[Shareholder's Meeting] Attached Documents (Convocation Notice for The 80th Ordinary General Meeting of Shareholders) (PDF: 166KB)

05af4ee1-5920-47b6-883c-b3867e0f99cc.pdf

BUSINESS REPORT

FOR THE 80TH FISCAL TERM

FROM APRIL 1, 2015

TO MARCH 31, 2016

10-1, Higashikotari 1-chome, Nagaokakyo-shi, Kyoto, Japan Murata Manufacturing Co., Ltd.

Tsuneo Murata President

Statutory Representative Director

Member of the Board of Directors

Business Report

1. Matters Concerning Status of the Corporate Group

   From April 1, 2015

   to March 31, 2016

2. Main business areas

   The Murata Manufacturing Co., Ltd. Group (the "Group") is an electronic component manufacturer that primarily engages in manufacturing and sales of electronic components and related products primarily of ceramic material, Components (such as capacitors and piezoelectric products) and Modules (communications modules and power supplies), and conducts vertically integrated technological development and production, from inorganic and organic materials, to ceramics and electronic components. Through the creation of original products that utilize a technological base featuring uniquely developed and accumulated materials development, process development, product design, production technology, and software, analysis, and evaluation to support the above, the Group conducts sales for various electronic components that are used in products such as AV devices, communications devices, computers and peripheral devices, automotive electronics, and domestic electric devices.

3. Business progress and results

4. Business conditions

   In the global economic environment during the year ended March 31, 2016, while the U.S. economy continued to steadily grow due to good employment numbers and domestic consumption, a weakened economy in China and a decline in resource prices hinted at a global economic slowdown. Although Europe gradually recovered, its current situation was unclear.

   In the electronics market, the smartphone market continuously grew despite a weakening of the growth rate. Moreover, improvements in the functions of smartphones contributed to an increased number of electronic components. As a result, the electronic components market showed significant continuous growth. Additionally, increased production of vehicles and advanced electrification contributed to an increase in demand for electronic components.

   Under these circumstances, the net sales of the Group were 1,210,841 million yen for the period under review, up 16.0% from the year ended March 31, 2015 with the average exchange rate against the U.S. dollar rising by 10.20 yen from the previous year end.

   Operating income was 275,406 million yen, up 28.4%, income before income taxes was 279,173 million yen, up 17.1%, and net income attributable to Murata Corporation was 203,776 million yen, up 21.5%, all increased significantly from the previous fiscal year. The primary factors for the profit increase were the launching of a high value-added new product, the increase in capacity utilization, comprehensive cost reductions and depreciation of the yen, while negative factors included price declines and increased fixed costs due to expansion in production capacity.

5. Sales by product category

   80th Fiscal Term (From April 1, 2015 to March 31, 2016)
   Orders received	Net sales
   Amount	Amount	Component ratio as a percentage of net sales		Year-on-year change
   Capacitors	Millions of yen	Millions of yen	%	%
   	366,881	367,319	30.4	109.9
   Piezoelectric Components	178,696	161,880	13.4	132.8
   Other Components	229,021	230,967	19.2	103.6
   Components total		774,598	760,166	63.0		111.9
   Communication Modules Power Supplies and Other Modules	390,519	395,197	32.7		128.3
   	51,029	51,652	4.3		97.5
   Modules total		441,548	446,849	37.0		123.8
   Total		1,216,146	1,207,015	100.0		116.1

   Net sales by product category for the period under review are as follows. (Orders and sales by product category)

   Sales of Components for the period under review increased by 11.9% year-on-year to 760,166 million yen.

   [Capacitors]

   The Capacitors category includes multilayer ceramic capacitors (MLCCs).

   For the period under review, sales of MLCCs, the main product in this category, rose due to an increase in sales of smartphones and demand of automotive electronics backed by advanced electrification of automobiles, although sales growth for AV devices, computers and peripherals slowed down.

   As a result, overall net sales increased by 9.9% year-on-year to 367,319 million yen. [Piezoelectric Components]

   The Piezoelectric Components category includes SAW (surface acoustic wave) filters, ceramic resonators, piezoelectric sensors, and ceramic filters.

   For the period under review, sales of SAW filters greatly increased due to the widespread penetration of multi-band smartphones mainly in China. In addition, sales of ultrasonic sensors increased for automotives. Sales of actuators increased for HDD.

   As a result, overall net sales increased by 32.8% year-on-year to 161,880 million yen. [Other Components]

   Other components include inductors (coils), EMI (electro-magnetic interference) suppression filters, connectors, sensors and thermistors.

   For the period under review, sales of connectors and TOKO products increased significantly for smartphones, although inductors (coils) and thermistors decreased.

   As a result, overall net sales increased by 3.6% year-on-year to 230,967 million yen.

   Sales of Modules for the period under review increased by 23.8% year-on-year to 446,849 million yen.

   [Communication Modules]

   The Communication Modules category includes short-range wireless communication modules, multilayer ceramic devices and circuit modules. For the period under review, sales of RF sub modules greatly increased for smartphones.

   As a result, overall net sales increased by 28.3% year-on-year to 395,197 million yen.

   [Power Supplies and Other Modules]

   This product category includes power supplies.

   For the period under review, sales of power supplies for car audio equipment decreased. As a result, overall net sales decreased by 2.5% year-on-year to 51,652 million yen.

6. Challenges facing the Company

   The global electronics market is expected to grow in the medium to long term, driven by new demand for sophisticated and multifunctional electronic components and increased demand for consumer electronics market centering on smartphones. The automotive market is also expected to grow due to its advanced electrification. Additionally, it is expected that future demand for electronics components will expand and shift to new applications which will become the next primary market such as energy, and healthcare / medical.

   For the rapidly growing markets, the Group intends to strengthen their sales and marketing abilities and enhance production capacity, launch new, high value-added products earlier than their competitors and contribute to the trend of reduced size and thickness of electronic devices, add more manifold functions, and also create new business models and customer value. In addition, with TOKO INC., which became a wholly owned subsidiary on May 1, 2016, the Group expects to achieve greater synergies at an early stage through an integrated operation of the corporate group and further enhance their businesses.

   In addition, the Group will seek to improve profitability by increasing production capacity outside Japan to reduce costs and mitigate foreign exchange fluctuations. Together with the increase in capacity at existing factories in China, Thailand, Malaysia and the Philippines, we intend to further expand production capacity outside Japan.

   In regards to its responsibility to society, the Group places equal emphasis on economic, environmental and social perspectives, and strives to fulfill their corporate responsibilities from each perspective. As for corporate governance, the Group established the "Corporate Governance Guidelines" during the fiscal year under review in order to emphasize principles underlying corporate governance of the Group and consolidate the operating structure.

   Additionally, in order to further promote corporate governance and improve corporate value, the Group plans to transition to a Company with Audit and

   Supervisory Committee structure upon receiving approval for the required amendments to the Articles of Incorporation at the Ordinary General Meeting of Shareholders of the Group scheduled to be held in June 2016.

   The Group positions corporate governance as one of its most important management issues, and while taking into consideration feedback from all stakeholders, the Group is building a sound corporate management structure and system. Concrete actions to be taken by the Group include improving management efficiency, strengthening management-monitoring functions, plan and implement management strategies, and ensuring through compliance with all relevant laws and regulations.

7. Status of capital expenditures

   During the period under review, the Group had capital expenditures totaling 172,540 million yen.

   Primary components were 122,845 million yen in reinforcement and rationalization of production facilities of the Company and its subsidiaries, 14,681 million yen in the acquisition of land and buildings, and 12,419 million yen in reinforcement of research and development facilities.

   No eliminations or sales were carried out hat had a significant effect on production capabilities.

8. Status of property and profits

9. Status of property and profits of the corporate group

   (Millions of yen, %)

   77th Fiscal Term From April 1, 2012 to March 31, 2013		78th Fiscal Term From April 1, 2013 to March 31, 2014			79th Fiscal Term From April 1, 2014 to March 31, 2015			80th Fiscal Term From April 1, 2015 to March 31, 2016
   Amou	nt	Amount		Year-on- year change	Amount		Year-on- year change	Amount		Year-on- year change
   Net sales	681,021		846,716		124.3	1,043,542		123.2	1,210,841		116.0
   Income before Income taxes	59,534		132,336		222.3	238,400		180.1	279,173		117.1
   Net income attributable to Murata Corporation	42,386		93,191		219.9	167,711		180.0	203,776		121.5
   Total assets	1,087,144		1,243,687		114.4	1,431,303		115.1	1,517,784		106.0
   Shareholders' equity	860,963		955,760		111.0	1,123,090		117.5	1,229,159		109.4
   Basic earnings attributable to Murata Corporation per share	Yen 200.81		Yen 440.63		-	Yen 792.19		-	Yen 962.55		-
   Shareholders' equity ratio	79.2	%	76.8	%	-	78.5	%	-	81.0	%	-

   (Notes)	1.	The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of
   America.
   2.	The basic earnings attributable to Murata Corporation per share are calculated based on "Accounting Standards Codification (ASC)
   260: Earnings Per Share" published by the Financial Accounting Standards Board (FASB) of the United States of America.
   3.	Amounts of less than one million yen are rounded to the nearest million yen.

10. Status of property and profits of the Company

(Millions of yen, %)

77th Fiscal Term From April 1, 2012 to March 31, 2013		78th Fiscal Term From April 1, 2013 to March 31, 2014			79th Fiscal Term From April 1, 2014 to March 31, 2015			80th Fiscal Term From April 1, 2015 to March 31, 2016
Amount		Amount		Year-on-year change	Amount		Year-on-year change	Amount		Year-on-year change
Net sales	535,155		635,028		118.7	752,660		118.5	889,121		118.1
Income before income taxes and extraordinary items	31,195		57,892		185.6	120,840		208.7	95,732		79.2
Net income	30,601		51,231		167.4	98,694		192.6	80,721		81.8
Total assets	616,263		714,395		115.9	855,498		119.8	840,658		98.3
Net assets	397,445		430,671		108.4	499,356		115.9	533,022		106.7
Basic earnings per share	Yen 144.98		Yen 242.23		-	Yen 466.18		-	Yen 381.29		-
Shareholders' equity ratio	64.5	%	60.3	%	-	58.4	%	-	63.4	%	-

(Note) Amounts of less than one million yen are rounded to the nearest million yen.