Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 under

the Securities Exchange Act of 1934

For the month of August 2018

Commission File Number: 1-07952

KYOCERA CORPORATION

(Translation of registrant’s name into English)

6 Takeda Tobadono-cho, Fushimi-ku,

Kyoto 612-8501, Japan

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒        Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Registration S-T Rule 101(b)(7):  ☐

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

KYOCERA CORPORATION

/s/ S HOICHI A OKI

(Signature)

Shoichi Aoki

Director,

Managing Executive Officer and

General Manager of

Corporate Management Control Group

Date: August 10, 2018

Table of Contents

Table of Contents

Quarterly Report

(English summary with full translation of consolidated financial information)

(The First Quarter of 65th Business Term)

From April 1, 2018 to June 30, 2018

KYOCERA CORPORATION

 

 

Table of Contents

Table of Contents

 

     Page  

[Cover]

  

Part I. Information on Kyocera

     1  

I. Overview of Kyocera

     1  

1. Selected Financial Data

     1  

2. Description of Business

     1  

II. Business Overview

     2  

1. Risk Factors

     2  

2. Management’s Discussion and Analysis of Financial Position, Operating Results and Cash Flows

     2  

3. Material Agreements

     6  

III. Corporate information

     7  

1. Information on Kyocera’s shares and others

     7  

2. Changes in Directors and Senior Management

     8  

IV. Condensed Quarterly Consolidated Financial Statements and Other Information

     9  

1. Condensed Quarterly Consolidated Financial Statements

     9  

(1) Condensed Quarterly Consolidated Statement of Financial Position

     9  

(2) Condensed Quarterly Consolidated Statement of Profit or Loss

     11  

(3) Condensed Quarterly Consolidated Statement of Comprehensive Income

     12  

(4) Condensed Quarterly Consolidated Statement of Changes in Equity

     13  

(5) Condensed Quarterly Consolidated Statement of Cash Flows

     14  

2. Others

     59  

Part II. Corporate Information on Guarantors and others

     59  

Table of Contents

[Cover]

 

[Document Filed]

   Quarterly Report (“Shihanki Hokokusho”)

[Applicable Law]

   Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act of Japan

[Filed with]

   Director, Kanto Local Finance Bureau

[Filing Date]

   August 10, 2018

[Fiscal Period]

   The First Quarter of 65th Business Term (from April 1, 2018 to June 30, 2018)

[Company Name]

   Kyocera Kabushiki Kaisha

[Company Name in English]

   KYOCERA CORPORATION

[Title and Name of Representative]

   Hideo Tanimoto, Director and President

[Address of Head Office]

   6, Takeda Tobadono-cho, Fushimi-ku, Kyoto

[Phone Number]

   +81-75-604-3500

[Contact Person]

   Shoichi Aoki, Director, Managing Executive Officer and General Manager of Corporate Management Control Group

[Contact Address]

   6, Takeda Tobadono-cho, Fushimi-ku, Kyoto

[Phone Number]

   +81-75-604-3500

[Contact Person]

   Shoichi Aoki, Director, Managing Executive Officer and General Manager of Corporate Management Control Group

[Place Where Available for Public

Inspection]

   Tokyo Stock Exchange, Inc. (2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)

 

 

This is an English translation of the Quarterly Report filed with the Director of the Kanto Local Finance Bureau via Electronic Disclosure for Investors’ NETwork (“EDINET”) pursuant to the Financial Instruments and Exchange Act of Japan.

Table of Contents

Part I. Information on Kyocera

I. Overview of Kyocera

1. Selected Financial Data

 

     For the three months ended
June 30, 2017 		    For the three months ended
June 30, 2018 		    For the year ended
March 31, 2018 		 
     (Yen in millions except per share amount)  

Sales revenue

     345,162       387,484       1,577,039  

Profit before income taxes

     49,353       55,488       129,992  

Profit attributable to owners of the parent

     35,026       42,284       79,137  

Comprehensive income attributable to owners of the parent

     55,309       122,829       43,131  

Equity attributable to owners of the parent

     2,360,127       2,388,680       2,325,791  

Total assets

     3,101,844       3,210,051       3,128,813  

Earnings per share attributable to owners of the parent—Basic (Yen)

     95.25       116.29       215.22  

Earnings per share attributable to owners of the parent—Diluted (Yen)

     95.23       116.26       215.20  

Ratio of equity attributable to owners of the parent to total assets (%)

     76.1       74.4       74.3  

Cash flows from operating activities

     59,772       70,347       158,905  

Cash flows from investing activities

     (41,315 )      (6,262 )      (53,128 ) 

Cash flows from financing activities

     (22,512 )      (61,490 )      (51,572 ) 

Cash and cash equivalents at the end of the period (year)

     374,641       433,047       424,938  

 

(Notes)   1.   Kyocera Corporation and its consolidated subsidiaries (hereinafter, “Kyocera”) prepared its condensed quarterly consolidated financial statements and consolidated financial statements in accordance with International Financial Reporting Standards (hereinafter, “IFRS”), and the figures are presented in Japanese yen and amounts less than one million yen are rounded.
  2.   Sales revenue do not include consumption taxes.
  3.   As Kyocera prepared the condensed quarterly consolidated financial statements, the selected non-consolidated financial data was not set forth in this document.

2. Description of Business

There were no significant changes in the business and operations of Kyocera and its associates during the three months ended June 30, 2018 (hereinafter, “the first quarter”). There were no changes in the organizations of major subsidiaries and associates.

 

1

Table of Contents

II. Business Overview

1. Risk Factors

There were no new risk factors recognized during the first quarter. There were no significant changes from the risk factors stated in the Annual Report for the year ended March 31, 2018 pursuant to the Financial Instruments and Exchange Act of Japan.

2. Management’s Discussion and Analysis of Financial Position, Operating Results and Cash Flows

Commencing from the beginning of its year ending March 31, 2019 (hereinafter, “fiscal 2019”), Kyocera has adopted the IFRS in lieu of the Generally Accepted Accounting Principles of the United States of America (hereinafter, “U.S. GAAP”). In addition, financial figures appearing herein for the three months ended June 30, 2017 (hereinafter, “the previous first quarter”) and the year ended March 31, 2018 (hereinafter, “fiscal 2018”) have been prepared in accordance with IFRS for the purpose of comparative analysis. Please refer to “Note 18. First-Time Adoption” under “IV. Condensed Quarterly Consolidated Financial Statements and Other Information” for details.

The future matter written in this document is determined at the date of submission of this Quarterly Report.

(1) Summary of Operating Results

 

     For the three months ended
June 30, 2017 		     For the three months ended
June 30, 2018 		     Change  
   Amount      %*      Amount      %*      Amount      %  
    

 

(Yen in millions)

 

Sales revenue

     345,162        100.0        387,484        100.0        42,322        12.3  

Operating profit

     31,260        9.1        37,104        9.6        5,844        18.7  

Profit before income taxes

     49,353        14.3        55,488        14.3        6,135        12.4  

Profit attributable to owners of the parent

     35,026        10.1        42,284        10.9        7,258        20.7  

Average U.S. dollar exchange rate (yen)

     111        —        109        —        —        —  

Average Euro exchange rate (yen)

     122        —        130        —        —        —  

 

*

% represents the percentage to sales revenue.

Sales revenue in the Electronic Devices Group and the Industrial & Automotive Components Group for the first quarter increased due to solid demand coupled with contributions from merger and acquisition activities conducted in fiscal 2018. Sales revenue in the Document Solutions Group also increased on the back of aggressive sales promotion activities. As a result, sales revenue for the first quarter increased by 42,322 million yen, or 12.3%, to 387,484 million yen, compared with the previous first quarter, marking a record high for first quarter sales revenue.

Profits increased compared with the previous first quarter reflecting the sales growth and efforts to reduce costs. Operating profit increased by 5,844 million yen, or 18.7%, to 37,104 million yen, profit before income taxes increased by 6,135 million yen, or 12.4%, to 55,488 million yen, and profit attributable to owners of the parent increased by 7,258 million yen, or 20.7%, to 42,284 million yen, compared with the previous first quarter.

Average exchange rates for the first quarter were 109 yen to the U.S. dollar, marking appreciation of 2 yen (1.8%), and 130 yen to the Euro, marking depreciation of 8 yen (6.6%), compared with the previous first quarter. As a result, sales revenue and profit before income taxes after translation into yen for the first quarter were pushed up by approximately 2 billion yen, respectively, compared with the previous first quarter.

 

2

Table of Contents

Sales Revenue by Reporting Segment

 

    For the three months ended
June 30, 2017 		    For the three months ended
June 30, 2018 		    Change  
  Amount     %*     Amount     %*     Amount     %  
    (Yen in millions)  

Industrial & Automotive Components Group

    61,185       17.7       81,956       21.1       20,771       33.9  

Semiconductor Components Group

    60,786       17.6       60,649       15.7       (137 )      (0.2 ) 

Electronic Devices Group

    63,120       18.3       88,284       22.8       25,164       39.9  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Components Business

    185,091       53.6       230,889       59.6       45,798       24.7  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Communications Group

    57,071       16.5       51,610       13.3       (5,461 )      (9.6 ) 

Document Solutions Group

    80,973       23.5       88,796       22.9       7,823       9.7  

Life & Environment Group

    24,606       7.1       18,692       4.8       (5,914 )      (24.0 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Equipment & Systems Business

    162,650       47.1       159,098       41.0       (3,552 )      (2.2 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Others

    5,245       1.5       4,932       1.3       (313 )      (6.0 ) 

Adjustments and eliminations

    (7,824 )      (2.2 )      (7,435 )      (1.9 )      389       —  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sales revenue

    345,162       100.0       387,484       100.0       42,322       12.3  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*  % represents the component ratio.

   

 

Business Profit (Loss) by Reporting Segment

 

 

    For the three months ended
June 30, 2017 		    For the three months ended
June 30, 2018 		    Change  
  Amount     %*     Amount     %*     Amount     %  
    (Yen in millions)  

Industrial & Automotive Components Group

    6,103       10.0       10,416       12.7       4,313       70.7  

Semiconductor Components Group

    7,651       12.6       5,846       9.6       (1,805 )      (23.6 ) 

Electronic Devices Group

    8,427       13.4       14,397       16.3       5,970       70.8  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Components Business

    22,181       12.0       30,659       13.3       8,478       38.2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Communications Group

    1,002       1.8       (2,241 )      —       (3,243 )      —  

Document Solutions Group

    9,160       11.3       10,348       11.7       1,188       13.0  

Life & Environment Group

    (1,310 )      —       (3,015 )      —       (1,705 )      —  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Equipment & Systems Business

    8,852       5.4       5,092       3.2       (3,760 )      (42.5 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Others

    412       7.9       617       12.5       205       49.8  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total business profit

    31,445       9.1       36,368       9.4       4,923       15.7  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Corporate gains and share of net profit of investments accounted for using the equity method

    18,196       —       19,465       —       1,269       7.0  

Adjustments and eliminations

    (288 )      —       (345 )      —       (57 )      —  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income taxes

      49,353         14.3         55,488         14.3       6,135       12.4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

% represents the percentage to sales revenue of each corresponding segment.

 

3

Table of Contents

The analysis of Reporting Segment is as follows:

a. Industrial & Automotive Components Group

Sales revenue in this reporting segment increased compared with the previous first quarter due to a significant increase in sales revenue of industrial tools resulting from growing demand and merger and acquisition activities. Sales revenue of fine ceramic parts used in semiconductor processing equipment also increased on the back of a buoyant market. Business profit increased markedly due to the growth in sales revenue and cost reductions.

b. Semiconductor Components Group

Sales revenue in this reporting segment were roughly on par with the previous first quarter. Despite an increase in sales revenue of organic packages mainly for automobile applications, demand for ceramic packages for optical communications was down relative to the previous first quarter, which registered a high level of sales, due mainly to the impact of inventory adjustments. Business profit decreased due to lower sales revenue of ceramic packages.

c. Electronic Devices Group

Sales revenue of ceramic capacitors for smartphones increased. Demand for printing devices for industrial equipment was also strong. Merger and acquisition activities at AVX Corporation, a U.S. subsidiary, also made a contribution. As a result, sales revenue and business profit in this reporting segment increased significantly compared with the previous first quarter.

d. Communications Group

Sales revenue decreased compared with the previous first quarter and a business loss was recorded in this reporting segment due to a decline in sales revenue in the telecommunications equipment business, despite increases in sales revenue and profit in the information and communications services business, which provides engineering services, etc.

e. Document Solutions Group

Sales revenue and business profit increased in this reporting segment compared with the previous first quarter due to an increase in sales volume resulting from aggressive sales promotion activities, contributions from merger and acquisition activities and the impact of foreign exchange rate fluctuations.

f. Life & Environment Group

Sales revenue in this reporting segment decreased compared with the previous first quarter due to a decline in sales revenue in the solar energy business. A business loss was recorded due primarily to this decrease in sales revenue and an increase in research and development expenses.

 

4

Table of Contents

(2) Summary of Cash Flows

 

     For the
three months ended
June 30, 2017 		    For the
three months ended
June 30, 2018 		    Change  
     (Yen in millions)  

Cash flows from operating activities

     59,772       70,347       10,575  

Cash flows from investing activities

     (41,315 )      (6,262 )      35,053  

Cash flows from financing activities

     (22,512 )      (61,490 )      (38,978 ) 

Effect of exchange rate changes on cash and cash equivalents

     2,501       5,514       3,013  

Increase (decrease) in cash and cash equivalents

     (1,554 )      8,109       9,663  

Cash and cash equivalents at the beginning of the year

     376,195       424,938       48,743  

Cash and cash equivalents at the end of the period

     374,641       433,047       58,406  

Cash and cash equivalents at June 30, 2018 increased by 8,109 million yen, or 1.9%, to 433,047 million yen from 424,938 million yen at March 31, 2018.

a. Cash flows from operating activities

Net cash provided by operating activities for the first quarter increased by 10,575 million yen, or 17.7%, to 70,347 million yen from 59,772 million yen for the previous first quarter. This was due mainly to an increase in profit for the period.

b. Cash flows from investing activities

Net cash used in investing activities for the first quarter decreased by 35,053 million yen, or 84.8%, to 6,262 million yen from 41,315 million yen for the previous first quarter. This reflected that the withdrawal of time deposit exceeded the acquisition for the first quarter although the acquisition exceeded the withdrawal for the previous first quarter.

c. Cash flows from financing activities

Net cash used in financing activities for the first quarter increased by 38,978 million yen, or 173.1%, to 61,490 million yen from 22,512 million yen for the previous first quarter. This was due mainly to the purchase of treasury stock.

(3) Liquidity and Capital Resources

For the main short-term demand of funds, Kyocera expects to pay for capital expenditures, research and development, merger and acquisition and cash dividends in addition to operation funds for business operations. The source of Kyocera’s short-term funding is primarily cash earned by sales activities. Some of Kyocera’s consolidated subsidiaries are funded by borrowing from financial institutions in several different currencies, primarily in Euro.

Based on the resolution of the ordinary general meeting of shareholders held on June 26, 2018, Kyocera held a year-end dividend, totaling 22,062 million yen, or 60 yen per share, on June 27, 2018, to all shareholders as of March 31, 2018.

Since Kyocera has 433,047 million yen in cash and cash equivalents at the end of first quarter, Kyocera recognizes that there are few concerns about the shortage of future predictable financial needs. In the future, in the event of a deteriorating market demand trend or a decline in product prices exceeding Kyocera’s expectations, the impact on Kyocera’s financial position and operating results could adversely affect the liquidity of Kyocera’s capital.

 

5

Table of Contents

(4) Business and Financial Tasks to be Addressed

There were no new business and financial tasks to be addressed during the first quarter. There were no significant changes from the content in the Annual Report for the year ended March 31, 2018 pursuant to the Financial Instruments and Exchange Act of Japan.

(5) Research and Development Activities

Research and development expenses in the first quarter increased by 3,129 million yen, or 23.0%, to 16,713 million yen from 13,584 million yen for the previous first quarter. This increase was due mainly to merger and acquisition activities conducted in fiscal 2018 and an increase in research and development expenses for automotive-related market. There were no significant changes in the status of research and development activities from the Annual Report for the year ended March 31, 2018 pursuant to the Financial Instruments and Exchange Act of Japan.

(6) Summary of Production, Orders and Sales

Orders by Reporting Segments

 

     For the three months ended
June 30, 2017 		    For the three months ended
June 30, 2018 		    Change  
   Amount     %*     Amount     %*     %  
     (Yen in millions)  

Industrial & Automotive Components Group

     63,589       17.7       85,096       21.1       33.8  

Semiconductor Components Group

     62,569       17.4       62,317       15.5       (0.4 ) 

Electronic Devices Group

     70,738       19.7       100,423       24.9       42.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Components Business

     196,896       54.8       247,836       61.5       25.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Communications Group

     61,909       17.2       53,408       13.3       (13.7 ) 

Document Solutions Group

     81,298       22.6       88,449       21.9       8.8  

Life & Environment Group

     21,827       6.1       16,957       4.2       (22.3 ) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Equipment & Systems Business

     165,034       45.9       158,814       39.4       (3.8 ) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Others

     3,509       1.0       3,205       0.8       (8.7 ) 

Adjustments and eliminations

     (6,050 )      (1.7 )      (6,821 )      (1.7 )      —  

Orders

     359,389       100.0       403,034       100.0       12.1  

 

*

% represents the component ratio.

 

(Note)

Kyocera flexibly produces in accordance with growing demands, customer’s request and market changes. Therefore results of production is similar to results of sales. Summary of production and sales is correlated to the description on “(1) Summary of Operating Results Sales Revenue by Reporting Segment.”

3. Material Agreements

Agreements for absorption type merger

Kyocera Corporation, at a meeting of its Board of Directors held on May 25, 2018, resolved that Kyocera Corporation will merge with Kyocera Display Corporation and Kyocera Optec Co., Ltd., both of which are wholly-owned subsidiaries of Kyocera Corporation in order to strength the management platform with further expanding liquid crystal displays and optical component businesses, effective as of October 1, 2018. Kyocera Corporation entered into those merger agreements on May 25, 2018.

 

6

Table of Contents

III. Corporate Information

1. Information on Kyocera’s shares and others

(1) Total number of shares and others

a. Total number of shares

 

Class

   Total number of shares authorized to be issued
(shares) 		 

Common stock

     600,000,000  

Total

     600,000,000  

b. Shares issued

 

Class

   Number of shares issued
as of June 30, 2018
(shares) 		     Number of shares issued
as of the filing date (shares)
(August 10, 2018) 		    

Stock exchange on which

Kyocera is listed or
authorized financial
instruments firms
association where Kyocera
is registered

  

Description

Common stock

     377,618,580        377,618,580     

Tokyo Stock Exchange

(the first section)

  

This is Kyocera’s standard stock. There is no restriction on contents of the right of the stock.

 

The number of shares per one unit of shares is

100 shares.

Total

     377,618,580        377,618,580      —    —

 

(Note)

Kyocera filed an application for delisting from the New York Stock Exchange (“NYSE”) on June 15, 2018, and its delisting from the NYSE became effective on June 26, 2018.

(2) Information on the stock acquisition rights and others

a. Details of stock option plans

Not applicable

b. Other information about stock acquisition rights.

Not applicable

(3) Information on moving strike convertible bonds

Not applicable

(4) Changes in the total number of shares issued and the amount of common stock and others

 

Date

   Change in the
total number of
shares issued
(shares) 		     Balance of
the total
number of
shares issued
(shares) 		     Changes in
common stock
(Yen in millions) 		     Balance of
common stock
(Yen in millions) 		     Changes in
additional paid-in
capital
(Yen in millions) 		     Balance of
additional paid-in
capital
(Yen in millions) 		 

From April 1, 2018 to June 30, 2018

     —        377,618,580        —        115,703        —        192,555  

(5) Major shareholders

Not applicable

 

7

Table of Contents

(6) Information on voting rights

Information on voting rights as of March 31, 2018 is stated in this item because Kyocera does not identify the number of voting rights as of June 30, 2018 due to the lack of information on the details entered in the shareholders registry as of June 30, 2018.

a. Shares issued

 

Classification

   Number of shares (shares)    

Number of voting

rights

  

Description

     As of March 31, 2018

Shares without voting right

     —     —    —

Shares with restricted voting rights (treasury stock)

     —     —    —

Shares with restricted voting rights (others)

     —     —    —

Shares with full voting right (treasury stock)

    

(Number of treasury stock)

Common stock         9,910,800

 

 

  —   

This is Kyocera’s standard stock. There is no restriction on contents of the right of the stock.

 

The number of shares per one unit of shares is 100 shares.

Shares with full voting right (others)

     Common stock     367,342,100     3,673,421    Same as above

Shares less than one unit

     Common stock            365,680     —    —

Number of shares issued

     377,618,580     —    —
  

 

 

   

 

  

 

Total number of voting rights

     —     3,673,421    —
  

 

 

   

 

  

 

 

(Note)

The “Shares with full voting rights (others)” column includes 1,100 shares registered in the name of Japan Securities Depository Center (“JASDEC”) and the “Number of voting rights” column includes 11 voting rights for those shares.

b. Treasury stock and others

 

Name of shareholder

  

Address

   Number of shares
held under own
name (shares) 		   

Number of shares
held under the
name of others
(shares)

     Total shares held
(shares) 		    Ownership
percentage to the
total number of
shares issued (%) 		 
          As of March 31, 2018  

Kyocera Corporation

   6, Takeda Tobadono- cho, Fushimi-ku, Kyoto      9,910,800     —        9,910,800       2.63  

Total

   —      9,910,800     —        9,910,800       2.63  

 

(Note)

Kyocera Corporation held 15,862,300 shares of treasury stock as of June 30, 2018.

2. Changes in Directors and Senior Management

Not Applicable

 

8

Table of Contents

IV. Condensed Quarterly Consolidated Financial Statements and Other Information

1. Condensed Quarterly Consolidated Financial Statements

(1) Condensed Quarterly Consolidated Statement of Financial Position

 

                                                                                                   
     Note    The date of
transition  to IFRS
(April 1, 2017) 		    As of
March 31, 2018 		    As of
June 30, 2018 		 
          (Yen in millions)  

Assets

         

Current assets

         

Cash and cash equivalents

        376,195       424,938       433,047  

Short-term investments

   13      297,371       196,802       176,493  

Trade and other receivables

   10      337,371       382,659       340,144  

Other financial assets

   13      7,778       12,996       10,403  

Inventories

        331,155       364,875       369,548  

Other current assets

      14         79,755       83,629       86,401  
     

 

 

   

 

 

   

 

 

 

Total current assets

        1,429,625       1,465,899       1,416,036  

Non-current assets

         

Debt and equity instruments

   13      1,146,608       1,071,990       1,181,127  

Investments accounted for using the equity method

        5,863       3,874       4,070  

Other financial assets

   13      13,429       15,681       15,713  

Property, plant and equipment

        254,341       288,898       306,959  

Goodwill

   7      110,470       144,268       147,196  

Intangible assets

   7      61,235       80,186       79,490  

Deferred tax assets

        56,614       41,370       41,800  

Other non-current assets

        6,452       16,647       17,660  
     

 

 

   

 

 

   

 

 

 

Total non-current assets

        1,655,012        1,662,914        1,794,015   
     

 

 

   

 

 

   

 

 

 

Total assets

        3,084,637       3,128,813       3,210,051  
     

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

9

Table of Contents
                                                                                                   
     Note    The date of
transition  to IFRS
(April 1, 2017) 		    As of
March 31, 2018 		    As of
June 30, 2018 		 
          (Yen in millions)  

Liabilities and Equity

         

Liabilities

         

Current liabilities

         

Trade and other payables

   14      190,292       216,685       210,290  

Other financial liabilities

   13      8,735       5,039       9,689  

Income tax payables

        15,707       19,436       17,572  

Accrued expenses

   10      108,367       114,049       98,634  

Provisions

   14, 15      14,225       32,302       31,679  

Other current liabilities

   10      27,492       31,876       42,135  
     

 

 

   

 

 

   

 

 

 

Total current liabilities

        364,818       419,387       409,999  

Non-current liabilities

         

Long-term financial liabilities

   13      5,292       7,370       9,462  

Retirement benefit liabilities

        28,794       29,112       28,768  

Deferred tax liabilities

        255,281       220,950       242,841  

Provisions

   14, 15      6,488       19,914       20,239  

Other non-current liabilities

        12,286       18,781       19,312  
     

 

 

   

 

 

   

 

 

 

Total non-current liabilities

        308,141       296,127       320,622  
     

 

 

   

 

 

   

 

 

 

Total liabilities

        672,959       715,514       730,621  

Equity

         

Common stock

        115,703       115,703       115,703  

Capital surplus

        165,172       165,079       164,955  

Retained earnings

        1,532,866       1,577,641       1,600,836  

Other components of equity

        545,452       499,710       579,530  

Treasury stock

   9      (32,309 )      (32,342 )      (72,344 ) 
     

 

 

   

 

 

   

 

 

 

Total equity attributable to owners of the parent

        2,326,884       2,325,791       2,388,680  

Non-controlling interests

        84,794       87,508       90,750  
     

 

 

   

 

 

   

 

 

 

Total equity

        2,411,678       2,413,299       2,479,430  
     

 

 

   

 

 

   

 

 

 

Total liabilities and equity

        3,084,637       3,128,813        3,210,051   
     

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

10

Table of Contents

(2) Condensed Quarterly Consolidated Statement of Profit or Loss

 

                                                                          
     Note      For the three months  ended
June 30, 2017 		    For the three months  ended
June 30, 2018 		 
            (Yen in millions except per share amounts)  

Sales revenue

     6, 10        345,162       387,484  

Cost of sales

     8        247,841       278,234  
     

 

 

   

 

 

 

Gross profit

        97,321       109,250  

Selling, general and administrative expenses

     8        66,061       72,146  
     

 

 

   

 

 

 

Operating profit

        31,260       37,104  

Finance income

     13        18,564       18,437  

Finance expenses

        160       203  

Foreign exchange gains (losses)

        (590 )      (445 ) 

Share of net profit of investments accounted for using the equity method

        25       367  

Other, net

        254       228  
     

 

 

   

 

 

 

Profit before income taxes

     6        49,353       55,488  

Income taxes

     11        12,771       10,687  
     

 

 

   

 

 

 

Profit for the period

        36,582       44,801  
     

 

 

   

 

 

 

Profit attributable to:

       

Owners of the parent

        35,026       42,284  

Non-controlling interests

        1,556       2,517  
     

 

 

   

 

 

 

Profit for the period

        36,582       44,801  
     

 

 

   

 

 

 

Per share information:

     12       

Earnings per share attributable to owners of the parent

       

Basic

        95.25 yen       116.29 yen  

Diluted

        95.23 yen       116.26 yen  

The accompanying notes are an integral part of these statements.

 

11

Table of Contents

(3) Condensed Quarterly Consolidated Statement of Comprehensive Income

 

                                                                                   
      Note       For the three months  ended
June 30, 2017 		    For the three months  ended
June 30, 2018 		 
            (Yen in millions)  

Profit for the period

        36,582       44,801  

Other comprehensive income, net of taxation

       

Items that will not be reclassified to profit or loss:

       

Financial assets measured at fair value through other comprehensive income

        —       72,278  

Re-measurement of defined benefit plans

        —       —  
     

 

 

   

 

 

 

Total items that will not be reclassified to profit or loss

        —       72,278  

Items that may be reclassified subsequently to profit or loss:

       

Net unrealized gains (losses) on securities

        14,993       —  

Net changes in fair value of cash flow hedge

        (78 )      6  

Exchange differences on translating foreign operations

        6,017       10,023  

Share of other comprehensive income of investments accounted for using the equity method

        22       89  
     

 

 

   

 

 

 

Total items that may be reclassified subsequently to profit or loss

        20,954       10,118  
     

 

 

   

 

 

 

Total other comprehensive income

        20,954       82,396  
     

 

 

   

 

 

 

Comprehensive income for the period

        57,536       127,197   
     

 

 

   

 

 

 

Comprehensive income attributable to:

       

Owners of the parent

        55,309       122,829  

Non-controlling interests

        2,227       4,368  
     

 

 

   

 

 

 

Comprehensive income for the period

        57,536       127,197  
     

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

12

Table of Contents

(4) Condensed Quarterly Consolidated Statement of Changes in Equity

For the three months ended June 30, 2017

 

        Total equity attributable to owners of the parent     Non-
controlling
interests 		    Total
equity 		 
    Note   Common
Stock 		    Capital
surplus 		    Retained
earnings 		    Other
components
of equity 		    Treasury
stock 		    Total  
    (Yen in millions)  

Balance as of April 1, 2017

      115,703       165,172       1,532,866       545,452       (32,309 )      2,326,884       84,794       2,411,678  

Profit for the period

          35,026           35,026       1,556       36,582  

Other comprehensive income

            20,283         20,283       671       20,954  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

      —       —       35,026       20,283       —       55,309       2,227       57,536  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends

  9         (22,063 )          (22,063 )      (1,049 )      (23,112 ) 

Purchase of treasury stock

              (10 )      (10 )        (10 ) 

Reissuance of treasury stock

        0           0       0         0  

Transactions with non-controlling interests and other

        (4 )        11         7       315       322  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2017

      115,703       165,168       1,545,829       565,746       (32,319 )      2,360,127       86,287       2,446,414  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

For the three months ended June 30, 2018

 

 

 
        Total equity attributable to owners of the parent     Non-
controlling
interests 		    Total
equity 		 
    Note   Common
Stock 		    Capital
surplus 		    Retained
earnings 		    Other
components
of equity 		    Treasury
stock 		    Total  
    (Yen in millions)  

Balance as of April 1, 2018

(Before applying new accounting standard)

      115,703       165,079       1,577,641       499,710       (32,342 )      2,325,791       87,508       2,413,299  

Cumulative effects of new accounting standard applied

          2,973       (729 )        2,244         2,244  

Balance as of April 1, 2018

(After applying new accounting standard)

      115,703       165,079       1,580,614       498,981       (32,342 )      2,328,035       87,508       2,415,543  

Profit for the period

          42,284           42,284       2,517       44,801  

Other comprehensive income

            80,545         80,545       1,851       82,396  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

      —       —       42,284       80,545       —       122,829       4,368       127,197  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends

  9         (22,062 )          (22,062 )      (1,219 )      (23,281 ) 

Purchase of treasury stock

  9             (40,002 )      (40,002 )        (40,002 ) 

Reissuance of treasury stock

        —           —       —         —  

Transactions with non-controlling interests and other

        (124 )        4         (120 )      93       (27 ) 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2018

      115,703       164,955       1,600,836       579,530       (72,344 )      2,388,680       90,750       2,479,430  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

13

Table of Contents

(5) Condensed Quarterly Consolidated Statement of Cash Flows

 

     Note    For the three months ended
June 30, 2017 		    For the three months ended
June 30, 2018 		 
          (Yen in millions)  

Cash flows from operating activities:

       

Profit for the period

        36,582       44,801  

Depreciation and amortization

        17,521       14,800  

Finance expenses (income)

        (18,404 )      (18,234 ) 

Share of net profit of investments accounted for using the equity method

        (25 )      (367 ) 

(Gains) losses from sales or disposal of property, plant and equipment

        (36 )      (778 ) 

Income taxes

        12,771       10,687  

(Increase) decrease in trade and other receivables

        48,753       45,666  

(Increase) decrease in inventories

        (19,573 )      (2,601 ) 

(Increase) decrease in other assets

        (548 )      316  

Increase (decrease) in trade and other payables

        (5,944 )      (10,762 ) 

Increase (decrease) in income tax payables

        (7,847 )      (6,273 ) 

Increase (decrease) in other liabilities

        (7,549 )      (3,406 ) 

Other, net

        (1,456 )      (4,761 ) 
     

 

 

   

 

 

 

Subtotal

        54,245       69,088  

Interests and dividends received

        17,818       18,223  

Interests paid

        (262 )      (102 ) 

Income taxes paid

        (12,029 )      (16,862 ) 
     

 

 

   

 

 

 

Net cash provided by operating activities

        59,772       70,347  

Cash flows from investing activities:

       

Payments for purchases of securities

        (16,681 )      (9,486 ) 

Proceeds from sales and maturities of securities

        15,956       16,071  

Acquisitions of business, net of cash acquired

        —       (1,742 ) 

Payments for purchases of property, plant and equipment

        (19,733 )      (27,234 ) 

Payments for purchases of intangible assets

        (1,852 )      (1,324 ) 

Proceeds from sales of property, plant and equipment

        444       2,321  

Acquisition of time deposits and certificate of deposits

        (155,251 )      (71,314 ) 

Withdrawal of time deposits and certificate of deposits

        135,586       86,381  

Other, net

        216       65  
     

 

 

   

 

 

 

Net cash used in investing activities

        (41,315 )      (6,262 ) 

Cash flows from financing activities:

       

Increase (decrease) in short-term borrowings

        (74 )      (356 ) 

Proceeds from long-term borrowings

        975       2,562  

Repayments of long-term borrowings

        (1,165 )      (718 ) 

Dividends paid

        (22,012 )      (22,530 ) 

Purchase of treasury stock

   9      (10 )      (40,002 ) 

Other, net

        (226 )      (446 ) 
     

 

 

   

 

 

 

Net cash used in financing activities

        (22,512 )      (61,490 ) 

Effect of exchange rate changes on cash and cash equivalents

        2,501       5,514  
     

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

        (1,554 )      8,109  

Cash and cash equivalents at the beginning of the year

        376,195       424,938  
     

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

        374,641       433,047  
     

 

 

   

 

 

 

The accompanying notes are an integral part of these statements.

 

14

Table of Contents

Notes to Condensed Quarterly Consolidated Financial Statements

1. Reporting Entity

Kyocera Corporation is a corporation domiciled in Japan, whose shares are listed on the Tokyo Stock Exchange. The registered address of headquarter and principal business offices are available on the Kyocera Corporation’s website ( https://global.kyocera.com/ ).

Condensed quarterly consolidated financial statements as of and for the three months ended June 30, 2018 consist of Kyocera Corporation and its consolidated subsidiaries (hereinafter, “Kyocera”) and shares of associates of Kyocera.

Kyocera globally operates various kinds of businesses, which include productions and distributions of material components, electronic devices and equipment as well as provisions of systems and services, in the markets primarily related to information and communications, automotive-related, environment and energy and medical and healthcare. The details are described in “Note 6. Segment Information.”

2. Basis of Preparation

(1) Compliance with IFRS and first-time adoption

The condensed quarterly consolidated financial statements of Kyocera have been prepared in accordance with International Accounting Standard (hereinafter, “IAS”) 34 “Interim Financial Reporting” pursuant to the provision of Article 93 of Regulations for Consolidated Financial Statements, as Kyocera meets the criteria of a “Designated IFRS Specified Company” defined under Article 1-2 of the regulations.

Kyocera adopts IFRS for the first-time this fiscal year (commencing on April 1, 2018 and ending on March 31, 2019), and so the annual consolidated financial statements for the year are the first ones prepared in conformity with IFRS. The date of transition of Kyocera to IFRS is April 1, 2017. Explanations of how the first-time adoption of, and the transition to, IFRS have affected Kyocera’s consolidated results of operations, financial conditions and cash flows are provided in “Note 18. First-Time Adoption.”

(2) Basis of measurement

These condensed quarterly consolidated financial statements have been prepared under the historical cost basis, except for certain items, such as financial instruments that are measured at fair value.

(3) Functional currency and presentation currency

These condensed quarterly consolidated financial statements are presented in Japanese yen, which is the functional currency of Kyocera, and are rounded to the nearest million yen.

(4) Application of new standards and interpretations

Kyocera has adopted IFRS 15 “Revenue from contracts with customers” (issued in May 2014 and amended in April 2016, hereinafter, “IFRS 15”) retrospectively from the year ended March 31, 2018. The details are provided in “Note 3. Significant accounting policies (16) Revenue recognition.” The effect to Kyocera’s financial position, operation results and cash flows by adopting IFRS 15 is described in “Note 18. First-Time Adoption.”

 

15

Table of Contents

(5) Changes in accounting policies

Kyocera has adopted IFRS 9 “Financial instruments” (issued in November 2009 and amended in July 2014, hereinafter, “IFRS 9”) from the year ending March 31, 2019. Kyocera has adopted exemptions from retrospective application of IFRS 9 in accordance with IFRS 1, and Kyocera has adopted U.S. GAAP, the previous accounting standards, at the date of transition to IFRS and the year ended March 31, 2018. As for the details of each accounting policy under U.S. GAAP and IFRS 9, please refer to “Note 3. Significant Accounting Policies (10) Financial instruments.”

At the beginning of the year ending March 31, 2019, Kyocera has changed the measurement method of unlisted-stocks which were measured at cost under U.S. GAAP. The amounts of these financial instruments were shown in below table. These financial instruments were included in “debt and equity instruments” on the condensed quarterly consolidated statement of financial position. As for the details of the valuation techniques to measure fair value of financial instruments, please refer to “Note 13. Financial instruments.”

 

Classification based on U.S. GAAP

 
(Yen in millions)  

Cost method investments

     19,536  

Classification based on IFRS 9

 
(Yen in millions)  

Financial instruments measured at fair value through other comprehensive income

     22,747  

IFRS 9 permits an entity to make an irrevocable election to present subsequent changes in the fair value in other comprehensive income for the investments in equity instruments. Kyocera chose to apply this option and classified listed stocks and unlisted stocks which meet the definition of equity instruments as financial instruments measured at fair value through other comprehensive income. As a result, Kyocera reclassified the amounts recorded in retained earnings under U.S. GAAP into other components of equity at the beginning of the year ending March 31, 2019.

As mentioned above, for adopting IFRS 9, retained earnings increased by 2,973 million yen, and other components of equity decreased by 729 million yen at the beginning of this fiscal year.

 

16

Table of Contents

3. Significant Accounting Policies

(1) Basis of consolidation

a. Subsidiaries

A subsidiary is an entity that is controlled by Kyocera. Kyocera controls an entity when Kyocera is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date when control is obtained to the date when the control is lost.

If any accounting policies applied by subsidiaries are different from those applied by Kyocera, adjustments are made to the subsidiary’s financial statements, as needed. All intragroup balances, transactions and unrealized gains or losses arising from intragroup transactions are eliminated in the preparation of condensed quarterly consolidated financial statements.

Any changes in ownership interest in subsidiaries that do not result in a loss of control is accounted for as equity transaction. The difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration is directly recognized in equity and attributed to owners of the parent. When Kyocera loses control of a subsidiary, gains and losses arising from the loss of control are recognized in profit or loss.

b. Associates

An associate is an entity over which Kyocera has significant influence over their financial and operating policies but does not have control. Associates are accounted for using the equity method from the date when Kyocera has significant influence to the date when Kyocera loses it.

(2) Business combination

Business combinations are accounted for using the acquisition method and acquisition-related costs are expensed as incurred. Each identifiable asset acquired, liability and contingent liability assumed in a business combination is measured in fair value at its acquisition date.

When the total of consideration transferred in business combinations, amount of non-controlling interests in the acquiree and fair value of the equity interest in the acquiree previously held by the acquirer exceeds net value of identifiable assets and liabilities on the acquisition date, such excess is recognized as goodwill. When the total is lower than the net value of identifiable assets and liabilities, the difference is recognized as profit. Consideration transferred is calculated as the total of the fair value of the assets transferred, liabilities assumed and equity interest issued, and includes fair value of assets of liabilities arising from the contingent consideration arrangement.

Non-controlling interests are measured at fair value or as non-controlling interest’s proportionate share of the acquirer’s net identifiable assets, for each individual business combination transaction.

 

17

Table of Contents

(3) Foreign currency translation

a. Functional currency

Each entity in Kyocera determines its own functional currency and measures transactions based on its own functional currency.

b. Foreign currency transactions

Foreign currency transactions are translated at the spot exchange rate of the date of transaction or the rate that approximates such exchange rate.

Monetary items denominated in foreign currencies are translated into the functional currency at the current exchange rates at the end of the reporting period. Non-monetary items denominated in foreign currencies that are measured in fair value are translated into the functional currency at the rates prevailing at the date when the fair value was determined. Differences arising from the translation and settlement are recognized in profit or loss during the period except for those deferred in equity as effective cash flow hedges.

c. Foreign operations

Foreign operation is an entity that is a subsidiary or associate of Kyocera, the activities of which are based or conducted in a country or currency other than those of Kyocera. Assets and liabilities of foreign operations are translated into Japanese yen at the rates of exchange prevailing at the closing date, while income and expenses of foreign operations are translated into Japanese yen at the average exchange rates for the period. Exchange differences arising from translation of foreign operations’ financial statements are recognized in other comprehensive income. In cases of disposition of interests of foreign operations involving loss of control or significant influence, the relevant cumulative amount of translation differences are transferred to profit or loss on disposal of foreign operations.

(4) Cash and cash equivalents

Cash and cash equivalents consist of cash, deposits readily withdrawn as needed and highly liquid investments with a maturity within three months.

(5) Inventories

Inventories are measured at the lower of acquisition cost and net realizable value. The remaining balance of raw materials to be purchased under the long-term purchase agreements are also measured at the lower of cost and net realizable value.

For finished goods and work in process, cost is determined mainly using the average method. For raw materials and supplies, cost is determined mainly using the first-in, first-out method.

Net realizable value is the estimated selling price in the ordinary course of business less any estimated costs of completion and estimated applicable variable selling expenses.

 

18

Table of Contents

(6) Property, plant and equipment

Property, plant and equipment are measured by using the cost model and are stated at acquisition cost less accumulated depreciation and accumulated impairment losses.

The acquisition cost includes costs directly attributable to the acquisition of the assets, and the costs of dismantling, removing and restoring.

Property, plant and equipment are depreciated on a straight-line method over their useful lives. The useful lives of major components of property, plant and equipment are as follows:

 

Building and structures

  

2 to 50 years

Machinery and equipment

  

2 to 20 years

The residual values, the useful lives and the depreciation methods of the assets are reviewed at end of each reporting period and the effect of any changes in estimate would be accounted prospectively as a change in an accounting estimate. Subsequent costs, major renewals and betterments, are capitalized as property, plant and equipment and depreciated based on their useful lives. All other repairs and maintenance are recognized as expenses during the financial period in which they are incurred.

Kyocera changed the depreciation method from the declining-balance method to the straight-line method from the year ending March 31, 2019.

Kyocera implemented capital expenditures in order to double its productivity at manufacturing facilities in Japan and overseas with the introduction of innovative technology to promote streamlining and automation of production processes. As a result, the operation of the property, plant and equipment is expected to be more consistently than before and future utilization of those assets will be consistent.

Accordingly, Kyocera believes that the change to the straight-line method will be preferable as it better reflects the consumption of future economic benefits of those assets.

In accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors,” a change in depreciation method is treated as a change in accounting estimate. Therefore, the effect of the change in depreciation method has been reflected on a prospective basis from April 1, 2018 and it was to increase profit before income taxes by 2,999 million yen due mainly to the decrease in depreciation expenses for the three months ended June 30, 2018.

 

19

Table of Contents

(7) Goodwill and intangible assets

a. Goodwill

Goodwill acquired in the business combination is stated at the amount of cost less accumulated impairment losses. Goodwill is not amortized, and is tested for impairment when there is an indication of impairment in cash generating unit to which goodwill has been allocated by expectation of benefits from business combination, and annually (January 1), regardless of any indication of impairment.

b. Intangible assets

Intangible assets are measured by using the cost model. Intangible assets with finite useful lives are stated at the amount of cost less accumulated amortization and accumulated impairment losses. Intangible assets with indefinite useful lives are stated at the amount of cost less accumulated impairment losses.

Expenditures in development activities are recognized as assets only if all of the following requirements can be demonstrated. Otherwise, it is recognized in profit or loss as incurred.

 

  (a)

Technical feasibility of completing the intangible asset so that it will be available for use or sale

 

  (b)

Intention to complete the intangible asset and use or sell it

 

  (c)

Ability to use or sell the intangible asset

 

  (d)

How the intangible asset will generate probable future economic benefits

 

  (e)

Availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset

 

  (f)

Ability to measure reliably the expenditure attributable to the intangible asset during its development

Intangible assets with finite useful lives are amortized using the straight-line method over their useful lives. The useful lives of major components of intangible assets are as follows:

 

Customer relationships

   3 to 20 years

Software

   2 to 15 years

Others

   2 to 21 years

The amortization period and amortization method for intangible assets with finite useful lives are reviewed at the end of each reporting period and the effect of any changes in estimate would be accounted prospectively as a change in an accounting estimate.

For intangible assets with finite useful life, an impairment test is carried out when there is an indication that the unit may be impaired. Intangible assets with indefinite useful life or which are not available for use are not amortized, and impairment test is carried out on an annual basis (January 1) or at time when there is an indication that the unit may be impaired, or situation is changed.

 

20

Table of Contents

(8) Lease

Leases are classified as finance leases whenever substantially all the risks and rewards incidental to ownership of assets are transferred to Kyocera. All other leases are classified as operating leases.

At inception, Kyocera initially recognizes finance leases as assets at the amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payment. After the initial recognition, assets held under finance leases are depreciated using straight-line method over the shorter of the lease term or their estimated useful lives based on the accounting policy Kyocera adopts for depreciable assets that are owned. Lease payments under a finance lease are apportioned between finance expenses and the reduction in the carrying amount of the liability. Finance expenses are recognized in the condensed quarterly consolidated statement of profit or loss.

Lease payments under an operating lease are recognized as an expense on a straight-line basis over the lease term.

(9) Impairment of non-financial assets

At the end of each fiscal year, Kyocera reviews each non-financial assets, excluding inventories and deferred tax assets, to assess whether there is an indication that it may be impaired. If any such indication exists, the recoverable amount of the asset is estimated and tested for impairment. Regardless of whether or not there are indications of impairment, impairment tests of goodwill and intangible assets with indefinite useful lives are tested annually (January 1). The impairment loss is recognized when the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount.

The recoverable amount of an asset or cash generating unit is the higher of fair value less costs to sell, or value in use. In calculating the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the time value of money and the risks specific to the asset.

Kyocera assesses whether there is any indication that an impairment loss recognized in prior years for an asset excluding goodwill may no longer exist or may have decreased, such as any changes in assumptions used for the determination of the recoverable amount. If any such indication exists, the recoverable amount of the asset or cash generating unit is estimated, and if the recoverable amount exceeds the carrying amount of the asset or cash generating unit, impairment losses are reversed up to the lower of the estimated recoverable amount or the carrying amount (net of depreciation) that would have been determined if no impairment losses had been recognized in prior years.

 

21

Table of Contents

(10) Financial instruments

With regard to accounting for financial instruments, under the exemptions from the retrospective application of IFRS 9 in accordance with IFRS 1, Kyocera has applied U.S. GAAP for the date of transition to IFRS and the year ended March 31, 2018, and applied IFRS 9 for the three months ended June 30, 2018.

Accounting policies under U.S. GAAP for the date of transition to IFRS and the year ended March 31, 2018 are as follows:

Kyocera classifies investments in debt and equity securities as available-for-sale or held-to-maturity. Securities classified as available-for-sale securities are recorded at fair value, with unrealized gains and losses excluded from income and reported in other components of equity. Securities classified as held-to-maturity securities are recorded at amortized cost. Non-marketable equity securities are accounted for by the cost method.

Kyocera evaluates whether the declines in fair value of securities are other-than-temporary. Other-than-temporary declines in fair value are recorded as a realized loss with a new cost basis. This evaluation is based mainly on the duration and the extent to which the fair value is less than cost, and the anticipated recoverability in fair value.

Kyocera maintains allowances for doubtful accounts related to trade and other 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 it is 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.

All derivatives are recorded as either assets or liabilities on the condensed quarterly consolidated statement of financial position and measured at fair value. Changes in the fair value of derivatives are recognized in profit or loss. However, cash flow hedges may qualify for hedge accounting, if the hedging relationship is expected to be highly effective in achieving offsetting cash flows of hedging instruments and hedged items. Under hedge accounting, changes in the fair value of the effective portion of these cash flow hedge derivatives are deferred in other components of equity and recognized in profit or loss when the underlying transaction being hedged occurs.

Kyocera designates certain foreign currency forward contracts. However, changes in fair value of most of the foreign currency forward contracts are recognized in profit or loss without applying hedge accounting as it is expected that such changes will be offset by corresponding gains or losses of the underlying hedged assets and liabilities. Kyocera’s associate designates interest rate swaps with applying hedge accounting to convert a portion of its variable rates debt to fixed rates debt.

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 linking all derivatives designated as cash flow hedge to specific assets and liabilities on the condensed quarterly consolidated statement of financial position or forecasted transactions. Kyocera also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items. When it is determined that a derivative is not a highly effective hedge or that it has ceased to be a highly effective hedge, Kyocera discontinues hedge accounting prospectively. When it is probable that the forecasted hedging transaction will not occur, the derivative gains or losses are reclassified into profit or loss immediately.

 

22

Table of Contents

Accounting policies under IFRS 9 for the three months ended June 30, 2018 are as follows:

a. Non-derivative financial assets

(a) Initial recognition and measurement

Financial assets, such as stocks and bonds, are initially recognized on the contract date. All other financial assets are initially recognized on the transaction date.

Financial assets are classified into financial assets measured at amortized cost or financial assets measured at fair value at initial recognition. This classification is made as follows, depends on whether the financial asset is a debt instrument or equity instrument.

Financial assets classified as a debt instrument is subsequently measured at amortized cost when the following conditions are both satisfied. Otherwise, financial assets measured at fair value through profit or loss.

 

  i.

The financial asset is held within Kyocera’s business model whose objective is to hold assets in order to collect contractual cash flows.

 

  ii.

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets that are equity instruments are, in principle, classified as financial assets measured at fair value through other comprehensive income.

Financial assets measured at fair value through other comprehensive income and financial assets measured at amortized cost are recognized initially at fair value plus transaction cost directly attributable to the asset.

(b) Subsequent measurement

 

  i.

Financial assets measured at amortized cost

These financial assets are measured at amortized cost using the effective interest method, and interests are recognized as “finance income” in profit or loss.

 

  ii.

Financial assets measured at fair value

For equity instruments that Kyocera has chosen to classify as financial assets measured at fair value through other comprehensive income, the changes in fair value are recognized in other comprehensive income. Cumulative gains or losses are transferred to retained earnings when the instrument is derecognized. However, dividends from these assets are recognized as “finance income” in profit or loss.

(c) Derecognition

Financial assets are derecognized when the contractual rights to the cash flows from the financial assets expire or when the contractual rights to receive the cash flows of the financial assets are transferred and substantially all the risks and rewards of ownership of such financial assets are transferred.

(d) Impairment

For impairment of financial assets measured at amortized cost, expected credit losses are assessed and credit loss allowance is recognized at each reporting date.

When the credit risk of the financial instrument has increased significantly since initial recognition, credit loss allowance of the financial instruments is measured as the same amount as full lifetime expected credit losses after all reasonable and supportable information available including forecasts is considered. Otherwise, when the credit risk has not increased significantly, expected credit losses are measured at an amount equal to the 12-month expected credit losses.

 

23

Table of Contents

However, with respect to trade receivables, notwithstanding the aforementioned, expected credit losses are always measured at an amount equal to full lifetime expected credit losses. The amount of expected credit losses and reversal of them is recognized in profit or loss.

b. Non-derivative financial liabilities

(a) Initial recognition and measurement

A financial liability is classified as a financial liability at amortized cost and it is initially measured at fair value less transaction cost directly attributable to the issuance of the financial liability.

(b) Subsequent measurement

These financial liabilities are measured at amortized cost using the effective interest method. Amortization using the effective interest method and gains or losses arising in the case of de-recognition are recognized as “finance expenses” in profit or loss.

(c) Derecognition

Financial liabilities are derecognized when the obligation specified in a contract is fulfilled or when liabilities are discharged, cancelled or expired.

c. Derivatives and hedge accounting

Kyocera utilizes derivatives consisting of exchange contracts to reduce foreign currency risk. Derivatives are initially recognized at fair value as of the date in which the derivative contracts are entered into. After initial recognition, derivatives are re-measured at fair value at the end of each reporting period.

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 linking all derivatives designated as cash flow hedge to specific assets and liabilities on the financial position or forecasted transactions. Kyocera’s associate utilizes interest rate swaps mainly with applying hedge accounting to convert a portion of its variable rates debt to fixed rates debt.

Cash flow hedge is accounted for as follows:

At the inception of the hedge and on an ongoing basis, Kyocera evaluates whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the relevant hedged item during the underlying period. Of changes in fair value of hedging instruments, the effective portion is recognized in other comprehensive income, while the ineffective portion is recognized in profit or loss. The amounts of hedging instruments recorded in other comprehensive income are reclassified to profit or loss when the hedged transactions affect profit or loss.

When it is determined that a derivative is not a highly effective hedge or that it has ceased to be a highly effective hedge, Kyocera discontinues hedge accounting prospectively. When it is probable that the forecasted hedging transaction will not occur, the derivative gains or losses are reclassified into profit or loss immediately.

 

24

Table of Contents

(11) Income taxes

Income taxes are composed of current and deferred taxes, and recognized in profit or loss, except for taxes related to business combinations and items that are recognized in other comprehensive income or directly in equity.

Current taxes are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the fiscal year.

Deferred taxes are recognized on temporary differences between the carrying amounts of assets and liabilities for accounting purposes and the amounts used for taxation purposes, the carryforward of unused tax losses and unused tax credit. Deferred tax assets are not recognized for temporary differences from initial recognition of assets and liabilities that do not arise from business combinations and that do not impact accounting profit or taxable income. Deferred tax liabilities are also not recognized for taxable temporary differences arising from the initial recognition of goodwill.

Deferred tax liabilities are not recognized for taxable temporary differences associated with investments in subsidiaries and associates when Kyocera is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognized for deductible temporary differences associated with investments in subsidiaries and associates when it is probable that the temporary difference will reverse in the foreseeable future and when there will be sufficient taxable profits against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured using the tax rates that are expected to be applied when they reverse, using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if Kyocera has a legally enforceable right to set off current tax assets against current tax liabilities, and income taxes are levied by the same taxation authority on the same taxable entity.

In principal, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences, the carryforward of unused tax losses and unused tax credit. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefits will be realized.

Kyocera records the effect of unrecognized tax benefits based on the premise of being subject to income tax examination by tax authorities, when it is more likely than not that tax benefits associated with tax positions will not be sustained. Actual results such as settlements with taxing authorities may differ from the recognition accounted.

Income taxes on condensed quarterly consolidated statement of profit or loss are calculated based on the estimated annual income tax rate expected for the full fiscal year.

(12) Government grants

Government grants are recognized at fair value when there is a reasonable assurance that Kyocera receives the grants and complies with the terms and conditions attached to the grants. Government grants that are intended to compensate for specific costs are recognized as income in the period in which Kyocera recognizes the corresponding expenses. Government grants related to assets are directly deducted from acquisition cost of the assets.

 

25

Table of Contents

(13) Employee benefits

a. Post-employee benefits

Kyocera adopts defined benefit plans and defined contribution plans.

(a) Defined benefit plans

Net defined benefit liability or asset is calculated by the present value of the defined benefit obligation less the fair value of plan assets. The ceiling of the amount recorded as assets based on this calculation is the present value of any future economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. The defined benefit obligation is determined using the projected unit credit method, and its present value is determined by applying a discount rate based on the yield curve of high-quality corporate bonds as of the end of the fiscal year over the approximate period of the benefit payments.

Service cost and net interest on the net defined benefit liability or asset are recognized as profit or loss.

Past service cost is immediately recognized in profit or loss.

Re-measurements of net defined benefit liability or asset including actuarial gains and losses are recognized in other comprehensive income when they incurred, and transferred to retained earnings immediately from other components of equity.

(b) Defined contribution plans

Contributions to defined contribution pension plans are recognized as employee benefits expenses in profit or loss in the period during which employees render services.

b. Short-term employee benefits

Short-term employee benefits such as wages, salaries and social security contributions are recognized as an expense when the service is rendered.

Bonus are recognized as a liability in the amount estimated to be paid under these plans, when Kyocera has legal or constructive obligations to pay them and reliable estimates of the obligation can be made.

Unused annual leave, which employees have earned but have not yet used, are recognized as accrued liabilities.

(14) Provisions

Provisions are recognized when Kyocera has present legal or constructive obligations as a result of past events, it is probable that outflows of resources embodying economic benefits will be required to settle the obligations, and reliable estimates can be made of the amount of obligations.

(15) Equity

a. Common stock

Proceeds from the issuance of common stocks by Kyocera are recognized in common stock and capital surplus and its transaction costs, net of taxation, are deducted from capital surplus.

b. Treasury stock

When Kyocera acquires treasury stock, the consideration paid, net of direct transaction costs and tax, are recognized as a deduction from equity.

When Kyocera sells treasury stock, amount of the consideration received is recognized as an increase in equity.

 

26

Table of Contents

(16) Revenue recognition

Kyocera recognizes revenue in accordance with IFRS 15, excluding interest and dividend income and other such income from financial instruments recognized in accordance with IFRS 9 and excluding lease arrangement recognized in accordance with IAS 17 “leases”, by applying the following step:

Step 1: Identify the contracts with customers

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

Kyocera generates revenue principally through the sale of the following markets: information and communications, automotive-related, environment and energy and medical and healthcare. Kyocera’s operations consist of the following reporting segments: “Industrial & Automotive Components Group,” “Semiconductor Components Group,” “Electronic Devices Group,” “Communications Group,” “Document Solutions Group” and “Life & Environment Group.”

Sales to customers in each of the above segments are based on the specific terms and conditions contained in basic contracts with customers and firm customer orders which detail the price, quantity and timing of the transfer of ownership (such as risk of loss and title) of the products.

For most customer orders, the revenue recognition occurs at the time of shipment of the products to the customer because the customer obtains control over the products upon shipment, the performance obligation is judged to have been satisfied and revenue is therefore recognized upon shipment of the products. For the remainder of customer orders, the revenue recognition occurs at the time of receipt of the products by the customer because the customer obtains control over the products upon receipt, the performance obligation is judged to have been satisfied, with the exception of sales of solar power generating systems in the “Life & Environment Group” and printers and multifunctional products in the “Document Solutions Group” for which sales are made to end users together with installation services. The revenue recognition in these cases occur at the completion of installation and customer acceptance because the performance obligation is judged to have been satisfied, as Kyocera have no further obligations under the contracts.

Revenue is measured at the consideration promised in a contract with a customer, less discounts, rebates, returned products and other items.

(17) Profit attributable to owners of the parent per share

Profit attributable to owners of the parent per share-Basic is calculated by dividing profit attributable to owners of the parent by the average number of shares outstanding after adjusting for treasury stock for the period. Profit attributable to owners of the parent per share-Diluted is calculated by adjusting the effects of dilutive potential stocks.

 

27

Table of Contents

4. Significant Accounting Estimates and Judgments Involving Estimations

In preparing condensed quarterly consolidated financial statements, the management is required to make estimates, judgments and assumptions that affect the application of accounting policies and carrying amounts of assets, liabilities, revenue and expenses. By the nature of the estimates or assumptions, however, actual results in the future may differ from those estimates and assumptions.

The estimates and underlying assumptions are continuously reviewed. Revision to accounting estimates are recognized in the period in which the estimates are revised as well as in the future periods.

Significant judgements, estimates and assumptions that affect the amounts recognized in Kyocera’s condensed quarterly consolidated financial statements are as follows:

 

  •  

Evaluation of inventories

(“Note 3. Significant Accounting Policies (5) Inventories”)

 

  •  

Estimates of useful lives and residual value of property, plant and equipment and intangible assets

(“Note 3. Significant Accounting Policies (6) Property, plant and equipment” and “Note 3. Significant Accounting Policies (7) Goodwill and intangible assets”)

 

  •  

Impairment of property, plant and equipment, goodwill and intangible assets

(“Note 3. Significant Accounting Policies (9) Impairment of non-financial assets”)

 

  •  

Fair value of financial instruments

(“Note 3. Significant Accounting Policies (10) Financial instrument” and “Note 13. Financial Instruments”)

 

  •  

Measurement of defined benefit obligation

(“Note 3. Significant Accounting Policies (13) Employee benefit”)

 

  •  

Contingencies

(“Note 14. Commitments” and “Note 15. Contingencies”)

5. Issued IFRS Standards and Interpretations not yet Adopted

The following new standards and amendments of IFRS and Interpretations by the International Financial Reporting Interpretation Committee (hereinafter, “IFRIC”) were announced by the approval date of the condensed quarterly consolidated financial statements.

 

IFRS

  

Effective date

(From the year beginning on
or after)

  

Kyocera’s adoption year

  

Summaries of new standards and
amendments

IFRS 16

   Leases    January 1, 2019   

From the year ending

March 31, 2020

   Revised accounting standard for leases

IFRIC 23

   Uncertainty over income tax treatments    January 1, 2019   

From the year ending

March 31, 2020

   Clarified ways to reflect uncertainty in accounting treatment for income tax

These standards are not mandatory for the three months ended June 30, 2018, and Kyocera has not early adopted them.

Kyocera is currently assessing the possible impacts that these applications will have on financial position, operating results and cash flows.

 

28

Table of Contents

6. Segment Information

Kyocera’s reporting segments are components of business activities for which discrete financial information is available, and such information is regularly reviewed by management in order to make decisions regarding the allocation of resources and assess its performance.

Kyocera’s reporting segments and main products or businesses of each reporting segment are as follows:

 

Reporting segment

  

Main products or businesses

Industrial & Automotive Components Group

   Fine Ceramic Components, Automotive Components, Liquid Crystal Displays, Industrial Tools

Semiconductor Components Group

   Ceramic Packages, Organic Multilayer Substrates and Boards

Electronic Devices Group

   Electronic Components (Capacitors, Crystal Devices, Connectors, Power Semiconductor Devices, etc.), Printing Devices

Communications Group

   Mobile Phones, M2M Modules, Information Systems and Telecommunication Service

Document Solutions Group

   Printers, Multifunctional Products, Document Solutions, Supplies

Life & Environment Group

   Solar Power Generating System related Products, Medical Devices, Jewelry and Ceramic Knives

Inter-segment sales, operating revenue and transfers are made with reference to prevailing market prices. Transactions between reporting segments are disclosed as “Adjustment & eliminations” and not shown separately due to immateriality. “Adjustment & eliminations” also includes adjustment of unrealized profit regarding inter-company transaction between each reporting segment.

Business profit for each reporting segment represents sales revenue, less related costs and operating expenses, excluding corporate gains and share of net profit of investments accounted for using the equity method and income taxes. Corporate gains includes income and expenses which do not belong to any reporting segments and mainly consists of finance income and expenses.

The segment information for the three months ended June 30, 2017 and 2018 are as follows:

[Information by reporting segment]

Sales revenue

 

     For the three months ended
June 30, 2017 		    For the three months ended
June 30, 2018 		 
    

 

(Yen in millions)

 

Industrial & Automotive Components Group

     61,185       81,956  

Semiconductor Components Group

     60,786       60,649  

Electronic Devices Group

     63,120       88,284  

Communications Group

     57,071       51,610  

Document Solutions Group

     80,973       88,796  

Life & Environment Group

     24,606       18,692  

Other

     5,245       4,932  

Adjustments and eliminations

     (7,824 )      (7,435 ) 
  

 

 

   

 

 

 

Total

     345,162       387,484  
  

 

 

   

 

 

 

Sales revenue to any specific customers was not more than 10% of consolidated sales revenue for the three months ended June 30, 2017 and 2018.

 

29

Table of Contents

Profit before income taxes

 

                                                             
     For the three months  ended
June 30, 2017 		    For the three months  ended
June 30, 2018 		 
     (Yen in millions)  

Industrial & Automotive Components Group

     6,103       10,416  

Semiconductor Components Group

     7,651       5,846  

Electronic Devices Group

     8,427       14,397  

Communications Group

     1,002       (2,241 ) 

Document Solutions Group

     9,160       10,348  

Life & Environment Group

     (1,310 )      (3,015 ) 

Other

     412       617  
  

 

 

   

 

 

 

Total business profit

     31,445       36,368  

Corporate gains and share of net profit of investments accounted for using the equity method

     18,196       19,465  

Adjustments and eliminations

     (288 )      (345 ) 
  

 

 

   

 

 

 

Total

     49,353       55,488  
  

 

 

   

 

 

 

Depreciation and amortization

 

                                                             
     For the three months  ended
June 30, 2017 		    For the three months  ended
June 30, 2018 		 
     (Yen in millions)  

Industrial & Automotive Components Group

     2,967       2,947  

Semiconductor Components Group

     3,817       2,309  

Electronic Devices Group

     3,912       4,170  

Communications Group

     1,551       1,332  

Document Solutions Group

     2,984        2,422   

Life & Environment Group

     1,514       748  

Other

     306       323  

Corporate

     470       549  
  

 

 

   

 

 

 

Total

     17,521       14,800  
  

 

 

   

 

 

 

Capital expenditures

 

                                                             
     For the three months  ended
June 30, 2017 		    For the three months  ended
June 30, 2018 		 
     (Yen in millions)  

Industrial & Automotive Components Group

     4,467       8,892  

Semiconductor Components Group

     2,834       4,649  

Electronic Devices Group

     5,685       8,853  

Communications Group

     1,233       1,629  

Document Solutions Group

     987       2,749  

Life & Environment Group

     1,124        547   

Other

     180       249  

Corporate

     670       2,282  
  

 

 

   

 

 

 

Total

     17,180       29,850  
  

 

 

   

 

 

 

 

30

Table of Contents

Information for sales revenue from external customers by destination based on physical location for the three months ended June 30, 2017 and 2018 are summarized as follows:

Sales revenue

 

                                                             
     For the three months  ended
June 30, 2017 		    For the three months  ended
June 30, 2018 		 
     (Yen in millions)  

Japan

     138,883       136,964  

Asia

     78,951       92,882  

Europe

     63,669       82,345  

United States of America

     50,125        59,994   

Others

     13,534       15,299  
  

 

 

   

 

 

 

Total

     345,162       387,484  
  

 

 

   

 

 

 

There are no individually material countries with respect to sales revenue from external customers in Asia, Europe and Others during the three months ended June 30, 2017 and 2018.

 

31

Table of Contents

7. Business Combination

On January 31, 2018, AVX Corporation, a U.S. based subsidiary, acquired 100% of the common stock of Ethertronics Inc. for 15,040 million yen (138 million U.S. dollar) in cash, made it consolidated subsidiary and changed its name as AVX Antenna, Inc. The purchase of Ethertronics expands AVX’s extensive electronic product offering into the antenna technology market and will provide new and exciting growth opportunities for AVX going forward.

Kyocera has used the acquisition method of accounting to record assets acquired and liabilities assumed. In accordance with the acquisition method, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Factors that contributed to the recognition of goodwill include expected synergies and the trained workforce.

As of June 30, 2018, the allocation of the purchase price was prepared based on estimates of fair values, as shown in the following table. The purchase price allocation of assets and liabilities is preliminary and subject to change as Kyocera awaits the completion of the fair value appraisal of certain personal and real tangible assets as well as certain intangible assets.

The result of operation of the acquired business was included into Kyocera’s condensed quarterly consolidated financial statements since the acquisition date. For segment reporting, it is reported in the “Electronic Devices Group.”

Kyocera revised assets and liabilities as of the acquisition date for the three months ended June 30, 2018.

 

     January 31, 2018  
     (Yen in millions)  

Asset:

  

Cash and cash equivalents

     1,088  

Trade and other receivables

     1,569  

Inventories

     644  

Others

     235  

Total current assets

     3,536  

Property, plant and equipment

     1,498  

Intangible assets

     7,050  

Others

     503  

Total non-current assets

     9,051  
  

 

 

 

Total

     12,587  
  

 

 

 

Liability:

  

Trade and other payables

     1,103  

Others

     486  

Total current liabilities

     1,589  

Long-term financial liabilities

     2,296  

Others

     1,889  

Total non-current liabilities

     4,185  
  

 

 

 

Total

     5,774  
  

 

 

 

Total identified assets and liabilities at fair value (net amount)

     6,813  

Purchase price (Cash)

     15,040  

Goodwill*

     8,227  

 

*

The total amount of goodwill is not expected to be deductible for tax purposes.

 

32

Table of Contents

Intangible assets that Kyocera recorded due to this acquisition are summarized as follows:

 

     January 31, 2018  
     (Yen in millions)  

Intangible assets subject to amortization:

  

Non-patent technology

     1,654  

Customer relationships

     4,265  

Trademarks

     849  

Other

     282  
  

 

 

 

Total

     7,050  
  

 

 

 

The weighted average amortization periods for non-patent technology, customer relationships and trademarks are 10 years, 13 years and 10 years, respectively.

Sales revenue and profit for the period of AVX Antenna, Inc. that were included in the condensed quarterly consolidated statement of profit or loss for the three months ended June 30, 2018 were not material.

8. Employee Benefits

The amount of “Cost of sales” and “Selling, general and administrative expenses” recognized related to defined benefit plans in the condensed quarterly consolidated statement of profit or loss are as follows:

Domestic

 

     For the three months ended
June 30, 2017 		     For the three months ended
June 30, 2018 		 
     (Yen in millions)  

Service cost

     3,166        3,012  

Net interest cost

     0        (18 ) 
  

 

 

    

 

 

 

Total

     3,166        2,994  
  

 

 

    

 

 

 

Foreign

 

     For the three months ended
June 30, 2017 		     For the three months ended
June 30, 2018 		 
     (Yen in millions)  

Service cost

     183        189  

Net interest cost

     93        71   
  

 

 

    

 

 

 

Total

     276        260  
  

 

 

    

 

 

 

 

33

Table of Contents

9. Equity and Other Equity

(1) Dividends

Dividends paid are as follows:

For the three months ended June 30, 2017

 

     Class    Total amount
of dividends
(Yen in
millions) 		     Dividends
per share
(Yen) 		     Record date    Effective date    Source of
dividends

Ordinary General Shareholders’ Meeting held on June 27, 2017

   Common
stock 		     22,063        60      March 31,
2017 		   June 28,
2017 		   Retained
earnings

For the three months ended June 30, 2018

 

     Class    Total amount
of dividends
(Yen in
millions) 		     Dividends
per share
(Yen) 		     Record date    Effective date    Source of
dividends

Ordinary General Shareholders’ Meeting held on June 26, 2018

   Common
stock 		     22,062        60      March 31,
2018 		   June 27,
2018 		   Retained
earnings

(2) Purchase of treasury stock

Kyocera Corporation has resolved at a meeting of its Board of Directors held on April 26, 2018 to undertake a repurchase of its own shares under the provisions of the Articles of Incorporation of the Company pursuant to Article 165, Paragraph 2 of the Companies Act of Japan, as described below.

 

Type of shares repurchased    Common stock
Total number of shares repurchased    5,951,000 shares
Total amount of repurchase price    40,000 million yen
Period of repurchase    From April 27, 2018 to May 30, 2018
Method of repurchase    Market purchases through the Tokyo Stock Exchange

 

34

Table of Contents

10. Sales Revenue

(1) Breakdown of revenue

Regarding to the breakdown of revenue, please refer to “Note 6. Segment information.”

(2) Contract balance

Receivables from contracts with customers, contract assets and contract liabilities are as follows:

 

     The date of
transition to IFRS
(April 1, 2017) 		     As of
March 31, 2018 		     As of
June 30, 2018 		 
     (Yen in millions)  

Receivables from contracts with customers

     309,846        337,646        310,021  

Contract assets

     7,139        17,270        12,361  

Contract liabilities

     23,354        30,410        30,756  

On the condensed quarterly consolidated statement of financial position, contract assets are included in “Trade and other receivables,” and contract liabilities are included in “Accrued expenses” and “Other current liabilities,” respectively.

11. Income Taxes

The effective tax rate for the three months ended June 30, 2018 decreased to 19.3% compared to the rate for the three months ended June 30, 2017 of 25.9%. This decrease was due mainly to that Kyocera reassessed unrecognized deferred tax assets for the temporary differences and the carryforward of unused tax losses of Kyocera Display Corporation based on that Kyocera Corporation, at a meeting of its Board of Directors held on May 25, 2018, resolved that Kyocera Corporation will merge with Kyocera Display Corporation which is a wholly-owned subsidiary of Kyocera Corporation.

12. Earnings Per Share

Basic and diluted profit attributable to owners of the parent per share are as follows:

 

     For the three months ended
June 30, 2017 		    For the three months ended
June 30, 2018 		 

Profit attributable to owners of the parent (Yen in millions)

     35,026       42,284  

Adjustment related to dilutive potential stocks of consolidated subsidiaries (Yen in millions)

     (11 )      (13 ) 
  

 

 

   

 

 

 

Diluted profit attributable to owners of the parent (Yen in millions)

     35,015       42,271  
  

 

 

   

 

 

 

Weighted average shares (Thousands of shares)

     367,712       363,600  
  

 

 

   

 

 

 

Basic earnings per share:

    

Profit attributable to owners of the parent per share (Yen)

     95.25       116.29  

Diluted earnings per share:

    

Profit attributable to owners of the parent per share (Yen)

     95.23       116.26  

 

35

Table of Contents

13. Financial Instruments

Fair values of financial instruments

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of inputs that may be used to measure fair value are as follows:

 

Level 1:    Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2:    Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3:    Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

For the date of transition to IFRS and the year ended March 31, 2018, information under U.S. GAAP has been provided under the exemptions from the retrospective application of IFRS 9 in accordance with IFRS 1. The details for the effect of adopting IFRS 9 are provided in “Note 2. Basis of Preparation (5) Changes in accounting policies” and “Note 3. Significant Accounting Policies (10) Financial instruments.”

Carrying amount and fair value of financial instruments are as follows:

 

     The date of
transition to IFRS
(April 1, 2017) 		     As of
March 31, 2018 		 
   Carrying
Amount 		     Fair Value      Carrying
Amount 		     Fair Value  
    

 

(Yen in millions)

 

Assets:

           

Short-term investments in debt securities

     84,703        84,713        38,023        38,051  

Long-term investments in debt and equity securities

     1,130,756        1,130,552        1,050,537        1,051,306  

Other long-term investments

     16,383        16,383        21,984        21,984  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,231,842        1,231,648        1,110,544        1,111,341  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Long-term debt (including due within one year)

     6,468        6,468        8,889        8,889  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     6,468        6,468        8,889        8,889  
  

 

 

    

 

 

    

 

 

    

 

 

 

Carrying amount and fair value of financial instruments measured at amortized cost are as follows:

 

     As of June 30, 2018  
   Carrying Amount      Fair Value  
    

 

(Yen in millions)

 

Assets:

     

Short-term investments (including short-term instruments in debt securities)

     176,411        176,465  

Long-term instruments in debt securities

     54,841        55,306  

Other financial investments (excluding derivatives)

     22,840        22,840  
  

 

 

    

 

 

 

Total

     254,092        254,611  
  

 

 

    

 

 

 

Liabilities:

     

Other financial liabilities (excluding derivatives)

     14,235        14,235  
  

 

 

    

 

 

 

Total

     14,235        14,235  
  

 

 

    

 

 

 

Carrying amounts of cash and cash equivalents, Trade and other receivables, and Trade and other payables approximate fair values because of the short maturity of these instruments.

 

36

Table of Contents

The levels of the fair value hierarchy of financial instruments measured at fair value are as follows:

 

                                                                                                                                                       
     The date of transition to IFRS
(April 1, 2017) 		     As of March 31, 2018  
   Level 1      Level 2      Level 3      Total      Level 1      Level 2      Level 3      Total  
     (Yen in millions)  

Assets:

                       

Derivatives

     —        2,470        —        2,470        —        5,742        —        5,742  

Marketable equity securities

     1,048,127        —        —        1,048,127        993,707        —        —        993,707  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,048,127        2,470        —        1,050,597        993,707        5,742        —        999,449  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

                       

Derivatives

     —        4,770        —        4,770        —        905        —        905  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —        4,770        —        4,770        —        905        —        905  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

                                                                           
     As of June 30, 2018  
   Level 1      Level 2      Level 3      Total  
     (Yen in millions)  

Assets:

           

Debt and equity instruments

           

Financial assets measured at fair value through other comprehensive income

     1,096,668        —        28,576        1,125,244  

Financial assets measured at fair value through profit or loss

     —        —        1,124        1,124  

Derivatives

     —        3,276        —        3,276  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,096,668        3,276        29,700        1,129,644  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Derivatives

     —        4,916        —        4,916  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     —        4,916        —        4,916  
  

 

 

    

 

 

    

 

 

    

 

 

 

The valuation techniques to measure fair value of financial instruments and input information are as follows:

The fair value of Level 1 investments is quoted price in an active market with sufficient volume and frequency of transactions.

The fair value of Level 2 derivatives is estimated based on quotes from financial institutions.

Equity securities classified Level 3 are mainly unlisted stocks, and their fair values are measured by discounted cash flows method and the comparable company valuation multiples technique. For financial instruments classified as Level 3, significant changes in fair value are not expected when unobservable inputs are changed to reasonably possible alternative assumptions.

Transfers between levels are recognized on the day when the event or change in circumstances that caused the transfer occurred. Kyocera did not recognize any transfers between levels for the year ended March 31, 2018 and for the three months ended June 30, 2018.

For financial instruments classified Level 3, there were no significant changes for the three months ended June 30, 2018.

Kyocera received dividends of 15,079 million yen from KDDI Corporation, and included in finance income in the condensed quarterly consolidated statements of profit or loss for three months ended June 30, 2017 and 2018.

 

37

Table of Contents

14. Commitments

(1) Acquisition of property, plant and equipment

Commitments for acquisition of property, plant and equipment after the closing date was 13,599 million yen at the date of transition to IFRS (April 1, 2017), 34,731 million yen at March 31, 2018 and 41,298 million yen at June 30, 2018, respectively.

(2) Long-term purchase agreements for the supply of raw materials

Between 2005 and 2008, Kyocera entered into four long-term purchase agreements (hereinafter, the “LTAs”), principally governed by Michigan law, with Hemlock Semiconductor Operations LLC and its subsidiary Hemlock Semiconductor, LLC (hereinafter, “Hemlock”) for the supply of polysilicon material for use in its solar energy business. As of June 30, 2018, there was a remaining balance of 117,648 million yen of polysilicon material to be purchased under the LTAs by December 31, 2020, of which 33,532 million yen is prepaid.

After the LTAs were signed, the price of polysilicon material in the world market significantly declined, causing a significant divergence between the market price of polysilicon material and the fixed contract price in the LTAs. In light of these circumstances, Kyocera requested Hemlock to modify the contract terms including its price and quantity, and Kyocera sued Hemlock contending that the LTAs are illegal and unenforceable because of Hemlock’s alleged abuse of a superior position, which is prohibited under Japanese Antitrust Law.

Taking into consideration these condition, Kyocera withheld to order the polysilicon material for the amount stated under the LTAs during the year ended December 31, 2017 (hereinafter, “the 2017 amount”), which is 31,495 million yen in total. As a result, Hemlock issued an invoice for the amount equal to the difference between the 2017 amount and applicable advanced payment, which was due for payment by Kyocera on February 15, 2018.

As Kyocera contends that it secures the right to purchase by ordering the 2017 amount within a certain period from the issuance of the invoice, Kyocera has accounted for its rights and obligations under the LTAs, and has recorded 31,495 million yen as “other current asset” for the 2017 amount and 22,820 million yen as “trade and other payables” for the amount equal to the difference between the 2017 amount and applicable advanced payment in the condensed quarterly consolidated statement of financial position as of June 30, 2018.

Kyocera evaluated the future material purchase commitments under the LTAs at the lower of cost and net realizable value. As a result of a decline in the profitability of the solar energy business in fiscal 2018, the net realizable value of the polysilicon material was less than the purchase price under the LTAs. Kyocera recorded a write-down in an amount equivalent to the difference between net realizable value and purchase price under the LTAs. The total amount of provision for such write-down at March 31, 2018 and June 30, 2018 was 30,885 million yen, and 18,340 million yen was included in “provisions” of current liabilities and 12,545 million yen was included in “provisions” of non-current liabilities in the condensed quarterly consolidated statement of financial position.

 

38

Table of Contents

15. Contingencies

(1) Assets pledged as collateral

Kyocera’s investment in Kagoshima Mega Solar Power Corporation was pledged as collateral for its debts from financial institutions in the amount of 16,820 million yen at June 30, 2018. The investment was accounted for using the equity method, and its book value was 1,893 million yen at the date of transition to IFRS (April 1, 2017), 2,034 million yen at March 31, 2018 and 1,815 million yen at June 30, 2018, respectively.

(2) Patent lawsuits

On April 25, 2013, AVX was named as a defendant in a patent infringement case filed in the United States District Court for the District of Delaware captioned Greatbatch, Inc. v. AVX Corporation. This case alleged that certain AVX products infringe on one or more of six Greatbatch patents. On January 26, 2016, the jury returned a verdict in favor of the plaintiff in the first phase of a segmented trial and a mixed verdict in the second phase of a segmental trial, and found damages to Greatbatch in the amount of 4,163 million yen (37.5 million dollars), which was recorded in the year ended March 31, 2016. That verdict was later vacated by the court on March 30, 2018. Operating profit for the year ended March 31, 2018 reflects a favorable accrual adjustment of 162 million yen (1.5 million dollars) related to this patent infringement case. The amount of damages will be subject to further legal proceedings including a potential trial on damages, which Kyocera expects to occur in the year ending March 31, 2019. AVX is continuing to litigate the case.

(3) Environmental matters

Kyocera is involved in various environmental matters and Kyocera currently has certain amount of reserves related to such environmental matters. The amount recorded for identified contingent liabilities is based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional legal and technical information that becomes available. The uncertainties about the status of laws, regulations, regulatory actions, technology and information related to individual matters make it difficult to develop an estimate of the reasonably possible aggregate environmental remediation exposure; therefore these costs could differ from Kyocera’s current estimates.

Kyocera is also 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 can be reasonably estimated. Based on the information available, management believes that damages, if any, resulting from these actions will not have a significant impact on Kyocera’s consolidated results of operations, financial condition and cash flows.

16. Subsequent Events

Not Applicable

17. Approval of Condensed Quarterly Consolidated Financial Statements

The condensed quarterly consolidated financial statements have been approved by Hideo Tanimoto, President and Representative Director, and Shoichi Aoki, Director, Managing Executive Officer and General Manager of Corporate Management Control Group, on August 10, 2018.

 

39

Table of Contents

18. First-Time Adoption

Kyocera disclosed the condensed quarterly consolidated financial statements under IFRS from the three months ended June 30, 2018. The latest consolidated financial statements under U.S. GAAP were prepared for the year ended March 31, 2018, and the date of transition to IFRS is April 1, 2017.

(1) First-time adoption based on IFRS 1

IFRS 1 requires that a company adopting IFRS for the first-time (hereinafter, the “first-time adopters”) shall apply IFRS retrospectively. However, IFRS 1 provides certain exemptions that allow first-time adopters to choose not to apply certain standards retrospectively. Kyocera has adopted the following exemptions:

Business combinations

A first-time adopter may choose not to apply IFRS 3 “Business combinations” (hereinafter, “IFRS 3”) retrospectively to business combinations that occurred before the date of transition to IFRS. Kyocera has applied this exemption and chosen not to apply IFRS 3 retrospectively to business combinations that occurred before the date of transition to IFRS. Therefore, the carrying amounts of goodwill prior to the date of transition to IFRS were based on U.S. GAAP. Kyocera performed an impairment test on goodwill at the date of transition to IFRS regardless of whether there was any indications that the goodwill may be impaired.

Exchange differences on translating foreign operations

A first-time adopter may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS. Kyocera has chosen to apply this exemption and deemed all cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS.

Deemed cost

For property, plant and equipment, a first-time adopter may use fair value as deemed cost at the date of transition to IFRS. Kyocera has applied this exemption and used fair value as the deemed cost at the date of transition to IFRS for certain items of property, plant and equipment.

Exemptions from retrospective application of IFRS 9

When a first-time adopter choose to adopt IFRS for the annual periods beginning before January 1, 2019 and apply IFRS 9, it may apply the previous accounting standards without restating comparative information in the first IFRS consolidated financial statements. Kyocera has applied this exemption, and recognized and measured target items included in the scope of IFRS 9 under U.S. GAAP, the previous accounting standards, at the date of transition to IFRS and the year ended March 31, 2018.

 

40

Table of Contents

(2) Reconciliation

The reconciliations required to be disclosed in the first IFRS financial statements are described in the reconciliations as below. “Effect of change in line items” includes items that do not affect retained earnings and comprehensive income, while “Recognition and measurement differences” includes items that affect retained earnings and comprehensive income.

a. Reconciliation of equity at the date of transition to IFRS (April 1, 2017)

 

                                                                                                                                                     

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
line items 		    Recognition and
measurement
differences 		    IFRS     

Note

  

Accounts under IFRS

     (Yen in millions)            

Assets

              

Assets

Current assets

              

Current assets

Cash and cash equivalents

     376,195       —       —       376,195        

Cash and cash equivalents

Short-term investments in debt securities

     84,703       212,668       —       297,371        

Short-term investments

Other Short-term investments

     212,668       (212,668 )      —       —        

Trade notes receivables

     28,370       309,001       —       337,371        

Trade and other receivables

Trade accounts receivables

     291,485       (291,485 )      —       —        

Less allowances for doubtful accounts and sales returns

     (5,593 )      5,593       —       —     

F

  
     —       7,778       —       7,778        

Other financial assets

Inventories

     331,155       —       —       331,155        

Inventories

Other current assets

     119,714       (33,952 )      (6,007 )      79,755        

Other current assets

  

 

 

   

 

 

   

 

 

   

 

 

       

Total current assets

     1,438,697       (3,065 )      (6,007 )      1,429,625        

Total current assets

Non-current assets

              

Non-current assets

Long-term investments in debt and equity securities

     1,130,756       15,852       —       1,146,608        

Debt and equity instruments

     —       5,863       —       5,863     

F

  

Investments accounted for using the equity method

Other long-term investments

     22,246       (8,817 )      —       13,429        

Other financial assets

Land

     59,963       206,641       (12,263 )      254,341     

B

  

Property, plant and equipment

Buildings

     351,431       (351,431 )      —       —        

Machinery and equipment

     841,973       (841,973 )      —       —        

Construction in progress

     14,097       (14,097 )      —       —        

Less accumulated depreciation

     (1,000,860 )      1,000,860       —       —        

Goodwill

     110,470       —       —       110,470        

Goodwill

Intangible assets

     61,235       —       —       61,235        

Intangible assets

     —       46,482       10,132       56,614     

D, F

  

Deferred tax assets

Other assets

     80,462       (75,349 )      1,339       6,452     

C

  

Other non-current assets

  

 

 

   

 

 

   

 

 

   

 

 

       

Total non-current assets

     1,671,773       (15,969 )      (792 )      1,655,012        

Total non-current assets

  

 

 

   

 

 

   

 

 

   

 

 

       

Total assets

     3,110,470       (19,034 )      (6,799 )      3,084,637        

Total assets

  

 

 

   

 

 

   

 

 

   

 

 

       

 

41

Table of Contents
                                                                                                                                                     

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
line items 		    Recognition and
measurement
differences 		    IFRS    

Note

  

Accounts under IFRS

     (Yen in millions)           

Liabilities and Equity

             

Liabilities and Equity

Liabilities

             

Liabilities

Current liabilities

             

Current liabilities

Short-term borrowings

     191       (191 )      —       —       

Current portion of long-term debt

     8,235       (8,235 )      —       —       

Trade notes and accounts payable

     129,460       60,832       —       190,292       

Trade and other payables

Other notes and accounts payable

     60,881       (60,881 )      —       —       
     —       8,735       —       8,735       

Other financial liabilities

Accrued payroll and bonus

     62,868       (62,868 )      —       —       

Accrued income taxes

     15,707       —       —       15,707       

Income tax payables

Other accrued liabilities

     51,062       53,850       3,455       108,367     E   

Accrued expenses

     —       14,225       —       14,225     F   

Provisions

Other current liabilities

     36,257       (8,765 )      —       27,492     F   

Other current liabilities

  

 

 

   

 

 

   

 

 

   

 

 

      

Total current liabilities

     364,661       (3,298 )      3,455       364,818       

Total current liabilities

Non-current liabilities

             

Non-current liabilities

Long-term debt

     16,409       (11,117 )      —       5,292       

Long-term financial liabilities

Accrued pension and severance liabilities

     31,720       —       (2,926 )      28,794     C   

Retirement benefit liabilities

Deferred income taxes

     258,859       (3,481 )      (97 )      255,281     D   

Deferred tax liabilities

     —       6,488       —       6,488     F   

Provisions

Other non-current liabilities

     19,912       (7,626 )      —       12,286       

Other non-current liabilities

  

 

 

   

 

 

   

 

 

   

 

 

      

Total non-current liabilities

     326,900       (15,736 )      (3,023 )      308,141       

Total non-current liabilities

  

 

 

   

 

 

   

 

 

   

 

 

      

Total liabilities

     691,561       (19,034 )      432       672,959       

Total liabilities

Equity

             

Equity

Common stock

     115,703       —       —       115,703       

Common stock

Additional paid-in capital

     165,230       —       (58 )      165,172       

Capital surplus

Retained earnings

     1,638,116       —       (105,250 )      1,532,866    

A,B,C

D,E

  

Retained earnings

Accumulated other comprehensive income

     447,479       —       97,973       545,452     A,C,D   

Other components of equity

Common stock in treasury stock, at cost

     (32,309 )      —       —       (32,309 )      

Treasury stock

  

 

 

   

 

 

   

 

 

   

 

 

      

Total Kyocera Corporation’s shareholders’ equity

     2,334,219       —       (7,335 )      2,326,884       

 

Total equity attributable to owners of the parent

Noncontrolling interests

     84,690       —       104       84,794       

Non-controlling interests

  

 

 

   

 

 

   

 

 

   

 

 

      

Total equity

     2,418,909       —       (7,231 )      2,411,678       

Total equity

  

 

 

   

 

 

   

 

 

   

 

 

      

Total liabilities and equity

     3,110,470       (19,034 )      (6,799 )      3,084,637       

Total liabilities and equity

  

 

 

   

 

 

   

 

 

   

 

 

      

 

42

Table of Contents

Notes to reconciliation of equity at the date of transition to IFRS (April 1, 2017)

The major items of the reconciliation of equity at the date of transition to IFRS are as follows:

A. Exchange differences on translating foreign operations

Under IFRS 1, a first-time adopter may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS. Kyocera has chosen to apply this exemption and transferred all cumulative exchange differences on translating foreign operations into retained earnings at the date of transition to IFRS.

As a result, “Retained earnings” decreased by 16,360 million yen and “Other component of equity” increased by the same amount.

B. Deemed cost

Under IFRS 1, for property, plant and equipment, a first-time adopter may use fair value as deemed cost at the date of transition to IFRS. Kyocera has applied this exemption and used fair value as the deemed cost at the date of transition to IFRS for certain item of property, plant and equipment.

The carrying amount of these property, plant and equipment under U.S. GAAP was 29,234 million yen, while the fair value was 18,269 million yen. As a result, “Property, plant and equipment” decreased by 10,965 million yen and “Retained earnings” decreased by 7,648 million yen, which was derived after deducting adjustments to deferred taxes of 3,317 million yen.

C. Retirement benefit

Under U.S. GAAP, the prior service costs and the actuarial gain and loss, resulted from defined benefit plan or unfunded retirement and severance plans which were incurred during the period but not recognized as the same periodic pension costs are recognized as accumulated other comprehensive income by the amount after tax. The amounts recognized in accumulated other comprehensive income are subsequently recognized in profit or loss as a component of retirement benefit expenses over a period of time in the future. Under IFRS, the prior service costs are expensed as incurred. The actuarial gain and loss are recognized in other comprehensive income by the amount after tax and they are transferred from other components of equity to retained earnings directly without recording through profit or loss.

Due to these changes, retirement benefit assets included in “Other non-current assets” increased by 2,157 million yen and “Retirement benefit liabilities” decreased by 2,926 million yen. As a result, “Retained earnings” decreased by 31,723 million yen and “Other components of equity” increased by 35,362 million yen, which were derived after deducting adjustments to deferred taxes of 1,533 million yen.

D. Income taxes

Under U.S. GAAP, all subsequent changes of deferred tax asset and liability due to a change in the tax rate, reassessment of recoverability are recognized in profit or loss. Under IFRS, changes of deferred tax assets and liabilities on other comprehensive income are recognized in other comprehensive income.

In addition, under U.S. GAAP, the temporary differences arising from the elimination of intercompany transaction are deferred as prepaid taxes using the sellers’ tax rates. Under IFRS, above temporary differences are recognized as deferred tax assets using the purchasers’ tax rates considering its recoverability.

As a result, “Retained earnings” decreased by 46,247 million yen and “Other components of equity” increased by 46,251 million yen.

 

43

Table of Contents

E. Levies

Under U.S. GAAP, items qualified as levies such as property tax were recognized at the time of payment. Under IFRS, they were recognized on the date when an obligation to pay arises.

As a result, “Accrued expenses” increased by 3,455 million yen and “Retained earnings” decreased by 2,370 million yen, which was derived after deducting adjustments to deferred taxes of 1,080 million yen.

F. Reclassification on the consolidated statement of financial position

Under the presentation requirement on IFRS 15, refund liabilities included in “Less allowances for doubtful accounts and sales returns” were reclassified into “Other current liabilities.”

Under the presentation requirement on IAS 1 “Presentation of financial statements” (hereinafter, “IAS 1”), “Investments accounted for using the equity method”, “Deferred tax assets” and “Provisions” were presented separately.

 

44

Table of Contents

b. Reconciliation of equity as of June 30, 2017

 

                                                                                                                                                     

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
line items 		    Recognition and
measurement
differences 		    IFRS     

Note

  

Accounts under IFRS

     (Yen in millions)            

Assets

              

Assets

Current assets

              

Current assets

Cash and cash equivalents

     374,641       —       —       374,641        

Cash and cash equivalents

Short-term investments in debt securities

     84,584       214,361       —       298,945        

Short-term investments

Other short-term investments

     214,361       (214,361 )      —       —        

Trade notes receivables

     26,195       266,471       —       292,666        

Trade and other receivables

Trade accounts receivables

     255,940       (255,940 )      —       —        

Less allowances for doubtful accounts and sales returns

     (5,736 )      5,736       —       —     

F

  
     —       6,174       —       6,174        

Other financial assets

Inventories

     352,890       —       —       352,890        

Inventories

Other current assets

     114,442       (26,013 )      (6,200 )      82,229        

Other current assets

  

 

 

   

 

 

   

 

 

   

 

 

       

Total current assets

     1,417,317       (3,572 )      (6,200 )      1,407,545        

Total current assets

Non-current assets

              

Non-current assets

Long-term investments in debt and equity securities

     1,153,296       16,380       —       1,169,676        

Debt and equity instruments

     —       5,517       —       5,517     

F

  

Investments accounted for using the equity method

Other long-term investments

     40,436       (8,331 )      —       32,105        

Other financial assets

Land

     59,897       210,367       (12,178 )      258,086     

B

  

Property, plant and equipment

Buildings

     355,159       (355,159 )      —       —        

Machinery and equipment

     845,663       (845,663 )      —       —        

Construction in progress

     13,811       (13,811 )      —       —        

Less accumulated depreciation

     (1,004,266 )      1,004,266       —       —        

Goodwill

     112,532       —       —       112,532        

Goodwill

Intangible assets

     61,511       —       —       61,511        

Intangible assets

     —       39,730       8,943       48,673     

D,F

  

Deferred tax assets

Other assets

     74,687       (69,203 )      715       6,199     

C

  

Other non-current assets

  

 

 

   

 

 

   

 

 

   

 

 

       

Total non-current assets

     1,712,726       (15,907 )      (2,520 )      1,694,299        

Total non-current assets

  

 

 

   

 

 

   

 

 

   

 

 

       

Total assets

     3,130,043       (19,479 )      (8,720 )      3,101,844        

Total assets

  

 

 

   

 

 

   

 

 

   

 

 

       

 

45

Table of Contents
                                                                                                                                                     

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
line items 		    Recognition and
measurement
differences 		    IFRS    

Note

  

Accounts under IFRS

     (Yen in millions)           

Liabilities and Equity

             

Liabilities and Equity

Liabilities

             

Liabilities

Current liabilities

             

Current liabilities

Short-term borrowings

     117       (117 )      —       —       

Current portion of long-term debt

     8,531       (8,531 )      —       —       

Trade notes and accounts payable

     131,134       56,114       —       187,248       

Trade and other payables

Other notes and accounts payable

     56,144       (56,144 )      —       —       
     —       10,764       —       10,764       

Other financial liabilities

Accrued payroll and bonus

     51,125       (51,125 )      —       —       

Accrued income taxes

     8,501       —       (364 )      8,137       

Income tax payables

Other accrued liabilities

     48,868       41,898       2,089       92,855     E   

Accrued expenses

     —       13,747       —       13,747     F   

Provisions

Other current liabilities

     45,525       (10,241 )      —       35,284     F   

Other current liabilities

  

 

 

   

 

 

   

 

 

   

 

 

      

Total current liabilities

     349,945       (3,635 )      1,725       348,035       

Total current liabilities

Non-current liabilities

             

Non-current liabilities

Long-term debt

     17,678       (12,258 )      —       5,420       

Long-term financial liabilities

Accrued pension and severance liabilities

     32,345       —       (2,617 )      29,728     C   

Retirement benefit liabilities

Deferred income taxes

     256,364       (2,408 )      (23 )      253,933     D   

Deferred tax liabilities

     —       6,647       —       6,647     F   

Provisions

Other non-current liabilities

     19,492       (7,825 )      —       11,667       

Other non-current liabilities

  

 

 

   

 

 

   

 

 

   

 

 

      

Total non-current liabilities

     325,879       (15,844 )      (2,640 )      307,395       

Total non-current liabilities

  

 

 

   

 

 

   

 

 

   

 

 

      

Total liabilities

     675,824       (19,479 )      (915 )      655,430       

Total liabilities

Equity

             

Equity

Common stock

     115,703       —       —       115,703       

Common stock

Additional paid-in capital

     165,220       —       (52 )      165,168       

Capital surplus

Retained earnings

     1,651,034       —       (105,205 )      1,545,829    

A,B,C

D,E

  

Retained earnings

Accumulated other comprehensive income

     468,414       —       97,332       565,746     A,C,D   

Other components of equity

Common stock in treasury stock, at cost

     (32,319 )      —       —       (32,319 )      

Treasury stock

  

 

 

   

 

 

   

 

 

   

 

 

      

Total Kyocera Corporation’s shareholders’ equity

     2,368,052       —       (7,925 )      2,360,127       

 

Total equity attributable to owners of the parent

Noncontrolling interests

     86,167       —       120       86,287       

Non-controlling interests

  

 

 

   

 

 

   

 

 

   

 

 

      

Total equity

     2,454,219       —       (7,805 )      2,446,414       

Total equity

  

 

 

   

 

 

   

 

 

   

 

 

      

Total liabilities and equity

     3,130,043       (19,479 )      (8,720 )      3,101,844       

Total liabilities and equity

  

 

 

   

 

 

   

 

 

   

 

 

      

 

46

Table of Contents

Notes to reconciliation of equity as of June 30, 2017

The major items of the reconciliation of equity as of June 30, 2017 are as follows:

A. Exchange differences on translating foreign operations

Under IFRS 1, a first-time adopter may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS. Kyocera has chosen to apply this exemption and transferred all cumulative exchange differences on translating foreign operations into retained earnings at the date of transition to IFRS.

As a result, “Retained earnings” decreased by 16,360 million yen and “Other component of equity” increased by 15,354 million yen, which was derived after deducting adjustments to deferred taxes of 1,006 million yen.

B. Deemed cost

Under IFRS 1, for property, plant and equipment, a first-time adopter may use fair value as deemed cost at the date of transition to IFRS. Kyocera has applied this exemption and used fair value as the deemed cost at the date of transition to IFRS for certain item of property, plant and equipment.

The carrying amount of these property, plant and equipment under U.S. GAAP was 29,234 million yen, while the fair value was 18,269 million yen. As a result, “Property, plant and equipment” decreased by 10,965 million yen and “Retained earnings” decreased by 7,648 million yen, which was derived after deducting adjustments to deferred taxes of 3,317 million yen.

C. Retirement benefit

Under U.S. GAAP, the prior service costs and the actuarial gain and loss, resulted from defined benefit plan or unfunded retirement and severance plans which were incurred during the period but not recognized as the same periodic pension costs are recognized as accumulated other comprehensive income by the amount after tax. The amounts recognized in accumulated other comprehensive income are subsequently recognized in profit or loss as a component of retirement benefit expenses over a period of time in the future. Under IFRS, the prior service costs are expensed as incurred. The actuarial gain and loss are recognized in other comprehensive income by the amount after tax and they are transferred from other components of equity to retained earnings directly without recording through profit or loss.

Due to these changes, retirement benefit assets included in “Other non-current assets” increased by 1,522 million yen and “Retirement benefit liabilities” decreased by 2,617 million yen. As a result, “Retained earnings” decreased by 32,624 million yen and “Other components of equity” increased by 35,603 million yen, which were derived after deducting adjustments to deferred taxes of 1,239 million yen.

D. Income taxes

Under U.S. GAAP, all subsequent changes of deferred tax asset and liability due to a change in the tax rate, reassessment of recoverability are recognized in profit or loss. Under IFRS, changes of deferred tax assets and liabilities on other comprehensive income are recognized in other comprehensive income.

In addition, under U.S. GAAP, the temporary differences arising from the elimination of intercompany transaction are deferred as prepaid taxes using the sellers’ tax rates. Under IFRS, above temporary differences are recognized as deferred tax assets using the purchasers’ tax rates considering its recoverability.

As a result, “Retained earnings” decreased by 46,300 million yen and “Other components of equity” increased by 46,243 million yen.

 

47

Table of Contents

E. Levies

Under U.S. GAAP, items qualified as levies such as property tax were recognized at the time of payment. Under IFRS, they were recognized on the date when an obligation to pay arises.

As a result, “Accrued expenses” increased by 2,089 million yen and “Retained earnings” decreased by 1,430 million yen, which was derived after deducting adjustments to deferred taxes of 659 million yen.

F. Reclassification on the condensed quarterly consolidated statement of financial position

Under the presentation requirement on IFRS 15, refund liabilities included in “Less allowances for doubtful accounts and sales returns” were reclassified into “Other current liabilities.”

Under the presentation requirement on IAS 1, “Investments accounted for using the equity method”, “Deferred tax assets” and “Provisions” were presented separately.

 

48

Table of Contents

c. Reconciliation of equity as of March 31, 2018

 

                                                                                                                                                     

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
line items 		    Recognition and
measurement
differences 		    IFRS     

Note

  

Accounts under IFRS

     (Yen in millions)            

Assets

              

Assets

Current assets

              

Current assets

Cash and cash equivalents

     424,938       —       —       424,938        

Cash and cash equivalents

Short-term investments in debt securities

     38,023       158,779       —       196,802        

Short-term investments

Other short-term investments

     158,779       (158,779 )      —       —        

Trade notes receivables

     26,072       356,587       —       382,659        

Trade and other receivables

Trade accounts receivables

     331,570       (331,570 )      —       —        

Less allowances for doubtful accounts and sales returns

     (5,490 )      5,490       —       —      F   
     —       12,996       —       12,996        

Other financial assets

Inventories

     364,875       —       —       364,875        

Inventories

Other current assets

     137,849       (47,383 )      (6,837 )      83,629        

Other current assets

  

 

 

   

 

 

   

 

 

   

 

 

       

Total current assets

     1,476,616       (3,880 )      (6,837 )      1,465,899        

Total current assets

Non-current assets

              

Non-current assets

Long-term investments in debt and equity securities

     1,050,537       21,453       —       1,071,990        

Debt and equity instruments

     —       3,874       —       3,874      F   

Investments accounted for using the equity method

Other long-term investments

     25,858       (10,177 )      —       15,681        

Other financial assets

Land

     62,141       238,783       (12,026 )      288,898      B   

Property, plant and equipment

Buildings

     363,714       (363,714 )      —       —        

Machinery and equipment

     880,918       (880,918 )      —       —        

Construction in progress

     23,996       (23,996 )      —       —        

Less accumulated depreciation

     (1,029,845 )      1,029,845       —       —        

Goodwill

     144,268       —       —       144,268        

Goodwill

Intangible assets

     80,186       —       —       80,186        

Intangible assets

     —       32,071       9,299       41,370      D, F   

Deferred tax assets

Other assets

     78,688       (65,040 )      2,999       16,647      C   

Other non-current assets

  

 

 

   

 

 

   

 

 

   

 

 

       

Total non-current assets

     1,680,461       (17,819 )      272       1,662,914        

Total non-current assets

  

 

 

   

 

 

   

 

 

   

 

 

       

Total assets

     3,157,077       (21,699 )      (6,565 )      3,128,813        

Total assets

  

 

 

   

 

 

   

 

 

   

 

 

       

 

49

Table of Contents
                                                                                                                                                     

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
line items 		    Recognition and
measurement
differences 		    IFRS    

Note

  

Accounts under IFRS

     (Yen in millions)           

Liabilities and Equity

             

Liabilities and Equity

Liabilities

             

Liabilities

Current liabilities

             

Current liabilities

Short-term borrowings

     145       (145 )      —       —       

Current portion of long-term debt

     9,293       (9,293 )      —       —       

Trade notes and accounts payable

     149,734       66,951       —       216,685       

Trade and other payables

Other notes and accounts payable

     66,970       (66,970 )      —       —       
     —       5,039       —       5,039       

Other financial liabilities

Accrued payroll and bonus

     68,664       (68,664 )      —       —       

Accrued income taxes

     19,436       —       —       19,436       

Income tax payables

Other accrued liabilities

     50,727       59,867       3,455       114,049     E   

Accrued expenses

     —       32,302       —       32,302     F   

Provisions

Other current liabilities

     55,017       (23,141 )      —       31,876     F   

Other current liabilities

  

 

 

   

 

 

   

 

 

   

 

 

      

Total current liabilities

     419,986       (4,054 )      3,455       419,387       

Total current liabilities

Non-current liabilities

             

Non-current liabilities

Long-term debt

     20,237       (12,867 )      —       7,370       

Long-term financial liabilities

Accrued pension and severance liabilities

     28,723       —       389       29,112     C   

Retirement benefit liabilities

Deferred income taxes

     223,530       (3,378 )      798       220,950     D   

Deferred tax liabilities

     —       19,914       —       19,914     F   

Provisions

Other non-current liabilities

     40,095       (21,314 )      —       18,781       

Other non-current liabilities

  

 

 

   

 

 

   

 

 

   

 

 

      

Total non-current liabilities

     312,585       (17,645 )      1,187       296,127       

Total non-current liabilities

  

 

 

   

 

 

   

 

 

   

 

 

      

Total liabilities

     732,571       (21,699 )      4,642       715,514       

Total liabilities

Equity

             

Equity

Common stock

     115,703       —       —       115,703       

Common stock

Additional paid-in capital

     165,125       —       (46 )      165,079       

Capital surplus

Retained earnings

     1,675,780       —         (98,139 )      1,577,641    

A,B,C

D,E

  

Retained earnings

Accumulated other comprehensive income

     411,980       —       87,730       499,710     A,C,D   

Other components of equity

Common stock in treasury stock, at cost

     (32,342 )      —       —       (32,342 )      

Treasury stock

  

 

 

   

 

 

   

 

 

   

 

 

      

Total Kyocera Corporation’s shareholders’ equity

     2,336,246       —       (10,455 )      2,325,791       

 

Total equity attributable to owners of the parent

Noncontrolling interests

     88,260       —       (752 )      87,508       

Non-controlling interests

  

 

 

   

 

 

   

 

 

   

 

 

      

Total equity

     2,424,506       —       (11,207 )      2,413,299       

Total equity

  

 

 

   

 

 

   

 

 

   

 

 

      

Total liabilities and equity

     3,157,077       (21,699 )      (6,565 )      3,128,813       

Total liabilities and equity

  

 

 

   

 

 

   

 

 

   

 

 

      

 

50

Table of Contents

Notes to reconciliation of equity as of March 31, 2018

The major items of the reconciliation of equity as of March 31, 2018 are as follows:

A. Exchange differences on translating foreign operations

Under IFRS 1, a first-time adopter may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS. Kyocera has chosen to apply this exemption and transferred all cumulative exchange differences on translating foreign operations into retained earnings at the date of transition to IFRS.

As a result, “Retained earnings” decreased by 14,124 million yen and “Other component of equity” increased by 13,118 million yen, which was derived after deducting adjustments to deferred taxes of 1,006 million yen.

B. Deemed cost

Under IFRS 1, for property, plant and equipment, a first-time adopter may use fair value as deemed cost at the date of transition to IFRS. Kyocera has applied this exemption and used fair value as the deemed cost at the date of transition to IFRS for certain item of property, plant and equipment.

The carrying amount of these property, plant and equipment under U.S. GAAP was 29,188 million yen, while the fair value was 18,266 million yen. As a result, “Property, plant and equipment” decreased by 10,922 million yen and “Retained earnings” decreased by 7,618 million yen, which was derived after deducting adjustments to deferred taxes of 3,304 million yen.

C. Retirement benefit

Under U.S. GAAP, the prior service costs and the actuarial gain and loss, resulted from defined benefit plan or unfunded retirement and severance plans which were incurred during the period but not recognized as the same periodic pension costs are recognized as accumulated other comprehensive income by the amount after tax. The amounts recognized in accumulated other comprehensive income are subsequently recognized in profit or loss as a component of retirement benefit expenses over a period of time in the future. Under IFRS, the prior service costs are expensed as incurred. The actuarial gain and loss are recognized in other comprehensive income by the amount after tax and they are transferred from other components of equity to retained earnings directly without recording through profit or loss.

Due to these changes, retirement benefit assets included in “Other non-current assets” increased by 3,767 million yen and “Retirement benefit liabilities” increased by 389 million yen. As a result, “Retained earnings” decreased by 25,547 million yen and “Other components of equity” increased by 28,445 million yen, which were derived after deducting adjustments to deferred taxes of 1,349 million yen.

D. Income taxes

Under U.S. GAAP, all subsequent changes of deferred tax asset and liability due to a change in the tax rate, reassessment of recoverability are recognized in profit or loss. Under IFRS, changes of deferred tax assets and liabilities on other comprehensive income are recognized in other comprehensive income.

In addition, under U.S. GAAP, the temporary differences arising from the elimination of intercompany transaction are deferred as prepaid taxes using the sellers’ tax rates. Under IFRS, above temporary differences are recognized as deferred tax assets using the purchasers’ tax rates considering its recoverability.

As a result, “Retained earnings” decreased by 47,685 million yen and “Other components of equity” increased by 46,200 million yen.

 

51

Table of Contents

E. Levies

Under U.S. GAAP, items qualified as levies such as property tax were recognized at the time of payment. Under IFRS, they were recognized on the date when an obligation to pay arises.

As a result, “Accrued expenses” increased by 3,455 million yen and “Retained earnings” decreased by 2,398 million yen, which was derived after deducting adjustments to deferred taxes of 1,052 million yen.

F. Reclassification on the consolidated statement of financial position

Under the presentation requirement on IFRS 15, refund liabilities included in “Less allowances for doubtful accounts and sales returns” were reclassified into “Other current liabilities.”

Under the presentation requirement on IAS 1, “Investments accounted for using the equity method” and “Deferred tax assets” were presented separately.

 

52

Table of Contents

d. Reconciliations of profit or loss and other comprehensive income for three month ended June  30, 2017

 

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
line items 		    Recognition and
measurement
differences 		    IFRS    

Note

  

Accounts under IFRS

    

 

(Yen in millions)

          

Net sales

     345,162       —       —       345,162       

Sales revenue

Cost of sales

     248,334       —       (493 )      247,841     A, B   

Cost of sales

  

 

 

   

 

 

   

 

 

   

 

 

      

Gross profit

     96,828       —       493       97,321       

Gross profit

Selling, general and administrative expenses

     65,661       —       400       66,061     A, B    Selling, general
and administrative expenses
  

 

 

   

 

 

   

 

 

   

 

 

      

Profit from operations

     31,167       —       93       31,260       

Operating profit

Other income (expenses)

             

Interest and dividend income

     18,403       161       —       18,564        Finance income

Interest expense

     323       (163 )      —       160        Finance expenses

Foreign currency transaction losses, net

  

 

 

 

(590

 

) 

 

 

 

 

—

 

 

 

 

 

 

—

 

 

 

 

 

 

(590

 

) 

    

 

Foreign exchange gains

(losses)

Gains on sales of securities, net

     328       (328 )      —       —       
     —       25       —       25     D    Share of net profit of
investments accounted for
using the equity method

Other, net

     275       (21 )      —       254       

Other, net

  

 

 

   

 

 

   

 

 

   

 

 

      

Income before income taxes

     49,260       —       93       49,353       

Profit before income taxes

Income taxes

     12,732       —       39       12,771       

Income taxes

  

 

 

   

 

 

   

 

 

   

 

 

      

Net income

     36,528       —       54       36,582       

Profit for the period

  

 

 

   

 

 

   

 

 

   

 

 

      
             

Profit attributable to:

Net income attributable to Kyocera Corporation’s shareholders

     34,981       —       45       35,026       

Owners of the parent

Net income attributable to noncontrolling interests

     1,547       —       9       1,556       

Non-controlling interests

 

53

Table of Contents

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
line items 		    Recognition and
measurement
differences 		    IFRS    

Note

  

Accounts under IFRS

    

 

(Yen in millions)

          

Net income

     36,528       —       54       36,582       

Profit for the period

Other comprehensive income—
net of taxes

              Other comprehensive income, net of taxation

Pension liability adjustment

     (587 )      —       587       —     A    Re-measurement of defined benefit plans

Net unrealized gains (losses) on securities

  

 

 

 

15,001

 

 

 

 

 

 

—

 

 

 

 

 

 

(8

 

) 

 

 

 

 

14,993

 

 

    

 

Net unrealized gains (losses) on securities

Net unrealized gains (losses) on derivative financial instruments

  

 

 

 

(52

 

) 

 

 

 

 

(26

 

) 

 

 

 

 

—

 

 

 

 

 

 

(78

 

) 

    

 

Net changes in fair value of cash flow hedge

Foreign currency translation adjustments

  

 

 

 

7,221

 

 

 

 

 

 

4

 

 

 

 

 

 

(1,208

 

) 

 

 

 

 

6,017

 

 

 

 

C

  

 

Exchange differences on translating foreign operations

     —       22       —       22        Share of other comprehensive income of investments
accounted for using the equity method
  

 

 

   

 

 

   

 

 

   

 

 

      

Total other comprehensive income

     21,583       —       (629 )      20,954        Total other comprehensive income
  

 

 

   

 

 

   

 

 

   

 

 

      

Comprehensive income

     58,111       —       (575 )      57,536        Comprehensive income for the period
  

 

 

   

 

 

   

 

 

   

 

 

      
              Comprehensive income attributable to:

Comprehensive income attributable to Kyocera Corporation’s shareholders

     55,900       —       (591 )      55,309       

Owners of the parent

Comprehensive income attributable to noncontrolling interests

     2,211       —       16       2,227       

Non-controlling interests

 

54

Table of Contents

Notes to reconciliations of profit or loss and other comprehensive income for the three months ended June 30, 2017.

The major items of the reconciliations of profit or loss and other comprehensive income for the three months ended June 30, 2017 are as follows:

A. Retirement benefit

Under U.S. GAAP, the prior service costs and the actuarial gain and loss, resulted from defined benefit plan or unfunded retirement and severance plans which were incurred during the period but not recognized as the same periodic pension costs are recognized as accumulated other comprehensive income by the amount after tax. The amounts recognized in accumulated other comprehensive income are subsequently recognized in profit or loss as a component of retirement benefit expenses over a period of time in the future. Under IFRS, the prior service costs are expensed as incurred. The actuarial gain and loss are recognized in other comprehensive income by the amount after tax and they are transferred from other components of equity to retained earnings directly without recording through profit or loss.

Due to these changes, “Cost of sales” and “Selling, general and administrative expenses” increased by 953 million yen and 404 million yen, respectively. As a result, “Profit before income taxes” decreased by 1,357 million yen.

B. Levies

Under U.S. GAAP, items qualified as levies such as property tax were recognized at the time of payment. Under IFRS, they were recognized on the date when an obligation to pay arises.

Due to this change, “Cost of sales” and “Selling, general and administrative expenses” decreased by 1,270 million yen and 95 million yen, respectively. As a result, “Profit before income taxes” increased by 1,365 million yen.

C. Exchange differences on translating foreign operations

Under IFRS 1, a first-time adopter may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS. Kyocera has chosen to apply this exemption and transferred all cumulative exchange differences on translating foreign operations into retained earnings at the date of transition to IFRS.

Due to the resolution for liquidation of certain foreign consolidated subsidiaries, Kyocera recognized deferred tax regarding cumulative exchange differences on translating foreign operations. As a result, “Exchange differences on translating foreign operations” decreased by 1,006 million yen.

D. Reclassifications on the consolidated statement of profit or loss

Under the presentation requirement on IAS 1, “Share of net profit of investments accounted for using the equity method” was presented separately.

 

55

Table of Contents

e. Reconciliations of profit or loss and other comprehensive income for the year ended March  31, 2018

 

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
   line items    		    Recognition and
measurement
differences 		    IFRS    

Note

  

Accounts under IFRS

     (Yen in millions)           

Net sales

     1,577,039       —       —       1,577,039        Sales revenue

Cost of sales

     1,200,911       —       3,300       1,204,211     A    Cost of sales
  

 

 

   

 

 

   

 

 

   

 

 

      

Gross profit

     376,128       —       (3,300 )      372,828        Gross profit

Selling, general and administrative expenses

  

 

 

 

280,553

 

 

 

 

 

 

—

 

 

 

 

 

 

1,576

 

 

 

 

 

 

282,129

 

 

 

 

A

  

 

Selling, general
and administrative expenses

  

 

 

   

 

 

   

 

 

   

 

 

      

Profit from operations

     95,575       —       (4,876 )      90,699        Operating profit

Other income (expenses)

             

Interest and dividend income

     40,498       985       —       41,483        Finance income

Interest expense

     1,395       165       —       1,560        Finance expenses

Foreign currency transaction losses, net

  

 

 

 

(827

 

) 

 

 

 

 

—

 

 

 

 

 

 

—

 

 

 

 

 

 

(827

 

) 

    

 

Foreign exchange gains
(losses)

Gains on sales of securities, net

     1,629       (1,629 )      —       —       
     —       (1,564 )      —       (1,564 )    C    Share of net loss of
investments accounted for
using the equity method

Other, net

     (3,614 )      2,373       3,002       1,761     B    Other, net
  

 

 

   

 

 

   

 

 

   

 

 

      

Income before income taxes

     131,866       —       (1,874 )      129,992        Profit before income taxes

Income taxes

     46,881       —       885       47,766        Income taxes
  

 

 

   

 

 

   

 

 

   

 

 

      

Net income

     84,985       —       (2,759 )      82,226        Profit for the year
  

 

 

   

 

 

   

 

 

   

 

 

      
              Profit attributable to:

Net income attributable to Kyocera Corporation’s shareholders

     81,789       —       (2,652 )      79,137        Owners of the parent

Net income attributable to noncontrolling interests

     3,196       —       (107 )      3,089        Non-controlling interests

 

56

Table of Contents

Accounts under U.S. GAAP

   U.S.
GAAP 		    Effect of
change in
   line items    		    Recognition and
measurement
differences 		    IFRS    

Note

  

Accounts under IFRS

     (Yen in millions)           

Net income

         84,985       —       (2,759 )          82,226        Profit for the year

Other comprehensive income—
net of taxes

              Other comprehensive income, net of taxation

Pension liability adjustment

     6,428       —       2,924       9,352     A    Re-measurement of defined benefit plans

Net unrealized gains (losses) on securities

     (40,087 )      —       (51 )      (40,138 )       Net unrealized gains (losses) on securities

Net unrealized gains (losses) on derivative financial instruments

     27       (82 )      —       (55 )       Net changes in fair value of cash flow hedge

Foreign currency translation adjustments

  

 

 

 

(2,703

 

) 

 

 

 

 

125

 

 

 

 

 

 

(4,092

 

) 

 

 

 

 

(6,670

 

) 

 

 

B

  

 

Exchange differences on translating foreign operations

     —       (43 )      —       (43 )       Share of other comprehensive income of investments
accounted for using the equity method
  

 

 

   

 

 

   

 

 

   

 

 

      

Total other comprehensive income

     (36,335 )      —       (1,219 )      (37,554 )       Total other comprehensive income
  

 

 

   

 

 

   

 

 

   

 

 

      

Comprehensive income

     48,650       —       (3,978 )      44,672        Comprehensive income for the year
  

 

 

   

 

 

   

 

 

   

 

 

      
              Comprehensive income attributable to:

Comprehensive income attributable to Kyocera Corporation’s shareholders

     46,252       —       (3,121 )      43,131        Owners of the parent

Comprehensive income attributable to noncontrolling interests

     2,398       —       (857 )      1,541        Non-controlling interests

 

57

Table of Contents

Notes to reconciliations of profit or loss and other comprehensive income for the year ended March 31, 2018.

The major items of the reconciliations of profit or loss and other comprehensive income for the year ended March 31, 2018 are as follows:

A. Retirement benefit

Under U.S. GAAP, the prior service costs and the actuarial gain and loss, resulted from defined benefit plan or unfunded retirement and severance plans which were incurred during the period but not recognized as the same periodic pension costs are recognized as accumulated other comprehensive income by the amount after tax. The amounts recognized in accumulated other comprehensive income are subsequently recognized in profit or loss as a component of retirement benefit expenses over a period of time in the future. Under IFRS, the prior service costs are expensed as incurred. The actuarial gain and loss are recognized in other comprehensive income by the amount after tax and they are transferred from other components of equity to retained earnings directly without recording through profit or loss.

Due to these changes, “Cost of sales” and “Selling, general and administrative expenses” increased by 3,718 million yen and 1,635 million yen, respectively. As a result, “Profit before income taxes” decreased by 5,353 million yen.

B. Exchange differences on translating foreign operations

Under IFRS 1, a first-time adopter may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS. Kyocera has chosen to apply this exemption and transferred all cumulative exchange differences on translating foreign operations into retained earnings at the date of transition to IFRS.

Due to the liquidation of certain foreign consolidated subsidiaries, Kyocera reclassified cumulative exchange differences on translating foreign operations into profit or loss. As a result, “Other, net” increased by 3,242 million yen and “Profit before income taxes” increased by the same amount.

C. Reclassifications on the consolidated statement of profit or loss

Under the presentation requirement on IAS 1, “Share of net loss of investments accounted for using the equity method” was presented separately.

f. Reconciliation of consolidated statement of cash flows for the three months ended June 30, 2017 and year ended March 31, 2018

There are no material differences between the consolidated statement of cash flows presented under U.S. GAAP and the consolidated statement of cash flows presented under IFRS.

 

58

Table of Contents

As mentioned above, the effect of transition to IFRS on retained earnings at the date of transition to IFRS, June 30, 2017 and March 31, 2018 are as follows:

 

 

     The date of transition
to IFRS
(April 1, 2017) 		    As of
June 30, 2017 		    As of
March 31, 2018 		 
     (Yen in millions)  

Exchange differences on translating foreign operations

     (16,360 )      (16,360 )      (14,124 ) 

Deemed cost

     (7,648 )      (7,648 )      (7,618 ) 

Retirement benefit

     (31,723 )      (32,624 )      (25,547 ) 

Income taxes

     (46,247 )      (46,300 )      (47,685 ) 

Levies

     (2,370 )      (1,430 )      (2,398 ) 

Other

     (902 )      (843 )      (767 ) 
  

 

 

   

 

 

   

 

 

 

Total

     (105,250 )      (105,205 )      (98,139 ) 
  

 

 

   

 

 

   

 

 

 

2. Others

Lawsuits

For detailed information about lawsuits, please refer to “Notes to Condensed Quarterly Consolidated Financial Statements 14. Commitments (2) Long-term purchase agreements for the supply of raw materials” and “15. Contingencies (2) Patent lawsuits, (3) Environmental matters.”

Part II. Corporate Information on Guarantors and others

Not Applicable

 

59

Kyocera (PK) (USOTC:KYOCY)
Historical Stock Chart
From Nov 2024 to Dec 2024 Click Here for more Kyocera (PK) Charts.
Kyocera (PK) (USOTC:KYOCY)
Historical Stock Chart
From Dec 2023 to Dec 2024 Click Here for more Kyocera (PK) Charts.