Annual Report 2005 (PDF:2.4MB)

Annual Report 2005 (PDF:2.4MB)
For the year ended March 31, 2005
YOUR FUTURE AWAITS
ANNUAL REPORT 2005
Into the future...
Sharp opens yet another door.
Driven by one-of-a-kind technology, Sharp has the ability to roll out unique products never-seen-before in Japan or indeed the world. Moving on, Sharp will
open new doors that lead us into the future with innovative products that both
inspire and delight.
65V
「LC-65GE1」
AQUOS, the world’s largest* 65V-inch digital high-definition LCD TV
*As of June 3, 2005, for digital high-definition LCD TVs
Financial Highlights
Sharp Corporation and Consolidated Subsidiaries
Years Ended March 31
Yen
(millions)
Net Sales
Net Income
Net Income per Share of Common Stock
U.S. Dollars
(thousands)
2001
2002
2003
2004
2005
2005
¥ 2,012,858
38,527
34.20
¥ 1,803,798
11,311
10.10
¥ 2,003,210
32,594
29.37
¥ 2,257,273
60,715
55.37
¥ 2,539,859
76,845
70.04
$ 23,960,934
724,953
0.66
13.00
14.00
15.00
18.00
20.00
0.19
943,505
2,003,641
1,126,647
926,856
1,966,909
1,110,598
902,116
2,004,832
1,089,855
943,532
2,150,250
1,090,672
1,004,326
2,385,026
1,091,075
9,474,773
22,500,245
—
49,101
46,518
46,633
46,164
46,751
—
(yen and U.S. dollars)
Cash Dividends per Share of Common Stock
(yen and U.S. dollars)
Shareholders’ Equity
Total Assets
Number of Shares Outstanding
(thousands of shares)
Number of Employees
(Notes) 1. The translation into U.S. dollar figures is based on ¥106=U.S.$1, the approximate exchange rate prevailing on March 31, 2005. All dollar figures herein
refer to U.S. currency.
2. The computation of net income per share is based on the weighted average number of shares of common stock outstanding during each fiscal year.
3. The number of shares outstanding is net of treasury stock.
4. Effective April 1, 2002, the Company adopted the new accounting standard for earnings per share and related guidance (Accounting Standards Board
Statement No.2, “Accounting Standard for Earnings Per Share” and Financial Standards Implementation Guidance No.4, “Implementation Guidance for
Accounting Standard for Earnings Per Share”), prior year figures have not been restated.
Net Sales (billions of yen)
Net Income (billions of yen)
Net Income per Share (yen)
76
2,539
70
2,257
2,012
2,003
60
55
1,803
38
34
32
29
11
01
02
03
04
05
01 SHARP ANNUAL REPORT 2005
01
02
10
03
04
05
01
02
03
04
05
Business Philosophy
We do not seek merely to expand our business volume.
Rather, we are dedicated to the use of our unique,
innovative technology to contribute to the culture,
benefits, and welfare of people throughout the world.
It is the intention of our corporation to grow
hand-in-hand with our employees,
encouraging and aiding them to reach their full potentials
and improve their standards of living.
Contents
01
03
06
Financial Highlights
A Message to Our Shareholders
Sharp Business Strategy
LCD TVs and Large-Size LCDs
Small- and Medium-Size LCDs
Photovoltaic Power Generation Systems
Mobile Phones
Home Appliances
13
15
17
19
20
48
Our future prosperity is directly linked to the prosperity of
our customers, dealers, and shareholders ... indeed,
the entire Sharp family.
Corporate Social Responsibility (CSR)
R&D and Intellectual Property
Product Group Outline
Board of Directors
Business Creed
Sharp Corporation is dedicated to two principal ideals:
“Sincerity and Creativity”
By committing ourselves to these ideals, we can derive genuine satisfaction
from our work, while making a meaningful contribution to society.
Sincerity is a virtue fundamental to humanity ... always be sincere.
Harmony brings strength ... trust each other and work together.
Politeness is a merit ... always be courteous and respectful.
Creativity promotes progress ... remain constantly aware of the need to innovate and improve.
Courage is the basis of a rewarding life ... accept every challenge with a positive attitude.
Financial Section
Investor Information
Forward-Looking Statements
This annual report contains certain statements describing the future plans, strategies and performance of Sharp Corporation and its consolidated subsidiaries (hereinafter “Sharp”).
These statements are not based on historical or present fact, but rather assumptions and estimations based on the current information available. These plans, strategies and performance are subject to known and unknown risks, uncertainties and other factors. Sharp’s actual performance, business activities and financial position may differ materially from
the assumptions and estimates supplied on account of such risks, uncertainties and other factors. Sharp is under no obligation to update these forward-looking statements in light
of new information, future events or any other factors. The risks, uncertainties and other factors that could affect actual results include, but are not limited to:
(1) The economic situation in which Sharp operates
(2) Sudden, rapid fluctuations in demand for Sharp’s products and services, as well as intense price competition
(3) Changes in foreign exchange markets (particularly in the yen/U.S. dollar and euro markets)
(4) Sharp’s ability to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products and services
(5) Regulations such as trade restrictions in other countries
SHARP ANNUAL REPORT 2005 02
A Message to Our Shareholders
INSIGHT
Pursuing Our One-of-a-Kind Strategy
Fiscal 2004 in Review
Sharp recorded historic highs in both net sales and profits for the second consecutive year in fiscal 2004 ended
March 31, 2005. Consolidated net sales increased by 12.5%
over the previous year to ¥2,539.8 billion, operating income
climbed 24.1% to ¥151.0 billion and net income rose 26.6%
to ¥76.8 billion.
Taking a look at each segment, Consumer/Information
Products posted growth in sales of LCD TVs, particularly largesize models. Notably, a new 45V-inch digital high-definition
LCD TV (HDTV) that features a full-spec high-definition LCD
panel received high plaudits from the market. We also enjoyed
strong sales of unique products such as 3G mobile phones
equipped with our original high-value-added LCDs, and a
Superheated Steam Oven which roasts food using water in the
form of superheated steam. In Electronic Components, we significantly increased sales of LCDs. We expanded sales of LCD
panels for TVs by boosting production capacity at the
President Katsuhiko Machida
Kameyama Plant. Sales gains were also registered in LCD
panels for mobile terminals. Focus was placed especially on
System LCDs. We also increased sales of solar cells by
expanding our global production capacity. (For further details
of its financial results, please refer to the Financial Section on
page 20.)
03 SHARP ANNUAL REPORT 2005
Sharp considers distributing profits to shareholders to be
Sharp will push assertively forward to ensure the protec-
one of the most important management issues. To this end,
tion of our earth by thoroughly considering all aspects of our
we declared an annual dividend for fiscal 2004 of 20 yen per
business activities.
share, an increase of 2 yen per share over the previous year
(an interim dividend of 10 yen per share and a year-end divi-
Bolster Our Spiral Strategy
dend of 10 yen).
Over the years, Sharp’s “Spiral Strategy,” the creation of
Mid-Term Management Strategy
highly distinctive products incorporating unique devices, has
Achieve “zero global warming impact”
propelled strong corporate growth. Moving forward, we will
continue to strengthen the development of cutting-edge
Sharp embraces the high ideal of contributing to the
devices, driven by proprietary technologies, in particular lever-
preservation of the natural environment through our unique
aging our core competency in LCDs. By employing these
proprietary technologies, and our target is to become an “envi-
devices, we will accelerate the creation of unrivalled products
ronmentally advanced company.” More specifically, by further
befitting the new era.
emphasizing technologies related to energy-creating and ener-
Through these efforts, we are committed to becoming a
gy-saving products, we have set our new corporate vision to
valued one-of-a-kind enterprise that can outstrip the ever-
be a company that has “zero global warming impact by 2010.”
intensifying global competition to realize stable and sustainable
This means that we will strive to limit to the greatest extent pos-
growth.
sible the amount of greenhouse gas emissions resulting from
Sharp’s business activities around the world, while at the same
Fulfill Corporate Social Responsibility (CSR)
time, significantly increasing reductions in greenhouse gas
emissions based on the energy-creating effects of solar cells
Sharp has always endeavored to contribute to the wellbe-
and the energy-saving effects of new products manufactured
ing of society through the creation of unique products and
by Sharp. The idea is for the amount of greenhouse gas emis-
services. We pride ourselves on having practiced environmen-
sions reduced to exceed the amount emitted by fiscal 2010.
tally friendly business activities and also on having been
SHARP ANNUAL REPORT 2005 04
engaged in a variety of social activities. In recent times, amid
Implement Human Resources Strategy to Boost
increasing awareness of social responsibility for corporate
Employee and Organizational Quality
activities and higher expectations from the general public, we
aim to garner an even greater level of trust from our stakehold-
With the objective of improving the quality of individual and
ers across the globe by bolstering our CSR efforts based on
organizational performance to support the implementation of
our business creed, “Sincerity and Creativity.” (Please refer to
business strategy, Sharp constantly works to strengthen
Corporate Social Responsibility (CSR) on page 13 or the
human resource management. Initiatives include enhancing
Company’s Environmental and Social Report 2005 for further
our core personnel development policies, instituting a results-
details.)
oriented compensation system that is closely linked to an individual’s performance, reforming our personnel system and cre-
Enhance Corporate Governance
ating an environment for productive work that brings job satisfaction. These moves will enable us to further increase corpo-
Sharp has always been a manufacturing and technology
rate competitiveness.
oriented company. In an effort to further strengthen our manufacturing competency, we are committed to improving speed
In order to achieve stable growth in such turbulent times,
and quality of managerial decisions. As a manufacturing com-
the Sharp Group will strive for improvement through “one-of-a-
pany, our business activities are limited to the development,
kind management” to further increase corporate value. We ask
productions and sales of products and devices, while at the
all shareholders for their continued support as we forge ahead.
same time there is a strong interrelation between these elements. Accordingly, we believe that giving all directors opera-
July 2005
tional responsibility at the divisional level to make decisions
after consulting with one another serves to clarify their reciprocal managerial responsibilities. It also facilitates nimble, responsive business execution.
From this viewpoint, we intend to further strengthen the
current Board of Directors/Corporate Auditors System, which
allows management and manufacturing divisions to work very
closely, enabling the business to expand. Through this system,
we can enhance corporate governance.
05 SHARP ANNUAL REPORT 2005
Katsuhiko Machida
President
Open the Door to Tomorrow
Sharp Business Strategy
SHARP ANNUAL REPORT 2005 06
Sharp Business Strategy
LCD TVs and Large-Size LCDs
LCD TVs: AQUOS, leading the flat-panel TV market
1
Pushing towards the realization of our vision to change all CRT TVs
into LCD TVs, Sharp launched the AQUOS series of LCD TV sets in
2001. The AQUOS line has gained high plaudits from the market for its
cutting-edge design coupled with high-resolution, low power consumption, a long service life and space saving features. Accumulated produc-
No. 1 Plant
tion volume topped 5 million units in December 2004.
As broadcasting around the world continues to shift to digital and
high-definition formats, demands for greater resolution in video images
on a big screen are growing stronger. As a result, the value of LCD TVs
with high-resolution displays has taken a quantum leap forward.
In response, Sharp is strengthening its lineup of LCD TVs equipped
with full-spec high-definition LCD panels that can precisely display content in high-definition format exactly as broadcast. We seek to establish
the reputation that, for viewing high-definition, LCD TVs are the best.
Kameyama Plant in Mie Prefecture
Sharp will also aggressively introduce new models with ultra-large
screens, an area previously held for Plasma Display Panel (PDP) TVs,
beginning with the AQUOS 65V-inch digital high-definition TV.
Looking ahead, we aim to bolster our dominance in flat-panel TVs by
strengthening the competitiveness of our AQUOS series, which includes
improving image quality and performance by incorporating our proprietary System LSIs, promoting innovation in design and production, and
slashing costs.
Large-size LCDs: LCD panels “Made in Kameyama”
The Kameyama No. 1 Plant went online in January 2004, complete
with a start-to-finish production process that handles from the manufac-
65V
ture of large-size LCD panels to the assembly of LCD TVs. This facility
employs sixth generation glass substrates (1,500 x 1,800mm), ideal for
the production of LCD panels for 30-inch-class TVs, the demand for
which continues to expand. The glass substrate input capacity at the
plant started off at 15,000 sheets a month, and we raised this number to
45,000 sheets a month in April 2005. The LCD panels manufactured
here have helped to establish a high brand image in Japan from the perspective of quality and are known as panels “Made in Kameyama.”
AQUOS, the world’s largest* 65V-inch digital high-definition LCD TV
*As of June 3, 2005, for digital high-definition LCD TVs
07 SHARP ANNUAL REPORT 2005
Sharp has also begun construction of the Kameyama No. 2 Plant
which is expected to go online in October 2006. This plant will adopt
eighth generation glass substrates optimal for the production of 40-inchclass and 50-inch-class models, which are expected to increase dramatically in demand in the coming years. The eighth generation sheets are
the world’s largest at 2,160 x 2,400mm. Besides increasing the size of
the glass substrates, we plan to further enhance competitiveness by
introducing new technologies that enable us to drastically cut down on
material costs and by implementing an innovative plant layout.
No. 2 Plant
In line with escalating demand for LCD TVs, we will continue to expand
our production capacity and improve the performance of LCD panels for
TVs through the development of one-of-a-kind LCD technology.
2
Small- and Medium-Size LCDs
Pioneering the market with one-of-a-kind LCD technology
The market for small- and medium-size LCDs has been expanding
steadily for mobile equipment such as mobile phones and portable game
(Note) No. 2 Plant is a conceptual diagram.
32V
37V
consoles.
Sharp possesses a number of one-of-a-kind technologies and seeks
to assert its dominance over rival companies by keeping them as “blackbox” as well as utilizing intellectual property rights. Mobile ASV
(Advanced Super View) LCD technology is an example of our latest oneof-a-kind LCD technology. This display, which brings together wide-
45V
viewing-angle ASV LCD technology nurtured in AQUOS LCD TVs, and
Advanced-TFT LCD technology that makes possible bright, vivid display
both indoors and out, is ideal for mobile equipment. It is now being
embedded in such equipment as late model mobile phones.
AQUOS digital high-definition LCD TVs
In May 2005, we increased the production capacity of Mie No. 3
Plant, our key facility for System LCDs, to boost our advantage in the
market.
In the coming years, we intend to expand sales through the cultivation of new markets, along with conventional applications in mobile
phones and PDAs.
Electronic dictionary PW-C8000
Mobile phone V603SH
SHARP ANNUAL REPORT 2005 08
Sharp Business Strategy
Photovoltaic Power Generation Systems
Contributing to the spread of photovoltaic power generation as the world’s No.1 manufacturer
3
Sharp first succeeded in the mass-production of solar cells in 1963.
In the ensuing years, we have led the market with the development and
manufacture of various photovoltaic power generation systems. We have
been the world’s leading producer of solar cells in terms of production
volume for five consecutive years from 2000 to 2004*.
With the Kyoto Protocol now in effect, awareness regarding the preser-
Solar Town in Matsudo, Chiba, Japan
vation of the global environment is stronger than ever, and photovoltaic
power generation systems are attracting more and more attention around
the world. Corporations are making it a priority to engage themselves in
environmental protection and energy conservation from the standpoint of
CSR, and demand for photovoltaic power generation systems is expected
to grow considerably not only for residential but also industrial use.
Aiming to strengthen photovoltaic products designed for industrial
application, we will expand our range of crystalline photovoltaic modules,
including high-power modules for large-scale systems and enhancedstrength modules designed for installation on the top of tall buildings. We
Photovoltaic power plant in Sonnen, Bavaria, Germany
are also developing new thin-film photovoltaic modules. These modules
are translucent and can be installed as windows in buildings or as the wall
surfaces of glass buildings. We anticipate that their adoption as a building
material will expand.
In fiscal 2004, Sharp brought to the market the Illuminating Solar Panel
“Lumiwall” in which energy-efficient, long-life, high-brightness LEDs for illumination are combined with thin-film “see-through” solar cells for power generation. During the day, Lumiwall panels admit external light while generating
electricity, and can be used for illumination at night. This development is
expected to change the conventional image of photovoltaic power generation.
Lumiwall panels placed at the ceiling of
the front entrance of Katsuragi Plant
At our Katsuragi Plant in Nara Prefecture, we increased annual solar
cell production capacity to 400MW starting in January 2005. With the
United Kingdom and the United States engaging in module assembly in
addition to Japan, we are now in a position to facilitate timely global supply.
We will work to spread photovoltaic power generation by developing
products with more varieties of application, slashing costs through technological innovation and expanding our production capacity.
* According to PV News, a photovoltaic newsletter in the U.S.A. (April 2005 issue)
▲ Back (light-emitting surface)
09 SHARP ANNUAL REPORT 2005
▲ Front (solar cell surface)
Illuminating Solar Panel “Lumiwall,” in which thin-film solar
cells are integrated with LEDs
Sharp integrates technology with know-how to meet diverse
requirements in diverse settings.
Satellites
Unmanned lighthouse
Water purification plant
(Photo courtesy of the Japan Aerospace
Exploration Agency (JAXA))
(Photo courtesy of Japan Coast Guard)
(Nara, Japan)
Bruchwegstadion football stadium
Salzburg airport
Central Bank of the Netherlands
(Mainz, Germany)
(Salzburg, Austria)
(Amsterdam, the Netherlands)
Ceronix, Inc.
Noyon Village, Mongolia
Junior high school
(California, U.S.A.)
(Yunnan, China)
SHARP ANNUAL REPORT 2005 10
Sharp Business Strategy
Mobile phones equipped with Sharp’s unique Mobile
ASV LCD and high-performance CCD camera module
Vodafone 902SH
Mobile Phones
Creating distinctive mobile phones through unique devices
4
Third generation telecommunication services are spreading in popularity not only in Japan, but Europe, Asia and the rest of the world. In line with
this proliferation, sophistication in mobile phones is progressing at a startling pace. High-speed, high-capacity communication enables such functionalities as sending and receiving high-resolution images, playing downloaded music and movies and videophone.
In the midst of these advancements, Sharp has released a series of
products equipped with high-resolution CCD camera modules featuring
a 2X optical zoom and auto-focus, and with Mobile ASV LCDs. These
items have received high praise from the market. Going forward, we will
promote the creation of distinctive mobile phones leveraging the competencies we possess in our unique devices, including LCD panels, CCD
FOMA® SH901iS
FOMA is a registered trademark of NTT DoCoMo, Inc. in Japan and other countries.
and CMOS camera modules, and flash memories.
We constructed a new central building at our Hiroshima Plant and gathered key divisions such as R&D and product planning there. This has enabled
us to create a system that facilitates much faster development than before.
We seek to increase cost competitiveness as well by standardizing
components, streamlining design and expanding production in China
especially for overseas models.
CCD (left) and CMOS (right) camera modules for mobile phones
11 SHARP ANNUAL REPORT 2005
Water Oven
Roasting food in superheated steam to provide low calorie cooking
Plasmacluster Ion air purifier
Eliminating harmful substances in the air for more comfortable living
5
Home Appliances
Contributing to people’s wellbeing with healthconscious and environmentally friendly products
Amid increasing global awareness towards the environment and personal
health, the roles of home appliances have taken on a whole new look. Sharp has
been pushing forward with initiatives to transform home appliances from mature
products into growth products by introducing novel products in full consideration
of people’s physical wellbeing and environment preservation.
Sharp introduced a home cooking appliance that roasts food using water in
Ag+ Ion Coating washing machine
Controlling bacteria and odors
the form of superheated steam. The “Healsio” Water Oven has huge benefits for
the health-conscious user as it causes a portion of the fat and salt contained in
foods to drop away while retaining nutrients such as vitamin C. The product has
proven to be a hit in Japan. Sharp has already started selling Healsio in the United
States and Asian countries outside Japan and plans to introduce it in Europe next.
In addition, we employ Plasmacluster Ions, our proprietary air-purifying technology that deactivates harmful substances in the air such as viruses, mold and
allergens, in all categories of Sharp’s air conditioning products that include dehumidifiers and air purifiers. This technology is also utilized in a variety of other manu-
Kitchen waste composter
facturers’ products that include shower toilets, central air conditioning systems, car
Breaking down organic kitchen waste and minimizing odor with
unique biotechnology
air conditioners and elevators. Cumulative sales of Plasmacluster Ion generating
devices topped eight million units in March 2005. We intend to expand our lineup
of products incorporating this technology and boost sales in overseas markets.
Other health-conscious and environmentally friendly products which we are
promoting are a washing machine with an Ag+ (silver) Ion Coating function that
controls bacteria and odors and inhibits static electricity on clothes, a kitchen
waste disposal system that breaks down organic food waste by means of our
unique biotechnology, and a dishwasher that provides hard-water ion washing
Hard-water ion dishwasher
Using salt for washing through a unique ion exchange system
and soft-water rinsing with salt. Through such innovative products, we aim to
stimulate new demand.
SHARP ANNUAL REPORT 2005 12
Corporate Social Responsibility (CSR)
With “Sincerity and Creativity,” we endeavor to contribute to the wellbeing of society
Sharp Group’s basic stance towards CSR is to strive to fulfill our responsibility to society as a
manufacturer through the creation of products built with the creed of “Sincerity and
Creativity.” This ideal forms the foundations of Sharp’s management. Sharp will continue to
offer never-seen-before products and novel lifestyles and to ensure the mutual prosperity of
all stakeholders in all our business activities.
Enhancing corporate ethics and compliance
Sharp has instituted a charter of conduct as a model to help all
employees understand and fulfill Sharp’s Business Philosophy and
Business Creed in their daily business lives.
In May 2005, the former Sharp Charter of Conduct was revised
into the “Sharp Group Charter of Corporate Behavior,” which is a set
of principles to guide our corporate behavior, and the “Sharp Code of
Conduct,” which clarifies the conduct expected of every employee
and director of the company.
The new Sharp Group Charter of Corporate Behavior, which
places the utmost priority on legal compliance and business ethics,
further clarifies “contributions to achieving a sustainable society” and
“efforts toward good communication with various stakeholders.”
Efforts towards socially responsible investment (SRI)
Besides providing the opportunity for ongoing training to all
At Sharp, as part of our efforts to disclose the most appropriate
employees, we constantly strive to boost awareness of CSR by issu-
information to our stakeholders, we respond in good faith to the sur-
ing CSR e-mail newsletters. To ensure there are no breaches of the
veys of research institutes regarding SRI.
law in our business operations, we have assigned a Chief of Legal
Affairs at each business group and affiliate company.
As of June 30, 2005, Sharp was a constituent of the following
three SRI indices (equity indices) in Japan and overseas:
• FTSE4Good Global Index (UK); September 2004
• Ethibel Sustainability Index (Belgium)
• Morningstar Socially Responsible Investment Index (Japan); July 2004
The Sharp Group Charter of Corporate Behavior
• Practice of Fair and Open Management
• Enhancement of Customer Satisfaction
• Disclosure of Relevant Information/Protection and Security of Information
• Contribution to Conservation of the Global Environment
• Sound, Equitable Economic Activities
• Respect for Human Rights
• Creating a Safe, Fair, Motivating Work Environment
• Harmony with the Community
• Implementation of The Sharp Group Charter of Corporate Behavior
13 SHARP ANNUAL REPORT 2005
Aiming to be an environmentally advanced company
ed as “Super Green Factories,” which have environmental perform-
Sharp aims to be an environmentally advanced company that
ance that goes beyond a normal Green Factory. We plan to con-
can simultaneously handle both “business expansion” and “envi-
vert all manufacturing sites, including those overseas, into Green
ronmental preservation.” We achieve this through the development
Factories by fiscal 2007.
of products and devices based on our unique technologies that
boast outstanding environmental performance. Efforts include a
In the years to come, we will focus on the development of
focus on solar cells, which are clean-energy-creating devices. We
energy-saving and energy-creating products, and reducing envi-
have been the world’s leading producer of solar cells in terms of
ronmental burden generated at our factories to realize our vision of
production volume for five consecutive years from 2000 to 2004*.
becoming a company that has “zero global warming impact by
Furthermore, the sales proportion of “Green Seal Products,” which
2010.”
have been evaluated and certified as offering excellent environmen-
* According to PV News, a photovoltaic newsletter in the U.S.A. (April 2005 issue)
tal performance based on our own standards, increased from 54%
in fiscal 2003 to 74% in fiscal 2004. We are currently strengthening
Social contribution activities
the development of “Super Green Products” with even higher levels
Sharp launched the Sharp Green Club with its labor union with
of environmental performance. We began evaluating and certifying
the aim of contributing to local communities as a good corporate
the environmental performance of our devices in fiscal 2004.
citizen. This club coordinates regional beautification and forestation
programs around the world.
Sharp also offers educational support through its Solar Academy
Achieving “Zero Global Warming Impact by 2010”
to primary, junior high and high schools so pupils come to underReductions surpass
emissions
Million t-CO2
Greenhouse gas
emissions
1.44
1.51
Greenhouse gas
reductions 0.14
0.24
2003
2004
stand that environmental and energy-related issues affect all of us.
For further details on Sharp’s social and environmental activities, please see the
Company’s Environmental and Social Report 2005 or access the Sharp homepage: http://sharp-world.com/corporate/eco/index.html
2010
(fiscal year)
(Note) The greenhouse gas reduction amount is a result of using photovoltaic power generation and does not include the amount reduced though the use of new energy-saving
products.
Sharp aims to limit to the greatest extent possible the amount of greenhouse gas emissions resulting from Sharp’s business activities around
the world, while at the same time, significantly increasing reductions in
greenhouse gas emissions based on the energy-creating effects of solar
cells and the energy-saving effects of new products manufactured by
Sharp. The idea is for the amount of greenhouse gas emissions reduced
to exceed the amount emitted by fiscal 2010.
Sharp refers to “Green Factories” as those factories that main-
Nara Wakakusayama Cleanup Campaign
(Japan)
Solar Academy
(Japan)
tain a high level of environmental consciousness, determined by
our unique set of evaluation and assessment criteria. All production
sites in Japan have cleared the Green Factory standards. Among
them, the Kameyama Plant and the Mie Plant have been designat-
Environment Day at a local school
(Malaysia)
SHARP ANNUAL REPORT 2005 14
R&D and Intellectual Property
One-of-a-kind technology and an aggressive patent strategy support Sharp’s
one-of-a-kind products
Sharp actively develops new technologies for the creation of one-of-a-kind products and
devices, while at the same time, conducts basic research for future businesses. As for intellectual property, an aggressive patent strategy helps us to build strong business foundations.
R&D Strategy
Sharp’s basic R&D strategy is “selection and concentration,” with
User Interface
the objective being to strike a balance between enhancing existing
Sharp promotes the development of a user interface for displays
businesses and pursuing creativity that brings rise to new future busi-
that makes LCD-applied products easier to use. In LCD font display
nesses. Based on this strategy, we focus our R&D on one-of-a-kind
technology, we developed a scalable font technology in which users
products and devices, especially LCD applied products and solar
can generate the size of lettering they
cells, as well as on businesses that will drive future growth such as
desire with a single set of font data. In
digital home appliances and health and environment related prod-
addition, our unique XMDF (Mobile
ucts. All the while, we strive to make the most of opportunities gener-
Document Format) enhances the func-
ated by industry-academia-government collaboration to improve
tionality of the displays of mobile equip-
R&D efficiency and minimize R&D risk.
ment. Cumulative sales of products
equipped with this XMDF technology
Development of new technologies
had hit 10 million units as of March
Mobile LCD technology
2005.
XMDF contents
In 2004, Sharp successfully developed and applied Mobile ASV
LCD technology, which is ideal for mobile equipment. This technolo-
Next-generation solar cells and fuel cells
gy integrates wide-viewing-angle ASV LCD technology nurtured in
Sharp is working to develop a crystalline solar cell that realizes
AQUOS LCD TVs, into Advanced-TFT LCD technology that makes
high conversion efficiency by creating contours in the surface that
possible bright, vivid display both indoors and out.
trap sunlight through diffused reflection as well as a thin-film solar cell
that has different manufacturing process, allowing substantial reduc-
Sharp has developed and mass-produces System LCDs which
tion in silicon materials.
employ CG-Silicon technology*. This technology enables high performance transistors equivalent to those made of monocrystalline silicon on
We also conduct the R&D of organic solar cells and succeeded
a glass substrate. In the future, we will strive for further innovation in CG-
in realizing a conversion efficiency of 10.2% (liquid cell; 5mm square),
silicon technology and Mobile ASV LCD technology in order to create
which is among the highest in the world.
displays befitting mobile equipment in the ubiquitous era.
We are currently developing high-performance nanotechnology-
* This technology was developed
jointly with Semiconductor Energy
Laboratory Co., Ltd. (SEL)
enabled fuel cells for mobile equipment jointly with a U.S. venture
company.
Zaurus: Personal mobile tool equipped
with System LCD
15 SHARP ANNUAL REPORT 2005
[ Sharp’s R&D Facilities ]
SLE/Sharp Laboratories of Europe, Ltd.
STE/Sharp Telecommunications of Europe, Ltd.
Sharp Corporation
Corporate Research and Development Group
SLA/Sharp Laboratories of America, Inc.
Display Technology Development Group
Production Technology Development Group
Designated Researcher Laboratories
Division Laboratories
STT/Sharp Technology (Taiwan) Corp.
SSDI/Sharp Software Development India Pvt. Ltd.
SLE staff engaged in the development of violet
laser diode
SLA staff for software development
Intellectual Property Strategy
High-definition image transmission technology
Sharp has developed an intellectual property strategy to secure a
In addition to developing technology to display high-definition
competitive edge with one-of-a-kind products and devices by
images on LCD panels, we are promoting R&D into technology to
aggressively promoting patent right obtainment and keeping tech-
store and transmit high-definition images. We have developed high
nologies as “black-box.“
quality AV transmission technology that ensures stable reception of
AV content and realizes high QoS (Quality of Service) for wireless
At Sharp, we have clearly delineated the fields that are central to
transmission at the 5GHz band (IEEE802.11a/e). We will apply this
each business, and have exhaustively filed patent applications in
technology to the transmission of more than one high-definition
those fields. We have assigned a patent specialist in each of these
image over UWB (Ultra Wide Band) and PLC (Power Line
core business areas to conduct strategic patent development close
Communication).
to the frontline.
Millimeter wave transmission technology
As a result, Sharp now has around 14,500 patents in Japan and
In cooperation with a CS broad-
around 17,000 patents overseas. Among these, we have a total of
casting company, we developed a
approximately 6,900 patents worldwide in LCD-related businesses,
shared reception system based on
our core competency*.
60GHz band millimeter wave radio
transmission technologies for build-
Sharp utilizes these patents to safeguard its strategic business-
ings and condominiums. A remark-
es. In order to make the most effective use of our patents, we pursue
60GHz band millimeter wave receiver
able feature of the system is that it is
a proactive patent strategy. We scrutinize the products of other com-
possible to wirelessly supply all channels on the CS, the BS digital
panies in the industry, and if a patent infringement is found, we issue
and the terrestrial digital broadcasting services merely by adding an
an appropriate warning, and in certain cases, will take more aggres-
extra set of millimeter wave transmitter and receiver. We will pursue
sive action such as filing a lawsuit.
the practical application of this shared reception system after con-
*Number of patents as of April 2005
ducting verification tests.
SHARP ANNUAL REPORT 2005 16
Product Group Outline
Sharp Corporation and Consolidated Subsidiaries
Years Ended March 31
Consumer/Information Products
Audio-Visual and
Communication Equipment
Main Products
Sales
(billions of yen)
With this product group, Sharp
aims to revolutionize audio-visual
entertainment and mobile communications towards new echelons of
excitement and convenience via
our market-pioneering products
such as LCD TVs and mobile
phones.
Home Appliances
LCD color televisions, color televisions, TV/VCR combos, projectors,
digital broadcast receivers, DVD
recorders, DVD players, LCD camcorders, VCRs, 1-bit digital audio
products, MD players, CD component systems, MD pickups, facsimiles, telephones, mobile phones, PHS
(personal handy-phone system) terminals
Main Products
972
837
746
03
04
05
Sales
(billions of yen)
Sharp creates unique products
such as those incorporating
Plasmacluster Ion technology and
ovens that cook with superheated
steam. Going forward, we seek to
develop more innovative products
in consideration of people’s health
and the environment to ensure
comfortable living.
Refrigerators, microwave ovens,
superheated steam ovens, air conditioners, washing machines, drumtype washer/dryers, vacuum cleaners, kerosene heaters, electric
heaters, home network control units,
air purifiers, dehumidifiers, small
cooking appliances
223
03
Information Equipment
Main Products
208 212
04
05
Sales
(billions of yen)
Sharp provides products and services for the ubiquitous network
environment through the development of its solutions business and
a variety of products that include
personal computers, POS systems
and digital copier/printers.
Personal computers, personal mobile
tools, electronic dictionaries, calculators, POS systems, handy data terminals, electronic cash registers, workstations, LCD color monitors, PC
software, digital copier/printers, electrostatic copiers, PC peripherals, supplies for copiers and printers, FA
equipment, ultrasonic cleaners
376 392
03
17 SHARP ANNUAL REPORT 2005
04
416
05
Electronic Components
ICs
Main Products
Sales
(billions of yen)
These key devices, such as CCD
and CMOS imagers, LSls for LCDs
and flash memory, greatly enhance
the uniqueness of Sharp’s products. Sharp seeks to develop
unequivocally unique electronic
devices to support the evolution of
products such as LCD TVs and
mobile phones.
Flash memory, combination memory,
CCD and CMOS imagers, LSIs for
LCDs, analog ICs, microcomputers
169
124
03
LCDs
Main Products
140
04
05
Sales
(billions of yen)
As the world’s leading company in
LCDs, Sharp promises to continue
pushing the boundaries by utilizing
cutting-edge technologies and
state-of-the-art facilities to develop
new, distinctive LCDs appropriate
for the 21st century.
TFT LCD modules, Duty LCD modules, System LCD modules, EL display modules
543
421
346
03
Other Electronic Components
Main Products
04
05
Sales
(billions of yen)
The key word in this product group
is “optics.” Sharp seeks to expand
its business through devices such
as solar cells, laser diodes and
LEDs. A wide range of devices,
including RF data communication
units, contribute to the advancement of digital network equipment.
Electronic tuners, RF/infrared data
communication units, network components, components for satellite
broadcasting, laser diodes, hologram
lasers, DVD pickups, optoelectronics,
regulators, switching power supplies,
solar cells, LEDs
227
254
185
03
04
05
SHARP ANNUAL REPORT 2005 18
Board of Directors
(As of June 23, 2005)
President
Katsuhiko Machida
Corporate Senior
Executive Vice President
Hiroshi Saji
Corporate Senior
Executive Director
Akihiko Kumagai
Corporate Senior
Executive Director
Toshishige Hamano
Corporate Senior
Executive Director
Masaaki Ohtsuka
Corporate Senior
Executive Director
Shigeo Nakabu
Corporate Senior
Executive Director
Kenji Ohta
Corporate Senior
Executive Director
Masafumi Matsumoto
Corporate
Executive Directors
Yoshiaki Ibuchi
Mikio Katayama
Toshio Adachi
Corporate Directors
Takashi Nakagawa
Itsuro Kato
Yoshiki Sano
Takashi Okuda
Tetsuo Onishi
Toshihiko Fujimoto
Takuji Okawara
19 SHARP ANNUAL REPORT 2005
Takashi Tomita
Takashi Nukii
Toru Chiba
Shigeaki Mizushima
Kohichi Takamori
Yoshisuke Hasegawa
Corporate Auditors
Tomohiro Gonda
Mitsuhiko Iwasaki
Michihiro Ishii
Hiroshi Chumon
Corporate Senior
Executive Director
Akira Mitarai
Financial Section
21
22
27
29
30
31
32
46
47
Five-Year Financial Summary
Financial Review
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ Report
Consolidated Subsidiaries
SHARP ANNUAL REPORT 2005 20
Five-Year Financial Summary
Sharp Corporation and Consolidated Subsidiaries
Years Ended March 31
Yen
(millions)
2001
2001
2003
U.S. Dollars
(thousands)
2004
2005
2005
Net Sales ......................................................... ¥ 2,012,858 ¥ 1,803,798 ¥ 2,003,210 ¥ 2,257,273 ¥ 2,539,859 $ 23,960,934
Domestic Sales ..............................................
1,057,405
1,143,548
983,660
12,544,443
1,329,711
1,149,775
Overseas Sales ..............................................
945,805
1,113,725
820,138
11,416,491
1,210,148
863,083
Operating Income ...........................................
99,466
121,670
73,585
1,424,717
151,020
105,913
Income before Income Taxes and Minority Interests...
57,325
102,720
19,863
1,209,283
128,184
70,724
Net Income ......................................................
32,594
60,715
11,311
724,953
76,845
38,527
Shareholders’ Equity.......................................
902,116
943,532
926,856
9,474,773
1,004,326
943,505
Total Assets ....................................................
2,004,832
2,150,250
1,966,909
22,500,245
2,385,026
2,003,641
Capital Investment*1 .......................................
170,254
248,178
147,478
2,296,113
243,388
162,393
Depreciation and Amortization.......................
145,818
159,831
133,947
1,660,085
175,969
152,455
R&D Expenditures*2 ........................................
152,145
162,991
144,744
1,656,208
175,558
149,722
Sales by Product Group*3
Audio-Visual Equipment ...............................
—
—
—
—
—
389,464
Home Appliances.........................................
—
—
—
—
—
252,950
Communication and Information Equipment ...
—
—
—
—
—
641,438
Consumer/Information Products .....................
—
—
—
—
—
1,283,852
Electronic Components...................................
—
—
—
—
—
729,006
Total ...............................................................
—
—
—
—
—
2,012,858
Audio-Visual and Communication Equipment....
746,404
837,390
655,679
9,175,122
972,563
629,870
Home Appliances.........................................
223,890
208,473
236,335
2,000,604
212,064
252,950
Information Equipment .................................
376,106
392,833
382,062
416,310
3,927,453
401,032
Consumer/Information Products .....................
1,346,400
1,438,696
1,274,076
1,600,937
15,103,179
1,283,852
I Cs ..............................................................
124,773
169,754
116,099
140,915
1,329,387
180,604
LCDs ..........................................................
346,646
421,741
261,295
543,804
5,130,226
374,520
Other Electronic Components .....................
185,391
227,082
152,328
2,398,142
254,203
173,882
Electronic Components...................................
656,810
818,577
529,722
8,857,755
938,922
729,006
Total ...............................................................
2,003,210
2,257,273
1,803,798
23,960,934
2,539,859
2,012,858
Sales by Region*4
Japan..............................................................
—
—
983,660
—
—
1,149,775
North America.................................................
—
—
369,934
—
—
377,062
Asia.................................................................
—
—
225,017
—
—
252,179
Europe ............................................................
—
—
188,840
—
—
190,521
Other ..............................................................
—
—
36,347
—
—
43,321
Total ...............................................................
—
—
1,803,798
—
—
2,012,858
Japan..............................................................
1,057,405
1,143,548
983,660
1,329,711
12,544,443
—
The Americas ..................................................
336,815
308,807
370,490
372,184
3,511,170
—
Asia.................................................................
270,618
279,161
174,017
207,186
1,954,585
—
Europe ............................................................
235,168
330,772
188,840
407,455
3,843,915
—
Other ..............................................................
103,204
194,985
86,791
223,323
2,106,821
—
Total ...............................................................
2,003,210
2,257,273
1,803,798
2,539,859
23,960,934
—
Per Share of Common Stock*5
Net Income ..................................................... ¥
Diluted Net Income .........................................
Cash Dividends ..............................................
Shareholders’ Equity .......................................
34.20 ¥
33.87
13.00
837.45
10.10 ¥
—
14.00
834.56
Other Financial Data
Return on Equity (ROE) ...................................
Return on Assets (ROA) ..................................
Percentage of Shareholders’ Equity ..................
4.2%
2.0%
47.1%
1.2%
0.6%
47.1%
Yen
29.37 ¥
29.15
15.00
827.51
3.6%
1.6%
45.0%
U.S. Dollars
55.37 ¥
54.73
18.00
864.77
70.04 $
69.60
20.00
920.09
6.6%
2.9%
43.9%
7.9%
3.4%
42.1%
0.66
0.66
0.19
8.68
—
—
—
amount of properties for lease is included in capital investment.
*12 The
Design and development expenses are included in R&D expenditures.
*3 For
the year ended March 31, 2002, product groupings have been recategorized and changed from Audio-Visual Equipment, Home Appliances, Communication and Information
* Equipment,
and Electronics Components to Audio-Visual and Communication Equipment, Home Appliances, Information Equipment, ICs, LCDs and Other Electronic Components.
For the year ended March 31, 2003, some items previously included in Audio-Visual and Communication Equipment have been recategorized and are included in Information Equipment.
In this connection, “Sales by Product Group” of 2001 and 2002 have been restated to conform with the 2003 presentation.
4 For the year ended March 31, 2003, the Company recategorized its segmentation for “Overseas sales” information. Consequently “China”, which had been previously included in “Asia”
segment, was reclassified into the “Other” segment. “Central & South America”, which had been previously included in the “Other” segment, was combined with “North America” into “The
Americas” segment.
In this connection, “Sales by Region” information of 2002 has been restated to conform with the 2003 presentation.
5 Effective April 1, 2002, the Company adopted the new accounting standard for earnings per share and related guidance (Accounting Standards Board Statement No.2, “Accounting
Standard for Earnings Per Share” and Financial Standards Implementation Guidance No.4, “Implementation Guidance for Accounting Standard for Earnings Per Share”), prior year figures
have not been restated.
*
*
21 SHARP ANNUAL REPORT 2005
Financial Review
Sharp Corporation and Consolidated Subsidiaries
Operations
boost sales of its cutting-edge mobile phones incorporated with
[Outline]
such distinctive devices, especially in Europe. The growth in
Consolidated net sales for the year ended March 31, 2005
sales of these products exceeded sales decrease of
increased by 12.5% compared with the previous fiscal year,
conventional products such as CRT TVs and facsimiles. Sales
to ¥2,539,859 million. Sales in all three groups of
in this group increased by 16.1% to ¥972,563 million.
Consumer/Information
Communication
Products,
Equipment,
Audio-Visual
Home
Appliances
and
and
● Home Appliances
Information Equipment, increased over the previous year. In
Under the persistently tough business environment caused
Electronic Components, LCDs and Other Electronic
by intensifying competition and price erosion, Sharp strove to
Components achieved higher sales than the previous year,
expand its range of unique products, including Water Oven that
while sales of ICs fell below the level of the previous year.
roasts food by superheated steam, and air conditioners and
refrigerators with built-in Plasmacluster Ion generating units. Sales
in this group increased by 1.7% to ¥212,064 million.
[Sales by Product Group]
Consumer/Information Products
● Information Equipment
● Audio-Visual and Communication Equipment
Sharp worked on further sales expansion of LCDs by
As the unique data security functionality of copier/printers were
widening its lineup to meet with the coming digital high-definition
well-received by the market, those sales, especially digital full-
era. Especially, the sales of large-size wide-screen LCD
color copiers, increased. Conversely, sales of PCs declined due
models equipped with LCD panels manufactured at the
to a fall in sales prices. However, sales in this group increased
Kameyama Plant were in good shape. As for mobile phones,
by 6.0% to ¥416,310 million.
in Japan, Sharp worked to expand sales of mobile phones by
rolling out a new series of 3G mobile phones equipped with
Electronic Components
unique electronic devices, including Mobile ASV LCDs and high-
● ICs
Sales of CCD and CMOS imagers exceeded the prior
resolution CCD camera modules. Overseas, Sharp sought to
Net Sales
Sales by Product Group
(billions of yen)
(billions of yen)
2,800
1,000
2,539
2,400
2,000
(Year Ended March 31, 2005)
+16.1%
Fiscal 2003 - Consolidated
Fiscal 2004 - Consolidated
2,257
2,012
Contribution to Sales by Product Group
Other
Electronic
Components
10.0%
(Figures represent changes from the previous fiscal year)
750
2,003
1,803
LCDs
21.4%
+28.9%
1,600
500
Audio-Visual and
Communication
Sales Equipment
38.3%
Net
¥2,539 billion
+6.0%
1,200
800
250
+11.9%
I Cs
5.6%
Information
Equipment
16.4%
+1.7%
-17.0%
400
Home
Appliances
8.3%
0
0
01
02
03
04
05
Audio-Visual Home Information
Appliances Equipment
and
Communication
Equipment
I Cs
LCDs
Other
Electronic
Components
SHARP ANNUAL REPORT 2005 22
year’s sales, notably by camera equipped mobile phones,
year to ¥1,959,658 million. The cost of sales ratio grew from
while sales of flash memory decreased considerably year-
75.9% to 77.2%.
Selling, general and administrative (SG&A) expenses were
on-year due to market sales price erosion. Sales in this group
up ¥6,696 million year-on-year to ¥429,181 million, while the
were down 17.0% to ¥140,915 million.
ratio of SG&A expenses against sales decreased from
● LCDs
18.7% to 16.9%. SG&A expenses included advertising
expenses of ¥51,211 million and employees’ salaries and other
In response to burgeoning demand for LCD panels for
benefits of ¥114,543 million.
TVs, Sharp increased production capacity of large-size
LCDs at its Kameyama Plant to boost sales. Also sales of
As a result, operating income stood at ¥151,020 million,
small- and medium-size LCDs especially applicable to
up ¥29,350 million from the previous year, and the
mobile phones and portable game consoles were
operating income ratio rose from 5.4% to 5.9%.
expanded. Sales of original System LCDs increased to meet
Other expenses, net of other income, increased ¥3,886
the rising demand for high-resolution displays in the market.
million to an other net loss of ¥22,836 million, with the major
Sales in this group rose by 28.9% to ¥543,804 million.
contributing factor being the absence of a gain on sales of
investments in securities (¥4,038 million in the previous year).
● Other Electronic Components
Income before income taxes and minority interests
Sharp increased its production capacity for solar cells at
increased by ¥25,464 million to ¥128,184 million. Net income
its Katsuragi Plant step by step to cope with rising demand
for the year was ¥76,845 million, up ¥16,130 million. Net income
in Japan and overseas. Sales of laser diodes fell far below
per share of common stock was ¥70.04.
levels recorded in the previous year due to a decline in sales
Segment Information
prices. Sales in this group rose by 11.9% to ¥254,203 million.
[By Business Segment]
Sales in the Consumer/Information Products segment
Financial Results
increased by 11.4% over the previous year to ¥1,612,030
Cost of sales rose by ¥246,540 million over the previous
Selling, General and
Administrative Expenses
Cost of Sales
(billions of yen)
2,000
1,959
(%)
(billions of yen)
90
450
(%)
422 429
405
400
1,713
1,600
1,501
85
1,509
Operating Income
389
393
45
(billions of yen)
Net Income
151
150
(%)
(billions of yen)
10
80
40
35
350
300
30
250
25
121
120
8
200
20
150
15
100
10
50
5
75
70
400
6
99
6
73
800
60
60
90
80
1,200
8
76
105
1,340
(%)
40
60
4
30
2
4
38
32
20
2
11
65
0
01
02
03
04
05
Ratio to Net Sales
23 SHARP ANNUAL REPORT 2005
0
0
01
02
03
04
05
Ratio to Net Sales
0
0
01
02
03
04
05
Ratio to Net Sales
0
0
01
02
03
04
05
Ratio to Net Sales
million. Operating income grew 20.2% to ¥57,035 million.
Sales in the Electronic Components segment increased
by 19.2% over the previous year to ¥1,197,315 million, while
operating income rose by 26.4% to ¥93,520 million.
negatively affected profits in this segment. Overall sales in
Europe increased by 20.3% to ¥356,173 million, while
operating income decreased by 39.6% to ¥1,947 million.
In Other, as sales of copier/printers and LCDs
increased, overall sales increased by 54.4% to ¥278,646
million. Operating income rose 21.3% to ¥6,133 million.
[By Geographic Segment]
In Japan, despite slumping sales of flash memory caused
by market price erosion, Sharp posted strong growth in LCD
Capital Investment* and Depreciation
TVs, 3G mobile phones, high-value-added LCDs for mobile
Capital investment for the year was ¥243,388 million, down
equipment and solar cells. As a result, sales increased by 14.4%
1.9% from the previous year. The majority of this was the
over the previous year to ¥2,256,428 million. Operating
investment in LCDs, notably to increase production
income surged 29.3% to ¥138,769 million.
capacity for large-size LCD panels at the Kameyama Plant
In the Americas, despite the appreciation of the yen, brisk
and to enhance the production lines for System LCDs at the
sales of LCD TVs, LCDs and solar cells culminated in an
Mie No. 3 Plant. In addition to this, investments were made
increase in sales of 16.5% to ¥346,200 million. Operating
to strengthen the production capacity of solar cells and bolster
income climbed by 90.6% to ¥2,544 million.
production facilities at overseas subsidiaries in China and the
In Asia, while sales increased in the Information
Americas.
Equipment group and manufacturing components for
With regard to capital investment by segment,
electronics equipment, sales of LCDs for monitors and
Consumer/Information Products was ¥34,588 million and
notebook PCs declined. Consequently, overall sales dipped
Electronic Components was ¥208,800 million.
1.8% to ¥269,486 million. Operating income stood at
Depreciation and amortization for the year increased by
10.1% to ¥175,969 million.
¥2,653 million, down 16.7%.
In Europe, sales of LCD TVs, LCDs and solar cells rose,
* The amount of properties for lease is included in capital investment.
although a marked decline in the sales price of LCD TVs
[Consumer/Information Products]
[Electronic Components]
Sales
Sales
Operating Income
Operating Income
(billions of yen)
(billions of yen)
(billions of yen)
1,800
60
1,200
57
(billions of yen)
1,197
100
93
1,612
1,500
1,004
50
1,447
1,352
1,289
1,279
47
900
43
75
832
73
793
40
1,200
75
34
900
30
600
20
56
625
30
600
50
37
25
300
10
300
0
0
01
02
03
04
05
0
01
02
03
04
05
0
01
02
03
04
05
01
02
03
04
05
SHARP ANNUAL REPORT 2005 24
[Liabilities]
Financial Position
Total assets increased by ¥234,776 million over the
Current liabilities increased by ¥229,506 million over the
previous year to ¥1,179,521 million. Short-term borrowings
previous year to ¥2,385,026 million.
increased by ¥148,974 million to ¥364,551 million. Of this
amount, bank loans rose by ¥20,203 million to ¥105,190
[Assets]
Current assets amounted to ¥1,320,613 million, an
million, commercial paper increased by ¥83,503 million to
increase of ¥172,478 million over the previous year. Cash and
¥165,737 million, and current portion of long-term debt
cash equivalents rose by ¥17,689 million and notes and
increased by ¥45,317 million to ¥93,544 million. Notes and
accounts receivable rose by ¥78,713 million. Meanwhile, short-
accounts payable were ¥613,838 million, an increase of
term investments, including certificates of deposits over three
¥55,719 million, and the ratio against monthly turnover
months and bonds and others, decreased by ¥15,485 million.
decreased from 3.0 to 2.9 months.
While inventories resulted in ¥325,723 million, an
Long-term liabilities were ¥192,291 million, down
increase of ¥52,055 million, the inventory ratio against
¥56,507 million from the previous year. This was due mainly
monthly turnover was 1.5 months, consistent with the
to a decrease of ¥64,911 million in long-term debt, which
previous year. Finished products were up ¥23,738 million to
outweighed an increase of ¥9,220 million in allowance for
¥180,002 million, work in process was up ¥6,572 million to
severance and pension benefits. The decrease in long-term
¥63,763 million, and raw materials were up ¥21,745 million
debt was primarily attributable to the transfer of the current
to ¥81,958 million.
portion of long-term debt to short-term borrowings.
Plant and equipment increased by ¥73,085 million to
¥833,882 million due mainly to investment in the
Interest-bearing debt totaled ¥525,335 million, up
¥84,112 million.
Kameyama Plant.
Investments and other assets stood at ¥230,531 million,
down ¥10,787 million due to the reduction in investments in
[Shareholders’ Equity]
Retained earnings increased by ¥54,546 million over the
previous year to ¥605,440 million, due mainly to the
securities.
Depreciation and
Amortization
Capital Investment
(billions of yen)
Total Assets
(billions of yen)
248
250
243
180
175
(billions of yen)
(billions of yen)
2,500
350
159
152
150
145
200
Inventories
2,000
2,385
2,150
2,004
2,003
1,966
(month)
3.5
325
300
271
284 284
3.0
273
133
170
162
147
150
250
2.5
200
2.0
150
1.5
100
1.0
50
0.5
120
1,500
90
100
1,000
60
50
500
30
0
02
03
04
05
01
02
03
04
05
0
0
0
0
01
01
02
03
04
05
01
02
03
04
05
Ratio to Monthly Turnover
25 SHARP ANNUAL REPORT 2005
increase in net income. Foreign currency translation
Net cash provided by financing activities totaled
adjustments generated a gain of ¥6,482 million owing to
¥57,541 million, up ¥126,502 million. The primary reason for
variation in the year-end exchange rate and as a result, total
this increase was the turnaround from a decrease in short-
shareholders’ equity increased by ¥60,794 million to
term borrowings of ¥38,980 million recorded in the previous
¥1,004,326 million, while the equity ratio was 42.1%.
year to an increase in short-term borrowings of ¥99,713 million.
Cash Flows
Cash and cash equivalents at the end of the year were
¥295,312 million, an increase of ¥17,689 million over the
previous year. Despite an increase in expenses for capital
investments which exceeded proceeds from operating
activities, Sharp procured funds mainly through financing
activities.
Net cash provided by operating activities decreased by
¥30,420 million to ¥219,198 million, mainly as a result of an
increase in inventories of ¥47,762 million accompanying sales
gains, compared with a decrease in inventories of ¥2,037
million recorded in the previous year, which outweighed an
increase of ¥25,464 million in income before income taxes
and minority interests.
Net cash used in investing activities amounted to
¥259,008 million, up ¥89,562 million from the previous year.
The primary factor was an increase of ¥87,259 million in
acquisitions of plant and equipment.
Interest-Bearing Debt
Percentage of
Shareholders’ Equity
Shareholders’ Equity
(billions of yen)
(billions of yen)
600
1,000
1,004
Cash and Cash
Equivalents
(%)
(billions of yen)
50
300
295
47.1 47.1
519
500
45.0
525
950
501
943
42.1
943
926
441
438
271
43.9
40
221
902
900
277
400
231
200
30
850
300
800
20
200
100
750
10
100
700
0
0
0
01
02
03
04
05
01
02
03
04
05
0
01
02
03
04
05
01
02
03
04
05
SHARP ANNUAL REPORT 2005 26
Consolidated Balance Sheets
Sharp Corporation and Consolidated Subsidiaries as of March 31, 2004 and 2005
Yen
(millions)
ASSETS
2004
U.S. Dollars
(thousands)
2005
2005
Current Assets:
Cash and cash equivalents ............................................................................
295,312
$ 2,785,962
15,313
35,306
333,075
76,988
61,503
580,217
Trade.......................................................................................................
376,311
443,758
4,186,396
Installment ...............................................................................................
36,432
48,568
458,189
Nonconsolidated subsidiaries and affiliates ..............................................
15,504
15,197
143,368
Allowance for doubtful receivables...........................................................
(4,018)
(4,581)
(43,217)
Inventories (Note 3).......................................................................................
273,668
325,723
3,072,859
Other current assets (Note 4).........................................................................
80,314
99,827
941,764
Total current assets ...........................................................................
1,148,135
1,320,613
12,458,613
Land..............................................................................................................
52,954
52,474
495,038
Buildings and structures ................................................................................
512,527
550,368
5,192,151
Machinery and equipment .............................................................................
1,425,925
1,505,079
14,198,858
Construction in progress ...............................................................................
65,799
89,870
847,830
2,057,205
2,197,791
20,733,877
(1,296,408)
(1,363,909)
(12,867,066)
760,797
833,882
7,866,811
Investments in securities (Note 2)...................................................................
123,614
103,648
977,811
Investments in nonconsolidated subsidiaries and affiliates .............................
17,068
19,745
186,274
Prepaid expenses and other (Note 4).............................................................
100,636
107,138
1,010,736
241,318
230,531
2,174,821
¥ 2,150,250
¥ 2,385,026
$ 22,500,245
Time deposits................................................................................................
Short-term investments (Note 2) ....................................................................
¥
277,623
¥
Notes and accounts receivable—
Plant and Equipment, at cost (Note 6):
Less-Accumulated depreciation ...................................................................
Investments and Other Assets:
The accompanying notes to consolidated financial statements are an integral part of these statements.
27 SHARP ANNUAL REPORT 2005
Yen
(millions)
LIABILITIES AND SHAREHOLDERS’ EQUITY
2004
U.S. Dollars
(thousands)
2005
2005
Current Liabilities:
Short-term borrowings, including current portion of long-term debt (Note 5) ......
¥
215,577
¥
364,551
$ 3,439,160
Notes and accounts payable—
Trade.......................................................................................................
428,918
511,922
4,829,453
Construction and other............................................................................
119,761
94,409
890,651
Nonconsolidated subsidiaries and affiliates ..............................................
9,440
7,507
70,821
Accrued expenses.........................................................................................
121,343
146,468
1,381,774
Income taxes (Note 4)....................................................................................
32,339
35,850
338,207
Other current liabilities (Note 4) ......................................................................
22,637
18,814
177,491
Total current liabilities.........................................................................
950,015
1,179,521
11,127,557
Long-term debt (Note 5) ................................................................................
225,775
160,864
1,517,585
Allowance for severance and pension benefits (Note 9) .................................
15,789
25,009
235,934
Long-term Liabilities:
Other long-term liabilities (Note 4) ..................................................................
Minority Interests...........................................................................................
7,234
6,418
60,547
248,798
192,291
1,814,066
7,905
8,888
83,849
Contingent Liabilities (Note 8)
Shareholders’ Equity (Note 7):
Common stock:
Authorized —1,982,607 thousand shares
—1,110,699 thousand shares ...............................................
204,676
204,676
1,930,905
Capital surplus...............................................................................................
Issued
262,140
262,283
2,474,368
Retained earnings..........................................................................................
550,894
605,440
5,711,698
Net unrealized holding gains on securities .........................................................
14,176
13,333
125,783
Foreign currency translation adjustments.......................................................
(61,828)
(55,346)
(522,132)
20,027 thousand shares in 2004 and 19,624 thousand shares in 2005 ...
(26,526)
(26,060)
(245,849)
Total shareholders’ equity ..................................................................
943,532
1,004,326
9,474,773
¥ 2,150,250
¥ 2,385,026
$ 22,500,245
Less-Cost of treasury stock:
SHARP ANNUAL REPORT 2005 28
Consolidated Statements of Income
Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2004 and 2005
Yen
(millions)
U.S. Dollars
(thousands)
2004
2005
2005
Net Sales........................................................................................................
¥ 2,257,273
¥ 2,539,859
$ 23,960,934
Cost of Sales .................................................................................................
1,713,118
544,155
1,959,658
580,201
18,487,340
5,473,594
422,485
121,670
429,181
151,020
4,048,877
1,424,717
5,294
(5,844)
(18,400)
(18,950)
102,720
5,446
(5,724)
(22,558)
(22,836)
128,184
51,377
(54,000)
(212,811)
(215,434)
1,209,283
48,971
(7,257)
41,714
61,006
62,795
(12,364)
50,431
77,753
592,406
(116,642)
475,764
733,519
(291)
60,715
(908)
76,845
(8,566)
724,953
Gross profit .........................................................................................
Selling, General and Administrative Expenses ............................................
Operating income ................................................................................
Other Income (Expenses):
Interest and dividend income .......................................................................
Interest expense ..........................................................................................
Other, net ....................................................................................................
Income before income taxes and minority interests .............................
Income Taxes (Note 4):
Current ........................................................................................................
Deferred ......................................................................................................
Income before minority interests ..........................................................
Minority Interests in Income of Consolidated Subsidiaries.........................
Net Income..........................................................................................
¥
¥
$
Yen
2004
U.S. Dollars
2005
2005
Per Share of Common Stock (Note 7):
Net income..................................................................................................
Diluted net income.......................................................................................
Cash dividends............................................................................................
¥
55.37
54.73
18.00
The accompanying notes to consolidated financial statements are an integral part of these statements.
29 SHARP ANNUAL REPORT 2005
¥
70.04
69.60
20.00
$
0.66
0.66
0.19
Consolidated Statements of Shareholders’ Equity
Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2004 and 2005
Number of Shares
(thousands)
2004
Common Stock (Note 7)...........................
1,110,699
Yen
(millions)
2005
1,110,699
2004
U.S. Dollars
(thousands)
2005
2005
¥
204,676
¥
204,676
$ 1,930,905
¥
261,415
¥
262,140
$ 2,473,019
143
1,349
Capital Surplus (Note 7):
Beginning balance ........................................................................................
Gains on sales of treasury stock ...................................................................
Ending balance.............................................................................................
725
¥
262,140
¥
262,283
$ 2,474,368
¥
507,871
¥
550,894
$ 5,197,113
Retained Earnings (Note 7):
Beginning balance ........................................................................................
Net income...................................................................................................
60,715
76,845
724,953
Cash dividends paid .....................................................................................
(17,437)
(21,819)
(205,840)
Directors’ and statutory auditors’ bonuses ..................................................
(255)
(349)
(3,292)
Other ............................................................................................................
—
(131)
(1,236)
$ 5,711,698
Ending balance.............................................................................................
¥
550,894
¥
605,440
¥
(2,803)
¥
14,176
Net Unrealized Holding Gains (Losses) on Securities:
Beginning balance ........................................................................................
Net increase .................................................................................................
Ending balance.............................................................................................
16,979
$
(843)
133,736
(7,953)
¥
14,176
¥
13,333
$
125,783
¥
(42,319)
¥
(61,828)
$
(583,283)
Foreign Currency Translation Adjustments:
Beginning balance ........................................................................................
Net increase .................................................................................................
Ending balance.............................................................................................
(19,509)
6,482
61,151
¥
(61,828)
¥
(55,346)
$
(522,132)
¥
(26,724)
¥
(26,526)
$
(250,245)
Treasury Stock:
Beginning balance ........................................................................................
Net increase .................................................................................................
Ending balance.............................................................................................
198
¥
(26,526)
466
¥
(26,060)
4,396
$
(245,849)
The accompanying notes to consolidated financial statements are an integral part of these statements.
SHARP ANNUAL REPORT 2005 30
Consolidated Statements of Cash Flows
Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2004 and 2005
Yen
(millions)
2004
Cash Flows from Operating Activities:
Income before income taxes and minority interests.......................................
Adjustments to reconcile income before income taxes and minority
interests to net cash provided by operating activities—
Depreciation and amortization of properties and intangibles ....................
Interest and dividend income ...................................................................
Interest expense ......................................................................................
Foreign exchange loss.............................................................................
Loss on sales and disposal of plant and equipment.................................
Increase in notes and accounts receivable...............................................
(Increase) decrease in inventories ............................................................
Increase in payable..................................................................................
Other, net ................................................................................................
Total ....................................................................................................
Interest and dividends received ....................................................................
Interest paid .................................................................................................
Income taxes paid ........................................................................................
¥
2005
$ 1,209,283
151,408
(5,294)
5,844
2,171
11,921
(72,258)
2,037
95,728
19,643
313,920
5,825
(5,939)
(64,188)
169,359
(5,446)
5,724
1,101
12,805
(48,579)
(47,762)
79,538
(19,811)
275,113
6,194
(5,808)
(56,301)
1,597,726
(51,377)
54,000
10,387
120,802
(458,292)
(450,585)
750,358
(186,896)
2,595,406
58,434
(54,792)
(531,142)
249,618
219,198
2,067,906
(39,627)
39,825
(417)
10,706
(183,155)
2,318
(50,022)
30,092
(1,066)
2,024
(270,414)
1,488
(471,906)
283,887
(10,057)
19,094
(2,551,075)
14,038
(8,852)
(8,668)
(81,774)
9,775
(13,994)
15,137
(1,162)
6,378
(10,351)
10,184
31,347
60,170
(97,651)
96,076
295,726
Net cash used in investing activities ..................................................
(169,446)
(259,008)
(2,443,472)
Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings, net ........................................
Proceeds from long-term debt......................................................................
Repayments of long-term debt .....................................................................
Purchase of treasury stock ...........................................................................
Dividends paid..............................................................................................
Other, net .....................................................................................................
(38,980)
15,898
(29,091)
(4,474)
(17,422)
5,108
99,713
25,514
(45,479)
(364)
(21,792)
(51)
940,689
240,698
(429,047)
(3,434)
(205,585)
(481)
Net cash provided by (used in) financing activities .............................
(68,961)
57,541
542,840
Effect of Exchange Rate Changes on Cash and Cash Equivalents............
Net Increase in Cash and Cash Equivalents ................................................
Cash and Cash Equivalents at Beginning of Year .......................................
Cash and Cash Equivalents of Newly Consolidated Subsidiaries ..............
Cash and Cash Equivalents Increased by Merger.......................................
(5,300)
5,911
271,712
–
–
(1,015)
16,716
277,623
970
3
(9,576)
157,698
2,619,085
9,151
28
295,312
$ 2,785,962
Cash Flows from Investing Activities:
Purchase of time deposits ............................................................................
Proceeds from redemption of time deposits .................................................
Purchase of short-term investments .............................................................
Proceeds from sales of short-term investments ............................................
Acquisitions of plant and equipment .............................................................
Proceeds from sales of plant and equipment ................................................
Purchase of investments in securities and investments in nonconsolidated
subsidiaries and affiliates ...........................................................................
Proceeds from sales of investments in securities and investments in
nonconsolidated subsidiaries and affiliates.................................................
Loans made .................................................................................................
Proceeds from collection of loans .................................................................
Other, net ....................................................................................................
Cash and Cash Equivalents at End of Year .................................................
¥
277,623
The accompanying notes to consolidated financial statements are an integral part of these statements.
31 SHARP ANNUAL REPORT 2005
¥
2005
128,184
Net cash provided by operating activities ..........................................
102,720
U.S. Dollars
(thousands)
¥
Notes to Consolidated Financial Statements
Sharp Corporation and Consolidated Subsidiaries
1. Summary of Significant Accounting and Reporting Policies
(a) Basis of presenting consolidated financial statements
Sharp Corporation (the “Company”) and its domestic
consolidated subsidiaries maintain their official accounting
records in Japanese yen and in accordance with the
provisions set forth in the Japanese Securities and
Exchange Law and its related accounting regulations, and in
conformity with accounting principles generally accepted in
Japan, (“Japanese GAAP”) which are different in certain
respects as to application and disclosure requirements of
International Financial Reporting Standards.
The accounts of overseas consolidated subsidiaries are
based on their accounting records maintained in conformity
with generally accepted accounting principles prevailing in
the respective countries of domicile. The accompanying
consolidated financial statements have been restructured
and translated into English (with some expanded
descriptions and the inclusion of consolidated statements of
shareholders’ equity) from the consolidated financial
statements of the Company prepared in accordance with
Japanese GAAP and filed with the appropriate Local
Finance Bureau of the Ministry of Finance as required by the
Securities and Exchange Law. Some supplementary
information included in the statutory Japanese language
consolidated financial statements, but not required for fair
presentation, is not presented in the accompanying
consolidated financial statements.
The translations of the Japanese yen amounts into U.S.
dollars are included solely for the convenience of readers
outside Japan, using the prevailing exchange rate at March 31,
2005, which was ¥106 to U.S. $1.00. The convenience
translations should not be construed as representations that
the Japanese yen amounts have been, could have been, or
could in the future be, converted into U.S. dollars at this or any
other rate of exchange.
(b) Principles of consolidation
The accompanying consolidated financial statements
include the accounts of the Company and significant
companies over which the Company has power of control
through majority voting right or existence of certain
conditions evidencing control by the Company. Investments in
nonconsolidated subsidiaries and affiliates over which the
Company has the ability to exercise significant influence
over operating and financial policies of the investees, are
accounted for on the equity method.
In the elimination of investments in consolidated
subsidiaries, the assets and liabilities of the subsidiaries,
including the portion attributable to minority shareholders,
are evaluated using the fair value at the time the Company
acquired control of the respective subsidiaries.
Material intercompany balances, transactions and profits
have been eliminated in consolidation.
(c) Translation of foreign currencies
Monetary assets and liabilities denominated in foreign
currency are translated into Japanese yen at current rates at
each balance sheet date and the resulting translation gains or
losses are charged to income currently.
As to translation of financial statements of overseas
subsidiaries and affiliates, assets and liabilities are
translated at current rates at each balance sheet date,
shareholders’ equity accounts are translated at historical
rates, and revenues and expenses are translated at
average rates prevailing during the year. The resulting
foreign currency translation adjustments are shown as a
separate component of shareholders’ equity.
(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand,
deposits placed with banks on demand and highly liquid
investments with insignificant risk of changes in value which
have maturities of three months or less when purchased.
(e) Short-term investments and investments in securities
Short-term investments consist of certificates of
deposits and interest-bearing securities.
Investments in securities consist principally of
marketable and nonmarketable equity securities and
interest-bearing securities.
The Company and its domestic consolidated
subsidiaries categorize those securities as “other securities”,
which, in principle, include all securities other than trading
securities and held-to-maturity securities.
Other securities with available fair market values are
SHARP ANNUAL REPORT 2005 32
stated at fair market value which is calculated as the average
of market prices during the last month of the fiscal year.
Unrealized holding gains and losses on these securities are
reported, net of applicable income taxes, as a separate
component of shareholders’ equity. Realized gains and
losses on sales of such securities are principally computed
using average cost.
Other securities with no available fair market values are
stated at average cost, except for interest-bearing securities
which are stated at amortized cost, net of the amount
considered not collectible.
If the fair market value of other securities declines
significantly, such securities are stated at fair market value
and the difference between fair market values and the
carrying amount is recognized as loss in the period of
decline. If the net asset value of other securities, except for
interest-bearing securities, with no available fair market
values declines significantly, such securities are written
down to the net asset value by charging to income. In these
cases, such fair market value or the net asset value is
carried forward to the next year.
( f ) Leases
Finance leases, except those leases for which the
ownership of the leased assets is considered to be
transferred to the lessee, are primarily accounted for as
operating leases.
(g) Inventories
Finished products are principally stated at the lower of
moving average cost or market, however, finished products
held by overseas consolidated subsidiaries are valued at the
lower of first-in, first-out cost or market. Work in process
and raw materials are stated at the current production and
purchase costs, respectively, not in excess of estimated
realizable value.
(h) Depreciation and amortization
Depreciation of plant and equipment is primarily
computed on the declining-balance method, except for
machinery and equipment in the Mie and Kameyama plants,
which are depreciated on the straight line method, over the
estimated useful lives. Buildings acquired by the Company and
its domestic consolidated subsidiaries on and after April 1,
33 SHARP ANNUAL REPORT 2005
1998 are depreciated on the straight-line method.
Properties at overseas consolidated subsidiaries are mainly
depreciated on the straight-line method.
Maintenance and repairs including minor renewals and
betterments are charged to income as incurred.
( i ) Accrued bonuses
The Company and its domestic consolidated
subsidiaries accrue estimated amounts of employees’
bonuses based on estimated amounts to be paid in the
subsequent period.
( j ) Income taxes
The asset and liability approach is used to recognize
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the
carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax
purposes.
(k) Severance and pension benefits
The Company and its domestic consolidated
subsidiaries have primarily a trusteed noncontributory
defined benefit pension plan for their employees with at
least five years of service to supplement a governmental
welfare pension plan.
In addition, the Company and its domestic consolidated
subsidiaries have an unfunded termination and retirement
allowance plan to provide benefits for their employees with less
than five years of service.
Certain overseas consolidated subsidiaries have defined
contribution pension plans and lump-sum retirement
benefit plans.
The Company and its domestic consolidated subsidiaries
provide the allowance for severance and pension benefits
based on the estimated amounts of projected benefit
obligation and the fair value of the plan assets at the
balance sheet date. Projected benefit obligation and
expenses for severance and pension benefits are
determined based on the amounts actuarially calculated
using certain assumptions.
The excess of the projected benefit obligation over the total
of the fair value of pension assets as of April 1, 2001 and the
allowance for severance and pension benefits recorded as of
April 1, 2001 (the “net transition obligation”) amounted to
¥69,090 million. The net transition obligation is being
amortized in equal amounts over 7 years commencing with the
year ended March 31, 2002. Prior service costs are
amortized using the straight-line method over the average of
the estimated remaining service lives (16 years)
commencing with the current period. Actuarial losses are
recognized in expenses using the straight-line method over the
average of the estimated remaining service lives (16 years)
commencing with the following period.
Directors and statutory auditors customarily receive
lump-sum payments upon their termination, subject to
shareholders’ approval. Such payments are charged to
income when paid.
( l ) Research and development expenses and software costs
Research and development expenses are charged to
income as incurred. The research and development
expenses charged to income amounted to ¥138,786 million
and ¥148,128 million ($1,397,434 thousand) for the years
ended March 31, 2004 and 2005, respectively.
Software costs are recorded principally in prepaid
expenses and other and amortized by the straight-line
method over estimated useful lives of principally 5 years.
(m) Derivative financial instruments
The Company and some of its consolidated subsidiaries
use derivative financial instruments, which include foreign
exchange forward contracts and interest rate swap
agreements, in order to hedge risks of fluctuations in foreign
currency exchange rates and interest rates associated with
assets and liabilities denominated in foreign currencies,
investments in securities and debt obligations.
All derivative financial instruments are stated at fair value
and recorded on the balance sheets. The deferred method is
used for recognizing gains or losses on hedging instruments
and the hedged items. When foreign exchange forward
contracts meet certain conditions, the hedged items are
stated by the forward exchange contract rates.
The derivative financial instruments are used based on
internal policies and procedures on risk control.
The risks of fluctuations in foreign currency exchange
rates and interest rates have been assumed to be
completely hedged over the period of hedging contracts as the
major conditions of the hedging instruments and the
hedged items are consistent. Accordingly, the evaluation of
effectiveness of the hedging contracts is not required.
The credit risk of such derivatives is assessed as being low
because the counter-parties of these transactions are
prestigious financial institutions.
(n) Impairment of fixed assets
In the years ended March 31, 2004 and 2005, the
Company and its domestic consolidated subsidiaries did not
adopt early the new accounting standard for impairment of
fixed assets (“Opinion Concerning Establishment of
Accounting Standard for Impairment of Fixed Assets” issued
by the Business Accounting Deliberation Council on August
9, 2002) and the implementation guidance for the
accounting standard for impairment of fixed assets (the
Financial Accounting Standard Implementation Guidance No.
6 issued by the Accounting Standards Board of Japan on
October 31, 2003). The new accounting standard is
required to be adopted in periods beginning on or after April
1, 2005, but the standard allows earlier adoption. The
Company and its domestic consolidated subsidiaries will adopt
the new standard effective April 1, 2005.
(o) Reclassifications
Certain prior year amounts have been reclassified to
conform to 2005 presentation. These changes had no
impact on previously reported results of operations.
SHARP ANNUAL REPORT 2005 34
2. Short-term Investments and Investments In Securities
The following is a summary of other securities with available fair market values as of March 31, 2004 and 2005:
Yen (millions)
Equity securities .................................................................
Other .................................................................................
Acquisition cost
2005
Unrealized gains
Unrealized losses
Fair market value
¥
¥
¥
¥
37,009
330
37,339
¥
23,237
179
23,416
¥
(680)
—
(680)
¥
¥
59,566
509
60,075
U.S. Dollars (thousands)
Equity securities .................................................................
Other .................................................................................
Acquisition cost
2005
Unrealized gains
Unrealized losses
Fair market value
$
$
$
$
349,142
3,113
352,255
$
219,216
1,689
220,905
$
$
(6,415)
—
(6,415)
$
561,943
4,802
566,745
Yen (millions)
Equity securities .................................................................
Other .................................................................................
Acquisition cost
2004
Unrealized gains
Unrealized losses
Fair market value
¥
¥
¥
¥
35 SHARP ANNUAL REPORT 2005
33,809
—
33,809
¥
24,159
—
24,159
¥
¥
(117)
—
(117)
¥
57,851
—
57,851
Redemptions of other securities with maturities as of March 31, 2004 and 2005 were as follows:
Yen
(millions)
2004
Government Bonds:
Due within one year .......................................................................................
Due after one year through five years.............................................................
Due after five years through ten years............................................................
Due over ten years .......................................................................................
Corporate Bonds:
Due within one year .......................................................................................
Due after one year through five years.............................................................
Due after five years through ten years............................................................
Due over ten years ........................................................................................
Convertible Bonds:
Due within one year .......................................................................................
Due after one year through five years.............................................................
Due after five years through ten years............................................................
Due over ten years ........................................................................................
Other:
Due within one year .......................................................................................
Due after one year through five years.............................................................
Due after five years through ten years............................................................
Due over ten years ........................................................................................
The proceeds from sales of other securities were
¥9,748 million and ¥6,378 million ($60,170 thousand) for
the years ended March 31, 2004 and 2005, respectively.
The gross realized gains on those sales were ¥4,541
million and ¥2,683 million ($25,311 thousand) for the years
ended March 31, 2004 and 2005, respectively. The gross
realized losses on those sales were ¥49 million and ¥52
¥
U.S. Dollars
(thousands)
2005
¥
—
5
—
—
2005
—
—
—
—
$
—
—
—
—
1,988
34,703
—
—
21,385
14,478
—
—
201,745
136,585
—
—
—
30
—
—
—
30
—
—
—
283
—
—
—
—
—
—
—
564
—
95
—
5,321
—
896
million ($491 thousand) for the years ended March 31,
2004 and 2005, respectively.
Other securities with no available fair market values
principally consisted of unlisted interest-bearing securities
whose carrying amounts were ¥36,729 million and
¥36,014 million ($339,755 thousand) as of March 31,
2004 and 2005, respectively.
3. Inventories
Inventories as of March 31, 2004 and 2005 were as follows:
Yen
(millions)
2004
Finished products ...........................................................................................
Work in process ..............................................................................................
Raw materials..................................................................................................
¥
¥
156,264
57,191
60,213
273,668
U.S. Dollars
(thousands)
2005
¥
¥
180,002
63,763
81,958
325,723
2005
$ 1,698,132
601,538
773,189
$ 3,072,859
SHARP ANNUAL REPORT 2005 36
4. Income Taxes
The Company is subject to a number of different income
taxes which, in the aggregate, indicate normal tax rates in
Japan of approximately 42.0% and 40.6% for the years
ended March 31, 2004 and 2005, respectively.
Effective for the year commencing on April 1, 2004 or
later, according to the revised Japanese local tax law, income
tax rates for enterprise taxes was reduced. Based on the
change of income tax rates, the effective tax rate used for the
calculation of deferred tax assets and liabilities was 40.6% in
Japan for the year ended March 31, 2004.
Deviations of the effective tax rate for financial statement
purposes from the normal tax rate on income before income
taxes and minority interests are due primarily to expenses not
deductible for tax purposes and differences in normal tax
rates of overseas subsidiaries.
The differences between the normal tax rate and effective
tax rate for financial statement purposes for the years ended
March 31, 2004 and 2005 were immaterial.
Effective for the year ended March 31, 2005, the
Company and the wholly owned domestic subsidiaries have
adopted the consolidated tax return system of Japan.
Significant components of deferred tax assets and deferred tax liabilities as of March 31, 2004 and 2005 were as follows:
Yen
(millions)
2004
Deferred tax assets:
Inventories.....................................................................................................
Allowance for doubtful receivables ................................................................
Accrued bonuses .........................................................................................
Warranty reserve ...........................................................................................
Software ......................................................................................................
Long-term prepaid expenses ........................................................................
Enterprise taxes ...........................................................................................
Other.............................................................................................................
Gross deferred tax assets .....................................................................
Deferred tax liabilities:
Retained earnings appropriated for tax allowable reserves ............................
Undistributed earnings of overseas subsidiaries ............................................
Net unrealized holding gains on securities .....................................................
Other.............................................................................................................
Gross deferred tax liabilities...................................................................
Net deferred tax assets .....................................................................................
¥
¥
U.S. Dollars
(thousands)
2005
14,748
1,732
12,270
1,379
19,862
12,476
3,228
28,626
94,321
¥
(8,464)
(3,821)
(9,762)
(2,761)
(24,808)
69,513 ¥
14,461
1,942
12,449
1,608
25,362
13,308
2,405
35,738
107,273
2005
$
136,425
18,321
117,443
15,170
239,264
125,547
22,689
337,151
1,012,010
(9,997)
(2,592)
(9,229)
(3,223)
(25,041)
82,232 $
(94,311)
(24,453)
(87,066)
(30,406)
(236,236)
775,774
Net deferred tax assets and liabilities as of March 31, 2004 and 2005 were included in the consolidated balance sheets
as follows:
Yen
(millions)
2004
Other current assets..........................................................................................
Prepaid expenses and other..............................................................................
Other current liabilities .......................................................................................
Other long-term liabilities ...................................................................................
Net deferred tax assets .....................................................................................
37 SHARP ANNUAL REPORT 2005
¥
¥
41,266 ¥
30,586
(22)
(2,317)
69,513 ¥
U.S. Dollars
(thousands)
2005
44,579 $
38,101
—
(448)
82,232 $
2005
420,557
359,443
—
(4,226)
775,774
5. Short-term Borrowings and Long-term Debt
The weighted average interest rates of short-term borrowings as of March 31, 2004 and 2005 were 1.3% and
1.1%, respectively. The Company and its consolidated
subsidiaries have had no difficulty in renewing such loans
when they have considered such renewal advisable.
Short-term borrowings including current portion of long-term debt as of March 31, 2004 and 2005 consisted of the following:
Yen
(millions)
2004
Bank loans ........................................................................................................
Banker’s acceptances payable .........................................................................
Commercial paper.............................................................................................
Current portion of long-term debt......................................................................
¥
¥
U.S. Dollars
(thousands)
2005
84,987
129
82,234
48,227
215,577
¥
¥
105,190
80
165,737
93,544
364,551
2005
$
992,358
755
1,563,557
882,490
$ 3,439,160
Long-term debt as of March 31, 2004 and 2005 consisted of the following:
Yen
(millions)
2004
0.0%–3.5% unsecured loans principally from banks, due 2004 to 2018 ...........
1.60% unsecured convertible bonds, due 2004 ...............................................
2.00% unsecured straight bonds, due 2005 .....................................................
1.65% unsecured straight bonds, due 2005 .....................................................
0.57% unsecured straight bonds, due 2007 .....................................................
0.05%–1.47% unsecured Euroyen notes issued by a consolidated subsidiary,
due 2004 to 2008 ...........................................................................................
6.00%–7.20% mortgage loans for employees’ housing from a
government-sponsored agency, due 2004 to 2009.........................................
0.48%–0.93% payables under securitized lease receivables, due 2004 to 2011 ......
¥
101,966
26,940
30,000
10,000
50,000
2005
¥
29,400
Less-Current portion included in short-term borrowings....................................
¥
U.S. Dollars
(thousands)
94,567
—
30,000
10,000
50,000
2005
$
28,400
6
25,690
274,002
(48,227)
225,775 ¥
892,141
—
283,019
94,340
471,698
267,925
3
28
41,438
390,924
254,408
2,400,075
(93,544)
(882,490)
160,864 $ 1,517,585
The following is a summary of the terms of conversion and redemption of the convertible bonds:
1.60% The convertible bonds, due 2004
Conversion price
Redemption at the option of the Company
¥1,554.00
At 106% to 100% of principal after September 30, 1997,
decreasing 1% annually
SHARP ANNUAL REPORT 2005 38
The conversion price of bonds is subject to adjustment for
certain subsequent events such as the issue of common
stock at less than fair value and stock splits.
As is customary in Japan, substantially all of the bank
borrowings are subject to general agreements with each
bank which provide, among other things, that security and
guarantees for present and future indebtedness will be
given upon request of the bank, and that any collateral so
furnished will be applicable to all indebtedness to that
bank. To date, the Company has not received such
requests from its banks. In addition, the agreements
provide that the bank has the right to offset cash deposited
against any short-term or long-term debt that becomes
due, and in case of default and certain other specified
events, against all other debts payable to the bank.
The aggregate annual maturities of long-term debt as of March 31, 2005 were as follows:
Yen
(millions)
Year ending March 31
2007 .............................................................................................................................................
2008 .............................................................................................................................................
2009 .............................................................................................................................................
2010 .............................................................................................................................................
2011 and thereafter.......................................................................................................................
¥
¥
21,475
94,891
31,860
4,076
8,562
160,864
U.S. Dollars
(thousands)
$
202,594
895,198
300,566
38,453
80,774
$ 1,517,585
6. Leases
Finance leases
Information relating to finance leases, excluding those leases for which the ownership of the leased assets is considered to
be transferred to the lessee, as of, and for the years ended March 31, 2004 and 2005, is as follows:
(a) As lessee
(1) Future minimum lease payments
Yen
(millions)
2004
Due within one year .......................................................................................
Due after one year .........................................................................................
¥
¥
U.S. Dollars
(thousands)
2005
80,037
156,522
236,559
¥
¥
84,663
171,092
255,755
2005
$
798,708
1,614,075
$ 2,412,783
(2) Lease payments
Yen
(millions)
2004
Lease payments ............................................................................................
39 SHARP ANNUAL REPORT 2005
¥
14,577
U.S. Dollars
(thousands)
2005
¥
15,775
2005
$
148,821
(b) As lessor
(1) Acquisition cost, accumulated depreciation and book value of leased properties
Yen
(millions)
2004
Machinery and equipment:
Acquisition cost ............................................................................................
Accumulated depreciation ............................................................................
Book value ...................................................................................................
¥
¥
U.S. Dollars
(thousands)
2005
63,763
17,667
46,096
¥
¥
91,300
30,582
60,718
2005
$
$
861,321
288,510
572,811
(2) Future minimum lease receipts
Yen
(millions)
2004
Due within one year .......................................................................................
Due after one year .........................................................................................
¥
¥
U.S. Dollars
(thousands)
2005
81,371
177,460
258,831
¥
¥
89,059
195,221
284,280
2005
$
840,179
1,841,708
$ 2,681,887
(3) Lease receipts, depreciation and assumed interest income
U.S. Dollars
(thousands)
Yen
(millions)
2004
Lease receipts ...............................................................................................
Depreciation ..................................................................................................
Assumed interest income ..............................................................................
¥
2005
11,122
10,052
1,483
¥
16,074
14,569
1,990
2005
$
151,642
137,443
18,774
Operating leases
(a) As lessee
Future minimum lease payments as of March 31, 2004 and 2005 were as follows:
Yen
(millions)
2004
Due within one year .......................................................................................
Due after one year .........................................................................................
¥
¥
U.S. Dollars
(thousands)
2005
1,161
2,188
3,349
¥
¥
1,558
1,947
3,505
2005
$
$
14,698
18,368
33,066
(b) As lessor
Future minimum lease receipts as of March 31, 2004 and 2005 were as follows:
Yen
(millions)
2004
Due within one year .......................................................................................
¥
Due after one year .........................................................................................
¥
1,142
802
1,944
U.S. Dollars
(thousands)
2005
¥
¥
1,236
1,077
2,313
2005
$
$
11,661
10,160
21,821
SHARP ANNUAL REPORT 2005 40
7. Shareholders’ Equity and Per Share Data
The Japanese Commercial Code provides that at least
one-half of the proceeds from shares issued be included in
common stock and the remaining amount of the proceeds be
accounted for as additional paid-in capital, which is
included in capital surplus.
The Company used its treasury stock in connection with
the conversion of bonds for the year ended March 31,
2005. The difference of carrying values of the bonds
converted and treasury stocks provided was included in
capital surplus.
The Code provides that an amount equivalent to at least
10% of cash dividends paid and other cash outlays shall be
appropriated and set aside as legal reserve until the total
amount of legal reserve and additional paid-in capital equals
25% of the stated capital.
As of March 31, 2005, the total amount of legal reserve
and additional paid-in capital exceeded 25% of the stated
capital and, therefore, no additional provision is required.
On condition that the total amount of legal reserve and
additional paid-in capital remains being equal to or
exceeding 25% of the stated capital, they are available for
distribution by the resolution of the shareholders’ meeting.
Legal reserve is included in retained earnings.
Year end cash dividends are approved by the
shareholders after the end of each fiscal year and
semiannual interim cash dividends are declared by the
Board of Directors after the end of each interim six-month
period. Such dividends are payable to shareholders of
record at the end of each fiscal year or interim six-month
period. In accordance with the Code, final cash dividends and
the related appropriations of retained earnings have not
been reflected in the financial statements at the end of such
fiscal year. However, cash dividends per share shown in the
accompanying consolidated statements of income reflect
dividends applicable to the respective period.
On June 23, 2005, the shareholders approved the
declaration of year end cash dividends totaling ¥10,910 million
($102,925 thousand) to shareholders of record as of March
31, 2005, covering the year then ended.
On June 24, 2004, the Ordinary General Meeting of
Shareholders passed a resolution on modifying the articles
of incorporation to allow the Company to purchase its
outstanding shares upon approval of the Board of Directors
in conformity with Article 211-3 of the Japanese
Commercial Code.
8. Contingent Liabilities
As of March 31, 2005, the Company and its consolidated subsidiaries had contingent liabilities as follows:
Loans guaranteed .........................................................................................................................
Notes discounted .........................................................................................................................
¥
¥
41 SHARP ANNUAL REPORT 2005
Yen
(millions)
U.S. Dollars
(thousands)
2005
2005
9,771
535
10,306
$
$
92,179
5,047
97,226
9. Employees’ Severance and Pension Benefits
Allowance for severance and pension benefits of the Company and its domestic consolidated subsidiaries as of March
31, 2004 and 2005 consisted of the following:
Yen
(millions)
Projected benefit obligation ........................................................................
Less-Fair value of plan assets.............................................................
Less-Unrecognized actuarial differences ............................................
Less-Unrecognized net transition obligation .......................................
Unrecognized prior service costs........................................................
Prepaid pension cost .........................................................................
Allowance for severance and pension benefits ...................................
In addition, allowance for severance and pension
benefits of ¥925 million as of March 31, 2004, and ¥808 million
($7,623 thousand) as of March 31, 2005, were provided by
¥
¥
U.S. Dollars
(thousands)
2004
2005
2005
330,759 ¥
(255,194)
(101,954)
(11,237)
48,437
4,053
14,864 ¥
340,898 $ 3,216,019
(277,007)
(2,613,274)
(95,625)
(902,123)
(8,428)
(79,509)
45,345
427,783
19,018
179,415
24,201 $
228,311
certain overseas consolidated subsidiaries in conformity with
generally accepted accounting principles and practices
prevailing in the respective countries of domicile.
Expenses for severance and pension benefits of the Company and its domestic consolidated subsidiaries for the
years ended March 31, 2004 and 2005 consisted of the following:
Yen
(millions)
2005
2004
Service costs .....................................................................................
Interest costs on projected benefit obligation .....................................
Expected return on plan assets ..........................................................
Amortization of net transition obligation ..............................................
Recognized actuarial loss ....................................................................
Amortization of prior service costs........................................................
Expenses for severance and pension benefits....................................
The discount rate used by the Company and its
domestic consolidated subsidiaries was 2.5% for the
years ended March 31, 2004 and 2005. The rate of
expected return on plan assets used by the Company and its
domestic consolidated subsidiaries for the years ended
¥
¥
U.S. Dollars
(thousands)
13,126 ¥
8,856
(9,126)
2,809
9,477
(1,030)
24,112 ¥
12,029 $
8,269
(11,484)
2,809
7,182
(3,091)
15,714 $
2005
113,481
78,009
(108,340)
26,500
67,755
(29,160)
148,245
March 31, 2004 and 2005 was 4.5%. The estimated
amount of all retirement benefits to be paid at future
retirement dates is allocated equally to each service year
using the estimated number of total service years.
SHARP ANNUAL REPORT 2005 42
10. Segment Information
The Company and its consolidated subsidiaries operate
in Consumer/Information Products business and Electronic
Components business. Consumer/Information Products
business includes audio-visual and communication equip-
ment, home appliances and information equipment.
Electronic Components business includes ICs, LCDs and
other electronic components.
Information by business segment for the years ended March 31, 2004 and 2005 is as follows:
Yen
(millions)
Net Sales:
Consumer/Information Products:
Customers..............................................................................................
Intersegment ..........................................................................................
Total .......................................................................................................
Electronic Components:
Customers..............................................................................................
Intersegment ..........................................................................................
Total .......................................................................................................
Elimination .....................................................................................................
Consolidated .................................................................................................
Operating Income:
Consumer/Information Products ....................................................................
Electronic Components .................................................................................
Elimination .....................................................................................................
Consolidated .................................................................................................
Total Assets:
Consumer/Information Products ....................................................................
Electronic Components .................................................................................
Elimination and Corporate Assets ..................................................................
Consolidated .................................................................................................
Depreciation and Amortization:
Consumer/Information Products ....................................................................
Electronic Components .................................................................................
Elimination .....................................................................................................
Consolidated .................................................................................................
Capital Expenditures:
Consumer/Information Products ....................................................................
Electronic Components .................................................................................
Elimination .....................................................................................................
Consolidated .................................................................................................
Corporate assets as of March 31, 2004 and 2005 were
¥494,401 million and ¥500,047 million ($4,717,425 thousand),
43 SHARP ANNUAL REPORT 2005
U.S. Dollars
(thousands)
2004
2005
2005
¥ 1,438,696
8,726
1,447,422
¥ 1,600,937
11,093
1,612,030
$ 15,103,179
104,651
15,207,830
818,577
938,922
8,857,755
185,920
258,393
2,437,670
1,004,497
1,197,315
11,295,425
(194,646)
(269,486)
(2,542,321)
¥ 2,257,273 ¥ 2,539,859 $ 23,960,934
¥
47,434
73,971
265
121,670
¥
¥
682,689
984,940
482,621
¥ 2,150,250
¥
¥
¥
¥
¥
57,035
93,520
465
151,020
$
¥
730,973
1,172,267
481,786
¥ 2,385,026
$
40,385 ¥
119,867
(421)
159,831 ¥
38,988 $
137,520
(539)
175,969 $
367,811
1,297,359
(5,085)
1,660,085
53,773 ¥
230,413
(929)
283,257 ¥
48,335 $
225,156
(1,551)
271,940 $
455,991
2,124,113
(14,632)
2,565,472
¥
$
538,066
882,264
4,387
1,424,717
6,895,972
11,059,122
4,545,151
$ 22,500,245
respectively, and were mainly comprised of the Company’s
cash and cash equivalents and investments in securities.
Information by geographic segment for the years ended March 31, 2004 and 2005 is as follows:
Yen
(millions)
Net Sales:
Japan:
Customers..........................................................................................
Intersegment ......................................................................................
Total ...................................................................................................
The Americas:
Customers..........................................................................................
Intersegment ......................................................................................
Total ..................................................................................................
Asia:
Customers .........................................................................................
Intersegment ......................................................................................
Total ..................................................................................................
Europe:
Customers .........................................................................................
Intersegment ......................................................................................
Total ..................................................................................................
Other:
Customers..........................................................................................
Intersegment ......................................................................................
Total ...................................................................................................
Elimination ...................................................................................................
Consolidated ...............................................................................................
Operating Income:
Japan ..........................................................................................................
The Americas ..............................................................................................
Asia .............................................................................................................
Europe ........................................................................................................
Other...........................................................................................................
Elimination ...................................................................................................
Consolidated ...............................................................................................
Total Assets:
Japan ..........................................................................................................
The Americas ..............................................................................................
Asia .............................................................................................................
Europe ........................................................................................................
Other...........................................................................................................
Elimination and Corporate Assets ................................................................
Consolidated ...............................................................................................
U.S. Dollars
(thousands)
2004
2005
2005
¥ 1,458,875
513,287
1,972,162
¥ 1,626,944
629,484
2,256,428
$ 15,348,528
5,938,528
21,287,056
289,789
7,421
297,210
338,342
7,858
346,200
3,191,906
74,132
3,266,038
140,777
133,545
274,322
110,658
158,828
269,486
1,043,943
1,498,378
2,542,321
293,629
2,521
296,150
353,198
2,975
356,173
3,332,057
28,066
3,360,123
74,203
106,257
180,460
(763,031)
¥ 2,257,273
110,717
167,929
278,646
(967,074)
¥ 2,539,859 $
1,044,500
1,584,236
2,628,736
(9,123,340)
23,960,934
¥
¥
¥
107,283
1,335
3,185
3,226
5,056
1,585
121,670
¥ 1,394,950
123,784
68,453
110,393
74,787
377,883
¥ 2,150,250
¥
138,769 $ 1,309,142
2,544
24,000
2,653
25,028
1,947
18,368
6,133
57,858
(1,026)
(9,679)
151,020 $ 1,424,717
¥ 1,585,073
131,016
68,201
135,068
100,698
364,970
¥ 2,385,026
$ 14,953,519
1,236,000
643,406
1,274,226
949,981
3,443,113
$ 22,500,245
SHARP ANNUAL REPORT 2005 44
Corporate assets as of March 31, 2004 and 2005 were
¥494,401 million and ¥500,047 million ($4,717,425 thousand),
respectively, and were mainly comprised of the Company’s cash
and cash equivalents and investments in securities.
For the year ended March 31, 2005, a new geographic
segment “Europe”, which had been previously categorized
as a part of the “Other” segment was disclosed separately,
given the increasing materiality of the Europe segment.
Consequently the geographic segment “Other” principally
consists of “China”, “Oceania” and “Middle East” region.
Geographic segment information of the prior year has been
restated to conform with the 2005 presentation.
Overseas sales for the years ended March 31, 2004 and 2005 were as follows:
Yen
(millions)
2004
Overseas sales:
The Americas............................................................................................
Asia ..........................................................................................................
Europe......................................................................................................
Other ........................................................................................................
Total .........................................................................................................
Overseas sales were comprised of overseas
subsidiaries’ sales and the Company’s and domestic
¥
308,807
279,161
330,772
194,985
¥ 1,113,725
U.S. Dollars
(thousands)
2005
2005
372,184
207,186
407,455
223,323
¥ 1,210,148
$ 3,511,170
1,954,585
3,843,915
2,106,821
$ 11,416,491
¥
subsidiaries’ export sales to customers.
11. Subsequent Events
On April 26, 2005, the Board of Directors of the
Company approved a comprehensive proposal authorizing
the issuance of as much as ¥50,000 million ($471,698
thousand) of unsecured straight bonds. Based on this
proposal, the 18th and the 19th unsecured straight bonds
(ranking pari passu among themselves) were issued.
Principal data on these issuances are as follows:
(a) The 18th issuance of unsecured straight bonds (ranking pari passu among themselves)
(1) Total issue amount: ¥30,000 million ($283,019 thousand)
(2) Issue price:
¥99.95 for each ¥100 of face value
(3) Payment date:
May 31, 2005
(4) Redemption date:
June 21, 2010
(5) Interest rate:
0.62%
(6) Application of funds: Repayment of bonds and funds for plant and equipment
(b) The 19th issuance of unsecured straight bonds (ranking pari passu among themselves)
(1) Total issue amount: ¥20,000 million ($188,679 thousand)
(2) Issue price:
¥99.95 for each ¥100 of face value
(3) Payment date:
May 31, 2005
(4) Redemption date:
June 20, 2012
(5) Interest rate:
0.97%
(6) Application of funds: Repayment of bonds and funds for plant and equipment
45 SHARP ANNUAL REPORT 2005
Independent Auditors’ Report
To the Board of Directors of Sharp Corporation:
We have audited the accompanying consolidated balance sheets of Sharp Corporation (a Japanese corporation) and its
consolidated subsidiaries as of March 31, 2004 and 2005, and the related consolidated statements of income,
shareholders’ equity and cash flows for the years then ended, all expressed in Japanese yen. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to independently express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Sharp Corporation and its consolidated subsidiaries as of March 31, 2004 and 2005,
and the consolidated results of their operations and their cash flows for the years then ended, in conformity with
accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March
31, 2005 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar
amounts and, in our opinion, such translation has been made on the basis described in Note 1(a) to the consolidated
financial statements.
Osaka, Japan
June 23, 2005
SHARP ANNUAL REPORT 2005 46
Consolidated Subsidiaries
Domestic:
Overseas:
<Countries and Areas>
47 SHARP ANNUAL REPORT 2005
Sharp Electronics Marketing Corporation
Sharp Finance Corporation
Sharp System Products Co., Ltd.
Sharp Manufacturing Systems Corporation
Sharp Engineering Corporation
Sharp Document Systems Corporation
Sharp Amenity Systems Corporation
Sharp Niigata Electronics Corporation
Sharp Trading Corporation
Sharp Electronics Corporation <New Jersey, U.S.A.>
Sharp Laboratories of America, Inc. <Washington, U.S.A.>
Sharp Electronics Manufacturing Company of America, Inc. <California, U.S.A.>
Sharp Electronics of Canada Ltd. <Ontario, Canada>
Sharp Electronica Mexico S.A. de C.V. <Baja California, Mexico>
Sharp Electronics (Europe) GmbH <Hamburg, Germany>
Sharp Electronics (U.K.) Ltd. <Manchester, U.K.>
Sharp Laboratories of Europe, Ltd. <Oxford, U.K.>
Sharp International Finance (U.K.) Plc. <Hertfordshire, U.K.>
Sharp Electronica España S.A. <Barcelona, Spain>
Sharp Electronics (Schweiz) AG <Dällikon, Switzerland>
Sharp Electronics (Nordic) AB <Bromma, Sweden>
Sharp Electronics France S.A. <Paris, France>
Sharp Manufacturing France S.A. <Soultz, France>
Sharp Electronics (Italia) S.p.A. <Milano, Italy>
Sharp Electronics Benelux B.V. <Houten, The Netherlands>
Sharp Electronics (Taiwan) Co., Ltd. <Kaohsiung, Taiwan>
Sharp Electronic Components (Taiwan) Corporation <Taipei, Taiwan>
Sharp Technology (Taiwan) Corporation <Taipei, Taiwan>
Sharp (Phils.) Corporation <Manila, Philippines>
Sharp-Roxy Sales (Singapore) Pte., Ltd. <Singapore>
Sharp Electronics (Singapore) Pte., Ltd. <Singapore>
Sharp Manufacturing Corporation (M) Sdn. Bhd. <Johor, Malaysia>
Sharp Electronics (Malaysia) Sdn. Bhd. <Selangor, Malaysia>
Sharp Microelectronics Technology (Malaysia) Sdn. Bhd. <Selangor, Malaysia>
Sharp Appliances (Thailand) Ltd. <Chachoengsao, Thailand>
Sharp Software Development India Pvt. Ltd. <Bangalore, India>
Shanghai Sharp Electronics Co., Ltd. <Shanghai, China>
Sharp Office Equipments (Changshu) Co., Ltd. <Changshu, China>
Wuxi Sharp Electronic Components Co., Ltd. <Wuxi, China>
Nanjing Sharp Electronics Co., Ltd. <Nanjing, China>
Sharp Electronics (Shanghai) Co., Ltd. <Shanghai, China>
Sharp Technical Components (Wuxi) Co., Ltd. <Wuxi, China>
P.T. Sharp Yasonta Indonesia <Jakarta, Indonesia>
P.T. Sharp Semiconductor Indonesia <West Java, Indonesia>
Sharp Corporation of Australia Pty. Ltd. <New South Wales, Australia>
Sharp Corporation of New Zealand Ltd. <Auckland, New Zealand>
Sharp Middle East FZE <Dubai, U.A.E.>
Investor Information
Japanese Stock
Exchange Listings
Tokyo, Osaka, Nagoya, Fukuoka, Sapporo
Overseas Stock
Exchange Listings
Paris, Luxembourg, Swiss
Transfer Agent for
the Shares
Mizuho Trust & Banking Co., Ltd.
Osaka Stock Transfer Agency Department
11-16, Sonezaki 2-chome, Kita-ku, Osaka 530-0057, Japan
Phone Osaka: +81-6-6313-5127 Tokyo: +81-3-5213-5213
Principal Shareholders
Number of
shares held
(As of March 31, 2005)
Japan Trustee Service Bank, Ltd. (Trust Account)
Nippon Life Insurance Company
Meiji Yasuda Life Insurance Company
The Master Trust Bank of Japan, Ltd. (Trust Account)
Mizuho Corporate Bank, Ltd.
The Dai-ichi Mutual Life Insurance Company
Mitsui Sumitomo Insurance Company, Limited
Sompo Japan Insurance Inc.
UFJ Bank Limited
Employees’ Stock Ownership Program
Total
58,639,000
52,967,384
47,359,000
46,649,000
32,410,469
30,704,140
30,658,022
26,870,000
20,071,526
19,152,562
365,481,103
Percentage of
total shares
5.28%
4.77
4.26
4.20
2.92
2.76
2.76
2.42
1.81
1.72
32.91%
(Note) Besides the above, the Company possesses 19,624,272 shares of treasury stock.
Share Distribution
Number of
shares held
(As of March 31, 2005)
Japanese financial institutions*
Japanese securities companies
Other Japanese corporations
.
Japanese individual shareholders
Foreign shareholders
Treasury stock
.
.
Total
537,855,105
17,554,911
41,608,318
257,588,081
236,469,200
19,624,272
1,110,699,887
Percentage of
total shares
48.42%
1.58
3.75
23.19
21.29
1.77
100.00%
* A total of 83,359,000 shares ( 7.50%) in pension trust funds and investment trusts are included in the number of shares held by Japanese financial institutions.
Number of Shareholders
121,426
(As of March 31, 2005)
Invester Relations Office
Sharp Corporation
Investor Relations Office
(Osaka) 22-22, Nagaike-cho, Abeno-ku, Osaka 545-8522, Japan
Phone: +81-6-6625-3023 Fax: +81-6-6627-1759
(Tokyo) 8, Ichigaya-Hachiman-cho, Shinjuku-ku, Tokyo 162-8408, Japan
Phone: +81-3-3260-1289 Fax: +81-3-3260-1822
Investor Relations home page: http://sharp-world.com/corporate/ir/index.html
SHARP ANNUAL REPORT 2005 48
22-22, Nagaike-cho, Abeno-ku, Osaka 545-8522, Japan
Phone: +81-6-6621-1221
http://www.sharp.co.jp
This publication is printed on recycled paper using environment-friendly soy ink.
TM
Was this manual useful for you? yes no
Thank you for your participation!

* Your assessment is very important for improving the work of artificial intelligence, which forms the content of this project

Download PDF

advertisement