Edgar Filing: KYOCERA CORP

Form 6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Report of Foreign Private Issuer

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

the Securities Exchange Act of 1934

For the month of October 2006

Commission File Number: 1-07952

KYOCERA CORPORATION

6 Takeda Tobadono-cho, Fushimi-ku,

Kyoto 612-8501, Japan

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

Form 20-F X Form 40-F

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

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

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

Yes No X

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

SIGNATURE

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

KYOCERA CORPORATION

/s/ AKIHIKO TOYOTANI

Akihiko Toyotani

General Manager of

Finance Division

Date: October 30, 2006

Information furnished on this form:

EXHIBITS


Exhibit Number
1.		Consolidated and Non-Consolidated Financial Results for the Six Months Ended September 30, 2006
2.		Supplemental information for Consolidated Financial Results for the Six Months Ended September 30, 2006

Consolidated Results of Kyocera Corporation and its Subsidiaries

for the Six Months Ended September 30, 2006

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

Date of the board of directors’ meeting for the interim consolidated results: October 30, 2006

1. Results for the six months ended September 30, 2006

(1) Consolidated results of operations:


	Japanese yen
	Six months ended September 30,						Year ended March 31,
	2006			2005			2006
Net sales	¥	615,390 million		¥	542,238 million		¥	1,173,544 million
% change from the previous period		13.5	%		(9.2	)%
Profit from operations		63,128 million			33,764 million			99,695 million
% change from the previous period		87.0	%		(44.0	)%
Income from continuing operations before income taxes		72,385 million			44,329 million			117,237 million
% change from the previous period		63.3	%		(32.2	)%
Net income		53,493 million			24,214 million			69,696 million
% change from the previous period		120.9	%		(43.1	)%

Earnings per share:
Basic	¥	284.64		¥	129.16		¥	371.68
Diluted		284.14			129.15			371.43

Notes:

1. Equity in earnings (losses) of affiliates and unconsolidated subsidiaries:


Six months ended September 30, 2006	¥	259 million
Six months ended September 30, 2005	¥	(236) million
Year ended March 31, 2006	¥	(1,216) million

2. Average number of shares outstanding during the period:


Six months ended September 30, 2006		187,932,385 shares
Six months ended September 30, 2005		187,478,104 shares
Year ended March 31, 2006		187,513,918 shares

3. Change in accounting policies: None

4. In accordance with Statement of Financial Accounting Standards No.144, “Accounting for the Impairment of Disposal of Long-Lived Assets,” the consolidated financial statements for the six months ended September 30, 2005 and for the year ended March 31, 2006 have been retrospectively reclassified as for the discontinued operations.

(2) Consolidated financial position:


	Japanese yen
	September 30,				March 31,
	2006		2005		2006
Total assets	¥1,951,702 million		¥1,862,928 million		¥1,931,522 million
Stockholders’ equity	1,373,567 million		1,241,695 million		1,289,077 million
Stockholders’ equity to total assets	70.4	%	66.6	%	66.7	%
Stockholders’ equity per share	¥7,306.02		¥6,623.25		¥6,865.75

Notes: Total number of shares outstanding as of:


September 30, 2006		188,004,780 shares
September 30, 2005		187,475,323 shares
March 31, 2006		187,754,750 shares

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(3) Consolidated cash flows:


	Japanese yen
	Six months ended September 30,				Year ended March 31,
	2006		2005		2006
Cash flows from operating activities	¥	47,923 million	¥	71,772 million	¥	171,077 million
Cash flows from investing activities		(74,084) million		(123,091) million		(165,467) million
Cash flows from financing activities		(13,079) million		(9,657) million		(23,289) million
Cash and cash equivalents at end of period		263,751 million		253,885 million		300,809 million

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

Number of consolidated subsidiaries: 168

Number of subsidiaries accounted for by the equity method: 2

Number of affiliates accounted for by the equity method: 12

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


	Consolidation	Equity method
Increase	6	0
Decrease	6	0

2. Consolidated financial forecast for the year ending March 31, 2007 :


		Year ending March 31, 2007
Net sales		¥1,250,000 million
Income from continuing operations before income taxes		¥148,000 million
Net income		¥96,000 million

Note:

Forecast of earnings per share: ¥509.92

Earnings per share amounts is computed based on Statement of Financial Accounting Standards No.128.

Forecast of earnings per share is computed based on the diluted average number of shares outstanding during

the six months ended September 30, 2006.

With regard to forecasts set forth above, please refer to the accompanying “Forward Looking Statements” on page 19.

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LOGO

October 30, 2006

KYOCERA CORPORATION

Consolidated Financial Highlights

Results for the Six Months Ended September 30, 2006


	(Yen in millions, except per share amounts, exchange rates and the number of employees)
	Six Months Ended September 30,		Increase (Decrease) (%)
	2005	2006	Increase (Decrease) (%)
Net sales	542,238	615,390	13.5
Profit from operations	33,764	63,128	87.0
Income from continuing operations before income taxes	44,329	72,385	63.3
Net income	24,214	53,493	120.9
Average exchange rates :
US$	109	115	—
Euro	136	146	—
Earnings per share :
Net income
Basic	129.16	284.64	120.4
Diluted	129.15	284.14	120.0
Capital expenditures	50,637	37,239	(26.5	)
Depreciation	28,034	33,682	20.1
R&D expenses	29,328	30,257	3.2
Total assets	1,862,928	1,951,702	4.8
Stockholders’ equity	1,241,695	1,373,567	10.6
Sales of products manufactured outside Japan to net sales (%)	29.7	34.9	—
The number of employees	59,347	63,235	—

Note: Kyocera sold Kyocera Leasing Co., Ltd., a subsidiary engaged in financing, and as a result, operating results and gain on sales of Kyocera Leasing Co., Ltd. for the six months ended September 30, 2006 have been recorded as income from discontinued operations in accordance with accounting principles generally accepted in the U.S. Figures for the six months ended September 30, 2005 have been retrospectively reclassified and consolidated statement of income for all prior periods have been adjusted to reflect this presentation. As a result, reclassified consolidated net sales for the six months ended September 30, 2005 decreased by ¥3,020 million compared with the result previously announced, reclassified profit from operations decreased by ¥1,585 million and income from continuing operations before income taxes decreased by ¥1,806 million, respectively.

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KYOCERA GROUP

Kyocera group consists of Kyocera Corporation, 170 subsidiaries and 12 affiliates.

(Chart of the group companies)

LOGO

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Management Policies

1. Basic Policy

Kyocera Corporation and its consolidated subsidiaries (collectively, “Kyocera Group”, the “Group” or “Kyocera”) aim to be “The Company” respected by society from the perspective of corporate ethics, while maintaining continuous sales growth and high profitability. To realize this management vision, Kyocera’s management policy is “to be a creative company that continues to grow” and “going back to the origin of the ‘Amoeba Management’ system.” Under such policy, Kyocera seeks to raise corporate value through improvement in business performance by putting emphasis on the efficient use of management resources and continuously enhancing consolidated management. In addition, the Kyocera Philosophy, which establishes “doing what is right as a human being” as the principle criterion for all business decisions, is shared and put into practice by all employees.

2. Medium Term Management Strategy

Kyocera promotes “high-value-added diversification” as its management strategy to realize such management policy. This involves ensuring that each business is highly profitable and pursuing synergies within Kyocera with the objective of driving sustainable growth even in an ever-changing business environment.

Specifically, Kyocera aims to: (1) exploit competitive advantages; (2) strengthen existing businesses; and (3) create new businesses.

1) Exploit competitive advantages

The “Kyocera Philosophy,” which places people’s hearts at its core, the “Amoeba Management” system, which is unique to Kyocera and has been a driving force for growth since Kyocera Corporation’s earliest days, and a strong financial structure, are sources of competitive advantage for Kyocera over other companies in implementing its diversification strategy. With these foundations firmly in place, Kyocera endeavors to strengthen competitiveness in technological development, sales and marketing in the high-growth-potential markets for telecommunications and information processing and for environmental protection, and to translate its diversification strategy into improved business performance.

2) Strengthen existing businesses

Kyocera strives to continuously improve profitability in all existing business within Kyocera Group. Elsewhere, by strengthening ties and maximizing synergies between headquarters and Kyocera Group companies, Kyocera seeks to improve profitability in each business segment on a consolidated basis. In promoting a global strategy in each business, Kyocera has created development, manufacturing and sales systems in optimal locations, while the integration of Group-wide resources helps boost the competitiveness of existing businesses. Kyocera regularly reviews those businesses that have lost market competitiveness and that show little promise of expansion going forward.

3) Create new businesses

Kyocera endeavors to create businesses that will become its core going forward in order to improve consolidated performance over the medium term. To achieve this goal, Kyocera integrates Group-wide management resources to develop new technologies and products and create new markets. The focus of Kyocera’s business creation strategy lies in the markets for telecommunications and information processing and for environmental protection.

3. Challenges

Kyocera aims to maintain ongoing sales expansion and high profitability in its components and equipment businesses in order to be “a creative company that continues to grow.” In this regard, Kyocera has implemented several initiatives outlined below to quickly achieve its target of a pre-tax profit ratio of 15% or higher.

1) Reinforce the “Amoeba Management” system Kyocera is strengthening its “Amoeba Management” system, which is unique management resource of Kyocera and remains a source of competitive advantage over other companies. It has been a major driving force for growth since its foundation. Kyocera plans to reinforce this system to revitalize operations across development, manufacturing, sales and back office divisions. The aim is to boost ability to achieve targets.

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2) Boost profitability in the equipment business

Kyocera has been conducting fundamental structural reforms in the Telecommunications Equipment Group over the past two years as a means of raising profitability. The positive effects of the reform have been reflected in steadily improving business performance in the first half of the year ending March 2007. In the second half of the year ending March 2007 and onward, Kyocera will strive to expand profits by maximizing group-wide synergies to promote business development.

Kyocera also seeks to further improve business performance in the Information Equipment Group. To achieve this, it will expand sales of multifunctional products and printers that are distinctive from the competition through effective utilization of component and device technology within Kyocera. Kyocera will also continue to release new high-value-added products such as color and network-compatible models.

Through the continuous implementation of the aforementioned initiatives, Kyocera pursues further corporate growth.

4. Basic Profit Distribution Policy

Kyocera believes that enhancing its performance into the future will lead to greater corporate value and to meeting shareholders’ expectations. In considering profit distribution, Kyocera aims to establish a strong link between dividend amounts and its performance. In particular, Kyocera will determine dividend amounts based on an overall assessment that will take into consideration capital expenditures necessary for the further development of Kyocera from a medium to long-term perspective, while also aiming for a payout ratio of approximately 20 to 25% on a consolidated basis.

In order to drive ongoing corporate growth, Kyocera will aggressively strive to cultivate new businesses and markets, to develop new technologies and to acquire external management resources, when necessary, to strengthen existing businesses. For such purpose, Kyocera will maintain a sound and stable financial position and increase internal reserves to enable timely investments.

5. Parent Company

Kyocera does not have a parent company.

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Business Results and Financial Condition

1. Business Results for the Six Months Ended September 30, 2006

(1) Economic Business Environment

The Japanese economy expanded steadily in the six months ended September 30, 2006 (the first half) on the back of growth in private-sector demand, spurred primarily by increasing private capital investment and personal spending supported by rising corporate earnings. The Chinese economy remained buoyant due to persistent expansion in capital investment activities. Similar to the Japanese economy, the U.S. economy continued to grow amid rising corporate earnings and personal spending. The European economy grew steadily due to increasing exports.

In the electronics industry, which is the principal market for Kyocera, a year-on-year increase in production of mobile phone handsets and digital TVs led to a considerable increase in demand for electronic components for these products.

(2) Consolidated Financial Results

Kyocera achieved an increase in sales and profits in the first half compared with the six months ended September 30, 2005 (the previous first half) in both the components and equipment businesses thanks to active efforts to launch new products in the favorable market environment and to improved productivity. Consolidated net sales for the first half amounted to ¥615,390 million, a 13.5% increase compared with the previous first half. Profit from operations increased by 87.0% to ¥63,128 million and income from continuing operations before income taxes and minority interest increased by 63.3% to ¥72,385 million. Net income increased by 120.9% to ¥53,493 million as tax refunds in the amount of ¥4,356 million accompanying the voidance of a portion of the correction disposition related to transfer pricing adjustment (see (3) Implemented management measures and significant decision 4) below for details).


	(Yen in millions, except per share amounts and exchange rates)
	Six months ended September 30,				Increase (Decrease) (%)
	2005		2006
	Amount	% to net sales	Amount	% to net sales
Net sales	542,238	100.0	615,390	100.0	13.5
Profit from operations	33,764	6.2	63,128	10.3	87.0
Income from continuing operations before income taxes	44,329	8.2	72,385	11.8	63.3
Net income	24,214	4.5	53,493	8.7	120.9
Diluted earnings per share	129.15	—	284.14	—	—
Average US$ exchange rate	109	—	115	—	—
Average Euro exchange rate	136	—	146	—	—

Note 1. Kyocera has sold its share in Kyocera Leasing Co., Ltd., a subsidiary engaged in financing, and as a result, business results and profit on sales for Kyocera Leasing for the first half have been recorded as income from discontinued operations in conformity with accounting principles generally accepted in the U.S. Figures for the first half have been retrospectively reclassified. As a result, reclassified consolidated net sales for the previous first half decreased by ¥3,020 million compared with the result previously announced, reclassified profit from operations decreased by ¥1,585 million and income from continuing operations before income taxes decreased by ¥1,806 million, respectively.

(3) Implemented management measures and significant decision

1) Effective April 1, 2006, Kyocera shifted to a new management system to speed up its decision making. The executive officer system undertaken by the officers with the titles of Chief Executive Officer, Chief Financial Officer and Chief Operating Officer was abandoned, and a new system was introduced in which the President, Representative Director and Executive Officer undertakes total responsibility for formulation and execution of the Group’s management strategies.

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2) In July 2006, Kyocera Kinseki Corporation acquired Hertz Technology Inc. as a wholly-owned subsidiary in order to further enhance its crystal devices business. Through this acquisition, Kyocera will gain new technology for tuning-fork crystal units, demand for which is expected to grow for mobile phone handsets and mobile music players, in particular, and thus expand its business as a total crystal device manufacturer. A wide range of products will be developed in the crystal devices business going forward. Hertz Technology Inc. was renamed Kyocera Kinseki Hertz Corporation on October 1, 2006.

3) As part of its policy of business selection and concentration, Kyocera transferred its shares of Kyocera Leasing Co., Ltd., a subsidiary engaged in financing services, to Diamond Lease Company Limited in August 2006. In line with this, ¥5,175 million was recorded as income from discontinued operations.

4) In the fiscal year ended March 31, 2005, Kyocera recorded ¥12,748 million as additional taxes accompanying the receipt of a tax assessment notice for transfer pricing adjustments from the Osaka Regional Taxation Bureau. On May 24, 2005, Kyocera filed a notice of opposition to such assessment with the Bureau. On September 25, 2006, Kyocera received an opposition decision letter from the Bureau that voided a portion of the original disposition. In accordance with this opposition decision, ¥4,356 million of tax refunds, including local taxes, is recognized as income tax benefits in the first half. Kyocera remains in disagreement with the decision concerning the portion of the original disposition that was not voided, and therefore on October 23, 2006, Kyocera submitted a written claim for examination with the Osaka Board of Tax Appeals. Concurrently, Kyocera is undertaking comprehensive deliberations that include consideration of a motion for mutual agreement procedures with the aim of avoiding double taxation within Kyocera.

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(4) Consolidated Sales and Operating Profits by Reporting Segment


	(Yen in millions)
	Six months ended September 30,								Increase (Decrease) (%)
	2005				2006
	Amount		% to net sales (segment’s sales)		Amount		% to net sales (segment’s sales)
Fine Ceramic Parts Group	33,258		6.1		38,564		6.3		16.0
Semiconductor Parts Group	63,544		11.7		75,843		12.3		19.4
Applied Ceramic Products Group	55,752		10.3		64,132		10.4		15.0
Electronic Device Group	125,383		23.1		139,984		22.7		11.6

Total components business	277,937		51.2		318,523		51.7		14.6
Telecommunications Equipment Group	91,084		16.8		117,181		19.0		28.7
Information Equipment Group	118,433		21.8		124,619		20.3		5.2
Optical Equipment Group	8,256		1.5		5,890		1.0		(28.7	)

Total equipment business	217,773		40.1		247,690		40.3		13.7
Others	56,049		10.3		60,850		9.9		8.6
Adjustments and eliminations	(9,521	)	(1.6	)	(11,673	)	(1.9	)	—

Net sales	542,238		100.0		615,390		100.0		13.5

Fine Ceramic Parts Group	4,805		14.4		7,373		19.1		53.4
Semiconductor Parts Group	7,251		11.4		11,887		15.7		63.9
Applied Ceramic Products Group	9,337		16.7		8,966		14.0		(4.0	)
Electronic Device Group	11,171		8.9		21,573		15.4		93.1

Total components business	32,564		11.7		49,799		15.6		52.9
Telecommunications Equipment Group	(9,355	)	—		(1,016	)	—		—
Information Equipment Group	13,244		11.2		15,491		12.4		17.0
Optical Equipment Group	(4,049	)	—		(899	)	—		—

Total equipment business	(160	)	—		13,576		5.5		—
Others	3,186		5.7		3,748		6.2		17.6

Operating profit	35,590		6.6		67,123		10.9		88.6

Corporate	8,882		—		5,152		—		(42.0	)
Equity in earnings of affiliates and unconsolidated subsidiaries	(236	)	—		259		—		—
Adjustments and eliminations	93		—		(149	)	—		—

Income from continuing operations before income taxes	44,329		8.2		72,385		11.8		63.3

Notes:

2. Commencing in the first half, net sales of the Precision Machine Division of Kyocera Corporation, previously included within “Corporate,” has been reclassified into “Others.” Accordingly, previously reported net sales of these reporting segments for the previous first half have been retrospectively reclassified.

3. By the reasons in notes 1 and 2, net sales of “Others” in the previous first half decreased by ¥2,985 million and “Adjustments and Eliminations” increased by ¥(35) million, compared with those previously announced.

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4. Commencing in the first half, operating profit of the Precision Machine Division of Kyocera Corporation, previously included within “Corporate,” have been reclassified into “Others.” Accordingly, previously reported operating profits of these reporting segments for the previous first half have been retrospectively reclassified.

5. By the reasons in notes 1 and 4, operating profit of “Others” in the previous first half decreased by ¥1,518 million and “Corporate” decreased by ¥288 million, compared with those previously announced.

Both sales and operating profit increased in the components business in the first half as compared with the previous first half due to growth in sales volume as components demand for digital consumer equipment expanded and to efforts to raise productivity. As a result, the operating profit ratio in the components business improved markedly from 11.7% in the previous first half to 15.6%.

The consolidated results by reporting segment in the components business are as follows.

1) Fine Ceramic Parts Group

Sales and operating profit in this reporting segment increased significantly compared with the previous first half. This was mainly because a recovery in the semiconductor industry led to a considerable increase in demand for ceramic parts for semiconductor fabrication equipment.

2) Semiconductor Parts Group

Sales and operating profit in this reporting segment increased compared with the previous first half due to active demand for ceramic packages used in digital consumer equipment such as mobile phone handsets.

3) Applied Ceramic Products Group

Sales in this reporting segment increased in the fiscal half compared with the previous fiscal half due to the favorable performance of the solar energy business, amid an expanding global market spurred by rising environmental awareness, and also to increased sales of cutting tools for the automotive industry.

Operating profit from cutting tools and medical materials increased in the first half as compared with the previous first half, while operating profit from solar energy business decreased due to costs for repair of defects in a portion of the products sold overseas up to the year ended March 31, 2004. Kyocera provides long-term warranties for such products, and accordingly set aside a reservation in the amount of ¥3.9 billion in the first half for warranty costs. As a result, operating profit from this reporting segment as a whole decreased as compared with the previous first half.

4) Electronic Device Group

Both sales and operating profit increased substantially in this reporting segment compared with the previous first half. Along with a particularly significant increase of sales at AVX Corporation, a U.S. subsidiary, compared with the previous first half, demand for capacitors, crystal-related components and connectors, etc., expanded due to strong production activity for digital consumer equipment.

Sales and operating profit in the equipment business increased compared with the previous first half due primarily to improved profitability in the Telecommunications Equipment Group and the Information Equipment Group resulting from higher sales, and to a reduction in loss in the Optical Equipment Group. The operating profit ratio in the equipment business stood at 5.5%, marking a significant improvement from the loss recorded in the previous first half.

The consolidated results by reporting segment in the equipment business are as follows

5) Telecommunications Equipment Group

Sales in this reporting segment increased compared with the previous first half due mainly to favorable sales of new models of mobile phone handsets in the domestic market. Operating profit also improved significantly compared with the previous first half, due to the positive effect of increased sales in the domestic mobile phone handset business and to decreased loss at Kyocera Wireless Corp., a U.S. subsidiary.

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6) Information Equipment Group

Both sales and operating profit in this reporting segment increased compared with the previous first half due to sales growth of digital multifunctional products and printers overseas and to the positive effect of the yen’s depreciation against the Euro and the U.S. dollar.

7) Optical Equipment Group

Sales in this reporting segment decreased compared with the previous first half due mainly to the downsizing of the camera equipment business, while operating loss was reduced by effects of a decrease in expenses for structural reforms.

Sales in “Others” increased compared with the previous first half due to sales growth in the telecommunications engineering business at Kyocera Communication Systems Co., Ltd. Operating profit also increased due primarily to an increase in profits in the electronic device materials business at Kyocera Chemical Corporation.

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(5) Consolidated Orders and Production by Reporting Segment


	(Yen in millions)
	Six months ended September 30,								Increase (Decrease) (%)
	2005				2006
	Amount		% to the total		Amount		% to the total
Fine Ceramic Parts Group	33,566		5.9		39,785		6.2		18.5
Semiconductor Parts Group	68,971		12.0		76,861		12.0		11.4
Applied Ceramic Products Group	58,241		10.1		66,757		10.4		14.6
Electronic Device Group	130,768		22.7		147,734		23.1		13.0

Total components business	291,546		50.7		331,137		51.7		13.6
Telecommunications Equipment Group	110,467		19.2		129,231		20.2		17.0
Information Equipment Group	118,275		20.5		124,136		19.4		5.0
Optical Equipment Group	7,962		1.4		5,958		0.9		(25.2	)

Total equipment business	236,704		41.1		259,325		40.5		9.6
Others	57,622		10.0		61,745		9.6		7.2
Adjustments and eliminations	(10,487	)	(1.8	)	(12,025	)	(1.8	)	—

Orders	575,385		100.0		640,182		100.0		11.3


	(Yen in millions)
	Six months ended September 30,								Increase (Decrease) (%)
	2005				2006
	Amount		% to the total		Amount		% to the total
Fine Ceramic Parts Group	32,963		6.1		38,959		6.1		18.2
Semiconductor Parts Group	64,055		11.9		77,929		12.2		21.7
Applied Ceramic Products Group	55,164		10.3		65,436		10.2		18.6
Electronic Device Group	124,363		23.2		144,236		22.5		16.0

Total components business	276,545		51.5		326,560		51.0		18.1
Telecommunications Equipment Group	93,910		17.5		126,414		19.8		34.6
Information Equipment Group	116,617		21.8		137,311		21.5		17.7
Optical Equipment Group	7,616		1.4		5,923		0.9		(22.2	)

Total equipment business	218,143		40.7		269,648		42.2		23.6
Others	41,778		7.8		43,724		6.8		4.7

Production	536,466		100.0		639,932		100.0		19.3

Notes:

6. Commencing in the first half, orders of the Precision Machine Division of Kyocera Corporation, previously included within “Corporate,” have been reclassified into “Others.” Accordingly, previously reported orders and production of these reporting segments in the previous first half have been retrospectively reclassified.

7. By the reasons in notes 1 and 6, order of “Others” in the previous first half decreased by ¥4,308 million and “Adjustments and Eliminations” increased by ¥(133) million, compared with those previously announced.

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(6) Consolidated Sales by Geographic Area


	(Yen in millions)
	Six months ended September 30,				Increase (Decrease) (%)
	2005		2006
	Amount	% to net sales	Amount	% to net sales
Japan	217,171	40.0	236,735	38.5	9.0
USA	112,642	20.8	130,265	21.2	15.6
Asia	91,643	16.9	107,111	17.4	16.9
Europe	87,848	16.2	97,464	15.8	10.9
Others	32,934	6.1	43,815	7.1	33.0

Net sales	542,238	100.0	615,390	100.0	13.5

Note 8. By the reasons in note 1, consolidated sales in Japan in the previous first half decreased by ¥3,020 million compared with that previously announced.

1) Japan

Sales increased compared with the previous first half due to burgeoning demand for products in the Fine Ceramic Parts Group and the Semiconductor Parts Group.

2) United States of America

Sales of the Semiconductor Parts Group and the Electronic Device Group increased due to expanded demand for components for digital consumer products. Sales of the Information Equipment Group also increased.

3) Asia

Sales increased compared with the previous first half due to expanded component demand, particularly in the Electronic Device Group.

4) Europe

Increased demand for solar energy products and products in the Electronic Device Group, coupled with sales growth in the Information Equipment Group, resulted in an increase in sales compared with the previous first half.

5) Others

Sales increased due to sales growth in the Telecommunications Equipment Group and the Information Equipment Group.

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2. Cash Flow

Cash and cash equivalent at September 30, 2006 decreased by ¥37,058 million to ¥263,751 million compared with at March 31, 2006.


	(Yen in millions)
	Six Months Ended September 30,
	2005		2006
Cash flow from operating activities	71,772		47,923
Cash flow from investing activities	(123,091	)	(74,084	)
Cash flow from financing activities	(9,657	)	(13,079	)
Effect of exchange rate changes on cash and cash equivalent	4,269		2,182
Net decrease in cash and cash equivalent	(56,707	)	(37,058	)
Cash and cash equivalent at beginning of period	310,592		300,809
Cash and cash equivalent at end of period	253,885		263,751

(1) Cash flow from operating activities

Net cash provided by operating activities for the first half decreased by ¥ 23,849 million to ¥ 47,923 million from the previous first half of ¥71,772 million. Although net income increased by ¥29,279 million, cash and cash equivalent in connection with receivables and inventories decreased compared with the previous first half.

(2) Cash flow from investing activities

Net cash used in investing activities in the first half decreased by ¥49,007 million to ¥74,084 million from the previous first half of ¥123,091 million. This was due to decreases in cash and cash equivalent used in payment for purchases of securities and property, plant, equipment and intangible assets, which exceeded decreases in cash and cash equivalent provided by sales and maturities of securities.

(3) Cash flow from financing activities

Net cash used in financing activities for the first half increased by ¥3,422 million to ¥13,079 million from the previous first half of ¥9,657 million. This was due to a decrease in proceeds from issuance of long-term debt and an increase in payments of long-term debt, which exceeded an increase in short-term debt.

- 14 -

3. Capital Expenditures and Depreciation


	(Yen in millions)
	Six months ended September 30,				Increase (Decrease) (%)
	2005		2006
	Amount	% to net sales	Amount	% to net sales
Capital expenditures	50,637	9.3	37,239	6.1	(26.5	)
Depreciation	28,034	5.2	33,682	5.5	20.1

Note 9. By the reasons in note 1, capital expenditures in the previous first half decreased by ¥1,384 million and the depreciation decreased by ¥48 million, compared with those previously announced.

In the first half, Kyocera made capital expenditures particularly to increase production capacity in the Electronic Device Group. However, capital expenditures in the first half decreased compared with the previous first half, which included large-scale expenditures such as the establishment of new production bases in the organic package business and the solar energy business. Depreciation increased compared with the previous first half.

4. Non-Consolidated Financial Results


	(Yen in millions)
	Six months ended September 30,				Increase (Decrease) (%)
	2005		2006
	Amount	% to net sales	Amount	% to net sales
Net sales	220,901	100.0	259,738	100.0	17.6
Profit from operations	12,383	5.6	21,284	8.2	71.9
Recurring profit	26,903	12.2	32,844	12.6	22.1
Net income	31,865	14.4	33,655	13.0	5.6

5. Business Risk

Please see “Forward-Looking Statements” on page 19 for details of business risk.

- 15 -

Business Outlook

1. Consolidated Forecasts for the Year Ending March 31, 2007 (Announced on October 30, 2006)

Business performance in the first half was solid, especially in the components business, while Kyocera projects continuing favorable business environment in the second half. Accordingly, the following revisions have been made to forecasts for the year ending March 31, 2007 (fiscal 2007), which were announced on April 27, 2006.


	(Yen in millions, except per share amounts and exchange rates)
			Forecast for FY2007 announced on				Increase (Decrease) to the result for FY2006 (%)
	Result for FY2006		April 27, 2006		October 30, 2006
	Amount	% to net sales	Amount	% to net sales	Amount	% to net sales
Net sales	1,173,544	100.0	1,230,000	100.0	1,250,000	100.0	6.5
Profit from operations	99,695	8.5	123,000	10.0	133,000	10.6	33.4
Income from continuing operations before income taxes	117,237	10.0	138,000	11.2	148,000	11.8	26.2
Net income	69,696	5.9	83,000	6.7	96,000	7.7	37.7
Diluted earnings per share	371.43	—	440.83	—	509.92	—	—
Average US$ exchange rate	113	—	109	—	114	—	—
Average Euro exchange rate	138	—	140	—	145	—	—

Notes:

10. By the reasons in note 1, net sales of the year ended March 31, 2006 (fiscal 2006) decreased by ¥7,945 million, the operating profit decreased by ¥3,512 million and the income from continuing operations before income taxes decreased by ¥4,151 million, compared with those previously announced.

11. The forecast of diluted earnings per share announced previously was revised on July 27, 2006 based on the diluted average number of shares outstanding during the three months ended June 30, 2006.

12. Although Kyocera changed its previously announced forecast of average exchange rates for fiscal 2007 based on the actual exchange rates for the first quarter, it has not changed its forecast of sales and profits for fiscal 2007 released on July 27, 2006 because the impact of this change in the forecast of average exchange rates is not considered material.

- 16 -

< Consolidated Forecasts by Reporting Segments >

Consolidated forecasts by reporting segments are revised, accordingly, as follows.


	(Yen in millions)
					Forecast for FY2007 announced on								Increase (Decrease) to the result for FY2006 (%)
	Result for FY2006				April 27, 2006				October 30, 2006
	Amount		% to net sales		Amount		% to net sales		Amount		% to net sales
Fine Ceramic Parts Group	69,373		5.9		71,000		5.8		78,000		6.2		12.4
Semiconductor Parts Group	135,299		11.6		145,000		11.8		150,000		12.0		10.9
Applied Ceramic Products Group	117,555		10.0		122,000		9.9		129,000		10.3		9.7
Electronic Device Group	259,592		22.1		263,000		21.4		276,000		22.1		6.3

Total components business	581,819		49.6		601,000		48.9		633,000		50.6		8.8
Telecommunications Equipment Group	229,035		19.5		245,000		19.9		245,000		19.6		7.0
Information Equipment Group	249,381		21.2		260,000		21.1		260,000		20.8		4.3
Optical Equipment Group	14,947		1.3		11,000		0.9		11,000		0.9		(26.4	)

Total equipment business	493,363		42.0		516,000		41.9		516,000		41.3		4.6
Others	117,409		10.0		133,000		10.8		125,000		10.0		6.5
Adjustments and eliminations	(19,047	)	(1.6	)	(20,000	)	(1.6	)	(24,000	)	(1.9	)	—

Net sales	1,173,544		100.0		1,230,000		100.0		1,250,000		100.0		6.5

Notes:

13. Commencing in the first half, net sales of the Precision Machine Division of Kyocera Corporation, previously included within “Corporate,” have been reclassified into “Others.” Accordingly, previously reported net sales of these reporting segments for fiscal 2006 have been retrospectively reclassified.

14. By the reasons in notes 1 and 13, net sales of “Others” in fiscal 2006 decreased by ¥7,565 million and “Adjustments and Eliminations” increased by ¥(380) million, compared with those previously announced.

- 17 -


	(Yen in millions)
				Forecast for FY2007 announced on					Increase (Decrease) to the result for FY2006 (%)
	Result for FY2006			April 27, 2006		October 30, 2006
	Amount		% to segment’s sales	Amount	% to segment’s sales	Amount		% to segment’s sales
Fine Ceramic Parts Group	11,014		15.9	11,500	16.2	14,500		18.6	31.7
Semiconductor Parts Group	17,742		13.1	21,000	14.5	23,500		15.7	32.5
Applied Ceramic Products Group	21,876		18.6	21,500	17.6	20,000		15.5	(8.6	)
Electronic Device Group	27,170		10.5	28,500	10.8	42,000		15.2	54.6

Total components business	77,802		13.4	82,500	13.7	100,000		15.8	28.5
Telecommunications Equipment Group	(1,706	)	—	9,000	3.7	4,000		1.6	—
Information Equipment Group	26,412		10.6	28,500	11.0	30,000		11.5	13.6
Optical Equipment Group	(5,774	)	—	0	—	(1,000	)	—	—

Total equipment business	18,932		3.8	37,500	7.3	33,000		6.4	74.3
Others	8,983		7.7	14,000	10.5	9,000		7.2	0.2

Operating profit	105,717		9.0	134,000	10.9	142,000		11.4	34.3

Corporate and others	11,520		—	4,000	—	6,000		—	(47.9	)

Income from continuing operations before income taxes	117,237		10.0	138,000	11.2	148,000		11.8	26.2

Notes:

15. Commencing in the first half, operating profits of the Precision Machine Division of Kyocera Corporation, previously included within “Corporate,” have been reclassified into “Others.” Accordingly, previously reported operating profits of these reporting segments for fiscal 2006 have been retrospectively reclassified.

16. By the reasons in notes 1 and 15, operating profit of “Others” in fiscal 2006 decreased by ¥3,577 million compared with that previously announced.

The business environment in the second half remains uncertain on account of rising material prices, particularly crude oil and precious metals, coupled with concerns over a slowdown in the U.S. economy. Nonetheless, in the electronics industry, demand for components for digital consumer equipment is projected to remain high. In addition to the sale of next-generation game consoles and new digital consumer products for the Christmas selling season, the introduction of Mobile Number Portability in Japan in October this year is expected to be another positive factor.

To make the most of such business opportunities, Kyocera intends to improve performance in the components business by boosting market share through the introduction of new high-value-added products and by cultivating new markets. In the equipment business, Kyocera will improve profitability through the timely launch of new products to assure capture of business opportunities. Specifically, Kyocera aims to increase profitability by releasing highly sophisticated mobile phone handsets in the Telecommunications Equipment Group and by expanding sales of new high-value-added multifunctional products and printers including color models in the Information Equipment Group.

- 18 -

2. Non-Consolidated Forecasts for the Year Ending March 31, 2007 (Announced on October 30, 2006)


	(Yen in millions)
			Forecast for FY2007 announced on				Increase (Decrease) to the result for FY2006 (%)
	Result for FY2006		April 27, 2006		October 30, 2006
	Amount	% to net sales	Amount	% to net sales	Amount	% to net sales
Net sales	477,379	100.0	510,000	100.0	520,000	100.0	8.9
Profit from operations	39,937	8.4	44,000	8.6	45,000	8.7	12.7
Recurring profit	68,182	14.3	74,000	14.5	75,000	14.4	10.0
Net income	68,712	14.4	53,000	10.4	61,000	11.7	(11.2	)

Note: Forward-Looking Statements

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

- 19 -

CONSOLIDATED BALANCE SHEETS


	Yen in millions
	September 30, 2006				March 31, 2006				September 30, 2005
	Amount			%	Amount			%	Amount			%
Current assets :
Cash and cash equivalents	¥	263,751			¥	300,809			¥	253,885
Short-term investments		128,747				87,942				94,526
Trade notes receivable		25,181				24,597				25,439
Trade accounts receivable		228,198				210,393				196,743
Short-term finance receivables		—				39,505				42,194
Less allowances for doubtful accounts and sales returns		(7,384	)			(7,425	)			(7,919	)
Inventories		220,879				190,564				200,607
Deferred income taxes		45,609				40,411				38,985
Other current assets		46,151				33,872				29,136

Total current assets		951,132		48.7		920,668		47.7		873,596		46.9

Non-current assets :
Investments in and advances to affiliates and unconsolidated subsidiaries		7,499				7,355				12,037
Securities and other investments		622,344				553,377				539,423

Total investments and advances		629,843		32.3		560,732		29.0		551,460		29.6
Long-term finance receivables		—		—		80,970		4.2		74,247		4.0

Property, plant and equipment, at cost :
Land		56,969				58,286				58,553
Buildings		253,643				249,506				241,692
Machinery and equipment		717,718				697,383				680,879
Construction in progress		11,817				13,473				13,679
Less accumulated depreciation		(752,878	)			(733,302	)			(713,078	)

		287,269		14.7		285,346		14.8		281,725		15.1

Goodwill		31,615		1.6		31,351		1.6		30,727		1.7
Intangible assets		29,516		1.5		31,227		1.6		30,124		1.6
Other assets		22,327		1.2		21,228		1.1		21,049		1.1

Total non-current assets		1,000,570		51.3		1,010,854		52.3		989,332		53.1

Total assets	¥	1,951,702		100.0	¥	1,931,522		100.0	¥	1,862,928		100.0

- 20 -


	Yen in millions
	September 30, 2006				March 31, 2006				September 30, 2005
	Amount			%	Amount			%	Amount			%
Current liabilities :
Short-term borrowings	¥	12,929			¥	90,865			¥	67,422
Current portion of long-term debt		6,643				16,347				53,123
Trade notes and accounts payable		111,059				103,503				90,713
Other notes and accounts payable		52,365				51,997				50,208
Accrued payroll and bonus		39,417				37,998				36,769
Accrued income taxes		31,343				27,658				25,137
Other accrued liabilities		36,230				31,414				31,143
Other current liabilities		24,217				18,841				17,595

Total current liabilities		314,203		16.1		378,623		19.6		372,110		20.0

Non-current liabilities :
Long-term debt		9,243				33,360				25,920
Accrued pension and severance liabilities		23,541				27,092				27,397
Deferred income taxes		149,097				125,686				123,151
Other non-current liabilities		12,992				12,742				11,595

Total non-current liabilities		194,873		10.0		198,880		10.3		188,063		10.1

Total liabilities		509,076		26.1		577,503		29.9		560,173		30.1


Minority interests in subsidiaries		69,059		3.5		64,942		3.4		61,060		3.3

Stockholders’ equity :
Common stock		115,703				115,703				115,703
Additional paid-in capital		162,080				161,994				162,060
Retained earnings		1,011,682				967,576				931,468
Accumulated other comprehensive income		111,211				72,947				63,890
Treasury stock, at cost		(27,109	)			(29,143	)			(31,426	)

Total stockholders’ equity		1,373,567		70.4		1,289,077		66.7		1,241,695		66.6

Total liabilities, minority interests and stockholders’ equity	¥	1,951,702		100.0	¥	1,931,522		100.0	¥	1,862,928		100.0

Note: Accumulated other comprehensive income is as follows:


	Yen in millions
	September 30, 2006			March 31, 2006			September 30, 2005
Net unrealized gains on securities	¥	114,808		¥	82,649		¥	84,536
Net unrealized losses on derivative financial instruments	¥	(58	)	¥	(75	)	¥	(13	)
Minimum pension liability adjustments	¥	(2,057	)	¥	(2,057	)	¥	(1,629	)
Foreign currency translation adjustments	¥	(1,482	)	¥	(7,570	)	¥	(19,004	)

- 21 -

CONSOLIDATED STATEMENTS OF INCOME


	Yen in millions, except per share amounts
	Six months ended September 30,										Increase (Dearease) %		Year ended March 31, 2006
	2006					2005							Year ended March 31, 2006
	Amount			%		Amount			%				Amount			%
Net sales	¥	615,390		100.0		¥	542,238		100.0		13.5		¥	1,173,544		100.0
Cost of sales		429,681		69.8			390,902		72.1		9.9			835,042		71.2

Gross profit		185,709		30.2			151,336		27.9		22.7			338,502		28.8
Selling, general and administrative expenses		122,581		19.9			117,572		21.7		4.3			238,807		20.3

Profit from operations		63,128		10.3			33,764		6.2		87.0			99,695		8.5
Other income or expenses :
Interest and dividend income		6,790		1.1			3,896		0.7		74.3			8,990		0.8
Interest expense		(782	)	(0.1	)		(633	)	(0.1	)	—			(1,301	)	(0.1	)
Foreign currency transaction gains (losses), net		273		0.1			(91	)	(0.0	)	—			(316	)	(0.0	)
Equity in earnings (losses) of affiliates and unconsolidated subsidiaries		259		0.0			(236	)	(0.0	)	—			(1,216	)	(0.1	)
Gains on sale of securities, net of losses		3,252		0.5			478		0.1		580.3			1,472		0.1
Gains on exchange for the shares		24		0.0			13		0.0		84.6			5,294		0.4
Gain on sale of investment in an affiliate		—		—			6,931		1.3		—			6,931		0.6
Loss on impairment of investment in an affiliate		—		—			—		—		—			(3,492	)	(0.3	)
Other, net		(559	)	(0.1	)		207		0.0		—			1,180		0.1

Total other income		9,257		1.5			10,565		2.0		(12.4	)		17,542		1.5

Income from continuing operations before income taxes and minority interests		72,385		11.8			44,329		8.2		63.3			117,237		10.0
Income taxes		20,954		3.4			19,924		3.7		5.2			46,760		4.0

Income from continuing operations before minority interests		51,431		8.4			24,405		4.5		110.7			70,477		6.0
Minority interests		(3,113	)	(0.5	)		(1,472	)	(0.3	)	—			(4,389	)	(0.4	)

Income from continuing operations		48,318		7.9			22,933		4.2		110.7			66,088		5.6
Income from discontinued operations		5,175		0.8			1,281		0.3		304.0			3,608		0.3

Net income	¥	53,493		8.7		¥	24,214		4.5		120.9		¥	69,696		5.9

Earnings per share:
Income from continuing operations
Basic	¥	257.10				¥	122.32						¥	352.44
Diluted	¥	256.65				¥	122.31						¥	352.21
Income from discontinued operations
Basic	¥	27.54				¥	6.84						¥	19.24
Diluted	¥	27.49				¥	6.84						¥	19.22
Net income
Basic	¥	284.64				¥	129.16						¥	371.68
Diluted	¥	284.14				¥	129.15						¥	371.43
Weighted average number of shares of common stock outstanding (shares in thousands):
Basic		187,932					187,478							187,514
Diluted		188,266					187,497							187,640

- 22 -

Notes:

Kyocera applies the Statement of Financial Accounting Standards Board (SFAS) No.130, “Reporting Comprehensive Income” Based on this standard, comprehensive income for the six months ended September 30, 2006 and 2005 were an increase of ¥91,757 million and an increase of ¥76,265 million, respectively.

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

Against the Correction Disposition with regard to transfer pricing taxation, which was rendered by the Osaka Regional Taxation Bureau in March 2005, Kyocera filed the Request for Reinvestigation in May 2005. Kyocera then received the Decision on the Request for Reinvestigation in September 2006. Based on the Decision, ¥(4,356) million is included in income taxes shown above, as refunds for the previous years.

4.	In accordance with the SFAS No.144, “Accounting for the Impairment of Disposal of Long-Lived Assets,” the consolidated financial statements for the six months ended September 30, 2005 and for the year ended March 31, 2006 have been retrospectively reclassified as for the discontinued operations.

- 23 -

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


	( Yen in millions and shares in thousands)
(Number of shares of common stock)	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income		Treasury stock			Comprehensive income
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
Other comprehensive income										61,108					61,108

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 period							53,493							¥	53,493
Other comprehensive income										38,264					38,264

Total comprehensive income for the period														¥	91,757

Cash dividends							(9,387	)
Purchase of treasury stock (11)												(104	)
Reissuance of treasury stock (261)				(23	)							2,138
Stock option plan of a subsidiary				109

Balance, September 30, 2006 (188,005)	¥	115,703	¥	162,080		¥	1,011,682		¥	111,211	¥	(27,109	)


	(Yen in millions and shares in thousands)
(Number of shares of common stock)	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income		Treasury stock			Comprehensive income
Balance, March 31, 2005 (187,481)	¥	115,703	¥	162,061		¥	916,628		¥	11,839	¥	(31,380	)

Net income for the period							24,214							¥	24,214
Other comprehensive income										52,051					52,051

Total comprehensive income for the period														¥	76,265

Cash dividends							(9,374	)
Purchase of treasury stock (10)												(77	)
Reissuance of treasury stock (4)				(1	)							31

Balance, September 30, 2005 (187,475)	¥	115,703	¥	162,060		¥	931,468		¥	63,890	¥	(31,426	)

- 24 -

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Yen in millions
	Six months ended September 30,						Year ended March 31, 2006
	2006			2005			Year ended March 31, 2006
Cash flows from operating activities :
Net income	¥	53,493		¥	24,214		¥	69,696
Adjustments to reconcile net income to net cash provided by operating activities :
Depreciation and amortization		38,836			31,763			73,186
Write-down of inventories		3,829			4,303			8,446
Minority interests		3,113			1,472			4,389
Gains on sales of securities, net of losses		(3,252	)		(478	)		(1,652	)
Gain on sale of investment in an affiliate		—			(6,931	)		(6,931	)
Loss on impairment of investment in an affiliate		—			—			3,492
Gain on sale of investment in a subsidiary		(8,228	)		—			—
Gains on exchange for the shares		(24	)		(13	)		(5,294	)
(Increase) decrease in receivables		(31,595	)		7,771			(9,237	)
(Increase) decrease in inventories		(31,174	)		10,417			21,263
Increase in notes and accounts payable		18,915			5,317			14,390
Other, net		4,010			(6,063	)		(671	)

Net cash provided by operating activities		47,923			71,772			171,077


Cash flows from investing activities :
Payments for purchases of securities		(31,521	)		(76,743	)		(109,289	)
Payments for purchases of investments and advances		(87	)		(127	)		(224	)
Sales and maturities of securities		30,712			38,539			52,430
Proceeds from sale of investment in an affiliate		—			24,133			24,133
Proceeds from sale of investment in a subsidiary		24,553			—			—
Payments for purchases of property, plant and equipment, and intangible assets		(35,509	)		(49,655	)		(102,025	)
Proceeds from sales of property, plant and equipment, and intangible assets		785			1,933			3,350
Acquisition of business, net of cash acquired		(756	)		—			3
Acquisitions of minority interests		(8	)		(3,575	)		(3,575	)
Deposit of negotiable certificate of deposits and time deposits		(147,457	)		(77,056	)		(132,286	)
Withdrawal of negotiable certificate of deposits and time deposits		85,081			18,121			100,923
Other, net		123			1,339			1,093

Net cash used in investing activities		(74,084	)		(123,091	)		(165,467	)


Cash flows from financing activities :
Increase in short-term debt		7,316			367			23,363
Proceeds from issuance of long-term debt		1,928			4,783			19,876
Payments of long-term debt		(10,713	)		(3,756	)		(48,458	)
Dividends paid		(10,385	)		(10,447	)		(20,473	)
Net sales (purchases) of treasury stock		2,011			(47	)		2,169
Other, net		(3,236	)		(557	)		234

Net cash used in financing activities		(13,079	)		(9,657	)		(23,289	)

Effect of exchange rate changes on cash and cash equivalents		2,182			4,269			7,896

Net decrease in cash and cash equivalents		(37,058	)		(56,707	)		(9,783	)
Cash and cash equivalents at beginning of period		300,809			310,592			310,592

Cash and cash equivalents at end of period	¥	263,751		¥	253,885		¥	300,809

- 25 -

SUPPLEMENTAL CASH FLOW INFORMATION


	Yen in millions
	Six months ended September 30,					Year ended March 31, 2006
	2006			2005		Year ended March 31, 2006
Cash paid during the period for :
Interest	¥	979		¥	917	¥	1,933
Income taxes		30,045			31,586		53,037

Acquisition of business :
Fair value of assets acquired	¥	1,151			—	¥	65
Fair value of liabilities assumed		(333	)		—		(45	)
Minority interests		—			—		(8	)
Cash acquired		(62	)		—		(15	)

	¥	756			—	¥	(3	)

- 26 -

SEGMENT INFORMATION

1. Reporting segments :


	Yen in millions
	Six months ended September 30,						Increase (Decrease)		Year ended March 31,
	2006			2005			Increase (Decrease)		2006
	Amount			Amount			%		Amount
Net sales :
Fine Ceramic Parts Group	¥	38,564		¥	33,258		16.0		¥	69,373
Semiconductor Parts Group		75,843			63,544		19.4			135,299
Applied Ceramic Products Group		64,132			55,752		15.0			117,555
Electronic Device Group		139,984			125,383		11.6			259,592
Telecommunications Equipment Group		117,181			91,084		28.7			229,035
Information Equipment Group		124,619			118,433		5.2			249,381
Optical Equipment Group		5,890			8,256		(28.7	)		14,947
Others		60,850			56,049		8.6			117,409
Adjustments and eliminations		(11,673	)		(9,521	)	—			(19,047	)

	¥	615,390		¥	542,238		13.5		¥	1,173,544

Operating profit :
Fine Ceramic Parts Group	¥	7,373		¥	4,805		53.4		¥	11,014
Semiconductor Parts Group		11,887			7,251		63.9			17,742
Applied Ceramic Products Group		8,966			9,337		(4.0	)		21,876
Electronic Device Group		21,573			11,171		93.1			27,170
Telecommunications Equipment Group		(1,016	)		(9,355	)	—			(1,706	)
Information Equipment Group		15,491			13,244		17.0			26,412
Optical Equipment Group		(899	)		(4,049	)	—			(5,774	)
Others		3,748			3,186		17.6			8,983

		67,123			35,590		88.6			105,717
Corporate		5,152			8,882		(42.0	)		12,785
Equity in earnings (losses) of affiliates and unconsolidated subsidiaries		259			(236	)	—			(1,216	)
Adjustments and eliminations		(149	)		93		—			(49	)

Income from continuing operations before income taxes	¥	72,385		¥	44,329		63.3		¥	117,237

Depreciation and amortization :
Fine Ceramic Parts Group	¥	1,943		¥	1,937		0.3		¥	4,126
Semiconductor Parts Group		5,853			4,349		34.6			10,623
Applied Ceramic Products Group		3,791			2,830		34.0			7,167
Electronic Device Group		9,598			10,144		(5.4	)		21,202
Telecommunications Equipment Group		3,201			3,049		5.0			8,692
Information Equipment Group		8,239			5,245		57.1			12,641
Optical Equipment Group		343			944		(63.7	)		1,635
Others		4,241			1,856		128.5			3,989
Corporate		1,507			1,353		11.4			2,996

Total	¥	38,716		¥	31,707		22.1		¥	73,071

Capital expenditures :
Fine Ceramic Parts Group	¥	2,900		¥	2,442		18.8		¥	4,182
Semiconductor Parts Group		5,721			15,484		(63.1	)		24,136
Applied Ceramic Products Group		2,510			9,698		(74.1	)		14,545
Electronic Device Group		10,893			8,884		22.6			21,562
Telecommunications Equipment Group		1,745			1,015		71.9			2,639
Information Equipment Group		8,061			6,633		21.5			12,389
Optical Equipment Group		134			111		20.7			199
Others		4,195			4,375		(4.1	)		5,654
Corporate		1,080			1,995		(45.9	)		3,554

Total	¥	37,239		¥	50,637		(26.5	)	¥	88,860

- 27 -

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


	Yen in millions
	Six months ended September 30,						Increase (Decrease) %		Year ended March 31, 2006
	2006			2005					Year ended March 31, 2006
	Amount			Amount					Amount
Net sales:
Japan	¥	250,962		¥	231,633		8.3		¥	497,758
Intra-group sales and transfer between geographic areas		199,385			153,233		30.1			327,786

		450,347			384,866		17.0			825,544

United States of America		155,355			127,527		21.8			288,746
Intra-group sales and transfer between geographic areas		17,783			11,007		61.6			26,246

		173,138			138,534		25.0			314,992

Asia		95,265			81,144		17.4			171,015
Intra-group sales and transfer between geographic areas		78,505			55,529		41.4			125,586

		173,770			136,673		27.1			296,601

Europe		101,494			89,666		13.2			189,750
Intra-group sales and transfer between geographic areas		19,784			16,593		19.2			33,764

		121,278			106,259		14.1			223,514

Others		12,314			12,268		0.4			26,275
Intra-group sales and transfer between geographic areas		5,534			3,783		46.3			8,274

		17,848			16,051		11.2			34,549

Adjustments and eliminations		(320,991	)		(240,145	)	—			(521,656	)

Net sales	¥	615,390		¥	542,238		13.5		¥	1,173,544

Operating Profits :
Japan	¥	49,773		¥	28,805		72.8		¥	79,278
United States of America		9,947			(3,054	)	—			3,317
Asia		11,068			5,864		88.7			14,880
Europe		3,825			533		617.6			4,748
Others		852			69		1,134.8			757

		75,465			32,217		134.2			102,980
Adjustments and eliminations		(8,491	)		3,466		—			2,688

		66,974			35,683		87.7			105,668
Corporate		5,152			8,882		(42.0	)		12,785
Equity in earnings (losses) of affiliates and unconsolidated subsidiaries		259			(236	)	—			(1,216	)

Income from continuing operations before income taxes	¥	72,385		¥	44,329		63.3		¥	117,237

- 28 -

3. Geographic segments (Sales by region) :


	Yen in millions
	Six months ended September 30,								Increase (Decrease)			Year ended March 31, 2006
	2006				2005				Increase (Decrease)			Year ended March 31, 2006
	Amount			%	Amount			%	Amount		%	Amount			%
Japan	¥	236,735		38.5	¥	217,171		40.0	¥	19,564	9.0	¥	467,035		39.8
United States of America		130,265		21.2		112,642		20.8		17,623	15.6		253,696		21.6
Asia		107,111		17.4		91,643		16.9		15,468	16.9		198,731		16.9
Europe		97,464		15.8		87,848		16.2		9,616	10.9		184,351		15.7
Others		43,815		7.1		32,934		6.1		10,881	33.0		69,731		6.0

Net sales	¥	615,390		100.0	¥	542,238		100.0	¥	73,152	13.5	¥	1,173,544		100.0

Sales outside Japan	¥	378,655			¥	325,067			¥	53,588	16.5	¥	706,509
Sales outside Japan to net sales		61.5	%			60.0	%						60.2	%

- 29 -

INVESTMENTS IN DEBT AND EQUITY SECURITIES

Available-for-sale securities are recorded at fair value, with unrealized gains and losses excluded from income and reported in other comprehensive income, net of tax. Held-to-maturity securities are recorded at amortized cost. Investments in debt and equity securities as of September 30, 2006, March 31, 2006 and September 30, 2005, included in short-term investments (current assets) and in securities and other investments (non-current assets) are summarized as follows :


	Yen in millions
	September 30, 2006								March 31, 2006
	Cost		Aggregate fair values		Gross unrealized gains		Gross unrealized losses		Cost		Aggregate fair values		Gross unrealized gains		Gross unrealized losses
Available-for-sale securities :
Corporate debt securities	¥	3,008	¥	3,143	¥	150	¥	15	¥	3,745	¥	3,908	¥	184	¥	21
Other debt securities		137,668		137,960		316		24		133,758		132,660		29		1,127
Equity securities		272,054		466,156		194,335		233		274,985		415,950		141,059		94

Total available-for-sale securities		412,730		607,259		194,801		272		412,488		552,518		141,272		1,242

Held-to-maturity securities :
Other debt securities		27,726		27,574		—		152		34,398		34,015		—		383

Total held-to-maturity securities		27,726		27,574		—		152		34,398		34,015		—		383

Total investments in debt and equity securities	¥	440,456	¥	634,833	¥	194,801	¥	424	¥	446,886	¥	586,533	¥	141,272	¥	1,625


	September 30, 2005
	Cost		Aggregate fair values		Gross unrealized gains		Gross unrealized losses
Available-for-sale securities :
Corporate debt securities	¥	2,724	¥	2,769	¥	55	¥	10
Other debt securities		101,653		101,490		87		250
Equity securities		272,147		414,354		142,264		57

Total available-for-sale securities		376,524		518,613		142,406		317

Held-to-maturity securities :
Other debt securities		33,224		32,834		—		390

Total held-to-maturity securities		33,224		32,834		—		390

Total investments in debt and equity securities	¥	409,748	¥	551,447	¥	142,406	¥	707


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

- 30 -

BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

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

Major consolidated subsidiaries :

AVX CORPORATION

KYOCERA WIRELESS CORPORATION

KYOCERA MITA CORPORATION

KYOCERA ELCO CORPORATION

Major affiliates accounted for by the equity method :

WILLCOM, INC.

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


Consolidation (Increase)	6	HERTZ TECHNOLOGY INC. and others
(Decrease)	6	KYOCERA LEASING CO., LTD. and others
Equity method
(Increase)	None
(Decrease)	None

3.	Summary of significant accounting policies

Kyocera’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.

(1)

Valuation of inventories

Finished goods and work in process are mainly stated at the lower or cost of market, the cost being determined by the average method. All other inventories are mainly stated at the lower or cost of market, the cost being determined by the first-in, first-out method.

(2)

Valuation of securities

Kyocera adopts Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities.”

Held-to-maturity securities are recorded at amortized cost.

Available-for-sales securities are recorded at fair value, with unrealized gains and losses excluded from income and recorded in other comprehensive income, net of tax.

(3)

Depreciation method of Property, Plant and Equipment

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

(4)

Goodwill and other intangible assets

Kyocera adopts Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

Goodwill and intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least annually.

Intangible assets with definite useful lives are amortized over their respective estimate useful lives.

- 31 -

(5)

Accounting for allowance and accruals

Allowance for doubtful accounts :

Kyocera provides the allowance for doubtful accounts based on the past actual ratio of losses on bad debt in addition to the estimation of uncollectible amount based on the analysis of certain individual receivables.

Accrued pension and severance cost :

Kyocera adopts Statement of Financial Accounting Standards No. 87, “Employers’ Accounting for Pensions”, pension and severance cost is accrued based on the projected benefit obligations and the fair value of plan assets at the balance sheet date. If the accumulated benefit obligation (i.e., obligations deducting an effect of future compensation levels from projected benefit obligations) exceeds the fair value of plan assets, a minimum pension liability equal to this difference is reflected in the consolidated balance sheets by recognizing an additional minimum pension liability. Unrecognized prior service cost is amortized by the straight-line method over the average remaining service period of employees. Unrecognized actuarial loss is recognized by amortizing a portion in excess of 10% of the greater of the projected benefit obligations or the market-related value of plan assets by the straight-line method over the average remaining service period of employees.

- 32 -

Non-Consolidated Results of Kyocera Corporation (parent company)

for the Six Months Ended September 30, 2006

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

Date	of the board of directors’ meeting for the interim results : October 30, 2006

Payment

date of interim dividends : December 5, 2006

1. Results for the six months ended September 30, 2006 :

(1) Results of operations :


	Japanese yen
	Six months ended September 30,						Year ended March 31, 2006
	2006			2005			Year ended March 31, 2006
Net sales	¥	259,738 million		¥	220,901 million		¥	477,379 million
% change from the previous period		17.6	%		(11.8	)%
Profit from operations		21,284 million			12,383 million			39,937 million
% change from the previous period		71.9	%		(41.9	)%
Recurring profit		32,844 million			26,903 million			68,182 million
% change from the previous period		22.1	%		(23.0	)%
Net income		33,655 million			31,865 million			68,712 million
% change from the previous period		5.6	%		55.3	%

Earnings per share	¥	179.08		¥	169.97		¥	366.07

Notes :

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


Six months ended September 30, 2006		187,932,385 shares
Six months ended September 30, 2005		187,478,104 shares
Year ended March 31, 2006		187,513,918 shares

2. Change in accounting policies : None

- 33 -

(2) Financial position :


	Japanese yen
	September 30,						March 31, 2006
	2006			2005			March 31, 2006
Total assets	¥	1,471,385 million		¥	1,343,060 million		¥	1,389,396 million
Net assets		1,191,940 million			1,100,768 million			1,132,261 million

Net assets to total assets		81.0	%		82.0	%		81.5	%

Net assets per share	¥	6,339.95		¥	5,871.53		¥	6,030.17
Notes : Total number of shares outstanding as of:


September 30, 2006		188,004,780 shares
September 30, 2005		187,475,323 shares
March 31, 2006		187,754,750 shares

Total number of treasury stock as of :

September 30, 2006		3,304,510 shares
September 30, 2005		3,833,967 shares
March 31, 2006		3,554,540 shares

2. Forecast for the year ending March 31, 2007 :


	Japanese yen
	Year ending March 31, 2007
Net sales	¥	520,000 million
Recurring profit		75,000 million
Net income		61,000 million

Earnings per share	¥	324.46

3. Dividends:

Cash dividends per share


	Japanese yen
	Interim dividends	Year-end dividends	Total
Year ended March 31, 2006	50.00	50.00	100.00

Year ended March 31, 2007 (result)	50.00	—	100.00
Year ended March 31, 2007 (forecast)	—	50.00	100.00

Note : With regard to forecasts set forth above, please refer to the accompanying “Forward Looking Statements” on page 19.

- 34 -

BALANCE SHEETS


	Yen in millions
	September 30, 2006				March 31, 2006				September 30, 2005
	Amount			%	Amount			%	Amount			%
Current assets :
Cash and bank deposits	¥	119,336			¥	136,870			¥	142,633
Trade notes receivable		46,376				43,325				39,963
Trade accounts receivable		96,306				90,073				84,134
Marketable securities		37,997				19,331				208
Finished goods and merchandise		17,818				17,588				17,450
Raw materials		16,546				14,152				18,353
Work in process		20,416				17,104				18,710
Supplies		745				751				553
Deferred income taxes		16,590				15,375				15,144
Short-term loans to subsidiaries		14,372				1,316				2,191
Other accounts receivable		8,048				9,012				7,302
Other current assets		6,904				3,401				1,913
Allowances for doubtful accounts		(164	)			(142	)			(133	)

Total current assets		401,290		27.3		368,156		26.5		348,421		25.9

Non-current assets :
Tangible fixed assets :
Buildings		35,770				36,978				36,411
Structures		2,197				2,268				2,165
Machinery and equipment		47,358				44,113				40,804
Vehicles		26				25				30
Tools, furniture and fixtures		7,679				7,477				7,578
Land		33,381				33,323				33,323
Construction in progress		947				4,533				5,783

Total tangible fixed assets		127,358		8.6		128,717		9.3		126,094		9.4

Intangible assets :
Patent rights and others		13,365				14,298				11,234

Total intangible assets		13,365		0.9		14,298		1.0		11,234		0.8

Investments and other assets :
Investments in securities		577,884				536,019				519,536
Investments in subsidiaries and affiliates		262,627				278,817				278,675
Investments in subsidiaries and affiliates other than equity securities		27,054				27,033				27,033
Long-term loans		22,659				30,428				31,581
Long-term prepaid expenses		3,051				3,785				4,296
Long-term deposits		34,000				—				—
Security deposits		1,880				1,918				1,922
Other investments		571				592				569
Allowances for doubtful accounts		(354	)			(367	)			(351	)
Allowances for impairment loss on investments		—				—				(5,950	)

Total investments and other assets		929,372		63.2		878,225		63.2		857,311		63.9

Total non-current assets		1,070,095		72.7		1,021,240		73.5		994,639		74.1

Total assets	¥	1,471,385		100.0	¥	1,389,396		100.0	¥	1,343,060		100.0

- 35 -


	Yen in millions
	September 30, 2006					March 31, 2006					September 30, 2005
	Amount			%		Amount			%		Amount			%
Current liabilities :
Trade accounts payable	¥	56,667				¥	49,570				¥	45,926
Other payables		20,763					29,659					25,250
Accrued expenses		8,014					7,610					5,799
Income taxes payables		13,052					14,200					10,700
Deposits received		2,738					2,315					2,519
Accrued bonuses		10,447					10,109					9,849
Accrued bonuses for directors		34					—					—
Warranty reserves		4,596					521					332
Allowances for sales returns		143					163					208
Other current liabilities		1,066					713					669

Total current liabilities		117,520		8.0			114,860		8.3			101,252		7.5

Non-current liabilities :
Long-term accounts payable		3,425					5,309					5,026
Deferred income taxes		142,667					118,557					115,828
Accrued pension and severance costs		14,585					17,236					19,046
Retirement allowances for directors and executive officers		968					889					820
Other non-current liabilities		280					284					320

Total non-current liabilities		161,925		11.0			142,275		10.2			141,040		10.5

Total liabilities		279,445		19.0			257,135		18.5			242,292		18.0

Stockholders’ equity
Common stock		—		—			115,703		8.3			115,703		8.6
Capital surplus:
Additional paid-in capital		—					192,555					192,555
Total capital surplus		—		—			192,555		13.9			192,555		14.3

Retained earnings:
Legal reserves		—					17,207					17,207
General reserve		—					558,721					558,721
Unappropriated retained earnings		—					69,245					41,838

Total retained earnings		—		—			645,173		46.4			617,766		46.0


Net unrealized gain on other securities		—		—			207,973		15.0			206,169		15.4

Treasury stock, at cost		—		—			(29,143	)	(2.1	)		(31,425	)	(2.3	)

Total stockholders’ equity		—		—			1,132,261		81.5			1,100,768		82.0

Total liabilities and stockholders’ equity		—		—		¥	1,389,396		100.0		¥	1,343,060		100.0


Net assets

Stockholders’ equity:
Common stock		115,703		7.8			—		—			—		—
Capital surplus:
Additional paid-in capital		192,555					—					—
Total capital surplus		192,555		13.1			—		—			—		—

Retained earnings:
Legal reserves		17,207					—					—
Other retained earnings:
Reserve for special depreciation		1,612					—					—
Reserve for research and development		1,000					—					—
Reserve for dividends		1,000					—					—
Reserve for retirement benefits		300					—					—
Reserve for overseas investments		1,000					—					—
General reserve		603,837					—					—
Unappropriated retained earnings		43,394					—					—

Total retained earnings		669,350		45.5			—		—			—		—

Treasury stock, at cost		(27,109	)	(1.8	)		—		—			—		—
Total stockholders’ equity		950,499		64.6			—		—			—		—

Difference of appreciation and conversion:
Net unrealized gains on other securities		241,441		16.4			—		—			—		—

Total net assets		1,191,940		81.0			—		—			—		—

Total liabilities and net assets	¥	1,471,385		100.0			—		—			—		—

- 36 -

STATEMENTS OF INCOME


	Yen in millions
	Six months ended September 30,								Increase (Decrease) %		Year ended March 31, 2006
	2006					2005					Year ended March 31, 2006
	Amount			%		Amount		%			Amount		%
Net sales	¥	259,738		100.0		¥	220,901	100.0	17.6		¥	477,379	100.0
Cost of sales		201,260		77.5			174,053	78.8	15.6			367,835	77.1

Gross profit		58,478		22.5			46,848	21.2	24.8			109,544	22.9
Selling, general and administrative expenses		37,194		14.3			34,465	15.6	7.9			69,607	14.5

Profit from operations		21,284		8.2			12,383	5.6	71.9			39,937	8.4

Non-operating income :
Interest and dividend income		9,955		3.8			13,557	6.1	(26.6	)		26,441	5.5
Foreign currency transaction gains, net		622		0.2			306	0.2	103.2			437	0.1
Other non-operating income		3,003		1.2			3,078	1.4	(2.4	)		6,652	1.4

Total non-operating income		13,580		5.2			16,941	7.7	(19.8	)		33,530	7.0

Non-operating expenses :
Interest expense		2		0.0			2	0.0	(21.2	)		14	0.0
Other non-operating expenses		2,018		0.8			2,419	1.1	(16.5	)		5,271	1.1

Total non-operating expenses		2,020		0.8			2,421	1.1	(16.5	)		5,285	1.1

Recurring profit		32,844		12.6			26,903	12.2	22.1			68,182	14.3

Non-recurring gain		10,753		4.2			22,252	10.1	(51.7	)		28,889	6.1
Non-recurring loss		484		0.2			5,153	2.4	(90.6	)		5,992	1.3

Income before income taxes		43,113		16.6			44,002	19.9	(2.0	)		91,079	19.1
Income taxes – current		14,176		5.4			11,248	5.1	26.0			20,233	4.2
Refund of income taxes – previous years		(4,356	)	(1.7	)		—	—	—			—	—
Income taxes – deferred		(362	)	(0.1	)		889	0.4	—			2,134	0.5

Net income		33,655		13.0			31,865	14.4	5.6			68,712	14.4


Unappropriated retained earnings brought forward from the previous year		—					9,974					9,974
Net realized loss on treasury stock, at cost		—					1					67
Interim dividends		—					—					9,374

Unappropriated retained earnings at the end of the period		—				¥	41,838				¥	69,245

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STATEMENT OF CHANGES IN NET ASSETS


	Yen in millions
	Six months ended September 30, 2006
	Stockholders’ equity																						Difference of appreciation and conversion		Total net assets
	Common stock		Capital surplus		Retained earnings														Trea- sury stock		Total stock- holders’ equity		Net unreali- azed gains on other securities	Total differece of appre- ciation and conversion
			Aditional paid-in capital	Total Capital surplus	Legal reserve	Other retained earnings											Total retained earnings
			Aditional paid-in capital	Total Capital surplus	Legal reserve	Reserve for special depre- ciation		Reserve for research and develop- ment	Reserve for dividends	Reserve for retire- ment benefits	Reserve for overseas invest- ments	General reserve	Unappro- priated retained earnings		Total other retained earnings		Total retained earnings
Balance, March 31, 2006	¥	115,703	192,555	192,555	17,207	1,584		1,000	1,000	300	1,000	553,837	69,245		627,966		645,173		(29,143	)	924,288		207,973	207,973	1,132,261

Changes in net assets
Appropriation to reserve for special depreciation		—	—	—	—	623		—	—	—	—	—	(623	)	—		—		—		—		—	—	—
Reversal of reserve for special depreciation		—	—	—	—	(595	)	—	—	—	—	—	595		—		—		—		—		—	—	—
Appropriation to general reserve		—	—	—	—	—		—	—	—	—	50,000	(50,000	)	—		—		—		—		—	—	—
Dividends		—	—	—	—	—		—	—	—	—	—	(9,387	)	(9,387	)	(9,387	)	—		(9,387	)	—	—	(9,387	)
Directors’ bonuses		—	—	—	—	—		—	—	—	—	—	(68	)	(68	)	(68	)	—		(68	)	—	—	(68	)
Net income		—	—	—	—	—		—	—	—	—	—	33,655		33,655		33,655		—		33,655		—	—	33,655
Purchase of treasury stock		—	—	—	—	—		—	—	—	—	—	—		—		—		(104	)	(104	)	—	—	(104	)
Reissurance of treasury stock		—	—	—	—	—		—	—	—	—	—	(23	)	(23	)	(23	)	2,138		2,115		—	—	2,115
Net change in items other than stockholders’ equity		—	—	—	—	—		—	—	—	—	—	—		—		—		—		—		33,468	33,468	33,468
Total changes in net assets		—	—	—	—	28		—	—	—	—	50,000	(25,851	)	24,177		24,177		2,034		26,211		33,468	33,468	59,679

Balance, September 30, 2006		115,703	192,555	192,555	17,207	1,612		1,000	1,000	300	1,000	603,837	43,394		652,143		669,350		(27,109	)	950,499		241,441	241,441	1,191,940

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Summary of significant accounting policies:

1. Valuation of assets:

(1)	Securities:


Held-to-maturity securities:		Amortized cost method
Investments in subsidiaries and affiliates:		Cost determined by the moving average method

Other securities


Marketable:		Based on market price of the closing date of the interim financial period (Unrealized gains and losses on those securities are reported in net assets and cost is determined by the moving average method.)
Non-marketable:		Cost determined by the moving average method

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

(3)	Inventories:

Finished goods, merchandise and work in process:

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

Raw materials and supplies:

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

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

2. Depreciation of fixed assets:

Tangible fixed assets:

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

The principal estimated useful lives are as follows:


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

Intangible fixed assets and long-term prepaid expenses:

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

3. Accounting for allowances and accruals:

(1)	Allowances for doubtful accounts:

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

Certain allowances are provided for estimated uncollectible receivables.

(2)	Allowances for impairment losses on investments:

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

(3)	Accrued bonuses:

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

(4)	Accrued bonuses for Directors:

Allowances for Directors are provided based upon the amounts expected to be paid to Directors.

(5)	Warranty reserves

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

(6)	Allowances for sales returns

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

(7)	Accrued pension and severance costs:

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

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

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

(8)	Retirement allowances for Directors and Executive officers

Retirement allowances for Directors are provided at an estimated amount in accordance with Kyocera Corporation’s internal reguation.

- 39 -

4. Lease transactions:

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

5. Income taxes for the interim periods:

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

6. Consumption tax:

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

Changes in presentations of financial statements

Accounting Standards for Presentation of Net Assets in the Balance Sheet

New Accounting Standards for Presentation of Net Assets in the Balance Sheet and the Guideline on Accounting Standards for Presentation of Net Assets in the Balance Sheet was effective from the six months ended September 30, 2006.

The amount which is equal to the former stockholders’ equity is ¥1,191,940 million.

Net assets shown in the balance sheet at September 30, 2006 was presented in accordance with the revised accounting standard.

Accounting Standard for Allowances for Directors

New Accounting Standard for Director’s Bonus was effective from the six months ended September 30, 2006.

As a result, profit from operations, recurring profit and income before income taxes decreased by ¥34 million, respectively, compared to the previous method.

- 40 -

Notes to the balance sheets:

1. As the financial institutions were not operated on September 30, 2006 that was the regular weekend day off, ¥1,235 million of matured notes receivable were not settled and included in notes receivables on the balance sheet.


	Yen in millions
	September 30, 2006		March 31, 2006		September 30, 2005
2. Accumulated depreciation of tangible fixed assets	¥	316,136	¥	311,516	¥	310,429

3. Equity security pledged as collateral

Investments in WILLCOM, INC.		—	¥	17,812	¥	17,812
Corresponding liability
WILLCOM, INC.’s long-term debt from financial institutions *		—	¥	113,752	¥	121,615

* All capital investors of WILLCOM INC. pledge their investment in equity security as collateral for this long-term debt.

4. Guarantees:

Guarantee in the form of commitment	¥	27	¥	1,198	¥	1,293
Guarantee in the form of letters of awareness	¥	2,948	¥	6,407	¥	6,517

5. Temporary paid consumption tax and the temporary received consumption tax are offset and included in other accounts receivables in the balance sheets.

Notes to the statements of income:


	Yen in millions
	Six months ended September 30,				Year ended March 31, 2006
	2006		2005		Year ended March 31, 2006
1. Major items in non-recurring gain:

Gain on sale of investments in a subsidiary and an affiliate	¥	9,084	¥	17,593	¥	17,593
Reversal of accrued pension and severance costs	¥	850		—		—
Gain on sale of investment securities	¥	613	¥	30	¥	30
Gain on disposal of tangible fixed assets	¥	202	¥	115	¥	779
Reversal of allowances for doubtful accounts for a subsidiary		—	¥	4,505	¥	4,505
Reversal of allowances for impairment losses on investments		—		—	¥	5,950

2. Major items in non-recurring loss:

Loss on disposal of tangible fixed assets	¥	365	¥	367	¥	1,189
Loss on devaluation of investment in securities	¥	117	¥	281	¥	282
Loss on devaluation of investment in a subsidiary		—	¥	4,437	¥	4,437
Loss on transfer of investment in securities		—	¥	67	¥	67

3. Depreciation and amortization:

Tangible fixed assets	¥	12,177	¥	10,600	¥	24,328
Intangible assets	¥	1,200	¥	986	¥	2,080

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Notes to the statement of changes in net assets:

Types and numbers of treasury stock


	Shares in thousands
	March 31, 2006	Six months ended September 30, 2006		September 30, 2006
	March 31, 2006	Increase	Decrease	September 30, 2006
Common stock	3,555	11	261	3,305

Total	3,555	11	261	3,305


Reason for the increase
Purchase of shares constituting less than one unit		11 thousand shares
Reason for the decrease
Exercise of stock acquisition rights		260 thousand shares
Sale of shares constituting less than one unit		1 thousand shares

- 42 -

Notes to marketable securities:

Market value for investment in a subsidiary:


Yen in millions
September 30, 2006
Carrying Amount		Market value		Difference
¥	65,904	¥	251,878	¥	185,974

Yen in millions
March 31, 2006
Carrying Amount		Market value		Difference
¥	65,904	¥	251,093	¥	185,189

Yen in millions
September 30, 2005
Carrying Amount		Market value		Difference
¥	65,904	¥	174,135	¥	108,231

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LOGO

Supplemental Information

Consolidated Financial Results

for the Six Months Ended September 30, 2006

KYOCERA Corporation

October 30, 2006

1. Six-months Trend of Net Sales and Income from continuing

operations before income taxes and minority interest

LOGO

Note: Kyocera sold Kyocera Leasing Co., Ltd., a subsidiary engaged in financing, and as a result, operating results and gain on sales for Kyocera Leasing Co., Ltd. for the first half have been recorded as income from discontinued operations. Previous figures in fiscal 2005 and 2006 have been retroactively reclassified.

2. Consolidated Financial Highlights


	(Yen in millions)
	Fiscal 2005				Fiscal 2006				Fiscal 2007
	1st half		2nd half		1st half		2nd half		1st half
	Amount	% to net sales	Amount	% to net sales	Amount	% to net sales	Amount	% to net sales	Amount	% to net sales	% change from the previous period
Net sales	596,904	100.0	576,756	100.0	542,238	100.0	631,306	100.0	615,390	100.0	13.5
Profit from operations	60,340	10.1	37,320	6.5	33,764	6.2	65,931	10.4	63,128	10.3	87.0
Income from continuing operations before income taxes and minority interest	65,420	11.0	38,593	6.7	44,329	8.2	72,908	11.5	72,385	11.8	63.3
Net income	42,549	7.1	3,359	0.6	24,214	4.5	45,482	7.2	53,493	8.7	120.9

Capital expenditures	28,631	4.8	34,529	6.0	50,637	9.3	38,223	6.1	37,239	6.1	D26.5
Depreciation	27,250	4.6	31,449	5.5	28,034	5.2	34,908	5.5	33,682	5.5	20.1
R&D expenses	27,432	4.6	26,966	4.7	29,328	5.4	28,108	4.5	30,257	4.9	3.2

US$ exchange rate (yen)	110		105		109		117		115
Euro exchange rate (yen)	133		137		136		140		146

Please refer to accompanying note on page 1.

3. Operating Profit Trend by Segment

LOGO


	(Yen in millions)
	Fiscal 2005		Fiscal 2006		Fiscal 2007
	1st half	2nd half	1st half	2nd half	1st half
Net sales
Components Business	291,849	266,698	277,937	303,882	318,523
Equipment Business	265,873	261,966	217,773	275,590	247,690
Others	52,188	58,407	56,049	61,360	60,850
Adjustments and eliminations	D13,006	D10,315	D9,521	D9,526	D11,673
Total	596,904	576,756	542,238	631,306	615,390

Operating profit
Components Business	46,640	34,980	32,564	45,238	49,799
Equipment Business	7,148	D1,267	D160	19,092	13,576
Others	4,455	5,250	3,186	5,797	3,748
Total	58,243	38,963	35,590	70,127	67,123

“Components Business” consists of Fine Ceramic Parts Group, Semiconductor Parts Group, Applied Ceramic Products Group and Electronic Device Group.

“Equipment Business” consists of Telecommunications Equipment Group, Information Equipment Group and Optical Equipment Group.

“Total operating profit” represents the amount excluding corporate gain and loss, equity method gain and loss, and adjustments and eliminations, from income from continuing operations before income taxes and minority interest.

Please refer to accompanying note on page 1.