Annual Report 2010 (PDF:6.3MB)

Annual Report 2010 (PDF:6.3MB)
Annual Report 2010
For the year ended March 31, 2010
Our Edge Lies
in the Future
Profile
Since its foundation in 1912, Sharp has devised a string of Japan-first and
world-first products, based on the spirit of “make products that others
want to imitate.”
Sharp formulated two business visions for its 2012 centennial anniversary: “Contribute to the world with environment and health conscious
business, focusing on energy-saving and energy-creating products” and
“Contribute to ubiquitous society with one-of-a-kind LCDs.”
To contribute even more actively to the creation of a green society,
Sharp has built and started operation of the environmentally advanced
manufacturing complex GREEN FRONT SAKAI to produce energy-saving
LCD panels and energy-creating solar cells, and will continue to create
innovative products such as solar products and LED lights. In this way,
Sharp is working to both contribute to protecting the environment and to
realize a new society built around electronics, guided by its corporate
vision of being an Eco-Positive Company.*
*A company that aims to create solutions, in cooperation with all stakeholders, that have significantly more positive
impact on the environment than negative impact caused by the company’s operations.
Cover: GREEN FRONT SAKAI
(An artist’s impression of the completed complex)
Contents
02
04
06
Financial Highlights
Message to
Our Shareholders
Interview with
the President
12
Special Feature: GREEN FRONT SAKAI
Aiming to be an Eco-Positive Company
18
20
24
Segment Outline
Fiscal 2009 Review
by Product Group
R&D and
Intellectual Property
26
29
32
Corporate Social
Responsibility (CSR)
Corporate Governance
Risk Factors
34
35
65
Directors,
Corporate Auditors
and Executive Officers
Financial Section
Investor Information
Annual Report 2010 01
Financial Highlights
Financial Highlights
Sharp Corporation and Consolidated Subsidiaries
Years Ended March 31
Yen
(millions)
U.S. Dollars
(thousands)
2006
2007
2008
2009
2010
2010
Net Sales . . . . . . . . . . . . . . . . . . . . ¥2,797,109
¥3,127,771
¥3,417,736
¥2,847,227
¥2,755,948
$29,955,957
Domestic sales . . . . . . . . . . . . . 1,397,081
1,526,938
1,590,747
1,302,261
1,429,057
15,533,228
Overseas sales . . . . . . . . . . . . . . 1,400,028
1,600,833
1,826,989
1,544,966
1,326,891
14,422,729
Operating Income (Loss) . . . . . . . . 163,710
186,531
183,692
(55,481)
51,903
564,163
Income (Loss) Before Income
Taxes and Minority Interests . . . . 140,018
158,295
162,240
(204,139)
6,139
66,728
Net Income (Loss) . . . . . . . . . . . . . 88,671
101,717
101,922
(125,815)
4,397
47,793
Net Assets . . . . . . . . . . . . . . . . . . . 1,098,910
1,192,205
1,241,868
1,048,447
1,065,860
11,585,435
Total Assets . . . . . . . . . . . . . . . . . . 2,560,299
2,968,810
3,073,207
2,688,721
2,836,255
30,828,859
Capital Investment . . . . . . . . . . . . . 238,839
314,301
344,262
260,337
215,781
2,345,446
R&D Expenditures . . . . . . . . . . . . . 154,362
189,852
196,186
195,525
166,507
1,809,859
Net income (loss) . . . . . . . . . . . . 80.85
93.25
93.17
(114.33)
4.00
0.04
Cash dividends . . . . . . . . . . . . . . 22.00
26.00
28.00
21.00
17.00
0.18
Net assets . . . . . . . . . . . . . . . . . 1,006.91
1,084.76
1,119.09
944.24
949.19
10.32
Return on Equity (ROE) . . . . . . . . . 8.4%
8.9%
8.4%
0.4%
–
Number of Shares Outstanding
(thousands of shares) . . . . . . . . . 1,090,901
1,090,678
1,100,525
1,100,480
1,100,414
–
Number of Employees . . . . . . . . . . 46,872
48,927
53,708
54,144
53,999
–
Per Share of Common Stock
(yen and U.S. dollars)
(11.1%)
(Notes)1. The translation into U.S. dollar figures is based on ¥92=U.S.$1.00, the approximate exchange rate prevailing on March 31, 2010. All dollar figures hereinafter refer to U.S. currency.
2. Effective for the year ended March 31, 2007, net assets are presented based on the new accounting standard, “Accounting Standard for Presentation
of Net Assets in the Balance Sheet” (Accounting Standards Board Statement No. 5) and the “Implementation Guidance for the Accounting Standard
for Presentation of Net Assets in the Balance Sheet” (Financial Standards Implementation Guidance No. 8). Prior year figure has not been restated.
3. The amount of leased properties is included in capital investment.
4. The computation of net income (loss) per share is based on the weighted average number of shares of common stock outstanding during each fiscal year.
5. The number of shares outstanding is net of treasury stock.
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 estimates based on information currently available. These future 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 provided 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 exchange rates (particularly between the yen and the U.S. dollar, the euro and other currencies)
(4) Sharp’s ability to respond to rapid technical 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
(6) Litigation and other legal proceedings against Sharp
02 Sharp Corporation
Operating Income (Loss)
(billions of yen)
(billions of yen)
4,000
(%)
200
6.0
100
3.0
0
0
3,000
2,000
1,000
0
–100
06
07
08
09
10
–3.0
06
07
08
09
10
07
08
09
10
n Ratio to net sales
Net Income (Loss)
Net Assets*
(billions of yen)
(%)
200
6.0
100
3.0
(billions of yen)
1,500
1,000
0
0
–100
–3.0
500
–6.0
–200
06
07
08
09
0
10
06
n Ratio to net sales
*Refer to footnote (Note 2) on page 2
Capital Investment
R&D Expenditures
(billions of yen)
(billions of yen)
(%)
400
200
8.0
300
150
6.0
200
100
4.0
100
50
2.0
0
0
0
06
07
08
09
10
06
07
08
09
10
n Ratio to net sales
Annual Report 2010 03
Financial Highlights
Net Sales
Message to Our Shareholders
Message to Our Shareholders
04 Sharp Corporation
Katsuhiko Machida
Mikio Katayama
Chairman
President
Message to Our Shareholders
The business climate in fiscal 2009 (ended March 31, 2010)
was marked by recovery in China and continuing difficulty in
Japan, Europe and the United States. In Japan, signs of economic recovery emerged as a raft of measures including the
Eco-Point Program took effect, but persistent high unemployment and other factors meant that conditions remained tough.
Outside of Japan, China’s economy recovered thanks to aggressive economic stimulus measures focused on internal demand;
but Europe and the United States saw a limited recovery
affected by continuing difficulty in the employment situation.
Amid these conditions, Sharp made steady progress with
its recovery plan. This included activities to cut total expenses
company-wide, with the goal of building a framework capable
of securing profits even in a harsh business environment. We
also introduced a new business model to innovate the way we
do business. Specifically, we worked to strengthen cooperation with prominent local companies that are involved with
LCD panels and solar cells in our effort to promote local production for local consumption.
Turning to our core businesses, in LCDs, we started production of LCD panels incorporating our proprietary UV2A
photo-alignment technology at our LCD panel plant at GREEN
FRONT SAKAI, which uses 10th generation glass substrates,
the largest in the world. In LCD TVs, we launched our LED
AQUOS product featuring high image quality with low power
consumption. In mobile phones, we worked to expand sales
of our unique products that have built-in solar cells and highdefinition CCD cameras. In health and environmental products,
we expanded our lineups for new products incorporating
Plasmacluster Ion technology and LED lights. In solar cells, we
started operation of our solar cell plant at GREEN FRONT
SAKAI in March 2010 to meet increasing worldwide demand,
mainly for use in large-scale photovoltaic power generation.
Sharp formulated two business visions for its 2012 centennial anniversary: “Contribute to the world with environment
and health conscious business, focusing on energy-saving and
energy-creating products,” and “Contribute to ubiquitous
society with one-of-a-kind LCDs.” At the same time, Sharp
aims to realize its corporate vision of becoming an Eco-Positive
Company, and is working to contribute to the environment as
well as to pursue economic activity through electronics.
The business conditions in fiscal 2010 will probably remain
harsh with economic instability in Europe and high prices for
resources. We will work to improve investment efficiency and
profitability not only by expanding sales in our main businesses, but also by further promoting local production for local
consumption, establishing a value chain in each region and
efficiently allocating our management resources, thereby
minimizing business risks, including those associated with
exchange rate fluctuations. At the same time, we will work to
raise our corporate value by taking steps to expand our CSR
activities group-wide, including enhancing and strengthening
our corporate governance, helping to preserve the global environment and enforcing compliance in business management.
We ask all our shareholders for even greater support and
encouragement going forward.
Chairman
July 2010
President
Annual Report 2010 05
Interview with the President
Interview with the President
Fiscal 2009 Results of Operations
Q
Sharp returned to profitability in fiscal 2009 with operating income of ¥51.9 billion and net income of ¥4.3 billion.
What is your evaluation of Sharp’s performance?
A
I view fiscal 2009 as a year of many significant accomplishments. We ended our losses by implementing a recovery
plan. We switched to a business model based on local production for local consumption. And we started operations at
our new manufacturing complex, GREEN FRONT SAKAI.
In fiscal 2008, Sharp suffered its first net loss since becoming a
listed company on the Tokyo Stock Exchange due to the global
recession and financial crisis. We responded to this downturn by
establishing two goals for fiscal 2009: returning to profitability and
putting a new business model in place. We made steady progress
in reorganizing LCD plants and a variety of other measures in our
recovery plan. Most significantly, our total cost reduction campaign surpassed our goal of eliminating ¥200.0 billion from our
annual expenses.
There were two significant events in our transition to a new
business model. In China, we signed an agreement to carry out a
project for production of LCD panels. In Italy, we signed joint
06 Sharp Corporation
venture agreements for production of solar cells and for photovoltaic power generation. These actions were an important first step
toward a local production for local consumption business model
with value chains established where products are consumed.
One more significant event is the start of operations at GREEN
FRONT SAKAI (please refer to Special Feature on pages 12-17),
which will play a central role in Sharp’s growth from now on.
These events explain why I believe fiscal 2009 was a period of
many noteworthy accomplishments.
Interview with the President
Sharp’s Strengths and Priority Issues
Q
Having ended last year’s losses, Sharp appears to be preparing a business base to start growing again. What strengths
will support Sharp’s growth and what are the issues you need to tackle to achieve this growth?
A
Outstanding technical expertise backed by many years of experience is our greatest strength. But I am strongly aware
that our success will require resolving two major issues: making our brand more powerful worldwide and balancing
our business portfolio.
Sharp will have its 100th anniversary in 2012. The two business
visions that we established for this anniversary year represent
Sharp’s core strengths. First is to “Contribute to the world with
environment and health conscious business, focusing on energysaving and energy-creating products.” Second is to “Contribute to
ubiquitous society with one-of-a-kind LCDs.” For example, in energysaving technologies, in addition to our many technologies centering
on LCDs, we also possess LED technologies. We have been
researching laser diodes, which are technically very close to LEDs,
for 40 years now. Knowledge gained from this research is now part
of our LED operations, too. In the field of energy creation technologies, we began mass production of solar cells 47 years ago. Today,
no other company has manufactured more solar cells than Sharp. We
established this leading position by preserving a clear competitive
edge in many applications and regions of the world. These kinds of
technological capabilities allow us to create a vertically integrated
business model centered on developing devices with innovative
features. This model has underpinned our ability to create a consistent stream of revolutionary products—another major strength of
ours. One more valuable strength is a corporate culture and workforce that can continue to create new technologies year after year.
On the other hand, increasing our brand power and balancing
our business portfolio are our most pressing issues.
In terms of brand power, in Japan, we have the largest share in
the LCD TV and mobile phone markets. Overseas, we are well
known in China for our LCD TVs and in the ASEAN countries for our
health and environmental equipment businesses. The Sharp brand
is very well established in these regions. Despite these strengths,
in the global LCD TV sector, Korean companies have a very high
market share, while in mobile phones we account for only about
1% of global handset sales. We must therefore continue to raise
the profile of our brand.
In our profit structure, two key issues are that our business
portfolio has become heavily weighted toward LCD related businesses and that our device production is based mostly in Japan.
The LCD business requires a large amount of capital investments.
Therefore, we must deal with the substantial effect that large
up-front LCD investments have on our cash flows. Also, manufacturing most devices in Japan makes us vulnerable to movements
in foreign exchange rates. This is a problem in LCDs as well as
solar cells, which we plan to develop into a core business. One of
our highest priorities will be to determine how to shield our profits
from these kinds of risks.
Goals for Business Operations
Q
Please explain your outlook for the business climate and Sharp’s goals for business operations. In particular, how do
you plan to utilize the core strengths you have explained for us, and resolve the two most pressing issues?
A
We will target opportunities created by shifts in the global economic frameworks and the values of consumers. Our
goal is to increase profitability by promoting the local production for local consumption business model and optimizing allocation of management resources.
Major structural changes are occurring in the global economy. The
world is moving closer to creating a low-carbon society. The
framework for global decision making is shifting from the G7,
which consists mostly of industrialized countries, to the G20,
which includes emerging countries, too. We are seeing a dramatic
worldwide shift in consumers’ values. Two capabilities will be vital
to success in this environment. One is developing technologies
for saving and creating energy that can support economic growth
while cutting CO2 emissions. The other is becoming more cost
competitive in relation to prices in emerging countries. These
capabilities are combined in our corporate vision of making Sharp
an Eco-Positive Company. To achieve this vision, we are changing
to a business structure centered on products for saving and creating energy that take advantage of the core strengths I explained
earlier. In this respect, I believe that building environmentallyfriendly plants like those in GREEN FRONT SAKAI will be vital to
our success in the future.
No company in the electronics industry can hope to grow and
remain profitable by relying on an existing business model. Survival demands that we succeed in powerful competition with
Annual Report 2010 07
Interview with the President
foreign companies, adapting to rapid changes in business infrastructures, such as communications and networks, and responding to other challenges. This is why Sharp must broaden its
business domain. In our conventional
business domain, we focused on industrialized countries and selling stand-alone
products, with an emphasis on the value
of each product. We need to expand this
into a wider domain that includes a solutions business and emerging countries. In
industrialized countries, Sharp must
extend beyond the business model centering on stand-alone products to include
Emerging countries
other fields. We must become a source of
Households with annual
total solutions and continue strengthening
our B2B businesses. In emerging countries, the number of households with
annual incomes of more than $10,000 is
climbing rapidly. We will recruit and promote employees within these countries
and step up local procurement, product
design and manufacturing operations. These are necessary steps
to establish a new cost structure that matches the values of
emerging countries.
Expanding Business Domain
Solutions
Expand value chain
Engineering business
Propose total solutions
Strengthen B2B business
ropose total-solution systems (Hardware/
P
software/maintenance)
n Royalty income by providing know-how
n
Industrialized
countries (G7)
incomes of $10,000
Diverse market
Costs to match the values of emerging countries
Product planning and sales promotion targeting
households with annual incomes of $10,000
n
n
Recruitment and promotion of local employees
C
ost reform by carrying out procurement/product
design/manufacturing in emerging countries
Conventional
business domain
Stand-alone products
Focus on value of each product
Q
Please give us more details about optimizing the allocation of management resources.
A
Specifically, we will shift the weight of resources focused on manufacturing upstream to R&D operations and
downstream into marketing. This will create a “smile curve” distribution that will improve investment efficiency
and profitability.
structure of our global business to provide a framework that encourIn the electronics industry, it has become extremely difficult to
ages greater regional autonomy and faster execution of business
improve investment efficiency and profitability in the production
processes. Our next step is to pick up on the unique needs in each
activities segment of the value chain, as illustrated by the smile
region and produce merchandise that is tailored to each market.
curve. This difficulty partly reflects increasing digitization, intensifying
I believe this is the way forward for expanding our business.
global competition and other developments. Sharp began to address
this challenge by continuing its ongoing
introduction of a new business model
Optimum Allocation of Management Resources
through alliances with major companies. By
Material/equipment/IPR, knowProduct planning/design/procureleveraging alliances, we will reduce the
Sales/servicing/solution
how/element technology
ment/production/logistics
Value chain
burden of investment in production, while
Product innovation
Process innovation
Value innovation
optimally allocating management resources
to materials development upstream and
Allocation of management resources
Current
marketing downstream. We believe that
aligning our investment distribution with
Management
the smile curve will increase investment
resources
Smile curve
efficiency and profitability.
Optimum allocation of management
We are focusing on marketing in parresources to match the smile curve
ticular in our investment of resources, with
Future
the goal of rebuilding the Sharp brand and
Allocation of management resources
Management
capturing a larger share of the market. Also,
Investment in marketing
Investment in R&D
resources
Smile curve
because every region presents a different
Expand investment in
Expand investment in
set of needs and market environment, in
upstream business field
downstream business field
April 2010 we revamped the organizational
08 Sharp Corporation
Interview with the President
Sharp’s Strategies for Growth
Q
Please explain your views of market conditions for Sharp’s core businesses and your strategies for achieving growth.
A
LCD/LCD TV Business
In the large-size LCD and LCD TV category, we plan to rebuild the Sharp brand around our proprietary LCD technology. For
small- and medium-size LCDs, we plan to improve profitability by utilizing continuous grain silicon (CG-Silicon) technology.
Large-size LCDs/LCD TVs
Small- and Medium-size LCDs
With demand in emerging countries growing faster than expected,
supplies of LCD panels for TVs are projected to remain tight until
fiscal 2011. The increasing popularity of LED TVs and 3D TVs is
another key dynamic in this market. Only a few manufacturers in
the world can supply panels with high definition and brightness
required by these new technologies.
In order to meet the strong demand for high-performance panels,
we increased input capacity at the LCD panel plant in GREEN FRONT
SAKAI to 72,000 glass substrates per month. This plant produces
highly competitive LCD panels that feature Sharp’s proprietary technologies like UV2A technology and four-primary-color technology.
In the LCD TV business, we plan to increase sales by focusing
on our AQUOS Quattron models, which combine our UV2A technology and four-primary-color technology, and launching an
AQUOS Quattron 3D TV. We plan to have AQUOS Quattron TVs in
stores worldwide by the end of fiscal 2010. I am confident this will
add impetus to our brand restructuring. Concurrently, we will
convert all of our TVs to LED-backlit models. However, the supply
of LED chips is limited. As eliminating procurement risk is a key
factor in our business expansion, we have established crosslicensing agreements with major LED manufacturers and started
making these chips ourselves. This will give us a well-balanced
framework for procuring LED chips. We started making blue LED
chips early in 2010 at our Mihara Plant and will begin mass production at the Fukuyama Plant by the end of fiscal 2010. I am
confident that these initiatives will allow us to keep up with rapid
growth in demand for LED TVs.
The market for small- and medium-size LCDs remained difficult in
fiscal 2009 and the oversupply of these panels is likely to continue. But there is good news, too. Display functionality and definition are expected to improve as new applications like
smartphones and e-books emerge. The 3D touch panel is a prime
example of this trend. As demand climbs, I expect to see a supply
shortage of high value-added LCDs.
Amid these trends, in April 2010, we unveiled a 3D touchscreen LCD that incorporates an advanced version of our CG-Silicon
technology, which is a key strength of ours in the LCD field. We
want to improve profitability in our small- and medium-size LCD
business by increasing sales of high value-added displays, a market
sector where we are very competitive.
Annual Report 2010 09
Interview with the President
A
Mobile Phone Business
We will work to grow in China and other overseas markets while expanding our smartphone business and creating
new mobile devices.
In Japan, where most mobile phone demand is for either high-end
or affordable products, our goal is to retain our number one position
for the sixth consecutive year. For the high end, we will introduce
new smartphones and other devices. At the same time, we will
work to expand our product lineup of affordable handsets.
In China, we are extending our sales network from major cities
to smaller regional cities. Concurrently, we will use technologies
A
from Japan to introduce cost-competitive products that match the
needs of local markets.
In Europe and the United States, our goals are to restart fullfledged operations in these regions, including the introduction of
smartphones and other high-performance devices. At the same
time, we will work to reinforce the Sharp brand.
Health and Environmental Equipment Business
We will promote our LED lights globally and expand our range of products with our proprietary Plasmacluster
Ion technology.
LED Lighting
Plasmacluster Ion Technology
Demand for LED lighting products is expected to grow rapidly
because of recent energy conservation programs in many countries around the world. Sharp started its industrial LED lighting
business in fiscal 2008 and began selling household LED lamps
in fiscal 2009. We are enlarging our product range and plan to
continue expanding this business by increasing B2B sales and
sales outside Japan.
Sharp has both an LED device business and products business
including LED lights and LED TVs that can use LEDs for backlights.
These two businesses harbor synergies that enable us to reduce
costs through mass production and quickly develop products that
allow adjustment of color and brightness.
Sales of products featuring our Plasmacluster Ion technology have
been strong. We use this technology in our own home appliances,
including air purifiers, and other products. In addition, 24 companies
in other industries are applying our Plasmacluster Ion technology for
automobiles, high-speed rail cars and many other applications. We
plan to further increase B2B sales of Plasmacluster Ion products and
grow our overseas business, mainly in China and the ASEAN region.
During fiscal 2010, we expect cumulative worldwide sales of
products incorporating the Plasmacluster Ion technology to surpass 30 million units.
Cumulative Worldwide Sales of Products Featuring
Plasmacluster Ion (PCI) Technology
(millions of units)
Achieved
high-density Ions
30
25
Application in
other Sharp
products
20
First PCI product:
Air purifier
Record 30
million units
Record 20
million units
Adopted in housing
complex
15
10
Introduced in
rail cars
Increased collaboration with
other industrial sectors
triggered by car application
(End of 2008)
First application in
other industrial
sectors
Record 10
million units
5
(Nov. 2005)
0
10 Sharp Corporation
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010 (FY)
(Forecast)
Interview with the President
A
Solar Cell Business
Sharp will work to meet strong demand with both crystalline and thin-film solar cells.
Electricity market
Peripheral devices
Modules
Cells
Wafers
Production
equipment
Raw material
Profit ratio
Value chain & Sharp’s strategy
Strong growth in demand for solar cells is anticipated worldwide,
Sharp wants to become a total solutions company in the solar
aided by government environmental programs in various councell market. Offering these solutions will require covering every step
tries. Japan has enhanced subsidies to assist with installation
of the value chain, including the production of materials, system
costs for residential households. The United States is expected to
integration services and even Independent Power Producer (IPP)
implement full scale “Green New Deal” policies. China as well is
businesses.*1 With this goal in mind, we are increasing activities in
this market and aiming for higher profitability. Our collaboration with
expected to establish policies that encourage more people to use
Enel Green Power and STMicroelectronics in Italy is one example.
photovoltaic power generation systems.
We intend to use our technological skills gained over many years in
To supply solar cells that meet various customers’ needs, Sharp
the solar cell business to establish a local production for local conproduces two types of cells. Crystalline solar cells are ideal for locasumption business model in other areas of the world, too.
tions like houses where installation space is limited. Thin-film solar
cells are the best choice for large-scale
power generation systems in hot climates.
Value Chain Targeted by Sharp
For crystalline solar cells, we are working on
Becoming a total solutions company
lowering manufacturing costs while boosting
IPP Joint venture
conversion efficiency. This involves innovaSystem
tion of technologies and strategic silicon
integration Industrial
procurement based on cooperation with
Sales company
EPC*2
major silicon makers. Meanwhile, thin-film
Residential
solar cells, which have a small loss of converIn-house
Strategic
sion efficiency even under high temperatures
In-house
procurement
production
In-house
production &
Consortium
O&M*3
In-house production
and are suited to installation over large areas,
production
Joint
In-house
development Consignment
production
are expected to see an increase in demand
production
for use in flat-space installations, such as
mega solar power generation facilities. To
Allocation of management resources
Expand investment in
Expand investment in
keep up with this rapid upturn in demand we
to match the smile curve
upstream business field
downstream business field
started operations in March 2010 at our solar
cell plant at GREEN FRONT SAKAI.
Corporate Value
*1 A business that builds and operates its own power generation facilities, and sells the electric power it generates to
power companies.
*2 Engineering, Procurement, Construction
*3 Operation & Management
Q
What is Sharp doing to increase its corporate value?
A
As we pursue our two business visions, we are committed to achieving our corporate vision of becoming an
Eco-Positive Company. We believe this will contribute to growth in our corporate value.
There are many opinions concerning the best way to increase
corporate value. From the standpoint of increasing shareholder
value, as I have explained earlier, I believe that we need to improve
our investment efficiency and our profitability. This is important
because it will give us a sounder financial position and support the
growth of our business operations. As a company, meanwhile,
Sharp places priority on acting as a responsible global citizen by
helping to protect the environment. Dramatic changes have
occurred in the global economy and the values of consumers in the
wake of the financial crisis. Sharp has many technologies that are at
the center of the ongoing global transition to a low-carbon society.
As a result, I believe that today’s operating environment presents us
with enormous opportunities to begin a period of renewed growth.
Sharp will retain a commitment to the two business visions I outlined earlier. While pursuing these visions, we will create “green”
added value from technologies that save and create energy through
our business operations. By adhering to these principles, I am
convinced that fulfilling our corporate vision of becoming an EcoPositive Company will make a direct contribution to further growth
in our corporate value.
Annual Report 2010 11
Special Feature
Utility Area
LCD Panel Plant
Logistics Area
Glass Plant
Color Filter Plant
12 Sharp Corporation
GREEN FRONT SAKAI
Aiming to be an Eco-Positive Company
Covering approximately 1.27 million m2, the huge production site GREEN
FRONT SAKAI integrates the production operations of companies from
various industries, using cutting-edge technology and processes. Managing the operations of 19 companies including Sharp as if they were one
enterprise contributes to significant efficiency gains for all.
The site features shared electric and gas utilities infrastructure, highefficiency logistics and simplified production steps to realize highly efficient and eco-friendly operations.
GREEN FRONT SAKAI represents the start of an environmental revolution in manufacturing that will contribute to a new, eco-friendly society
built around advanced electronics.
Solar Cell Plant
Logistics
Glass
substrates
Liquid
chemicals
Hydrogen
gas
Office
leasing
operations
Gas
List of 19 companies on site
n Asahi
Electric
power
Color filters
Bringing together advanced technology
to form “a unified virtual company”
Industrial
gases
Energy
Pure water
supply and
wastewater
treatment
Packaging
Sewerage
treatment
Photoresist
LCD panels
Solar cells
Glass Co., Ltd.
Japan K.K.
n Daido Air Products Electronics, Inc.
n Dai Nippon Printing Co., Ltd.
n Daiwa House Industry Co., Ltd.
n Iwatani Corporation
n Kanden Energy Solution Co., Inc.
n Kobelco Eco-Solutions Co., Ltd.
n Koike Sangyo K.K.
n Kurita Water Industries Ltd.
n Nagase & Co., Ltd.
n Nippon Express Co., Ltd.
n Osaka Gas Co., Ltd.
n Sekisui Plastics Co., Ltd.
n Sharp Corporation
n Sharp Display Products Corporation
n Taiyo Nippon Sanso Corporation
n The Kansai Electric Power Co., Inc.
n Toppan Printing Co., Ltd.
(Listed in alphabetical order)
n Corning
Sections shown in dashed lines and rooftop solar panels are an artist’s
impression of the completed complex.
Areas outside the GREEN FRONT SAKAI site do not portray real areas.
Annual Report 2010 13
Special Feature
Sharp’s new state-of-the-art GREEN FRONT SAKAI is one of the
largest and most advanced eco-friendly manufacturing complexes
in the world. We aim to become an Eco-Positive Company by making
products with superior environmental performance in green factories.
Saving Energy
LCD Panel Plant
An LCD Panel Plant—a Mother Plant for a New Business Model
Special Feature
The factory uses the latest technology to realize super-efficient production of high-performance LCD panels to supply
the growing world market for LED TVs and 3D TVs. This plant is the mother plant for a new business model that will focus
on the establishment of local value chains in regions where products are consumed to promote local production for
local consumption.
The LCD TV industry is witnessing a surge in consumer expectations for TVs with new technology such as LED TVs and 3D
TVs that enable outstanding energy-saving performance and
new ways to enjoy viewing. This has created great demand
for LCD panels that offer even higher levels of definition and
brightness, while using less electricity.
In response, we have combined Sharp’s proprietary UV2A
technology and four-primary-color technology to develop a
revolutionary LCD technology that delivers LCD panels with
super-high image quality that also consume minimal power.
Sharp Display Products Corporation (SDP)*1 makes these
LCD panels at a state-of-the-art plant in GREEN FRONT SAKAI.
The initial input capacity of the plant when operations began in
October 2009 was 36,000 glass substrates per month, but we
doubled this to 72,000 units per month in July 2010 to meet
the booming demand for high-performance LCD panels.
The plant is the first in the world to employ 10th generation glass substrates. In addition to LCD TVs, we aim to
develop the market for super-size LCD products larger than 60
inches, such as digital signage displays.
The World’s First Introduction of 10th Generation
Expanding the Market for Super-size LCDs
Glass Substrates
Covering an area of about 9m2, each 10th generation glass
A multi-screen display system with a system frame width of
substrate can be cut to make energy-efficient, high-contrast
6.5mm,*2 the thinnest in the world,*3 uses super-size LCDs to
LCD panels of either the 40-inch or 60-inch class. We will supply
create completely new and innovative spaces.
these cutting-edge LCD panels to the global market.
*1 A joint venture between Sharp and Sony Corporation, and a subsidiary of Sharp.
*2 The width of the frames between the LCD monitors that make up a multi-screen display system.
*3 For LCDs of 46 inches and larger, as of June 7, 2010.
14 Sharp Corporation
UV2A technology allows highly efficient use of backlighting and saves energy, while four-primary-color technology
produces vivid, natural images. Sharp fuses these advances to create a one-of-a-kind LCD panel technology at its plant in
GREEN FRONT SAKAI.
UV2A* Technology
Four-Primary-Color Technology
The plant uses UV2A technology, a completely new photoalignment technology that exposes ultraviolet (UV) light onto
an alignment film as part of the LCD panel manufacturing process. This next-generation “pico-technology” for LCDs can
control the tilt angle of liquid crystal molecules only 2 nanometers (a nanometer equals 10–9m) long, controlling them evenly
and with precision measured in picometers (a picometer equals
10–12m). Conventional technology required structural ribs and
slits to stably control the alignment of liquid crystal molecules
in each individual cell. These structures allowed light to leak
through when making the screen dark, and reduced transmissivity when making the screen bright, compromising contrast
and preventing efficient use of the backlight. By eliminating
ribs and slits UV2A technology enables far more efficient use of
light and greatly reduces power consumption. The result is a
high-perfomance display able to produce a wide range from
extremely deep blacks to brilliant whites that also consumes
significantly less power.
Sharp has overturned the conventional color reproduction
approach in TVs based on three primary colors (red/green/blue)
by adding yellow as a fourth color. We have started production
of LCD panels featuring this newly developed four-primarycolor technology. The conventional three-primary-color method
makes accurate color reproduction difficult for many intermediate hues. Adding yellow makes it possible to reproduce
colors such as gold, sunflower yellow and cyan blue in a more
vivid and realistic way than ever before. By integrating this
four-primary-color approach with Sharp’s image processing
circuit technology, we have realized higher definition and a
wider color gamut.
Innovation of LCD Panel Technology
Conventional Technology
UV2A Technology
Bright image
Fast response
■ High contrast
Four-Primary-Color Technology
Bright image
Fast response
■ High contrast
■
■
■
■
■
■
ider color gamut
W
High definition
* An abbreviation of Ultraviolet-induced multi-domain Vertical Alignment.
Annual Report 2010 15
Special Feature
State-of-the-art LCD Panel Technology by Sharp
Creating Energy
Solar Cell Plant
A Solar Cell Plant at the Cutting-edge of the Industry
Special Feature
Solar cells are set to become a vital part of global power generation infrastructure as we move toward a low-carbon society. Building on almost half a century of technical expertise, cost efficiency and operational reliability, the new solar cell
plant at GREEN FRONT SAKAI will realize world-class productivity and conversion efficiency while supplying a rapidly
expanding global market.
Markets for solar cells are expected to expand across many
regions of the world. In addition to Europe, where strong sales
are projected to continue, subsidies for residential households
have been enhanced in Japan. Furthermore, the United States
is expected to implement full-scale “Green New Deal” policies, and the Chinese government is also expected to begin
encouraging market adoption of photovoltaic power generation systems.
Against this backdrop, demand for thin-film solar cells is
predicted to increase due to demand from mega solar power
generation plants. Thin-film solar cells are ideal for use in
such projects, since they are suited for flat-space installation.
There are many business deals under negotiation for our
thin-film solar cells with plans to use them in mega solar
power generation plants and other industrial applications.
Global Solar Cell Demand Trends and Market Size
18%
Solar Cell Demand (Crystalline/Thin-film)
(GW)
20
33%
FY2012
(Forecast)
FY2009
The new plant at GREEN FRONT SAKAI is positioned to
supply the surging demand.
The new plant began producing thin-film solar cells using
large-size (1,000 × 1,400 mm) glass substrates in March
2010. Integration with the LCD panel plant helps to boost
productivity through efficiency gains because thin-film solar
cells share materials and infrastructure with LCD panels. In
the first phase, the plant has started operating with an annual
production capacity of 160MW. This will be expanded in line
with global demand growth.
In a bid to realize grid parity* at an early stage, Sharp will
also leverage manufacturing equipment based on our proprietary production technology to boost conversion efficiency, while dramatically lowering material costs and
improving productivity.
n Residential
n Industrial
n Flat-space
installation
n Independent
sources
(GW)
20
Approx.
3.7 times
15
(rel. to FY2009)
10
16.9
15
13.2
10.5
10
5.5
5
0
5
7.7
2008
2009
2010
(Forecast)
2011
(Forecast)
2012 (FY)
(Forecast)
0
Japan
Other
The Europe World
Americas
FY2009
n Japan n Europe n The Americas n Other
(Source: Sharp)
n Crystalline n Thin-film
*Generation of electricity at a cost on par with the price of that supplied by power stations through the electricity grid.
16 Sharp Corporation
Japan
Other
The Europe World
Americas
FY2012 (Forecast)
(Source: Sharp)
GREEN FRONT SAKAI is a showcase for creation of energy-saving LCD panels and energy-creating solar cells. The office facilities
on site also incorporate the latest in environmental technology, further reducing the overall environmental burden generated by
business activities.
Environmental Performance (1):
Eco-friendly, High-efficiency Manufacturing
Environmental Performance (2):
Eco-friendly Design for the Entire Plant
Major energy savings realized by integrated energy
management center
Large-scale on-site photovoltaic power generation set-up
Conventionally, utilities such as electricity, gas and water are
managed separately at each plant. At GREEN FRONT SAKAI,
an integrated energy management center controls energy use
across the entire complex, realizing significant savings in
energy and resources. The systems at this facility allow controllers to visualize energy
use across the complex in
real time, allowing them to
optimize energy control to
prevent waste and safety
problems.
Inter-building transport system for super-efficient production
Previously, the glass substrates and color filters used to make
LCD panels were delivered to the LCD panel plant each day
by trucks from their respective factories. At GREEN FRONT
SAKAI however, the factories are all in close proximity and are
connected by an inter-building transport system, allowing
smooth delivery of materials as though they were
being transported within a
single plant. This cuts lead
times and reduces CO2
emissions from transportation, helping to realize
super-efficient operations.
State-of-the-art IT system for convergence of supply
chain management
GREEN FRONT SAKAI features a large-scale photovoltaic
power generation system on rooftops and other spaces. This
system will be used to generate a portion of the power used
for production.
100,000 energy-efficient LED lights installed
Long-life, energy-efficient
LED lighting has been
installed throughout GREEN
FRONT SAKAI. The site also
includes LED lights fitted
with Sharp’s Plasmacluster
Ion generating units, as well
as solar-powered LED lights
for use outdoors.
Walkways constructed from recycled LCD panel waste glass
The walkways at GREEN FRONT SAKAI are made from proprietary porous blocks that incorporate recycled waste glass
from LCD panel production.
The material in the blocks
allows rainwater to pass
through and is expected to
help keep the walkways
from becoming hot.
On-site fleet of low-emission vehicles (LEVs)
To reduce CO2 emissions further, we will systematically introduce a fleet of low-emission vehicles for on-site travel. These
will include LEVs powered by electricity and natural gas.
IT systems are used at GREEN FRONT SAKAI to realize
highly efficient production. These technologies make the
entire supply chain flow visible—from production planning to
process management and shipment. They also improve efficiency by allowing information about manufacturing at each
plant to be shared.
Annual Report 2010 17
Special Feature
GREEN FRONT SAKAI Showcases High-efficiency
Operations Combined with Eco-friendliness
Segment Outline
Sharp Corporation and Consolidated Subsidiaries
Years Ended March 31
Consumer/Information Products
Audio-Visual and
Communication Equipment
Health and
Environmental Equipment
Segment Outline
Main Products
LCD color televisions, color televisions, projectors, DVD recorders,
Blu-ray Disc recorders, Blu-ray Disc
players, mobile phones, PHS (personal handy-phone system) terminals, mobile communications
handsets, personal computers,
electronic dictionaries, calculators,
facsimiles, telephones
Information Equipment
Main Products
Refrigerators, superheated steam
ovens, microwave ovens, air conditioners, washing machines, vacuum
cleaners, air purifiers, dehumidifiers, humidifiers, electric heaters,
small cooking appliances, Plasmacluster Ion generators, LED lights,
solar-powered LED lights
Sales
Main Products
POS systems, handy data terminals, electronic cash registers, LCD
color monitors, information displays, digital MFPs (multi-function
printers), options and consumables,
software, FA equipment, ultrasonic
cleaners
Total Assets
(billions of yen)
(billions of yen)
0
1,000
3,000
2,000
0
500
1,000
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
Operating Income (Loss)
Capital Investment
(billions of yen)
–50
2,000
(billions of yen)
0
50
100
150
0
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
100
· Sales shown on pages 18-19 include internal sales between segments (Consumer/Information Products and Electronic Components).
· Operating income (loss) shown on pages 18-19 is the amount before elimination of intersegment trading.
· Total assets shown on pages 18-19 show the amounts before elimination of intersegment trading, and do not include corporate assets.
· Capital investment shown on pages 18-19 includes the amount of leased properties.
18 Sharp Corporation
1,500
200
300
Electronic Components
Solar Cells
Main Products
TFT LCD modules, Duty LCD modules, System LCD modules
Other Electronic Devices
Main Products
Crystalline solar cells, thin-film solar
cells
Sales
Main Products
CCD/CMOS imagers, LSIs for
LCDs, microprocessors, flash
memory, analog ICs, components
for satellite broadcasting, terrestrial
digital tuners, RF modules, network
components, laser diodes, LEDs,
optical pickups, optical sensors,
components for optical communications, regulators, switching power
supplies
Total Assets
(billions of yen)
(billions of yen)
0
1,000
3,000
2,000
0
500
1,000
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
Operating Income (Loss)
Capital Investment
(billions of yen)
–50
1,500
2,000
(billions of yen)
0
50
100
150
0
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
100
200
300
Annual Report 2010 19
Segment Outline
LCDs
Fiscal 2009 Review by Product Group
Sharp Corporation and Consolidated Subsidiaries
Years Ended March 31
Consumer/Information Products
Audio-Visual and Communication Equipment
Sales of Audio-Visual and Communication Equipment
(billions of yen)
0
500
1,000
1,500
2,000
2008
41.1%
2009
2010
Fiscal 2009 Review by Product Group
This product group posted lower sales and higher profits. Brisk sales of LCD TVs and Blu-ray Disc recorders in
Japan were overshadowed by a decline in sales of LCD TVs overseas. Nevertheless, improved profitability in LCD
TVs and mobile phones resulted in increased profits.
LCD TVs
The market for LCD TVs expanded, primarily in China and Japan, the latter benefitting
from the Eco-Point Program. In the United States and Europe, there was an increase in
demand for LED models. Sharp’s new high-image-quality, low-power-consumption LED
AQUOS was well received by the market. Going forward, by using proprietary technologies, such as the UV2A technology and four-primary-color technology, to differentiate
itself from its competitors, Sharp will work to expand sales of LED models and 3D
models, for which demand is expected to grow. Through these efforts, Sharp will aim
to grow the LCD TV business and strengthen the brand.
LED AQUOS
Blu-ray Disc Recorders/Players
In Japan, there has been growth in the market for Blu-ray Disc recorders capable of
recording long-play digital broadcasting in high-definition. In response, Sharp has introduced and increased sales of products featuring the AQUOS Familink, which allows
use of a single remote control to operate LCD TVs and linked surround sound systems,
as well as Sharp’s proprietary technology that allows extended recording. Sharp will
continue to develop products that meet the needs of the market, such as 3D models,
and aim to grow sales.
AQUOS Blu-ray Disc recorder
Mobile Phones
Despite the downturn in the domestic market, Sharp continued to expand its product
lineup, including unique handsets featuring high-definition CCD cameras and solar cells,
and as a result retained the top share* in the Japanese market for the fifth consecutive
year. Meanwhile, in markets outside of Japan, Sharp has enhanced its product lineup
and increased sales in China, where the mobile phone market continues to expand.
Going forward, Sharp will continue to expand the business by pouring energy into the
smartphone market, which is expected to see an increase in demand, and otherwise
develop products that meet the needs of both the domestic market and markets
overseas.
*Research from MM Research Institute, Ltd.
Mobile phones
Left: for Japanese market
Right: for Chinese market
· Sales shown on pages 20-23 include internal sales between segments (Consumer/Information Products and Electronic Components). The percentage of sales in pie charts is
calculated accordingly. The Other Electronic Device group’s sales do not include internal sales to the LCD/Solar Cell groups.
· Effective for the year ended March 31, 2009, product groupings had been recategorized. In this connection, results for 2008 have been restated to conform with the 2009
presentation. Also, effective for the year ended March 31, 2010, some items previously included in Information Equipment had been reclassified and were included in AudioVisual and Communication Equipment. In this connection, results for 2009 have been restated to conform with the 2010 presentation.
20 Sharp Corporation
Health and Environmental Equipment
Sales of Health and Environmental Equipment
(billions of yen)
0
100
200
300
2008
7.5%
2009
2010
Fiscal 2009 Review by Product Group
This product group saw sales and profits increase mainly due to increased sales of air purifiers equipped with
Plasmacluster Ion technology and Plasmacluster Ion generators.
Health and Environmental Products
Amid rising awareness of health among consumers, there has been heightened interest in products featuring Sharp’s unique Plasmacluster Ion technology that controls
airborne viruses,* mold and other impurities, and eliminates odors. Sharp has increased
sales of products featuring this technology by introducing portable products and has
otherwise enhanced the lineup of Plasmacluster Ion generators, along with thorough
efforts to promote the benefits and efficacy of this technology. Sharp has also
responded to the growth in the LED lighting market by launching sales of LED lamps in
Japan and steadily expanding the product lineup. Going forward, we will strive to
expand the LED lighting business overseas, starting with the North American market.
*This result was from a 10-minute experiment inside a 1m3 sealed container. It is not the result of a trial in actual use.
Plasmacluster Ion generators
Left: for use in lounges
Right: for use in vehicles
LED lamp
Information Equipment
Sales of Information Equipment
(billions of yen)
0
100
200
300
400
500
2008
8.7%
2009
2010
Both sales and profits in this product group fell amid a continued harsh environment for B2B business mainly due
to reduced capital expenditure by companies.
Digital MFPs
Demand for digital MFPs declined in conjunction with the global economic downturn,
particularly in industrialized countries, but signs of a recovery emerged in the second
half of the fiscal year. Sharp introduced a monochrome digital MFP that consumes
significantly less electric power, and otherwise enhanced the product lineup. We also
actively proposed document solutions linked with business applications. Going forward,
as companies grow increasingly conscious of the environment and the need to reduce
costs, we will respond by further increasing our lineup and enhancing the environmental performance of our products. We will also work to promote total office solutions by
proposing solutions to help customers improve the efficiency of their business activities, and offering ideas for comfortable and environmentally friendly office spaces.
Digital MFP
Annual Report 2010 21
Electronic Components
LCDs
Sales of LCDs
(billions of yen)
0
500
1,000
1,500
2008
27.4%
2009
2010
Fiscal 2009 Review by Product Group
This product group saw a decline in sales, as there was a decline in prices mainly of LCDs for use in mobile devices.
Meanwhile, profits for this product group increased, even taking into account the start-up costs of an LCD panel
plant at GREEN FRONT SAKAI.
Large-size LCDs
The demand for large-size LCDs was firm following the growth in the LCD TV market.
In October 2009, Sharp brought online a plant at GREEN FRONT SAKAI to produce
cutting-edge LCD panels using the world’s first 10th generation glass substrates. This
plant employs Sharp’s proprietary technologies, including the UV2A technology, which
realizes high optical efficiency for energy-saving and produces high-contrast levels, as
well as four-primary-color technology, which newly adds yellow to the primary colors of
red, green and blue to enhance color reproduction. These technologies allow us to
produce optimal, high value-added LCDs for LED TVs and 3D TVs, which are expected
to see an increase in demand going forward. To meet the robust demand for highperformance panels, in July 2010 we doubled the input capacity of glass substrates to
72,000 per month, from the 36,000 per month at the start of operations.
LCD panel plant at GREEN FRONT SAKAI
Small- and Medium-size LCDs
The business environment remained challenging, particularly due to the decline in
market prices of LCDs for mobile phones and portable game devices. In addition to
efforts to overhaul the cost structures of existing businesses, Sharp worked to cultivate
new markets and develop new technologies with the aim of shifting to high valueadded businesses. We are promoting design-in activities for high value-added LCDs,
such as 3D LCDs and touchscreen LCDs, which have evolved from our strong-point
CG-Silicon technology. We will actively incorporate these LCDs in mobile phones, portable game devices and digital cameras, as well as smartphones and e-books, for which
market growth is anticipated.
22 Sharp Corporation
3D touchscreen LCD
Solar Cells
Sales of Solar Cells
(billions of yen)
0
50
100
150
200
250
2008
6.4%
2009
Sales and profits both increased for this product group. Sales increased mainly in Japan, supported by subsidies to
assist with installation costs for residential photovoltaic power generation systems, and a scheme to require utility
companies to buy back surplus power generated.
Solar Cells
The mainstay European market was temporarily impacted by revisions to feed-in tariffs and the
financial crisis, but the market was relatively solid in the second half of the fiscal year. In the
Japanese market, demand increased, particularly for residential applications, due to the
strengthening of government policies to promote greater uptake. In crystalline solar cells, we
worked to reduce material costs through strategic procurement of silicon materials, and to
expand the sales network. We also commenced production of thin-film solar cells at the new
plant in GREEN FRONT SAKAI. With governments around the world bolstering their environmental policies and programs, demand for solar cells is expected to grow worldwide. We will
therefore expand our production frameworks for both crystalline solar cells and thin-film solar
cells, and boost our cost performance by improving conversion efficiencies and productivity.
Solar cell plant at GREEN FRONT SAKAI
Other Electronic Devices
Sales of Other Electronic Devices
(billions of yen)
0
100
200
300
400
2008
8.9%
2009
2010
This product group saw sales decline as sales prices of devices mainly for digital products fell, despite growth in sales
of mainstay CCD/CMOS imagers. Profits increased, however, despite the decline in sales.
Electronic Devices
The electronic devices market showed signs of recovery after a downturn due to the
global economic slowdown. However, although sales volumes increased, prices fell
significantly. Sharp responded by leveraging its strengths in a wide range of devices,
from semiconductors to electronic components, and working to merge technologies to
create distinctive devices. We developed high value-added devices such as 12 megapixel CCD camera modules and solar modules for mobile devices. Other developments
include LED backlight modules for LCD TVs and LED modules for lighting, which have
expanded our business fields. Next we will strengthen our LED business by vertically
integrating it from LED chips through to products equipped with LEDs.
12 megapixel CCD
camera module
LED device for lighting
Annual Report 2010 23
Fiscal 2009 Review by Product Group
2010
R&D and Intellectual Property
R&D Strategy
Based on the fundamental policy of “selection and concentration,” Sharp conducts R&D activities with the goal of developing the technologies needed to constantly create one-of-a-kind
products from the perspective of users. The final objective is
to ensure that customers are satisfied with Sharp products. To
accomplish this objective, we focus on three approaches to
R&D. First is creating unique products through the vertical
integration of our core technologies. Second is leveraging
commodity technologies shared in and outside of the company. Third is using “open innovation” and cooperation with
partners to gain expertise in fields of technology that are new
to Sharp. Using all three approaches allows us to perform
R&D that is distinctive, speedy and efficient.
UV2A technology and four-primary-color technology
R&D and Intellectual Property
Sharp has created UV2A technology*1 and four-primary-color
technology,*2 which greatly improve LCD picture quality while
lowering power consumption. UV2A technology uses an alignment film made of an innovative material that responds to UV
light to control the alignment of liquid crystal molecules with
extremely high precision in accordance with the direction of
the UV radiation. This UV2A technology enables LCDs to use
light much more efficiently and achieve higher contrast and a
faster response time. Four-primary-color technology adds
yellow to the conventional primary colors of red, green and
blue. This technology realizes more efficient use of light and
generates a wider color gamut to allow outstanding color
reproduction. Combining these two technologies with FRED
technology*3 and side-mount scanning LED backlight technology,*4 has enabled the high brightness, high contrast and low
crosstalk (undesirable double-contour “ghost” images) that
are vital to producing realistic 3D pictures.
*1 Please refer to “UV A Technology” on page 15.
*2 Please refer to “Four-Primary-Color Technology” on page 15.
*3 An abbreviation of Frame Rate Enhanced Driving. It is a signal processing technology
that allows high brightness with a single source array.
*4 A technology that reduces crosstalk by dividing the LED backlight into separate areas
and switching the backlight on and off at high speed.
2
Personal protein chip
Sharp has developed a system able to detect specific proteins in the body that are associated with diseases with high
accuracy. We plan to use this system in medical care and
other health-related businesses. The system detects multiple
Personal protein chip detection system
24 Sharp Corporation
proteins at the same time, enabling healthcare workers not
only to detect the presence of proteins, but also to measure
their composition pattern. We are working with medical
institutions to create a method to employ this technology for
determining an individual’s sensitivity to drugs used to fight
cancer. The technology is expected to contribute to progress
in personalized health care that will help physicians to detect
diseases early and select the best treatment method for
each individual.
LC font technology for Chinese
For some time, Sharp has been involved in research concerning LC font generating technology, which improves the quality
of text on LCDs. One recent development is an LC font for
Chinese that incorporates designs based on China’s rich culture of lettering. The font conforms with GB18030-2000, the
Chinese national character set standard that encompasses
about 28,000 characters. Sharp has begun using the font in
AQUOS LCD TVs for the Chinese market. Sharp uses a compact, high-speed-processing display engine for the fonts that
employs a unique center-line stroke writing method to display
character-based information in a way that is easy to read.
AQUOS LCD TV embedded with a
Chinese LC font
Mobile communications technology
Sharp is working to develop a wireless communication technology that transmits large volumes of data efficiently using
only limited frequencies. This research is a joint effort with
overseas research institutes and universities in Japan and
other countries. We have been announcing the results of our
research at international standardization meetings. Some of
our technologies have already been adopted as a core component of Long Term Evolution (LTE), the next-generation
mobile communication standard. We will continue these
activities with the aim of contributing to further progress in
mobile communications.
Sharp has much experience in the development of multijunction compound solar cells, which stack layers to absorb differing wavelengths of light and generate electricity. This
allows efficient generation of electricity from solar energy,
which is made up of a broad spectrum of wavelengths. Our
triple-junction solar cell, which has layers made of three
different materials, is used to power satellites. Sharp’s compound solar cells achieving a conversion efficiency of more
than 30% propelled a Tokai University solar car to victory in
October 2009 in Australia at one of the world’s largest solar
car races. This accomplishment demonstrates the outstanding performance of our solar cells. Going one more step,
Sharp has achieved the world’s highest conversion efficiency* of 35.8% at the research level. We set this record by
using a composition of materials that maximizes the efficient
use of solar energy and employing our exclusive technology
for forming layers. We will continue to create more innovative technologies that can further improve the performance
of solar cells.
The Tokai University team with the solar car “Tokai Challenger,” the winning entry in
Global Green Challenge, one of the world’s largest solar car races
*As of May 2010, for non-concentrator solar cells at the research level (based on a
Sharp survey).
Topic: IEEE Milestone* recognition
President Katayama accepting the commemorative plaque
Sharp’s achievements in the commercialization and industrialization of solar cells
from 1959 to 1983 have been recognized as an IEEE Milestone by the IEEE (Institute of Electrical and Electronics Engineers), the world’s largest academic society
for electrical, electronics, information, and telecommunications engineering. Following the 1963 start of mass production of solar cells, Sharp continued to conduct steady R&D activities to produce solar cells for demanding applications like
lighthouses and satellites, where cells need to be resistant to salt water and wind,
or the extreme temperature changes of space. These R&D activities played a
major role in the subsequent expansion of the markets for residential and industrial solar cells. The IEEE milestone award paid tribute to these achievements.
*The IEEE established the IEEE Milestone program in 1983 to honor significant historic achievements in electricity,
electronics, and other related fields, that have contributed to the betterment of society.
Intellectual Property Strategy
Sharp views its intellectual property strategy as one of its key
management measures, promoting it in a coherent manner
with business and R&D strategies. In order to secure a competitive edge with one-of-a-kind products and one-of-a-kind
devices for stronger business foundations, Sharp is aggressively promoting patent right obtainment.
Sharp has clearly delineated the fields that are central to
each business group and has assigned engineers well versed
in patent matters to each of these core business areas to
conduct strategic patent development close to the frontline.
Sharp also obtains useful patents arising from alliance activities from collaboration with other companies or universities.
As of March 31, 2010, Sharp had approximately 17,500 patents in Japan and 22,500 overseas.
Sharp utilizes these patents to strengthen its strategic
businesses. In addition, we take actions to protect our patents,
such as by examining the products of competitors. We exercise care concerning the intellectual property of other companies, however, our policy is to have other companies respect
our intellectual property in return. If we discover an infringement on any of our patents, we issue a warning. In certain
cases, more aggressive action is taken, including filing lawsuits. Sharp is also promoting obtainment of design and trademark registrations based on its brand strategy and aiming to
increase the number of applications and registrations globally.
Annual Report 2010 25
R&D and Intellectual Property
Multijunction compound solar cells
Corporate Social Responsibility (CSR)
CSR Concept
“Make products that others want to imitate.” This message of Sharp’s
founder Tokuji Hayakawa encapsulates management’s stance of contributing to society by quickly grasping and responding to the needs of the next
era as a manufacturer. Management over the years may have used different words to express this concept, but all have managed Sharp with the
aim of continuing to be a trusted company that contributes to society
through manufacturing.
In 1973, Sharp codified the unchanging spirit of its founder in the Company’s business philosophy and business creed. The business philosophy,
which states Sharp’s vision, includes statements such as “Contribute to the
culture, benefits and welfare of people throughout the world.” This forms
the foundation of CSR at Sharp today, aimed at achieving co-existence and
mutual prosperity with society and stakeholders. The business creed calls
for “Sincerity and Creativity” and all employees must adhere to and follow it
in order to fully realize this business philosophy.
Sharp aims to realize the business philosophy through its business activities as well as social contribution activities that leverage the Sharp Group’s
strengths and distinctiveness. Moving forward, Sharp will create new products found nowhere else in the world, harnessing the creativity that has
flowed through its corporate DNA since its founding. And by also fulfilling its
corporate social responsibilities with sincerity, Sharp will remain a company
trusted by society.
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 potential and improve their standard of living.
Our future prosperity is directly linked to the prosperity of
our customers, dealers and shareholders …indeed, the entire
Sharp family.
Business Creed
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.
Achieve the Tenets of the Business Philosophy by Promoting “Sincerity and Creativity” in All Business Practices
Corporate Social Responsibility (CSR)
Realization of Business Philosophy
Sales
Production
Service
Business Creed
Dedicated to two
principal ideals
Sincerity and
Creativity
Planning
Procurement
■ Perspective of social contribution through
business activities
“Contribute to the culture, benefits, and
welfare of people throughout the world”
■ Perspective concerning employees
“It is the intention of our corporation to grow
hand-in-hand with our employees”
Business Activities
R&D
Design
Social Contribution
Activities
■ Perspective concerning stakeholders
“Prosperity is directly linked to the prosperity
of the entire Sharp family”
Participation in the United Nations
Global Compact
Sharp has been a participant in the United Nations
Global Compact since June 2009. The Global Compact
contains 10 principles in the
areas of human rights, labor,
the environment, and anticorruption. Sharp has set
targets for specific activities
in each of these areas and
is promoting efforts across
the group.
26 Sharp Corporation
• The business creed is the central axis of all business activities.
• “Sincerity” means a working attitude mindful of
what will offer genuinely useful solutions and
happiness to everyone.
• “Creativity” means a working attitude not content
with the way things are. An attitude which always
seeks to add value, and to make efforts to innovate and improve.
Socially Responsible Investment (SRI) Recognition
Sharp has received recognition in Japan and overseas for its strong commitment to corporate citizenship. As of the end of June 2010, Sharp was
recognized by major SRI evaluating bodies and either selected for SRI
indices or awarded CSR certification as noted below.
• FTSE4Good Global Index (U.K.)
• FTSE KLD Global Climate 100 Index (U.S.A.)
• Dow Jones Sustainability Asia Pacific Index (U.S.A., Switzerland)
• Ethibel Sustainability Index (Belgium)
• Morningstar Socially Responsible Investment Index (Japan)
• Corporate Responsibility Prime Status by oekom research AG (Germany)
Environmental Activities
Products and devices with high environmental performance
In fiscal 2010 Sharp announced its corporate vision of becoming
an Eco-Positive Company. By working with stakeholders, Sharp
aims to become a company whose positive impact through
contributions to the environment greatly outweighs any negative
impact of environmental load resulting from its business activities. Sharp has developed an Eco-Positive Strategy for achieving
this aim, which comprises four channels for action: Technologies, Products, Operations, and Relationships. Sharp is implementing this strategy throughout its entire value chain.
Sharp’s LED AQUOS LCD TV achieves energy savings of
over 30%* compared with previous models—the result of
combining LCD panels employing UV2A technology that
enhances optical efficiency with a high-efficiency LED backlight system. Furthermore, the LED AQUOS has a thoroughly
environmentally-friendly design featuring halogen-free resin
cabinets, back cabinets that can be repeatedly recycled, and
a halogen-free power cord and internal wiring.
Our LED lights also have excellent environmental performance, as they consume low amounts of electric power, have
long operating lives, and contain no mercury. We offer a large
lineup of LED lights for residential and office use, which contribute to reduced power consumption in homes and offices.
Corporate Vision: Eco-Positive Company
Environmental contribution
through products and services
such as GHG emission reductions
<Positive Impact>
Environmental burden
through company’s
operations
<Negative Impact>
*Comparison of annual power consumption of LC-52SE1 J / 46SE1 J / 40SE1 J (sales
began in February 2010) with that of LC-52DS6 J / 46DS6 J / 40DS6 J (sales began in
June 2009). Annual power consumption amount calculated based on the Energy
Conservation Law in Japan.
"
4 domains of Eco-Positive Strategy
Eco-Positive Technologies
Eco-Positive Products
EP
Products
Eco-Positive
Company
EP
Operations
Expand contribution to protecting the environment through creating energy-saving/-creating
products and services.
Eco-Positive Operations
EP
Relationships
Reduce environmental impacts in product engineering and manufacturing as much as possible.
Eco-Positive Relationships
Enhance corporate value through involvement
with the community.
EP: Eco-Positive
Examples of Initiatives
Photovoltaic power generation
Sharp started its research on solar cells in 1959 and now has
more than 50 years of experience in R&D and promotion of
this technology. We have accumulated a broad base of technologies and consumer trust. In March 2010 we began operations at our solar cell plant in GREEN FRONT SAKAI. Then in
April 2010 Sharp’s achievements in the commercialization and
industrialization of solar cells from 1959 to 1983 were recognized as an IEEE Milestone* by the IEEE, the world’s largest
academic society for electrical, electronics, information, and
telecommunications engineering. Going forward, Sharp will
continue to develop the solar cell business around the two
products of crystalline solar cells and thin-film solar cells, and
to promote greater use of photovoltaic power generation.
*Please refer to “Topic” on page 25.
LED AQUOS featuring high
environmental performance
Environmental friendliness at plants
Sharp has an environmental certification system based on its
own assessment standards. Plants that are environmentally
friendly are designated as Green Factories (GF) and those with
superior environmental performance receive the Super Green
Factory (SGF) designation. All plants in Japan and overseas
have been certified as GF, while 24 plants among these,
including 10 Sharp Corporation plants, have been certified as
SGF. After being certified as an SGF, a plant pursues the SGF II
level of certification by achieving even higher environmental
performance. GREEN FRONT SAKAI, which began operation
in fiscal 2009, features an environmental conservation system
befitting its status as one of the world’s most environmentally
advanced manufacturing complexes.
Unique environmental technologies
Sharp developed a closed-loop material recycling technology
that has been in use since fiscal 2001. This recycling technique repeatedly recovers plastic from used electronics products and reuses it in parts of new consumer electronics. Since
then, we have developed and implemented new technologies
to increase the amount of plastic that can be recycled and
expand the use of these plastics. In fiscal 2009, the cumulative amount of recycled plastic used thanks to this technology
reached the 5,050 ton mark. In fiscal 2009, Sharp also developed a high-performance paint from the glass material discarded from LCD panel plants. We plan to use the paint in
LED security lights.
Annual Report 2010 27
Corporate Social Responsibility (CSR)
Generate new business through one-of-a-kind
environmental technologies.
EP
Technologies
Social Contribution Activities
Sharp Forests
Sharp carries out social contribution activities to uphold the
trust placed in it as a corporate citizen. In particular, we focus
on the three important fields of the environment, education
and social welfare. We undertake voluntary activities in these
areas on an ongoing basis.
Sharp Green Club* oversees Sharp Forests at 11 locations
throughout Japan, most of which are near to Sharp business
sites or sales bases. These forest development activities
include tree planting and cultivation in wasted forests and other
natural areas. These activities contribute to preservation of
nature and ecological systems and help to develop environmental awareness among Sharp employees. In another activity, we used the Sharp Forest at Konoyama in Osaka Prefecture
to run outdoor environmental education classes for elementary
school children, allowing them to learn about the importance of
restoring natural areas through field work. Sharp will maintain
its commitment to protecting the global environment and biodiversity through social contribution activities.
Three Important Fields of
Social Contribution Activities
*A joint organization of labor and management for planning and running various volunteer events centered on the environment, such as tree planting, restoration of natural
areas and cleanup activities. Founded in June 2003.
Examples of Initiatives
Educational support activities
Corporate Social Responsibility (CSR)
To help raise awareness among elementary school students of
global warming and eco-friendly lifestyles, Sharp has run a
program of environmental education classes at elementary
schools throughout Japan since October 2006. By January
2010 a total of 100,000 students had taken part in the program. We also run the program outside of Japan, mainly in the
United States and China. Here, the environmental education
classes feature locally relevant information. From January
2009 we have also run a program of craftsmanship education
classes at elementary schools throughout Japan, with the aim
of interesting children in science and helping them to develop
their views on careers and work. We will continue our efforts
to contribute to the future of society through educational support activities with the goal of raising environmental awareness and promoting understanding about craftsmanship
among children.
Tree planting at Konoyama
Activities to support people with disabilities
Sharp is playing its part to expand employment opportunities for
people with disabilities. In October 2009 these efforts were recognized by the non-profit organization Osaka Prefectural Association
of Employment Development, which presented Sharp Tokusen
Industry Co., a subsidiary of Sharp Corporation, with an award for
merit as a company which contributed to the employment of
persons with disabilities. The same NPO also recognized the
efforts of an employee of Sharp Tokusen with an award for a longtime employee with disabilities. In other activities to support
people with disabilities, Sharp ran environmental education classes
at schools for people with hearing impairments, and sold products
(bread, confectionary, etc.) from vocational aid centers at its business sites. Sharp will continue these various support activities,
including promotion of employment for people with disabilities.
Environmental education class
for elementary school students
Awards presented by the Osaka Prefectural Association of
Employment Development
28 Sharp Corporation
Corporate Governance
Basic Concept Concerning Corporate Governance
Sharp has always been a manufacturing- and technologyoriented company. In an effort to further strengthen manufacturing competency, Sharp is committed to improving the
speed and quality of managerial decisions. Our business activities are limited to the development, production and sale of
products and devices, which have a strong interrelation and
require high expertise. This enables our directors, who are
highly adept at our business, to make swift and accurate management decisions through the mutual exchange of ideas. It
also serves to clarify reciprocal managerial responsibilities and
promote mutual supervisory functions.
We are also striving to preserve transparency, objectivity
and soundness in management together with realizing appropriate management. From the viewpoint of increasing our
consideration of shareholders and corporate social
responsibility, we have appointed an outside director with an
international and multi-faceted perspective, including regarding
compliance, on wide-ranging issues such as the social and
economic environment, and the future direction of Sharp. In
doing so we have strengthened the decision-making functions
within the Board of Directors and the functions for supervising
directors’ execution of duties.
We have also introduced the Executive Officer System,
thereby creating a structure that steadily facilitates nimble,
efficient business execution.
Sharp has taken these measures to further strengthen the
current Director/Corporate Auditor System, which allows management and manufacturing divisions to work together very
closely, enabling the business to expand. Sharp works to
enhance its corporate governance through this system.
Corporate Governance System (As of June 23, 2010)
Shareholders’ Meeting
Election/dismissal
Supplement supervisory
functions
Audit functions
Supervision/
decision-making
Board of Directors
Meeting
Directors
Report
Audit
Internal Control Committee
Special Committee
Resolution/
report
Supervision
Report
Report
Report
Accounting
auditors
Board of Corporate
Auditors
Corporate auditors
Audit
Coordination
Appointment/
removal
(Election/
dismissal)
Compensation Committee
Nominating Committee
Report
Monitoring
Coordination
Internal Audit
Division
Coordination
Coordination
Business execution functions
Corporate Governance
Supervisory/decision-making functions
Election/dismissal
Election/dismissal
Representative directors/
managing directors
(Executive officers)
Supplement business
execution functions
Strategic and Consultative
Committees
Technology Strategy Committee
One-of-a-kind Product
Strategy Committee
Core Business Strategy
Committee
Investment Committee
CSR/BRM Committee
Compliance Committee
Deliberation on key
policies, etc.
Executive Management
Committee
Corporate
Auditors Office
Executive officers, etc.
Business
execution
and
checks
Discussion/report
Report
Operational
audit
Operational
audit
Accounting
audit
Information sharing of
business status, etc.
Business Promotion
Committee
Executive officers
Division general managers
Sales subsidiary presidents, etc.
Ensure apt policy execution/
information sharing
Business execution (Business groups/functional groups/sales and marketing groups/subsidiaries and affiliates)
Annual Report 2010 29
Sharp strives to achieve timely and accurate disclosure of
information to all stakeholders such as shareholders and investors, and is increasing the transparency of management by
widely publicizing information.
Status of Corporate Governance System
Corporate Governance
The Board of Directors Meetings of Sharp Corporation are held
on a monthly basis in principle to make decisions on matters
stipulated by law and management-related matters of importance, and to supervise the state of business execution. To
improve management agility and flexibility, and to clarify the
responsibilities of the company management during each
accounting period, the term of office for members of the
Board of Directors is set at one year. As advisory bodies to the
Board of Directors, the Company has established an Internal
Control Committee, a Nominating Committee and a Compensation Committee.
To strengthen the decision-making functions within the
Board of Directors and the functions for supervising directors’
execution of duties, the Company appointed an outside director. The outside director serves as a member of the
­Nominating Committee and the Compensation Committee, as
well as the Special Committee that forms part of the takeover
defense plan. The Company also introduced the Executive
Officer System to carry out swift and efficient business execution, and to maximize the functions of the Board of Directors
by optimizing the number of members.
In addition to the Board of Directors, the Company has an
Executive Management Committee, where matters of importance related to corporate management and business operation are discussed and reported twice a month in principle.
This committee facilitates prompt executive decision-making.
The Board of Corporate Auditors is composed of four
corporate auditors, three of whom are outside corporate auditors with a high degree of independence. Each corporate
auditor meets regularly with the representative directors, the
directors, the accounting auditors, the head of the Internal
Audit Division and others to exchange opinions and work to
ensure that business is executed legally and appropriately.
Ongoing Development of the Internal
Control System
In May 2006, the Board of Directors passed a resolution to
adopt a basic policy related to the development of systems
necessary to ensure the properness of business (Basic Policy
for Internal Control), which was partially amended at the Board
of Directors Meeting in August 2009. This amended policy
forms the basis for Sharp’s ongoing development and implementation of its internal control system. Sharp has set up the
Internal Control Committee as an advisory body to the Board
of Directors. The committee deliberates on basic policies
regarding internal controls and internal audits, and the state of
development and implementation of initiatives related to the
internal control system, then reports on and discusses important matters with the Board of Directors. The Internal Control
30 Sharp Corporation
Promotion Department within the CSR Promotion Group is
responsible for internal control of all business execution
departments company-wide. Meanwhile the Internal Audit
Division makes concrete proposals on how to improve business operations and reinforces internal controls by checking
the validity of business execution as well as the appropriateness and efficiency of management.
To enhance compliance throughout the group, Sharp introduced the Sharp Group Charter of Corporate Behavior, a set of
principles to guide corporate behavior, and the Sharp Code of
Conduct, which clarifies the conduct expected of every
employee, director, auditor and executive officer of Sharp. The
Sharp Group Charter of Corporate Behavior and the Sharp
Code of Conduct were revised in April 2010 in line with
changes in the business environment. Sharp ensures that
these guidelines are thoroughly observed by posting them on
the Web and carrying out position-specific training programs.
Sharp has also set up a Compliance Committee and is developing a company-wide compliance promotion system. Meanwhile, Sharp is implementing thorough measures to prevent
compliance breaches by distributing a Sharp Group Compliance Guidebook to all employees and implementing training
based on the guidebook.
In order to comprehensively and systematically deal with
diverse business risk, Sharp formulated the Business Risk
Management Guideline to achieve prevention of and swift
responses to risk.
Plan Regarding Large-Scale Purchases of Sharp
Corporation Shares (Takeover Defense Plan)
In order to protect and enhance the corporate value and
common interests of shareholders of a manufacturing firm
such as Sharp, a company must develop in-house and make
good use of advanced technology and manufacturing technology from a medium- to long-term perspective. Furthermore,
Sharp believes it is essential to build good cooperative relationships with stakeholders such as customers, business
partners and employees.
The Board of Directors of Sharp believes that determining
whether to accept purchases aimed at a takeover and conducted without obtaining the approval of the Board of Directors of Sharp should be ultimately entrusted to the
shareholders. However, the Board of Directors of Sharp also
believes that it is not appropriate for any party that conducts
an inappropriate purchase, such as one that clearly harms the
corporate value and common interests of shareholders and/or
puts undue pressure on shareholders to sell their shares, to
take control over Sharp’s policy decisions on finance and
business operations, and that it is necessary to take reasonable countermeasures if such an inappropriate purchase is
actually conducted.
In order to prevent such purchasing activity, Sharp has
adopted the prior warning type of defense measures called
the Plan Regarding Large-Scale Purchases of Sharp Corporation Shares (Takeover Defense Plan)* (hereinafter referred to
as the “Plan”).
The Plan provides rules for enabling shareholders to reach
a proper decision, by requiring large-scale purchasers of the
Company’s shares who intend to obtain 20% or more of the
voting rights of the Company to provide sufficient information
and give an adequate assessment period. If a large-scale purchaser does not follow the rules, or although the large-scale
purchaser complies with these rules, the large-scale purchase
is deemed to be harmful to corporate value and common
interests of shareholders, Sharp may take countermeasures in
order to protect its corporate value and the common interests
of shareholders. The Board of Directors of Sharp will make the
final decision concerning the implementation of countermeasures after fully taking into consideration the advice and recommendations of a Special Committee consisting of three or
more persons who are independent of Sharp’s management.
A majority of shareholders present at the 116th Ordinary
General Meeting of Shareholders on June 23, 2010 approved
the continuation of the Plan. The effective term of the Plan is
up to the conclusion of the 117th Ordinary General Meeting of
Shareholders, which will be held by June 30, 2011.
The decision whether or not to continue the Plan will be
put to shareholders at the Ordinary General Meeting of Shareholders held in June every year.
*For details of the Plan and profiles of the Special Committee members, please visit
Sharp’s website:
http://sharp-world.com/corporate/ir/topics/pdf/100427a.pdf
Outside Director
Kunio Ito
The fundamental principle of corporate management is to maximize corporate value. This
is a difficult thing to accomplish and brings numerous strategic options and challenges.
Today management has become far more complex and sophisticated than in the past,
involving manifold variables. Naturally, one important aspect is the executive capability
needed to view each variable in light of the business environment and implement the
best course of action. At the same time, an aspect that has become even more important
is the management capability needed to carry out optimal overall management taking the
balance of all of these variables.
In his recent book, “The Future of Management,” influential management theorist
Gary Hamel points out that while improving business operations is important, the real
power to win out against one’s competitors lies in the ability to also bring innovation
to management.
A key point in management systems of the future will be how to achieve both the
piece-wise strengthening of each business and the overall optimization of the entire company or group. I believe that a bold strategy to achieve both of these will further
strengthen the appeal of the Sharp brand. By continuing and indeed escalating its pursuit
of its “One-of-a-Kind” identity, Sharp will raise the value of its brand.
I hope that in my role as an outside director here at Sharp, I will be able to contribute
to making this kind of management innovation a reality.
Career overview
April 1992
Professor, Faculty of Commerce and Management,
Hitotsubashi University
August 2002
Dean, Graduate School of Commerce and Management,
Hitotsubashi University
December 2004
Vice President and Executive Staff of Hitotsubashi University
December 2006
Professor, Graduate School of Commerce and Management,
Hitotsubashi University (current position)
June 2009
Director, Sharp Corporation (current position)
Annual Report 2010 31
Corporate Governance
Message from the Outside Director
Risk Factors
Listed below are the principal business risks of Sharp that may
have a significant influence on investors’ decisions. Note that
in addition to these, there exist certain other risks that are
difficult to foresee. Each of these risks has the potential to
impact the operations, business results and financial position
of Sharp. All references to possible future developments in
the following text were made by Sharp as of March 31, 2010.
(1) Global Market Trends
Sharp manufactures and sells products and services in different
regions around the world. Business results and financial position
are thus subject to economic and consumer trends (especially
trends in private consumption and corporate capital investment),
competition with other companies, product demand, raw material supply and price fluctuations in each region. The political and
economic situation in respective areas may also exert an influence on business results and financial position.
(2) Exchange Rate Fluctuations
The proportion of consolidated net sales accounted for by
overseas sales stood at 53.5% in fiscal 2007, 54.3% in fiscal
2008 and 48.1% in fiscal 2009. Although Sharp hedges the
risk of exchange rate fluctuations by employing forward
exchange contracts and expanding and strengthening overseas production, such fluctuations may affect Sharp’s business results.
(3) Strategic Alliances and Collaborations
Risk Factors
Sharp implements strategic alliances and collaborations with
other companies in respective business fields to bolster the
development of new technologies and products, and to enhance
competitiveness. If, however, any strategic or other business
issues arise, or objectives change, it may become difficult to
maintain such alliances and collaborative ties with these companies, or to generate adequate results. In such cases, Sharp’s
business results and financial position may be impacted.
(4) Business Partners
Sharp procures materials and receives services from a large
number of business partners, and transactions are made only
once a detailed credit check of the company has been completed. However, there is a risk that business partners may
suffer deterioration in performance due to slumping demand
or severe price erosion, or face an unexpected M&A, or be
impacted by natural disasters or accidents, or procure materials of insufficient quality, or become involved in a corporate
scandal including a breach of the law–any of which may affect
Sharp’s business results and financial position.
(5) Technological Innovation
New technologies are emerging rapidly in the markets where
Sharp operates. Resultant changes in social infrastructure,
intensified market competition, changes in technology standards, or the appearance of substitute technologies may
impact Sharp’s business results and financial position.
32 Sharp Corporation
(6) Intellectual Property Rights
Sharp strives to protect its proprietary technologies by acquiring patents, trademarks, and other intellectual property rights
in Japan and in other countries, and by concluding contracts
with other companies. However, there is a risk that rights may
not be granted, or a third party may demand invalidation of an
application, such that Sharp may be unable to obtain sufficient
legal protection of its proprietary technologies. In addition,
intellectual property that Sharp holds may not result in a superior competitive advantage, or Sharp may not be able to make
effective use of such intellectual property, such as when a
third party infringes on the intellectual property rights of Sharp.
There may also be instances where a third party launches
litigation against Sharp, claiming infringement of intellectual
property rights. Resolution of such cases may place a significant financial burden on Sharp. Furthermore, if such a thirdparty claim against Sharp is recognized, Sharp may have to
pay a large amount of compensation, and may incur further
damage by having to cease using the technology in question.
Also, as a result of an M&A, a third party previously unlicensed
to use Sharp’s intellectual property may acquire such license,
with the result that Sharp’s intellectual property may lose its
superiority. Alternatively, an M&A with a third party could
result in Sharp’s business becoming subject to new restrictions to which it had not previously been subject, the resolution
of which may require Sharp to pay additional compensation.
Furthermore, although compensation is given to employees
for innovations that they make in the course of their work
pursuant to a patent reward system governed by internal
regulations, an employee may consider such payment inadequate and initiate legal action. If any of the above problems
related to intellectual property were to occur, it could impact
Sharp’s business results and financial position.
(7) Product Liability
Sharp manufactures products in accordance with strict quality
control standards to ensure the utmost in quality. In order to
fulfill its responsibility as a manufacturer in case product
defects do arise, Sharp has taken out insurance to cover compensations based on product liability. Nonetheless, there is
still a risk of a large-scale product recall or litigation caused by
unforeseen events, which may adversely affect brand image
or influence Sharp’s business results and financial position.
(8) Laws and Regulations
The business activities of Sharp are subject to various regulations in countries where it operates, including business and
investment approval, export regulations, tariffs, accounting
standards and taxation. Sharp must also adhere to various
laws and regulations concerning trading, antitrust practices,
product liability, consumer protection, intellectual property
rights, product safety, the environment and recycling, and
internal control. Changes in such laws and regulations, and
additional expenses to comply with the amendments may
affect Sharp’s business results and financial position. Further,
in a case where an accident occurs related to one of Sharp’s
products, report of said incident, based on the Consumer
Product Safety Law and related regulations in Japan, and
disclosure of the accident information based on a system for
public announcements could diminish Sharp’s brand image.
(9) Litigation and Other Legal Proceedings
Sharp conducts business activities around the world, and as
such, there is a risk that Sharp could become involved with
litigation and other legal proceedings in each country. If Sharp
becomes involved in litigation or other legal proceedings, with
the different legal and judicial systems in each country,
depending on the case, Sharp may be ordered to pay a significant amount in damages or fines. Sharp is subject to investigations conducted by the Directorate-General for Competition of
the European Commission, etc., with respect to its TFT LCD
business. In addition, civil lawsuits seeking monetary damages
resulting from alleged anticompetitive behavior have been
filed in North America and Europe against Sharp. Sharp also
received a cease and desist order and a surcharge payment
order from the Japan Fair Trade Commission. However, Sharp
has submitted a complaint to the Commission and the complaint is pending. It is difficult to predict the result of these
proceedings and litigation at this stage. An adverse result
could affect Sharp’s business results and financial position.
(10) Leakage of Personal Data and Other
Information
Risk Factors
Sharp retains personal data and other confidential information
concerning its customers, business partners and employees.
Extreme care is taken to protect this information. A companywide management system promotes employee education,
internal auditing, and other measures aimed at ensuring compliance with management regulations. If information is leaked,
however, it may reduce confidence in Sharp or result in substantial costs (associated with leakage prevention measures or
indemnification for damages, for instance), which may affect
Sharp’s business results and financial position.
(11) Other Key Variable Factors
In addition to the aforementioned risks, Sharp’s business
results may be significantly affected by accidents and natural
calamities such as earthquakes or typhoons; human calamities
such as conflicts, insurrections or terrorism; the spread of a
new strain of influenza or other infectious disease; or major
fluctuations in the stock and bond markets.
Annual Report 2010 33
Directors, Corporate Auditors and Executive Officers
(As of June 23, 2010)
Directors
Directors, Corporate Auditors and Executive Officers
Representative Director, Chairman
Representative Director, President
Katsuhiko Machida
Mikio Katayama
Representative Director
Representative Director
Representative Director
Representative Director
Masafumi Matsumoto
Toshio Adachi
Toshishige Hamano
Yoshiaki Ibuchi
Director
Director
Director
Director
Kenji Ohta
Nobuyuki Taniguchi
Katsuaki Nomura
Kunio Ito*1
Corporate Auditors Executive Officers
Full-time Corporate Auditors
Chairman
Senior Executive Managing Officer
Executive Officers
Junzo Ueda
Shinji Hirayama*2
Katsuhiko Machida
Kenji Ohta
Yoshiki Sano
Takashi Okuda
Toshihiko Fujimoto
Masami Ohbatake
Toru Chiba
Masatsugu Teragawa
Nobuyuki Taniguchi
Tetsuroh Muramatsu
Kazutaka Ihori
Fujikazu Nakayama
Tsuneo Nakamura
President
Executive Managing Officers
Corporate Auditors
Mikio Katayama
Hiroshi Chumon*2
Yoichiro Natsuzumi*2
Executive Vice Presidents
Shigeaki Mizushima
Nobuyuki Sugano
Takashi Nukii
Toshihiko Hirobe
Yoshisuke Hasegawa
Tetsuo Onishi
Moriyuki Okada
Kozo Takahashi
Masafumi Matsumoto
Toshio Adachi
Toshishige Hamano
Yoshiaki Ibuchi
*1 Outside Director
*2 Outside Corporate Auditors
34 Sharp Corporation
Motohiko Hayashi
Hiroshi Morimoto
Miyoshi Yamauchi
Katsuaki Nomura
Yukihiro Gentsu
Taimi Oketani
Noboru Fujimoto
Kazutoshi Goto
36
38
42
Five-Year Financial
Summary
Financial Review
Consolidated
Balance Sheets
44
45
46
Consolidated
Statements of
Operations
Consolidated
Statements of
Changes in Net Assets
Consolidated
Statements of
Cash Flows
47
63
64
Notes to Consolidated
Financial Statements
Independent Auditors’
Report
Consolidated
Subsidiaries
Financial Section
Financial Section
Annual Report 2010 35
Five-Year Financial Summary
Sharp Corporation and Consolidated Subsidiaries
Years Ended March 31
Yen
(millions)
U.S. Dollars
(thousands)
2006
2007
2008
2010
2010
Net Sales �������������������������������������������������
Domestic sales �������������������������������������
Overseas sales���������������������������������������
Operating Income (Loss)�������������������������
Income (Loss) Before Income
Taxes and Minority Interests�����������������
Net Income (Loss)�����������������������������������
¥2,797,109
1,397,081
1,400,028
163,710
¥3,127,771
1,526,938
1,600,833
186,531
¥3,417,736
1,590,747
1,826,989
183,692
¥2,847,227
1,302,261
1,544,966
(55,481)
¥2,755,948
1,429,057
1,326,891
51,903
$29,955,957
15,533,228
14,422,729
564,163
140,018
88,671
158,295
101,717
162,240
101,922
(204,139)
(125,815)
6,139
4,397
66,728
47,793
Net Assets*1���������������������������������������������
Total Assets ���������������������������������������������
1,098,910
2,560,299
1,192,205
2,968,810
1,241,868
3,073,207
1,048,447
2,688,721
1,065,860
2,836,255
11,585,435
30,828,859
Capital Investment*2�������������������������������
Depreciation and Amortization*3�����������
R&D Expenditures�����������������������������������
238,839
193,114
154,362
314,301
217,715
189,852
344,262
276,567
196,186
260,337
315,799
195,525
215,781
277,257
166,507
2,345,446
3,013,663
1,809,859
Per Share of Common Stock
Net income (loss)�����������������������������������
Diluted net income���������������������������������
Cash dividends���������������������������������������
Net assets���������������������������������������������
Other Financial Data
Return on equity (ROE) �������������������������
Return on assets (ROA)�������������������������
Equity ratio���������������������������������������������
2009
Yen
¥
80.85
–
22.00
1,006.91
8.4%
3.6%
42.9%
¥
93.25
90.00
26.00
1,084.76
8.9%
3.7%
39.9%
¥
93.17
86.91
28.00
1,119.09
8.4%
3.4%
40.1%
U.S. Dollars
¥
(114.33)
–
21.00
944.24
(11.1%)
(4.4%)
38.6%
¥
4.00
3.78
17.00
949.19
0.4%
0.2%
36.8%
$
0.04
0.04
0.18
10.32
–
–
–
*1 E
ffective for the year ended March 31, 2007, the Company adopted the new accounting standards, “Accounting Standard for Presentation of Net
Assets in the Balance Sheet” (Accounting Standards Board Statement No. 5) and the “Implementation Guidance for the Accounting Standard for
Presentation of Net Assets in the Balance Sheet” (Financial Standards Implementation Guidance No. 8). Prior year figure has not been restated.
*2 The amount of leased properties is included in capital investment.
*3 E
ffective for the year ended March 31, 2008, pursuant to an amendment to the Corporate Tax Law, the Company and its domestic consolidated
subsidiaries have depreciated tangible fixed assets acquired on and after April 1, 2007 in accordance with the method stipulated in the amended
Corporate Tax Law.
Financial Section
36 Sharp Corporation
Audio-Visual and
Communication Equipment ���������������
Health and Environmental Equipment ���
Information Equipment�������������������������
Consumer/Information Products �������������
LCDs�����������������������������������������������������
Solar Cells���������������������������������������������
Other Electronic Devices���������������������
Electronic Components���������������������������
Total ���������������������������������������������������������
Sales by Region*5
Japan�������������������������������������������������������
The Americas�������������������������������������������
Europe�����������������������������������������������������
China �������������������������������������������������������
Other�������������������������������������������������������
Total ���������������������������������������������������������
2006
2007
2009
2010
U.S. Dollars
(thousands)
2010
¥2,797,109
¥3,127,771
¥3,417,736
¥2,847,227
¥2,755,948
$29,955,957
1,090,905
224,650
421,208
1,736,763
135,754
633,493
291,099
1,060,346
2,797,109
1,381,105
239,081
437,923
2,058,109
146,556
628,821
294,285
1,069,662
3,127,771
1,598,199
249,843
437,299
2,285,341
163,504
683,310
285,581
1,132,395
3,417,736
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,624,713
249,843
410,785
2,285,341
683,310
151,011
298,074
1,132,395
3,417,736
1,367,600
225,290
306,077
1,898,967
573,854
157,095
217,311
948,260
2,847,227
1,332,129
244,090
266,920
1,843,139
508,630
208,732
195,447
912,809
2,755,948
14,479,663
2,653,152
2,901,305
20,034,120
5,528,587
2,268,826
2,124,424
9,921,837
29,955,957
1,397,081
1,526,938
1,590,747
1,302,261
1,429,057
15,533,228
450,307
488,945
195,333
265,443
2,797,109
582,588
523,301
305,895
189,049
3,127,771
625,841
584,252
412,470
204,426
3,417,736
488,428
451,090
407,777
197,671
2,847,227
342,923
393,212
365,440
225,316
2,755,948
3,727,424
4,274,044
3,972,174
2,449,087
29,955,957
*4 Effective for the year ended March 31, 2008, some items previously included in Other Electronic Components had been reclassified and were
included in LSIs. In this connection, “Sales by Product Group” of 2007 has been restated to conform with the 2008 presentation.
Effective for the year ended March 31, 2009, the Company adopted the segment classification presented above in “Sales by Product Group” in
place of the former classification: Audio-Visual and Communication Equipment, Home Appliances, Information Equipment, LSIs, LCDs, and Other
Electronic Components. In addition, some items previously included in Audio-Visual and Communication Equipment had been reclassified and were
included in Information Equipment, and some items previously included in Information Equipment had been reclassified and were included in AudioVisual and Communication Equipment. In this connection, “Sales by Product Group” of 2008 has been restated to conform with the 2009
presentation.
Effective for the year ended March 31, 2010, some items previously included in Information Equipment have been reclassified and are included in
Audio-Visual and Communication Equipment. In this connection, “Sales by Product Group” of 2009 has been restated to conform with the 2010
presentation.
*5 For the year ended March 31, 2007, the Company recategorized its segmentation for “Sales by Region” information. Consequently, “China,” which had
been previously included in “Other,” is indicated as one of the geographic segments and “Asia,” which had been indicated as one of the geographic segments, has been reclassified into “Other.” In this connection, “Sales by Region” of 2006 has been restated to conform with the 2007 presentation.
Annual Report 2010 37
Financial Section
Net Sales ���������������������������������������������������
Sales by Product Group*4
(Sales to Outside Customers)
Audio-Visual and
Communication Equipment ���������������
Home Appliances���������������������������������
Information Equipment�������������������������
Consumer/Information Products �������������
LSIs �����������������������������������������������������
LCDs ���������������������������������������������������
Other Electronic Components �������������
Electronic Components���������������������������
Total ���������������������������������������������������������
Yen
(millions)
2008
Financial Review
Sharp Corporation and Consolidated Subsidiaries
Operations
Consolidated net sales for the year ended March 31, 2010
Electronic Components
LCDs
were ¥2,755,948 million, down 3.2% from the prior year.
Sales in this group were ¥887,255 million, down 15.9%, due
to a decrease in sales of LCD panels for mobile devices.
Sales by Product Group
(Including Intersegment Sales)
Solar Cells
The following sales by product group include internal sales
reflecting sales growth in Japan, which is supported by
between segments (Consumer/Information Products and
government’s subsidies for the installation of residential
Electronic Components).
photovoltaic power generation systems and the start of a
Consumer/Information Products
Audio-Visual and Communication Equipment
scheme to require utility companies to buy back surplus
Sales in this group were ¥1,332,980 million, down 2.5%
Other Electronic Devices
from the prior year. Though sales of Blu-ray Disc recorders
Sales in this group were ¥289,517 million, down 6.1%,
and LCD TVs for the Japanese market were strong, sales
due to a decrease in sales of devices for digital products.
Sales in this group were ¥208,763 million, up 32.8%,
power generated.
of LCD TVs in overseas markets declined.
Health and Environmental Equipment
Financial Results
Sales in this group were ¥244,137 million, up 7.9%. Sales
Cost of sales declined ¥162,887 million over the prior year
increased for Plasmacluster Ion generators and air puri-
to ¥2,229,510 million, and the cost of sales ratio decreased
fiers featuring Plasmacluster Ion technology.
from 84.0% recorded in the prior year to 80.9%.
Information Equipment
Selling, general and administrative (SG&A) expenses
Sales in this group were ¥281,091 million, down 10.1%,
declined ¥35,776 million to ¥474,535 million. The ratio of
due to a decrease in sales of digital MFPs.
SG&A expenses against net sales decreased from 17.9%
Sales by Product Group*1 (Including Intersegment Sales)
Sales by product group below include internal sales between segments
(Consumer/Information Products and Electronic Components).
Yen
(millions)
2009
Financial Section
2010
U.S. Dollars
(thousands)
2010
¥1,367,847
¥1,332,980
$14,488,913
226,186
312,556
1,906,589
244,137
281,091
1,858,208
2,653,663
3,055,337
20,197,913
LCDs ��������������������������������������������
Solar Cells ������������������������������������
Other Electronic Devices*2 ����������
Electronic Components��������������������
1,054,559
157,145
308,458
1,520,162
887,255
208,763
289,517
1,385,535
9,644,076
2,269,163
3,146,924
15,060,163
Elimination����������������������������������������
Total��������������������������������������������������
(579,524)
2,847,227
(487,795)
2,755,948
(5,302,119)
29,955,957
Audio-Visual and
Communication Equipment��������
Health and
Environmental Equipment����������
Information Equipment ����������������
Consumer/Information Products������
*1 E ffective for the year ended March 31, 2010, some items previously included in
Information Equipment have been reclassified and are included in Audio-Visual and
Communication Equipment. In this connection, “Sales by Product Group” of 2009
has been restated to conform with the 2010 presentation.
*2 Other Electronic Device group’s sales do not include internal sales to the LCD/Solar Cell groups.
38 Sharp Corporation
Net Sales
(billions of yen)
4,000
3,000
2,000
1,000
0
06
07
08
09
10
to 17.2%. SG&A expenses include advertising expenses
By Geographic Segment
of ¥50,246 million, and employees’ salaries and other
In Japan, sales decreased by 4.0% over the prior year to
benefits expenses of ¥113,517 million.
¥2,324,903 million and operating income amounted to
As a result, operating income amounted to ¥51,903
¥10,785 million compared to an operating loss of ¥74,552
million compared to an operating loss of ¥55,481 million in
million in the prior year. Sales increased for LCD TVs, solar
the prior year.
cells, Plasmacluster Ion generators and air purifiers featuring Plasmacluster Ion technology. Sales of LCD panels for
Other expenses, net of other income, were in a net
mobile devices significantly declined. Profitability
loss position and amounted to ¥45,764 million.
improved for LCD TVs, mobile phones and health and
Income before income taxes and minority interests
environmental products.
amounted to ¥6,139 million compared to a loss before
In the Americas, sales decreased by 27.8% to
income taxes and minority interests of ¥204,139 million in
the prior year. Net income for the year was ¥4,397 million
¥322,157 million and operating income amounted to ¥818
compared to a net loss of ¥125,815 million in the prior
million compared to an operating loss of ¥1,057 million in
year. Net income per share of common stock was ¥4.00.
the prior year. Sales of LCD TVs and LCD panels for
mobile devices declined. Profitability improved for LCD
Segment Information
TVs and health and environmental products.
By Business Segment
In Europe, sales decreased by 12.7% to ¥375,898
Sales in the Consumer/Information Products segment
million and operating income amounted to ¥6,890 million
decreased by 2.5% over the prior year to ¥1,858,208 million.
compared to operating income of ¥7,395 million in the
Operating income amounted to ¥33,983 million compared to
prior year. Although sales of solar cells increased, sales of
an operating loss of ¥33,769 million in the prior year.
LCD TVs and LCD panels for mobile devices declined.
Sales in the Electronic Components segment
In China, sales decreased by 17.9% to ¥527,957 million
decreased by 8.9% to ¥1,385,535 million, while operating
and operating income amounted to ¥12,105 million com-
income amounted to ¥20,134 million compared to an
pared to operating income of ¥9,988 million in the prior
operating loss of ¥23,975 million in the prior year.
year. Although sales of mobile phones increased, sales of
LCD panels for mobile devices significantly declined.
Selling, General and
Administrative Expenses
(billions of yen)
3,000
(%)
90.0
2,000
60.0
Operating Income (Loss)/
Net Income (Loss)
(billions of yen)
600
(%)
30.0
(billions of yen)
200
Financial Section
Cost of Sales
100
400
20.0
0
1,000
30.0
200
10.0
–100
0
0
06
07
n Ratio to net sales
08
09
10
0
0
06
07
n Ratio to net sales
08
09
10
–200
06
07
08
09
10
nn Operating income (loss)
nn Net income (loss)
Annual Report 2010 39
Assets, Liabilities and Net Assets
In Other, sales increased by 1.4% to ¥320,084 million
and operating income amounted to ¥7,908 million com-
Total assets increased by ¥147,534 million over the prior
pared to operating income of ¥5,158 million in the prior
year to ¥2,836,255 million.
year. Although sales of facsimiles declined, sales of
Assets
Blu-ray Disc recorders increased.
Current assets amounted to ¥1,417,535 million, an
Capital Investment* and Depreciation
increase of ¥115,573 million from the prior year. This was
Capital investment for the fiscal year was ¥215,781 mil-
mainly due to an increase of ¥106,654 million in notes and
lion, down 17.1% from the prior year. The majority of this
accounts receivable to ¥536,718 million. Inventories
was investment for the construction of a new LCD panel
increased by ¥11,278 million to ¥411,263 million. Included
plant at GREEN FRONT SAKAI, and for the commence-
in inventories, finished products decreased by ¥14,959
ment of its operations, which are aimed at enhancing
million to ¥164,670 million, work in process increased by
competitiveness and improving profitability of large-size
¥21,609 million to ¥170,091 million, and raw materials
LCD panels. Additionally, a portion of this investment also
increased by ¥4,628 million to ¥76, 502 million.
relates to the construction of a new solar cell plant at
Plant and equipment decreased by ¥4,471 million to
GREEN FRONT SAKAI.
¥1,027,604 million.
By business segment, capital investment for Con-
Investments and other assets amounted to ¥391,116
sumer/Information Products was ¥32,648 million, and for
million, an increase of ¥36,432 million mainly due to
Electronic Components was ¥183,133 million.
increases in investments in securities and other assets.
Depreciation and amortization decreased by 12.2% to
¥277,257 million.
Liabilities
*The amount of leased properties is included in capital investment.
Current liabilities increased by ¥33,937 million from the
prior year to ¥1,223,906 million. Short-term borrowings
decreased by ¥103,589 million to ¥302,184 million.
Included in short-term borrowings, bank loans increased
by ¥9,107 million to ¥70,452 million, commercial paper
Information by Business Segment
Sales*1
Operating Income (Loss)*2
Capital Investment/
Depreciation and Amortization
(billions of yen)
2,500
(billions of yen)
120
(billions of yen)
400
Financial Section
2,000
80
300
40
200
0
100
1,500
1,000
500
–40
0
06
07
08
09
10
0
06
07
08
09
10
nn Consumer/Information Products
nn Electronic Components
nn Consumer/Information Products
nn Electronic Components
*1 Including intersegment sales
*2 Before elimination of intersegment trading
40 Sharp Corporation
06
07
08
09
nn Capital investment
nn Depreciation and amortization
10
decreased by ¥169,671 million to ¥165,755 million, and
to ¥6,139 million of income before income taxes and
current portion of long-term debt increased by ¥57,138
minority interests, a recovery from the previous year
million to ¥65,977 million. Notes and accounts payable
when a ¥204,139 million loss before income taxes and
were ¥653,153 million, a decrease of ¥100,668 million.
minority interests was recognized. Additionally, there was
Long-term liabilities increased by ¥96,184 million to
an increase in payables of ¥131,698 million compared to a
¥546,489 million. This was mainly due to an increase of
decrease in payables of ¥175,734 million recorded in the
¥93,810 million in long-term debt.
prior year. These changes were slightly offset by an
Interest-bearing debt was ¥820,135 million, a decrease
of ¥9,616 million.
increase of ¥87,301 million in notes and accounts receivable compared to a decrease of ¥102,119 million in the
prior year.
Net Assets
Net cash used in investing activities amounted to
Net assets amounted to ¥1,065,860 million, an increase of
¥253,805 million, an increase of ¥31,576 million. This was
¥17,413 million compared to the prior year. This was due
mainly due to a decrease of ¥64,889 million in proceeds
to an increase of ¥12,020 million in minority interests to
from withdrawal of time deposits, which was slightly
¥21,353 million and other increases, which was slightly
offset by a decrease of ¥34,325 million in payments into
offset by a decrease of ¥15,129 million in retained earn-
time deposits.
ings to ¥649,795 million. The equity ratio was 36.8%.
Net cash used in financing activities amounted to
¥35,441 million, a difference of ¥221,670 million from the
Cash Flows
net cash provided by financing activities in the prior year.
Cash and cash equivalents at end of year were ¥328,125
This was mainly due to a decrease of ¥171,315 million in
million, an increase of ¥10,767 million over the prior year,
short-term borrowings, net, compared to an increase of
as proceeds from operating activities exceeded payments
¥163,494 million in the prior year, which was slightly
in investing activities, associated with capital investments
offset by an increase of ¥68,262 million in proceeds from
and payments for financing activities.
long-term debt.
Net cash provided by operating activities increased by
¥278,129 million to ¥303,564 million. This was mainly due
Interest-Bearing Debt
Equity Ratio
Cash and Cash Equivalents
(billions of yen)
500
(billions of yen)
900
(%)
50.0
(billions of yen)
400
400
40.0
Financial Section
Inventories
300
600
300
30.0
200
200
20.0
300
100
100
10.0
0
0
06
07
08
09
10
0
0
06
07
08
09
10
06
07
08
09
10
06
07
08
09
10
Annual Report 2010 41
Consolidated Balance Sheets
Sharp Corporation and Consolidated Subsidiaries as of March 31, 2009 and 2010
Yen
(millions)
U.S. Dollars
(thousands)
2009
2010
2010
317,358
¥ 328,125
$ 3,566,576
19,579
20,289
220,533
Trade��������������������������������������������������������������������������������������������������������������
417,483
526,422
5,721,978
Nonconsolidated subsidiaries and affiliates��������������������������������������������������
17,756
15,293
166,228
ASSETS
Current Assets:
Cash and cash equivalents (Note 7)������������������������������������������������������������������
Time deposits (Note 7)��������������������������������������������������������������������������������������
¥
Notes and accounts receivable (Note 7)—
Allowance for doubtful receivables����������������������������������������������������������������
(5,175)
Inventories (Note 3)������������������������������������������������������������������������������������������
399,985
411,263
4,470,250
Deferred tax assets (Note 4)����������������������������������������������������������������������������
60,538
64,347
699,424
Other current assets ����������������������������������������������������������������������������������������
74,438
56,793
617,315
Total current assets������������������������������������������������������������������������������������
1,301,962
1,417,535
15,407,989
(4,997)
(54,315)
Plant and Equipment, at Cost (Note 6):
Land������������������������������������������������������������������������������������������������������������������
97,653
101,573
1,104,054
Buildings and structures������������������������������������������������������������������������������������
692,894
795,380
8,645,435
Machinery and equipment��������������������������������������������������������������������������������
2,006,779
2,030,447
22,070,076
Construction in progress����������������������������������������������������������������������������������
110,390
36,138
392,804
2,907,716
2,963,538
32,212,369
(1,875,641)
(1,935,934)
(21,042,760)
1,032,075
1,027,604
11,169,609
Investments in securities (Notes 2 and 7)��������������������������������������������������������
44,606
59,669
648,576
Investments in nonconsolidated subsidiaries and affiliates������������������������������
28,287
32,543
353,728
Bond issue cost������������������������������������������������������������������������������������������������
3,524
3,173
34,489
Deferred tax assets (Note 4)����������������������������������������������������������������������������
113,314
115,667
1,257,250
Less accumulated depreciation������������������������������������������������������������������������
Investments and Other Assets:
Financial Section
Other assets ����������������������������������������������������������������������������������������������������
164,953
180,064
1,957,218
354,684
391,116
4,251,261
¥2,688,721
¥2,836,255
$30,828,859
The accompanying notes to the consolidated financial statements are an integral part of these statements.
42 Sharp Corporation
Yen
(millions)
U.S. Dollars
(thousands)
2009
2010
2010
¥ 405,773
¥ 302,184
$ 3,284,609
LIABILITIES AND NET ASSETS
Current Liabilities:
Short-term borrowings, including current portion
of long-term debt (Notes 5 and 7) ��������������������������������������������������������������������
Notes and accounts payable (Note 7)—
Trade����������������������������������������������������������������������������������������������������������������
441,939
548,988
5,967,261
Construction and other������������������������������������������������������������������������������������
107,126
100,418
1,091,500
Nonconsolidated subsidiaries and affiliates����������������������������������������������������
3,420
3,747
40,728
Accrued expenses����������������������������������������������������������������������������������������������
188,299
198,274
2,155,152
Income taxes (Note 4)����������������������������������������������������������������������������������������
5,461
14,149
153,793
Other current liabilities (Note 4)��������������������������������������������������������������������������
37,951
56,146
610,283
Total current liabilities����������������������������������������������������������������������������������
1,189,969
1,223,906
13,303,326
5,629,902
Long-term Liabilities:
Long-term debt (Notes 5 and 7)��������������������������������������������������������������������������
424,141
517,951
Allowance for severance and pension benefits (Note 11) ����������������������������������
5,719
5,462
59,370
Other long-term liabilities (Note 4)����������������������������������������������������������������������
20,445
23,076
250,826
450,305
546,489
5,940,098
Contingent Liabilities (Note 10)
Net Assets (Note 9):
Common stock:
Authorized—2,500,000 thousand shares
Issued
—1,110,699 thousand shares��������������������������������������������������������
204,676
204,676
2,224,739
Capital surplus����������������������������������������������������������������������������������������������������
268,538
268,534
2,918,848
Retained earnings ����������������������������������������������������������������������������������������������
664,924
649,795
7,062,989
Less cost of treasury stock:
(13,740)
Net unrealized holding gains (losses) on securities��������������������������������������������
(1,946)
7,372
Deferred gains (losses) on hedges����������������������������������������������������������������������
(9,142)
218
Foreign currency translation adjustments ����������������������������������������������������������
(74,196)
(13,805)
(72,283)
(150,054)
80,130
2,370
(785,685)
Minority interests������������������������������������������������������������������������������������������������
9,333
21,353
232,098
Total net assets��������������������������������������������������������������������������������������������
1,048,447
1,065,860
11,585,435
¥2,688,721
¥2,836,255
$30,828,859
Annual Report 2010 43
Financial Section
10,219 thousand shares in 2009 and 10,285 thousand shares in 2010 ����������
Consolidated Statements of Operations
Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2009 and 2010
Yen
(millions)
2009
2010
U.S. Dollars
(thousands)
2010
Net Sales ��������������������������������������������������������������������������������������������������������������
¥2,847,227
¥2,755,948
$29,955,957
Cost of Sales ��������������������������������������������������������������������������������������������������������
2,392,397
2,229,510
24,233,805
Gross profit������������������������������������������������������������������������������������������������������
454,830
526,438
5,722,152
Selling, General and Administrative Expenses��������������������������������������������������
510,311
474,535
5,157,989
Operating income (loss)����������������������������������������������������������������������������������
(55,481)
51,903
564,163
Interest and dividends income����������������������������������������������������������������������������
7,009
3,547
38,554
Other Income (Expenses):
Interest expenses ����������������������������������������������������������������������������������������������
(9,147)
(7,794)
(84,717)
Foreign exchange gains (losses), net������������������������������������������������������������������
(6,137)
(4,256)
(46,261)
Gain on sales of subsidiaries and affiliates’ stocks ��������������������������������������������
18,521
–
–
Loss on sales of investment securities��������������������������������������������������������������
(1,914)
–
–
Loss on valuation of investment securities��������������������������������������������������������
(49,875)
–
–
Loss on valuation of inventories��������������������������������������������������������������������������
(7,639)
–
Restructuring charges (Note 13)��������������������������������������������������������������������������
(58,439)
–
(20,078)
(218,239)
Loss on violation of the antitrust law������������������������������������������������������������������
(12,004)
Other, net ����������������������������������������������������������������������������������������������������������
(29,033)
(17,183)
(186,772)
(148,658)
(45,764)
(497,435)
(204,139)
6,139
66,728
Income (loss) before income taxes and minority interests ����������������������������
–
–
Income Taxes (Note 4):
Current����������������������������������������������������������������������������������������������������������������
4,274
Deferred��������������������������������������������������������������������������������������������������������������
(83,177)
15,092
164,043
(15,090)
(164,022)
(78,903)
2
21
Income (loss) before minority interests����������������������������������������������������������
(125,236)
6,137
66,707
Minority Interests in Income of Consolidated Subsidiaries������������������������������
(579)
(1,740)
(18,914)
Net income (loss)��������������������������������������������������������������������������������������������
¥ (125,815)
¥
4,397
Yen
2009
2010
$
47,793
U.S. Dollars
2010
Financial Section
Per Share of Common Stock (Note 9):
Net income (loss)������������������������������������������������������������������������������������������������
¥ (114.33)
Diluted net income����������������������������������������������������������������������������������������������
–
3.78
0.04
Cash dividends����������������������������������������������������������������������������������������������������
21.00
17.00
0.18
The accompanying notes to the consolidated financial statements are an integral part of these statements.
44 Sharp Corporation
¥
4.00
$
0.04
Consolidated Statements of Changes in Net Assets
Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2009 and 2010
(thousands)
Number of shares
Common stock
(Note 9)
Capital surplus
(Note 9)
1,110,699
¥204,676
¥268,582
Net loss
Dividends from surplus
Retained earnings
(Note 9)
¥ 816,387
(125,815)
(30,814)
Effect of changes in accounting policies
applied to foreign subsidiaries
5,101
Effect of unfunded retirement benefit
obligation of foreign subsidiaries
65
¥(13,711)
(44)
1,110,699
¥204,676
¥268,538
Net income
Dividends from surplus
Change of scope of consolidation
Change of scope of equity method
¥ 664,924
4,397
(15,406)
(1,090)
(26)
Effect resulting from change of accounting
period of consolidated subsidiaries
(1,956)
Effect of unfunded retirement benefit
obligation of foreign subsidiaries
(1,048)
¥(13,740)
(4)
1,110,699
¥204,676
¥268,534
¥ 649,795
(thousands)
Balance at March 31, 2009
Number of shares
Common stock
(Note 9)
Capital surplus
(Note 9)
1,110,699
$2,224,739
$2,918,891
Dividends from surplus
Change of scope of consolidation
Change of scope of equity method
Retained earnings
(Note 9)
¥(46,155)
¥10,282
Total
¥1,241,868
(125,815)
(30,814)
65
(176)
103
(3,608)
¥(1,946)
(9,287)
¥(9,142)
(28,041)
¥(74,196)
(949)
¥  9,333
(41,885)
¥1,048,447
4,397
(15,406)
(1,090)
(26)
(1,048)
(80)
11
¥(13,805)
9,318
¥ 7,372
9,360
¥   218
1,913
¥(72,283)
Deferred
gains
(losses) on
hedges
Foreign
currency
translation
adjustments
12,020
¥21,353
(21,261)
Effect of unfunded retirement benefit
obligation of foreign subsidiaries
(11,391)
(43)
Net changes of items other than
shareholders’ equity
$2,224,739
$2,918,848
Net unrealized
holding gains
(losses) on
securities
Minority
interests
32,611
¥1,065,860
$7,062,989
Total
$11,396,163
47,793
(167,456)
(11,848)
(283)
(21,261)
(11,391)
(870)
121
(870)
164
Purchase of treasury stock
Disposal of treasury stock
Treasury
stock
$7,227,435 $(149,348) $(21,152) $(99,370) $(806,478) $101,446
47,793
(167,456)
(11,848)
(283)
Effect resulting from change of accounting
period of consolidated subsidiaries
1,110,699
¥   145
U.S. Dollars (thousands)
Net income
Balance at March 31, 2010
¥  1,662
Minority
interests
(1,956)
Net changes of items other than
shareholders’ equity
Balance at March 31, 2010
Foreign
currency
translation
adjustments
(80)
15
Purchase of treasury stock
Disposal of treasury stock
Deferred
gains
(losses) on
hedges
5,101
Net changes of items other than
shareholders’ equity
Balance at March 31, 2009
Net unrealized
holding gains
(losses) on
securities
(176)
147
Purchase of treasury stock
Disposal of treasury stock
Treasury
stock
101,282
$(150,054) $ 80,130
101,740
$  2,370
20,793
130,652
$(785,685) $232,098
354,467
$11,585,435
Financial Section
Balance at March 31, 2008
Yen (millions)
The accompanying notes to the consolidated financial statements are an integral part of these statements.
Annual Report 2010 45
Consolidated Statements of Cash Flows
Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2009 and 2010
Yen
(millions)
Cash Flows from Operating Activities:
Income (loss) before income taxes and minority interests �������������������������������������������������������������
Adjustments to reconcile income (loss) before income taxes and minority
interests to net cash provided by operating activities—
Depreciation and amortization of properties and intangibles�������������������������������������������������������
Interest and dividends income�����������������������������������������������������������������������������������������������������
Interest expenses�������������������������������������������������������������������������������������������������������������������������
Foreign exchange losses �������������������������������������������������������������������������������������������������������������
Loss on sales and retirement of noncurrent assets���������������������������������������������������������������������
Gain on sales of subsidiaries and affiliate’s stocks�����������������������������������������������������������������������
Loss on valuation of investment securities ���������������������������������������������������������������������������������
Loss on violation of the antitrust law�������������������������������������������������������������������������������������������
(Increase) decrease in notes and accounts receivable�����������������������������������������������������������������
(Increase) decrease in inventories �����������������������������������������������������������������������������������������������
Increase (decrease) in payables���������������������������������������������������������������������������������������������������
Other, net�������������������������������������������������������������������������������������������������������������������������������������
Total�������������������������������������������������������������������������������������������������������������������������������������������
Interest and dividends income received �����������������������������������������������������������������������������������������
Interest expenses paid���������������������������������������������������������������������������������������������������������������������
Income taxes (paid) refund �������������������������������������������������������������������������������������������������������������
Net cash provided by operating activities�����������������������������������������������������������������������������
U.S. Dollars
(thousands)
2009
2010
2010
¥(204,139)
¥    6,139
$    66,728
305,115
(7,009)
9,147
2,217
10,576
(18,521)
49,875
12,004
102,119
27,180
(175,734)
(53,539)
59,291
8,735
(9,179)
(33,412)
25,435
264,429
(3,547)
7,794
3,609
4,930
–
442
–
(87,301)
(22,250)
131,698
(7,425)
298,518
4,041
(7,551)
8,556
303,564
2,874,228
(38,554)
84,717
39,229
53,587
–
4,804
–
(948,924)
(241,848)
1,431,500
(80,706)
3,244,761
43,924
(82,076)
93,000
3,299,609
(74,089)
104,027
2,500
(39,764)
39,138
–
(432,217)
425,413
–
28,278
(237,801)
893
–
(222,772)
1,910
–
(2,421,435)
20,761
Financial Section
Cash Flows from Investing Activities:
Payments into time deposits�����������������������������������������������������������������������������������������������������������
Proceeds from withdrawal of time deposits �����������������������������������������������������������������������������������
Proceeds from sales of short-term investment securities���������������������������������������������������������������
Proceeds from sales of stocks of subsidiaries and affiliates resulting in change
in scope of consolidation���������������������������������������������������������������������������������������������������������������
Purchase of property, plant and equipment�������������������������������������������������������������������������������������
Proceeds from sales of property, plant and equipment�������������������������������������������������������������������
Purchase of investment securities and investments in nonconsolidated
subsidiaries and affiliates���������������������������������������������������������������������������������������������������������������
Proceeds from sales of investment securities and investments in
nonconsolidated subsidiaries and affiliates �����������������������������������������������������������������������������������
Payments of loans receivable ���������������������������������������������������������������������������������������������������������
Collection of loans receivable ���������������������������������������������������������������������������������������������������������
Other, net�����������������������������������������������������������������������������������������������������������������������������������������
Net cash used in investing activities�������������������������������������������������������������������������������������
(5,504)
(4,101)
(44,576)
3,843
(304,267)
306,520
(46,629)
(222,229)
1,207
(226,114)
226,281
(29,590)
(253,805)
13,120
(2,457,761)
2,459,576
(321,631)
(2,758,750)
Cash Flows from Financing Activities:
Net (decrease) increase in short-term borrowings���������������������������������������������������������������������������
Proceeds from long-term debt���������������������������������������������������������������������������������������������������������
Repayments of long-term debt �������������������������������������������������������������������������������������������������������
Proceeds from stock issuance to minority shareholders�����������������������������������������������������������������
Purchase of treasury stock���������������������������������������������������������������������������������������������������������������
Cash dividends paid�������������������������������������������������������������������������������������������������������������������������
Other, net�����������������������������������������������������������������������������������������������������������������������������������������
Net cash (used in) provided by financing activities���������������������������������������������������������������
163,494
88,912
(35,031)
–
(176)
(30,804)
(166)
186,229
(171,315)
157,174
(15,634)
10,000
(80)
(15,411)
(175)
(35,441)
(1,862,119)
1,708,413
(169,935)
108,696
(870)
(167,511)
(1,902)
(385,228)
(12,001)
(22,566)
339,266
550
108
(4,187)
10,131
317,358
228
69
(45,511)
110,120
3,449,543
2,478
750
Effect of Exchange Rate Change on Cash and Cash Equivalents �������������������������������������������������
Net Increase (Decrease) in Cash and Cash Equivalents�����������������������������������������������������������������
Cash and Cash Equivalents at Beginning of Year���������������������������������������������������������������������������
Increase in Cash and Cash Equivalents from Newly Consolidated Subsidiary���������������������������
Increase in Cash and Cash Equivalents resulting from Merger�����������������������������������������������������
Increase in Cash and Cash Equivalents resulting from Change of Accounting
Period of Consolidated Subsidiaries ���������������������������������������������������������������������������������������������
Cash and Cash Equivalents at End of Year �������������������������������������������������������������������������������������
The accompanying notes to the consolidated financial statements are an integral part of these statements.
46 Sharp Corporation
–
¥ 317,358
339
¥ 328,125
3,685
$ 3,566,576
Notes to Consolidated Financial Statements
Sharp Corporation and Consolidated Subsidiaries
1. Summary of Significant Accounting and Reporting Policies
The accompanying consolidated financial statements of Sharp
Corporation (“the Company”) and its consolidated subsidiaries have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments 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 from International
Financial Reporting Standards (“IFRS”).
The financial statements of the Company’s overseas
consolidated subsidiaries for consolidation purposes have
been prepared in conformity with IFRS or generally accepted
accounting principles in the United States of America (“US
GAAP”), and partially reflect the adjustments which are
­necessary to conform with Japanese GAAP.
The accompanying consolidated financial statements have
been restructured and translated into English (with certain
expanded disclosures) 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 Japanese
Financial Instruments and Exchange Law. Certain supplementary information included in the Japanese language statutory
consolidated financial statements, but not required for fair
presentation, is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S.
dollar amounts is included solely for the convenience of readers outside Japan, using the prevailing exchange rate at
March 31, 2010, which was ¥92 to U.S. $1.00. The translations should not be construed as a representation 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 are accounted for using 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 subsidiary.
Material intercompany balances, transactions and unrealized profits have been eliminated in consolidation.
Sharp Office Equipments (Changshu) Co., Ltd. and 7 other
consolidated subsidiaries have fiscal year end of December
31. Previously, the Company’s consolidated financial statements included the accounts of these subsidiaries as of
December 31, with appropriate adjustments for significant
transactions which have occurred from December 31 through
to the consolidated fiscal year end of March 31. Effective for
the year ended March 31, 2010, the Company’s consolidated
financial statements include the accounts of these subsidiaries as of March 31, to provide more appropriate and timely
disclosure. The gains and losses of these subsidiaries,
incurred from January 1, 2009 to March 31, 2009, have been
included as a change in retained earnings.
(c) Translation of foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at current rates at each
balance sheet date, and the resulting translation gains or
losses are charged to income.
Assets and liabilities are translated at current rates at
each balance sheet date, net assets 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 in net assets.
(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits on
demand placed with banks and highly liquid investments with
insignificant risk of changes in value which have maturities of
three months or less when purchased.
(e) Investments in securities
Investments in securities consist principally of marketable
and nonmarketable equity 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
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 net assets. Realized gains and losses on the sale of
such securities are principally computed using average cost.
Other securities with no available fair market values are
stated at average cost.
Annual Report 2010 47
Financial Section
(a) Basis of presenting consolidated financial
statements
If the fair market value of other securities declines significantly, such securities are stated at fair market value and the
difference between the fair market value and the carrying
amount is recognized as loss in the period of decline. If the
net asset value of other securities with no available fair
market values declines significantly, the securities are written
down to the net asset value and charged to income. In these
cases, the fair market value or the net asset value is carried
forward to the next year.
(f) Inventories
Inventories held by the Company and its domestic consolidated subsidiaries are primarily stated at moving average
cost (for balance sheet valuation, in the event that an impairment is determined inventories impairment is computed
using net realizable value). For overseas consolidated subsidiaries, inventories are stated at the lower of moving average
cost or market.
(g) Depreciation and amortization
Financial Section
For the Company and its domestic consolidated subsidiaries,
depreciation of plant and equipment, other than lease assets
is computed using the declining-balance method, except for
machinery and equipment at the LCD plants in Mie,
Kameyama and Sakai, as well as buildings (excluding attached
structures) acquired by the Company and its domestic consolidated subsidiaries on and after April 1, 1998; All of which are
depreciated using the straight-line method over the estimated
useful life of the asset. Properties at overseas consolidated
subsidiaries are depreciated using the straight-line method.
Maintenance and repairs, including minor renewals and
betterments, are charged to income as incurred.
Amortization of intangible assets except for lease assets
is computed using the straight-line method.
Depreciation of lease assets under finance leases that do
not transfer ownership is computed using the straight-line
method, using the lease period as the depreciable life and the
residual value as zero. Finance leases of the Company and its
domestic consolidated subsidiaries that do not transfer ownership, for which the starting date of the lease transaction is
on and before March 31, 2008, lease payments are recognized as expenses.
(h) Accrued bonuses
The Company and its domestic consolidated subsidiaries
accrue estimated amounts of employees’ bonuses based on
the estimated amounts to be paid in the subsequent period.
(i) 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
48 Sharp Corporation
amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
(j) Severance and pension benefits
The Company and its domestic consolidated subsidiaries
have primarily a trustee noncontributory defined benefit pension plan for their employees to supplement a governmental
welfare pension plan.
Certain overseas consolidated subsidiaries primarily have
defined contribution pension plans and lump-sum retirement
benefit plans.
The Company and its domestic consolidated subsidiaries
provide an allowance for severance and pension benefits
based on the estimated amounts of projected benefit obligation and the fair value of 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.
Prior service costs are amortized using the straight-line
method over the average of the estimated remaining service
years (16 years) commencing with the current period. Actuarial gains and losses are primarily amortized using the
straight-line method over the average of the estimated
remaining service years (16 years) commencing with the
following period.
(k) Research and development expenses and
software costs
Research and development expenses are charged to income
as incurred. The research and development expenses are
charged to income amounted to ¥195,525 million and
¥166,507 million ($1,809,859 thousand) for the years ended
March 31, 2009 and 2010, respectively.
Software costs are recorded principally in other assets.
Software used by the Company is amortized using the
straight-line method over the estimated useful life of principally 5 years, and software embedded in products is amortized over the forecasted sales quantity.
(l) Derivative financial instruments
The Company and some of its consolidated subsidiaries use
derivative financial instruments, including foreign exchange
forward contracts and interest rate swap agreements, in order
to hedge the risk of fluctuations in foreign currency exchange
rates and interest rates associated with assets and liabilities
denominated in foreign currencies 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.
(m) Changes in accounting methods
(1) Standard and Method for Measurement of
Inventories
Effective for the year ended March 31, 2009, the Company
and its domestic consolidated subsidiaries have applied the
“Accounting Standard for Measurement of Inventories”
(Accounting Standards Board of Japan (ASBJ) Statement No.
9, issued by the ASBJ on July 5, 2006). As a result, for the
year ended March 31, 2009, operating loss and loss before
income taxes and minority interests increase by ¥5,274
­million and ¥12,919 million, respectively, compared to
amounts calculated under the previous method.
Also, valuation methods for raw materials and work in
process had previously been based on the last invoice
method. However, effective for the year ended March 31,
2009, the Company and its domestic consolidated subsidiaries have adopted the moving average method in order to
properly reflect the impact of fluctuations in raw material
prices on financial statements, and to achieve more appropriate periodic accounting of profit and loss. This change has an
immaterial impact on the financial statements for the year
ended March 31, 2009.
The effect of these changes on segmented information is
stated in Note 12. Segment Information.
(2) Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements
Effective for the year ended March 31, 2009, the Company
has applied the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements” (ASBJ PITF No. 18, issued by the
ASBJ on May 17, 2006) and made revisions required for consolidated accounting. As a result, for the year ended March
31, 2009, operating loss and loss before income taxes and
minority interests increase by ¥1,804 million and ¥1,922
­million, respectively, compared to amounts calculated under
the previous method. The effect of this change on segmented
information is stated in Note 12. Segment Information.
(3) Accounting Standard for Lease Transactions
Previously, lease payments under finance leases that do not
transfer ownership of the leased property to the lessee had
been recognized as expenses. However, effective for the year
ended March 31, 2009, the Company and its domestic consolidated subsidiaries have applied the “Accounting Standard
for Lease Transactions” (ASBJ Statement No. 13, revised on
March 30, 2007 (originally issued by the 1st committee of the
Business Accounting Council on June 17, 1993)) and the
“Guidance on Accounting Standard for Lease Transactions”
(ASBJ Guidance No. 16, revised on March 30, 2007 (originally
issued by the Auditing Standards Committee of JICPA on
January 18, 1994)) and are accounting for such transactions as
capital lease transactions. Finance leases that do not transfer
ownership for which the starting date of the lease transaction
is on and before March 31, 2008, lease payments are recognized as expenses. This change has an immaterial impact on
the financial statements for the year ended March 31, 2009.
The effect of this change on segmented information is stated
in Note 12. Segment Information.
(4) Accounting Standard for Recognizing Revenues
and Costs of Construction Contracts
Previously, revenues and costs of construction contracts had
been recognized using the completed-contract method. Effective for the year ended March 31, 2010, the Company and its
domestic consolidated subsidiaries have applied the following
accounting standards; “Accounting Standard for Construction
Contracts” (ASBJ Statement No. 15, issued by the ASBJ on
December 27, 2007) and the “Guidance on Accounting
­Standard for Construction Contracts” (ASBJ Guidance No. 18,
issued by the ASBJ on December 27, 2007). Accordingly, for
construction contracts which commenced on and after April 1,
2009, and for which the outcome of the construction activity
is deemed certain as of March 31, 2010, the percentage-ofcompletion method has been applied, otherwise the
­complete-contract method has been applied. Under the
­percentage-of-completion method, revenue is recognized,
based on the percentage of the actual costs incurred of the
estimated total cost. This change has an immaterial impact on
the financial statements for the year ended March 31, 2010.
The effect of this change on segmented information is stated
in Note 12. Segment Information.
Annual Report 2010 49
Financial Section
If certain hedging criteria are met, interest rate swaps are
not recognized at their fair values as an alternative method
under Japanese accounting standards. The net amounts
received or paid for such interest rate swap arrangements are
charged or credited to income as incurred.
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, an evaluation of the 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 have
good credit ratings with financial institutions.
(5) Accounting Standard for Pension Benefits
Effective for the year ended March 31, 2010, the Company
and its domestic consolidated subsidiaries have applied the
“Partial Amendments to Accounting Standard for Retirement
Benefits (Part 3)” (ASBJ Statement No. 19, issued by the
ASBJ on July 31, 2008). This change has no impact on the
financial statements for the year ended March 31, 2010.
2. Investments in Securities
The following is a summary of other securities with available fair market values as of March 31, 2009 and 2010:
Yen (millions)
Equity securities ������������������������������������������������������������������������������������������
Acquisition
cost
Unrealized
gains
¥38,955
¥38,955
¥17,423
¥17,423
Unrealized
losses
¥(4,661)
¥(4,661)
2010
Fair market
value
¥51,717
¥51,717
U.S. Dollars (thousands)
Equity securities ������������������������������������������������������������������������������������������
Acquisition
cost
Unrealized
gains
Unrealized
losses
2010
Fair market
value
$423,424
$423,424
$189,380
$189,380
$(50,663)
$(50,663)
$562,141
$562,141
Yen (millions)
Equity securities ������������������������������������������������������������������������������������������
Acquisition
cost
Unrealized
gains
¥40,142
¥40,142
¥4,003
¥4,003
Unrealized
losses
¥(7,142)
¥(7,142)
2009
Fair market
value
¥37,003
¥37,003
The proceeds from sales of other securities were ¥1,715
¥187 million ($2,033 thousand), respectively. The gross
million and ¥1,207 million ($13,120 thousand) for the
realized losses on those sales were ¥1,915 million and ¥0
years ended March 31, 2009 and 2010, respectively. The
million ($0 thousand), respectively.
gross realized gains on those sales were ¥224 million and
3. Inventories
Inventories as of March 31, 2009 and 2010 were as follows:
Yen
(millions)
2009
Financial Section
Finished products ��������������������������������������������������������������������������������������������������
Work in process������������������������������������������������������������������������������������������������������
Raw materials��������������������������������������������������������������������������������������������������������
50 Sharp Corporation
¥179,629
148,482
71,874
¥399,985
2010
U.S. Dollars
(thousands)
2010
¥164,670
170,091
76,502
¥411,263
$1,789,891
1,848,815
831,544
$4,470,250
4. Income Taxes
The Company is subject to a number of different income
taxes which, in the aggregate, indicate a normal tax rate in
Japan of approximately 40.6% for the years ended March 31,
2009 and 2010.
The Company and its wholly owned domestic subsidiaries
have adopted the consolidated tax return system of Japan.
The following table summarizes the significant differences between the normal tax rate and the effective tax rate for financial
statements purposes for the year ended March 31, 2010:
2010
Normal tax rate�����������������������������������������������������������������������������������������������������������������������������������������������������������������
Differences in normal tax rates of overseas subsidiaries�����������������������������������������������������������������������������������������������
Tax credit �����������������������������������������������������������������������������������������������������������������������������������������������������������������������
Tax effect on equity in earnings of affiliates, net �����������������������������������������������������������������������������������������������������������
Dividends income ���������������������������������������������������������������������������������������������������������������������������������������������������������
Expenses not deductible for tax purposes���������������������������������������������������������������������������������������������������������������������
Other�����������������������������������������������������������������������������������������������������������������������������������������������������������������������������
Effective tax rate���������������������������������������������������������������������������������������������������������������������������������������������������������������
The difference between the normal tax rate and the effective tax rate for financial statements purposes for the year
40.6%
(69.8)
(13.7)
(8.5)
24.2
23.8
3.4
0.0%
ended March 31, 2009 is omitted because loss before
income taxes and minority interests is recorded.
Significant components of deferred tax assets and deferred tax liabilities as of March 31, 2009 and 2010 were as follows:
Deferred tax assets:
Inventories����������������������������������������������������������������������������������������������������������
Allowance for doubtful receivables ��������������������������������������������������������������������
Accrued bonuses������������������������������������������������������������������������������������������������
Warranty reserve������������������������������������������������������������������������������������������������
Software�������������������������������������������������������������������������������������������������������������
Long-term prepaid expenses������������������������������������������������������������������������������
Loss carried forward ������������������������������������������������������������������������������������������
Other������������������������������������������������������������������������������������������������������������������
Gross deferred tax assets ������������������������������������������������������������������������������
Valuation allowance ����������������������������������������������������������������������������������������
Total deferred tax assets����������������������������������������������������������������������������������
Deferred tax liabilities:
Retained earnings appropriated for tax allowable reserves��������������������������������
Undistributed earnings of overseas subsidiaries������������������������������������������������
Other������������������������������������������������������������������������������������������������������������������
Total deferred tax liabilities������������������������������������������������������������������������������
Net deferred tax assets������������������������������������������������������������������������������������������
2010
U.S. Dollars
(thousands)
2010
¥  24,460
1,907
9,691
2,764
25,644
16,928
86,403
42,919
210,716
(3,915)
206,801
¥  21,098
1,641
10,702
3,174
20,825
16,600
130,647
47,498
252,185
(4,409)
247,776
$  229,326
17,837
116,326
34,500
226,359
180,435
1,420,076
516,282
2,741,141
(47,924)
2,693,217
(19,858)
(3,838)
(11,869)
(35,565)
¥171,236
(57,209)
–
(16,359)
(73,568)
¥174,208
(621,837)
–
(177,815)
(799,652)
$1,893,565
Net deferred tax assets as of March 31, 2009 and 2010 were included in the consolidated balance sheets as follows:
Yen
(millions)
2009
Deferred tax assets (Current Assets) ��������������������������������������������������������������������
Deferred tax assets (Investments and Other Assets)��������������������������������������������
Other current liabilities ������������������������������������������������������������������������������������������
Other long-term liabilities ��������������������������������������������������������������������������������������
Net deferred tax assets������������������������������������������������������������������������������������������
¥  60,538
113,314
(1)
(2,615)
¥171,236
2010
¥  64,347
115,667
(23)
(5,783)
¥174,208
U.S. Dollars
(thousands)
2010
$  699,424
1,257,250
(250)
(62,859)
$1,893,565
Annual Report 2010 51
Financial Section
Yen
(millions)
2009
5. Short-term Borrowings and Long-term Debt
The weighted average interest rates of short-term borrowings
as of March 31, 2009 and 2010 were 0.8% and 0.4%, respectively. The Company and its consolidated subsidiaries have
had no difficulty in renewing such loans when loans have
come due or management has determined such renewal
advisable.
Short-term borrowings including current portion of long-term debt as of March 31, 2009 and 2010 consisted of the following:
Yen
(millions)
2009
Bank loans��������������������������������������������������������������������������������������������������������������
Bankers’ acceptances payable��������������������������������������������������������������������������������
Commercial paper ������������������������������������������������������������������������������������������������
Current portion of long-term debt ��������������������������������������������������������������������������
¥  61,345
163
335,426
8,839
¥405,773
2010
U.S. Dollars
(thousands)
2010
¥  70,452
–
165,755
65,977
¥302,184
$  765,783
–
1,801,685
717,141
$3,284,609
Long-term debt as of March 31, 2009 and 2010 consisted of the following:
Yen
(millions)
2009
0.0%–5.2% unsecured loans principally from banks, due 2009 to 2024 ��������������
0.620% unsecured straight bonds, due 2010��������������������������������������������������������
0.970% unsecured straight bonds, due 2012��������������������������������������������������������
1.165% unsecured straight bonds, due 2012 ��������������������������������������������������������
1.423% unsecured straight bonds, due 2014 ��������������������������������������������������������
2.068% unsecured straight bonds, due 2019��������������������������������������������������������
0.846% unsecured straight bonds, due 2014��������������������������������������������������������
1.141% unsecured straight bonds, due 2016 ��������������������������������������������������������
1.604% unsecured straight bonds, due 2019 ��������������������������������������������������������
0.000% unsecured convertible bonds with
subscription rights to shares, due 2013 ��������������������������������������������������������������
0.950%–1.177% unsecured Euroyen notes
issued by a consolidated subsidiary, due 2009 to 2013����������������������������������������
0.400%–0.700% unsecured Pound discount notes issued by
a consolidated subsidiary, due 2009 to 2010��������������������������������������������������������
lease obligations ����������������������������������������������������������������������������������������������������
Less – Current portion included in short-term borrowings ������������������������������������
2010
U.S. Dollars
(thousands)
2010
¥100,178
30,000
20,000
10,000
30,000
10,000
–
–
–
¥  99,994
30,000
20,000
10,000
30,000
10,000
100,000
20,000
30,000
$1,086,891
326,087
217,391
108,696
326,087
108,696
1,086,957
217,391
326,087
203,211
202,497
2,201,054
5,818
5,057
54,967
502
23,271
432,980
(8,839)
¥424,141
698
25,682
583,928
(65,977)
¥517,951
7,587
279,152
6,347,043
(717,141)
$5,629,902
The following is a summary of the terms for conversion and redemption of the convertible bonds with subscription rights to shares:
Financial Section
Yen
Conversion
price
0.000% unsecured convertible bonds with subscription rights to shares, due 2013 ����������������������������������������������������
The conversion price is subject to adjustment for certain
subsequent events such as the issue of common stock at
less than market value and stock splits.
If all convertible bonds with subscription rights to shares
were converted as of March 31, 2009 and March 31, 2010,
79,018 thousand shares of common stock would have been
issuable, in both years.
As is customary in Japan, substantially all of the bank
borrowings are subject to general agreements with each bank
52 Sharp Corporation
¥2,531.00
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. 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, 2010 were as follows:
Yen
(millions)
Years ending March 31
2012������������������������������������������������������������������������������������������������������������������������������������������������������
2013������������������������������������������������������������������������������������������������������������������������������������������������������
2014������������������������������������������������������������������������������������������������������������������������������������������������������
2015������������������������������������������������������������������������������������������������������������������������������������������������������
2016 and thereafter������������������������������������������������������������������������������������������������������������������������������
¥  34,681
37,968
241,863
101,636
101,803
¥517,951
U.S. Dollars
(thousands)
$  376,967
412,696
2,628,946
1,104,739
1,106,554
$5,629,902
6. Leases
Finance leases
Finance leases that do not transfer ownership for which the starting date of the lease transaction is on and before March 31, 2008,
lease payments are recognized as expenses.
Information relating to finance leases that do not transfer ownership for which the starting date of the lease transaction is on
and before March 31, 2008, as of, and for the years ended March 31, 2009 and 2010, is as follows:
As lessee
(1) Future minimum lease payments and accumulated impairment loss on leased assets
Yen
(millions)
2009
Future minimum lease payments:
Due within one year��������������������������������������������������������������������������������������������
Due after one year����������������������������������������������������������������������������������������������
Accumulated impairment loss on leased assets����������������������������������������������������
2010
U.S. Dollars
(thousands)
2010
¥18,973
32,770
¥51,743
¥14,324
18,161
¥32,485
$155,696
197,402
$353,098
¥    987
¥   749
$   8,141
(2) Lease payments, reversal of allowance for impairment loss on leased assets and impairment loss
Yen
(millions)
2009
¥23,383
–
987
2010
¥18,515
238
–
$201,250
2,587
–
Financial Section
Lease payments ����������������������������������������������������������������������������������������������������
Reversal of allowance for impairment loss on leased assets ��������������������������������
Impairment loss������������������������������������������������������������������������������������������������������
U.S. Dollars
(thousands)
2010
Operating leases
(a) As lessee
Future minimum lease payments for only non-cancelable contracts as of March 31, 2009 and 2010 were as follows:
Yen
(millions)
2009
Due within one year ����������������������������������������������������������������������������������������������
Due after one year��������������������������������������������������������������������������������������������������
¥2,844
6,536
¥9,380
2010
U.S. Dollars
(thousands)
2010
¥23,676
41,456
¥65,132
$257,348
450,609
$707,957
Annual Report 2010 53
(b) As lessor
Future minimum lease receipts for only non-cancelable contracts as of March 31, 2009 and 2010 were as follows:
Yen
(millions)
2009
Due within one year ����������������������������������������������������������������������������������������������
Due after one year��������������������������������������������������������������������������������������������������
¥  699
1,341
¥2,040
2010
U.S. Dollars
(thousands)
2010
¥  831
1,641
¥2,472
$  9,033
17,837
$26,870
7. Financial Instruments
(a) Qualitative information on financial instruments
The Company and its consolidated subsidiaries obtain
necessary funds, mainly through bank loans and issuing
bonds, according to its capital investment plan, for its main
business of manufacturing and distributing electronics
equipment, electronic components and other products.
Any surplus funds are invested in high quality financial
instruments, deem to be low risk. Short-term operating
funds are obtained through issuing commercial paper and
bank loans.
Long-term borrowings and bonds are used to obtain
funds principally necessary for capital investment. Interestrate swaps are used to hedge exposure to interest rate
risks on a part of these funds.
Transactions involving such financial instruments are
with creditworthy financial institutions.
For accounts receivables and long-term loan receivables, the Company periodically reviews the status of its
key customers, monitoring their respective payment
deadlines and remaining outstanding balances.
The Company strives to recognize and reduce irrecoverable risks, due to deteriorating financial conditions or
other factors, at an early stage. The Company’s consolidated subsidiaries also follow the same monitoring and
administration process.
(b) Fair values of financial instruments
The consolidated balance sheet amounts, fair values and differences between the two, as of March 31, 2010 are as follows:
Yen (millions)
2010
Financial Section
(1) Cash and cash equivalents, and Time deposits�����������������������������������������������
(2) Notes and accounts receivable (excluding other accounts receivable)�����������
(3) Investments in securities
1) Debt securities held to maturity �����������������������������������������������������������������
2) Other securities�������������������������������������������������������������������������������������������
Total Assets�����������������������������������������������������������������������������������������������������������
(4) Notes and accounts payable (excluding other accounts payable) �������������������
(5) Bank loans and Current portion of long-term borrowings
(included in short-term borrowings)�����������������������������������������������������������������
(6) Commercial paper (included in short-term borrowings)�����������������������������������
(7) Straight bonds (included in short-term borrowings and long-term debt)�����������
(8) Bonds with subscription rights to shares (included in long-term debt)�����������
(9) Long-term borrowings (included in long-term debt)�����������������������������������������
Total of Liabilities���������������������������������������������������������������������������������������������������
(10) Derivative transactions*���������������������������������������������������������������������������������
54 Sharp Corporation
Consolidated
Balance Sheet
Amount
Fair Value
¥  348,414
439,877
¥  348,414
438,912
–
51,717
840,008
554,368
–
51,717
839,043
554,368
–
0
(965)
0
97,886
165,755
258,094
193,997
73,965
1,344,065
104
0
0
2,339
(8,500)
1,405
(4,756)
283
97,886
165,755
255,755
202,497
72,560
1,348,821
(179)
Difference
¥
0
(965)
U.S. Dollars (thousands)
2010
(1) Cash and cash equivalents, and Time deposits�����������������������������������������������
(2) Notes and accounts receivable (excluding other accounts receivable)�����������
(3) Investments in securities
1) Debt securities held to maturity �����������������������������������������������������������������
2) Other securities�������������������������������������������������������������������������������������������
Total Assets�����������������������������������������������������������������������������������������������������������
(4) Notes and accounts payable (excluding other accounts payable) �������������������
(5) Bank loans and Current portion of long-term borrowings
(included in short-term borrowings)�����������������������������������������������������������������
(6) Commercial paper (included in short-term borrowings)�����������������������������������
(7) Straight bonds (included in short-term borrowings and long-term debt)���������
(8) Bonds with subscription rights to shares (included in long-term debt)�����������
(9) Long-term borrowings (included in long-term debt)�����������������������������������������
Total Liabilities�������������������������������������������������������������������������������������������������������
(10) Derivative transactions*���������������������������������������������������������������������������������
Consolidated
Balance Sheet
Amount
Fair Value
$  3,787,109
4,781,272
$  3,787,109
4,770,783
$
0
(10,489)
–
562,141
9,130,522
6,025,739
–
562,141
9,120,033
6,025,739
–
0
(10,489)
0
1,063,978
1,801,685
2,779,946
2,201,054
788,696
14,661,098
(1,946)
1,063,978
1,801,685
2,805,370
2,108,663
803,967
14,609,402
1,130
0
0
25,424
(92,391)
15,271
(51,696)
3,076
Difference
* Net receivables and payables arising from derivative transactions. Net payables are indicated by “( ).”
(5)Bank loans and current portion of long-term borrowings (included in short-term borrowings)
Are stated at book value, as the fair value of bank
loans and current portion of long-term borrowings
approximates their book value, due to their short
maturity periods.
(6)Commercial paper (included in short-term
borrowings)
Are stated at book value, as the fair value of commercial paper approximates their book value, due
to their short maturity periods.
(7)Straight bonds (included in short-term borrowings
and long-term debt)
Marketable straight bonds are stated at the
­observable price on the relevant exchange. Non­marketable straight bonds are stated based on
quoted prices from financial institutions.
(8)Bonds with subscription rights to shares (included in
long-term debt)
Marketable bonds with subscription rights to
shares, are stated at the observable prices on the
relevant exchange.
Non-marketable bonds with subscription rights to
shares are stated based on quoted prices from
­financial institutions.
(9) Long-term borrowings (included in long-term debt)
To estimate the fair value of long-term borrowings,
the total amount of the principal and interest is
discounted using the rate which would apply if
similar borrowings were newly made.
Annual Report 2010 55
Financial Section
(Note 1)Methods of Calculating the Fair Value of Financial
Instruments and Matters Related to Securities and
Derivative Transactions
(1) Cash and cash equivalents, and Time deposits
Are stated at book value, as the fair value of time
deposits approximates their book value, due to their
short maturity periods.
(2)Notes and accounts receivable (excluding other
accounts receivable)
Are stated at book value, as the fair value of notes
and accounts receivable (excluding other accounts
receivable), approximates their book value, due to
their short maturity periods. For the fair value of
accounts receivable (excluding other accounts
receivable) with long maturity periods, the amount
of each accounts receivable (excluding other
accounts receivable) is classified based on certain
terms and are discounted using a rate which
reflects both the period until maturity and credit risk.
(3) Investments in securities
The fair value of investments in securities is based
on average observable prices on the relevant
exchanges during the last month of the fiscal year.
(4)Notes and accounts payable (excluding other
accounts payable)
Are stated at book value, as the fair value of notes
and accounts payable (excluding other accounts
payable) approximates their book value, due to their
short maturity periods.
(10) Derivative transactions
As interest-rate swaps are recorded under the preferential accounting method, they are accounted for
as a single item with the underlying bank loans and
current portion of long-term borrowings; which are
hedged transactions. Therefore their fair values are
included in bank loans and current portion of longterm borrowings. (Please see (5) above.)
(Note 2)As unlisted stocks ¥ 39,487 million ($429,207
­thousand) and investments in capital ¥371 million
($4,033 thousand) have no observable market price
and as it is not possible to accurately estimate future
cash flows, it is very difficult to determine their fair
value accurately. Therefore, they are not included in
“(3) Investments in securities; 2) Other securities.”
(Additional Information)
Effective for the year ended March 31, 2010, the
Company and its consolidated subsidiaries have
applied the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10, issued by
the ASBJ on March 10, 2008) and the “Guidance on
Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, issued by the ASBJ
on March 10, 2008).
8. Business Combinations
Transaction under Common Control
(a)Principal Business Targeted for Transaction Under
Common Control, Legal Method of Business Combination, Corporate Name after Business Combination and,
Outline and Purpose of the Transaction
(1)Principal Business Targeted for Transaction Under
Common Control
Production and sales of LCD panels and LCD modules
(2) Legal Method of Business Combination
Legal method of business combination is called, a simplified absorption-type corporate split defined under
Japanese Corporate Law (“kani-kyushu-bunkatsu”), in
which the business is split from the Company. Following this split, Sharp Display Products Corporation, which
is a consolidated subsidiary of the ­Company, absorbs
the split business.
(3)Corporate Name after the Business Combination
Sharp Display Products Corporation
(4) Outline and Purpose of the Transaction
The Company’s consolidated subsidiary, Sharp Display
Products Corporation, has succeeded the business, in
the production and sales business, of large-sized LCD
panels and LCD modules, through an absorption-type
corporate split. This transaction allows the production
of large-sized LCD panels and modules, which deliver
the industry’s highest levels of quality, cost and performance, maximizing the advantages gained by using the
world’s first 10th generation glass substrates.
(b) Outline of Account Processing
The Company and its domestic consolidated subsidiaries have applied the “Accounting Standard for Business
Combinations” (Business Accounting Council (BAC)
Accounting Standard, issued by the BAC on October
31, 2003) and the “Guidance on Accounting Standard
for Business Combinations and Accounting Standard for
Business Divestitures” (ASBJ Guidance No. 10, issued
by the ASBJ on November 15, 2007) as a commonlycontrolled business combination.
Financial Section
9. Net Assets and Per Share Data
Under the Japanese Corporate Law (“the Law”), the entire
amount paid for new shares is required to be designated as
common stock. However, a company may, by a resolution of
the Board of Directors, designate an amount not exceeding
one-half of the price of the new shares as additional paid-in
capital, which is included in capital surplus.
Under the Law, in cases where a dividend distribution of
surplus is made, the smaller of an amount equal to 10% of
the dividend or the excess, if any, of 25% of common stock
over the total of legal earnings reserve and additional paid-in
capital must be set aside as legal earnings reserve or
56 Sharp Corporation
additional paid-in capital. Legal earnings reserve is included
in retained earnings in the accompanying consolidated balance sheets.
As of March 31, 2010, the total amount of legal earnings
reserve and additional paid-in capital exceeded 25% of the
common stock, therefore, no additional provision is required.
Legal earnings reserve and additional paid-in capital may not
be distributed as dividends. By the resolution of shareholders’
meeting, legal earnings reserve and additional paid-in capital may
be transferred to other retained earnings and capital surplus,
respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as
dividends is calculated based on the nonconsolidated financial
statements of the Company in accordance with the Law.
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 Law, 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 operations reflect dividends applicable
to the respective period.
On June 23, 2010, the shareholders approved the declaration of year end cash dividends totaling ¥11,004 million
($119,609 thousand) to shareholders of record as of March
31, 2010, covering the year then ended.
10. Contingent Liabilities
As of March 31, 2010, the Company and its consolidated subsidiaries had contingent liabilities as follows:
Loans guaranteed ����������������������������������������������������������������������������������������������������������������������������
The Company and some of its subsidiaries are subject to
the investigations being conducted by the Directorate-General
for Competition of the European Commission etc., with
respect to TFT LCD business. In addition, civil lawsuits seeking monetary damages resulting from the alleged anticompetitive behavior have been filed in North America and Europe
Yen
(millions)
2010
U.S. Dollars
(thousands)
2010
¥29,281
¥29,281
$318,272
$318,272
against the Company and some of its subsidiaries. The Company also received a cease and desist order and a surcharge
payment order from the Japan Fair Trade Commission. However, the Company has submitted a complaint to the Japan
Fair Trade Commission, which is currently pending.
11. Employees’ Severance and Pension Benefits
Allowance for severance and pension benefits of the Company and its domestic consolidated subsidiaries as of March 31, 2009
and 2010 consisted of the following:
Projected benefit obligation������������������������������������������������������������������������������������
Less – fair value of plan assets������������������������������������������������������������������������������
Less – unrecognized actuarial differences��������������������������������������������������������������
Unrecognized prior service costs ��������������������������������������������������������������������������
Prepaid pension cost����������������������������������������������������������������������������������������������
Allowance for severance and pension benefits������������������������������������������������������
¥ 355,538
(247,412)
(166,278)
32,060
27,571
¥    1,479
2010
¥ 355,894
(290,914)
(118,781)
29,048
26,456
¥    1,703
U.S. Dollars
(thousands)
2010
$ 3,868,413
(3,162,108)
(1,291,098)
315,739
287,565
$     18,511
In addition, allowances for severance and pension benefits of ¥4,240 million as of March 31, 2009 and ¥3,759 million ($40,859
thousand) as of March 31, 2010 were provided by certain overseas consolidated subsidiaries.
Expenses for severance and pension benefits of the Company and its domestic consolidated subsidiaries for the years ended
March 31, 2009 and 2010 consisted of the following:
Yen
(millions)
2009
Service costs����������������������������������������������������������������������������������������������������������
Interest costs on projected benefit obligation��������������������������������������������������������
Expected return on plan assets������������������������������������������������������������������������������
Recognized actuarial loss����������������������������������������������������������������������������������������
Amortization of prior service costs������������������������������������������������������������������������
Expenses for severance and pension benefits ������������������������������������������������������
¥ 12,841
8,870
(14,439)
7,598
(3,011)
¥ 11,859
2010
¥ 12,841
8,894
(11,137)
12,971
(3,011)
¥ 20,558
U.S. Dollars
(thousands)
2010
$ 139,576
96,674
(121,054)
140,989
(32,728)
$ 223,457
Annual Report 2010 57
Financial Section
Yen
(millions)
2009
The discount rate used by the Company and its domestic
consolidated subsidiaries was 2.5% for the years ended March
31, 2009 and 2010. The rate of expected return on plan assets
used by the Company and its domestic consolidated subsidiar-
ies for the years ended March 31, 2009 and 2010 was 4.5%.
The estimated amount of all retirement benefits to be
paid at future retirement dates is allocated to each service
year mainly based on points.
12. Segment Information
The Company and its consolidated subsidiaries operate in
Consumer/Information Products business and Electronic
Components business. The Consumer/Information Products
business segment includes audio-visual and communication
equipment, health and environmental equipment and information equipment. The Electronic Components business segment includes LCDs, solar cells and other electronic devices.
Information by business segment for the years ended March 31, 2009 and 2010 is as follows:
Yen
(millions)
2009
2010
U.S. Dollars
(thousands)
2010
¥1,898,967
7,622
1,906,589
¥1,843,139
15,069
1,858,208
$20,034,120
163,793
20,197,913
948,260
571,902
1,520,162
(579,524)
¥2,847,227
912,809
472,726
1,385,535
(487,795)
¥2,755,948
9,921,837
5,138,326
15,060,163
(5,302,119)
$29,955,957
Operating Income (Loss):
Consumer/Information Products ������������������������������������������������������������������������
Electronic Components��������������������������������������������������������������������������������������
Elimination����������������������������������������������������������������������������������������������������������
Consolidated ������������������������������������������������������������������������������������������������������
¥ (33,769)
(23,975)
2,263
¥ (55,481)
¥    33,983
20,134
(2,214)
¥    51,903
$    369,380
218,848
(24,065)
$    564,163
Total Assets:
Consumer/Information Products ������������������������������������������������������������������������
Electronic Components��������������������������������������������������������������������������������������
Elimination and Corporate Assets ����������������������������������������������������������������������
Consolidated ������������������������������������������������������������������������������������������������������
¥   869,392
1,398,773
420,556
¥2,688,721
¥   953,316
1,481,109
401,830
¥2,836,255
$10,362,130
16,099,011
4,367,718
$30,828,859
Depreciation and Amortization:
Consumer/Information Products ������������������������������������������������������������������������
Electronic Components��������������������������������������������������������������������������������������
Elimination����������������������������������������������������������������������������������������������������������
Consolidated ������������������������������������������������������������������������������������������������������
¥   115,798
200,920
(919)
¥   315,799
¥    93,643
184,519
(905)
¥   277,257
$  1,017,859
2,005,641
(9,837)
$  3,013,663
Impairment Loss:
Consumer/Information Products ������������������������������������������������������������������������
Electronic Components��������������������������������������������������������������������������������������
Elimination����������������������������������������������������������������������������������������������������������
Consolidated ������������������������������������������������������������������������������������������������������
¥     3,506
5,962
–
¥     9,468
Capital Expenditures:
Consumer/Information Products ������������������������������������������������������������������������
Electronic Components��������������������������������������������������������������������������������������
Elimination����������������������������������������������������������������������������������������������������������
Consolidated ������������������������������������������������������������������������������������������������������
¥   106,855
221,386
(407)
¥   327,834
Net Sales:
Consumer/Information Products:
Customers������������������������������������������������������������������������������������������������������
Intersegment��������������������������������������������������������������������������������������������������
Total ����������������������������������������������������������������������������������������������������������������
Electronic Components:
Customers������������������������������������������������������������������������������������������������������
Intersegment��������������������������������������������������������������������������������������������������
Total ����������������������������������������������������������������������������������������������������������������
Elimination����������������������������������������������������������������������������������������������������������
Consolidated ������������������������������������������������������������������������������������������������������
Financial Section
58 Sharp Corporation
¥
¥
–
–
–
–
¥    74,024
212,683
(584)
¥   286,123
$
$
–
–
–
–
$    804,609
2,311,772
(6,348)
$  3,110,033
had been recognized as expenses. However, effective for the
year ended March 31, 2009, the Company and its domestic
consolidated subsidiaries have applied the “Accounting
­Standard for Lease Transactions” (ASBJ Statement No. 13,
revised on March 30, 2007 (originally issued by the 1st committee of the Business Accounting Council on June 17, 1993))
and the “Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, revised on March 30, 2007
(originally issued by the Auditing Standards Committee of
JICPA on January 18, 1994)) and are accounting for such
transactions as capital lease transactions. Finance leases that
do not transfer ownership for which the starting date of the
lease transaction is on and before March 31, 2008, lease
payments are recognized as expenses. This change has an
immaterial impact on segmented information for the year
ended March 31, 2009.
Previously, revenues and costs of construction contracts
had been recognized using the completed-contract method.
Effective for the year ended March 31, 2010, the Company
and its domestic consolidated subsidiaries have applied the
following accounting standards; “Accounting Standard for
Construction Contracts” (ASBJ Statement No. 15, issued by
the ASBJ on December 27, 2007) and the “Guidance on
Accounting Standard for Construction Contracts” (ASBJ
­Guidance No. 18, issued by the ASBJ on December 27, 2007).
Accordingly, for construction contracts which commenced on
and after April 1, 2009, and for which the outcome of the
construction activity is deemed certain as of March 31, 2010,
the percentage-of-completion method has been applied,
otherwise the complete-contract method has been applied.
Under the percentage-of-completion method, revenue is
recognized, based on the percentage of the actual costs
incurred of the estimated total cost. This change has an
immaterial impact on segmented information for the year
ended March 31, 2010.
Financial Section
Corporate assets as of March 31, 2009 and 2010 were
¥442,849 million and ¥421,303 million ($4,579,380 thousand),
respectively, and were mainly comprised of the Company’s
cash and cash equivalents, investments in securities and
deferred tax assets.
Effective for the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries have applied
the “Accounting Standard for Measurement of Inventories”
(Accounting Standards Board of Japan (ASBJ) Statement No.
9, issued by the ASBJ on July 5, 2006). As a result, for the
year ended March 31, 2009, operating loss for Consumer/
Information Products increases by ¥1,347 million and operating loss for Electronic Components increases by ¥3,927 million, compared to amounts calculated under the previous
method. Also, valuation methods for raw materials and work
in process had previously been based on the last invoice
method. However, effective for the year ended March 31,
2009, the Company and its domestic consolidated subsidiaries have adopted the moving average method in order to
properly reflect the impact of fluctuations in raw material
prices on financial statements, and to achieve more appropriate periodic accounting of profit and loss. This change has an
immaterial impact on segmented information for the year
ended March 31, 2009.
Effective for the year ended March 31, 2009, the Company has applied the “Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ PITF No. 18, issued by
the ASBJ on May 17, 2006) and made revisions required for
consolidated accounting. As a result, for the year ended
March 31, 2009, operating loss for Consumer/Information
Products increases by ¥1,765 million and operating loss for
Electronic Components increases by ¥39 million, compared to
amounts calculated under the previous method.
Previously, lease payments under finance leases that do
not transfer ownership of the leased property to the lessee
Annual Report 2010 59
Information by geographic segment for the years ended March 31, 2009 and 2010 is as follows:
Yen
(millions)
2009
2010
U.S. Dollars
(thousands)
2010
¥ 1,637,056
784,649
2,421,705
¥ 1,730,280
594,623
2,324,903
$ 18,807,391
6,463,294
25,270,685
439,695
6,580
446,275
311,814
10,343
322,157
3,389,283
112,424
3,501,707
427,521
3,051
430,572
373,372
2,526
375,898
4,058,391
27,457
4,085,848
210,961
431,755
642,716
199,336
328,621
527,957
2,166,696
3,571,967
5,738,663
Financial Section
Net Sales:
Japan:
Customers������������������������������������������������������������������������������������������������������
Intersegment��������������������������������������������������������������������������������������������������
Total ����������������������������������������������������������������������������������������������������������������
The Americas:
Customers������������������������������������������������������������������������������������������������������
Intersegment��������������������������������������������������������������������������������������������������
Total ����������������������������������������������������������������������������������������������������������������
Europe:
Customers������������������������������������������������������������������������������������������������������
Intersegment��������������������������������������������������������������������������������������������������
Total ����������������������������������������������������������������������������������������������������������������
China:
Customers������������������������������������������������������������������������������������������������������
Intersegment��������������������������������������������������������������������������������������������������
Total ����������������������������������������������������������������������������������������������������������������
Other:
Customers������������������������������������������������������������������������������������������������������
Intersegment��������������������������������������������������������������������������������������������������
Total ����������������������������������������������������������������������������������������������������������������
Elimination����������������������������������������������������������������������������������������������������������
Consolidated ������������������������������������������������������������������������������������������������������
131,994
183,736
315,730
(1,409,771)
¥ 2,847,227
141,146
178,938
320,084
(1,115,051)
¥ 2,755,948
1,534,196
1,944,978
3,479,174
(12,120,120)
$ 29,955,957
Operating Income (Loss):
Japan������������������������������������������������������������������������������������������������������������������
The Americas������������������������������������������������������������������������������������������������������
Europe����������������������������������������������������������������������������������������������������������������
China ������������������������������������������������������������������������������������������������������������������
Other������������������������������������������������������������������������������������������������������������������
Elimination����������������������������������������������������������������������������������������������������������
Consolidated ������������������������������������������������������������������������������������������������������
¥    (74,552)
(1,057)
7,395
9,988
5,158
(2,413)
¥    (55,481)
¥     10,785
818
6,890
12,105
7,908
13,397
¥    51,903
$    117,228
8,891
74,891
131,576
85,957
145,620
$    564,163
Total Assets:
Japan������������������������������������������������������������������������������������������������������������������
The Americas������������������������������������������������������������������������������������������������������
Europe����������������������������������������������������������������������������������������������������������������
China ������������������������������������������������������������������������������������������������������������������
Other������������������������������������������������������������������������������������������������������������������
Elimination and Corporate Assets ����������������������������������������������������������������������
Consolidated ������������������������������������������������������������������������������������������������������
¥ 1,871,166
142,267
151,735
163,785
78,753
281,015
¥ 2,688,721
¥ 2,012,786
159,455
151,032
178,742
107,318
226,922
¥ 2,836,255
$ 21,878,109
1,733,207
1,641,652
1,942,848
1,166,500
2,466,543
$ 30,828,859
60 Sharp Corporation
Corporate assets as of March 31, 2009 and 2010 were
¥442,849 million and ¥421,303 million ($4,579,380 thousand),
respectively, and were mainly comprised of the Company’s
cash and cash equivalents, investments in securities and
deferred tax assets.
Effective for the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries have applied
the “Accounting Standard for Measurement of Inventories”
(Accounting Standards Board of Japan (ASBJ) Statement No.
9, issued by the ASBJ on July 5, 2006). As a result, for the
year ended March 31, 2009, operating loss for “Japan”
increases by ¥5,274 million, compared to amounts calculated
under the previous method. Also, valuation methods for raw
materials and work in process had previously been based on
the last invoice method. However, effective for the year
ended March 31, 2009, the Company and its domestic consolidated subsidiaries have adopted the moving average
method in order to properly reflect the impact of fluctuations
in raw material prices on financial statements, and to achieve
more appropriate periodic accounting of profit and loss. This
change has an immaterial impact on segmented information
for the year ended March 31, 2009.
Effective for the year ended March 31, 2009, the Company
has applied the “Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for Consolidated
­Financial Statements” (ASBJ PITF No. 18, issued by the ASBJ
on May 17, 2006) and made revisions required for consolidated
accounting. As a result, for the year ended March 31, 2009,
operating loss for “The Americas” increases by ¥2,613 million,
operating income for “Europe” decreases by ¥135 million,
while operating income for “China” and “Other” increase by
¥910 million and ¥34 million, respectively, compared to
amounts calculated under the previous method.
Previously, lease payments under finance leases that do
not transfer ownership of the leased property to the lessee
had been recognized as expenses. However, effective for the
year ended March 31, 2009, the Company and its domestic
consolidated subsidiaries have applied the “Accounting
­Standard for Lease Transactions” (ASBJ Statement No. 13,
revised on March 30, 2007 (originally issued by the 1st committee of the Business Accounting Council on June 17, 1993))
and the “Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, revised on March 30, 2007
(originally issued by the Auditing Standards Committee of
JICPA on January 18, 1994)) and are accounting for such
transactions as capital lease transactions. Finance leases that
do not transfer ownership for which the starting date of the
lease transaction is on and before March 31, 2008, lease
payments are recognized as expenses. This change has an
immaterial impact on segmented information for the year
ended March 31, 2009.
Previously, revenues and costs of construction contracts
had been recognized using the completed-contract method.
Effective for the year ended March 31, 2010, the Company
and its domestic consolidated subsidiaries have applied the
following accounting standards; “Accounting Standard for
Construction Contracts” (ASBJ Statement No. 15, issued by
the ASBJ on December 27, 2007) and the “Guidance on
Accounting Standard for Construction Contracts” (ASBJ
­Guidance No. 18, issued by the ASBJ on December 27,
2007). Accordingly, for construction contracts which commenced on and after April 1, 2009, and for which the outcome
of the construction activity is deemed certain as of March 31,
2010, the percentage-of-completion method has been
applied, otherwise the complete-contract method has been
applied. Under the percentage-of-completion method, revenue is recognized, based on the percentage of the actual
costs incurred of the estimated total cost. This change has an
immaterial impact on segmented information for the year
ended March 31, 2010.
Yen
(millions)
2009
Overseas sales:
The Americas������������������������������������������������������������������������������������������������������
Europe����������������������������������������������������������������������������������������������������������������
China ������������������������������������������������������������������������������������������������������������������
Other������������������������������������������������������������������������������������������������������������������
Total ��������������������������������������������������������������������������������������������������������������������
¥  488,428
451,090
407,777
197,671
¥1,544,966
2010
U.S. Dollars
(thousands)
2010
¥  342,923
393,212
365,440
225,316
¥1,326,891
$  3,727,424
4,274,044
3,972,174
2,449,087
$14,422,729
Overseas sales were comprised of overseas consolidated subsidiaries’ sales and the Company’s and its domestic consolidated
subsidiaries’ export sales to customers.
Annual Report 2010 61
Financial Section
Overseas sales for the years ended March 31, 2009 and 2010 were as follows:
13. Restructuring Charges
These restructuring charges for the year ended March 31,
2009 are mainly related to the reorganization of LCD plants,
including depreciation and maintenance charges of ¥43,051
million concerning plants that are suspended due to centralization and optimization of LCD production and impairment
losses of fixed assets of ¥9,468 million.
These restructuring charges for the year ended March 31,
2010 are mainly related to the reorganization of LCD plants,
including depreciation and maintenance charges concerning
plants that are suspended due to centralization and optimization of LCD production.
(Impairment Loss)
With regards to application of accounting for impairment
assets, the Company and its consolidated subsidiaries
­identifies cash generating units in consideration of business
Financial Section
62 Sharp Corporation
characteristics and business operation. As a result, idle assets
are identified as respective cash generating units.
As a part of the reorganization of LCD plants, the C
­ ompany
and its consolidated subsidiaries mainly reduced the book
value of LCD production facilities which are expected not to
be used to recoverable amount, and recognized the
decreased amount of ¥9,468 million as restructuring charges
categorized in Other Income (Expenses) for the year ended
March 31, 2009.
Details are as follows: ¥4,926 million, for machinery and
equipment; ¥1,262 million, for buildings and structures;
¥3,280 million, for the others.
The recoverable amount of those impaired assets was
measured using their net realizable values, and net realizable
values of impaired assets that are not expected to be sold are
regarded as zero.
Independent Auditors’ Report
To the Board of Directors of Sharp Corporation:
We have audited the accompanying consolidated balance sheets of Sharp Corporation and consolidated subsidiaries as of
March 31, 2010 and 2009, and the related consolidated statements of operations, changes in net assets and cash flows for
the years then ended, 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 subsidiaries as of March 31, 2010 and 2009, 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.
Without qualifying our opinion, we draw attention to the following:
As discussed in Note 1. (m) (1) to the consolidated financial statements, effective for the year ended March 31, 2009,
Sharp Corporation and its domestic consolidated subsidiaries have applied the “Accounting Standard for Measurement
of Inventories”.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31,
2010 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 Section
financial statements.
Osaka, Japan
June 23, 2010
Annual Report 2010 63
Consolidated Subsidiaries
Financial Section
Domestic:
Sharp Electronics Marketing 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 Business Computer Software Inc.
Sharp Yonago Corporation
SD Future Technology Co., Ltd.
Sharp Mie Corporation
Sharp Display Products Corporation
Overseas:
<Countries and Areas>
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 Corporation Mexico, S.A. de C.V. <Mexico City, Mexico>
Sharp Electronics (Europe) GmbH <Hamburg, Germany>
Sharp Electronics (U.K.) Ltd. <Middlesex, U.K.>
Sharp Laboratories of Europe, Ltd. <Oxford, U.K.>
Sharp International Finance (U.K.) Plc. <Middlesex, U.K.>
Sharp Electronica España S.A. <Barcelona, Spain>
Sharp Electronics (Schweiz) AG <Rüschlikon, Switzerland>
Sharp Electronics (Nordic) AB <Bromma, Sweden>
Bertil Stenbeck Dokumenthantering AB <Bromma, Sweden>
Kontorstjänst i Norrköping AB <Norrköping, 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 Manufacturing Poland Sp. zo. o. <Torun, Poland>
Sharp Electronics Russia LLC. <Moscow, Russia>
Sharp Electronics (Taiwan) Co., Ltd. <Kaohsiung, Taiwan>
Sharp Electronic Components (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 Appliances (Thailand) Ltd. <Chachoengsao, Thailand>
Sharp Manufacturing (Thailand) Co., Ltd. <Nakornpathom, 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>
Sharp Electronics Sales (China) Co., Ltd. <Shanghai, China>
P.T. Sharp Electronics Indonesia <Jakarta, Indonesia>
P.T. Sharp Semiconductor Indonesia <West Java, Indonesia>
Sharp Electronics (Vietnam) Company Limited <Ho Chi Minh City, Vietnam>
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.>
64 Sharp Corporation
Investor Information
(As of March 31, 2010)
Shareholders
Number of Shareholders 121,817
Principal Shareholders
Number of
shares held
Percentage of
total shares (%)
Nippon Life Insurance Company
55,667,384
5.01
Japan Trustee Services Bank, Ltd. (Trust Account)
51,766,000
4.66
Meiji Yasuda Life Insurance Company
47,359,000
4.26
Mizuho Corporate Bank, Ltd.
41,910,469
3.77
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
41,678,116
3.75
The Master Trust Bank of Japan, Ltd. (Trust Account)
37,083,000
3.34
The Dai-ichi Mutual Life Insurance Company
30,704,140
2.76
Mitsui Sumitomo Insurance Company, Limited
30,658,022
2.76
Sompo Japan Insurance Inc.
26,870,000
2.42
Sharp Employees’ Stockholding Association
21,555,866
1.94
Notes:1. Percentage of total shares is calculated by the number of shares issued including 10,285,175 treasury shares.
2. Aside from the above, a total of 4,770,000 shares in Mizuho Corporate Bank, Ltd. have been set up as trust
assets related to the employee pension trust.
3. The Dai-ichi Mutual Life Insurance Company reorganized from a mutual life insurance company to a joint
stock corporation as of April 1, 2010, and has become The Dai-ichi Life Insurance Company, Limited.
Share Distribution (Proportion of total issued shares)
Japanese securities companies
19,902,808 (1.79%)
Treasury stock
10,285,175 (0.93%)
Other Japanese corporations
61,831,128 (5.57%)
Total
1,110,699,887
shares
Japanese individual shareholders
255,851,459 (23.03%)
Stock Exchange
Listings
Tokyo, Osaka, Nagoya, Fukuoka, Sapporo
Transfer Agent
Mizuho Trust & Banking Co., Ltd.
Japanese financial institutions*
543,080,783 (48.90%)
* A total of 86,250,000 shares (7.77%) in
investment trusts and pension trust funds
are included in shares held by Japanese
financial institutions.
Investor Information
Foreign shareholders
219,748,534 (19.78%)
Osaka Stock Transfer Agency Department
11-16, Sonezaki 2-chome, Kita-ku, Osaka 530-0057, Japan
Investor Relations
Sharp Corporation Investor Relations
(Osaka) 22-22, Nagaike-cho, Abeno-ku, Osaka 545-8522, Japan
Phone: +81-6-6625-3023 Fax: +81-6-6625-0918
(Tokyo) 8, Ichigaya-Hachiman-cho, Shinjuku-ku, Tokyo 162-8408, Japan
Phone: +81-3-3260-1289 Fax: +81-3-3260-1822
Web Sites:
(English)
(Japanese) http://www.sharp.co.jp/corporate/ir/index.html
http://sharp-world.com/corporate/ir/index.html
Annual Report 2010 65
Sharp Corporation
Annual Report 2010
22-22, Nagaike-cho, Abeno-ku, Osaka 545-8522, Japan
Phone: +81-6-6621-1221
http://www.sharp.co.jp
This publication is using environment-friendly soy ink.
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