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For the year ended March 31, 2004
Annual Report 2004Crystal-Clear Vision

Table of contents

  • Page 1
    For the year ended March 31, 2004 Crystal-Clear Vision Annual Report 2004

  • Page 2
    ... 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...

  • Page 3
    ...Vision 8 _ LCDs and LCD TVs 12 _ Photovoltaic Power Systems 14 _ Mobile Phones 16 _ Research and Development 18 _ Corporate Social Responsibility (CSR) 20 _ Product Group Outline 22 _ Board of Directors 23 _ Financial Section 49 _ Investor Information Disclaimer regarding future plans and estimates...

  • Page 4
    ...2004 $ 21,497,838 578,238 0.53 0.17 8,986,019 20,478,571 - - ¥ 1,854,774 28,130 24.97 12.00 896,618 1,922,794 1,126,577 49,748 Cash Dividends per Share of Common Stock (yen and U.S. dollars) Shareholders' Equity Total Assets Number of Shares Outstanding (thousands of shares) Number of Employees...

  • Page 5
    ...-Clear Vision" Sharp aims to revolutionize lifestyles across the globe by offering never-before-imagined possibilities for people and the environment. Based on this vision, Sharp will continue playing an integral role in society through innovative products and services. Sharp Annual Report 2004 3

  • Page 6
    ... of operations at the Kameyama Plant with startto-finish production of large-screen LCD TVs. This plant went on line in January 2004 ahead of our original schedule. (Please refer to page 10 for further details.) Product business In the product business, sales of LCD TVs and mobile phones increased...

  • Page 7
    ... to accelerate the development of one-of-a-kind products, such as top-ofthe-line large-size LCD TVs, next-generation high-valueadded communications terminals, and innovative health- and eco-conscious home appliances. cells. We are confident that such efforts will further enhance our brand image as...

  • Page 8
    ... the competencies and drive of our employees. In order to generate continuous improvements in the value of the Company in terms of profitability, shareholder value and efficiency of capital utilization, we employ two main financial performance indicators - return on equity (ROE) and free cash flow...

  • Page 9
    Special Feature Ingredients for Success in Achieving Our Vision X 3 In this special feature, we outline the following key business areas that will be the forerunners to fulfilling the Sharp Vision. 1. LCDs and LCD TVs 2. Photovoltaic Power Systems 3. Mobile Phones Sharp Annual Report 2004 7

  • Page 10
    ...will continue to strive to achieve our goal of replacing conventional CRT TVs with LCD TVs. At the new leading-edge Kameyama Plant, which commenced operations in January 2004, we employ the world's largest substrates to enable the effective production of LCD panels for optimal cuts for 30-inch class...

  • Page 11
    1 LCDs and LCD TVs Leveraging our core competency in LCDs and their application, Sharp remains at the forefront of LCD and LCD TV evolution. Sharp Annual Report 2004 9

  • Page 12
    ... of large-size LCD panels and LCD TVs with overwhelming cost competitiveness In January 2004, Sharp commenced operations at its Kameyama Plant, complete with a start-to-finish production process that handles from the manufacture of large-size LCD panels to the assembly of LCD TVs. The state-of...

  • Page 13
    1,500 x 1,800 mm substrate LCD TV production line (isothermal test process) Sharp Annual Report 2004 11

  • Page 14
    ... electricity is unavailable, we are promoting the utilization of our photovoltaic power systems. In line with these developments, in June 2004, we boosted annual solar cell production at our Shinjo Plant in Nara prefecture to 315 MW, the world's largest. Sharp also commenced module production...

  • Page 15
    ...Photovoltaic Power Systems Sharp boasts the world's largest production volume for solar cells* and intends to continue contributing to global environmental conservation in the years to come. Solar cells for satellites Provided by Japan Aerospace Exploration Agency (JAXA) Sharp Annual Report 2004...

  • Page 16
    ... videophone systems, games and purchasing functions. We seek to develop terminals that make full use of 3G communications infrastructure by incorporating unique electronic devices and employing network technology (from mobile PCs and PDAs) and the latest AV technology (from LCD TVs). On a production...

  • Page 17
    3 Mobile Phones Sharp mobile phones stimulate the senses and provide the ultimate in entertainment. Sharp Annual Report 2004 15

  • Page 18
    ... devices applied to products for European markets • Development of software for mobile phone communication protocols STE Bracknell, U.K. SLA • R&D in advanced digital processing technology, Camas, Washington...

  • Page 19
    Sharp Corporation Corporate Research and Development Group Display Technology Development Group Digital Home Electronics Development Group Production Technology Development Group Designated Researcher Laboratories Division Laboratories R&D Expenditures (billions of yen) Sharp Corporation and ...

  • Page 20
    ... the personality and individuality of each employee Taking positive actions for the protection of the environment Making contributions to society as a "corporate citizen" Maintaining civil order and safety Business Creed Business Philosophy Fundamental Policy 18 Sharp Annual Report 2004

  • Page 21
    ...in the manufacturing process. *Cogeneration System: An energy-saving system which produces electricity from city gas and utilizes the resulting waste heat for air conditioning, hot-water supply and steam power production. Wakakusayama Clean-Up Campaign (Japan) Planting trees for the public (Taiwan...

  • Page 22
    ...Personal computers, personal mobile tools, electronic dictionaries, calculators, POS systems, handy data terminals, electronic cash registers, workstations, LCD color monitors, PC software, digital copier/printers, electrostatic copiers, PC peripherals including color scanners, supplies for copiers...

  • Page 23
    ... in four key business areas - CCD and CMOS imagers, flash memory, LSIs for LCDs and analog ICs - Sharp seeks to develop unequivocally unique electronic devices to support the evolution of products such as mobile phones and LCD TVs. LCDs As the world's leading company in LCDs, Sharp promises to...

  • Page 24
    ...Corporate Directors Hideaki Kamitsuma Takashi Nakagawa Itsuro Kato Yoshiki Sano Mikio Katayama Takashi Okuda Tetsuo Onishi Toshio Adachi Toshihiko Fujimoto Takuji Okawara Takashi Tomita Corporate Auditors Tomohiro Gonda Mitsuhiko Iwasaki Michihiro Ishii Hiroshi Chumon 22 Sharp Annual Report 2004

  • Page 25
    ... Balance Sheets 32 _ Consolidated Statements of Income 33 _ Consolidated Statements of Shareholders' Equity 34 _ Consolidated Statements of Cash Flows 35 _ Notes to Consolidated Financial Statements 47 _ Independent Auditors' Report 48 _ Consolidated Subsidiaries Sharp Annual Report 2004...

  • Page 26
    ...676 - Europe ...188,840 235,168 - 330,772 3,150,210 - Other ...86,791 103,204 - 194,985 1,857,000 - Total ...1,803,798 2,003,210 - 2,257,273 21,497,838 - Per Share of Common Stock*5 Net Income ...Â¥ Diluted Net Income ...Cash Dividends ...Shareholders' Equity ...Other Financial Data Return on Equity...

  • Page 27
    ...these efforts, price erosion in Japan and overseas markets coupled with unseasonable weather led to a decrease of 6.9% in sales, from the previous year to Â¥208,473 million. â- Information Equipment Sales of digital copier/printers increased as Sharp expanded its line-up to include models with data...

  • Page 28
    ... of large-size LCDs at its Kameyama Plant in January 2004, thereby increasing the proportion of LCD panel production for TVs. Sales of small- and medium-size LCDs especially applicable to mobile phones increased. Sales of System LCDs were particularly strong due to efforts to steadily increase...

  • Page 29
    ... In Japan, despite the negative impact of a fall in prices in home appliances for domestic and overseas markets, and slumping sales of PCs, Sharp recorded strong sales of LCD TVs, camera-equipped mobile phones, high-valueadded LCDs mainly for mobile phones, CCD and CMOS imagers, and solar cells. As...

  • Page 30
    ... the Kameyama Plant, which handles the start-to-finish production of LCD TVs; increasing production capacity for System LCDs at the Mie No. 3 Plant; expanding production of CCD and CMOS imagers; promoting miniaturization of design rule for flash memory; and, strengthening production of solar cells...

  • Page 31
    ... the equity ratio was 43.9%. Cash Flows Cash and cash equivalents at the end of the year were ¥277,623 million, an increase of ¥5,911 million over the previous year, due to net cash provided by operating activities, which compensated for the year's capital investment and the reduction in interest...

  • Page 32
    Consolidated Balance Sheets Sharp Corporation and Consolidated Subsidiaries as of March 31, 2003 and 2004 ASSETS Current Assets: Cash and cash equivalents ...Time deposits...Short-term investments (Note 2) ...Notes and accounts receivable- Trade...Installment ...Nonconsolidated subsidiaries and ...

  • Page 33
    ...-term debt (Note 5) ...Notes and accounts payable- Trade...Construction and other...Nonconsolidated subsidiaries and affiliates ...Accrued expenses...Income taxes (Note 4)...Other current liabilities (Note 4) ...Total current liabilities... Yen (millions) U.S. Dollars (thousands) 2003 2004 2004...

  • Page 34
    ...and dividends income ...Interest expense ...Loss on sales of investments in securities...Loss on impairment of investments in securities ...Gain on return of substituted portion of employee pension fund (Note 9) ...Other, net ...Income before income taxes and minority interests ...Income Taxes (Note...

  • Page 35
    Consolidated Statements of Shareholders' Equity Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2003 and 2004 Number of Shares (thousands) Yen (millions) U.S. Dollars (thousands) 2003 Common Stock (Note 7) ... 2004 2003 2004 2004 1,110,699 1,110,699 ¥ 204,676...

  • Page 36
    ... in notes and accounts receivable...Decrease (increase) in inventories ...Increase in payable...Other, net ...Total ...Interest and dividends received ...Interest paid ...Income taxes paid ...Net cash provided by operating activities ...Cash Flows from Investing Activities: Purchase of time deposits...

  • Page 37
    ... principally of marketable and nonmarketable equity securities and interest-bearing securities. The Company and its domestic consolidated subsidiaries categorize those securities as "other securities", which, in principle, include all securities other than trading Sharp Annual Report 2004 35

  • Page 38
    ... certain assumptions. The excess of the projected benefit obligation over the total of the fair value of pension assets as of April 1, 2001 and the allowance for severance and pension benefits recorded as of April 1, 2001 (the "net transition obligation") amounted to 36 Sharp Annual Report 2004

  • Page 39
    ... securities and debt obligations. All derivative financial instruments are stated at fair value and recorded on the balance sheets. The deferred method is used for recognizing gains or losses on hedging instruments and the hedged items. When foreign exchange forward contracts meet certain conditions...

  • Page 40
    ... for the years ended March 31, 2003 and 2004, respectively. The gross realized losses on those sales were ¥23,559 million and ¥49 million ($467 thousand) for the years ended March 31, 2003 and 2004, respectively. Other securities with no fair market value principally 38 Sharp Annual Report 2004

  • Page 41
    ...2003 and 2004 were as follows: Yen (millions) U.S. Dollars (thousands) 2003 Deferred tax assets: Inventories ...Allowance for doubtful receivables...Accrued bonus ...Warranty reserve ...Software ...Long-term prepaid expenses...Enterprise taxes ...Net unrealized holding losses on securities ...Other...

  • Page 42
    ...2004 were included in the consolidated balance sheets as follows: Yen (millions) U.S. Dollars (thousands) 2003 Other current assets ...Prepaid expenses and other ...Other current liabilities ...Other long-term liabilities ...Net deferred tax assets ... 2004 2004...,238 40 Sharp Annual Report 2004

  • Page 43
    ...any collateral so furnished will be applicable to all indebtedness to that bank. To date, the Company has not received such requests from its banks. In addition, the agreements provide that the bank has the right to offset cash deposited against any short-term or long-term debt that becomes due, and...

  • Page 44
    ... As lessee Future minimum lease payments as of March 31, 2003 and 2004 were as follows: Yen (millions) U.S. Dollars (thousands) 2003 Due within one year ...Due after one year ... 2004 2004 ¥ ¥ 1,618 2,373 3,991 ¥ ¥ 1,161 2,188 3,349 $ $ 11,057 20,838 31,895 42 Sharp Annual Report 2004

  • Page 45
    ... of income reflect dividends applicable to the respective period. On June 24, 2004, the shareholders approved the declaration of cash dividends totaling ¥10,906 million ($103,867 thousand) to shareholders of record as of March 31, 2004, covering the year then ended. The Ordinary General Meeting of...

  • Page 46
    ... 84,343 (86,914) 26,752 90,257 (9,810) 229,638 - 229,638 March 31, 2003 and 2004 was 4.5%. The estimated amount of all retirement benefits to be paid at future retirement dates is allocated equally to each service year using the estimated number of total service years. 44 Sharp Annual Report 2004

  • Page 47
    ... Components business includes ICs, LCDs and other electronic components. Information by business segment for the years ended March 31, 2003 and 2004 is as follows: Yen (millions) U.S. Dollars (thousands) 2003 Net Sales: Consumer/Information Products: Customers...Intersegment ...Total ...Electronic...

  • Page 48
    ...comprised of the Company's cash and cash equivalents and investments in securities. Overseas sales for the years ended March 31, 2003 and 2004 were as follows: Yen (millions) U.S. Dollars (thousands) 2003 Overseas sales: The Americas...Â¥ Asia ...Europe ...Other ...Total ...Â¥ 2004 2004 336,815...

  • Page 49
    ... balance sheets of Sharp Corporation (a Japanese corporation) and its consolidated subsidiaries as of March 31, 2003 and 2004, and the related consolidated statements of income, shareholders' equity and cash flows for the years then ended, all expressed in Japanese yen. These consolidated financial...

  • Page 50
    ..., Taiwan) Sharp Technology (Taiwan) Corporation (Taipei, Taiwan) Sharp (Phils.) Corporation (Manila, Philippines) Sharp-Roxy Sales (Singapore) Pte., Ltd. (Singapore) Sharp Electronics (Singapore) Pte., Ltd. (Singapore) Sharp Manufacturing Corporation (M) Sdn. Bhd. (Johor, Malaysia) Sharp Electronics...

  • Page 51
    ...cho, Abeno-ku, Osaka 545-8522, Japan Phone: +81-6-6625-3023 Fax: +81-6-6627-1759 (Tokyo) 8, Ichigaya-Hachiman-cho, Shinjuku-ku, Tokyo 162-8408, Japan Phone: +81-3-3260-1289 Fax: +81-3-3260-1822 Investor Relations home page: http://sharp-world.com/corporate/ir/index.html Sharp Annual Report 2004 49

  • Page 52
    SHARP CORPORATION, JAPAN 22-22, Nagaike-cho, Abeno-ku, Osaka 545-8522, Japan Phone: +81-6-6621-1221 http://www.sharp.co.jp/ This publication is printed on recycled paper using environment-friendly soy ink.