Report of Foreign Issuer (6-k)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 6-K

Report of Foreign Private Issuer

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

the Securities Exchange Act of 1934

For the month of July 2018

Commission File Number: 1-07952

KYOCERA CORPORATION

(Translation of registrant’s name into English)

6 Takeda Tobadono-cho, Fushimi-ku,

Kyoto 612-8501, Japan

(Address of principal executive office)

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

Form 20-F  ☒        Form 40-F  ☐

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

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

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SIGNATURE

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

 

KYOCERA CORPORATION (Registrant)

/s/ SHOICHI AOKI

(Signature)

Shoichi Aoki

Director,

Managing Executive Officer and

General Manager of

Corporate Management Control Group

Date: July 31, 2018

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Information furnished on this form:

EXHIBITS

 

Exhibit     Number
1.		Consolidated Financial Results for the Three Months Ended June 30, 2018 (IFRS)

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(English summary with full translation of consolidated financial results)

Consolidated Financial Results

for the Three Months Ended June 30, 2018 (IFRS)

 

				July 31, 2018
Company name:             KYOCERA CORPORATION				Stock Listing: Tokyo Stock Exchange
Code number:               6971		URL  https://global.kyocera.com/
Representative:             Hideo Tanimoto, Director and President
Contact person:            Shoichi Aoki, Director, Managing Executive Officer				TEL    [phone]
Scheduled date of quarterly report filing:		August 10, 2018
Scheduled date of dividend payment:		—
Supplementary documents of the quarterly financial results:        Yes
Holding quarterly financial results meeting:        Yes (conference call for institutional investors and analysts)

(Amounts less than one million yen are rounded)

1. Consolidated Financial Results for the Three Months Ended June 30, 2018

 

(1) Consolidated operating results														(% of change from the same period of the previous year)
		Sales revenue								Operating profit						Profit before income taxes								Profit attributable to owners of the parent								Comprehensive income for the period
Three months ended		Million yen				%				Million yen				%		Million yen				%				Million yen				%				Million yen				%
June 30, 2018			387,484				12.3				37,104			18.7			55,488				12.4				42,284				20.7				127,197				121.1
June 30, 2017			345,162				—				31,260			—			49,353				—				35,026				—				57,536				—

 

		Earnings per share attributable to owners of the parent - Basic				Earnings per share attributable to owners of the parent - Diluted
Three months ended		Yen				Yen
June 30, 2018			116.29				116.26
June 30, 2017			95.25				95.23

(2) Consolidated financial position

 

		Total assets				Total equity				Equity attributable to owners of the parent				Ratio of equity attributable to owners of the parent to total assets
As of		Million yen				Million yen				Million yen				%
June 30, 2018			3,210,051				2,479,430				2,388,680				74.4
March 31, 2018			3,128,813				2,413,299				2,325,791				74.3

2. Cash Dividends

 

		Annual dividends
		First quarter-end				Second quarter-end				Third quarter-end				Year-end				Total
		Yen				Yen				Yen				Yen				Yen
Year ended March 31, 2018			—				60.00				—				60.00				120.00
Year ending March 31, 2019			—
Year ending March 31, 2019 (forecast)							—				—				—				120.00

(Note) Revision of previously announced dividend targets during this reporting period: Not Applicable

Dividends per share for the year ending March 31, 2019 are forecasted to be 120.00 yen on an annual basis.

3. Consolidated Financial Forecasts for the Year Ending March 31, 2019

 

															(% of change from the previous year)
		Sales revenue								Operating profit								Profit before income taxes								Profit attributable to owners of the parent								Earnings per share attributable to owners of the parent - Basic
		Million yen				%				Million yen				%				Million yen				%				Million yen				%				Yen
Full year			1,650,000				4.6				154,000				69.8				190,000				46.2				134,000				69.3				368.54

(Note) Revision of the previously announced financial forecast during this reporting period: Not Applicable

% of change from previous year are calculated by rearranging the consolidated results for the year ended March 31, 2018 to IFRS.

“Earnings per share attributable to owners of the parent - Basic” is calculated using the average number of shares outstanding for the three months ended June 30, 2018.

 

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* Notes

(1) Changes in significant subsidiaries during the period

(Changes in specified subsidiaries that caused a change in the scope of consolidation): Not Applicable

(2) Changes in accounting policies and accounting estimates

(i) Changes in accounting policies required under IFRS: Yes

(ii) Changes in accounting policies due to reasons other than (i): Not Applicable

(iii) Changes in accounting estimates: Yes

Please refer to page 16 “(4) Notes to Condensed Quarterly Consolidated Financial Statements b. Changes in Accounting Policies” and “c. Changes in Accounting Estimates” under “2. Condensed Quarterly Consolidated Financial Statements and Primary Notes” for details.

(3) Number of shares issued (common stock)

(i) Number of shares issued (including treasury stock):

 

As of June 30, 2018		377,618,580 shares
As of March 31, 2018		377,618,580 shares

(ii) Number of treasury stock:

 

As of June 30, 2018		15,862,303 shares
As of March 31, 2018		9,910,822 shares

(iii) Average number of shares outstanding:

 

For the three months ended June 30, 2018		363,599,571 shares
For the three months ended June 30, 2017		367,711,511 shares

* Instruction for Forecasts and Other Notes

1. Adopting IFRS

Kyocera Corporation and its consolidated subsidiaries (“Kyocera”) has adopted IFRS for its consolidated financial statements from the year ending March 31, 2019. Accordingly, the consolidated financial statements for the three months ended June 30, 2017 and those for the year ended March 31, 2018 are also presented in accordance with IFRS.

 

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2. Cautionary statements with respect to forward-looking statements

Certain of the statements made in this document are forward-looking statements, which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to the following:

 

(1)

General conditions in the Japanese or global economy;

 

(2)

Unexpected changes in economic, political and legal conditions in countries where we operate;

 

(3)

Various export risks which may affect the significant percentage of our revenues derived from overseas sales;

 

(4)

The effect of foreign exchange fluctuations on our results of operations;

 

(5)

Intense competitive pressures to which our products are subject;

 

(6)

Fluctuations in the price and ability of suppliers to provide the required quantity of raw materials for use in our production activities;

 

(7)

Manufacturing delays or defects resulting from outsourcing or internal manufacturing processes;

 

(8)

Shortages and rising costs of electricity affecting our production and sales activities;

 

(9)

The possibility that future initiatives and in-process research and development may not produce the desired results;

 

(10)

Companies or assets acquired by us not produce the returns or benefits, or bring in business opportunities;

 

(11)

Inability to secure skilled employees, particularly engineering and technical personnel;

 

(12)

Damages on our information security systems from cyberattacks, etc. and significant costs in order to recover and maintain the systems;

 

(13)

Insufficient protection of our trade secrets and intellectual property rights including patents;

 

(14)

Expenses associated with licenses we require to continue to manufacture and sell products;

 

(15)

Environmental liability and compliance obligations by tightening of environmental laws and regulations;

 

(16)

Unintentional conflict with laws and regulations or newly enacted laws and regulations;

 

(17)

Our market or supply chains being affected by terrorism, plague, wars or similar events;

 

(18)

Earthquakes and other natural disasters affecting our headquarters and major facilities as well as our suppliers and customers;

 

(19)

Credit risk on trade receivables;

 

(20)

Fluctuations in the value of, and impairment losses on, securities and other assets held by us;

 

(21)

Impairment losses on property, plant and equipment, goodwill and intangible assets;

 

(22)

Unrealized deferred tax assets and additional liabilities for unrecognized tax benefits; and

 

(23)

Changes in accounting principles.

Due to such risks, uncertainties and other factors, our actual results, performance, achievements or financial condition may be substantially different from any future results, performance, achievements or financial condition expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.

3. Method of obtaining supplementary materials on the financial results

The supplementary material will be published on our website on July 31, 2018.

4. This consolidated financial report is not subject to quarterly review procedure.

 

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(Attachment)

Table of Contents

 

1. Qualitative Information related to Consolidated Financial Statements			5
(1) Explanation of Financial Results			5
(2) Explanation of Financial Position			8
(3) Explanation Regarding Future Forecasts of Consolidated Financial Results			9
2. Condensed Quarterly Consolidated Financial Statements and Primary Notes			11
(1) Condensed Quarterly Consolidated Statement of Financial Position			11
(2) Condensed Quarterly Consolidated Statement of Profit or Loss and Comprehensive Income			13
a. Condensed Quarterly Consolidated Statement of Profit or Loss			13
b. Condensed Quarterly Consolidated Statement of Comprehensive Income			14
(3) Condensed Quarterly Consolidated Statement of Changes in Equity			15
(4) Notes to Condensed Quarterly Consolidated Financial Statements			16
a. Notes to Going Concern Assumption			16
b. Changes in Accounting Policies			16
c. Changes in Accounting Estimates			16
d. First-Time Adoption			17

 

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1. Qualitative Information related to Consolidated Financial Statements

Commencing from the beginning of its fiscal year ending March 31, 2019 (“fiscal 2019”), Kyocera has adopted the International Financial Reporting Standards (“IFRS”) in lieu of the Generally Accepted Accounting Principles of the United States of America (“U.S. GAAP”). In addition, financial figures appearing herein for the three months ended June 30, 2017 (“the previous first quarter”) and the year ended March 31, 2018 (“fiscal 2018”) have been reclassified in accordance with IFRS for the purpose of comparative analysis.

(1) Explanation of Financial Results

a. Consolidated Results of Operations

Sales in the three months ended June 30, 2018 (“the first quarter”) increased due to solid demand in the Electronic Devices Group and the Industrial & Automotive Components Group coupled with contributions from merger and acquisition activities conducted in fiscal 2018. Sales in the Document Solutions Group also increased on the back of aggressive sales promotion activities. As a result, sales revenue for the first quarter increased by 42,322 million yen, or 12.3%, to 387,484 million yen, compared with the previous first quarter, marking a record high for first quarter sales.

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

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

Consolidated Results of Operations

 

		For the three months ended June 30, 2017								For the three months ended June 30, 2018								Change
		Amount				%*				Amount				%*				Amount				%
		(Yen in millions)
Sales revenue			345,162				100.0				387,484				100.0				42,322				12.3
Operating profit			31,260				9.1				37,104				9.6				5,844				18.7
Profit before income taxes			49,353				14.3				55,488				14.3				6,135				12.4
Profit attributable to owners of the parent			35,026				10.1				42,284				10.9				7,258				20.7
Average US$ exchange rate (yen)			111				—				109				—				—				—
Average Euro exchange rate (yen)			122				—				130				—				—				—

*	% represents the percentage to sales revenue.

 

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b. Consolidated Results by Reporting Segment

1) Industrial & Automotive Components Group

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

2) Semiconductor Components Group

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

3) Electronic Devices Group

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

4) Communications Group

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

5) Document Solutions Group

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

6) Life & Environment Group

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

 

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Sales Revenue by Reporting Segment

 

		For the three months ended June 30, 2017								For the three months ended June 30, 2018								Change
		Amount				%*				Amount				%*				Amount				%
		(Yen in millions)
Industrial & Automotive Components Group			61,185				17.7				81,956				21.1				20,771				33.9
Semiconductor Components Group			60,786				17.6				60,649				15.7				(137	)			(0.2	)
Electronic Devices Group			63,120				18.3				88,284				22.8				25,164				39.9
Total Components Business			185,091				53.6				230,889				59.6				45,798				24.7
Communications Group			57,071				16.5				51,610				13.3				(5,461	)			(9.6	)
Document Solutions Group			80,973				23.5				88,796				22.9				7,823				9.7
Life & Environment Group			24,606				7.1				18,692				4.8				(5,914	)			(24.0	)
Total Equipment & Systems Business			162,650				47.1				159,098				41.0				(3,552	)			(2.2	)
Others			5,245				1.5				4,932				1.3				(313	)			(6.0	)
Adjustments and eliminations			(7,824	)			(2.2	)			(7,435	)			(1.9	)			389				—
Sales revenue			345,162				100.0				387,484				100.0				42,322				12.3
*  % represents the component ratio.
Business Profit (Loss) by Reporting Segment
		For the three months ended June 30, 2017								For the three months ended June 30, 2018								Change
		Amount				%*				Amount				%*				Amount				%
		(Yen in millions)
Industrial & Automotive Components Group			6,103				10.0				10,416				12.7				4,313				70.7
Semiconductor Components Group			7,651				12.6				5,846				9.6				(1,805	)			(23.6	)
Electronic Devices Group			8,427				13.4				14,397				16.3				5,970				70.8
Total Components Business			22,181				12.0				30,659				13.3				8,478				38.2
Communications Group			1,002				1.8				(2,241	)			—				(3,243	)			—
Document Solutions Group			9,160				11.3				10,348				11.7				1,188				13.0
Life & Environment Group			(1,310	)			—				(3,015	)			—				(1,705	)			—
Total Equipment & Systems Business			8,852				5.4				5,092				3.2				(3,760	)			(42.5	)
Others			412				7.9				617				12.5				205				49.8
Total business profit			31,445				9.1				36,368				9.4				4,923				15.7
Corporate gains and share of net profit of investments accounted for using the equity method			18,196				—				19,465				—				1,269				7.0
Adjustments and eliminations			(288	)			—				(345	)			—				(57	)			—
Profit before income taxes			49,353				14.3				55,488				14.3				6,135				12.4
*  % represents the percentage to sales revenue of each corresponding segment.

 

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(2) Explanation of Financial Position

Consolidated Cash Flows

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

1) Cash flows from operating activities

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

2) Cash flows from investing activities

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

3) Cash flows from financing activities

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

Consolidated Cash Flows

 

		For the three months ended June 30, 2017				For the three months ended June 30, 2018				Change
		(Yen in millions)
Cash flows from operating activities			59,772				70,347				10,575
Cash flows from investing activities			(41,315	)			(6,262	)			35,053
Cash flows from financing activities			(22,512	)			(61,490	)			(38,978	)
Effect of exchange rate changes on cash and cash equivalents			2,501				5,514				3,013
Changes in cash and cash equivalents			(1,554	)			8,109				9,663
Cash and cash equivalents at the beginning of the year			376,195				424,938				48,743
Cash and cash equivalents at the end of the period			374,641				433,047				58,406

 

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(3) Explanation Regarding Future Forecasts of Consolidated Financial Results

Results in the first quarter as a whole were in line with initial projections. From the three months ending September 30, 2018 (“the second quarter”) onward, Kyocera forecasts increased sales due to an expected increase in demand for components used in the automotive-related market and the industrial machinery market, and to further sales promotion activities in the Document Solutions Group. In light of this market outlook, Kyocera has not made any changes to its sales revenue and profit forecasts for fiscal 2019 announced on April 26, 2018.

Future Forecasts of Consolidated Financial Results

 

				Results for the year  ended March 31, 2018								Forecasts for the year  ending March 31, 2019								Change
				Amount				%*				Amount				%*				Amount				%
				(Yen in millions)
Sales revenue					1,577,039				100.0				1,650,000				100.0				72,961				4.6
Operating profit					90,699				5.8				154,000				9.3				63,301				69.8
Profit before income taxes					129,992				8.2				190,000				11.5				60,008				46.2
Profit attributable to owners of the parent					79,137				5.0				134,000				8.1				54,863				69.3
Average US$ exchange rate		(yen)			111				—				105				—				—				—
Average Euro exchange rate		(yen)			130				—				130				—				—				—

*	% represents the percentage to sales revenue.

 

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Sales Revenue by Reporting Segment

 

				Results for the year  ended March 31, 2018								Forecasts for the year  ending March 31, 2019								Change
				Amount				%*				Amount				%*				Amount				%
				(Yen in millions)
Industrial & Automotive Components Group					287,620				18.2				313,000				19.0				25,380				8.8
Semiconductor Components Group					257,237				16.3				259,000				15.7				1,763				0.7
Electronic Devices Group					305,145				19.4				345,000				20.9				39,855				13.1
Total Components Business					850,002				53.9				917,000				55.6				66,998				7.9
Communications Group					255,535				16.2				245,000				14.9				(10,535	)			(4.1	)
Document Solutions Group					371,058				23.5				385,000				23.3				13,942				3.8
Life & Environment Group					112,212				7.1				111,000				6.7				(1,212	)			(1.1	)
Total Equipment & Systems Business					738,805				46.8				741,000				44.9				2,195				0.3
Others					18,827				1.2				17,800				1.1				(1,027	)			(5.5	)
Adjustments and eliminations					(30,595	)			(1.9	)			(25,800	)			(1.6	)			4,795				—
Sales revenue					1,577,039				100.0				1,650,000				100.0				72,961				4.6

*	% represents the component ratio.

Business Profit (Loss) by Reporting Segment

 

				Results for the year  ended March 31, 2018								Forecasts for the year  ending March 31, 2019								Change
				Amount				%*				Amount				%*				Amount				%
				(Yen in millions)
Industrial & Automotive Components Group					31,400				10.9				36,000				11.5				4,600				14.6
Semiconductor Components Group					31,049				12.1				35,800				13.8				4,751				15.3
Electronic Devices Group					46,632				15.3				48,000				13.9				1,368				2.9
Total Components Business					109,081				12.8				119,800				13.1				10,719				9.8
Communications Group					4,440				1.7				5,200				2.1				760				17.1
Document Solutions Group					40,851				11.0				41,500				10.8				649				1.6
Life & Environment Group					(55,492	)			—				(3,000	)			—				52,492				—
Total Equipment & Systems Business					(10,201	)			—				43,700				5.9				53,901				—
Others					1,393				7.4				(400	)			—				(1,793	)			—
Total business profit					100,273				6.4				163,100				9.9				62,827				62.7
Corporate and others					29,719				—				26,900				—				(2,819	)			(9.5	)
Profit before income taxes					129,992				8.2				190,000				11.5				60,008				46.2

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

 

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2. Condensed Quarterly Consolidated Financial Statements and Primary Notes

(1) Condensed Quarterly Consolidated Statement of Financial Position

 

		The date of transition to IFRS (April 1, 2017)								As of March 31, 2018								As of June 30, 2018								Change
		Amount				%*				Amount				%*				Amount				%*
		(Yen in millions)
Assets
Current assets
Cash and cash equivalents			376,195								424,938								433,047								8,109
Short-term investments			297,371								196,802								176,493								(20,309	)
Trade and other receivables			337,371								382,659								340,144								(42,515	)
Other financial assets			7,778								12,996								10,403								(2,593	)
Inventories			331,155								364,875								369,548								4,673
Other current assets			79,755								83,629								86,401								2,772
Total current assets			1,429,625				46.3				1,465,899				46.9				1,416,036				44.1				(49,863	)
Non-current assets
Debt and equity instruments			1,146,608								1,071,990								1,181,127								109,137
Investments accounted for using the equity method			5,863								3,874								4,070								196
Other financial assets			13,429								15,681								15,713								32
Property, plant and equipment			254,341								288,898								306,959								18,061
Goodwill			110,470								144,268								147,196								2,928
Intangible assets			61,235								80,186								79,490								(696	)
Deferred tax assets			56,614								41,370								41,800								430
Other non-current assets			6,452								16,647								17,660								1,013
Total non-current assets			1,655,012				53.7				1,662,914				53.1				1,794,015				55.9				131,101
Total assets			3,084,637				100.0				3,128,813				100.0				3,210,051				100.0				81,238

*	% represents the component ratio.

 

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		The date of transition to IFRS (April 1, 2017)								As of March 31, 2018								As of June 30, 2018								Change
		Amount				%*				Amount				%*				Amount				%*
		(Yen in millions)
Liabilities and Equity
Liabilities
Current liabilities
Trade and other payables			190,292								216,685								210,290								(6,395	)
Other financial liabilities			8,735								5,039								9,689								4,650
Income tax payables			15,707								19,436								17,572								(1,864	)
Accrued expenses			108,367								114,049								98,634								(15,415	)
Provisions			14,225								32,302								31,679								(623	)
Other current liabilities			27,492								31,876								42,135								10,259
Total current liabilities			364,818				11.8				419,387				13.4				409,999				12.8				(9,388	)
Non-current liabilities
Long-term financial liabilities			5,292								7,370								9,462								2,092
Retirement benefit liabilities			28,794								29,112								28,768								(344	)
Deferred tax liabilities			255,281								220,950								242,841								21,891
Provisions			6,488								19,914								20,239								325
Other non-current liabilities			12,286								18,781								19,312								531
Total non-current liabilities			308,141				10.0				296,127				9.5				320,622				10.0				24,495
Total liabilities			672,959				21.8				715,514				22.9				730,621				22.8				15,107
Equity
Common stock			115,703								115,703								115,703								—
Capital surplus			165,172								165,079								164,955								(124	)
Retained earnings			1,532,866								1,577,641								1,600,836								23,195
Other components of equity			545,452								499,710								579,530								79,820
Treasury stock			(32,309	)							(32,342	)							(72,344	)							(40,002	)
Total equity attributable to owners of the parent			2,326,884				75.4				2,325,791				74.3				2,388,680				74.4				62,889
Non-controlling interests			84,794				2.8				87,508				2.8				90,750				2.8				3,242
Total equity			2,411,678				78.2				2,413,299				77.1				2,479,430				77.2				66,131
Total liabilities and equity			3,084,637				100.0				3,128,813				100.0				3,210,051				100.0				81,238

*	% represents the component ratio.

 

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(2) Condensed Quarterly Consolidated Statement of Profit or Loss and Comprehensive Income

a. Condensed Quarterly Consolidated Statement of Profit or Loss

 

		For the three months ended June 30, 2017								For the three months ended June 30, 2018								Change
		Amount				%*				Amount				%*				Amount				%
		(Yen in millions except per share amounts)
Sales revenue			345,162				100.0				387,484				100.0				42,322				12.3
Cost of sales			247,841				71.8				278,234				71.8				30,393				12.3
Gross profit			97,321				28.2				109,250				28.2				11,929				12.3
Selling, general and administrative expenses			66,061				19.1				72,146				18.6				6,085				9.2
Operating profit			31,260				9.1				37,104				9.6				5,844				18.7
Finance income			18,564				5.4				18,437				4.7				(127	)			(0.7	)
Finance expenses			160				0.1				203				0.1				43				26.9
Foreign exchange gains (losses)			(590	)			(0.2	)			(445	)			(0.1	)			145				—
Share of net profit of investments accounted for using the equity method			25				0.0				367				0.1				342				—
Other, net			254				0.1				228				0.1				(26	)			(10.2	)
Profit before income taxes			49,353				14.3				55,488				14.3				6,135				12.4
Income taxes			12,771				3.7				10,687				2.7				(2,084	)			(16.3	)
Profit for the period			36,582				10.6				44,801				11.6				8,219				22.5
Profit attributable to:
Owners of the parent			35,026				10.1				42,284				10.9				7,258				20.7
Non-controlling interests			1,556				0.5				2,517				0.7				961				61.8
Profit for the period			36,582				10.6				44,801				11.6				8,219				22.5
Per share information:
Earnings per share attributable to owners of the parent
Basic			95.25 yen								116.29 yen
Diluted			95.23 yen								116.26 yen

*	% represents the percentage to sales revenue.

 

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b. Condensed Quarterly Consolidated Statement of Comprehensive Income

 

		For the three months ended June 30, 2017				For the three months ended June 30, 2018				Change
		Amount				Amount
		(Yen in millions)
Profit for the period			36,582				44,801				8,219
Other comprehensive income, net of taxation
Items that will not be reclassified to profit or loss:
Financial assets measured at fair value through other comprehensive income			—				72,278				72,278
Re-measurement of defined benefit plans			—				—				—
Total items that will not be reclassified to profit or loss			—				72,278				72,278
Items that may be reclassified subsequently to profit or loss:
Net unrealized gains (losses) on securities			14,993				—				(14,993	)
Net changes in fair value of cash flow hedge			(78	)			6				84
Exchange differences on translating foreign operations			6,017				10,023				4,006
Share of other comprehensive income of investments accounted for using the equity method			22				89				67
Total items that may be reclassified subsequently to profit or loss			20,954				10,118				(10,836	)
Total other comprehensive income			20,954				82,396				61,442
Comprehensive income for the period			57,536				127,197				69,661
Comprehensive income attributable to:
Owners of the parent			55,309				122,829				67,520
Non-controlling interests			2,227				4,368				2,141
Comprehensive income for the period			57,536				127,197				69,661

 

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(3) Condensed Quarterly Consolidated Statement of Changes in Equity

For the three months ended June 30, 2017

 

		Total equity attributable to owners of the parent																								Non- controlling interests				Total equity
		Common Stock				Capital surplus				Retained earnings				Other components of equity				Treasury stock				Total
		(Yen in millions)
Balance as of April 1, 2017			115,703				165,172				1,532,866				545,452				(32,309	)			2,326,884				84,794				2,411,678
Profit for the period											35,026												35,026				1,556				36,582
Other comprehensive income															20,283								20,283				671				20,954
Total comprehensive income for the period			—				—				35,026				20,283				—				55,309				2,227				57,536
Cash dividends											(22,063	)											(22,063	)			(1,049	)			(23,112	)
Purchase of treasury stock																			(10	)			(10	)							(10	)
Reissuance of treasury stock							0												0				0								0
Transactions with non-controlling interests and other							(4	)							11								7				315				322
Balance as of June 30, 2017			115,703				165,168				1,545,829				565,746				(32,319	)			2,360,127				86,287				2,446,414
For the three months ended June 30, 2018
		Total equity attributable to owners of the parent																								Non- controlling interests				Total equity
		Common Stock				Capital surplus				Retained earnings				Other components of equity				Treasury stock				Total
		(Yen in millions)
Balance as of April 1, 2018 (Before applying new accounting standard)			115,703				165,079				1,577,641				499,710				(32,342	)			2,325,791				87,508				2,413,299
Cumulative effects of new accounting standard applied											2,973				(729	)							2,244								2,244
Balance as of April 1, 2018 (After applying new accounting standard)			115,703				165,079				1,580,614				498,981				(32,342	)			2,328,035				87,508				2,415,543
Profit for the period											42,284												42,284				2,517				44,801
Other comprehensive income															80,545								80,545				1,851				82,396
Total comprehensive income for the period			—				—				42,284				80,545				—				122,829				4,368				127,197
Cash dividends											(22,062	)											(22,062	)			(1,219	)			(23,281	)
Purchase of treasury stock																			(40,002	)			(40,002	)							(40,002	)
Reissuance of treasury stock							—												—				—								—
Transactions with non-controlling interests and other							(124	)							4								(120	)			93				(27	)
Balance as of June 30, 2018			115,703				164,955				1,600,836				579,530				(72,344	)			2,388,680				90,750				2,479,430

 

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(4) Notes to Condensed Quarterly Consolidated Financial Statements

a. Notes to Going Concern Assumption

Not Applicable

b. Changes in Accounting Policies

Kyocera has adopted IFRS 15 “Revenue from contracts with customers” (issued in May 2014 and amended in April 2016, hereinafter, “IFRS 15”) retrospectively from the year ended March 31, 2018. The effect to our consolidated results of operations, financial conditions and cash flows by adopting IFRS 15 is described in “d. First-time adoption” under “(4) Notes to Condensed Quarterly Consolidated Financial Statements.”

Kyocera has adopted IFRS 9 “Financial instruments” (issued in November 2009 and amended in July 2014, hereinafter, “IFRS 9”) from the year ending March 31, 2019. We have adopted exemptions from retrospective application of IFRS 9 in accordance with IFRS 1 “First-Time Adoption of International Financing Reporting Standards” (hereinafter, “IFRS 1”), and we have adopted U.S. GAAP, the previous accounting standards, at the date of transition to IFRS and the year ended March 31, 2018.

The amounts of financial instruments whose classifications were changed at the beginning of this fiscal year are as follows:

 

Classification based on U.S. GAAP
		(Yen in millions)
Other long-term investments			19,536

 

Classification based on IFRS 9
		(Yen in millions)
Financial instruments measured at fair value through other comprehensive income			22,747

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

c. Changes in Accounting Estimates

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

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

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

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

 

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d. First-Time Adoption

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

(a) First-time adoption based on IFRS 1

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

Business combinations

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

Exchange differences on translating foreign operations

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

Deemed cost

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

Exemptions from retrospective application of IFRS 9

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

 

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(b) Reconciliation

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

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

 

Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note		Accounts under IFRS
		(Yen in millions)
Assets																				Assets
Current assets																				Current assets
Cash and cash equivalents			376,195				—				—				376,195					Cash and cash equivalents
Short-term investments in debt securities			84,703				212,668				—				297,371					Short-term investments
Other short-term investments			212,668				(212,668	)			—				—
Trade notes receivables			28,370				309,001				—				337,371					Trade and other receivables
Trade accounts receivables			291,485				(291,485	)			—				—
Less allowances for doubtful accounts and sales returns			(5,593	)			5,593				—				—			F
			—				7,778				—				7,778					Other financial assets
Inventories			331,155				—				—				331,155					Inventories
Other current assets			119,714				(33,952	)			(6,007	)			79,755					Other current assets
Total current assets			1,438,697				(3,065	)			(6,007	)			1,429,625					Total current assets
Non-current assets																				Non-current assets
Long-term investments in debt and equity securities			1,130,756				15,852				—				1,146,608					Debt and equity instruments
			—				5,863				—				5,863			F		Investments accounted for using the equity method
Other long-term investments			22,246				(8,817	)			—				13,429					Other financial assets
Land			59,963				206,641				(12,263	)			254,341			B		Property, plant and equipment
Buildings			351,431				(351,431	)			—				—
Machinery and equipment			841,973				(841,973	)			—				—
Construction in progress			14,097				(14,097	)			—				—
Less accumulated depreciation			(1,000,860	)			1,000,860				—				—
Goodwill			110,470				—				—				110,470					Goodwill
Intangible assets			61,235				—				—				61,235					Intangible assets
			—				46,482				10,132				56,614			D,F		Deferred tax assets
Other assets			80,462				(75,349	)			1,339				6,452					Other non-current assets
Total non-current assets			1,671,773				(15,969	)			(792	)			1,655,012					Total non-current assets
Total assets			3,110,470				(19,034	)			(6,799	)			3,084,637					Total assets

 

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Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note		Accounts under IFRS
		(Yen in millions)
Liabilities and Equity																				Liabilities and Equity
Liabilities																				Liabilities
Current liabilities																				Current liabilities
Short-term borrowings			191				(191	)			—				—
Current portion of long-term debt			8,235				(8,235	)			—				—
Trade notes and accounts payable			129,460				60,832				—				190,292					Trade and other payables
Other notes and accounts payable			60,881				(60,881	)			—				—
			—				8,735				—				8,735					Other financial liabilities
Accrued payroll and bonus			62,868				(62,868	)			—				—
Accrued income taxes			15,707				—				—				15,707					Income taxes payables
Other accrued liabilities			51,062				53,850				3,455				108,367			E		Accrued expenses
			—				14,225				—				14,225			F		Provisions
Other current liabilities			36,257				(8,765	)			—				27,492			F		Other current liabilities
Total current liabilities			364,661				(3,298	)			3,455				364,818					Total current liabilities
Non-current liabilities																				Non-current liabilities
Long-term debt			16,409				(11,117	)			—				5,292					Long-term financial liabilities
Accrued pension and severance liabilities			31,720				—				(2,926	)			28,794			C		Retirement benefit liabilities
Deferred income taxes			258,859				(3,481	)			(97	)			255,281			D		Deferred tax liabilities
			—				6,488				—				6,488			F		Provisions
Other non-current liabilities			19,912				(7,626	)			—				12,286					Other non-current liabilities
Total non-current liabilities			326,900				(15,736	)			(3,023	)			308,141					Total non-current liabilities
Total liabilities			691,561				(19,034	)			432				672,959					Total liabilities
Equity																				Equity
Common stock			115,703				—				—				115,703					Common stock
Additional paid-in capital			165,230				—				(58	)			165,172					Capital surplus
Retained earnings			1,638,116				—				(105,250	)			1,532,866			A,B,C D,E		Retained earnings
Accumulated other comprehensive income			447,479				—				97,973				545,452			A,C,D		Other components of equity
Common stock in treasury stock, at cost			(32,309	)			—				—				(32,309	)				Treasury stock
Total Kyocera Corporation’s shareholders’ equity			2,334,219				—				(7,335	)			2,326,884					Total equity attributable to owners of the parent
Noncontrolling interests			84,690				—				104				84,794					Non-controlling interests
Total equity			2,418,909				—				(7,231	)			2,411,678					Total equity
Total liabilities and equity			3,110,470				(19,034	)			(6,799	)			3,084,637					Total liabilities and equity

 

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(ii) Reconciliation of equity as of June 30, 2017

 

Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note		Accounts under IFRS
		(Yen in millions)
Assets																				Assets
Current assets																				Current assets
Cash and cash equivalents			374,641				—				—				374,641					Cash and cash equivalents
Short-term investments in debt securities			84,584				214,361				—				298,945					Short-term investments
Other short-term investments			214,361				(214,361	)			—				—
Trade notes receivables			26,195				266,471				—				292,666					Trade and other receivables
Trade accounts receivables			255,940				(255,940	)			—				—
Less allowances for doubtful accounts and sales returns			(5,736	)			5,736				—				—			F
			—				6,174				—				6,174					Other financial assets
Inventories			352,890				—				—				352,890					Inventories
Other current assets			114,442				(26,013	)			(6,200	)			82,229					Other current assets
Total current assets			1,417,317				(3,572	)			(6,200	)			1,407,545					Total current assets
Non-current assets																				Non-current assets
Long-term investments in debt and equity securities			1,153,296				16,380				—				1,169,676					Debt and equity instruments
			—				5,517				—				5,517			F		Investments accounted for using the equity method
Other long-term investments			40,436				(8,331	)			—				32,105					Other financial assets
Land			59,897				210,367				(12,178	)			258,086			B		Property, plant and equipment
Buildings			355,159				(355,159	)			—				—
Machinery and equipment			845,663				(845,663	)			—				—
Construction in progress			13,811				(13,811	)			—				—
Less accumulated depreciation			(1,004,266	)			1,004,266				—				—
Goodwill			112,532				—				—				112,532					Goodwill
Intangible assets			61,511				—				—				61,511					Intangible assets
			—				39,730				8,943				48,673			D,F		Deferred tax assets
Other assets			74,687				(69,203	)			715				6,199					Other non-current assets
Total non-current assets			1,712,726				(15,907	)			(2,520	)			1,694,299					Total non-current assets
Total assets			3,130,043				(19,479	)			(8,720	)			3,101,844					Total assets

 

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Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note		Accounts under IFRS
		(Yen in millions)
Liabilities and Equity																				Liabilities and Equity
Liabilities																				Liabilities
Current liabilities																				Current liabilities
Short-term borrowings			117				(117	)			—				—
Current portion of long-term debt			8,531				(8,531	)			—				—
Trade notes and accounts payable			131,134				56,114				—				187,248					Trade and other payables
Other notes and accounts payable			56,144				(56,144	)			—				—
			—				10,764				—				10,764					Other financial liabilities
Accrued payroll and bonus			51,125				(51,125	)			—				—
Accrued income taxes			8,501				—				(364	)			8,137					Income tax payables
Other accrued liabilities			48,868				41,898				2,089				92,855			E		Accrued expenses
			—				13,747				—				13,747			F		Provisions
Other current liabilities			45,525				(10,241	)			—				35,284			F		Other current liabilities
Total current liabilities			349,945				(3,635	)			1,725				348,035					Total current liabilities
Non-current liabilities																				Non-current liabilities
Long-term debt			17,678				(12,258	)			—				5,420					Long-term financial liabilities
Accrued pension and severance liabilities			32,345				—				(2,617	)			29,728			C		Retirement benefit liabilities
Deferred income taxes			256,364				(2,408	)			(23	)			253,933			D		Deferred tax liabilities
			—				6,647				—				6,647			F		Provisions
Other non-current liabilities			19,492				(7,825	)			—				11,667					Other non-current liabilities
Total non-current liabilities			325,879				(15,844	)			(2,640	)			307,395					Total non-current liabilities
Total liabilities			675,824				(19,479	)			(915	)			655,430					Total liabilities
Equity																				Equity
Common stock			115,703				—				—				115,703					Common stock
Additional paid-in capital			165,220				—				(52	)			165,168					Capital surplus
Retained earnings			1,651,034				—				(105,205	)			1,545,829			A,B,C D,E		Retained earnings
Accumulated other comprehensive income			468,414				—				97,332				565,746			A,C,D		Other components of equity
Common stock in treasury stock, at cost			(32,319	)			—				—				(32,319	)				Treasury stock
Total Kyocera Corporation’s shareholders’ equity			2,368,052				—				(7,925	)			2,360,127					Total equity attributable to owners of the parent
Noncontrolling interests			86,167				—				120				86,287					Non-controlling interests
Total equity			2,454,219				—				(7,805	)			2,446,414					Total equity
Total liabilities and equity			3,130,043				(19,479	)			(8,720	)			3,101,844					Total liabilities and equity

 

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(iii) Reconciliation of equity as of March 31, 2018

 

Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note				Accounts under IFRS
		(Yen in millions)
Assets																						Assets
Current assets																						Current assets
Cash and cash equivalents			424,938				—				—				424,938							Cash and cash equivalents
Short-term investments in debt securities			38,023				158,779				—				196,802							Short-term investments
Other short-term investments			158,779				(158,779	)			—				—
Trade notes receivables			26,072				356,587				—				382,659							Trade and other receivables
Trade accounts receivables			331,570				(331,570	)			—				—
Less allowances for doubtful accounts and sales returns			(5,490	)			5,490				—				—				F
			—				12,996				—				12,996							Other financial assets
Inventories			364,875				—				—				364,875							Inventories
Other current assets			137,849				(47,383	)			(6,837	)			83,629							Other current assets
Total current assets			1,476,616				(3,880	)			(6,837	)			1,465,899							Total current assets
Non-current assets																						Non-current assets
Long-term investments in debt and equity securities			1,050,537				21,453				—				1,071,990							Debt and equity instruments
			—				3,874				—				3,874				F			Investments accounted for using the equity method
Other long-term investments			25,858				(10,177	)			—				15,681							Other financial assets
Land			62,141				238,783				(12,026	)			288,898				B			Property, plant and equipment
Buildings			363,714				(363,714	)			—				—
Machinery and equipment			880,918				(880,918	)			—				—
Construction in progress			23,996				(23,996	)			—				—
Less accumulated depreciation			(1,029,845	)			1,029,845				—				—
Goodwill			144,268				—				—				144,268							Goodwill
Intangible assets			80,186				—				—				80,186							Intangible assets
			—				32,071				9,299				41,370				D,F			Deferred tax assets
Other assets			78,688				(65,040	)			2,999				16,647							Other non-current assets
Total non-current assets			1,680,461				(17,819	)			272				1,662,914							Total non-current assets
Total assets			3,157,077				(21,699	)			(6,565	)			3,128,813							Total assets

 

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Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note		Accounts under IFRS
		(Yen in millions)
Liabilities and Equity																				Liabilities and Equity
Liabilities																				Liabilities
Current liabilities																				Current liabilities
Short-term borrowings			145				(145	)			—				—
Current portion of long-term debt			9,293				(9,293	)			—				—
Trade notes and accounts payable			149,734				66,951				—				216,685					Trade and other payables
Other notes and accounts payable			66,970				(66,970	)			—				—
			—				5,039				—				5,039					Other financial liabilities
Accrued payroll and bonus			68,664				(68,664	)			—				—
Accrued income taxes			19,436				—				—				19,436					Income tax payables
Other accrued liabilities			50,727				59,867				3,455				114,049			E		Accrued expenses
			—				32,302				—				32,302			F		Provisions
Other current liabilities			55,017				(23,141	)			—				31,876			F		Other current liabilities
Total current liabilities			419,986				(4,054	)			3,455				419,387					Total current liabilities
Non-current liabilities																				Non-current liabilities
Long-term debt			20,237				(12,867	)			—				7,370					Long-term financial liabilities
Accrued pension and severance liabilities			28,723				—				389				29,112			C		Retirement benefit liabilities
Deferred income taxes			223,530				(3,378	)			798				220,950			D		Deferred tax liabilities
			—				19,914				—				19,914			F		Provisions
Other non-current liabilities			40,095				(21,314	)			—				18,781					Other non-current liabilities
Total non-current liabilities			312,585				(17,645	)			1,187				296,127					Total non-current liabilities
Total liabilities			732,571				(21,699	)			4,642				715,514					Total liabilities
Equity																				Equity
Common stock			115,703				—				—				115,703					Common stock
Additional paid-in capital			165,125				—				(46	)			165,079					Capital surplus
Retained earnings			1,675,780				—				(98,139	)			1,577,641			A,B,C D,E		Retained earnings
Accumulated other comprehensive income			411,980				—				87,730				499,710			A,C,D		Other components of equity
Common stock in treasury stock, at cost			(32,342	)			—				—				(32,342	)				Treasury stock
Total Kyocera Corporation’s shareholders’ equity			2,336,246				—				(10,455	)			2,325,791					Total equity attributable to owners of the parent
Noncontrolling interests			88,260				—				(752	)			87,508					Non-controlling interests
Total equity			2,424,506				—				(11,207	)			2,413,299					Total equity
Total liabilities and equity			3,157,077				(21,699	)			(6,565	)			3,128,813					Total liabilities and equity

 

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(iv) Reconciliation of profit or loss and other comprehensive income for three month ended June 30, 2017

 

Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note				Accounts under IFRS
		(Yen in millions)
Net sales			345,162				—				—				345,162							Sales revenue
Cost of sales			248,334				—				(493	)			247,841				C,E			Cost of sales
Gross profit			96,828				—				493				97,321							Gross profit
Selling, general and administrative expenses			65,661				—				400				66,061				C,E			Selling, general and administrative expenses
Profit from operations			31,167				—				93				31,260							Operating profit
Other income (expenses)
Interest and dividend income			18,403				161				—				18,564							Finance income
Interest expense			323				(163	)			—				160							Finance expenses
Foreign currency transaction losses, net			(590	)			—				—				(590	)						Foreign exchange gains (losses)
Gains on sales of securities, net			328				(328	)			—				—
			—				25				—				25				G			Share of net profit of investments accounted for using the equity method
Other, net			275				(21	)			—				254							Other, net
Income before income taxes			49,260				—				93				49,353							Profit before income taxes
Income taxes			12,732				—				39				12,771							Income taxes
Net income			36,528				—				54				36,582							Profit for the period
																						Profit attributable to:
Net income attributable to Kyocera Corporation’s shareholders			34,981				—				45				35,026							Owners of the parent
Net income attributable to noncontrolling interests			1,547				—				9				1,556							Non-controlling interests

 

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Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note				Accounts under IFRS
		(Yen in millions)
Net income			36,528				—				54				36,582							Profit for the period
Other comprehensive income – net of taxes																						Other comprehensive income, net of taxation
Pension liability adjustment			(587	)			—				587				—				C			Re-measurement of defined benefit plans
Net unrealized gains (losses) on securities			15,001				—				(8	)			14,993							Net unrealized gains (losses) on securities
Net unrealized gains (losses) on derivative financial instruments			(52	)			(26	)			—				(78	)						Net changes in fair value of cash flow hedge
Foreign currency translation adjustments			7,221				4				(1,208	)			6,017				A			Exchange differences on translating foreign operations
			—				22				—				22							Share of other comprehensive income of investments accounted for using the equity method
Total other comprehensive income			21,583				—				(629	)			20,954							Total other comprehensive income
Comprehensive income			58,111				—				(575	)			57,536							Comprehensive income for the period
																						Comprehensive income attributable to:
Comprehensive income attributable to Kyocera Corporation’s shareholders			55,900				—				(591	)			55,309							Owners of the parent
Comprehensive income attributable to noncontrolling interests			2,211				—				16				2,227							Non-controlling interests

 

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(v) Reconciliation of profit or loss and other comprehensive income for the year ended March 31, 2018

 

Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note				Accounts under IFRS
		(Yen in millions)
Net sales			1,577,039				—				—				1,577,039							Sales revenue
Cost of sales			1,200,911				—				3,300				1,204,211				C,E			Cost of sales
Gross profit			376,128				—				(3,300	)			372,828							Gross profit
Selling, general and administrative expenses			280,553				—				1,576				282,129				C,E			Selling, general and administrative expenses
Profit from operations			95,575				—				(4,876	)			90,699							Operating profit
Other income (expenses)
Interest and dividend income			40,498				985				—				41,483							Finance income
Interest expense			1,395				165				—				1,560							Finance expenses
Foreign currency transaction losses, net			(827	)			—				—				(827	)						Foreign exchange gains (losses)
Gains on sales of securities, net			1,629				(1,629	)			—				—
			—				(1,564	)			—				(1,564	)			G			Share of net loss of investments accounted for using the equity method
Other, net			(3,614	)			2,373				3,002				1,761							Other, net
Income before income taxes			131,866				—				(1,874	)			129,992							Profit before income taxes
Income taxes			46,881				—				885				47,766							Income taxes
Net income			84,985				—				(2,759	)			82,226							Profit for the year
																						Profit attributable to:
Net income attributable to Kyocera Corporation’s shareholders			81,789				—				(2,652	)			79,137							Owners of the parent
Net income attributable to noncontrolling interests			3,196				—				(107	)			3,089							Non-controlling interests

 

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Accounts under U.S. GAAP		U.S. GAAP				Effect of change in line items				Recognition and measurement differences				IFRS				Note				Accounts under IFRS
		(Yen in millions)
Net income			84,985				—				(2,759	)			82,226							Profit for the year
Other comprehensive income – net of taxes																						Other comprehensive income, net of taxation
Pension liability adjustment			6,428				—				2,924				9,352				C			Re-measurement of defined benefit plans
Net unrealized gains (losses) on securities			(40,087	)			—				(51	)			(40,138	)						Net unrealized gains (losses) on securities
Net unrealized gains (losses) on derivative financial instruments			27				(82	)			—				(55	)						Net changes in fair value of cash flow hedge
Foreign currency translation adjustments			(2,703	)			125				(4,092	)			(6,670	)			A			Exchange differences on translating foreign operations
			—				(43	)			—				(43	)						Share of other comprehensive income of investments accounted for using the equity method
Total other comprehensive income			(36,335	)			—				(1,219	)			(37,554	)						Total other comprehensive income
Comprehensive income			48,650				—				(3,978	)			44,672							Comprehensive income for the year
																						Comprehensive income attributable to:
Comprehensive income attributable to Kyocera Corporation’s shareholders			46,252				—				(3,121	)			43,131							Owners of the parent
Comprehensive income attributable to noncontrolling interests			2,398				—				(857	)			1,541							Non-controlling interests

 

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Notes to reconciliation of equity, profit or loss and other comprehensive income

A. Exchange differences on translating of foreign operations

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

B. Deemed cost

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

C. Retirement benefit

Under U.S. GAAP, the prior service costs and the actuarial gain and loss, resulted from defined benefit plan or unfunded retirement and severance plans which were incurred during the period but not recognized as the same periodic pension costs are recognized as accumulated other comprehensive income by the amount after tax. The amounts recognized in accumulated other comprehensive income are subsequently recognized in profit or loss as a component of retirement benefit expenses over a period of time in the future.

Under IFRS, the prior service costs are expensed as incurred. The actuarial gain and loss are recognized in other comprehensive income by the amount after tax and they are transferred from other components of equity to retained earnings directly without recording through profit or loss.

D. Income taxes

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

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

E. Levies

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

F. Reclassification on the consolidated statement of financial position

Under the presentation requirement on IFRS15, refund liabilities included in “Less allowances for doubtful accounts and sales returns” was reclassified into “Other current liabilities” on the consolidated statement of financial position. Under the presentation requirement on IAS 1 “Presentation of financial statements” (hereinafter, “IAS 1”), “Investments accounted for using the equity method”, “Deferred tax assets” and “Provisions” were presented separately.

G. Reclassifications on the consolidated statement of profit or loss

Under the presentation requirement on IAS1, “Share of net profit of investments accounted for using the equity method” was presented separately on the consolidated statement of profit or loss.

 

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Effects of items of these differences in recognition and measurement on retained earnings at the date of transition to IFRS, as of June 30, 2017 and March 31, 2018 are as follows:

 

		The date of transition to IFRS (April 1, 2017)				As of June 30, 2017				As of March 31, 2018
		(Yen in millions)
Exchange differences on translating foreign operations			(16,360	)			(16,360	)			(14,124	)
Deemed cost			(7,648	)			(7,648	)			(7,618	)
Retirement benefit			(31,723	)			(32,624	)			(25,547	)
Income taxes			(46,247	)			(46,300	)			(47,685	)
Levies			(2,370	)			(1,430	)			(2,398	)
Other			(902	)			(843	)			(767	)
Total effect on retained earnings			(105,250	)			(105,205	)			(98,139	)

 

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