the Board of Directors. With respect to items 7, 8 and 9, standard are determined but additional
matters must be submitted as well.
Type of Matter

1. Business plans(1) Annual business plans(2)

Approval of numerical figures to be published for forecasted
business results and revised forecasted business results2.

Matters concerning General Meetings of Shareholders(1)

Convocation of a General Meeting of Shareholders anddetermining the agenda and proposals to be submitted thereto(2)

Fixing record date in order to confirm the list of shareholders(if such record date is not provided for by the Articles ofIncorporation)(3)

Deciding whether a proposal submitted by a shareholder
should be presented to a General Meeting of Shareholders(4)

Deciding the order of those authorized to convene a General
Meeting of Shareholders(5)

Deciding the order of those authorized to act as Chairman of aGeneral Meeting of Shareholders

Standards, Comments

Master plans and revised master plans are to be submitted aspart of annual business plans

Type of Matter

3.

Matters concerning Closing of Accounts(1)

Approval of accounting statements

Standards, Comments(1) Accounting statements for full-year, half-year and eachquarter which are to be approved by the Board of Directors
and/or prepared for public disclosure in accordance with thelaw must be submitted.
(Note:) “accounting statements” shall consist of
unconsolidated and consolidated balance sheets, profit and loss
statements, statements for changes in equity and notes thereto,
explanatory comments to unconsolidated statements,
consolidated cash flows statements and business reports, etc.

(2)

Deciding to pay an interim dividend and the amount thereof.

(3)

Approval of forecasted dividends and revised forecasted
dividends.

4.

Matters concerning Directors(1)

Election and retirement of Representative Directors(2)Election and retirement of Executive Directors(3)

Determination of duties of each Director(4)

Determination of the order of the Directors who shall convene
a Meeting of the Board of Directors(5)

Determination of the order of the Directors who shall act as
Chairman at a Meeting of the Board of Directors(6)

Approval of engagement by a Director in any competitive
business(Note:) “competitive business” shall consist of a Director,
acting on his own behalf or as the representative or agent ofanother company, engaging in a transaction which pertains to
the ordinary business of the Company.

Type of Matter(7)

Approval of a transaction between a Director and theCompany(8)

Allocation of the remuneration of Directors as previously
determined by the General Meeting of Shareholders(9)

Allocation of the bonuses of Directors as previously
determined by the General Meeting of Shareholders(10) Determination of the amount and manner of payment of
retirement allowances or condolence money payable to
Directors as previously determined by the General Meeting of
Shareholders(11) Basic policy for corporate governance and internal control ofKyocera Group5.

Matters concerning Shares(1)

Offering of shares to be newly issued or of treasury shares tobe disposed of (Issuance of new shares for offering, etc.)(2)

Stock splits(3)

Allocation of shares without consideration(4)

Appointment of a manager of the shareholders register anddesignation of its management office(5)

Issuance of stock acquisition rights(6)

Method for acquisition of its own stock by the Company as per
the approval at its General Meeting of Shareholders(7)

Acquisition and cancellation of its own stock by the Company

6.

Matters concerning Personnel and Organization(1)

Management of key personnel, i.e., General Managers ofdivisions and officers in similar positions

Standards, Comments(Note:) “transaction between a Director and the Company”
shall consist of Director, acting on his own behalf or as therepresentative or agent of another company, engaging in atransaction with the Company.

Type of Matter

Standards, Comments(2)

Selection of support personnel to be seconded to important
subsidiaries and affiliated companies(3)

Appointment and dismissal of counselors and consultants who
are not employees(4)

Establishment, relocation and closure of the head office andbranch offices(5)

Establishment, relocation and closure of a principal place ofbusiness

7.

Matters concerning Businesses(1)Planning of new business in conjunction with a newlyestablished business department(2)

Business collaborations which are important to the business of
the Company(3)

Sale or acquisition of a business(4)

A significant amount of investment or the disposition thereof(Note:) a minimum of ¥100,000,000 per transaction(5)

Acquisition or disposal of shares in conjunction with changesof subsidiaries and affiliated companies (including theestablishment and liquidation of subsidiaries and affiliatedcompanies)(Note:) “in conjunction with changes of subsidiaries andaffiliated companies” shall consist of cases where a company
becomes a subsidiary or affiliated company pursuant to suchacquisition of shares and cases where such company is nolonger a subsidiary or affiliated company in consequence ofsuch disposal of shares.

(Note:) “head office” and “branch offices” shall consist of
those places of business which have been registered as a head
office or a branch office in the commercial registry.

(Note:) whether or not a matter is “important to the business of
the Company” shall be determined based on reference to theapplicable standards which require disclosure of importantmatters to Stock Exchanges.

Type of Matter

8.

Matters concerning Assets(1)

Acquisition of important assets

Standards, Comments

Regarding items (1) through (7):- Real property, contracted construction:a minimum of ¥3,000,000,000 per transaction- Personal property, software:a minimum of ¥1,000,000,000 per transaction- Intellectual property rights, (including know-how but
excluding software):a minimum of ¥500,000,000 per transaction(2)

Transfer or destruction of important assets(3)

Loaning important assets to a third party(4)

Borrowing important assets from a third party

(5)
(6)

Leasing important assets
Establishment of security interests in important assets(7)

Selection of a contractor for important construction anddetermination of the terms and conditions of the contract
therefor

9. Matters concerning Funds(1) Issuance of bonds and bonds with stock acquisition rights(Note:)(2)

A significant amount of loan(2) a minimum of ¥100,000,000 per transaction(3)

Guarantee of a significant amount of debt

(3) a minimum of ¥100,000,000 per transaction

(4)
(5)

Discharge of a significant amount of debt
A significant amount of donation(4) a minimum of ¥100,000,000 per transaction(5) a minimum of ¥100,000,000 per transaction(6)

A significant amount of borrowing(6) a minimum of ¥5,000,000,000 per transaction

Type of Matter

10.

Establishment and Revocation of Important Regulations(1)

Regulations of the Board of Directors(2)

Regulations for Employee Retirement Allowances(3)

Share Handling Regulations(4)

Regulations to Prevent Insider Transactions(5)

Regulations concerning Management of Funds(6)

Regulations concerning Transfers, Business Trips and Duties
of Employees

11.

Others(1)

Institution of or response to a lawsuit which is of importancein the management of the Company(2)

Settlement or withdrawal of a lawsuit which is of importancein the management of the Company(3)

Decision on the policy or compromise of a dispute which is ofimportance in the management of the Company(4)

Other important or extraordinary matters concerning theexecution of business of the Company

Standards, Comments

With respect to items (1), (2) and (3), whether or not a matteris “of important in the management of the Company” shall be
determined based on reference to the applicable standards
which require disclosure of important matters to Stock
Exchanges.

Appendix 2
Matters to Be Reported to Meetingsof the Board of Directors
Those matters which must be reported to meetings of the Board of Directors in accordance with Article 11.2 of the Regulations of theBoard of Directors are as follows:
Matters to Be Reported(1)Monthly business plans and the status of their implementation(2)

Important facts concerning competing transactions by Directors(3)

Important facts concerning transactions between Directors and the Company(4)

Important funding plans, investment plans business acquisition plans and other important business plans concerning
subsidiaries,(5)

Other matters deemed necessary by the Board of Directors

Exhibit 12.1
CERTIFICATION
I, Makoto Kawamura, certify that:1.

I have reviewed this annual report on Form 20-F of Kyocera Corporation;2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the company as of, and for, the periods
presented in this report;

4.

The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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: June 29, 2006
/s/ Makoto Kawamura
Name: Makoto Kawamura
Title: President and Representative Director(Principal Executive Officer)-1-

Exhibit 12.2
CERTIFICATION
I, Masahiro Umemura, certify that:1.

I have reviewed this annual report on Form 20-F of Kyocera Corporation;2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the company as of, and for, the periods
presented in this report;

4.

The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

5.

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, ismade known to us by others within those entities, particularly during the period in which this report is being prepared;(b)[omitted in accordance with the guidance of SEC Release No. 33-8238](c)

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

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial
information; and(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in thecompany’s internal control over financial reporting.

Date: June 29, 2006
/s/ Masahiro Umemura
Name: Masahiro Umemura
Title: Vice Chairman
and Representative Director(Principal Financial Officer)-1-

Exhibit 13.1
CERTIFICATION
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Kyocera Corporation (the “Company”) hereby certifies, to suchofficer’s knowledge, that the Company’s annual report on Form 20-F for the year ended March 31, 2006 (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: June 29, 2006
/s/ Makoto Kawamura
Name: Makoto Kawamura
Title: President and Representative Director(Principal Executive Officer)-1-

Exhibit 13.2
CERTIFICATION
Pursuant to 18 U.S.C. § 1350, the undersigned officer of Kyocera Corporation (the “Company”) hereby certifies, to suchofficer’s knowledge, that the Company’s annual report on Form 20-F for the year ended March 31, 2006 (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: June 29, 2006
/s/ Masahiro Umemura
Name: Masahiro Umemura
Title: Vice Chairman
and Representative Director(Principal Financial Officer)-1-

Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos.33-84904, 33-98132, 3399134, 33-99140, 33-99150, 33-99154, 333-109200, 333-118678, and 333-127976) of our report dated June 26, 2006 relating to thefinancial statements and financial statement schedule, which appear in this Annual Report on Form 20-F.
/s/ ChuoAoyama PricewaterhouseCoopers
Osaka, Japan
June 29, 2006