Edgar Filing: KYOCERA CORP

Form 6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Report of Foreign Private Issuer

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

the Securities Exchange Act of 1934

For the month of October 2004

Commission File Number: 1-07952

KYOCERA CORPORATION

6 Takeda Tobadono-cho, Fushimi-ku,

Kyoto 612-8501, Japan

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 X 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):

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes No X

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b); 82-

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/ Hideki Ishida

Hideki Ishida

Managing Executive Officer

General Manager of

Corporate Finance Division

Date: October 28, 2004

Information furnished on this form:

EXHIBITS


Exhibit Number

1.		Consolidated and Non-Consolidated Financial Results for the Six Months Ended September 30, 2004

LOGO

October 28, 2004

KYOCERA CORPORATION

Consolidated Financial Highlights

Results for the Six Months Ended September 30, 2004

(Yen in millions, except per share amounts, exchange rates and number of employees)


	Six months ended September 30,		Increase (Decrease) (%)
	2004	2003	Increase (Decrease) (%)
Net sales	600,562	518,378	15.9
Profit from operations	62,092	22,554	175.3
Income before income taxes	67,253	25,127	167.7
Net income	42,549	15,754	170.1
Average exchange rates :
US$	110	118	—
Euro	133	133	—
Earnings per share :
Net income
Basic	226.94	84.79	—
Diluted	226.85	84.79	—
Capital expenditures	28,631	27,458	4.3
Depreciation	27,296	28,933	(5.7	)
R&D expenses	27,432	23,804	15.2
Total assets	1,785,505	1,771,550	—
Stockholders’ equity	1,180,941	1,092,402	—
Sales of products manufactured outside Japan to net sales (%)	33.4	33.1	—
Number of employees at the end of periods	60,163	54,740	—

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Consolidated Results of Kyocera Corporation and its Subsidiaries

for the Six Months Ended September 30, 2004

The consolidated financial statements are in conformity with accounting principles generally accepted in the United States of America.

Date of the board of directors’ meeting for the interim consolidated results : October 28, 2004

1. Results for the six months ended September 30, 2004

(1) Consolidated results of operations :


	Japanese yen
	Six months ended September 30,						Year ended March 31, 2004
	2004			2003			Year ended March 31, 2004
Net sales	¥	600,562 million		¥	518,378 million		¥	1,140,814 million
% change from the previous period		15.9	%		0.3	%
Profit from operations		62,092 million			22,554 million			108,962 million
% change from the previous period		175.3	%		(39.0	)%
Income before income taxes		67,253 million			25,127 million			115,040 million
% change from the previous period		167.7	%		(25.2	)%
Net income		42,549 million			15,754 million			68,086 million
% change from the previous period		170.1	%		(8.0	)%
Earnings per share :
Basic	¥	226.94		¥	84.79		¥	364.79
Diluted		226.85			84.79			364.78

Notes :

1. Equity in earnings of affiliates and unconsolidated subsidiaries :


Six months ended September 30, 2004	¥	582 million
Six months ended September 30, 2003	¥	1,729 million
Year ended March 31, 2004	¥	2,575 million

2. Average number of shares outstanding during the period :


Six months ended September 30, 2004		187,492,144 shares
Six months ended September 30, 2003		185,802,535 shares
Year ended March 31, 2004		186,642,680 shares

3. Change in accounting policies :

None

(2) Consolidated financial condition :


	Japanese yen
	September 30,						March 31, 2004
	2004			2003			March 31, 2004
Total assets	¥	1,785,505 million		¥	1,771,550 million		¥	1,794,758 million
Stockholders’ equity		1,180,941 million			1,092,402 million			1,153,746 million
Stockholders’ equity to total assets		66.1	%		61.7	%		64.3	%
Stockholders’ equity per share	¥	6,298.63		¥	5,826.70		¥	6,153.83

Notes : Total number of shares outstanding as of :


September 30, 2004		187,491,883 shares
September 30, 2003		187,482,238 shares
March 31, 2004		187,484,253 shares

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(3) Consolidated cash flows :


	Japanese yen
	Six months ended September 30,				Year ended March 31, 2004
	2004		2003		Year ended March 31, 2004
Cash flows from operating activities	¥	88,891 million	¥	28,510 million	¥	62,575 million
Cash flows from investing activities		(144,177) million		(5,163) million		29,581 million
Cash flows from financing activities		(53,582) million		(16,112) million		(20,422) million
Cash and cash equivalents at end of period		256,965 million		299,160 million		361,132 million

(4) Scope of consolidation and application of the equity method :

Number of consolidated subsidiaries : 162

Number of subsidiaries accounted for by the equity method : 2

Number of affiliates accounted for by the equity method : 13

(5) Changes in scope of consolidation and application of the equity method :


	Consolidation	Equity method
Increase	4	0
Decrease	1	1

2. Forecast for the year ending March 31, 2005 :

There is no revision of the initial forecast for the fiscal year ending March 31, 2005, which was described in Form 6-K submitted on April 27, 2004. (Please refer to the accompanying “Forward Looking Statements” on page 17 with regard to the forecasts.)

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KYOCERA GROUP

Kyocera group consists of Kyocera Corporation, 164 subsidiaries and 13 affiliates.

(Chart of the group companies)

LOGO

Note : Others include affiliates that are accounted for by the equity method.

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Management Policies

1. Management Goal and Strategies

•

Kyocera Corporation and its subsidiaries (Kyocera) strive to be a “creative company that continues to grow in 21^st century.” To achieve this goal, Kyocera promotes “high-value-added” diversification in three high growth potential areas – telecommunications and information processing, environmental protection, and quality of life – in accordance with the following criteria and management system.

1) Criteria

“Value added business” is defined as a business generating pre-tax profit ratio of 15% or more. Whether or not to remain in a field is based on a judgment of the existence of an evident need in the relevant markets and the possibility of serving that market need from the current or future attainable technologies.

2) Management System

Kyocera’s unique management system allows it to make accurate and swift assessments of individual business conditions to facilitate timely decision-making and maximize synergies among businesses.

•

By promoting the development of business diversification, Kyocera aims to drive stable and continuous corporate growth in a rapidly changing business environment.

•

The most important management resource for successful business diversification is technological prowess. Based on this conviction, Kyocera strives to expand and diversify applications through advancement and specialization of its technical expertise, thereby promptly responding to the variety of market needs brought about by rapid changes in society. Kyocera also views sales competency and brand awareness as vital management resources for business expansion, and constantly works to strengthen these elements.

•

Kyocera will demarcate areas for either expansion or reorganization and aggressively invest management resources in valuable or promising businesses.

•

Kyocera will maintain a sound financial position to enable to pursue new business development and market creation.

2. Specific Policies

•

Kyocera will select and concentrate management resources into “value added” fields and its candidates. With the objective of outstripping the competition and becoming leader in each business area, Kyocera will create new markets and technologies through the integration of Group resources, including technical and sales competencies, while utilizing external management resources when it is necessary.

•

Authorization of decision-making on planning, execution and control of the business will be delegated to each Corporate Business Division and Business Division to act as an independent company, in order to speed up management decision-making processes.

•

A prime emphasis is placed on cash flows, in particular, boosting returns on capital investment, improving inventory control and shortening lead-times.

•

Kyocera will increase its profitability of each operating segment on a consolidated basis by strengthening ties between each Corporate Business Division and Business Division and Kyocera Group subsidiaries and affiliates to maximize synergies.

•

Kyocera will employ a global strategy in each business and optimize R&D, production and sales structures.

•

In order to increase stockholder value (market capitalization), Kyocera seeks to generate a higher return on investment to maximize future profits and cash flows.

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•

A stock option plan will be extended to senior managers within Kyocera to further increase value by ensuring their interests in agreement with stockholders and investors.

3. Basic Policy on Profit Distribution

•

Since its listing, Kyocera Corporation has endeavored to increase dividends per share in line with improvements in performance. Kyocera Corporation has also boosted share dividends by actively applying free-share distributions and stock splits. In the coming years, Kyocera Corporation will work to further improve earnings per share and cash flow, and on the basis of the results, will share its success by securing continued dividend payments in accordance with holistic judgments.

•

Kyocera’s goal of constantly enhancing profitability will ensure greater returns for stockholders. In order to be a “creative company that continues to grow in the 21st century,” Kyocera will strive at the same time to be a market leader in the three strategic areas of telecommunications and information processing, environmental protection and quality of life. Accordingly, Kyocera aims to cultivate new businesses, markets and to develop technologies, acquiring external management resources when necessary to achieve this objective. Kyocera will also enhance technological prowess and marketing force in each of the businesses Kyocera is in, and select an optimal structure for each by leveraging Group resources, to build up a “winning” competitive structure, without limiting ourselves to any single formula. Kyocera will prioritize a healthy and stable financial position and retain a high level of internal reserves to facilitate the execution of this management strategy.

4. Corporate Governance Guidelines and Policy Implementation

•

Kyocera’s corporate governance is designed to ensure extremely sound, transparent and effective management and thereby best protect the interests of stockholders. No discussion of corporate governance at Kyocera would be complete without first looking at the “Kyocera Philosophy,” which provides both the moral and intellectual backbone for Kyocera’s management style.

•

The “Kyocera Philosophy” was created by Kyocera’s founder, as he codified his views on the subject of business management. He was convinced that one of the most important points for the management of the company was that the “Kyocera Philosophy” should apply to the actions of all who work for the enterprise—directors, managers and employees alike. The “Kyocera Philosophy” embodies many principles, covering subjects ranging from the fundamentals of business management to the specifics of day-to-day operations. Its principles demand impartial, fair and totally transparent management, while emphasizing the importance of maximizing profits by eliminating waste, minimizing expenses and maximizing revenues. The “Kyocera Philosophy” demands particularly high standards of ethical behavior from all leaders within the company. Managers are never allowed to put their personal interests ahead of the company’s interests. From the beginning, Kyocera has been guided by principles that have naturally worked toward achieving the corporate governance goals mentioned above.

•

Kyocera’s management believes that the standards and criteria applied by all members of the enterprise hold the key to achieving the aims of corporate governance. At its core, the “Kyocera Philosophy” exhorts workers to use the criterion of what they judge “the right thing to do as human being” as the basis for guiding all actions and decisions. Because of their universal nature, the principles of the “Kyocera Philosophy” are as applicable to Kyocera’s worldwide operations as they are to any other business.

•

During the year ended March 31, 2004, Kyocera managers around the world attended an aggregated total of 19,440 training and education sessions designed to promote deeper understanding of the “Kyocera Philosophy.” The “Kyocera Philosophy” also formed an important part of our orientation efforts for new recruits and on-the-job training programs. In the year ending March 31, 2005, Kyocera plans to extend these programs to cover all employees in Japan. A total of 755 managers at Kyocera subsidiaries outside Japan received training along these lines in the year ended March 31, 2004.

•

Kyocera emphasizes a so-called “amoeba” management system in which operations are managed at the level of small groups. This system is believed to reflect the “Kyocera Philosophy” best, and is regarded as the source of Kyocera’s strength in creating highly motivated management by getting all employees involved in the daily operation of the company.

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•

Explicit delegation of responsibilities to small groups has the added advantage of promoting transparency in all details of management, while creating a system that promotes efficiency. In Kyocera’s experience, these processes maintain sound business management practices, which in turn translate into greater benefits for all stakeholders.

•

To make these principles work in practice, a system of checks and balances is also crucial. Kyocera has adopted the corporate governance model outlined in the Commercial Code of Japan that is based on the use of corporate auditors. In this system, the board of corporate auditors oversees the management decisions of the board of directors and policy execution by executive officers.

•

Of four corporate auditors, two are appointed externally. Kyocera implemented an executive officer system, in which the functions of business execution and supervision of management have been separated to further raise management efficiency. The Board of Directors consists of 13 people, including eight members from Kyocera group management who are not responsible for business execution of Kyocera Corporation.

•

In addition, to ensure a systematic and sustained approach to compliance management throughout Kyocera, Kyocera established a Risk Management Department.

•

By respecting the “Kyocera Philosophy” as a corporate culture and completing internal management control system apart from management aspect, Kyocera aims to achieve solid corporate governance as our stockholders expect.

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LOGO

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Business Results and Financial Condition

1. Business Results for the Six Months Ended September 30, 2004

(1) Economic Situation and Business Environment

•

The Japanese economy showed moderate signs of recovery during the six months ended September 30, 2004 (the first half), spurred by revitalized production activities, especially in the manufacturing sector; increased exports; improved corporate earnings and expanded capital investment. The global economy expanded as a whole, as represented by continued steady growth in the U.S. economy and healthy growth in the Asian economy, particularly in China.

•

In the electronics industry, which is a key market for Kyocera, demand for mobile handsets increased due to the proliferation of models with built-in cameras. Additionally, the production of computer equipment grew steadily, while in digital consumer product markets, demand for flat-screen TVs and DVD recorders rose due to the broadcast of the Olympics.

(2) Consolidated Financial Results

(Yen in millions, except per share amounts and exchange rates)


	Six months ended September 30,		Increase (Decrease) (%)
	2004	2003	Increase (Decrease) (%)
Net sales	600,562	518,378	15.9
Profit from operations	62,092	22,554	175.3
Income before income taxes	67,253	25,127	167.7
Net income	42,549	15,754	170.1
Diluted earnings per share	226.85	84.79	—
US$ average exchange rate	110	118	—
Euro average exchange rate	133	133	—

1) Sales

•

Sales for the first half increased compared with those in the six months ended September 30, 2003 (the previous first half), due mainly to an increase in component business sales.

•

Demand for Kyocera’s components, such as Fine Ceramics Group and Electronic Device Group, expanded strongly and was supported by the increased production activities of electronic equipment, notably mobile phones and digital consumer products. As a favorable market environment resulted in increased production volume and a moderate decline in components prices, sales of Kyocera’s components have increased considerably in the first half compared with the previous first half.

•

Sales of the Equipment Group have increased, due mainly to the introduction of new information equipment, as well as higher sales of mobile handsets in the U.S. and the new contribution of camera modules for mobile phones.

•

As a result, consolidated net sales for the first half amounted to ¥600.6 billion, an increase of 15.9% compared with the previous first half.

2) Profits

•

The effect of an increase in sales, especially in the components business, coupled with an increased capacity utilization rate through considerable growth in components production volume, and group-wide structural reforms implemented in the year ended March 31, 2004 that aimed to improve profitability, showed positive effects in the first half. Consequently, profit from operations for the first half increased by ¥39.5 billion compared with the previous first half. Both income before income taxes and net income also increased.

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3) Effect of Exchange Rate Fluctuations

•

The average yen rate appreciated 8 yen against the U.S. dollar and was unchanged against the Euro compared with those in the previous first half. Consequently, net sales and income before income taxes after translation into yen was negatively affected by approximately ¥19.3 billion and ¥2.9 billion yen, respectively, compared with the previous first half, due primarily to the yen’s appreciation against the U.S. dollar.

(3) Operating Highlights

Kinseki, Ltd. (Kinseki), a wholly-owned subsidiary, and Kyocera Corporation re-organized the operations related to crystal components on April 1, 2004. Kinseki’s marketing division was merged into the marketing division of the electronic component of Kyocera Corporation and the manufacturing division of crystal related components of Kyocera Corporation was transferred to Kinseki. At the same time, Kinseki changed its name to Kyocera Kinseki Corporation (Kyocera Kinseki).

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

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

The construction of new factory of KST started in August 2004 in the City of Ayabe, Kyoto Prefecture. At the factory, KST plans to produce semiconductor organic packages and laminated high-density printed circuit boards used in micro processors and chipsets for digital consumer products. Operations are expected to commence in June 2005. Planned investment in the factory totals approximately ¥17.0 billion.

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

Kyocera started to implement structural reforms in the first half in order to reorganize its optical instruments business a “value added business.” Major initiatives included (a) downsizing of the camera business and expansion of the optical module business, and (b) reorganizing of overseas sales operation. A total of approximately ¥1.9 billion was recorded as operating expenses in line with the execution of these reforms.

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(4) Consolidated Operating Segments

(Yen in millions)


	Six months ended September 30,				Increase (Decrease) (%)
	2004		2003		Increase (Decrease) (%)
Net sales	600,562		518,378		15.9
Fine Ceramics Group	151,986		119,399		27.3
Electronic Device Group	139,790		119,787		16.7
Equipment Group	265,597		241,372		10.0
Others	56,193		45,735		22.9
Adjustments and eliminations	(13,004	)	(7,915	)	—

Operating profit	59,936		19,959		200.3
Fine Ceramics Group	24,399		11,322		115.5
Electronic Device Group	22,241		(6,392	)	—
Equipment Group	7,136		10,274		(30.5	)
Others	6,160		4,755		29.5

Corporate	6,683		3,010		122.0
Equity in earnings of affiliates and unconsolidated subsidiaries	582		1,729		(66.3	)
Adjustments and eliminations	52		429		(87.9	)
Income before income taxes	67,253		25,127		167.7

Commencing in the third quarter of fiscal 2004 (October to December 2003), net sales and operating profit of the Precision Machine Division of Kyocera Corporation, previously included within “Others,” have been charged to “Corporate.” Accordingly, we have restated previously published net sales and operating profit of this operating segment for the previous first half.

1) Fine Ceramics Group

Demand for fine ceramic parts was strong, particularly for semiconductor and LCD fabrication equipment and sapphire substrates for LEDs. In semiconductor parts, sales of ceramic packages increased appreciably, especially those applicable for mobile phones and digital consumer products, as well as ceramic packages for image sensors, such as CCD, CMOS image devices. Sales of consumer-related products such as solar modules and cutting tools also increased markedly. Operating profit in this segment rose considerably in the first half, increasing approximately 2.2 times compared with the previous first half, due mainly to the effect of increased sales and of improved productivity through cost reduction efforts in all divisions.

2) Electronic Device Group

Sales in this segment grew, due primarily to strong demand for ceramic capacitors and crystal-related components. In addition to the sales contribution from Kyocera Kinseki since the start of the fiscal year, sales at AVX CORPORATION (AVX), a U.S. subsidiary, increased remarkably. Strong sales, improved capacity utilization rate, improved production and the absence of restructuring charges at AVX that were recorded in the previous first half culminated in a significant increase of approximately ¥28.6 billion in operating profit compared with operating loss recorded in the previous first half.

3) Equipment Group

Sales of this segment expanded, due to healthy sales of new products in information equipment and sales at KYOCERA WIRELESS CORP., a U.S. subsidiary. Sales of optical instruments also increased due to new contributions from optical camera modules for mobile phones. Nevertheless, operating profit in this segment decreased compared with the previous first half, due predominantly to one-off charges associated with the start-up costs of the optical camera module business and restructuring of overseas sales operation, and price erosion in mobile phones in Japan and overseas.

4) Others

Sales and operating profit in this segment increased due to strong growth for Kyocera Chemical Corporation, especially in its business of flexible printed circuit board materials and semiconductor epoxy molding compounds, and favorable growth for Kyocera Communication Systems Co., Ltd. (KCCS), especially in its data center, network optimizing and telecommunications engineering businesses.

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(5) Orders and Production (Consolidated)

See “(4) Consolidated Operating Segments” for descriptions of orders and production by operating segments for the first half.

(Yen in millions)


	Six months ended September 30,				Increase (Decrease) (%)
	2004		2003		Increase (Decrease) (%)
Orders	614,813		570,843		7.7
Fine Ceramics Group	154,926		124,173		24.8
Electronic Device Group	143,490		123,328		16.3
Equipment Group	271,453		281,920		(3.7	)
Others	58,267		49,024		18.9
Adjustments and eliminations	(13,323	)	(7,602	)	—

Production	617,958		515,006		20.0
Fine Ceramics Group	155,719		119,979		29.8
Electronic Device group	146,503		118,454		23.7
Equipment Group	277,007		245,191		13.0
Others	38,729		31,382		23.4

(6) Geographic Segments (Consolidated)

(Yen in millions)


	Six months ended September 30,		Increase (Decrease) (%)
	2004	2003	Increase (Decrease) (%)
Sales	600,562	518,378	15.9
Japan	227,772	211,276	7.8
USA	130,505	114,335	14.1
Asia	116,357	90,122	29.1
Europe	83,906	73,472	14.2
Others	42,022	29,173	44.0

1) Japan

Sales increased compared with the previous first half due to increased sales of parts for mobile phones and digital consumer products and that of solar energy products, in addition, due also to increased sales of optical camera modules and that in telecommunications engineering business of KCCS.

2) USA

Sales increased due mainly to increased sales of mobile handsets and also to that in components business in the environment of growing demand.

3) Asia

Sales grew considerably due mainly to increased sales of parts for mobile handsets, digital consumer production and computer related equipment and also to increased sales of telecommunications equipment and information equipment.

4) Europe

Sales increased due mainly to increased sales of information equipment and also to increased sales of electronic devices, solar modules etc.

5) Others

Sales increased due mainly to increased sales of mobile handsets in Central and South America.

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2. Cash Flow

Cash and cash equivalents at September 30, 2004 decreased by ¥104,167 million to ¥256,965 million compared with at
March 31, 2004.

(Yen in millions)


	Six months ended September 30,
	2004		2003
Cash flow from operating activities	88,891		28,510
Cash flow from investing activities	(144,177	)	(5,163	)
Cash flow from financing activities	(53,582	)	(16,112	)
Effect of exchange rate changes on cash and cash equivalent	4,701		(6,385	)
Net (decrease) increase in cash and cash equivalent	(104,167	)	850
Cash and cash equivalent at beginning of period	361,132		298,310
Cash and cash equivalent at end of period	256,965		299,160

Net cash provided by operating activities for the first half increased by ¥60,381 million to ¥88,891 million from the previous first half of ¥28,510 million. This was due to an increase in net income by ¥26,795 million to ¥42,549 million compared with the previous first half and a significant decrease in receivables by collection, including the short-term finance receivables.

Net cash used in investing activities in the first half increased by ¥139,014 million to ¥144,177 million from net cash provided in the previous first half of ¥5,163 million. This was due mainly to increases in purchases of the government bonds and negotiable certificate of deposits in consideration of current and future financial position according to our investment policy.

Net cash used in financing activities for the first half increased by ¥37,470 million to ¥53,582 million from the previous first half of ¥16,112 million. This was due mainly to payments of long-term debt.

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3. Capital Expenditures and Depreciation (Consolidated)

(Yen in millions)


	Six months ended September 30,				Increase (Decrease) (%)
	2004		2003		Increase (Decrease) (%)
Capital expenditures	28,631		27,458		4.3
(% to net sales)	4.8	%	5.3	%	—

Depreciation expenses	27,296		28,933		(5.7	)
(% to net sales)	4.5	%	5.6	%	—

•	Fine Ceramics Group invested in facilities to increase production of solar cells and solar modules.

•	New facilities were constructed in line with the commencement of optical camera modules for mobile phones.

4. Non-Consolidated Results for the Six Months Ended September 30, 2004

(Yen in millions)


	Six months ended September 30,		Increase (Decrease) (%)
	2004	2003	Increase (Decrease) (%)
Net sales	250,463	237,808	5.3
Profit from operations	21,297	17,572	21.2
Recurring profit	34,937	26,176	33.5
Net income	20,512	16,159	26.9

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Business Outlook and Future Strategies

1. Forecasts for the Year Ending March 31, 2005 (Consolidated)

(Yen in millions, except per share amounts and exchange rates)


	Year ending March 31, 2005 (Forecast)	Year ended March 31, 2004 (Result)	Increase (Decrease) (%)
Net sales	1,260,000	1,140,814	10.4
Profit from operations	135,000	108,962	23.9
Income before income taxes	140,000	115,040	21.7
Net income	85,000	68,086	24.8
Diluted earnings per share	455.40	364.78	—
US$ average exchange rate	106	113	—
Euro average exchange rate	129	133	—

There are no changes in Forecasts for the Fiscal Year Ending March 31, 2005 (Consolidated) from the original forecasts as of April 27, 2004, except ones in average exchange rates and in outlook by operating segment.

(1)	Economic Situation and Business Environment for the Year Ending March 31, 2005

•	The economic environment in the second half seems to become highly uncertain due to anxiety over the effect of persistently high oil prices on the world economy.

•

In the electronics industry, there are plans to introduce new digital consumer products and mobile handsets for the Christmas season, but it is uncertain whether this will create significant consumer demand. Prices in the general electronic components market are expected to continue dropping compared with the first half.

•

Kyocera expects the appreciation of the yen against the U.S. dollar and Euro to continue in the second half, and, therefore, assumes an average exchange rate of 100 yen to the U.S. dollar and 123 yen to the Euro during the second half, and 106 yen to the U.S. dollar and 129 yen to the Euro for the full year ending March 31, 2005. Accordingly, the appreciation of the yen against both currencies is projected to produce a negative impact on net sales and income before income taxes of approximately ¥42.0 billion and ¥8.0 billion yen, respectively.

(2)	Challenges for the Second Half

•

Despite relative uncertainty in the economic environment in the second half, especially in the components business, Kyocera will push ahead with its strategy of “high-value-added diversification” in the components and equipment businesses, with concerted group-wide efforts aimed at achieving the forecasts for the year ending March 31, 2005 shown above. Specifically, energies will be devoted to the following key initiatives.

•

Kyocera plans to conclude structural reform of its optical instruments business by March 2005, the objective of which is to swiftly raise profitability of the equipment business. The positive effects of this move are expected to emerge in the following fiscal year and beyond. Concretely, Kyocera will continue with its policy of business selection and concentration and management resources will be invested into high growth areas by pursuing group synergies. One example of this is expansion of the optical module business for mobile phones. In the telecommunications equipment business, Kyocera intends to aggressively launch new mobile handsets onto the market to increase sales in Japan and overseas. In PHS related products, efforts will be made to increase sales of browser terminals in Japan, introduce new models in China and cultivate new markets in Asia.

•

In the components business, which posted a remarkable growth in the first half, Kyocera will strive to maximize Group synergies in production and sales to further strengthen management foundations. Kyocera will also boost profitability by improving productivity at production bases in Japan and China. In the digital consumer equipment and automotive markets, which are projected to expand over the mid-to long-term, Kyocera will actively promote design-in activities and increase orders in the components business. In addition, Kyocera seeks to become the leader in the solar energy market, in which demand is growing rapidly around the world, by establishing a solid global production system for solar cells and modules including the expansion of production capacity.

- 15 -

2. Outlook and Future Business Strategies by Operating Segment (Consolidated)

(Yen in millions)


	Year ending March 31, 2005 (Forecast as of October 28, 2004)		Year ending March 31, 2005 (Forecast as of April 27, 2004)		Year ended March 31, 2004 (Result)		Increase (Decrease) (%)
Net sales	1,260,000		1,260,000		1,140,814		10.4
Fine Ceramics Group	302,500		288,000		255,805		18.3
Electronic Device Group	278,500		274,000		256,906		8.4
Equipment Group	585,000		610,000		545,811		7.2
Others	118,500		110,000		100,505		17.9
Adjustments and eliminations	(24,500	)	(22,000	)	(18,213	)	—

Operating profit	129,700		133,900		77,126		68.2
Fine Ceramics Group	47,300		39,500		31,139		51.9
Electronic Device Group	42,800		39,400		5,047		748.0
Equipment Group	25,700		42,000		31,257		(17.8	)
Others	13,900		13,000		9,683		43.6

Corporate and others	10,300		6,100		37,914		(72.8	)
Income before income taxes	140,000		140,000		115,040		21.7

(1)Fine Ceramics Group

•	Kyocera plans to further strengthen its competitiveness in the markets for fine ceramic parts for semiconductor fabrication equipment, sapphire substrates and ceramic packages for image sensors.

•

In line with rising demand for solar systems, Kyocera intends to create a global production system centered in Japan, China, Central America and Eastern Europe. Kyocera will commence its production of solar modules in Mexico in the second half, while preparations for a new production facility in the Czech Republic are progressing smoothly.

(2)Electronic Device Group

•	Kyocera will work to secure new orders by launching new ceramic capacitors and crystal-related components, with specific attention paid to attracting new customers in the digital consumer equipment and automotive markets.

•	Kyocera will introduce and promote the extensive use of production methods that will increase productivity. Kyocera also devote to reduce production costs and improve profitability by fully utilizing factories in China.

(3)Equipment Group

•	In the telecommunications equipment business, Kyocera intends to launch new models aggressively and timely, optimize its development resources and pursue group synergies in order to increase sales of CDMA handsets in Japan, the U.S. and Central and South America.

•

In the information equipment business, Kyocera seeks to increase sales through new introductions by expanding its line-up of digital multifunction products (MFPs) and color printers. Standardization of engines and key parts for the printers and digital MFPs will allow us to reduce production costs and improve price competitiveness.

•	In the optical instruments business, Kyocera plans to boost profitability by continuing efforts aimed at structural reforms. A total of approximately ¥7.6 billion is projected as operating expenses on a full-year basis for the purpose.

(4)Others

•	Kyocera Chemical plans to expand sales of flexible printed circuit boards and environmentally friendly sealants for electronic component materials, and to create Group synergies with our electronic components business.

- 16 -

•	KCCS is focused on expanding its outsourcing business, such as system integration services, security systems services, and its network service business utilizing mobile equipment.

3. Forecasts for the Fiscal Year Ending March 31, 2005 (Non-Consolidated)

(Yen in millions)


	Year ending March 31, 2005 (Forecast)	Increase (Decrease)(%) compared with Year ended March 31, 2004
Net sales	562,000	13.8
Profit from operations	50,000	21.3
Recurring profit	76,000	23.0
Net income	48,000	(20.9	)

There are no changes in Forecasts for the Fiscal Year Ending March 31, 2005 (Non-Consolidated) from the original forecasts as of April 27, 2004.

Note: Forward-Looking Statements

Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to: general economic conditions in our markets, which are primarily Japan, North America, Europe, and Asia, including in particular China; changes in exchange rates, particularly between the yen and the U.S. dollar and Euro, respectively, in which we make significant sales; our ability to launch innovative products and otherwise meet the advancing technical requirements of our customers, particularly in the highly competitive markets for ceramics, semiconductor parts and electronic components; the extent and pace of future growth or contraction in information technology-related markets around the world, including those for communications and personal computers; and events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of diseases such as SARS. Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.

- 17 -

CONSOLIDATED BALANCE SHEETS


	Yen in millions
	September 30, 2004				March 31, 2004				September 30, 2003
	Amount			%	Amount			%	Amount			%
Current assets :
Cash and cash equivalents	¥	256,965			¥	361,132			¥	299,160
Restricted cash		—				—				54,121
Short-term investments		74,262				3,855				10,321
Trade notes receivable		33,549				33,801				30,753
Trade accounts receivable		211,504				207,583				179,047
Short-term finance receivables		42,820				70,553				71,195
Less allowances for doubtful accounts and sales returns		(7,569	)			(8,468	)			(7,399	)
Inventories		239,612				197,194				192,600
Deferred income taxes		39,408				34,957				52,469
Other current assets		31,207				33,089				28,536

Total current assets		921,758		51.6		933,696		52.0		910,803		51.4

Non-current assets :
Investments in and advances to affiliates and unconsolidated subsidiaries		24,240				24,054				21,387
Securities and other investments		440,844				430,096				425,733

Total investments and advances		465,084		26.0		454,150		25.3		447,120		25.2

Long-term finance receivables		73,477		4.1		88,512		5.0		90,034		5.1

Property, plant and equipment, at cost :
Land		55,021				54,867				55,625
Buildings		223,956				217,216				214,532
Machinery and equipment		642,657				622,721				616,865
Construction in progress		9,815				10,384				6,723
Less accumulated depreciation		(675,190	)			(650,668	)			(636,732	)

		256,259		14.4		254,520		14.2		257,013		14.5
Goodwill		28,589		1.6		25,254		1.4		24,587		1.4
Intangible assets		17,495		1.0		16,645		0.9		17,076		1.0
Other assets		22,843		1.3		21,981		1.2		24,917		1.4

Total non-current assets		863,747		48.4		861,062		48.0		860,747		48.6

Total assets	¥	1,785,505		100.0	¥	1,794,758		100.0	¥	1,771,550		100.0


Note 1:		Restricted cash represents the amount of the time deposit to a financial institution in order to reduce the cost for the issuance of letter of credit in connection with the litigation against LaPine. Kyocera Corporation withdrew all restricted cash because Kyocera Corporation reached agreement to settle all claims in pending litigation on December 22, 2003 (U.S. time).

- 18 -


	Yen in millions
	September 30, 2004				March 31, 2004				September 30, 2003
	Amount			%	Amount			%	Amount			%
Current liabilities :
Short-term borrowings	¥	78,044			¥	84,815			¥	115,408
Current portion of long-term debt		4,406				44,522				55,258
Trade notes and accounts payable		120,646				110,759				98,875
Other notes and accounts payable		36,232				38,115				33,065
Accrued payroll and bonus		35,725				34,161				33,633
Accrued income taxes		23,641				19,054				19,753
Accrued litigation expenses		—				—				39,495
Other accrued expenses		30,029				28,665				25,058
Other current liabilities		17,223				16,548				13,422

Total current liabilities		345,946		19.4		376,639		21.0		433,967		24.5

Non-current liabilities :
Long-term debt		70,743				70,608				27,117
Accrued pension and severance costs		36,929				38,620				78,685
Deferred income taxes		86,387				95,498				77,267
Other non-current liabilities		5,386				6,409				7,055

Total non-current liabilities		199,445		11.2		211,135		11.7		190,124		10.7

Total liabilities		545,391		30.6		587,774		32.7		624,091		35.2

Minority interests in subsidiaries		59,173		3.3		53,238		3.0		55,057		3.1

Stockholders’ equity :
Common stock		115,703				115,703				115,703
Additional paid-in capital		162,087				162,091				162,068
Retained earnings		922,187				885,262				838,555
Accumulated other comprehensive income		12,262				22,046				7,443
Treasury stock, at cost		(31,298	)			(31,356	)			(31,367	)

Total stockholders’ equity		1,180,941		66.1		1,153,746		64.3		1,092,402		61.7

Total liabilities, minority interests and stockholders’ equity	¥	1,785,505		100.0	¥	1,794,758		100.0	¥	1,771,550		100.0

Note 2: Accumulated other comprehensive income is as follows:


	Yen in millions
	September 30, 2004			March 31, 2004			September 30, 2003
Net unrealized gains on securities	¥	39,996		¥	59,241		¥	48,024
Net unrealized losses on derivative financial instruments	¥	(22	)	¥	(48	)	¥	(203	)
Minimum pension liability adjustments	¥	(1,477	)	¥	(1,477	)	¥	(10,931	)
Foreign currency translation adjustments	¥	(26,235	)	¥	(35,670	)	¥	(29,447	)

- 19 -

CONSOLIDATED STATEMENTS OF INCOME


	Yen in millions, except per share amounts
	Six months ended September 30,										Increase (Decrease) %		Year ended March 31, 2004
	2004					2003							Year ended March 31, 2004
	Amount			%		Amount			%				Amount			%
Net sales	¥	600,562		100.0		¥	518,378		100.0		15.9		¥	1,140,814		100.0
Cost of sales		429,643		71.5			397,654		76.7		8.0			860,224		75.4

Gross profit		170,919		28.5			120,724		23.3		41.6			280,590		24.6

Selling, general and administrative expenses		108,827		18.2			98,170		18.9		10.9			171,628		15.0

Profit from operations		62,092		10.3			22,554		4.4		175.3			108,962		9.6

Other income or expenses :
Interest and dividend income		2,728		0.5			2,419		0.4		12.8			4,883		0.4
Interest expense		(613	)	(0.1	)		(701	)	(0.1	)	—			(1,286	)	(0.1	)
Foreign currency transaction gains (losses), net		2,096		0.3			(1,621	)	(0.3	)	—			(1,546	)	(0.1	)
Equity in earnings of affiliates and unconsolidated subsidiaries		582		0.1			1,729		0.3		(66.3	)		2,575		0.2
Loss on devaluation of investment in securities		(89	)	0.0			(105	)	0.0		—			(1,030	)	(0.1	)
Other, net		457		0.1			852		0.1		(46.4	)		2,482		0.2

Total other income or expenses		5,161		0.9			2,573		0.4		100.6			6,078		0.5

Income before income taxes and minority interests		67,253		11.2			25,127		4.8		167.7			115,040		10.1
Income taxes		22,748		3.8			12,749		2.4		78.4			50,310		4.4

Income before minority interests		44,505		7.4			12,378		2.4		259.5			64,730		5.7
Minority interests		(1,956	)	(0.3	)		3,376		0.6		—			3,356		0.3

Net income	¥	42,549		7.1		¥	15,754		3.0		170.1		¥	68,086		6.0

Earnings per share:
Net income:
Basic	¥	226.94				¥	84.79						¥	364.79
Diluted	¥	226.85				¥	84.79						¥	364.78

Weighted average number of shares of common stock outstanding (shares in thousands) :
Basic		187,492					185,803							186,643
Diluted		187,569					185,803							186,649

- 20 -

Notes:

Kyocera applies the Statement of Financial Accounting Standards Board (SFAS) No.130, “Financial Reporting of Comprehensive Income.” Based on this standard, comprehensive income for the six months ended September 30, 2004 and 2003 was an increase of 32,765 million yen and an increase of 79,391 million yen, respectively.

Earnings per share amounts were computed based on SFAS No.128, “Earnings per Share.” Under SFAS No.128, basic earnings per share was computed based on the average number of shares of common stock outstanding during each period and diluted earnings per share assumed the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock.

Profit from operation for the year ended March 31, 2004 included 18,917 million yen of net settlement gain for the substitutional portion of Employee Pension Funds, which was recorded at Kyocera Corporation and Kyocera Mita Corporation. Kyocera Corporation and Kyocera Mita Corporation adopted Emerging issues Task Force issue No. 03-02 “Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities” for the settlement process of the substitutional portion of Employee Pension Funds.

- 21 -

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

( Yen in millions and shares in thousands)


(Number of shares of common stock)	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income			Treasury stock, at cost			Comprehensive income
Balance, March 31, 2003 (184,964)	¥	115,703	¥	167,675		¥	828,350		¥	(56,194	)	¥	(52,034	)

Net income for the year							68,086								¥	68,086
Other comprehensive income										78,240						78,240

Total comprehensive income for the year															¥	146,326

Cash dividends							(11,174	)
Purchase of treasury stock (14)													(105	)
Reissuance of treasury stock (5)				4									44
Allocation of treasury stock for share exchange (2,529)				(5,607	)								20,739
Stock option plan of a subsidiary				19

Balance, March 31, 2004 (187,484)		115,703		162,091			885,262			22,046			(31,356	)

Net income for the period							42,549								¥	42,549
Other comprehensive income										(9,784	)					(9,784	)

Total comprehensive income for the period															¥	32,765

Cash dividends							(5,624	)
Purchase of treasury stock (8)													(74	)
Reissuance of treasury stock (16)				(4	)								132

Balance, September 30, 2004 (187,492 )	¥	115,703	¥	162,087		¥	922,187		¥	12,262		¥	(31,298	)

(Yen in millions and shares in thousands)


(Number of shares of common stock)	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income			Treasury stock, at cost			Comprehensive income
Balance, March 31, 2003 (184,964)	¥	115,703	¥	167,675		¥	828,350		¥	(56,194	)	¥	(52,034	)

Net income for the period							15,754								¥	15,754
Other comprehensive income										63,637						63,637

Total comprehensive income for the period															¥	79,391

Cash dividends							(5,549	)
Purchase of treasury stock (11)													(72	)
Allocation of treasury stock for share exchange (2,529)				(5,607	)								20,739

Balance, September 30, 2003 (187,482)	¥	115,703	¥	162,068		¥	838,555		¥	7,443		¥	(31,367	)

- 22 -

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Yen in millions
	Six months ended September 30,						Year ended March 31, 2004
	2004			2003			Year ended March 31, 2004
Cash flows from operating activities:
Net income	¥	42,549		¥	15,754		¥	68,086
Adjustments to reconcile net income to net cash provided by operating activities :
Depreciation and amortization		31,089			33,667			70,260
Losses on inventories		7,493			9,338			11,228
Foreign currency adjustments		(1,849	)		1,308			1,294
Decrease (increase) in receivables		50,272			2,296			(34,704	)
Increase in inventories		(44,324	)		(22,059	)		(32,966	)
Increase in other current assets		(389	)		(4,815	)		(4,402	)
Increase in notes and accounts payable		3,222			5,626			20,701
Settlement regarding LaPine Case		—			—			(35,454	)
Other, net		828			(12,605	)		(1,468	)

Net cash provided by operating activities		88,891			28,510			62,575

Cash flows from investing activities :
Payments for purchases of securities		(60,340	)		(22,632	)		(37,981	)
Payments for purchases of investments and advances		(452	)		(606	)		(7,917	)
Sales and maturities of securities		19,929			42,358			77,487
Proceeds from sales of investment in an affiliate		—			—			5,004
Payments for purchases of property, plant and equipment, and intangible assets		(30,574	)		(29,128	)		(58,869	)
Proceeds from sales of property, plant and equipment, and intangible assets		1,982			1,123			2,720
Acquisitions of businesses, net of cash acquired		(2,794	)		5,135			(2,271	)
Negotiable certificate of deposits		(68,100	)		—			—
Deposit of restricted cash		—			(1,994	)		(1,994	)
Withdrawal of restricted cash		—			—			52,983
Other, net		(3,828	)		581			419

Net cash (used in) provided by investing activities		(144,177	)		(5,163	)		29,581

Cash flows from financing activities :
(Decrease) increase in short-term debt		(7,047	)		6,701			(23,823	)
Proceeds from issuance of long-term debt		8,662			1,168			48,975
Payments of long-term debt		(48,847	)		(18,361	)		(33,152	)
Dividends paid		(6,409	)		(6,114	)		(12,372	)
Net purchases of treasury stock		55			(49	)		(33	)
Other, net		4			543			(17	)

Net cash used in financing activities		(53,582	)		(16,112	)		(20,422	)

Effect of exchange rate changes on cash and cash equivalents		4,701			(6,385	)		(8,912	)

Net (decrease) increase in cash and cash equivalents		(104,167	)		850			62,822
Cash and cash equivalents at beginning of period		361,132			298,310			298,310

Cash and cash equivalents at end of period	¥	256,965		¥	299,160		¥	361,132

- 23 -

SUPPLEMENTAL CASH FLOW INFORMATION


	Yen in millions
	Six months ended September 30,						Year ended March 31, 2004
	2004			2003			Year ended March 31, 2004
Cash paid during the period for :
Interest	¥	1,277		¥	1,632		¥	3,043
Income taxes		18,165			26,699			38,774

Acquisitions of businesses :
Fair value of assets acquired	¥	8,471		¥	47,510		¥	56,506
Fair value of liabilities assumed		(2,672	)		(19,086	)		(19,804	)
Minority interests		(2,444	)		—			—
Investments accounted for by the equity method		—			(4,600	)		(4,600	)
Stock issuance for acquisition		—			(15,132	)		(15,132	)
Cash acquired		(561	)		(13,827	)		(14,699	)

	¥	2,794		¥	(5,135	)	¥	2,271

- 24 -

SEGMENT INFORMATION

1. Operating segments :


	Yen in millions
	Six months ended September 30,						Increase (Decrease) %		Year ended March 31, 2004
	2004			2003					Year ended March 31, 2004
	Amount			Amount					Amount
Net sales :
Fine Ceramics Group	¥	151,986		¥	119,399		27.3		¥	255,805
Electronic Device Group		139,790			119,787		16.7			256,906
Equipment Group		265,597			241,372		10.0			545,811
Others		56,193			45,735		22.9			100,505
Adjustments and eliminations		(13,004	)		(7,915	)	—			(18,213	)

	¥	600,562		¥	518,378		15.9		¥	1,140,814

Operating profit :
Fine Ceramics Group	¥	24,399		¥	11,322		115.5		¥	31,139
Electronic Device Group		22,241			(6,392	)	—			5,047
Equipment Group		7,136			10,274		(30.5	)		31,257
Others		6,160			4,755		29.5			9,683

		59,936			19,959		200.3			77,126

Corporate		6,683			3,010		122.0			34,871
Equity in earnings of affiliates and unconsolidated subsidiaries		582			1,729		(66.3	)		2,575
Adjustments and eliminations		52			429		(87.9	)		468

Income before income taxes	¥	67,253		¥	25,127		167.7		¥	115,040

Depreciation and amortization :
Fine Ceramics Group	¥	7,883		¥	7,775		1.4		¥	16,729
Electronic Device Group		10,134			11,293		(10.3	)		23,323
Equipment Group		9,460			10,979		(13.8	)		22,814
Others		2,363			2,276		3.8			4,838
Corporate		1,249			1,344		(7.1	)		2,556

	¥	31,089		¥	33,667		(7.7	)	¥	70,260

Capital expenditures :
Fine Ceramics Group	¥	7,329		¥	5,827		25.8		¥	13,307
Electronic Device Group		10,320			9,111		13.3			18,612
Equipment Group		8,958			9,004		(0.5	)		18,303
Others		914			521		75.4			1,099
Corporate		1,110			2,995		(62.9	)		3,616

	¥	28,631		¥	27,458		4.3		¥	54,937

- 25 -

2. Geographic segments (Sales and Operating profits by geographic area) :


	Yen in millions
	Six months ended September 30,						Increase (Decrease) %		Year ended March 31, 2004
	2004			2003					Year ended March 31, 2004
	Amount			Amount					Amount
Net sales:
Japan	¥	259,600		¥	240,051		8.1		¥	519,532
Intra-group sales and transfer between geographic areas		164,220			134,338		22.2			284,346

		423,820			374,389		13.2			803,878

United States of America		166,827			135,540		23.1			313,007
Intra-group sales and transfer between geographic areas		13,711			11,590		18.3			20,815

		180,538			147,130		22.7			333,822

Asia		78,674			58,985		33.4			128,629
Intra-group sales and transfer between geographic areas		59,642			46,484		28.3			100,527

		138,316			105,469		31.1			229,156

Europe		86,288			74,962		15.1			161,364
Intra-group sales and transfer between geographic areas		15,313			15,868		(3.5	)		32,918

		101,601			90,830		11.9			194,282

Others		9,173			8,840		3.8			18,282
Intra-group sales and transfer between geographic areas		3,921			3,494		12.2			7,686

		13,094			12,334		6.2			25,968

Adjustments and eliminations		(256,807	)		(211,774	)	—			(446,292	)

	¥	600,562		¥	518,378		15.9		¥	1,140,814


Operating Profits :
Japan	¥	54,484		¥	39,374		38.4		¥	89,193
United States of America		5,793			(4,694	)	—			2,560
Asia		8,636			3,094		179.1			9,829
Europe		(698	)		(14,296	)	—			(17,601	)
Others		740			416		77.9			1,042

		68,955			23,894		188.6			85,023
Adjustments and eliminations		(8,967	)		(3,506	)	—			(7,429	)

		59,988			20,388		194.2			77,594
Corporate		6,683			3,010		122.0			34,871
Equity in earnings of affiliates and unconsolidated subsidiaries		582			1,729		(66.3	)		2,575

Income before income taxes	¥	67,253		¥	25,127		167.7		¥	115,040

- 26 -

3. Geographic segments (Sales by region) :


	Yen in millions
	Six months ended September 30,								Increase (Decrease)			Year ended March 31, 2004
	2004				2003				Increase (Decrease)			Year ended March 31, 2004
	Amount			%	Amount			%	Amount		%	Amount			%
Japan	¥	227,772		37.9	¥	211,276		40.8	¥	16,496	7.8	¥	456,807		40.0
United States of America		130,505		21.7		114,335		22.0		16,170	14.1		251,326		22.0
Asia		116,357		19.4		90,122		17.4		26,235	29.1		194,302		17.0
Europe		83,906		14.0		73,472		14.2		10,434	14.2		156,929		13.8
Others		42,022		7.0		29,173		5.6		12,849	44.0		81,450		7.2

Net sales	¥	600,562		100.0	¥	518,378		100.0	¥	82,184	15.9	¥	1,140,814		100.0

Sales outside Japan	¥	372,790			¥	307,102			¥	65,688	21.4	¥	684,007
Sales outside Japan to net sales		62.1	%			59.2	%						60.0	%

- 27 -

INVESTMENTS IN DEBT AND EQUITY SECURITIES

Available-for-sale securities are recorded at fair value, with unrealized gains and losses excluded from income and reported in other comprehensive income, net of tax. Held-to-maturity securities are recorded at amortized cost.

Investments in debt and equity securities as of September 30, 2004, March 31, 2004 and September 30, 2003, included in short-term investments (current assets) and in securities and other investments (non-current assets) are summarized as follows :


	Yen in millions
	September 30, 2004								March 31, 2004
	Cost		Aggregate fair values		Gross unrealized gains		Gross unrealized losses		Cost		Aggregate fair values		Gross unrealized gains		Gross unrealized losses
Available-for-sale securities :
Corporate debt securities	¥	1,728	¥	1,723	¥	6	¥	11	¥	14,961	¥	14,891	¥	26	¥	96
Other debt securities		71,134		70,999		84		219		12,994		12,839		1		156
Investment trust		20,099		16,835		16		3,280		20,106		16,954		11		3,163
Equity securities		261,461		330,836		69,540		165		261,037		363,548		102,568		57

Total available-for-sale securities		354,422		420,393		69,646		3,675		309,098		408,232		102,606		3,472

Held-to-maturity securities :
Corporate debt securities		—		—		—		—		—		—		—		—
Other debt securities		17,650		17,598		—		52		21,093		21,165		72		—

Total held-to-maturity securities		17,650		17,598		—		52		21,093		21,165		72		—

Total investments in debt and equity securities	¥	372,072	¥	437,991	¥	69,646	¥	3,727	¥	330,191	¥	429,397	¥	102,678	¥	3,472


	September 30, 2003
	Cost		Aggregate fair values		Gross unrealized gains		Gross unrealized losses
Available-for-sale securities :
Corporate debt securities	¥	28,622	¥	28,541	¥	22	¥	103
Other debt securities		14,062		13,968		33		127
Investment trust		20,106		16,780		3		3,329
Equity securities		261,639		345,915		84,560		284

Total available-for-sale securities		324,429		405,204		84,618		3,843

Held-to-maturity securities :
Corporate debt securities		4,660		4,655		—		5
Other debt securities		22,389		22,448		59		—

Total held-to-maturity securities		27,049		27,103		59		5

Total investments in debt and equity securities	¥	351,478	¥	432,307	¥	84,677	¥	3,848

Note:

Cost represents amortized cost for debt securities and acquisition cost for equity securities. The cost basis of the individual securities is written down to fair value as a new cost basis when other-than-temporary impairment is recognized.

- 28 -

BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

1. Scope of consolidation and application of the equity method :

Major consolidated subsidiaries :

AVX CORPORATION

KYOCERA WIRELESS CORP.

KYOCERA MITA CORPORATION

KYOCERA ELCO CORPORATION

Major affiliates accounted for by the equity method :

TAITO CORPORATION

2. Changes in scope of consolidation and application of the equity method :


Consolidation

(Increase) Established : 3		JAPAN MEDICAL MATERIALS CORPORATION and others

Acquired : 1		KYOCERA MARUZEN SYSTEM INTEGRATION CO., LTD.

(Decrease) Liquidated : 1		KYOCERA CHEMICAL REINFORCED PLASTIC CO., LTD.

Equity method

(Increase) None

(Decrease) Sold : 1		MILLENNIUM BUSINESS SYSTEMS, L.L.C.

- 29 -

Non-Consolidated Results of Kyocera Corporation (parent company)

for the Six Months Ended September 30, 2004

The interim non-consolidated financial statements are in conformity with accounting principles generally accepted in Japan.

Date of the board of directors’ meeting for the interim results : October 28, 2004

Payment date of interim dividends : December 6, 2004

1. Results for the six months ended September 30, 2004 :

(1) Results of operations :


	Japanese yen
	Six months ended September 30,						Year ended March 31, 2004
	2004			2003			Year ended March 31, 2004
Net sales	¥	250,463 million		¥	237,808 million		¥	494,035 million
% change from the previous period		5.3	%		4.4	%

Profit from operations		21,297 million			17,572 million			41,222 million
% change from the previous period		21.2	%		17.6	%

Recurring profit		34,937 million			26,176 million			61,788 million
% change from the previous period		33.5	%		75.0	%

Net income		20,512 million			16,159 million			60,663 million
% change from the previous period		26.9	%		73.9	%

Earnings per share	¥	109.40		¥	86.97		¥	324.70

Notes :


1. Average number of common stock outstanding during the period :


	Six months ended September 30, 2004	187,492,144 shares
	Six months ended September 30, 2003	185,804,001 shares
	Year ended March 31, 2004	186,644,145 shares

2. Change in accounting policies :		None

(2) Dividend information :


	Japanese yen
	Six months ended September 30,				Year ended March 31, 2004
	2004		2003		Year ended March 31, 2004
Interim dividends per share	¥	30.00	¥	30.00		—
Annual dividends per share		—		—	¥	60.00

- 30 -

(3) Financial Condition :


	Japanese yen
	September 30,						March 31, 2003
	2004			2003			March 31, 2003
Total assets	¥	1,233,908 million		¥	1,251,420 million		¥	1,241,012 million
Stockholders’ equity		1,025,776 million			980,458 million			1,029,738 million

Stockholders’ equity to total assets		83.1	%		78.3	%		83.0	%

Stockholders’ equity per share	¥	5,471.05		¥	5,229.48		¥	5,492.08


Notes : Total number of shares outstanding as of :
September 30, 2004		187,491,883 shares
September 30, 2003		187,486,635 shares
March 31, 2004		187,484,253 shares

Total number of treasury stock as of :
September 30, 2004		3,817,407 shares
September 30, 2003		3,822,655 shares
March 31, 2004		3,825,037 shares

2. Forecast for the year ending March 31, 2005 :

- 31 -

BALANCE SHEETS


	Yen in millions
	September 30, 2004				March 31, 2004				September 30, 2003
	September 30, 2004				March 31, 2004				September 30, 2003
	Amount			%	Amount			%	Amount			%
Current assets :
Cash and bank deposits	¥	158,313			¥	192,928			¥	203,935
Trade notes receivable		45,630				50,414				47,230
Trade accounts receivable		88,650				85,441				81,105
Marketable securities		1,517				—				3,660
Finished goods and merchandise		23,840				20,010				20,234
Raw materials		24,128				20,058				22,370
Work in process		19,676				21,904				19,839
Supplies		532				742				579
Deferred income taxes		10,879				10,806				27,535
Short-term loans to subsidiaries		3,343				3,178				5,136
Other accounts receivable		5,884				5,772				3,306
Refundable income taxes		—				2,645				—
Other current assets		831				1,349				1,591
Allowances for doubtful accounts		(140	)			(144	)			(137	)

Total current assets		383,083		31.0		415,103		33.4		436,383		34.9

Fixed assets :
Tangible fixed assets :
Buildings		34,569				36,499				38,291
Structures		2,185				2,275				2,358
Machinery and equipment		35,250				37,163				37,570
Vehicles		31				30				28
Tools, furniture and fixtures		8,677				9,232				9,832
Land		31,972				31,972				31,979
Construction in progress		985				1,634				629

Total tangible fixed assets		113,669		9.2		118,805		9.6		120,687		9.6

Intangible assets :
Patent rights and others		2,651				3,178				3,264

Total intangible assets		2,651		0.2		3,178		0.3		3,264		0.3

Investments and other assets :
Investments in securities		424,972				413,960				412,115
Investments in subsidiaries and affiliates		263,362				249,591				242,219
Investments in subsidiaries and affiliates other than equity securities		23,063				25,664				25,686
Long-term loans		19,797				10,540				7,898
Long-term prepaid expenses		5,882				6,791				5,726
Security deposits		2,236				2,279				2,270
Other investments		5,733				1,292				2,156
Allowances for doubtful accounts		(4,590	)			(241	)			(1,034	)
Allowances for impairment loss on securities		(5,950	)			(5,950	)			(5,950	)

Total investments and other assets		734,505		59.6		703,926		56.7		691,086		55.2

Total fixed assets		850,825		69.0		825,909		66.6		815,037		65.1

Total assets	¥	1,233,908		100.0	¥	1,241,012		100.0	¥	1,251,420		100.0

- 32 -


	Yen in millions
	September 30, 2004					March 31, 2004					September 30, 2003
	September 30, 2004					March 31, 2004					September 30, 2003
	Amount			%		Amount			%		Amount			%
Current liabilities :
Trade accounts payable	¥	59,572				¥	51,684					50,747
Current portion of long-term debt		0					0					1
Other payables		12,645					14,012					54,313
Accrued expenses		6,399					6,355					6,947
Income taxes payables		8,401					45					7,300
Deposits received		2,378					2,176					2,247
Accrued bonuses		10,035					10,658					10,520
Provision for warranties		411					650					673
Provision for sales returns		189					184					169
Other current liabilities		494					52					75

Total current liabilities		100,524		8.2			85,816		6.9			132,992		10.7

Non-current liabilities :
Long-term debt		0					1					2
Deferred income taxes		79,215					90,977					69,757
Accrued pension and severance costs		26,989					33,148					66,945
Directors’ retirement allowance		1,024					985					921
Other non-current liabilities		380					347					345

Total non-current liabilities		107,608		8.7			125,458		10.1			137,970		11.0

Total liabilities		208,132		16.9			211,274		17.0			270,962		21.7

Stockholder’s equity
Common stock		115,703		9.3			115,703		9.3			115,703		9.2
Additional paid-in capital		192,555		15.6			192,555		15.5			192,555		15.4

Retained earnings:
Legal reserves		17,207					17,207					17,207
General reserve		541,140					493,521					493,520
Unappropriated retained earnings		28,800					61,588					22,712

Total retained earnings		587,147		47.6			572,316		46.2			533,439		42.6

Net unrealized gain on other securities		161,669		13.1			180,520		14.5			170,104		13.6
Treasury stock, at cost		(31,298	)	(2.5	)		(31,356	)	(2.5	)		(31,343	)	(2.5	)

Total stockholders’ equity		1,025,776		83.1			1,029,738		83.0			980,458		78.3

Total liabilities and stockholders’ equity	¥	1,233,908		100.0		¥	1,241,012		100.0		¥	1,251,420		100.0

- 33 -

STATEMENTS OF INCOME


	Yen in millions
	Six months ended September 30,								Increase (Decrease) %		Year ended March 31, 2004
	2004					2003					Year ended March 31, 2004
	Amount			%		Amount		%			Amount		%
Net sales	¥	250,463		100.0		¥	237,808	100.0	5.3		¥	494,035	100.0
Cost of sales		194,313		77.6			187,351	78.8	3.7			385,752	78.1

Gross profit		56,150		22.4			50,457	21.2	11.3			108,283	21.9
Selling, general and administrative expenses		34,853		13.9			32,885	13.8	6.0			67,061	13.6

Profit from operations		21,297		8.5			17,572	7.4	21.2			41,222	8.3

Non-operating income :
Interest and dividend income		12,512		5.0			8,031	3.4	55.8			17,757	3.6
Foreign currency transaction gains, net		497		0.2			—	—	—			1,267	0.3
Other non-operating income		3,513		1.4			2,356	1.0	49.1			4,666	0.9

Total non-operating income		16,522		6.6			10,387	4.4	59.1			23,690	4.8

Non-operating expenses :
Interest expense		2		0.0			2	0.0	82.7			16	0.0
Foreign currency transaction losses, net		—		—			273	0.1	—			—	—
Other non-operating expenses		2,880		1.2			1,508	0.7	90.9			3,108	0.6

Total non-operating expenses		2,882		1.2			1,783	0.8	61.7			3,124	0.6

Recurring profit		34,937		13.9			26,176	11.0	33.5			61,788	12.5

Non-recurring gain		67		0.0			204	0.1	(66.8	)		36,701	7.4
Non-recurring loss		9,277		3.6			506	0.2	—			1,414	0.3

Income before income taxes		25,727		10.3			25,874	10.9	(0.6	)		97,075	19.6
Income taxes – current		6,255		2.5			7,820	3.3	(20.0	)		3,807	0.7
Income taxes – deferred		(1,040	)	(0.4	)		1,895	0.8	—			32,605	6.6

Net income		20,512		8.2			16,159	6.8	26.9			60,663	12.3

Unappropriated retained earnings brought forward from the previous year		8,293					6,553					6,553
Net realized loss on treasury stock, at cost		5					—					3
Interim dividends		—					—					5,625

Unappropriated retained earnings at the end of the period	¥	28,800				¥	22,712				¥	61,588

- 34 -

Summary of significant accounting policies :

1. Valuation of assets :

(1) Securities :

Held-to-maturity securities : Amortized cost method

Investments in subsidiaries and affiliates : Cost determined by the moving average method

Other securities

Marketable :

Based on market price of the closing date of the interim financial period

(Unrealized gains and losses on those securities are reported in the stockholders’

equity and cost is determined by the moving average method.)

Non-marketable :

Cost determined by the moving average method

(2) Derivatives instruments : Mark-to-market method

(3) Inventories :

Finished good, merchandise and work in process :

Finished goods and work in process are stated at the lower of cost or market, the cost being determined by the average method. Merchandise are stated at the lower of cost or market, the cost being determined by the last purchase method.

Raw materials and supplies :

Raw materials and supplies, except those for telecommunications equipment, are valued at the lower of cost or market, the cost being determined by the last purchase method.

Raw materials for telecommunications equipment are valued at the lower of cost or market, the cost being determined by the first-in, first-out method.

2. Depreciation of fixed assets :

Tangible fixed assets :

Depreciation is computed at rates based on the estimated useful lives of assets using the declining balance method.

The principal estimated useful lives are as follows:


Building and structures		2 to 25 years
Machinery and equipment, and Tools, furniture and fixtures		2 to 10 years

Intangible fixed assets :

Amortization is computed at rates based on the estimated useful lives of assets using the straight-line method.

3. Accounting for allowance and accruals :

Allowances for doubtful accounts :

Allowances for doubtful accounts are provided at an estimated amount of the past actual ratio of losses on bad debts.

Certain allowances are provided for estimated uncollectible receivables.

Allowances for impairment losses on investments :

Allowances for impairment losses on investments are provided at an estimated uncollectible amount of investments in subsidiaries or affiliates.

Accrued bonuses :

Accrued bonuses are provided based upon the amounts expected to be paid which is determined by actual payment of previous year.

Warranty reserves

Warranty reserves are provided based upon the estimated after-service costs to be paid during warranty periods, which is determined by actual payment of past years, for communication equipment and optical instruments.

Allowances for sales return

Allowances for sales return are provided based upon the estimated loss on returned products, which is determined by the historical experience of sales returns.

Accrued pension and severance costs :

Pension and severance costs are recognized based on projected benefit obligation and plan assets at the year end.

Past service liability is amortized over estimated average remaining service period of employees by using the straight-line method.

Actuarial gains or losses are amortized over estimated average remaining service period of employees by using the straight-line method following the year incurred.

Retirement allowance for Directors and Corporate Auditors

Retirement allowances for Directors and Corporate Auditors are provided at an estimated amount in accordance with Kyocera Corporation’s internal regulation.

4. Translation of assets and liabilities denominated in foreign currencies into Japanese yen :

Assets and liabilities denominated in foreign currencies are translated at the exchange rates in effect at the respective balance sheet dates, and resulting transaction gains or losses are included in the determination of net income.

5. Lease transactions :

Finance lease other than those which are deemed to transfer the ownership of leased assets to lessees are accounted for by the method similar to that applicable to an ordinary operating lease.

6. Income taxes for the interim periods :

Calculation of deferred income taxes and income tax payables for the interim periods included estimated amounts of addition and reversal of reserve for special depreciation which will be made within appropriation of retained earnings for the year-end.

7. Consumption tax :

The consumption tax withheld upon sale and the consumption tax paid for purchases of goods and services are not included in the amounts of respective revenue and cost or expense items in the accompanying statements of income.

- 35 -

Notes to the balance sheets :


	Yen in millions
	September 30, 2004		March 31, 2004		September 30, 2003
(1) Accumulated depreciation of tangible fixed assets	¥	299,555	¥	318,482	¥	309,323

(2) Time deposit pledged as collateral		—		—	¥	54,121

(3) Guarantees :
Guarantee in the form of commitment	¥	1,545	¥	25,503	¥	66,937
Guarantee in the form of letters of awareness	¥	7,086	¥	8,546	¥	8,616

(4)	Temporary paid consumption tax and temporary received consumption tax are offset and included in other accounts receivables on the balance sheets.

Notes to the statements of income :

(1)	Major items in non-recurring gain and loss :


	Yen in millions
	Six months ended September 30,				Year ended March 31, 2004
	2004		2003		Year ended March 31, 2004
1) Non-recurring gain :
Gain on disposal of tangible fixed assets	¥	63	¥	204	¥	309
Reversal of allowance for doubtful accounts	¥	4	¥	0	¥	0
Settlement gain for a substitutional
portion of employee benefit obligation		—		—	¥	32,721
Gain on sale of investment in an affiliate		—		—	¥	3,670

2) Non-recurring loss :
Allowance for doubtful accounts for a subsidiary	¥	4,272		—		—
Loss on devaluation of investment in a subsidiary	¥	4,141		—		—
Loss on disposal of tangible fixed assets	¥	784	¥	472	¥	791
Loss on devaluation of investment in securities	¥	78	¥	27	¥	615

(2)	Depreciation and amortization :


	Yen in millions
	Six months ended September 30,				Year ended March 31, 2004
	2004		2003		Year ended March 31, 2004
Tangible fixed assets	¥	10,841	¥	11,911	¥	26,323
Intangible assets	¥	814	¥	834	¥	1,673

- 36 -

Note for marketable securities:

Market value for investment in subsidiaries and affiliates:


	Yen in millions
	September 30, 2004
	Carrying Amount		Market value		Difference
Investment in subsidiaries	¥	65,904	¥	158,839	¥	92,935
Investment in affiliates	¥	6,541	¥	21,055	¥	14,514

	¥	72,445	¥	179,894	¥	107,449


	Yen in millions
	March 31, 2004
	Carrying Amount		Market value		Difference
Investment in subsidiaries	¥	65,904	¥	210,167	¥	144,263
Investment in affiliates	¥	6,541	¥	20,789	¥	14,248

	¥	72,445	¥	230,956	¥	158,511


	Yen in millions
	September 30, 2003
	Carrying Amount		Market value		Difference
Investment in subsidiaries	¥	57,174	¥	176,929	¥	119,755
Investment in affiliates	¥	6,541	¥	21,322	¥	14,781

	¥	63,715	¥	198,251	¥	134,536

- 37 -

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