Edgar Filing: KYOCERA CORP

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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 January 2005

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: January 27, 2005

Information furnished on this form:

EXHIBITS


Exhibit Number

1.		Consolidated Financial Results for the Nine Months Ended December 31, 2004

2.		Notice relating to Transfer of Domestic Sales Business of Solar Energy Products of Kyocera Group

LOGO

January 27, 2005

KYOCERA CORPORATION

Consolidated Financial Highlights (Unaudited)

Results for the Nine Months Ended December 31, 2004

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


	Nine months ended December 31,		Increase (Decrease) (%)
	2004	2003	Increase (Decrease) (%)
Net sales	892,642	815,832	9.4
Profit from operations	81,399	48,478	67.9
Income before income taxes	88,965	53,698	65.7
Net income	57,163	33,254	71.9
Average exchange rates :
US$	109	115	—
Euro	135	132	—
Earnings per share :
Net income
Basic	304.88	178.44	—
Diluted	304.80	178.44	—
Capital expenditures	46,202	40,584	13.8
Depreciation	42,782	44,410	(3.7	)
R&D expenses	41,364	34,972	18.3
Sales of products manufactured outside Japan to net sales (%)	33.2	34.1	—

- 1 -

Consolidated Results of Kyocera Corporation and its Subsidiaries

for the Nine Months Ended December 31, 2004

1. The basic items on preparation for consolidated results for the nine months ended December 31, 2004 :

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

(2)	Change in accounting policies : None

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


	Consolidation	Equity method
Increase	5	2
Decrease	2	1

2. Consolidated financial information for the nine months ended December 31, 2004 :

(1) Consolidated results of operations :


	Nine months ended December 31,						Year ended March 31,
	2004			2003			2004
Net sales	¥	892,642 million		¥	815,832 million		¥	1,140,814 million
% change from the previous period		9.4	%		2.2	%		6.6	%
Profit from operations		81,399 million			48,478 million			108,962 million
% change from the previous period		67.9	%		(14.0	)%		30.7	%
Income before income taxes		88,965 million			53,698 million			115,040 million
% change from the previous period		65.7	%		2.2	%		51.3	%
Net income		57,163 million			33,254 million			68,086 million
% change from the previous period		71.9	%		15.6	%		65.4	%
Earnings per share :
Basic	¥	304.88		¥	178.44		¥	364.79
Diluted		304.80			178.44			364.78

(2) Consolidated financial conditions :


	As of December 31,						As of March 31,
	2004			2003			2004
Total assets	¥	1,770,575 million		¥	1,776,179 million		¥	1,794,758 million
Stockholders’ equity		1,190,144 million			1,117,548 million			1,153,746 million
Stockholders’ equity to total assets		67.2	%		62.9	%		64.3	%
Stockholders’ equity per share	¥	6,347.93		¥	5,960.76		¥	6,153.83

- 2 -

(3) Consolidated cash flows :


	Nine months ended December 31,				Year ended March 31,
	2004		2003		2004
Cash flows from operating activities	¥	101,564 million	¥	(3,048) million	¥	62,575 million
Cash flows from investing activities		(144,795) million		29,555 million		29,581 million
Cash flows from financing activities		(58,019) million		(12,893) million		(20,422) million
Cash and cash equivalents at end of period		261,220 million		304,184 million		361,132 million

3. Consolidated financial forecast for the year ending March 31, 2005 :


	Year ending March 31, 2005
Net sales	¥	1,150,000 million
Income before income taxes	¥	100,000 million
Net income	¥	59,000 million

Note:

Forecast of earnings per share : 314.59

Net income per share amounts is computed based on Statement of Financial Accounting Standards (SFAS) No.128.

Forecast of earnings per share is computed based on the diluted average number of shares outstanding during the nine months ended December 31, 2004.

With regard to forecasts set forth above, please refer to the accompanying “Forward-Looking Statements” on page 13.

- 3 -

Business Results, Financial Condition and Prospects

1.Business Results for the Nine Months Ended December 31, 2004

(1) Economic Situation and Business Environment

•

During the nine months ended December 31, 2004 (the nine months), the Japanese economy showed a downtrend due to that a stable production activities in the manufacturing sector during the six months ended September 30, 2004 (the first half) turned into a weakness in the six months ending March 31, 2005 (the second half), and also due to a negative impact of continued appreciation of the yen against the U.S. dollar on corporate earnings. Despite a slowdown in the European economy, the U.S. economy expanded steadily led by solid personal consumption and capital expenditures, while the Asian economy continued to manifest healthy growth, particularly in China.

•

The electronics industry, a key market for Kyocera Corporation and its consolidated subsidiaries (Kyocera), has stagnated globally since summer 2004 and now faces a difficult business environment due to production adjustments in the second half for mobile phone handsets, computer equipment and digital consumer products, which had shown steady growth.

(2) Consolidated Financial Results

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


	Nine months ended December 31,		Increase (Decrease) %
	2004	2003	Increase (Decrease) %
Net sales	892,642	815,832	9.4
Profit from operations	81,399	48,478	67.9
Income before income taxes	88,965	53,698	65.7
Net income	57,163	33,254	71.9
Diluted earnings per share	304.80	178.44	—
Average US$ exchange rate	109	115	—
Average Euro exchange rate	135	132	—

1) Sales

•

Net sales for the nine months increased in all operating segments compared with the nine months ended December 31, 2003 (the previous nine months).

•

Demand for Kyocera’s components from Fine Ceramics Group and Electronic Device Group expanded, especially for mobile phone handsets and digital consumer products in the first half. The market environment deteriorated upon entering the second half, however, as component demand lessened and component prices dropped. Nevertheless, component sales for the nine months increased significantly compared with the previous nine months.

- 4 -

•

Net sales of Equipment Group increased as compared with the previous nine months due to higher sales of color printers and digital multifunction products (MFPs) and the contribution of camera modules for mobile phone handsets.

•

As a result, consolidated net sales for the nine months amounted to ¥892.6 billion, an increase of 9.4% compared with the previous nine months.

2) Profits

•

Despite the implementation of structural reforms in the optical instruments business to strengthen the business and improve profitability led to a one-off expense, the positive effects of an increase in sales, especially in the components business, and of group-wide structural reforms to boost profitability, began to emerge amid a favorable market environment in the first half. Consequently, profit from operations for the nine months increased by 67.9% from the previous nine months to ¥81.4 billion. Income before income taxes for the nine months increased by 65.7% to ¥89.0 billion, while net income increased by 71.9% to ¥57.2 billion.

3) Effect of Exchange Rate Fluctuations

•

The average yen rate appreciated 6 yen against the U.S. dollar and depreciated 3 yen against the Euro compared with the previous nine months. Consequently, net sales and income before income taxes after translation into yen were negatively affected by approximately 20.0 billion and 2.0 billion yen, respectively, compared with the previous nine months.

(3) Operating Highlights

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

- 5 -

On May 18, 2004, Kyocera announced that a new factory would be built in the City of Ayabe, Kyoto Prefecture. Operations are expected to commence in June 2005. At the factory, KST plans to produce organic semiconductor packages and laminated high-density printed circuit boards used in micro processors and chipsets for digital consumer products. Planned investment in the factory totals approximately ¥17.0 billion.

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 (“New Co”) was invested 30% by Kyocera. In cooperation with New Co, Kyocera will endeavor to expand sales in its PHS related business by carving out new markets in Japan as well as overseas.

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.

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

- 6 -

(4) Consolidated Operating Segments

(Yen in millions)


	Nine months ended December 31,				Increase (Decrease) %
	2004		2003		Increase (Decrease) %
Net sales	892,642		815,832		9.4
Fine Ceramics Group	224,767		186,519		20.5
Electronic Device Group	202,253		188,151		7.5
Equipment Group	399,850		384,026		4.1
Others	84,082		69,796		20.5
Adjustments and eliminations	(18,310	)	(12,660	)	—

Operating profit	78,427		44,099		77.8
Fine Ceramics Group	34,789		19,606		77.4
Electronic Device Group	29,053		(1,187	)	—
Equipment Group	5,842		18,382		(68.2	)
Others	8,743		7,298		19.8

Corporate	10,651		7,267		46.6
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries	(213	)	1,848		—
Adjustments and eliminations	100		484		(79.3	)
Income before income taxes	88,965		53,698		65.7

Commencing in the three months ended December 31, 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 and organic packages increased considerably, especially those used in mobile phone handsets and digital consumer products. Sales of solar systems and cutting tools also increased markedly as global markets for these products continued to expand.

Operating profit in this segment increased compared with the previous nine months due mainly to the effect of increased sales and of improved productivity in all business divisions, especially semiconductor parts, solar systems and cutting tools.

2) Electronic Device Group

Sales of ceramic capacitors and crystal-related components grew significantly due to strong components demand, particularly in the first half. Additionally, Kyocera Kinseki, which became a wholly-owned subsidiary in the year ended March 31, 2004, has contributed to sales since the start of the year ending March 31, 2005. Sales of thermal printheads and LCDs also increased steadily.

- 7 -

Operating profit in this segment improved appreciably compared with the previous nine months. This was due primarily to strong sales of key products and improved productivity, while the absence of restructuring charges at a U.S. subsidiary that were recorded in the previous nine months also had a positive effect.

3) Equipment Group

Sales of telecommunications equipment weakened due to intensifying price competition for mobile phone handsets in Japan and overseas, and the negative impact of inventory adjustments for PHS-related products in China. Sales of information equipment, however, increased dramatically through capture of major new users and an expanded product lineup of color printers and digital MFPs. Sales of optical instruments also increased due to new contributions from optical camera modules for mobile phone handsets. As a result, sales of this segment increased markedly compared with the previous nine months.

Nevertheless, operating profit in this segment decreased compared with the previous nine months. Although profit from information equipment grew strongly due to higher sales, profit from telecommunications equipment decreased due to lower sales of mobile phone handsets for the domestic market and PHS-related products for the Chinese market. Meanwhile, optical instruments recorded restructuring charges associated with concentrating management resources into the optical components business. As a result, profit from operations in this segment decreased compared with the previous nine months.

4) Others

Net sales and operating profit in this segment increased due mainly to strong growth of Kyocera Chemical Corporation, especially in its business relating to flexible printed circuit boards and semiconductor epoxy molding compounds, and favorable growth of Kyocera Communications Systems Co., Ltd. (KCCS), especially in its data center, network optimizing and telecommunications engineering businesses.

- 8 -

(5) Orders and Production (Consolidated)

(Yen in millions)


	Nine months ended December 31,				Increase (Decrease) %
	2004		2003		Increase (Decrease) %
Orders	887,272		859,114		3.3
Fine Ceramics Group	226,720		194,056		16.8
Electronic Device Group	205,813		197,574		4.2
Equipment Group	384,565		405,704		(5.2	)
Others	88,503		74,072		19.5
Adjustments and eliminations	(18,329	)	(12,292	)	—

Production	907,912		814,233		11.5
Fine Ceramics Group	229,261		186,098		23.2
Electronic Device Group	209,290		185,117		13.1
Equipment Group	412,492		394,266		4.6
Others	56,869		48,752		16.6

(6) Geographic Segments (Sales by region)

(Yen in millions)


	Nine months ended December 31,		Increase (Decrease) %
	2004	2003	Increase (Decrease) %
Sales	892,642	815,832	9.4
Japan	346,163	325,931	6.2
United States of America	192,153	178,622	7.6
Asia	159,994	142,132	12.6
Europe	129,256	112,429	15.0
Others	65,076	56,718	14.7

1) Japan

Net sales increased compared with the previous nine months due to a rise in sales of solar energy products and components for mobile handsets, digital consumer products, etc. and also due to favorable performance of communication engineering business of KCCS.

2) United States of America

Net sales increased compared with the previous nine months due to a rise in sales of components as well as mobile handsets and information equipment.

3) Asia (excluding Japan)

Net sales increased over the previous nine months due to increased sales in solar energy products and components for mobile handsets, digital consumer products and computer related equipment in addition to favorable sales in information equipment.

- 9 -

4) Europe

Net sales increased over the previous nine months due mainly to growth in sales of information equipment and also to a rise in sales of solar energy products and electronic devices.

5) Others

Net sales increased compared with the previous nine months due to increased sales of telecommunication equipment and information equipment.

2. Cash Flows

Cash and cash equivalents at December 31, 2004 decreased by ¥99.9 billion to ¥261.2 billion compared with at March 31, 2004.

(Yen in millions)


	Nine months ended December 31,
	2004		2003
Cash flows from operating activities	101,564		(3,048	)
Cash flows from investing activities	(144,795	)	29,555
Cash flows from financing activities	(58,019	)	(12,893	)
Effect of exchange rate changes on cash and cash equivalents	1,338		(7,740	)
Net (decrease) increase in cash and cash equivalents	(99,912	)	5,874
Cash and cash equivalents at beginning of period	361,132		298,310
Cash and cash equivalents at end of period	261,220		304,184

1) Cash Flows from Operating Activities

Net cash provided by operating activities for the nine months increased by ¥104.6 billion to ¥101.6 billion compared with net cash used in the previous nine months of ¥3.0 billion. This was due to an increase in net income and a significant decrease in receivables by collection, including the short-term finance receivables.

2) Cash Flows from Investing Activities

Net cash used in investing activities for the nine months increased by ¥174.4 billion to ¥144.8 billion from net cash provided by the previous nine months of ¥29.6 billion. 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.

3) Cash Flows from Financing Activities

Net cash used in financing activities for the nine months increased by ¥45.1 billion to ¥58.0 billion from the previous nine months of ¥12.9 billion. This was due mainly to payments of long-term debt.

- 10 -

3. Business Outlook and Future Strategies

1) Consolidated Financial Forecast for the Year Ending March 31, 2005 (Announced January 27, 2005)

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


	Forcast for the year ending March 31, 2005 announced on		Result for the year ended March 31, 2004	Increase (Decrease) to the result for the year ended March 31, 2004 %
	January 27, 2005	October 28, 2004	Result for the year ended March 31, 2004
Net sales	1,150,000	1,260,000	1,140,814	0.8
Profit from operations	95,000	135,000	108,962	(12.8	)
Income before income taxes	100,000	140,000	115,040	(13.1	)
Net income	59,000	85,000	68,086	(13.3	)
Diluted earnings per share	314.59	455.40	364.78	—
Average US$ exchange rate	107	106	113	—
Average Euro exchange rate	135	129	133	—

In the fourth quarter (from January 1, 2005 to March 31, 2005), there are concerns that a slowdown in economic growth in Japan and overseas coupled with rapid appreciation of the yen against the U.S. dollar will have a broad negative impact on corporate earnings and the economy.

Sales in the solar energy business and cutting tools business are expected to continue growing steadily. In the electronics industry, however, due to a slump in production activities for mobile phones, computer related equipment and digital consumer products since last summer, Kyocera does not expect any genuine recovery in component demand for these products before the end of the current fiscal year. Sales in Kyocera’s components business, namely Electronic Device Group and Fine Ceramics Group, are therefore expected to fall short of previously announced forecasts. Additionally, as a consequence of intensifying price competition for mobile phones and PHS related products, particularly in overseas markets, a decline in sales of telecommunications equipment is projected. As a result, consolidated net sales are expected to fall short of previously announced forecasts by ¥110.0 billion.

Despite promoting initiatives aimed at boosting productivity across Kyocera, this is not expected to cover the negative impact on profits of the declines in sales, and accordingly, profits are projected to dip below previously announced forecasts. Furthermore, Kyocera will record restructuring charges associated with the swift completion of reforms in the telecommunications equipment business and optical instruments business to strengthen market competitiveness and raise profitability. As a result, income before income taxes and net income are expected to fall short of previously announced forecasts by ¥40.0 billion and ¥26.0 billion, respectively.

- 11 -

In light of these circumstances, net sales and operating profit forecasts for each operating segment have been adjusted as follows.

(Yen in millions)


	Forcast for the year ending March 31, 2005 announced on				Result for the year ended March 31, 2004		Increase (Decrease) to the result for the year ended March 31, 2004
	January 27, 2005		October 28, 2004		Result for the year ended March 31, 2004
Sales	1,150,000		1,260,000		1,140,814		0.8
Fine Ceramics Group	287,000		302,500		255,805		12.2
Electronic Device Group	261,000		278,500		256,906		1.6
Equipment Group	518,000		585,000		545,811		(5.1	)
Others	114,000		118,500		100,505		13.4
Adjustments and eliminations	(30,000	)	(24,500	)	(18,213	)	—

Operating profit	89,500		129,700		77,126		16.0
Fine Ceramics Group	42,600		47,300		31,139		36.8
Electronic Device Group	33,300		42,800		5,047		559.8
Equipment Group	1,000		25,700		31,257		(96.8	)
Others	12,600		13,900		9,683		30.1

Corporate	10,500		10,300		37,914		(72.3	)
Income before income taxes	100,000		140,000		115,040		(13.1	)

2) Business Outlook

Although the yen is expected to continue appreciating in the next fiscal year, particularly against the U.S. dollar, Kyocera expects a full-scale recovery in production activities for electronic equipment from the second half of the next fiscal year.

Kyocera aims to increase profitability in this business environment by promoting its group-wide management policy of “high-value-added diversification.” In order to strengthen each business and make it into a highly profitable “value-added business,” Kyocera will boost productivity, primarily by expanding production in China, and invest aggressively in areas with high growth potential, including the solar energy and fuel cell businesses, organic materials components business, components for semiconductor and LCD fabrication equipment, LCDs and organic EL displays. In addition to this investment, Kyocera intends to push forward with initiatives aimed at raising productivity and streamlining production. In the optical instruments and mobile phone businesses, Kyocera seeks to swiftly strengthen market competitiveness and boost profitability.

By promoting such business developments, Kyocera intends to create “value-added businesses” that will drive its growth for the next fiscal year and beyond.

- 12 -

4. Non-Consolidated Financial Forecast for the Year Ending March 31, 2005

Due to the deteriorating market environment, sales of telecommunications equipment and in the components business are expected to fall short of previously announced forecasts. As a result, non-consolidated net sales are projected to fall below previously announced forecasts by ¥82.0 billion. Furthermore, the decline in net sales is expected to result in non-consolidated recurring profit and net income that are ¥19.0 billion and ¥8.0 billion, respectively, below previously announced forecasts.

(Yen in millions)


	Forcast for the year ending March 31, 2005 announced on		Result for the year ended March 31, 2004	Increase (Decrease) to the result for the year ended March 31, 2004 %
	January 27, 2005	October 28, 2004	Result for the year ended March 31, 2004
Net sales	480,000	562,000	494,035	(2.8	)
Profit from operations	27,000	50,000	41,222	(34.5	)
Recurring profit	57,000	76,000	61,788	(7.7	)
Net income	40,000	48,000	60,663	(34.1	)

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.

- 13 -

CONSOLIDATED BALANCE SHEETS


	Yen in millions
	(Unaudited) December 31, 2004				March 31, 2004				Increase (Decrease)
	Amount			%	Amount			%	Increase (Decrease)
Current assets :
Cash and cash equivalents	¥	261,220			¥	361,132			¥	(99,912	)
Short-term investments		49,789				3,855				45,934
Trade notes receivable		33,360				33,801				(441	)
Trade accounts receivable		206,239				207,583				(1,344	)
Short-term finance receivables		39,952				70,553				(30,601	)
Less allowances for doubtful accounts and sales returns		(7,917	)			(8,468	)			551
Inventories		234,650				197,194				37,456
Deferred income taxes		40,262				34,957				5,305
Other current assets		42,574				33,089				9,485

Total current assets		900,129		50.8		933,696		52.0		(33,567	)

Non-current assets :
Investments and advances :
Investments in and advances to affiliates and unconsolidated subsidiaries		32,219				24,054				8,165
Securities and other investments		443,818				430,096				13,722

Total investments and advances		476,037		26.9		454,150		25.3		21,887

Long-term finance receivables		69,724		3.9		88,512		5.0		(18,788	)

Property, plant and equipment, at cost :
Land		54,702				54,867				(165	)
Buildings		223,734				217,216				6,518
Machinery and equipment		646,393				622,721				23,672
Construction in progress		12,004				10,384				1,620
Less accumulated depreciation		(679,852	)			(650,668	)			(29,184	)

		256,981		14.5		254,520		14.2		2,461

Goodwill		27,738		1.6		25,254		1.4		2,484
Intangible assets		16,739		1.0		16,645		0.9		94
Other assets		23,227		1.3		21,981		1.2		1,246

Total non-current assets		870,446		49.2		861,062		48.0		9,384

Total assets	¥	1,770,575		100.0	¥	1,794,758		100.0	¥	(24,183	)

- 14 -


	Yen in millions
	(Unaudited) December 31, 2004				March 31, 2004				Increase (Decrease)
	Amount			%	Amount			%	Increase (Decrease)
Current liabilities :
Short-term borrowings	¥	78,773			¥	84,815			¥	(6,042	)
Current portion of long-term debt		3,943				44,522				(40,579	)
Trade notes and accounts payable		101,354				110,759				(9,405	)
Other notes and accounts payable		35,867				38,115				(2,248	)
Accrued payroll and bonus		26,726				34,161				(7,435	)
Accrued income taxes		21,220				19,054				2,166
Other accrued liabilities		30,199				28,665				1,534
Other current liabilities		22,813				16,548				6,265

Total current liabilities		320,895		18.1		376,639		21.0		(55,744	)

Non-current liabilities :
Long-term debt		70,497				70,608				(111	)
Accrued pension and severance costs		33,662				38,620				(4,958	)
Deferred income taxes		91,972				95,498				(3,526	)
Other non-current liabilities		4,928				6,409				(1,481	)

Total non-current liabilities		201,059		11.4		211,135		11.7		(10,076	)

Total liabilities		521,954		29.5		587,774		32.7		(65,820	)

Minority interests in subsidiaries		58,477		3.3		53,238		3.0		5,239

Stockholders’ equity :
Common stock		115,703				115,703				—
Additional paid-in capital		162,086				162,091				(5	)
Retained earnings		931,176				885,262				45,914
Accumulated other comprehensive income		12,525				22,046				(9,521	)
Treasury stock, at cost		(31,346	)			(31,356	)			10

Total stockholders’ equity		1,190,144		67.2		1,153,746		64.3		36,398

Total liabilities, minority interests and stockholders’ equity	¥	1,770,575		100.0	¥	1,794,758		100.0	¥	(24,183	)

Note : Accumulated other comprehensive income is as follows:
	Yen in millions
	December 31, 2004				March 31, 2004
Net unrealized gains on securities		¥48,517				¥59,241
Net unrealized gains and losses on derivative financial instruments		¥27				¥(48)
Minimum pension liability adjustments		¥(1,477)				¥(1,477)
Foreign currency translation adjustments		¥(34,542)				¥(35,670)

- 15 -

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	Yen in millions and shares in thousands, except per share amounts
	Nine months ended December 31,
	2004					2003					Increase (Decrease)
	Amount			%		Amount			%		Amount			%
Net sales	¥	892,642		100.0		¥	815,832		100.0		¥	76,810		9.4
Cost of sales		643,445		72.1			616,580		75.6			26,865		4.4

Gross profit		249,197		27.9			199,252		24.4			49,945		25.1

Selling, general and administrative expenses		167,798		18.8			150,774		18.5			17,024		11.3

Profit from operations		81,399		9.1			48,478		5.9			32,921		67.9
Other income (expenses) :
Interest and dividend income		5,430		0.6			4,229		0.5			1,201		28.4
Interest expense		(927	)	(0.1	)		(938	)	(0.1	)		11		—
Foreign currency transaction gains (losses), net		1,933		0.2			(1,155	)	(0.1	)		3,088		—
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries		(213	)	(0.0	)		1,848		0.2			(2,061	)	—
Other, net		1,343		0.2			1,236		0.2			107		8.7

Total other income (expenses)		7,566		0.9			5,220		0.7			2,346		44.9

Income before income taxes, minority interests		88,965		10.0			53,698		6.6			35,267		65.7
Income taxes		29,843		3.4			23,732		2.9			6,111		25.8

Income before minority interests		59,122		6.6			29,966		3.7			29,156		97.3
Minority interests		(1,959	)	(0.2	)		3,288		0.4			(5,247	)	—

Net income	¥	57,163		6.4		¥	33,254		4.1		¥	23,909		71.9

Earnings per share :
Basic	¥	304.88				¥	178.44
Diluted	¥	304.80				¥	178.44
Weighted average number of shares of common stock outstanding :
Basic		187,491					186,362
Diluted		187,544					186,362

- 16 -

Notes:

1.	Kyocera applies SFAS No. 130, “Financial Reporting of Comprehensive Income.” Based on this standard, comprehensive income for the nine months ended December 31, 2004 and 2003 were an increase of 47,642 million yen and an increase of 110,148 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.

- 17 -

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 for the year										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	)

(Unaudited)
Net income for the period							57,163								¥	57,163
Other comprehensive income for the period										(9,521	)					(9,521	)

Total comprehensive income for the period															¥	47,642

Cash dividends							(11,249	)
Purchase of treasury stock (16)													(134	)
Reissuance of treasury stock (17)				(5	)								144

Balance, December 31, 2004 (187,485)	¥	115,703	¥	162,086		¥	931,176		¥	12,525		¥	(31,346	)


										(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	)

(Unaudited)
Net income for the period							33,254								¥	33,254
Other comprehensive income for the period										76,894						76,894

Total comprehensive income for the period															¥	110,148

Cash dividends							(11,174	)
Purchase of treasury stock (10)													(72	)
Reissuance of treasury stock (1)				5									9
Allocation of treasury stock for share exchange (2,529)				(5,607	)								20,739

Balance, December 31, 2003 (187,484)	¥	115,703	¥	162,073		¥	850,430		¥	20,700		¥	(31,358	)

- 18 -

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Yen in millions
	Nine months ended December 31,
	2004			2003
Cash flows from operating activities:
Net income	¥	57,163		¥	33,254
Adjustments to reconcile net income to net cash provided by (used in) operating activities :
Depreciation and amortization		48,503			51,523
Losses of inventories		10,397			8,936
Foreign currency adjustments		(2,053	)		700
Decrease (increase) in receivables		54,834			(39,983	)
Increase in inventories		(47,635	)		(25,684	)
Increase in other current assets		(745	)		(3,904	)
(Decrease) increase in notes and accounts payable		(11,896	)		13,417
Settlement regarding LaPine Case		—			(35,454	)
Other, net		(7,004	)		(5,853	)

Net cash provided by (used in) operating activities		101,564			(3,048	)

Cash flows from investing activities :
Payments for purchases of securities		(67,230	)		(29,195	)
Payments for purchases of investments and advances		(19,524	)		(7,410	)
Sales and maturities of securities		23,794			54,009
Payments for purchases of property, plant and equipment, and intangible assets		(48,384	)		(42,362	)
Proceeds from sales of property, plant and equipment, and intangible assets		3,398			1,665
Acquisitions of businesses, net of cash acquired		(2,794	)		5,135
Deposit of negotiable certificate of deposits and time deposits		(110,777	)		—
Withdrawal of negotiable certificate of deposits and time deposits		76,387			79
Deposit of restricted cash		—			(1,994	)
Withdrawal of restricted cash		—			52,983
Other, net		335			(3,355	)

Net cash (used in) provided by investing activities		(144,795	)		29,555

Cash flows from financing activities :
(Decrease) increase in short-term debt		(6,265	)		16,720
Proceeds from issuance of long-term debt		8,959			1,265
Payments of long-term debt		(49,635	)		(19,134	)
Dividends paid		(12,333	)		(11,910	)
Other, net		1,255			166

Net cash used in financing activities		(58,019	)		(12,893	)

Effect of exchange rate changes on cash and cash equivalents		1,338			(7,740	)

Net (decrease) increase in cash and cash equivalents		(99,912	)		5,874
Cash and cash equivalents at beginning of period		361,132			298,310

Cash and cash equivalents at end of period	¥	261,220		¥	304,184

- 19 -

SEGMENT INFORMATION (Unaudited)

1. Operating segments :


	Yen in millions
	Nine months ended December 31,
	2004			2003			Increase (Decrease)
	Amount			Amount			Amount			%
Net sales :
Fine Ceramics Group	¥	224,767		¥	186,519		¥	38,248		20.5
Electronic Device Group		202,253			188,151			14,102		7.5
Equipment Group		399,850			384,026			15,824		4.1
Others		84,082			69,796			14,286		20.5
Adjustments and eliminations		(18,310	)		(12,660	)		(5,650	)	—

	¥	892,642		¥	815,832		¥	76,810		9.4

Operating profit :
Fine Ceramics Group	¥	34,789		¥	19,606		¥	15,183		77.4
Electronic Device Group		29,053			(1,187	)		30,240		—
Equipment Group		5,842			18,382			(12,540	)	(68.2	)
Others		8,743			7,298			1,445		19.8

		78,427			44,099			34,328		77.8

Corporate		10,651			7,267			3,384		46.6
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries		(213	)		1,848			(2,061	)	—
Adjustments and eliminations		100			484			(384	)	(79.3	)

Income before income taxes	¥	88,965		¥	53,698		¥	35,267		65.7

Depreciation and amortization :
Fine Ceramics Group	¥	12,337		¥	12,077		¥	260		2.2
Electronic Device Group		15,910			17,264			(1,354	)	(7.8	)
Equipment Group		14,765			16,775			(2,010	)	(12.0	)
Others		3,585			3,443			142		4.1
Corporate		1,906			1,964			(58	)	(3.0	)

	¥	48,503		¥	51,523		¥	(3,020	)	(5.9	)

Capital expenditures :
Fine Ceramics Group	¥	15,091		¥	9,128		¥	5,963		65.3
Electronic Device Group		14,757			13,302			1,455		10.9
Equipment Group		12,875			14,234			(1,359	)	(9.5	)
Others		1,729			709			1,020		143.9
Corporate		1,750			3,211			(1,461	)	(45.5	)

	¥	46,202		¥	40,584		¥	5,618		13.8

- 20 -

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


	Yen in millions
	Nine months ended December 31,
	2004			2003			Increase (Decrease)
	Amount			Amount			Amount			%
Net sales:
Japan	¥	389,127		¥	370,449		¥	18,678		5.0
Intra-group sales and transfer between geographic areas		241,985			204,908			37,077		18.1

		631,112			575,357			55,755		9.7

United States of America		243,200			221,515			21,685		9.8
Intra-group sales and transfer between geographic areas		20,071			16,516			3,555		21.5

		263,271			238,031			25,240		10.6

Asia		112,940			95,042			17,898		18.8
Intra-group sales and transfer between geographic areas		91,049			75,035			16,014		21.3

		203,989			170,077			33,912		19.9

Europe		132,956			115,038			17,918		15.6
Intra-group sales and transfer between geographic areas		22,790			24,184			(1,394	)	(5.8	)

		155,746			139,222			16,524		11.9

Others		14,419			13,788			631		4.6
Intra-group sales and transfer between geographic areas		5,805			5,562			243		4.4

		20,224			19,350			874		4.5

Adjustments and eliminations		(381,700	)		(326,205	)		(55,495	)	—

	¥	892,642		¥	815,832		¥	76,810		9.4


Operating Profits :
Japan	¥	70,459		¥	58,084		¥	12,375		21.3
United States of America		5,482			(1,461	)		6,943		—
Asia		11,152			6,686			4,466		66.8
Europe		(798	)		(14,943	)		14,145		—
Others		1,017			751			266		35.4

		87,312			49,117			38,195		77.8
Adjustments and eliminations		(8,785	)		(4,534	)		(4,251	)	—

		78,527			44,583			33,944		76.1
Corporate		10,651			7,267			3,384		46.6
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries		(213	)		1,848			(2,061	)	—

Income before income taxes	¥	88,965		¥	53,698		¥	35,267		65.7

- 21 -

3. Geographic segments (Sales by region) :


	Yen in millions
	Nine months ended December 31,
	2004				2003				Increase (Decrease)
	Amount			%	Amount			%	Amount		%
Japan	¥	346,163		38.8	¥	325,931		40.0	¥	20,232	6.2
United States of America		192,153		21.5		178,622		21.9		13,531	7.6
Asia		159,994		17.9		142,132		17.4		17,862	12.6
Europe		129,256		14.5		112,429		13.8		16,827	15.0
Others		65,076		7.3		56,718		6.9		8,358	14.7

Net sales	¥	892,642		100.0	¥	815,832		100.0	¥	76,810	9.4

Sales outside Japan	¥	546,479			¥	489,901			¥	56,578	11.5
Sales outside Japan to net sales		61.2	%			60.0	%

- 22 -

CONSOLIDATED BALANCE SHEETS (Unaudited)


	Yen in millions
	December 31, 2004				September 30, 2004				Increase (Decrease)
	Amount			%	Amount			%	Increase (Decrease)
Current assets :
Cash and cash equivalents	¥	261,220			¥	256,965			¥	4,255
Short-term investments		49,789				74,262				(24,473	)
Trade notes receivable		33,360				33,549				(189	)
Trade accounts receivable		206,239				211,504				(5,265	)
Short-term finance receivables		39,952				42,820				(2,868	)
Less allowances for doubtful accounts and sales returns		(7,917	)			(7,569	)			(348	)
Inventories		234,650				239,612				(4,962	)
Deferred income taxes		40,262				39,408				854
Other current assets		42,574				31,207				11,367

Total current assets		900,129		50.8		921,758		51.6		(21,629	)

Non-current assets :
Investments and advances :
Investments in and advances to affiliates and unconsolidated subsidiaries		32,219				24,240				7,979
Securities and other investments		443,818				440,844				2,974

Total investments and advances		476,037		26.9		465,084		26.0		10,953

Long-term finance receivables		69,724		3.9		73,477		4.1		(3,753	)

Property, plant and equipment, at cost :
Land		54,702				55,021				(319	)
Buildings		223,734				223,956				(222	)
Machinery and equipment		646,393				642,657				3,736
Construction in progress		12,004				9,815				2,189
Less accumulated depreciation		(679,852	)			(675,190	)			(4,662	)

		256,981		14.5		256,259		14.4		722

Goodwill		27,738		1.6		28,589		1.6		(851	)
Intangible assets		16,739		1.0		17,495		1.0		(756	)
Other assets		23,227		1.3		22,843		1.3		384

Total non-current assets		870,446		49.2		863,747		48.4		6,699

	¥	1,770,575		100.0	¥	1,785,505		100.0	¥	(14,930	)

- 23 -


	Yen in millions
	December 31, 2004				September 30, 2004				Increase (Decrease)
	Amount			%	Amount			%	Increase (Decrease)
Current liabilities :
Short-term borrowings	¥	78,773			¥	78,044			¥	729
Current portion of long-term debt		3,943				4,406				(463	)
Trade notes and accounts payable		101,354				120,646				(19,292	)
Other notes and accounts payable		35,867				36,232				(365	)
Accrued payroll and bonus		26,726				35,725				(8,999	)
Accrued income taxes		21,220				23,641				(2,421	)
Other accrued liabilities		30,199				30,029				170
Other current liabilities		22,813				17,223				5,590

Total current liabilities		320,895		18.1		345,946		19.4		(25,051	)

Non-current liabilities :
Long-term debt		70,497				70,743				(246	)
Accrued pension and severance costs		33,662				36,929				(3,267	)
Deferred income taxes		91,972				86,387				5,585
Other non-current liabilities		4,928				5,386				(458	)

Total non-current liabilities		201,059		11.4		199,445		11.2		1,614

Total liabilities		521,954		29.5		545,391		30.6		(23,437	)

Minority interests in subsidiaries		58,477		3.3		59,173		3.3		(696	)

Stockholders’ equity :
Common stock		115,703				115,703				—
Additional paid-in capital		162,086				162,087				(1	)
Retained earnings		931,176				922,187				8,989
Accumulated other comprehensive income		12,525				12,262				263
Treasury stock, at cost		(31,346	)			(31,298	)			(48	)

Total stockholders’ equity		1,190,144		67.2		1,180,941		66.1		9,203

Total liabilities, minority interests and stockholders’ equity	¥	1,770,575		100.0	¥	1,785,505		100.0	¥	(14,930	)

Note: Accumulated other comprehensive income is as follows:
	Yen in millions
	December 31, 2004				September 30, 2004
Net unrealized gains on securities		¥48,517				¥39,996
Net unrealized gains (losses) on derivative financial instruments		¥27				¥(22)
Minimum pension liability adjustments		¥(1,477)				¥(1,477)
Foreign currency translation adjustments		¥(34,542)				¥(26,235)

- 24 -

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	Yen in millions and shares in thousands, except per share amounts
	Three months ended December 31,										Increase
	2004					2003					(Decrease)
	Amount			%		Amount			%		Amount			%
Net sales	¥	292,080		100.0		¥	297,454		100.0		¥	(5,374	)	(1.8	)
Cost of sales		213,802		73.2			218,926		73.6			(5,124	)	(2.3	)

Gross profit		78,278		26.8			78,528		26.4			(250	)	(0.3	)

Selling, general and administrative expenses		58,971		20.2			52,604		17.7			6,367		12.1

Profit from operations		19,307		6.6			25,924		8.7			(6,617	)	(25.5	)
Other income (expenses) :
Interest and dividend income		2,702		0.9			1,810		0.6			892		49.3
Interest expense		(314	)	(0.1	)		(237	)	(0.1	)		(77	)	—
Foreign currency transaction (losses) gains, net		(163	)	(0.0	)		466		0.2			(629	)	—
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries		(795	)	(0.3	)		119		0.0			(914	)	—
Other, net		975		0.3			489		0.2			486		99.4

Total other income (expenses)		2,405		0.8			2,647		0.9			(242	)	(9.1	)

Income before income taxes, minority interests		21,712		7.4			28,571		9.6			(6,859	)	(24.0	)

Income taxes		7,095		2.4			10,983		3.7			(3,888	)	(35.4	)

Income before minority interests		14,617		5.0			17,588		5.9			(2,971	)	(16.9	)
Minority interests		(3	)	(0.0	)		(88	)	(0.0	)		85		—

Net income	¥	14,614		5.0		¥	17,500		5.9		¥	(2,886	)	(16.5	)

Earnings per share :
Basic	¥	77.94				¥	93.34
Diluted	¥	77.94				¥	93.34
Weighted average number of shares of common stock outstanding :
Basic		187,488					187,482
Diluted		187,492					187,482

- 25 -

Notes:

1.	Kyocera applies SFAS No.130, “Financial Reporting of Comprehensive Income.” Based on this standard, comprehensive income for the three months ended December 31, 2004 and 2003 were an increase of 14,877 million yen and an increase of 30,757 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.

- 26 -

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Yen in millions
	Three months ended December 31,
	2004			2003
Cash flows from operating activities:
Net income	¥	14,614		¥	17,500
Adjustments to reconcile net income to net cash provided by (used in) operating activities :
Depreciation and amortization		17,414			17,856
Losses of inventories		2,904			(402	)
Foreign currency adjustments		(204	)		(608	)
Decrease (increase) in receivables		4,562			(42,279	)
Increase in inventories		(3,311	)		(3,625	)
(Increase) decrease in other current assets		(356	)		911
(Decrease) increase in notes and accounts payable		(15,118	)		7,791
Settlement regarding LaPine Case		—			(35,454	)
Other, net		(7,832	)		6,752

Net cash provided by (used in) operating activities		12,673			(31,558	)

Cash flows from investing activities :
Payments for purchases of securities		(6,890	)		(6,563	)
Payments for purchases of investments and advances		(19,072	)		(6,804	)
Sales and maturities of securities		3,865			11,651
Payments for purchases of property, plant and equipment, and intangible assets		(17,810	)		(13,234	)
Proceeds from sales of property, plant and equipment, and intangible assets		1,416			542
Deposit of negotiable certificate of deposits and time deposits		(38,177	)		—
Withdrawal of negotiable certificate of deposits and time deposits		75,871			—
Withdrawal of restricted cash		—			52,983
Other, net		179			(3,857	)

Net cash (used in) provided by investing activities		(618	)		34,718

Cash flows from financing activities :
Increase in short-term debt		782			10,019
Proceeds from issuance of long-term debt		297			97
Payments of long-term debt		(788	)		(773	)
Dividends paid		(5,924	)		(5,796	)
Other, net		1,196			(328	)

Net cash (used in) provided by financing activities		(4,437	)		3,219

Effect of exchange rate changes on cash and cash equivalents		(3,363	)		(1,355	)

Net increase in cash and cash equivalents		4,255			5,024
Cash and cash equivalents at beginning of period		256,965			299,160

Cash and cash equivalents at end of period	¥	261,220		¥	304,184

- 27 -

SEGMENT INFORMATION (Unaudited)

1. Operating segments :


	Yen in millions
	Three months ended December 31,
	2004			2003			Increase (Decrease)
	Amount			Amount			Amount			%
Net sales :
Fine Ceramics Group	¥	72,781		¥	67,120		¥	5,661		8.4
Electronic Device Group		62,463			68,364			(5,901	)	(8.6	)
Equipment Group		134,253			142,654			(8,401	)	(5.9	)
Others		27,889			24,061			3,828		15.9
Adjustments and eliminations		(5,306	)		(4,745	)		(561	)	—

	¥	292,080		¥	297,454		¥	(5,374	)	(1.8	)

Operating profit :
Fine Ceramics Group	¥	10,390		¥	8,284		¥	2,106		25.4
Electronic Device Group		6,812			5,205			1,607		30.9
Equipment Group		(1,294	)		8,108			(9,402	)	—
Others		2,583			2,543			40		1.6

		18,491			24,140			(5,649	)	(23.4	)

Corporate		3,968			4,257			(289	)	(6.8	)
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries		(795	)		119			(914	)	—
Adjustments and eliminations		48			55			(7	)	(12.7	)

Income before income taxes	¥	21,712		¥	28,571		¥	(6,859	)	(24.0	)

Depreciation and amortization :
Fine Ceramics Group	¥	4,454		¥	4,302		¥	152		3.5
Electronic Device Group		5,776			5,971			(195	)	(3.3	)
Equipment Group		5,305			5,796			(491	)	(8.5	)
Others		1,222			1,167			55		4.7
Corporate		657			620			37		6.0

	¥	17,414		¥	17,856		¥	(442	)	(2.5	)

Capital expenditures :
Fine Ceramics Group	¥	7,762		¥	3,301		¥	4,461		135.1
Electronic Device Group		4,437			4,191			246		5.9
Equipment Group		3,917			5,230			(1,313	)	(25.1	)
Others		815			188			627		333.5
Corporate		640			216			424		196.3

	¥	17,571		¥	13,126		¥	4,445		33.9

- 28 -

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


	Yen in millions
	Three months ended December 31,
	2004			2003			Increase (Decrease)
	Amount			Amount			Amount			%
Net sales:
Japan	¥	129,527		¥	130,398		¥	(871	)	(0.7	)
Intra-group sales and transfer between geographic areas		77,765			70,570			7,195		10.2

		207,292			200,968			6,324		3.1

United States of America		76,373			85,975			(9,602	)	(11.2	)
Intra-group sales and transfer between geographic areas		6,360			4,926			1,434		29.1

		82,733			90,901			(8,168	)	(9.0	)

Asia		34,266			36,057			(1,791	)	(5.0	)
Intra-group sales and transfer between geographic areas		31,407			28,551			2,856		10.0

		65,673			64,608			1,065		1.6

Europe		46,668			40,076			6,592		16.4
Intra-group sales and transfer between geographic areas		7,477			8,316			(839	)	(10.1	)

		54,145			48,392			5,753		11.9

Others		5,246			4,948			298		6.0
Intra-group sales and transfer between geographic areas		1,884			2,068			(184	)	(8.9	)

		7,130			7,016			114		1.6

Adjustments and eliminations		(124,893	)		(114,431	)		(10,462	)	—

	¥	292,080		¥	297,454		¥	(5,374	)	(1.8	)


Operating Profits :
Japan	¥	15,975		¥	18,710		¥	(2,735	)	(14.6	)
United States of America		(311	)		3,233			(3,544	)	—
Asia		2,516			3,592			(1,076	)	(30.0	)
Europe		(100	)		(647	)		547		—
Others		277			335			(58	)	(17.3	)

		18,357			25,223			(6,866	)	(27.2	)
Adjustments and eliminations		182			(1,028	)		1,210		—

		18,539			24,195			(5,656	)	(23.4	)
Corporate		3,968			4,257			(289	)	(6.8	)
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries		(795	)		119			(914	)	—

Income before income taxes	¥	21,712		¥	28,571		¥	(6,859	)	(24.0	)

- 29 -

3. Geographic segments (Sales by region) :


	Yen in millions
	Three months ended December 31,
	2004				2003				Increase (Decrease)
	Amount			%	Amount			%	Amount			%
Japan	¥	118,391		40.5	¥	114,655		38.5	¥	3,736		3.3
United States of America		61,648		21.1		64,287		21.6		(2,639	)	(4.1	)
Asia		43,637		15.0		52,010		17.5		(8,373	)	(16.1	)
Europe		45,350		15.5		38,957		13.1		6,393		16.4
Others		23,054		7.9		27,545		9.3		(4,491	)	(16.3	)

Net sales	¥	292,080		100.0	¥	297,454		100.0	¥	(5,374	)	(1.8	)

Sales outside Japan	¥	173,689			¥	182,799			¥	(9,110	)	(5.0	)
Sales outside Japan to net sales		59.5	%			61.5	%

- 30 -

January 27, 2005


To whom it may concern:

Name of Company listed:		Kyocera Corporation

Name of Representative:		Yasuo Nishiguchi
		President and Director
		(Code number: 6971,
		The First Section of the Tokyo Stock Exchange,
		The First Section of the Osaka Securities Exchange)

		Person for Inquiry: Hideki Ishida
		Managing Executive Officer
		General Manager of Corporate Finance Division
		(Tel. No.: 075-604-3500)

Notice relating to Transfer of

Domestic Sales Business of Solar Energy Products of Kyocera Group

Kyocera Corporation (the “Company”) will transfer its domestic sales business of solar energy products by means of corporate splits to Kyocera Solar Corporation (“KSC”), as announced on December 17, 2004. This is to advise you that the agreement for corporate split was approved at the Company’s Board of Directors Meeting on January 27, 2005, as descried below.

1.	Objective of Corporate Split

Domestic sales of Kyocera Group solar energy products is undertaken by the Company, handling sales of solar power generation systems for use by domestic public sector industries, and by KSC, a wholly owned subsidiary of the Company, handling solar power generation systems for residential use. To enhance its business in the expanding market for domestic solar power generation systems, the Company will transfer its domestic sales division for solar energy products to KSC. In addition, in order to improve materials procurement efficiency, the Company will integrate a part of its solar energy products manufacturing division, which procures peripheral components incorporated into solar power generation systems, into KSC.

2.	Outline of Corporate Split

(1)	Schedule of Corporate Split


Meeting of Board of Directors to approve agreement for corporate split:		January 27, 2005

Execution of agreement for corporate split:		January 27, 2005

General Shareholders Meeting to approve agreement for corporate sprit:		Both the Company and KSC will undertake the corporate split without approval of their respective General Shareholders Meetings in accordance with Articles 374-22 and 374-23 (Easy Method for Corporate Split), respectively.

Effective date of corporate split:		April 1, 2005 (scheduled)

Register of corporate split in Commercial Register:		April 1, 2005 (scheduled)

(2)	Method of Corporate Split

(i)

Method of Corporate Split

“Dividing and succeeding corporate split,” in which the Company will be the divided company and KSC, a wholly-owned subsidiary of the Company, will be the succeeding company.

(ii)

Reason for Choosing Method

It has been decided that a “dividing and succeeding corporate split,” in which shares issued by KSC shall be allocated to the Company, is the most suitable option for transfer of the Company’s domestic sales division for solar energy products and a part of the manufacturing division relating to solar energy products to KSC, a wholly-owned subsidiary of the Company.

(3)	Allocation of Shares

(i)

Allocation Ratio of Shares

One share to be issued by KSC in the corporate split shall be allocated to the Company.

- 2 -

(ii)

The Basis of Calculation of Allocation Ratio

KSC is a wholly-owned subsidiary of the Company and, as a result, all shares to be issued in the corporate split (using the dividing and succeeding corporate split method) will be allocated to the Company. Accordingly, KSC will succeed to all assets and liabilities of the Company at their book value. As a result of the corporate split, there will be no change in the Company’s net asset value regardless of the number of shares to be allocated by KSC to the Company because the amount of the difference between assets and liabilities of KSC to which the Company will succeed will be equivalent to the amount of increase in the amount of Company’s investments in subsidiaries. In the light of the above, the Company and KSC have agreed that the one share of KSC shall be issued and allocated to the Company.

(4)	Cash to be Delivered

No cash shall be delivered in the corporate split.

(5)	Rights and Obligations to be Succeeded to by the Succeeding Company (KSC)

KSC will succeed to assets and liabilities and rights and obligations belonging to the Company’s domestic sales division for solar energy products and a part of the manufacturing division of solar energy products pursuant to agreements as of the effective date of the corporate split. More detailed content thereof shall be decided by the time of execution of the agreement for the corporate split.

(6)	Expectations with Respect to Performance of Debts

(i)

Divided Company (the Company)

Taking into consideration the amounts of assets, liabilities and net asset value of the Company, it is judged that there will be no problem with respect to the certainty of performance by the Company of its debts.

(ii)

Succeeding Company (KSC)

Taking into consideration the amounts of the assets, liabilities and net asset value of KSC and the amounts of assets, liabilities and net asset value, etc. to which KSC will succeed, it is judged that there will be no problem with respect to the certainty of performance by KSC of its debts.

(7)	New Directors or Corporate Auditors of the Succeeding Company (KSC)

Not yet decided.

- 3 -

3.	Content of Business to be Divided

(1)	Content of the domestic sales division for solar energy products and a part of the manufacturing division of solar energy products:

Sale of solar power generation systems, procurement of peripheral components other than solar batteries, etc., which are incorporated into solar power generation systems. Quality guarantee relating thereto.

(2)	Performance of the Domestic Sales Division for Solar Energy Products of the Company for the fiscal year ended March 31, 2004:

Net sales of the Company derived from its domestic sales division for solar energy products for the fiscal year ended March 31, 2004 were 4,391 million yen, representing 0.9% of the total net sales of the Company in the amount of 494,035 million yen for the same period.

(3)	Assets and Liabilities to be Transferred and Amounts thereof (as of December 31, 2004):

(Millions of Yen)


Assets		Liabilities

Item	Book Value	Item	Book Value
Current Assets	448	Current Liabilities	103
Fixed Assets	93	Fixed Liabilities	0
Total	541	Total	103

*	As of December 31, 2004, the amount of assets to be succeeded (541 million yen) represented 0.04% of the total assets of the Company (1,247,415 million yen) as of the same date.

4.	Outlines of Parties to the Corporate Split (as of December 31, 2004)


(1) Name	Kyocera Corporation	Kyocera Solar Corporation

(2) Principal Businesses	- Fine ceramics group - Electronic device group - Equipment group - Others	Sales, servicing and construction of solar power generating systems.

(3) Date of Incorporation	April, 1959	September, 1996

(4) Location of Headquarters	Fushimi-ku, Kyoto	Fushimi-ku, Kyoto

(5) Representatives	Yasuo Nishiguchi President and Director	Isao Yukawa President and Director

(6) Capital Amount	115,703 million yen	300 million yen

(7) Number of Shares Issued and Outstanding	191,309,290 shares (out of which 3,823,896 shares are treasury stock)	6,000 shares (there is no treasury stock)

(8) Shareholders’ Equity	1,042,354 million yen	1,818 million yen

(9) Total Assets	1,247,415 million yen	6,396 million yen

- 4 -



(12) Principal Suppliers and Customers	Suppliers:	Suppliers:
	Matsushita Electric Industrial Co., Ltd. Mitsui & Co., Ltd.	Kyocera Corporation
	Sony Corp.
	Customers:	Customers:
	Fujitsu Ltd. Hitachi, Ltd. NEC Corp.	PanaHome Corporation Daiwa House Industry Co., Ltd.

(13) Principal Shareholders and Their Shareholding Ratios

Japan Trustee Services Bank, Ltd.

(Trust Account)

7.19%

Kyocera Corporation 100.00%

The Master Trust Bank of Japan, Ltd.

(Trust Account)

6.18%


		The Bank of Kyoto, Ltd.		3.77%


		Kazuo Inamori		3.56%


		Inamori Foundation		2.45%



(15) Relationship between the Parties	Capital Relationship	KSC is a wholly-owned subsidiary of the Company.


		Personnel Relationship				The Company forwards Directors, Corporate Auditors and employees to KSC. KSC seconds employees to the Company.


		Trades between the Parties				Manufacture and development of solar power generating equipments

- 5 -

(16)	Performance in Most Recent Three Fiscal Years

(Millions of Yen)

Kyocera Corporation

(100% parent company)

Kyocera Solar Corporation

(wholly-owned subsidiary)

Fiscal Year Ended March 31,

2002

2003

2004

2002

2003

2004

Net Sales

499,264

482,834

494,035

941

1,283

11,784

Recurring Profit (or Loss)

56,412

54,685

61,788

148

503

Net Income

34,475

27,923

60,663

135

309

Net Income per Share

182.36 yen

149.45 yen

324.70 yen

483.73 yen

22,512.99 yen

51,568.70 yen

Dividend per Share

60.00 yen

11,256 yen

25,784 yen

Shareholders Equity per Share

4,652.07 yen

4,676.97 yen

5,492.08 yen

207,771 yen

225,961 yen

261,952 yen

5.	Status of the Company after Corporate Splits

(1)	There will be no change in the corporate name, content of businesses, location of headquarters, names of representatives, amount of capital or fiscal year end, in connection with the corporate split.

(2)	Total Assets

There will be a decrease in the amount of the Company’s assets in an amount equivalent to the amount of liabilities to be assumed by KSC.

(3)	Impact on Company’s Performance

The effective date of the corporate split will be April 1, 2005, and accordingly, there will be no impact from the corporate split on the forecasted performance of the Company for the fiscal year ending March 31, 2005.

- 6 -

(10) Fiscal Year End

(11) Number of Employees