Edgar Filing: KYOCERA CORP

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

Year ending March 31,

Amortization of prior service cost

Recognized actuarial loss

Form 20-F Amendment No.1

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 20-F/A

(Amendment No. 1)

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2007

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number: 1-7952

Kyocera Kabushiki Kaisha

(Exact name of Registrant as specified in its charter)

Kyocera Corporation

(Translation of Registrant’s name into English)

Japan

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

Kyoto 612-8501, Japan

(Jurisdiction of incorporation or organization)

(Address of principal executive offices)

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


Title of Each Class		Name of Each Exchange On Which Registered
Common Stock (“Shares”)*		New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of March 31, 2007, 188,649,089 shares of common stock were outstanding, comprised of 184,820,723 Shares and 3,828,366 American Depositary Shares (equivalent to 3,828,366 Shares).

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

If this report is an annual transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark which financial statement item the Registrant has elected to follow. Item 17 ¨ Item 18 x

If this is an annual report, indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

*	Not for trading, but only in connection with the registration of the American Depositary Shares, each representing one share of Common Stock.

TABLE OF CONTENTS


		Page
Explanatory Note		1
Item 15.	Controls and Procedures	2
Item 18.	Financial Statements	3
Item 19.	Exhibits	4

Explanatory Note

On July 5, 2007, Kyocera filed with the Securities and Exchange Commission its annual report on Form 20-F for the year ended March 31, 2007 (the “Original Form 20-F”), which included its consolidated balance sheets as of March 31, 2006 and 2007 and its consolidated statements of income, shareholders’ equity and cash flows for the years ended March 31, 2005, 2006 and 2007 together with the report of MISUZU PricewaterhouseCoopers. On June 27, 2007, Kyocera appointed Kyoto Audit Corporation as its accounting auditor under the Corporation Act of Japan and as its independent registered accounting firm for purposes of its consolidated financial statements filed with the Securities and Exchange Commission. Kyocera is filing this Form 20-F/A (Amendment No. 1) to re-file its consolidated financial statements for the year ended March 31, 2007 together with the report of Kyoto Audit Corporation thereon. The consolidated financial statements being re-filed with this Form 20-F/A (Amendment No. 1) are in all other respects identical to those previously filed as part of the Original Form 20-F and do not reflect any subsequent information or events other than the re-filing of the consolidated financial statements and audit report of Kyoto Audit Corporation thereon. This Form 20-F/A (Amendment No. 1) also includes a report of Kyoto Audit Corporation with respect to the evaluation by Kyocera’s management of the effectiveness of Kyocera’s internal control over financial reporting as of March 31, 2007.

There are no further changes to the Original Form 20-F. All information in this Form 20-F/A (Amendment No. 1) is as of July 5, 2007 and does not reflect any subsequent information or events other than the re-filing of the consolidated financial statements and audit report of Kyoto Audit Corporation thereon and the inclusion of the report of Kyoto Audit Corporation with respect to the evaluation by Kyocera’s management of the effectiveness of Kyocera’s internal control over financial reporting referred to above.

Item 15. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Kyocera’s management, with the participation of its principal executive and principal financial officers, evaluated the effectiveness of Kyocera’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the U.S. Securities Exchange Act of 1934) as of March 31, 2007. Based on that evaluation, Kyocera’s principal executive and principal financial officers concluded that the disclosure controls and procedures were effective as of that date.

Management’s Report on Internal Control Over Financial Reporting

Kyocera’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) under the U.S. Securities Exchange Act of 1934). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Kyocera’s management, with the participation of its principal executive and principal financial officers, evaluated the effectiveness of Kyocera’s internal control over financial reporting using the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, Kyocera’s management concluded that Kyocera’s internal control over financial reporting was effective as of March 31, 2007. Kyocera’s independent registered public accounting firm, Kyoto Audit Corporation, has issued an audit report on management’s assessment of the company’s internal control over financial reporting, which appears on page F-1 of this Form 20-F/A (Amendment No. 1).

Evaluation of Changes in Internal Control Over Financial Reporting

Kyocera’s management, with the participation of its principal executive and principal financial officers, also carried out an evaluation of changes in our internal control over financial reporting during the year ended March 31, 2007. Based upon that evaluation, there was no change in Kyocera’s internal control over financial reporting that occurred during the year ended March 31, 2007 that materially affected, or is reasonably likely to materially affect, Kyocera’s internal control over financial reporting.

Item 18. Financial Statements

The information required by this item is set forth beginning on page F-1 of this Form 20-F/A (Amendment No. 1).


	Description	Page

(1)	Report of Independent Registered Public Accounting Firm related to the Consolidated Financial Statements listed below	F-1

(2)	Consolidated Balance Sheets at March 31, 2006 and 2007	F-2 & F-3

(3)	Consolidated Statements of Income for the years ended March 31, 2005, 2006 and 2007	F-4

(4)	Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2005, 2006 and 2007	F-5

(5)	Consolidated Statements of Cash Flows for the years ended March 31, 2005, 2006 and 2007	F-6

(6)	Notes to the Consolidated Financial Statements	F-7 to F-35

(7)	SCHEDULE II. Valuation and Qualifying Accounts for the years ended March 31, 2005, 2006 and 2007	F-36

Item 19. Exhibits


Exhibit Number		Description
1.1		Articles of Incorporation (English translation) (incorporated by reference to the Registrant’s annual report on Form 20-F filed on June 29, 2006)

1.2		Share Handling Regulations of the Registrant (English translation) (incorporated by reference to the Registrant’s annual report on Form 20-F filed on June 29, 2006)

1.3		Regulations of the Board of Directors of the Registrant (English translation) (incorporated by reference to the Registrant’s annual report on Form 20-F filed on June 29, 2006)

1.4		Regulations of the Board of Corporate Auditors of the Registrant (English translation) (incorporated by reference to the Registrant’s annual report on Form 20-F filed on July 5, 2007)

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

2.2		Deposit Agreement, dated as of June 29, 1998 among Kyocera Corporation, Citibank N.A. as Depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt, as amended by Amendment No.1 thereto, dated as of January 5, 1999 (incorporated by reference to the Registrant’s annual report on Form 20-F filed on September 24, 2001)

8.1		List of Significant Subsidiaries (incorporated by reference to the Registrant’s annual report on Form 20-F filed on July 5, 2007)

11.1		Code of Ethics (incorporated by reference to the Registrant’s annual report on Form 20-F filed on July 5, 2007)

12.1		Certification of the principal executive officer of the Registrant required by Rule 13a-14(a)

12.2		Certification of the principal financial officer of the Registrant required by Rule 13a-14(a)

13.1		Certification of the principal executive officer of the Registrant required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code

13.2		Certification of the principal financial officer of the Registrant required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code

15.1		Consent of Kyoto Audit Corporation with respect to its report on the audit of the financial statements included in this Form 20-F/A

Kyocera has not included as exhibits certain instruments with respect to its long-term debt, the amount of debt authorized under each of which does not exceed 10% of its total assets, and it agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Kyocera Corporation

We have completed an integrated audit of Kyocera Corporation’s 2007 consolidated financial statements and of its internal control over financial reporting as of March 31, 2007 and audits of its 2005 and 2006 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Kyocera Corporation and its consolidated subsidiaries (“Kyocera”) at March 31, 2006 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of Kyocera’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, Kyocera changed the manner in which it accounts for defined benefit pensions effective March 31, 2007.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in the “Management’s Report on Internal Control over Financial Reporting” appearing under Item 15, that Kyocera maintained effective internal control over financial reporting as of March 31, 2007 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, Kyocera maintained, in all material respects, effective internal control over financial reporting as of March 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the COSO. Kyocera’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of Kyocera’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Kyoto Audit Corporation

Kyoto Audit Corporation

Kyoto, Japan

June 28, 2007

F-1

Consolidated Balance Sheets

Kyocera Corporation and Consolidated Subsidiaries

March 31, 2006 and 2007

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

ASSETS

2006

2007

Current assets:

Cash and cash equivalents (Note 13)

300,809

282,208

2,391,593

Short-term investments (Notes 4 and 13)

87,942

213,495

1,809,280

Trade receivables (Notes 7):

Notes

24,597

25,033

212,144

Accounts

210,393

236,380

2,003,220

Short-term finance receivables (Notes 3, 5 and 13)

39,505

—

274,495

261,413

2,215,364

Less allowances for doubtful accounts and sales returns

(7,425

)

(5,960

)

(50,508

)

267,070

255,453

2,164,856

Inventories (Notes 6)

190,564

209,188

1,772,780

Deferred income taxes (Note 16)

40,411

45,390

384,661

Other current assets

33,872

40,757

345,398

Total current assets

920,668

1,046,491

8,868,568

Investments and advances:

Investments in and advances to affiliates and unconsolidated subsidiaries (Note 7)

7,355

10,093

85,534

Securities and other investments (Notes 4 and 13)

553,377

690,568

5,852,271

560,732

700,661

5,937,805

Long-term finance receivables (Notes 3, 5 and 13)

80,970

—

Property, plant and equipment, at cost (Note 9):

Land

58,286

56,806

481,407

Buildings

249,506

261,998

2,220,322

Machinery and equipment

697,383

729,636

6,183,356

Construction in progress

13,473

7,362

62,390

1,018,648

1,055,802

8,947,475

Less accumulated depreciation

(733,302

)

(774,896

)

(6,566,916

)

285,346

280,906

2,380,559

Goodwill (Note 8)

31,351

32,894

278,763

Intangible assets (Note 8)

31,227

24,657

208,958

Other assets (Notes 10 and 16)

21,228

44,855

380,127

1,931,522

2,130,464

18,054,780

The accompanying notes are an integral part of these statements.

F-2

LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY

2006

2007

Current liabilities:

Short-term borrowings (Notes 3, 9 and 13)

90,865

15,250

129,237

Current portion of long-term debt (Notes 3, 9 and 13)

16,347

5,853

49,602

Notes and accounts payable:

Trade

103,503

100,295

849,958

Other

51,997

49,134

416,390

Accrued liabilities:

Payroll and bonus

37,998

41,680

353,220

Income taxes

27,658

36,475

309,110

Other

31,414

33,391

282,975

Other current liabilities (Note 16)

18,841

24,110

204,322

Total current liabilities

378,623

306,188

2,594,814

Long-term debt (Notes 3, 9 and 13)

33,360

7,283

61,720

Accrued pension and severance liabilities (Note 10)

27,092

16,297

138,110

Deferred income taxes (Note 16)

125,686

206,858

1,753,034

Other non-current liabilities

12,742

12,355

104,703

Total liabilities

577,503

548,981

4,652,381

Minority interests in subsidiaries

64,942

66,923

567,144

Commitments and contingencies (Notes 14)

Stockholders’ equity (Note 15):

Common stock:

Authorized 600,000 shares

Issued 191,309 shares

115,703

115,703

980,534

Additional paid-in capital

161,994

162,363

1,375,958

Retained earnings

967,576

1,055,293

8,943,161

Accumulated other comprehensive income

72,947

203,056

1,720,814

Common stock in treasury, at cost (Note 11):
3,554 shares at March 31, 2006 and 2,660 shares at March 31, 2007

(29,143

)

(21,855

)

(185,212

)

Total stockholders’ equity

1,289,077

1,514,560

12,835,255

1,931,522

2,130,464

18,054,780

The accompanying notes are an integral part of these statements.

F-3

Consolidated Statements of Income

Kyocera Corporation and Consolidated Subsidiaries

For the three years ended March 31, 2007

(Yen in millions and U.S. dollars and shares in thousands, except per share amounts–Note 2)


	2005			2006			2007			2007
Net sales (Note 7)	¥	1,173,660		¥	1,173,544		¥	1,283,897		$	10,880,483
Cost of sales		852,527			835,042			900,470			7,631,102

Gross profit		321,133			338,502			383,427			3,249,381
Selling, general and administrative expenses		223,473			238,807			248,325			2,104,449

Profit from operations		97,660			99,695			135,102			1,144,932

Other income (expenses):
Interest and dividend income		6,443			8,990			15,472			131,119
Interest expense (Note 12)		(1,275	)		(1,301	)		(1,647	)		(13,958	)
Foreign currency transaction gains (losses), net (Note 12)		2,606			(316	)		(65	)		(551	)
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries (Note 7)		(1,678	)		(1,216	)		2,621			22,212
(Losses) gains on sales and maturities of securities, net		(2,084	)		1,472			3,819			32,365
Gains on exchange for the shares (Note 4)		—			5,294			24			203
Gain on sale of investment in an affiliate (Note 7)		—			6,931			26			220
Loss on impairment of investment in an affiliate (Note 7)		—			(3,492	)		—			—
Other, net		2,341			1,180			1,188			10,068

		6,353			17,542			21,438			181,678

Income from continuing operations before income taxes and minority interests		104,013			117,237			156,540			1,326,610

Income taxes (Note 16):
Current (Note 14)		52,606			46,240			53,765			455,636
Deferred		5,608			520			(4,878	)		(41,339	)

		58,214			46,760			48,887			414,297

Income from continuing operations before minority interests		45,799			70,477			107,653			912,313
Minority interests		(3,142	)		(4,389	)		(6,324	)		(53,593	)

Income from continuing operations		42,657			66,088			101,329			858,720
Income from discontinued operations (Notes 3, 12 and 18)		3,251			3,608			5,175			43,856

Net income	¥	45,908		¥	69,696		¥	106,504		$	902,576

Earnings per share (Note 19):
Income from continuing operations:
Basic	¥	227.52		¥	352.44		¥	538.52		$	4.56
Diluted		227.47			352.21			537.35			4.55
Income from discontinued operations:
Basic		17.34			19.24			27.51			0.24
Diluted		17.34			19.22			27.44			0.24
Net income:
Basic		244.86			371.68			566.03			4.80
Diluted		244.81			371.43			564.79			4.79
Cash dividends declared per share:
Per share of common stock		80.00			100.00			110.00			0.93
Weighted average number of shares of common stock outstanding:
Basic		187,489			187,514			188,160
Diluted		187,528			187,640			188,573

The accompanying notes are an integral part of these statements.

F-4

Consolidated Statements of Stockholders’ Equity

Kyocera Corporation and Consolidated Subsidiaries

For the three years ended March 31, 2007

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


	Common Stock		Additional Paid-in Capital			Retained Earnings (Note 15)			Accumulated Other Comprehensive Income (Note 15)			Treasury Stock (Notes 11 and 15)			Comprehensive Income
Balance, March 31, 2004 (187,484)	¥	115,703	¥	162,091		¥	881,969		¥	22,046		¥	(31,356	)
Net income for the year							45,908								¥	45,908
Foreign currency translation adjustments										6,704						6,704
Minimum pension liability adjustment - net of taxes of ¥125 (Note 10)										(152	)					(152	)
Net unrealized losses on securities - net of taxes of ¥11,909 (Note 4)										(18,441	)					(18,441	)
Reclassification adjustments for net losses on securities - net of taxes of ¥1,234 (Note 4)										1,661						1,661
Net unrealized losses on derivative financial instruments (Note 12)										(27	)					(27	)
Reclassification adjustments for net losses on derivative financial instruments (Note 12)										48						48

Total comprehensive income for the year															¥	35,701

Cash dividends							(11,249	)
Purchase of treasury stock (21)													(170	)
Reissuance of treasury stock (18)				(5	)								146
Stock option plan of a subsidiary				(25	)

Balance, March 31, 2005 (187,481)		115,703		162,061			916,628			11,839			(31,380	)
Net income for the year							69,696								¥	69,696
Foreign currency translation adjustments										21,396						21,396
Minimum pension liability adjustment - net of taxes of ¥322 (Note 10)										(428	)					(428	)
Net unrealized gains on securities - net of taxes of ¥29,400 (Note4)										42,054						42,054
Reclassification adjustments for net gains on securities - net of taxes of ¥1,206 (Note 4)										(1,866	)					(1,866	)
Net unrealized losses on derivative financial instruments (Note 12)										(75	)					(75	)
Reclassification adjustments for net losses on derivative financial instruments (Note 12)										27						27

Total comprehensive income for the year															¥	130,804

Cash dividends							(18,748	)
Purchase of treasury stock (20)													(170	)
Reissuance of treasury stock (294)				(67	)								2,407

Balance, March 31, 2006 (187,755)		115,703		161,994			967,576			72,947			(29,143	)
Net income for the year							106,504								¥	106,504
Foreign currency translation adjustments										10,474						10,474
Minimum pension liability adjustment - net of taxes of ¥108 (Note 10)										(82	)					(82	)
Net unrealized gains on securities - net of taxes of ¥70,986 (Note 4)										103,334						103,334
Reclassification adjustments for net gains on securities - net of taxes of ¥6 (Note 4)										(1,313	)					(1,313	)
Net unrealized gains on derivative financial instruments (Note 12)										89						89
Reclassification adjustments for net losses on derivative financial instruments (Note 12)										49						49

Total comprehensive income for the year															¥	219,055

Adjustment for initially applying SFAS No. 158 - net of taxes of ¥12,035 (Note 10)										17,558
Cash dividends							(18,787	)
Purchase of treasury stock (24)													(251	)
Reissuance of treasury stock (918)				127									7,539
Stock option plans of subsidiaries				242

Balance, March 31, 2007 (188,649)	¥	115,703	¥	162,363		¥	1,055,293		¥	203,056		¥	(21,855	)

Balance, March 31, 2006	$	980,534	$	1,372,831		$	8,199,797		$	618,195		$	(246,975	)
Net income for the year							902,576								$	902,576
Foreign currency translation adjustments										88,763						88,763
Minimum pension liability adjustment - net of taxes of $915 (Note 10)										(695	)					(695	)
Net unrealized gains on securities - net of taxes of $601,576 (Note4)										875,712						875,712
Reclassification adjustments for net gains on securities - net of taxes of $51 (Note 4)										(11,127	)					(11,127	)
Net unrealized gains on derivative financial instruments (Note 12)										754						754
Reclassification adjustments for net losses on derivative financial instruments (Note 12)										415						415

Total comprehensive income for the year															$	1,856,398

Adjustment for initially applying SFAS No. 158 - net of taxes of $ 101,992 (Note 10)										148,797
Cash dividends							(159,212	)
Purchase of treasury stock													(2,127	)
Reissuance of treasury stock				1,076									63,890
Stock option plans of subsidiaries				2,051

Balance, March 31, 2007	$	980,534	$	1,375,958		$	8,943,161		$	1,720,814		$	(185,212	)

The accompanying notes are an integral part of these statements.

F-5

Consolidated Statements of Cash Flows

Kyocera Corporation and Consolidated Subsidiaries

For the three years ended March 31, 2007

(Yen in millions and U.S. dollars in thousands –Note 2)


	2005			2006			2007			2007
Cash flows from operating activities:
Net income	¥	45,908		¥	69,696		¥	106,504		$	902,576
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		65,909			73,186			82,182			696,457
Provision for doubtful accounts		(18	)		(466	)		(494	)		(4,186	)
Write-down of inventories		10,405			8,446			11,328			96,000
Deferred income taxes		5,608			(218	)		(4,878	)		(41,339	)
Minority interests		3,142			4,389			6,324			53,593
Losses (gains) on sales and maturities of securities, net		2,037			(1,652	)		(3,819	)		(32,365	)
Equity in losses (earnings) of affiliates and unconsolidated subsidiaries (Note 7)		1,678			1,216			(2,621	)		(22,212	)
Gain on sales of investment in an affiliate (Note 7)		—			(6,931	)		(26	)		(220	)
Loss on impairment of investment in an affiliate (Note 7)		—			3,492			—			—
Gains on sales of investment in subsidiaries (Note 3)		—			—			(8,252	)		(69,932	)
Gains on exchange for the shares (Note 4)		—			(5,294	)		(24	)		(203	)
Foreign currency adjustments		(2,391	)		272			160			1,356
Change in assets and liabilities:
Decrease (increase) in receivables		68,558			(9,237	)		(32,626	)		(276,492	)
(Increase) decrease in inventories		(25,598	)		21,263			(25,100	)		(212,712	)
Decrease (increase) in other current assets		14			(3,331	)		(1,901	)		(16,110	)
(Decrease) increase in notes and accounts payable		(31,914	)		14,390			6,015			50,975
Increase (decrease) in accrued income taxes		13,566			(4,720	)		9,066			76,830
(Decrease) increase in other current liabilities		(1,744	)		3,284			11,111			94,161
Decrease in other non-current liabilities		(11,464	)		(118	)		(7,062	)		(59,847	)
Other, net		1,827			3,410			3,757			31,839

Total adjustments		99,615			101,381			43,140			365,593

Net cash provided by operating activities		145,523			171,077			149,644			1,268,169

Cash flows from investing activities:
Payments for purchases of available-for-sale securities		(81,946	)		(98,219	)		(44,582	)		(377,814	)
Payments for purchases of held-to-maturity securities		(10,141	)		(11,070	)		(26,867	)		(227,685	)
Payments for purchases of investments and advances		(11,858	)		(224	)		(307	)		(2,602	)
Sales and maturities of available-for-sale securities		40,955			50,090			99,230			840,932
Maturities of held-to-maturity securities		8,719			2,340			27,889			236,347
Proceeds from sales of investment in an affiliate (Note 7)		—			24,133			60			508
Proceeds from sales of investment in subsidiaries (Note 3)		—			—			24,602			208,492
Payments for purchases of property, plant and equipment		(59,381	)		(91,436	)		(64,751	)		(548,737	)
Payments for purchases of intangible assets		(4,820	)		(10,589	)		(8,215	)		(69,619	)
Proceeds from sales of property, plant and equipment, and intangible assets		2,920			3,350			2,693			22,822
Acquisition of businesses, net of cash acquired (Note 20)		(2,794	)		3			(756	)		(6,407	)
Deposit of negotiable certificate of deposits and time deposits		(112,903	)		(132,286	)		(356,169	)		(3,018,381	)
Withdrawal of negotiable certificate of deposits and time deposits		95,220			100,923			203,076			1,720,983
Other, net		3,535			(2,482	)		(7,606	)		(64,458	)

Net cash used in investing activities		(132,494	)		(165,467	)		(151,703	)		(1,285,619	)

Cash flows from financing activities:
(Decrease) increase in short-term debt		(18,490	)		23,363			9,369			79,398
Proceeds from issuance of long-term debt		21,077			19,876			1,928			16,339
Payments of long-term debt		(58,720	)		(48,458	)		(13,361	)		(113,229	)
Dividends paid		(12,614	)		(20,473	)		(20,632	)		(174,847	)
Purchase of treasury stock		(170	)		(170	)		(251	)		(2,127	)
Sales of treasury stock		142			2,339			7,666			64,966
Other, net		1,431			234			(5,364	)		(45,458	)

Net cash used in financing activities		(67,344	)		(23,289	)		(20,645	)		(174,958	)

Effect of exchange rate changes on cash and cash equivalents		3,775			7,896			4,103			34,772

Net decrease in cash and cash equivalents		(50,540	)		(9,783	)		(18,601	)		(157,636	)
Cash and cash equivalents at beginning of year		361,132			310,592			300,809			2,549,229

Cash and cash equivalents at end of year	¥	310,592		¥	300,809		¥	282,208		$	2,391,593

The accompanying notes are an integral part of these statements.

F-6

Notes to The Consolidated Financial Statements

Kyocera Corporation and Consolidated Subsidiaries

1. ACCOUNTING POLICIES

Financial Statements Presentation:

The accounts of Kyocera Corporation and its Japanese subsidiaries are generally maintained in accordance with accounting principles generally accepted in Japan. Adjustments, which are not recorded in KC and its Japanese subsidiaries’ books of account, have been booked to the accompanying consolidated financial statements in order to present them in conformity with accounting principles generally accepted in the United States of America.

Basis of Consolidation and Accounting for Investments in Affiliated Companies:

The consolidated financial statements include the accounts of Kyocera Corporation, its majority-owned subsidiaries and a variable interest entity for which Kyocera Corporation is a primarily beneficiary under the Financial Accounting Standard Board Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities.” The consolidated variable interest entity for which Kyocera Corporation is the primary beneficiary does not have a material effect on Kyocera’s financial position and result of operations. All significant intercompany transactions and accounts are eliminated. Investments in 20% to 50% owned companies are accounted for under the equity method, whereby Kyocera includes in net income its equity in the earnings or losses from these companies.

Revenue Recognition:

Kyocera sells various types of products, including fine ceramic parts, semiconductor parts, and telecommunications equipment. Kyocera recognizes revenue upon completion of the earnings process, which occurs when products are shipped or delivered to customers in accordance with the terms of an agreement of sale, there is a fixed or determinable selling price, title and risk of loss have been transferred, and collectibility is reasonably assured. Most of these conditions are satisfied at the time of delivery to customers in domestic sales (FOB destination) and at the time of shipment (FOB shipping) for export sales.

Sales returns

Kyocera records an estimated sales return allowance at the time of sales based on its historical returns experience.

Products warranty

For after-service costs to be paid during warranty periods, Kyocera accrues a product warranty liability for claims under warranties relating to the products that have been sold. Kyocera records an estimated product warranty liability based on its historical repair experience.

Revenue from financial services

In addition to the tangible products as discussed above, Kyocera also provided certain services, primarily financial services provided by Kyocera Leasing Co., Ltd. (KLC) until August 2006. Revenue from direct financing leases was recognized over the term of the lease, and amortization of unearned lease income was recognized using the interest method. Interest income on installment loans was recognized on an accrual basis. Interest income was no longer accrued at the time the collection of the interest was past due 1 year or more, or the collection of the principal was past due 6 months or more. The interest received from cash payments on impaired loans was recorded as income, unless the collectibility of the remaining investments was doubtful, in which case the cash receipt was recorded as collection of the principal.

Cash and Cash Equivalents:

Cash and cash equivalents include time deposits and certificates of deposit with original maturities of three months or less.

Translation of Foreign Currencies:

Assets and liabilities of consolidated foreign subsidiaries and affiliates accounted for under the equity method are translated into Japanese yen at the exchange rates in effect on the respective balance sheet dates. Operating accounts are translated at the average rates of exchange for the respective years. Translation adjustments result from the process of translating foreign currency financial statements into Japanese yen. These translation adjustments, which are not included in the determination of net income, are reported in other comprehensive income.

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

Allowances for Doubtful Accounts:

Kyocera maintains allowances for doubtful accounts related to both trade and finance receivables for estimated losses resulting from customers’ inability to make timely payments, including interest on finance receivables. Kyocera’s estimates are based on various factors including the length of past due payments, historical experience and current business environments. In circumstances where it is aware of specific customer’s inability to meet its financial obligations, a specific allowance against these amounts is provided considering the fair value of assets pledged by the customer as collateral.

Inventories:

Inventories are stated at the lower of cost or market. Cost is determined by the average method for approximately 57% and 62% of finished goods and work in process as well as approximately 24% and 21% of raw materials and supplies at March 31, 2006 and 2007, respectively. The first-in, first-out method is applied to the other inventories. Kyocera recognizes estimated write-down of inventories for excess, slow-moving and obsolete inventories.

Securities:

Certain investments in debt and equity securities are accounted for under the Statement of Financial Accounting Standards (SFAS) No. 115 “Accounting for Certain Investments in Debt and Equity Securities.” Securities classified as available-for-sale securities are recorded at the fair value, with unrealized gains and losses excluded from income and reported in other comprehensive income, net of taxes. Securities classified as held-to-maturity securities are recorded at amortized cost. Kyocera evaluates whether the declines in fair value of debt and equity securities with readily determinable fair values are other-than-temporary. Other-than-temporary declines in fair value are recorded as a realized loss with a new cost basis. This evaluation is based mainly on the duration and the extent to which the fair value is less than cost, and the anticipated recoverability in fair value.

F-7

Property, Plant and Equipment and Depreciation:

Property, Plant and Equipment are recorded at cost less accumulated depreciation. Kyocera provides for depreciation of buildings, machinery and equipment over their estimated useful lives primarily on the declining balance method. The principal estimated useful lives used for computing depreciation are as follows:


Buildings		2 to 50 years
Machinery and equipment		2 to 20 years

The cost of maintenance, repairs and minor renewals is charged to expense in the year incurred; major renewals and betterments are capitalized.

When assets are sold or otherwise disposed of, the profits or losses thereon, computed on the basis of the difference between depreciated costs and proceeds, are credited or charged to income in the year of disposal, and costs and accumulated depreciation are removed from the accounts.

Goodwill and Other Intangible Assets:

Kyocera has adopted SFAS No.142, “Goodwill and Other Intangible Assets.” This requires that, rather than being amortized, goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually, and also following any events or changes in circumstances that might lead to impairment. Intangible assets with definite useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

The principal estimated useful lives for intangible assets are as follows:


Patent rights		2 to 8 years
Software		2 to 5 years

Impairment of Long-Lived Assets:

Pursuant to SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” Kyocera reviews its long-lived assets and intangible assets with definite useful lives for impairment periodically. Long-lived assets and intangible assets with definite useful lives are considered to be impaired when the expected undiscounted cash flow from the asset group is less than its carrying value. A loss on impairment is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived assets and intangible assets with definite useful lives.

Derivative Financial Instruments:

Kyocera utilizes derivative financial instruments to manage its exposure resulting from fluctuations of foreign currencies and interest rates. These derivative financial instruments include foreign currency forward contracts and interest rate swaps. Kyocera does not hold or issue such derivative financial instruments for trading purposes.

Kyocera applies SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities an Amendment of Financial Accounting Standards Board (FASB) Statement No. 133.” All derivatives are recorded as either assets or liabilities on the balance sheet and measured at fair value. Changes in the fair value of derivatives are charged in current earnings. However cash flow hedges which meet the criteria of SFAS No. 133 may qualify for hedge accounting treatment. Changes in the fair value of the effective portion of these hedge derivatives are deferred in other comprehensive income and charged to earnings when the underlying transaction being hedged occurs.

Kyocera designates certain foreign currency forward contracts and certain interest rate swaps as cash flow hedges under SFAS No. 133. Most of Kyocera’s foreign currency forward contracts are entered into as hedges of existing foreign currency denominated assets and liabilities and as such do not qualify for hedge accounting. Accordingly, Kyocera records changes in fair value of these foreign currency forward contracts currently in earnings. It is expected that such changes will be offset by corresponding gains or losses on the underlying assets and liabilities.

Kyocera formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes all derivatives designated as cash flow hedge are linked to specific assets and liabilities on the balance sheet or forecasted transactions. Kyocera also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, Kyocera discontinues hedge accounting prospectively. When hedge accounting is discontinued, the derivative will continue to be carried on the balance sheet at its fair value, with deferred unrealized gains or losses charged immediately in current earnings.

F-8

Stock-Based Compensation:

Prior to April 1, 2006, Kyocera accounted for stock-based compensation in accordance with SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” an Amendment of FASB Statement No. 123, “Accounting for Stock-Based Compensation.” As allowed by SFAS No. 148, Kyocera measured stock-based compensation expense using the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related interpretations. Effective April 1 2006, Kyocera adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), “Share – Based Payment” and recognized the cost resulting from share-based payment transactions in financial statements by adopting fair-value based measurement method in accordance with SFAS No. 123R. Under the modified prospective method of adoption for SFAS No.123R, Kyocera recognized compensation cost which includes: (a) compensation cost for all stock options granted prior to, but not yet vested as of April 1, 2006, and (b) compensation cost for all stock options granted or modified subsequent to April 1, 2006.

The following table illustrates the effect on income from continuing operations, net income and earnings per share if Kyocera had applied the fair value recognition provisions of SFAS 123 for the years ended March 31, 2005 and 2006.

(Yen in millions except per share amounts)


	Years ended March 31,
	2005			2006
Income from continuing operations, as reported	¥	42,657		¥	66,088
Add: Stock-based employee compensation expense included in reported income - net of taxes		(25	)		—
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards - net of taxes		(2,772	)		(1,550	)

Pro forma income from continuing operations		39,860			64,538
Income from discontinued operations		3,251			3,608

Pro forma net income	¥	43,111		¥	68,146

Earnings per share:
Income from continuing operations:
Basic, as reported	¥	227.52		¥	352.44
Basic, pro forma		212.60			344.18
Diluted, as reported		227.47			352.21
Diluted, pro forma		212.55			343.94
Net income:
Basic, as reported		244.86			371.68
Basic, pro forma		229.94			363.42
Diluted, as reported		244.81			371.43
Diluted, pro forma		229.89			363.17

F-9

Earnings and Cash Dividends per Share:

Basic earnings per share is computed based on the weighted average number of shares outstanding during each period. Diluted earnings per share assumes the dilution that could occur if all stock options were exercised and resulted in the issuance of common stock.

Cash dividends per share are those declared with respect to the earnings for the respective periods for which dividends are proposed by the Board of Directors. Dividends are charged to retained earnings in the year in which they are paid.

Research and Development Expenses and Advertising Expenses:

Research and development expenses and advertising expenses are charged to operations as incurred.

Use of Estimates:

Preparation of consolidated financial statements in conformity with generally accepted accounting principles requires managements’ estimates and assumption if it is expected to have any impacts on assets and liabilities, which includes contingently arose, at the period end date, and also on revenue and expenses during the period. However, the results may possibly differ from the estimates.

Accounting Changes:

In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, “Inventory Costs-an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 requires that all abnormal idle facility expense, freight, handling costs, and spoilage be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 was effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 did not have a material impact on Kyocera’s consolidated results of operations and financial position.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3.” SFAS No. 154 replaces APB Opinion No. 20, “Accounting Changes”, and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements”, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement when the pronouncement does not include specific transition provisions. APB Opinion No. 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. SFAS No. 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle. SFAS No. 154 was effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 did not have a material impact on Kyocera’s consolidated results of operations and financial position.

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment.” This statement is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 123R supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related interpretations. SFAS No. 123R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. SFAS No. 123R establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee share ownership plans. SFAS No. 123R was announced to be effective as of the beginning of the first fiscal year that would begin after June 15, 2005, however, on April 14, 2005, the Securities and Exchange Commission (SEC) staff postponed implementation of SFAS No. 123R. Kyocera adopted SFAS No.123R effective April 1, 2006, and the impact of adoption of SFAS No. 123R was ¥333 million ($2,822 thousand) on Kyocera’s consolidated results of operations for the year ended March 31, 2007.

In September 2006, SEC staff published Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB No. 108). SAB No. 108 provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB No. 108 requires quantification of the effects of financial statement errors by two approaches generally referred to as “rollover” and “iron curtain”. SAB No. 108 shall be effective for fiscal years ending after November 15, 2006. The adoption of SAB No. 108 did not have a material impact on Kyocera’s consolidated results of operations and financial position.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No.87, 88, 106, and 132 (R)”, which requires an employer to recognize the overfunded or underfunded status of its defined benefit postretirement plans as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. Kyocera recognized the funded status of its defined benefit plans and provided the required disclosures in accordance with SFAS No. 158 as of the year ended March 31, 2007. For the impact of adoption of SFAS No. 158 on Kyocera’s consolidated results of operations and financial position, see Note 10 to the Consolidated Financial Statements in this annual report. SFAS No. 158 also requires an employer to measure the funded status of a plan as of the date of its year end statement of financial position. Kyocera will be required to measure the funded status of its plans at the date of its year end as of the year ending March 31, 2009. Kyocera is currently evaluating the impact of adoption of this requirement for measurement date in its consolidated results of operations and financial position.

F-10

Recently Issued Accounting Standards:

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No.109” (FIN 48) which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 also provides guidance on derecognition, classification, interest and penalties, disclosure and transitional measures. FIN 48 shall be effective for fiscal years beginning after December 15, 2006. Kyocera is currently evaluating the impact of adoption of FIN 48 in its consolidated results of operations and financial position.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The purpose of SFAS No. 157 is to define fair value, establish a framework for measuring fair value and enhance disclosures about fair value measurements. The measurement and disclosure requirements are effective beginning after November 15, 2007. Kyocera is currently evaluating the impact of adoption of SFAS No. 157 in its consolidated results of operations and financial position.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115”. SFAS No.159 provides companies with an option to report selected financial assets and liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings. SFAS No.159 is effective for fiscal years beginning after November 15, 2007 and Kyocera will adopt SFAS No. 159 effective April 1, 2008. Kyocera is currently evaluating the impact of adoption of SFAS No. 159 in its consolidated results of operations and financial position.

Reclassifications:

Certain reclassifications of previously reported amounts have been made to the consolidated statements of income, cash flows and corresponding footnotes for the year ended March 31, 2005 and 2006 in order to conform to the current year presentation. Such reclassifications have no effect on net assets, net income and cash flows.

2. U.S. DOLLAR AMOUNTS

The consolidated financial statements as of and for the year ended March 31, 2007 presented herein are expressed in the Japanese yen, and, solely for the convenience of the readers, have been translated into the U.S. dollar at the rate of ¥118 for US$1, the rate prevailing on March 30, 2007.

This translation should not be construed as a representation that the yen amounts shown could be so converted into the U.S. dollar at ¥118 for US$1 or at any other rate.

3. DISCONTINUED OPERATIONS

On August 1, 2006, Kyocera sold 100% of the shares of KLC (presently Diamond Asset Finance Company Limited) to Diamond Lease Company Limited (presently Mitsubishi UFJ Lease & Finance Company Limited) for ¥25,274 million ($214,186 thousand), aimed to concentrate Kyocera’s management resources on its core businesses to enhance and improve its corporate value. Kyocera has accounted for the results of operations and the sale of KLC less income taxes, as discontinued operations in accordance with SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets” in its consolidated statements of income. Accordingly, the prior years’ financial statements and related footnote disclosures have been reclassified.

For comparative purposes, the components of the income from discontinued operations, which had been reported as the “Others” segment previously, are summarized as follows:


	(Yen in millions and U.S. dollars in thousands)
	Years ended March 31,
	2005		2006		2007		2007
Net sales	¥	9,069	¥	9,213	¥	1,779	$	15,076
Income before income taxes		3,517		4,150		862		7,305
Income taxes		266		542		381		3,229
Net income		3,251		3,608		481		4,076
Gain on sales of discontinued operations - net of taxes of ¥3,534 ($ 29,949)		—		—		4,694		39,780
Income from discontinued operations		3,251		3,608		5,175		43,856

The financial positions of discontinued operations at March 31, 2006 are summarized as follows:


	(Yen in millions)
	March 31, 2006
Short-term finance receivables	¥	48,121
Long-term finance receivables		80,971
Other assets		4,981

Total assets		134,073

Short-term borrowings		80,351
Long-term debt (including portion due within one year)		25,857
Other liabilities		11,772

Total liabilities	¥	117,980

F-11

4. INVESTMENTS IN DEBT AND EQUITY SECURITIES

Available-for-sale securities are recorded at fair value, with unrealized gains and losses excluded from income and reported in other comprehensive income, net of tax. Held-to-maturity securities are recorded at amortized cost. In gross unrealized gains and losses on equity securities, ¥111,178 million of gross unrealized gain at March 31, 2006 and ¥289,853 million ($2,456,381 thousand) of gross unrealized gain at March 31, 2007 were derived from a fluctuation in the market value of the shares of KDDI Corporation (KDDI) held by Kyocera Corporation.

Other-than-temporary loss on debt and equity securities with readily determinable fair values for the years ended March 31, 2005, 2006 and 2007 amounted to ¥1 million, ¥113 million and ¥797 million ($6,754 thousand), respectively.

Due to the merger of Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., on October 1, 2005, Kyocera’s holding shares in UFJ Holdings, Inc. were exchanged for shares of the new company, Mitsubishi UFJ Financial Group. As a result of this share exchange, Kyocera recognized a gain in the amount of ¥5,281 million for the year ended March 31, 2006 in accordance with Emerging Issues Task Force (EITF) 91-5, “Nonmonetary Exchange of Cost-Method Investments.”

Investments in debt and equity securities at March 31, 2006 and 2007, included in short-term investments (current assets) and in securities and other investments (non-current assets) are summarized as follows:


	(Yen in millions)
	March 31,
	2006								2007
	Cost*		Aggregate Fair Value		Gross Unrealized Gains		Gross Unrealized Losses		Cost*		Aggregate Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
Available-for-sale securities:
Corporate debt securities	¥	3,745	¥	3,908	¥	184	¥	21	¥	3,842	¥	4,033	¥	194	¥	3
Other debt securities		133,758		132,660		29		1,127		74,563		74,574		71		60
Equity securities		274,985		415,950		141,059		94		272,653		585,274		312,724		103

Total available-for-sale securities		412,488		552,518		141,272		1,242		351,058		663,881		312,989		166

Held-to-maturity securities:
Other debt securities		34,398		34,015		—		383		33,512		33,447		—		65

Total held-to-maturity securities		34,398		34,015		—		383		33,512		33,447		—		65

Total investments in debt and equity securities	¥	446,886	¥	586,533	¥	141,272	¥	1,625	¥	384,570	¥	697,328	¥	312,989	¥	231

(U.S. dollars in thousands)

March 31, 2007

Cost*

Aggregate
Fair Value

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Available-for-sale securities:

Corporate debt securities

32,559

34,178

1,644

Other debt securities

631,890

631,983

602

509

Equity securities

2,310,619

4,959,949

2,650,203

873

Total available-for-sale securities

2,975,068

5,626,110

2,652,449

1,407

Held-to-maturity securities:

Other debt securities

284,000

283,449

—

551

Total held-to-maturity securities

284,000

283,449

—

551

Total investments in debt and equity securities

3,259,068

5,909,559

2,652,449

1,958

F-12

At March 31, 2007, the contractual maturities of available-for-sale and held-to-maturity securities are summarized as follows:

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

March 31, 2007

Available-for-Sale

Held-to-Maturity

Available-for-Sale

Held-to-Maturity

Cost*

Aggregate
Fair Value

Cost*

Aggregate
Fair Value

Cost*

Aggregate
Fair Value

Cost*

Aggregate
Fair Value

Due within 1 year

24,168

24,295

17,110

17,062

204,814

205,890

145,000

144,593

Due after 1 year to 5 years

52,338

52,391

16,402

16,385

443,542

443,991

139,000

138,856

Due after 5 years

1,899

1,921

—

16,093

16,280

—

Equity securities

272,653

585,274

—

2,310,619

4,959,949

—

351,058

663,881

33,512

33,447

2,975,068

5,626,110

284,000

283,449

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

Proceeds from sales of available-for-sale securities and the related gross realized gains and losses for the years ended March 31, 2005, 2006 and 2007 are as follows:


	(Yen in millions and U.S. dollars in thousands)
	Years ended March 31,
	2005		2006		2007		2007
Proceeds from sales of available-for-sale securities	¥	22,662	¥	48,173	¥	99,171	$	840,432
Gross realized gains		2,015		2,769		6,055		51,314
Gross realized losses		4,224		1,346		2,305		19,534

For the purpose of computing gains and losses, the cost of those securities is determined by the moving average method.

Kyocera’s available-for-sale securities were classified by its length of an unrealized loss position at March 31, 2006 and 2007 as follows:


	(Yen in millions)
	March 31, 2006
	within 1 year				over 1 year				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Corporate debt securities	¥	1,012	¥	21	¥	—	¥	—	¥	1,012	¥	21
Other debt securities		131,942		1,127		—		—		131,942		1,127
Equity securities		1,252		87		25		7		1,277		94

	¥	134,206	¥	1,235	¥	25	¥	7	¥	134,231	¥	1,242


	(Yen in millions)
	March 31, 2007
	within 1 year				over 1 year						Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Corporate debt securities	¥	529	¥	3	¥	—	¥	—	¥	529	¥	3
Other debt securities		50,867		60		—		—		50,867		60
Equity securities		1,700		103		—		—		1,700		103

	¥	53,096	¥	166	¥	—	¥	—	¥	53,096	¥	166


	(U.S. dollars in thousands)
	March 31, 2007
	within 1 year				over 1 year				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Corporate debt securities	$	4,483	$	25	$	—	$	—	$	4,483	$	25
Other debt securities		431,076		509		—		—		431,076		509
Equity securities		14,407		873		—		—		14,407		873

	$	449,966	$	1,407	$	—	$	—	$	449,966	$	1,407

At March 31, 2006 and 2007, the number of individual available-for-sale securities in an unrealized loss position held by Kyocera were 33 and 38, respectively.

F-13

5. FINANCE RECEIVABLES

On August 1, 2006, Kyocera sold 100% of the shares of KLC. Detailed information regarding this transaction is described in Note 3.

Finance receivables at March 31, 2006 consist of the following:


	(Yen in millions)
	March 31, 2006
Investments in financing leases :
Minimum lease payments receivable	¥	7,469
Unearned lease income		(639	)

		6,830
Less-allowance for doubtful accounts		(501	)

		6,329
Less-current portion		(2,499	)

	¥	3,830


Other finance receivables	¥	119,911
Less-allowance for doubtful accounts		(5,831	)

		114,080
Less-current portion		(36,940	)

	¥	77,140

	¥	80,970

Investments in financing leases consisted primarily of direct financing leases of telecommunications equipment and information equipment. Other finance receivables consisted primarily of installment loans to unrelated third parties.

Investments in loans of ¥5,146 million at March 31, 2006 were considered to be impaired, for which valuation allowances at March 31, 2006 were provided of ¥3,567 million, calculated under SFAS No.114, “Accounting by Creditors for Impairment of a Loan” and included in allowances for doubtful accounts.

The average recorded investments in impaired loans for the years ended March 31, 2005 and 2006 were ¥9,567 million and ¥6,179 million, respectively. The related recognized interest income for the years ended March 31, 2005 and 2006 were, ¥43 million and ¥34 million, respectively.

The principal amount of the loan on which interest income was no longer accrued at March 31, 2006 was ¥6,207 million, and at March 31, 2006 there was no loan, on which the collection of the principal was past due ninety days or more and on which interest income was still accrued.

Changes in allowances for doubtful accounts on finance receivables are as follows:


	(Yen in millions)
	Years ended March 31,
	2005			2006
Beginning balance	¥	36,315		¥	14,919
Provision charged to income		508			326
Charge-offs		(21,904	)		(8,913	)

Ending balance	¥	14,919		¥	6,332

F-14

6. INVENTORIES

Inventories at March 31, 2006 and 2007 are as follows:


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2006		2007		2007
Finished goods	¥	95,492	¥	106,135	$	899,449
Work in process		38,425		44,806		379,712
Raw materials and supplies		56,647		58,247		493,619

	¥	190,564	¥	209,188	$	1,772,780

7. INVESTMENTS IN AND ADVANCES TO AFFILIATES

Kyocera Corporation owned a 36.02% interest in Taito Corporation, a major affiliate which operates in the electric amusement business and accounted for its investment under the equity method. On September 28, 2005, Kyocera Corporation sold its entire holding of shares of Taito Corporation in a tender offer bid for Taito shares by Square Enix Co., Ltd., one of the leading companies in the game software industry. As a result of this sale of Taito Corporation shares, Kyocera Corporation recorded a gain of ¥6,931 million for the year ended March 31, 2006.

Kyocera Mita Corporation owns a 30% interest in Triumph-Adler AG Group (TA), which is a distributor of office equipment and accounted for its investment under the equity method. Kyocera recognized loss on impairment of investment in an affiliate of ¥3,492 million due to an extended decline in its market value for the year ended March 31, 2006.

Kyocera Corporation owns a 30% interest in WILLCOM, INC., which operates a Personal Handyphone System (PHS) business and is accounted for its investment under the equity method.

On March 31, 2006 and 2007, TA was a listed company. The market values of investment in TA at March 31, 2006 and 2007 were ¥2,669 million and ¥3,375 million ($28,602 thousand), respectively.

Related party transactions with the affiliates, accounted for under the equity method is as follows:

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

March 31,

2006

2007

Kyocera’s investments in and advances to affiliates

7,107

9,818

83,203

Kyocera’s trade receivables from affiliates

15,851

13,940

118,136

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

Years ended March 31,

2005

2006

2007

Kyocera’s equity in (losses) earnings of affiliates

(1,712

)

(1,311

)

2,593

21,975

Kyocera’s sales to affiliates

21,320

42,822

39,189

332,110

F-15

8. GOODWILL AND OTHER INTANGIBLE ASSETS

Intangible assets subject to amortization are summarized as follows:


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2006				2007				2007
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Patent rights	¥	31,755	¥	15,546	¥	29,008	¥	17,710	$	245,830	$	150,085
Software		24,314		13,019		27,626		16,876		234,119		143,017
Other		6,754		3,031		6,562		3,955		55,610		33,517

	¥	62,823	¥	31,596	¥	63,196	¥	38,541	$	535,559	$	326,619

The carrying amount of intangible assets other than goodwill having an indefinite life at March 31, 2006 and 2007 were not significant.

Intangible assets acquired during the year ended March 31, 2007 totaled ¥5,710 million ($48,390 thousand) and primarily consist of patent rights of ¥626 million ($5,305 thousand) and software of ¥4,661 million ($39,500 thousand).

The weighted average amortization periods for patent rights and software are 5 years and 4 years, respectively.

Total amortization of intangible assets during the years ended March 31, 2005, 2006 and 2007 amounted to ¥7,008 million, ¥10,042 million and ¥11,666 million ($98,864 thousand), respectively.

The estimated aggregate amortization expenses for intangible assets for the next five years are as follows:


Years ending March 31,	(Yen in millions and U.S. dollars in thousands)
2008	¥	9,433	$	79,941
2009		7,504		63,593
2010		4,539		38,466
2011		1,359		11,517
2012		435		3,686

The changes in the carrying amounts of goodwill by reporting segment for the years ended March 31, 2006 and 2007 are as follows:


	(Yen in millions and U.S. dollars in thousands)
	Fine Ceramic Parts Group		Semiconductor Parts Group		Applied Ceramic Products Group		Electronic Device Group		Information Equipment Group		Others			Total
Balance at March 31, 2005	¥	—	¥	—	¥	6,293	¥	17,099	¥	586	¥	4,132		¥	28,110
Goodwill acquired during the year		100		912		150		754		44		5			1,965
Translation adjustments and reclassification to other accounts		—		—		603		619		54		—			1,276

Balance at March 31, 2006		100		912		7,046		18,472		684		4,137			31,351
Goodwill acquired during the year		—		—		—		2,699		—		19			2,718
Impairment of goodwill		—		—		—		—		—		(1,478	)		(1,478	)
Translation adjustments and reclassification to other accounts		—		—		60		239		5		(1	)		303

Balance at March 31, 2007	¥	100	¥	912	¥	7,106	¥	21,410	¥	689	¥	2,677		¥	32,894

Balance at March 31, 2006	$	847	$	7,729	$	59,712	$	156,542	$	5,797	$	35,059		$	265,686
Goodwill acquired during the year		—		—		—		22,873		—		161			23,034
Impairment of goodwill		—		—		—		—		—		(12,525	)		(12,525	)
Translation adjustments and reclassification to other accounts		—		—		508		2,026		42		(8	)		2,568

Balance at March 31, 2007	$	847	$	7,729	$	60,220	$	181,441	$	5,839	$	22,687		$	278,763

Kyocera performed the annual impairment test of goodwill and other intangible assets and recorded an impairment loss of ¥1,478 million ($12,525 thousands), which caused by stagnant sales and profit results in a reporting unit in the “Others” segment in the three months ended March 31, 2007. The impairment charge reflected the overall decline in the fair value of a domestic subsidiary. The fair value of the subsidiary was estimated principally using the expected present value of future cash flow.

F-16

9. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term borrowings at March 31, 2006 and 2007 are comprised of the following:

Loans, principally from banks with average interest rate of 0.71% and 5.17% at March 31, 2006 and 2007, respectively.

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

March 31,

2006

2007

Unsecured*

90,865

15,250

129,237

Long-term debt at March 31, 2006 and 2007 are comprised of the following:

Loans, principally from banks with interest rates ranging from 0.15% to 5.45% and from 0.15% to 5.82% at March 31, 2006 and 2007, respectively.

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

March 31,

2006

2007

Secured

4,149

3,256

27,593

Unsecured *

45,558

9,880

83,729

49,707

13,136

111,322

Less, portion due within one year

(16,347

)

(5,853

)

(49,602

)

33,360

7,283

61,720

*	See note 3 for more information.

Aggregate maturities of long-term debt at March 31, 2007 are as follows:


Years ending March 31,	(Yen in millions and U.S. dollars in thousands)
2009	¥	1,899	$	16,093
2010		1,488		12,610
2011		1,370		11,610
2012		1,020		8,644
2013 and thereafter		1,506		12,763

	¥	7,283	$	61,720

Kyocera’s assets pledged as collateral of property, plant and equipment, net of accumulated depreciation for long-term debt at March 31, 2006 and 2007 were ¥5,692 million and ¥5,374 million ($45,542 thousand), respectively.

F-17

10. BENEFIT PLANS

Adoption of SFAS No. 158:

As of March 31, 2007, Kyocera adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106 and 132 (R),” which requires an employer to recognize the over funded or under funded status of its defined benefit postretirement plans as an asset or liability in its consolidated balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. Kyocera initially recognized the funded status of its defined benefit plans and to provide the required disclosures in accordance with this standard at March 31, 2007.

The following tables show the incremental effect of the applying SFAS No. 158 at March 31, 2007 on the consolidated balance sheet line items listed below. These adjustments had no effect on Kyocera’s consolidated statements of income and cash flows for the year ended March 31, 2007.


	(Yen in millions)
	Before Application of SFAS No. 158			Adjustments			After Application of SFAS No. 158
Investments in and advances to affiliates and unconsolidated subsidiaries	¥	—		¥	1,033		¥	1,033
Intangible assets		12			(12	)		—
Deferred tax assets		8,354			(2,555	)		5,799
Prepaid benefit cost		568			23,614			24,182

Accrued benefit liability		17,856			(4,931	)		12,925
Deferred tax liabilities		1,466			9,480			10,946
Minority interests in subsidiaries		(942	)		(27	)		(969	)
Accumulated other comprehensive income (loss)		(2,139	)		17,558			15,419

	(U.S. dollars in thousands)
	Before Application of SFAS No. 158			Adjustments			After Application of SFAS No. 158
Investments in and advances to affiliates and unconsolidated subsidiaries	$	—		$	8,754		$	8,754
Intangible assets		102			(102	)		—
Deferred tax assets		70,797			(21,653	)		49,144
Prepaid benefit cost		4,813			200,119			204,932

Accrued benefit liability		151,322			(41,788	)		109,534
Deferred tax liabilities		12,424			80,339			92,763
Minority interests in subsidiaries		(7,983	)		(229	)		(8,212	)
Accumulated other comprehensive income (loss)		(18,127	)		148,796			130,669

Domestic:

a. Defined benefit plans

At March 31, 2007, Kyocera Corporation and its major domestic subsidiaries sponsor funded defined benefit pension plans or unfunded retirement and severance plans for their employees.

Kyocera Corporation adopted a variable expected interest rate for benefits paid for pensioners, which is linked with the long- term interest rate prevailing in Japan instead of a fixed expected interest rate, effective April 2004.

Benefits under the plan of Kyocera Corporation were previously calculated based on base salary, employee’s position, length of service period and conditions at the time of retirement. However, after April 2005, Kyocera adopted “point system” whereby benefits under the plan are calculated according to (i) accumulated “points” that are earned based on employee’s position, extent of contribution and length of service period during employment, and (ii) conditions at the time of retirement. In addition, employees were provided an option to receive lifetime pension payments for the full amount of their retirement payment, while after April 2005, employees are provided an option to receive lifetime pension payments for 50% of their retirement payment and 50% of pension payments for 20 years in maximum. These amendments reduced the projected benefit obligation of the pension plan for Kyocera Corporation. This effect of the reduction in the projected benefit obligation was reflected as a prior service cost.

Major domestic subsidiaries also amended their benefit plans and adopted the “point system” effective April 2006. As a result of this amendment, their projected benefit obligations decreased and such decreases were reflected as prior service costs.

F-18

The funded statuses of the benefit plans at Kyocera Corporation and its major domestic subsidiaries at March 31, 2006 and 2007 are as follows:


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2006			2007			2007
Change in projected benefit obligations:
Projected benefit obligation at beginning of year	¥	104,484		¥	110,530		$	936,695
Service cost		6,661			7,873			66,720
Interest cost		2,045			2,098			17,780
Actuarial loss (gain)		1,464			(1,792	)		(15,186	)
Benefits paid		(3,292	)		(3,355	)		(28,432	)
Amendment		(832	)		(5,329	)		(45,161	)

Projected benefit obligation at end of year		110,530			110,025			932,416
Change in plan assets:
Fair value of plan assets at beginning of year		107,265			119,920			1,016,271
Actual return on plan assets		6,482			2,033			17,229
Employer contribution		9,043			8,935			75,720
Benefits paid		(2,870	)		(3,236	)		(27,423	)

Fair value of plan assets at end of year		119,920			127,652			1,081,797

Funded status	¥	9,390		¥	17,627		$	149,381

Amounts recognized in the consolidated balance sheets consist of:
Prepaid benefit cost	¥	657		¥	24,182		$	204,932
Accrued benefit liability		(17,239	)		(6,555	)		(55,551	)

Net amount recognized	¥	(16,582	)	¥	17,627		$	149,381

Reconciliation from funded status to amounts recognized in the consolidated balance sheets consist of:
Funded status	¥	9,390			—			—

Unrecognized net transition obligation		(522	)		—			—
Prior service cost not yet recognized		55,051			—			—
Unrecognized actuarial loss		(28,557	)		—			—

Net amount recognized	¥	(16,582	)		—			—
Amounts recognized in accumulated other comprehensive income (loss) consist of:
Net transition obligation		—		¥	(337	)	$	(2,856	)
Prior service cost		—			55,642			471,542
Actuarial loss		—			(26,235	)		(222,330	)

Accumulated other comprehensive income		—		¥	29,070		$	246,356


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2006			2007			2007
Accumulated benefit obligation at end of year	¥	106,963		¥	108,037		$	915,568
Pension plans with an accumulated benefit obligation in excess of plan assets at the end of year are as follows:
Projected benefit obligation	¥	25,731		¥	17,614		$	149,271
Accumulated benefit obligation		22,477			17,211			145,856
Fair value of plan assets		8,653			11,059			93,720

F-19

Net periodic pension costs at Kyocera Corporation and its major domestic subsidiaries in the years ended March 31, 2005 , 2006 and 2007, include the following components:


	(Yen in millions and U.S. dollars in thousands)
	Years ended March 31,
	2005			2006			2007			2007
Service cost	¥	6,494		¥	6,661		¥	7,873		$	66,720
Interest cost		2,385			2,045			2,098			17,780
Expected return on plan assets		(1,789	)		(2,159	)		(2,870	)		(24,322	)
Amortization of transition obligation		221			221			185			1,568
Amortization of prior service cost		(2,283	)		(4,445	)		(4,739	)		(40,161	)
Recognized actuarial loss		1,243			1,350			1,310			11,101

Net periodic pension cost	¥	6,271		¥	3,673		¥	3,857		$	32,686

Transition obligation, actuarial loss, and prior service cost expected to be amortized at Kyocera Corporation and its major domestic subsidiaries in the year ending March 31, 2008 are as follows:


	(Yen in millions and U.S. dollars in thousands)
	Year ending March 31,
	2008			2008
Amortization of transition obligation	¥	226		$	1,915
Amortization of prior service cost		(4,320	)		(36,610	)
Recognized actuarial loss		1,047			8,873

Assumptions used to determine projected benefit obligations at Kyocera Corporation and its major domestic subsidiaries at March 31, 2006 and 2007 are as follows:


	March 31,
	2006	2007
Discount rate	1.75% -2.00%	1.75% -2.00%

Assumptions used to determine net periodic pension costs at Kyocera Corporation and its major domestic subsidiaries for the years ended March 31, 2005 , 2006 and 2007 are as follows:


	Years ended March 31,
	2005	2006	2007
Discount rate	2.00%	2.00%	1.75%-2.00%
Expected long-term rate of return on plan assets	2.00%-2.50%	2.00%-2.50%	2.00%-2.50%
Rate of increase in compensation levels	3.00%	—	—

Kyocera Corporation and its domestic subsidiaries use a December 31 measurement date for their plans. Certain domestic subsidiaries use a March 31 measurement date for their plans. Kyocera Corporation and its domestic subsidiaries, which currently use a December 31 measurement date, will use a March 31 measurement date upon the adoption of measurement provision of SFAS No. 158 for the year ending March 31, 2009.

Rate of increase in compensation levels was not used in the calculation of projected benefit obligation and net periodic pension costs for the years ended March 31, 2006 and 2007 under the “point system.”

Kyocera Corporation and its major domestic subsidiaries determine its expected long-term rate of return on plan assets based on the defined yields of life insurance company general account, which occupies major part of plan assets categories, and their consideration of the current expectations for future returns and the historical returns of other plan assets categories in which they invest.

Plan assets categories at Kyocera Corporation and its major domestic subsidiaries at March 31, 2006 and 2007 are as follows:


	March 31,
	2006	2007
Life insurance company general account	65.1%	58.6%
Equity securities	21.9%	25.6%
Debt securities	9.5%	8.2%
Cash and cash equivalents	2.2%	1.4%
Other	1.3%	6.2%

	100.0%	100.0%

F-20

Kyocera Corporation and its major domestic subsidiaries manage and operate their plan assets with a target of obtaining better performance more than earnings from the expected rate of return on plan assets to ensure the sources of funds sufficient to cover the pension benefits paid to participants and beneficiaries into the future. In terms of the plan assets management, they make appropriate investment choices and optimal portfolios with a consideration of its performances, expected returns and risks, and entrusts their plan assets to the fund trustees which can be expected to be the most appropriate to accomplish Kyocera’s objective. They also make an effort to maintain their portfolios within reasonable allocations of plan assets. They evaluate their categories of plan assets allocations and can change their portfolios when it is needed. Their long-term strategy is to allocate approximately 60% Life insurance company general account which assures fixed income, and approximately 30% equity and debt securities and approximately 10% cash and other for their defined benefit plans.

Kyocera Corporation and its major domestic subsidiaries forecast to contribute ¥8,753 million ($74,178 thousand) to the defined benefit pension plans in the year ending March 31, 2008.

Estimated future benefit payments at Kyocera Corporation and its major domestic subsidiaries are as follows:


Years ending March 31,	(Yen in millions and U.S. dollars in thousands)
2008	¥	4,368	$	37,017
2009		5,372		45,525
2010		5,420		45,932
2011		5,269		44,653
2012		5,843		49,517
2013 to 2017		32,453		275,025

b. Other plan

Kyocera Corporation and its major domestic subsidiaries also provide for lump-sum severance benefits with respect to directors and corporate auditors. To reserve future payments of lump-sum severance benefits to directors and corporate auditors, annual provisions are made in the accounts for the estimated cost of this termination plan, which is not funded.

Foreign:

a. Pension plans

Kyocera International, Inc. and its consolidated subsidiaries (KII) and AVX Corporation and its consolidated subsidiaries (AVX) which are both consolidated U.S. subsidiaries of Kyocera Corporation, maintain non-contributory defined benefit pension plans in the U.S. and contributory defined benefit pension plans outside the U.S. The KII plan covers substantially all full-time employees in the U.S., of which benefits are based on years of service and the employees’ average compensation. AVX sponsors various defined benefit pension plans covering certain employees. Pension benefits provided to certain U.S. employees covered under collective bargaining agreements are based on a flat benefit formula. Effective December 31, 1995. AVX froze benefit accruals under its domestic non-contributory defined benefit pension plan for a significant portion of the employees covered under collective bargaining agreements. AVX’s pension plans for certain European employees provide for benefits based on a percentage of final pay. AVX’s funding policy is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws.

F-21

The following table sets forth the funded statuses of the KII’s and AVX’s plans at March 31, 2006 and 2007:


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2006			2007			2007
Change in benefit obligations:
Benefit obligation at beginning of year	¥	22,142		¥	26,854		$	227,576
Service cost		433			538			4,559
Interest cost		1,252			1,431			12,127
Plan participants’ contributions		90			98			830
Actuarial loss (gain)		2,590			(491	)		(4,161	)
Benefits paid		(979	)		(987	)		(8,364	)
Amendment		—			154			1,305
Foreign exchange adjustment		1,272			1,884			15,967

Benefit obligation at end of year		26,800			29,481			249,839
Change in plan assets:
Fair value of plan assets at beginning of year		16,893			19,681			166,788
Actual return on plan assets		2,079			1,927			16,330
Employer contribution		630			1,095			9,280
Plan participants’ contributions		90			98			830
Benefits paid		(979	)		(987	)		(8,364	)
Other expenses		(621	)		(64	)		(542	)
Foreign exchange adjustment		1,589			1,359			11,517

Fair value of plan assets at end of year		19,681			23,109			195,839
Funded status	¥	(7,119	)	¥	(6,372	)	$	(54,000	)

Amounts recognized in the consolidated balance sheets consist of:
Intangible assets	¥	21		¥	—		$	—
Accrued benefit liability		(5,615	)		(6,372	)		(54,000	)
Accumulated other comprehensive loss		4,614			—			—

Net amount recognized	¥	(980	)	¥	(6,372	)	$	(54,000	)

Reconciliation from funded status to amounts recognized in the consolidated balance sheets consist of:
Funded status	¥	(7,119	)		—			—

Prior service cost not yet recognized		(15	)		—			—
Unrecognized actuarial loss		(6,124	)		—			—

Net amount recognized	¥	(980	)		—			—

Amounts recognized in accumulated other comprehensive Income (loss) consist of:
Prior service cost		—		¥	(159	)	$	(1,347	)
Actuarial loss		—			(3,782	)		(32,051	)

Accumulated other comprehensive loss		—		¥	(3,941	)	$	(33,398	)


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2006			2007			2007
Accumulated benefit obligation at end of year	¥	25,054		¥	27,567		$	233,619
Pension plans with an accumulated benefit obligation in excess of plan assets at the end of year:
Projected benefit obligation	¥	26,800		¥	19,685		$	166,822
Accumulated benefit obligation		25,054			19,510			165,339
Fair value of plan assets		19,681			14,725			124,788

F-22

KII’s and AVX’s net periodic pension costs in the years ended March 31, 2005 , 2006 and 2007 include the following components:


	(Yen in millions and U.S. dollars in thousands)
	Years ended March 31,
	2005			2006			2007			2007
Service cost	¥	845		¥	433		¥	538		$	4,559
Interest cost		1,186			1,252			1,431			12,127
Expected return on plan assets		(1,118	)		(1,283	)		(1,482	)		(12,559	)
Amortization of prior service cost		13			13			17			144
Recognized actuarial loss		166			163			238			2,017

Net periodic pension cost	¥	1,092		¥	578		¥	742		$	6,288

KII’s and AVX’s actuarial losses and prior service costs expected to be amortized in the year ending March 31, 2008 are as follows:

KII’s and AVX’s assumptions used to determine projected benefit obligations at March 31, 2006 and 2007 are as follows:


	March 31,
	2006	2007
Discount rate	4.25%-5.50%	4.40%-6.00%
Rate of increase in compensation levels	2.00%-4.50%	3.40%-4.50%

KII’s and AVX’s assumptions used to determine net periodic pension costs in the years ended March 31, 2005 , 2006 and 2007 are as follows:


	Years ended March 31,
	2005	2006	2007
Discount rate	5.25%-6.00%	4.50%-6.00%	4.25%-5.50%
Rate of increase in compensation levels	1.25%-4.50%	1.25%-4.50%	3.00%-4.50%
Expected long-term rate of return on plan assets	7.00%-8.50%	6.30%-8.50%	6.40%-8.50%

KII and AVX use a December 31 measurement date for their plans. KII and AVX determine their expected long-term rate of return on plan assets based on the consideration of the current expectations for future returns and the historical returns of other plan assets categories in which they invest.

KII’s and AVX’s plan assets categories at March 31, 2006 and 2007 are as follows:


	March 31,
	2006		2007
Equity securities	65.9	%	65.9	%
Debt securities	33.2	%	30.5	%
Cash and cash equivalents	0.9	%	2.2	%
Other	—		1.4	%

	100.0	%	100.0	%

KII’s long-term strategy is for target allocation of 65%-75% equity securities and 15%-35% debt securities for its defined benefit plans. AVX’s long-term strategy is for target allocation of 40% equity and 60% fixed income for its U.S. defined benefit plans and 60% equity and 40% fixed income for its non-U.S. defined benefit plans.

AVX forecasts to contribute ¥931 million ($7,890 thousand) to the defined benefit pension plans in the year ending March 31, 2008.

KII’s and AVX’s estimated future benefit payments are as follows:


Years ending March 31,	(Yen in millions and U.S. dollars in thousands)
2008	¥	964	$	8,169
2009		1,004		8,508
2010		1,072		9,085
2011		1,136		9,627
2012		1,203		10,195
2013 to 2017		7,148		60,576

F-23

b. Savings plans

KII and AVX maintain retirement savings plans which allow eligible U.S. employees to defer part of their annual compensation.

AVX also maintains non-qualified deferred compensation programs which permit key employees to annually elect to defer a portion of their compensation until retirement.

Contributions to the plans for the years ended March 31, 2005, 2006 and 2007 were ¥853 million, ¥928 million and ¥1,003 million ($8,500 thousand), respectively.

11. STOCK OPTION PLANS

Kyocera Corporation:

Kyocera Corporation granted directors, corporate auditors, corporate executive officers and certain key employees of Kyocera with stock option plans until the year ended March 31, 2006. Under the plans, they were granted options to purchase Kyocera Corporation’s shares of common stock at a price determined by the higher of (1) multiplying by 1.1 the average market price of Kyocera Corporation’s common stock in previous month of the date of the grant or (2) the market price of Kyocera Corporation’s common stock at the date of grant and an option’s maximum term is 5 years. All options vested and are exercisable.

At March 31, 2007, Kyocera Corporation reserved 2,113 thousand shares of its common stock for the plans.

The following table summarizes information on stock option plans for the year ended March 31, 2007:

Number of
Options
(in thousands)

Weighted Average
Exercise Price

Weighted
Average
Contractual
life remaining
(years)

Aggregated
Intrinsic Value

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

Outstanding at March 31, 2006

3,087

8,498

Granted

—

Exercised

(918

)

8,344

70.71

2,103

17,822

Expired and cancelled

(56

)

8,531

72.30

Outstanding at March 31, 2007

2,113

8,564

72.58

1.5

5,380

45,593

Exercisable at March 31, 2007

2,113

8,564

72.58

1.5

5,380

45,593

The total aggregate intrinsic value of options exercised is ¥16 million, ¥626 million and ¥2,103 million ($17,822 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively.

At March 31, 2007, there was no unrecognized compensation costs related to unvested awards. The total aggregate fair value of options vested was ¥2,419 million and ¥1,248 million for the years ended March 31, 2005 and 2006, respectively.

Because Kyocera granted no stock options during the year ended March 31, 2007 and requisite service period of Kyocera’s stock options granted prior to April 1, 2006 did not attribute to the year ended March 31, 2007, no stock based compensation expense was recognized for the year ended March 31, 2007.

Cash received from the exercise of stock options was ¥120 million, ¥2,332 million and ¥7,654 million ($64,864 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively.

Kyocera’s weighted average fair value is estimated at the date of grant using Black Scholes model. Kyocera estimated expected life, volatility and expected dividends by considering historical record.

The following are significant weighted average assumptions used estimating the fair value of options issued under the Kyocera’s stock option plans:


	Years ended March 31,
	2005			2006
Fair value	¥	1,946		¥	959
Interest rate		0.39	%		0.20	%
Expected life		3.7 years			2.7 years
Volatility		39.09	%		28.00	%
Expected dividends		1.00	%		1.30	%

AVX Corporation:

AVX has four fixed stock option plans. Under the 1995 stock option plan, as amended, AVX could grant options to employees for the purchase of up to an aggregate of 9,300 thousand shares of common stock. Under the non-employee directors’ stock option plan, as amended, AVX could grant options for the purchase of up to an aggregate of 650 thousand shares of common stock. No awards were made under these two plans after August 1, 2005. Under the 2004 stock option plan AVX may grant options to employees for the purchase of up to an aggregate of 10,000 thousand shares of common stock. Under the 2004 non-employee directors’ stock option plan, AVX may grant options for the purchase of up to an aggregate of 1,000 thousand shares of common stock. Under all plans, the exercise price of each option shall not be less than the market price of AVX’s stock on the date of grant and an option’s maximum term is 10 years. Options granted under the 1995 stock option plan and the 2004 stock option plan vest as to 25% annually and options granted under the non-employee directors’ stock option plan and the 2004 non-employee directors’ stock option plan vest as to one third annually. Requisite service periods related to all of the plans begin on the grant date. The number of shares of common stock available for future issuance under all of the plans, consisting of options available to be granted and options currently outstanding, was 15,300 thousand at March 31, 2007.

Options exercised under the AVX’s stock option plans are issued from the AVX’s treasury shares.

F-24

Activity under the AVX’s stock option plans is summarized as follows:

Number of
Options
(in thousands)

Weighted
Average
Exercise Price

Weighted
Average
contractual
life remaining
(years)

Aggregated
Intrinsic Value
(Yen in millions and U.S.
dollars in thousands)

Outstanding at March 31, 2006

4,813

14.72

Granted

513

15.27

Exercised

(430

)

10.27

323

2,737

Expired and cancelled

(75

)

18.62

Outstanding at March 31, 2007

4,821

15.14

5.11

280

Exercisable at March 31, 2007

3,564

15.69

4.03

(207

)

(1,754

)

The total aggregate intrinsic value of options exercised is ¥14 million, ¥120 million and ¥323 million ($2,737 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively.

Unvested share activity under the AVX’s stock options plans at March 31, 2007 is summarized as follows:


	Number of Options (in thousands)		Weighted Average Grant- Dated Fair Value
Unvested balance at March 31, 2006	1,382		$	5.65
Options granted	513			5.44
Option forfeited	(36	)		5.60
Options vested	(602	)		6.57

Unvested balance at March 31, 2007	1,257		$	5.39

At March 31, 2007, ¥438 million ($3,712 thousand) of total unrecognized compensation costs related to unvested awards is expected to be recognized over the vesting period, approximately four years. The total aggregate fair value of options vested is ¥658 million, ¥497 million and ¥463 million ($3,924 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively.

The weighted average estimated fair value of the AVX’s stock options granted at grant date market prices was $6.07, $4.91 and $5.44 per option for the years ended March 31, 2005, 2006 and 2007, respectively. The consolidated statement of income includes ¥263million ($2,229 thousand), net of ¥45 million ($381 thousand) of tax benefit, in stock based compensation expense for the year ended March 31, 2007.

Cash received from the exercise of stock options was ¥31 million, ¥646 million and ¥ 516 million ($4,373 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively. Excess tax benefit from stock-based payment arrangements was ¥78 million ($661 thousand) for the year ended March 31, 2007.

AVX’s weighted average fair value is estimated at the date of grant using Black Scholes model. AVX estimated volatility by considering the AVX’s historical stock volatility. AVX calculated the dividend yield based on historical dividend paid. In accordance with SFAS No. 123R AVX has estimated forfeitures in determining the weighted average fair value calculation. The forfeiture rate used for the year ended March 31, 2007 was 6.4%. The following are significant weighted average assumptions used for estimating the fair value of options issued under the AVX’s stock option plans:


	Years ended March 31,
	2005		2006		2007
Interest rate	3.53	%	4.00	%	4.90	%
Expected life	4 years		4 years		5 years
Volatility	55.97	%	55.74	%	35.25	%
Expected dividends	1.07	%	1.31	%	0.98	%

Kyocera Wireless Corp. (KWC):

KWC provides key employees with stock options. The options become vested gradually over a four-year period provided participants remain a KWC employee. The exercise price shall not be less than 85% of the fair value of the common stock at the time the option is granted, and the grant has a maximum term of 10 years. Since KWC’s securities are not traded on any stock change, KWC’s Board of Directors is responsible for determining the fair value using reasonable means. KWC may grant options to all key employees for the purchase for up to an aggregate of 3,800 thousand shares of common stock. The issuance of new options under this plan has been suspended as of April 1, 2006.

Activity under the KWC’s stock option plans is summarized as follows:

Number of
Options
(in thousands)

Weighted
Average
Exercise Price

Weighted
Average
contractual
life remaining
(years)

Aggregated
Intrinsic Value
(Yen in millions and U.S.
dollars in thousands)

Outstanding at March 31, 2006

2,124

2.33

Granted

—

Exercised

—

Expired and cancelled

(585

)

2.41

Outstanding at March 31, 2007

1,539

2.30

5.45

(363

)

(3,076

)

Exercisable at March 31, 2007

1,253

2.38

5.45

(307

)

(2,602

)

F-25

Unvested share activity under the KWC’s stock options plans at March 31, 2007 is summarized as follows:


	Number of Options (in thousands)		Weighted Average Grant- Dated Fair Value
Unvested balance at March 31, 2006	669		$	0.92
Options granted	—			—
Option forfeited	(149	)		1.11
Options vested	(234	)		0.87

Unvested balance at March 31, 2007	286		$	0.87

At March 31, 2007, ¥36 million ($305 thousand) of total unrecognized compensation costs related to unvested awards is expected to be recognized over the vesting period, approximately four years. The total aggregate fair value of options vested is ¥78 million, ¥76 million and ¥22 million ($186 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively.

The weighted average estimated fair value of the KWC’s stock options granted at grant date was $1.43 and $0.63 per option for the years ended March 31, 2005 and 2006, respectively. The consolidated statement of income includes ¥(25) million and ¥25 million ($212 thousand) in stock based compensation expense for the years ended March 31, 2005 and 2007, respectively.

KWC’s weighted average fair value is estimated at the date of grant using Black Scholes model. KWC estimated volatility by considering historical volatility. The following are significant weighted average assumptions used for estimating the fair value of options issued under the KWC’s stock option plans:


	Years ended March 31,
	2005			2006
Fair value	$	1.43		$	0.63
Interest rate		3.65	%		4.21	%
Expected life		5 years			5 years
Volatility		45.00	%		45.00	%
Expected dividends		—			—

12. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Kyocera’s activities are exposed it to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Approximately 60% of Kyocera’s revenues are generated from overseas customers, which exposes Kyocera to foreign currency exchange rates fluctuations. These financial exposures are monitored and managed by Kyocera as an integral part of its overall risk management program. Kyocera’s risk management program focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

Kyocera maintains a foreign currency risk management strategy that uses derivative financial instruments, such as foreign currency forward contracts, to minimize the volatility in its cash flows caused by changes in foreign currency exchange rates. Movements in foreign currency exchange rates pose a risk to Kyocera’s operations and competitive position, since exchange rates changes may affect the profitability, cash flows, and business and/or pricing strategies of non Japan-based competitors. These movements affect cross-border transactions that involve, but not limited to, direct export sales made in foreign currencies and raw material purchases incurred in foreign currencies.

Kyocera maintains an interest rate risk management strategy that may use derivative financial instruments, such as interest rate swaps, to minimize significant, unanticipated cash flow fluctuations caused by interest rate volatility.

By using derivative financial instruments to hedge exposures to changes in exchange rates and interest rates, Kyocera became exposed itself to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contracts. When the fair value of a derivative contract is positive, the counterparty owes Kyocera, which creates repayment risk for Kyocera. When the fair value of a derivative contract is negative, Kyocera owes the counterparty and, therefore, it does not possess repayment risk. Kyocera minimizes the credit (or repayment) risk in derivative financial instruments by (1) entering into transactions with creditworthy counterparties, (2) limiting the amount of exposure to each counterparty, and (3) monitoring the financial condition of its counterparties.

Cash Flow Hedges

Kyocera uses certain foreign currency forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in its forecasted transactions related to purchase and sales.

Kyocera charged deferred net gains of ¥30 million and net losses of ¥27 million and ¥8 million ($68 thousand) from accumulated other comprehensive income to foreign currency transaction gains (losses), net in the consolidated statements of income for the years ended March 31, 2005, 2006 and 2007, as a result of the execution of the hedged transactions.

Also, Kyocera uses interest rate swaps mainly to convert a portion of its variable rate debt to fixed rates. Kyocera charged deferred net losses of ¥78 million and ¥23 million ($195 thousand) from accumulated other comprehensive income to income from discontinued operations in the consolidated statements of income for the years ended March 31, 2005 and 2007. Kyocera charged deferred net losses of ¥18 million ($152 thousand) from accumulated other comprehensive income to equity in (losses) earnings of affiliates in the consolidated statement of income for the year ended March 31, 2007.

Kyocera recognized net losses of ¥75 million and net gains of ¥63 million ($534 thousand) in accumulated other comprehensive income at March 31, 2006 and 2007, respectively

F-26

Other Derivatives

Kyocera’s main direct foreign export sales and some import purchases are denominated in the customers’ and suppliers’ local currency, principally the U.S. dollar, Euro and STG. Kyocera purchases foreign currency forward contracts with terms normally lasting less than three months to protect against the adverse effects that exchange-rate fluctuations may have on foreign-currency-denominated trade receivables and payables. Kyocera does not adopt hedge accounting for such derivatives. The gains and losses on both the derivatives and the foreign-currency-denominated trade receivables and payables are recorded as foreign currency transaction gains (losses), net in the consolidated statements of income.

The aggregate contract amounts of derivative financial instruments to which hedge accounting is not applied are as follows:


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2006		2007		2007
Foreign currency forward contracts to sell	¥	118,911	¥	135,227	$	1,145,992
Foreign currency forward contracts to purchase		8,572		14,961		126,788
Interest rate swaps		13,000		—		—

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of financial instruments at March 31, 2006 and 2007 and the methods and assumptions used to estimate the fair value are as follows:


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2006						2007						2007
	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Carrying Amount			Fair Value
Non-derivatives:
Assets:
Cash and cash equivalents ^(a)	¥	300,809		¥	300,809		¥	282,208		¥	282,208		$	2,391,593		$	2,391,593
Short-term investments ^(b)		87,942			87,791			213,495			213,447			1,809,280			1,808,873
Short-term finance receivables ^(c)		36,940			36,946			—			—			—			—
Securities and other investments ^(b)		553,377			553,144			690,568			690,527			5,852,271			5,851,924
Long-term finance receivables ^(c)		77,140			77,164			—			—			—			—

	¥	1,056,208		¥	1,055,854		¥	1,186,271		¥	1,186,182		$	10,053,144		$	10,052,390

Liabilities:
Short-term borrowings ^(a)	¥	(90,865	)	¥	(90,865	)	¥	(15,250	)	¥	(15,250	)	$	(129,237	)	$	(129,237	)
Current portion of long-term debt ^(c)		(16,347	)		(16,367	)		(5,853	)		(5,880	)		(49,602	)		(49,831	)
Long-term debt ^(c)		(33,360	)		(33,470	)		(7,283	)		(7,285	)		(61,720	)		(61,737	)

	¥	(140,572	)	¥	(140,702	)	¥	(28,386	)	¥	(28,415	)	$	(240,559	)	$	(240,805	)

Derivatives:
Foreign currency forward contracts to sell^(d)	¥	(1,271	)	¥	(1,271	)	¥	(1,386	)	¥	(1,386	)	$	(11,746	)	$	(11,746	)
Foreign currency forward contracts to purchase ^(d)		(27	)		(27	)		70			70			593			593
Interest rate swaps ^(d)		(511	)		(511	)		—			—			—			—

At March 31, 2006, both short-term finance receivables and long-term finance receivables in the above do not include investments in direct financing leases.

^(a)	The carrying amount approximates fair value because of the short maturity of these instruments.

^(b)

The fair value is based on quoted market prices. It was not practicable to estimate the fair value of investments in unlisted common stock because of the lack of the market price and difficulty in estimating fair value without incurring excessive cost, and Kyocera did not identify any events or changes in circumstances that may have had a significant adverse effect on these investments. The aggregated carrying amounts of these investments included in the table at March 31, 2006 and 2007 were ¥2,258 million and ¥2,100 million ($17,797 thousand), respectively.

^(c)	The fair value is estimated by discounting cash flows, using current interest rates for instruments with similar terms and remaining maturities.

^(d)	The fair value is estimated based on quotes from financial institutions.

F-27

14. COMMITMENTS AND CONTINGENCIES

At March 31, 2007, Kyocera had contractual obligations for the acquisition or construction of property, plant and equipment aggregating ¥15,893 million ($134,686 thousand) principally due within one year.

Kyocera is lessee under long-term operating leases primarily for office space and equipment. Rental expenses for operating leases were ¥12,204 million, ¥11,485 million and ¥7,681 million ($65,093 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively.

Future minimum lease commitments under non-cancelable operating leases at March 31, 2007 are as follows:


Years ending March 31,	(Yen in millions and U.S. dollars in thousands)
2008	¥	6,346	$	53,780
2009		4,126		34,966
2010		2,997		25,398
2011		2,370		20,085
2012		1,771		15,008
2013 and thereafter		5,270		44,661

	¥	22,880	$	193,898

Kyocera has entered into material supply agreements for a significant portion of their anticipated material used in its operations. Under those agreements, during the year ended March 31, 2007, Kyocera purchased ¥2,414 million ($20,458 thousand) and is obligated to purchase ¥106,938 million ($906,254 thousand) in total by the end of December 2018.

Kyocera guarantees the debt of employees, customers, an investee and an unconsolidated subsidiary. At March 31, 2007, the total amount of these guarantees was ¥850 million ($7,203 thousand). The financial guarantees are made in the form of commitments and letters of awareness issued to financial institutions and generally obligate Kyocera to make payments in the event of default by the borrowers. Kyocera also guarantees the leasing debts of customers of the Information Equipment Group. At March 31, 2007, the amount of such guarantee was ¥180 million ($1,525 thousand).

Kyocera is subject to various lawsuits and claims, which arise, in the ordinary course of business. Kyocera consults with legal counsel and assesses the likelihood of adverse outcome of these contingencies. Kyocera records liabilities for these contingencies when the likelihood of an adverse outcome is probable and the amount is reasonably estimated. However, based on the information available, management believes that damages, if any, resulting from these actions will not have a significant effect on Kyocera’s consolidated results of operations and financial position.

On March 28, 2005, Kyocera Corporation received a notice of tax assessment based on transfer pricing adjustments from the Osaka Regional Tax Bureau stating that, in the Bureau’s judgment, allocation of profit earned from transfers of products between Kyocera Corporation and its overseas subsidiaries was not appropriate for the five years from the year ended March 31, 1999 through the year ended March 31, 2003. The notice indicated that income should be adjusted upwards ¥24,394 million and that resultant additional taxes, including local taxes, etc., amounted to ¥12,748 million, which Kyocera had recognized as current income taxes in its consolidated statement of income for the year ended March 31, 2005. On May 24, 2005, Kyocera Corporation filed a complaint against tax assessment based on transfer pricing adjustments with the Osaka Regional Tax Bureau.

On September 25, 2006, Kyocera Corporation received decision letter from the Bureau that voided a portion of the original assessment. In accordance with this decision, ¥4,305 million ($36,483 thousand) of tax refunds, including local taxes, was recognized in current income taxes in fiscal 2007. Kyocera Corporation remains in disagreement with the decision concerning the portion of the original assessment that was not voided, and therefore, on October 23,2006, Kyocera submitted a written claim for examination with the Osaka Board of Tax Appeals. Furthermore, with the objective of avoiding duplicate taxation within Kyocera Group, a notice stating mutual agreement with the United States was submitted to the National Tax Agency on December 26, 2006.

15. STOCKHOLDERS’ EQUITY

Under the Company Law of Japan (the “Company Law”), the entire amount paid in for the shares is principally required to be capitalized as stated capital, although Kyocera Corporation may, by resolution of its Board of Directors, capitalize an amount not exceeding one-half of the amount paid in for the shares as additional paid-in capital.

The Company Law requires a domestic company to appropriate as legal reserve or additional paid-in capital, an amount equal to 10% of the amount paid out for dividends until the sum of the legal reserve and the additional paid-in capital equals 25% of its stated capital. The legal reserve and additional paid-in capital, which could be decreased due to stockholder actions, may be transferred to stated capital or used to reduce a deficit principally. The appropriated legal reserve at March 31, 2007 included in retained earnings was ¥18,873 million ($ 159,941 thousand).

F-28

The Company Law does not permit any payment of dividends in connection with the repurchased treasury stock. At March 31,2007, Kyocera Corporation reserved ¥21,855 million ($185,212 thousand) of treasury stock repurchased mainly for stock options, which are restricted as to the payment of cash dividends. The amount of statutory retained earnings of Kyocera Corporation available for the payment of dividends to stockholders at March 31, 2007 was ¥649,412 million ($5,503,492 thousand).

The accompanying consolidated financial statements do not include any provision for the dividend of ¥60 ($0.51) per share aggregating ¥11,319 million ($95,924 thousand) payable on June 28, 2007 which was approved by the stockholders at the meeting held on June 27, 2007.

Kyocera’s equity in retained earnings or deficits of affiliates and unconsolidated subsidiaries accounted for by the equity method of accounting aggregating ¥ (13,373 million) ($(113,331 thousand)) at March 31, 2007 was included in retained earnings.

Changes in accumulated other comprehensive income are as follows:


	(Yen in millions and U.S. dollars in thousands)
	Foreign Currency Translation Adjustments			Pension Adjustments		Minimum Pension Liability Adjustments			Net Unrealized Gains on Securities			Net Unrealized Gains (Losses) on Derivative Financial Instruments			Total Accumulated Other Comprehensive Income
Balance at March 31, 2004	¥	(35,670	)	¥	—	¥	(1,477	)	¥	59,241		¥	(48	)	¥	22,046
Net change for the year		6,704			—		(152	)		(16,780	)		21			(10,207	)

Balance at March 31, 2005		(28,966	)		—		(1,629	)		42,461			(27	)		11,839
Net change for the year		21,396			—		(428	)		40,188			(48	)		61,108

Balance at March 31, 2006		(7,570	)		—		(2,057	)		82,649			(75	)		72,947
Net change for the year		10,474			—		(82	)		102,021			138			112,551
Adjustment for initially applying SFAS No.158		—			15,419		2,139			—			—			17,558

Balance at March 31, 2007	¥	2,904		¥	15,419	¥	—		¥	184,670		¥	63		¥	203,056

Balance at March 31, 2006	$	(64,153	)	$	—	$	(17,432	)	$	700,415		$	(635	)	$	618,195
Net change for the year		88,763			—		(695	)		864,585			1,169			953,822
Adjustment for initially applying SFAS No.158		—			130,670		18,127			—			—			148,797

Balance at March 31, 2007	$	24,610		$	130,670	$	—		$	1,565,000		$	534		$	1,720,814

16. INCOME TAXES

Income from continuing operations before income taxes and minority interests and income taxes for the years ended March 31, 2005, 2006 and 2007 are made up of the following components:


	(Yen in millions and U.S. dollars in thousands)
	Years ended March 31,
	2005			2006			2007			2007
Income from continuing operations before income taxes and minority interests:
Domestic	¥	89,673		¥	93,078		¥	102,048		$	864,813
Foreign		14,340			24,159			54,492			461,797

Total income from continuing operations before income taxes and minority interests	¥	104,013		¥	117,237		¥	156,540		$	1,326,610

Income taxes:
Current income taxes:
Domestic	¥	47,400		¥	39,025		¥	41,227		$	349,382
Foreign		5,206			7,215			12,538			106,254

Total current income taxes		52,606			46,240			53,765			455,636

Deferred income taxes:
Domestic		(723	)		(1,202	)		(4,479	)		(37,958	)
Foreign		6,331			1,722			(399	)		(3,381	)

Total deferred income taxes		5,608			520			(4,878	)		(41,339	)

Total income taxes	¥	58,214		¥	46,760		¥	48,887		$	414,297

F-29

In Japan, a company is subject to a number of taxes, based on income, which in the aggregate indicate normal statutory income tax rates for the years ended March 31, 2005, 2006 and 2007 of approximately 41.0%.

Reconciliations between the Japanese statutory income tax rate and Kyocera’s effective tax rate for the years ended March 31, 2005, 2006 and 2007 are as follows:


	Years ended March 31,
	2005		2006		2007
Japanese statutory tax rate	41.0	%	41.0	%	41.0	%
Difference in statutory tax rates of foreign subsidiaries	(4.1	)	(2.8	)	(4.6	)
Change in valuation allowance	9.8		5.8		0.0
Tax credit for research and development expenses	(2.3	)	(3.6	)	(3.3	)
Tax refunds related to transfer pricing adjustments (Note 14)	—		—		(2.8	)
Adjustments of transfer pricing (Note 14)	12.3		—		—
Other	(0.7	)	(0.5	)	0.9

Effective income tax rate	56.0	%	39.9	%	31.2	%

The components of the deferred tax assets and deferred tax liabilities at March 31, 2006 and 2007 are as follows:

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

March 31,

2006

2007

Deferred tax assets:

Enterprise tax

2,162

2,521

21,364

Inventories

19,228

22,358

189,475

Allowance for doubtful accounts

2,851

1,972

16,712

Accrued expenses

7,478

9,178

77,780

Employee benefits

20,825

18,774

159,102

Depreciation and amortization

28,244

31,165

264,110

Securities

2,390

2,194

18,593

Net operating losses and tax credit carry forwards

31,378

32,500

275,424

Liquidation of a foreign subsidiary

3,479

3,800

32,203

Other

6,456

4,817

40,822

Total gross deferred tax assets

124,491

129,279

1,095,585

Valuation allowance

(42,149

)

(42,124

)

(356,983

)

Net deferred tax assets

82,342

87,155

738,602

Deferred tax liabilities:

Depreciation and amortization

3,496

2,566

21,746

Deduction of foreign branch losses

5,670

5,474

46,390

Securities

143,734

214,900

1,821,186

Prepaid benefit cost

269

10,946

92,763

Other

973

2,968

25,153

Total deferred tax liabilities

154,142

236,854

2,007,238

Net deferred tax liabilities

(71,800

)

(149,699

)

(1,268,636

)

F-30

Net deferred tax assets and liabilities at March 31, 2006 and 2007 are reflected in the consolidated balance sheets under the following captions.


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2006			2007			2007
Deferred income taxes - current assets	¥	40,411		¥	45,390		$	384,661
Other assets		13,504			12,024			101,898
Other current liabilities		(29	)		(255	)		(2,161	)
Deferred income taxes - non-current liabilities		(125,686	)		(206,858	)		(1,753,034	)

Net deferred tax liabilities	¥	(71,800	)	¥	(149,699	)	$	(1,268,636	)

At March 31, 2007, Kyocera had net operating losses carried forward of approximately ¥ 89,177 million ($755,737 thousand), which are available to offset future taxable income. Of these net operating losses carried forward, the amount of ¥20,429 million ($173,127 thousand) recorded at domestic subsidiaries will expire within next seven years, and the amount of approximately ¥16,615 million ($140,805 thousand) recorded at U.S. subsidiaries will expire within next twenty years. Certain other foreign subsidiaries have net operating losses carried forward totaling approximately ¥52,133 million ($441,805 thousand) of which most have no expiration date.

Kyocera intends to reinvest certain undistributed earnings of foreign subsidiaries for an indefinite period of time. Therefore, no deferred tax liabilities have been provided on undistributed earnings of these subsidiaries, which are not expected to be remitted in the foreseeable future. Kyocera estimates that this unrecognized deferred tax liability amount are ¥17,862 million ($151,373 thousand) at March 31, 2007. The undistributed earnings of these subsidiaries are ¥172,320 million ($1,460,339 thousand) at March 31, 2007.

Total gross deferred tax assets at March 31, 2006 and 2007 were reduced by valuation allowances of ¥42,149 million and ¥42,124 million ($356,983 thousand), respectively. The total valuation allowance for the year ended March 31, 2007 decreased by ¥25 million ($212 thousand).

17. SUPPLEMENTAL EXPENSE INFORMATION

Research and development expenses for the years ended March 31, 2005, 2006 and 2007 amounted to ¥54,398 million, ¥57,436 million and ¥61,100 million ($517,797 thousand), respectively.

Advertising expenses for the years ended March 31, 2005, 2006 and 2007 amounted to ¥13,914 million, ¥10,840 million and ¥11,845 million ($100,381 thousand), respectively.

Shipping and handling costs for the years ended March 31, 2005, 2006 and 2007 amounted to ¥12,914 million, ¥13,984 million and ¥15,945 million ($135,127 thousand), respectively, and were included in selling, general and administrative expenses in the Consolidated Statements of Income.

F-31

18. SEGMENT REPORTING

Kyocera manufactures and sells a highly diversified range of products, including components involving fine ceramic technologies and applied ceramic products, telecommunications and information equipment and optical instruments, etc. Main products or businesses of each reporting segment are as follows:

(Fine Ceramic Parts Group)

Information & Telecommunication Components

Sapphire Substrates

Components for Semiconductor Processing Equipment

Components for LCD Fabrication Equipment

Automotive Components

ITS-related Components

Ceramic Components for General Industrial Equipment

(Semiconductor Parts Group)

Surface Mount Device (SMD) Ceramic Packages

CCD/CMOS Sensor Ceramic Packages

LSI Ceramic Packages

Wireless Communication Device Packages

Optical Communication Device Packages and Components

Organic Multilayer Packages and Substrates

(Applied Ceramic Products Group)

Residential and Industrial Solar Power Generating Systems

Solar Cells and Modules

Cutting Tools

Printed Circuit Board Micro Drills

Jewelry

Applied Ceramic Related Products

Dental and Medical Implants

(Electronic Device Group)

Ceramic Capacitors

Tantalum Capacitors

Timing Devices (Temperature Compensated Crystal Oscillators (TCXOs), Ceramic Resonators, Crystal Units)

RF Modules

Surface Acoustic Wave (SAW) Filters

Connectors

Thermal Printheads

LED Printheads

Amorphous Silicon Drums

Liquid Crystal Displays

(Telecommunications Equipment Group)

CDMA Mobile Phone Handsets

Personal Handy Phone System (PHS) Related Products (PHS Mobile

Phone Handsets, PHS Base Stations, High Speed Wireless Data

Transmission Systems)

(Information Equipment Group)

ECOSYS Printers

Copying Machines

Multifunctional Systems

(Optical Equipment Group)

Optical Modules and Lenses

(Others)

Chemical Materials for Electronic Components

Electrical Insulators

Synthetic Resin Molded Parts

Telecommunication Engineering Business

Information and Communication Technology Business

Management Consulting Business

Hotel Business

Realty Development Business

Insurance Agent and Travel Agent Business

Kyocera Corporation sold its shares of KLC, a subsidiary engaged in financing services included in “Others.” As a result, business results and profit on sale of its shares of KLC for the year ended March 31, 2007 have been recorded as income from discontinued operations. Additionally, commencing for the year ended March 31, 2007, results of Precision Machine Division of Kyocera Corporation, previously included within “Corporate,” has been reclassified into “Others.” Accordingly, reported results of related segments for the years ended March 31, 2005 and 2006 have been reclassified.

Inter-segment sales, operating revenue and transfers are made with reference to prevailing market prices. Transactions between reportable segments are immaterial and not shown separately. Operating profit for each reporting segment represents net sales, less related costs and operating expenses, excluding corporate revenue and expenses, equity in earnings (losses), income taxes and minority interest. Assets for each reporting segment represent those assets associated with a specific reporting segment. Corporate assets consist primarily of cash and cash equivalents, the facilities of corporate headquarters and various other investments and assets that are not specific to each reporting segment.

Kyocera’s sales to KDDI and its consolidated subsidiaries, which are mainly recorded at the Telecommunications Equipment group, for the years ended March 31, 2005, 2006 and 2007 comprised of 7.6%, 8.1% and 9.6% to consolidated net sales, respectively.

Information by reporting segment at and for the years ended March 31, 2005, 2006 and 2007 is summarized on the following page:

F-32

Reporting segments


	(Yen in millions and U.S. dollars in thousands)
	Years ended March 31,
	2005			2006			2007			2007
Net sales:
Fine Ceramic Parts Group	¥	73,711		¥	69,373		¥	81,326		$	689,203
Semiconductor Parts Group		127,960			135,299			152,292			1,290,610
Applied Ceramic Products Group		93,879			117,555			131,103			1,111,042
Electronic Device Group		262,997			259,592			286,156			2,425,051
Telecommunications Equipment Group		250,918			229,035			251,183			2,128,670
Information Equipment Group		241,145			249,381			268,781			2,277,805
Optical Equipment Group		35,776			14,947			11,704			99,187
Others		110,595			117,409			125,656			1,064,881
Adjustments and eliminations		(23,321	)		(19,047	)		(24,304	)		(205,966	)

	¥	1,173,660		¥	1,173,544		¥	1,283,897		$	10,880,483

Operating profit:
Fine Ceramic Parts Group	¥	11,535		¥	11,014		¥	15,677		$	132,856
Semiconductor Parts Group		17,550			17,742			22,210			188,220
Applied Ceramic Products Group		17,129			21,876			22,334			189,271
Electronic Device Group		35,406			27,170			44,487			377,009
Telecommunications Equipment Group		(14,918	)		(1,706	)		291			2,466
Information Equipment Group		36,186			26,412			33,970			287,881
Optical Equipment Group		(15,387	)		(5,774	)		(1,895	)		(16,059	)
Others		9,705			8,983			8,776			74,373

		97,206			105,717			145,850			1,236,017
Corporate		8,480			12,785			8,569			72,618
Equity in (losses) earnings of affiliates and unconsolidated subsidiaries		(1,678	)		(1,216	)		2,621			22,212
Adjustments and eliminations		5			(49	)		(500	)		(4,237	)

Income from continuing operations before income taxes and minority interests	¥	104,013		¥	117,237		¥	156,540		$	1,326,610

Depreciation and amortization:
Fine Ceramic Parts Group	¥	4,320		¥	4,126		¥	4,500		$	38,135
Semiconductor Parts Group		8,922			10,623			12,533			106,212
Applied Ceramic Products Group		4,645			7,167			8,097			68,619
Electronic Device Group		21,723			21,202			21,537			182,517
Telecommunications Equipment Group		8,101			8,692			9,075			76,907
Information Equipment Group		8,953			12,641			16,326			138,356
Optical Equipment Group		2,909			1,635			655			5,551
Others		4,197			3,989			6,764			57,322
Corporate		2,039			2,996			2,575			21,822

	¥	65,809		¥	73,071		¥	82,062		$	695,441

Depreciation and amortization of KLC amounted to ¥100 million, ¥115 million and ¥120 million ($1,017 thousand) for the years ended March 31, 2005, 2006 and 2007 respectively, are no longer included in the above table since the result of operations of KLC are reported as discontinued operations. Therefore, the total amounts of depreciation and amortization in the above table differ from the depreciation and amortization reported in the statements of cash flows.

F-33

Reporting segments


	(Yen in millions and U.S. dollars in thousands)
	Years ended March 31,
	2005			2006			2007			2007
Write-down of inventories:
Fine Ceramic Parts Group	¥	14		¥	14		¥	54		$	458
Semiconductor Parts Group		45			382			1,848			15,661
Applied Ceramic Products Group		312			1,176			1,283			10,873
Electronic Device Group		598			385			670			5,678
Telecommunications Equipment Group		4,053			4,184			5,208			44,135
Information Equipment Group		1,583			2,079			1,791			15,178
Optical Equipment Group		3,793			194			464			3,932
Others		7			32			10			85
Corporate		—			—			—			—

	¥	10,405		¥	8,446		¥	11,328		$	96,000

Capital expenditures:
Fine Ceramic Parts Group	¥	4,394		¥	4,182		¥	7,447		$	63,110
Semiconductor Parts Group		7,111			24,136			11,432			96,881
Applied Ceramic Products Group		7,584			14,545			7,330			62,119
Electronic Device Group		19,453			21,562			19,812			167,898
Telecommunications Equipment Group		5,170			2,639			3,800			32,203
Information Equipment Group		11,751			12,389			11,962			101,373
Optical Equipment Group		2,248			199			322			2,729
Others		2,387			5,654			5,452			46,204
Corporate		3,062			3,554			2,339			19,822

	¥	63,160		¥	88,860		¥	69,896		$	592,339


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2005			2006			2007			2007
Assets:
Fine Ceramic Parts Group	¥	43,414		¥	43,822		¥	54,860		$	464,915
Semiconductor Parts Group		79,711			103,302			106,359			901,348
Applied Ceramic Products Group		85,595			112,422			125,266			1,061,576
Electronic Device Group		357,797			383,150			412,979			3,499,822
Telecommunications Equipment Group		98,877			87,343			92,584			784,610
Information Equipment Group		178,596			185,362			207,862			1,761,542
Optical Equipment Group		31,338			16,211			11,934			101,136
Others		218,423			243,166			121,150			1,026,695

		1,093,751			1,174,778			1,132,994			9,601,644
Corporate		682,725			815,833			1,056,646			8,954,627
Investments in and advances to affiliates and unconsolidated subsidiaries		30,623			7,355			10,093			85,534
Adjustments and eliminations		(61,580	)		(66,444	)		(69,269	)		(587,025	)

Total assets	¥	1,745,519		¥	1,931,522		¥	2,130,464		$	18,054,780

F-34

Information for revenue from external customers by destination and long-lived assets based on physical location as of and for the years ended March 31,2005, 2006 and 2007 are summarized as follows:

Geographic segments


	(Yen in millions and U.S. dollars in thousands)
	Years ended March 31,
	2005		2006		2007		2007
Net sales:
Japan	¥	465,422	¥	467,035	¥	496,959	$	4,211,517
United States of America		248,333		253,696		274,361		2,325,093
Asia		203,848		198,731		216,663		1,836,127
Europe		175,850		184,351		210,726		1,785,814
Others		80,207		69,731		85,188		721,932

	¥	1,173,660	¥	1,173,544	¥	1,283,897	$	10,880,483


	(Yen in millions and U.S. dollars in thousands)
	March 31,
	2005		2006		2007		2007
Long-lived assets:
Japan	¥	212,291	¥	251,555	¥	235,325	$	1,994,280
United States of America		35,712		36,248		36,777		311,669
Asia		31,070		37,308		42,204		357,661
Europe		23,269		22,344		24,398		206,763
Others		3,294		3,711		4,635		39,280

	¥	305,636	¥	351,166	¥	343,339	$	2,909,653

There are no individually material countries with respect to revenue from external customers and long-lived assets in Asia, Europe and Others.

19. EARNINGS PER SHARE

A reconciliation of the numerators and the denominators of basic and diluted earnings per share computations is as follows:

(Yen in millions and U.S. dollars in thousands
except per share amounts)

Years ended March 31,

2005

2006

2007

Income from continuing operations

42,657

66,088

101,329

858,720

Income from discontinued operations

3,251

3,608

5,175

43,856

Net income

45,908

69,696

106,504

902,576

Basic earnings per share:

Income from continuing operations

227.52

352.44

538.52

4.56

Income from discontinued operations

17.34

19.24

27.51

0.24

Net income

244.86

371.68

566.03

4.80

Diluted earnings per share:

Income from continuing operations

227.47

352.21

537.35

4.55

Income from discontinued operations

17.34

19.22

27.44

0.24

Net income

244.81

371.43

564.79

4.79


	(shares in thousands)
	Years ended March 31,
	2005	2006	2007
Basic weighted average number of shares outstanding	187,489	187,514	188,160
Dilutive effect of stock options	39	126	413

Diluted weighted average number of shares outstanding	187,528	187,640	188,573

20. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental information related to the Consolidated Statements of Cash Flows is as follows:


	(Yen in millions and U.S. dollars in thousands)
	Years ended March 31,
	2005			2006			2007			2007
Cash paid during the year:
Interest	¥	2,331		¥	1,933		¥	1,603		$	13,585
Income taxes		40,055			53,037			52,847			447,856
Acquisitions of businesses:
Fair value of assets acquired	¥	8,478		¥	65		¥	1,151		$	9,754
Fair value of liabilities assumed		(2,683	)		(45	)		(333	)		(2,822	)
Minority Interests		(2,440	)		(8	)		—			—
Cash acquired		(561	)		(15	)		(62	)		(525	)

	¥	2,794		¥	(3	)	¥	756		$	6,407

F-35

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

For the years ended March 31, 2005, 2006 and 2007


	Yen in millions
Column A	Column B		Column C					Column D			Column E
			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses		Charged (Credited) to other Accounts (A)			Deductions (B)			Balance at End of Period
For the year ended March 31, 2005:
Allowance for doubtful accounts	¥	42,792	¥	548	¥	109		¥	(22,410	)	¥	21,039
Allowance for sales returns		4,408		8,473		58			(9,040	)		3,899

Total	¥	47,200	¥	9,021	¥	167		¥	(31,450	)	¥	24,938

For the year ended March 31, 2006:
Allowance for doubtful accounts	¥	21,039	¥	696	¥	388		¥	(9,939	)	¥	12,184
Allowance for sales returns		3,899		7,039		364			(7,590	)		3,712

Total	¥	24,938	¥	7,735	¥	752		¥	(17,529	)	¥	15,896

For the year ended March 31, 2007:
Allowance for doubtful accounts	¥	12,184	¥	804	¥	(4,802	)	¥	(3,204	)	¥	4,982
Allowance for sales returns		3,712		7,811		65			(8,499	)		3,089

Total	¥	15,896	¥	8,615	¥	(4,737	)	¥	(11,703	)	¥	8,071

(A)	Foreign currency translation adjustments, beginning balance of newly consolidated subsidiaries and the decrease by the sale of Kyocera Leasing Co., Ltd.

(B)	Charge-offs

F-36

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, Kyocera certifies that it meets all of the requirements for filing on Form 20-F/A and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.


		Kyocera Corporation
		(Company)

By		/s/ Shoichi Aoki
		Shoichi Aoki
		Executive Officer General Manager of Corporate Financial & Accounting Group

October 5, 2007

INDEX OF EXHIBITS


		Description

1.1		Articles of Incorporation (English translation) (incorporated by reference to the Registrant’s annual report on Form 20-F filed on June 29, 2006)

1.2		Share Handling Regulations of the Registrant (English translation) (incorporated by reference to the Registrant’s annual report on Form 20-F filed on June 29, 2006)

1.3		Regulations of the Board of Directors of the Registrant (English translation) (incorporated by reference to the Registrant’s annual report on Form 20-F filed on June 29, 2006)

1.4		Regulations of the Board of Corporate Auditors of the Registrant (English translation) (incorporated by reference to the Registrant’s annual report on Form 20-F filed on July 5, 2007)

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

2.2		Deposit Agreement, dated as of June 29, 1998 among Kyocera Corporation, Citibank N.A. as Depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt, as amended by Amendment No.1 thereto, dated as of January 5, 1999 (incorporated by reference to the Registrant’s annual report on Form 20-F filed on September 24, 2001)

8.1		List of Significant Subsidiaries (incorporated by reference to the Registrant’s annual report on Form 20-F filed on July 5, 2007)

11.1		Code of Ethics (incorporated by reference to the Registrant’s annual report on Form 20-F filed on July 5, 2007)

12.1		Certification of the principal executive officer of the Registrant required by Rule 13a-14(a)

12.2		Certification of the principal financial officer of the Registrant required by Rule 13a-14(a)

13.1		Certification of the principal executive officer of the Registrant required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code

13.2		Certification of the principal financial officer of the Registrant required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code

15.1		Consent of Kyoto Audit Corporation with respect to its report on the audit of the financial statements included in this Form 20-F/A