1 Kyocera Corporation Telephone Conference Call (July 30, 2007) P1/ - PDF document

1 Kyocera Corporation Telephone Conference Call (July 30, 2007) P1/ President, Makoto Kawamura P5/ Executive Officer and General Manager of Corporate Financial and Accounting Group, Shoichi Aoki President, Makoto Kawamura <Consolidated Results for the First Quarter> Now, let me start discussing consolidated financial result for the three months ended June 30, 2007 (the "first quarter"). Please turn to page 4 of the financial results handout. Please note that Kyocera Corporation sold Kyocera Leasing Co., Ltd. in August 2006. Accordingly, figures for the three months ended June 30, 2006 (“the previous first quarter") have been retrospectively reclassified. The impact therefrom is stated in note 1 under the table. The figure unit is billion. This was the first time for Kyocera that its consolidated net sales exceeded ¥300.0 billion in any first three-month period of the fiscal year. The result was increase by 8.3% as compared with the previous first quarter to ¥315.5 billion. Such favorable result was due to significant sales growth in the Equipment Business and solid sales in the most of the Components Business. Profit was down in the Components Business compared with the previous first quarter due to a change in product mix in such Business, such as a slump in sales of semiconductor parts for imaging devices as well as temporary stagnation in demand of automotive components for overseas markets, while sales of new products increased. In addition, an increase in depreciation costs due in part to reviewing the accounting method based on tax revision in Japan was another cause of the decrease in profit. A substantial increase in profit in the Equipment Business, led by improved profitability in the Telecommunications Equipment Group, however, was more than to offset the decrease in profit in the Components Business mentioned above. As a result, profit from operations for Kyocera Group amounted to ¥31.6 billion, 5.7% increase compared with the previous first quarter. The ratio of profit from operations to net sales was 10.0%. Income from continuing operations before income taxes ("pre-tax income") totaled ¥40.5 billion, an increase of 12.3%, due to increases in interest and dividend income and equity in earnings of

2 affiliates and unconsolidated subsidiaries. The pre-tax income ratio was 12.8%. Amount of pre-tax income and the pre-tax income ratio both marked record highs as results during any first three month period of the fiscal year. Net income for the first quarter was ¥25.0 billion, an increase of 24.5% compared with the previous first quarter, and the net income ratio was 7.9%. Diluted earnings per share stood at ¥131.93. Let’s turn to average exchange rates for the first quarter as shown two lines from the bottom of the table. The yen depreciated ¥6 against the U.S. dollar to ¥121, and ¥19 against the Euro to ¥163, as compared with to the previous first quarter. As a result, net sales and pre-tax income after translation into yen were, for calculation purposes, pushed up by approximately ¥14.0 billion and ¥5.4 billion, respectively. Next, I will explain results by reporting segment. Page 7 and 8 of the financial results handout show net sales and operating profit by reporting segment. Please note that the Optical Equipment Group, which was previously an independent reporting segment, has been included in “Others” from this fiscal year ending March 31, 2008 ("this fiscal year"). Accordingly, figures for the previous first quarter have been retrospectively reclassified. First, I will explain the results of the Components Business. Sales in this business increased by 5.5% compared with the previous first quarter to ¥162.7 billion. Operating profit decreased by 8.4% compared with the previous first quarter to ¥23.5 billion and the operating profit ratio was 14.4%. Next, I will discuss each reporting segment in the Components Business. Sales in the Fine Ceramic Parts Group increased by 10.4% compared with the previous first quarter to ¥20.5 billion, due to an increase in sales of parts for semiconductor processing equipment. Despite this, operating profit decreased by 11.3% compared with the previous first quarter, to ¥3.0 billion due to the decrease in sales of automotive components for the overseas market and the increase in cost to start producing automotive components in local plant at China. The operating profit ratio was 14.8%. Sales in the Semiconductor Parts Group decreased by 2.0% compared with the previous first quarter to ¥35.3 billion as a result of the change in the product mix in this Group due to an

3 adjustment in demand of ceramic packages used in imaging devices that was more than to offset an increase in sales of organic packages and other new products. As a result, operating profit decreased by 27.0% compared with the previous first quarter to ¥4.0 billion and the operating profit ratio was 11.4%. Sales in the Applied Ceramic Products Group increased by 6.9% compared with the previous first quarter to ¥33.4 billion on account of sales growth primarily in the solar energy business in overseas markets and cutting tools business. Profitability in the medical materials business deteriorated, however, due to erosion in official prices of medical products. As a result, operating profit in the Applied Ceramic Products Group decreased by 4.0% compared with the previous first quarter, to ¥ 6.1billion. The operating profit ratio was 18.4%. Sales in the Electronic Device Group increased by 7.5% compared with the previous first quarter to ¥73.5 billion. Sales at AVX Corporation ("AVX") increased. In addition sales of ceramic capacitors for flat-panel TVs and game consoles and of crystal devices for mobile phone handsets also increased. Operating profit remained roughly on par with the previous first quarter at ¥10.3 billion. This is because depreciation costs affected adversely to operating profit, and because the profit margin in the thin-film device business, which includes thermal printheads, deteriorated due to a decrease in sales. Let’s move on to results for the Equipment Business. Sales in the Equipment Business increased by 14.8% compared with the previous first quarter, to ¥127.2 billion. Operating profit substantially increased by 55.6% compared with the previous first quarter, to ¥9.0 billion. The operating profit ratio was 7.1%. The Telecommunications Equipment Group posted favorable sales of new slim design models of mobile phone handsets in the domestic market, notably “ W44K Ⅱ . ” As a result, sales in this segment increased by a significant 18.5%, compared with the previous first quarter, to ¥60.0 billion. Operating profit improved by ¥2.5 billion from a loss of ¥2.8 billion recorded in the previous first quarter due to sales growth in the domestic mobile phone handset business, improved profitability in Personal Handy Phone System ("PHS") related business and a reduction in loss at Kyocera Wireless Corp. (KWC). The Information Equipment Group posted an increase in sales of 11.6%, compared with the previous first quarter, to ¥67.3 billion due to an increase in sales of color printers and