Sharp 2009 Annual Report Download

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Annual Report 2009
For the year ended March 31, 2009

Table of contents

  • Page 1
    For the year ended March 31, 2009 Opening New Frontiers Annual Report 2009

  • Page 2
    ... the origin of our present company name. Sharp became the first company to succeed in mass production of solar cells. The cells have been used as power supplies for increasingly widespread applications, including lighthouses, satellites, and electronic calculators. 1964 Sharp successfully developed...

  • Page 3
    ... Seg terrestrial digital TV broadcasts. The AQUOS mobile phone became highly popular for its use of Sharp's LCD technology developed for LCD TVs. 2008 Sharp launched the world's first digital highdefinition LCD TV with built-in Blu-ray Disc recorder. With this product, Sharp created a new dimension...

  • Page 4
    ...'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...

  • Page 5
    ... net sales 06 07 08 09 -6.0 0 05 06 07 08 09 * Refer to footnote (Note 2) on page 2 Capital Investment (billions of yen) 400 R&D Expenditures (billions of yen) 200 (%) 8.0 300 150 6.0 200 100 4.0 100 50 2.0 0 05 06 07 08 09 0 05 n Ratio to net sales 06 07 08 09 0 Annual Report 2009...

  • Page 6
    ...same time, Sharp is taking steps to improve cash flow by raising profitability and maximizing investment efficiency. We will achieve this by implementing a new business model to promote localization of front-end processes in our device business. Katsuhiko Machida Chairman & CEO 4 ShARp CORpORAtION

  • Page 7
    Sharp has worked to expand its operations and achieve stable growth as a valued one-of-a-kind company that offers new lifestyles and brings new levels of satisfaction. Specifically, Sharp is active in creating unique devices and distinctive products rooted in cutting-edge electronics technologies. ...

  • Page 8
    ... and other measures, review capital investment strategies and actively develop new systems for investment returns. We will treat the current harsh business climate as yet another opportunity for raising corporate value by pursuing management reforms from a new perspective. 6 ShARp CORpORAtION

  • Page 9
    ... in digital products, movement towards formation of economic blocs, and sudden changes in Europe's solar market. We also face internal challenges-older LCD plants losing their competitiveness, falling prices and slower growth in the LCD TV and mobile phone sectors, and worsening financial position...

  • Page 10
    ... efficiency and improve cash flow as we work to thoroughly minimize risks associated with investment returns and exchange rate fluctuations. While we still plan to bolster cutting-edge production technologies and manufacturing capabilities at mother plants in Japan, technologies that are developed...

  • Page 11
    ... selling methods. Challenging market conditions are expected throughout fiscal 2009 as well. Sharp intends to work to further increase our market share by well-timed launching of distinctive mobile phones that leverage our unique technologies. One example is the development of new models with solar...

  • Page 12
    Special Feature: Sharp Pioneers the Future with Environment and health Business 1 Developing Business with a Focus on "Energy Creation": Solar Cell Business (1) Earth's energy budget Reflected by Reflected atmosphere by clouds 6% 20% Reflected from Earth's surface 4% Radiated to space from ...

  • Page 13
    ... for Solar Cells Expectations of photovoltaic power generation, which does not discharge greenhouse gas during operation, are growing each year as a method to address the Earth's environmental and energy problems. Enormous potential exists: Solar energy reaching the Earth's surface in just one hour...

  • Page 14
    ...a satellite Started mass-production of thin-film solar cells 0.5 1966 1959 Started work to develop solar cells Installed solar cells at a lighthouse 1994 Started selling residential photovoltaic power generation systems 0 1959 1963 1966 1976 1993 2000 2008 Source: Sharp 12 ShARp CORpORAtION

  • Page 15
    ...some residential applications. Thin-film solar cells are used primarily in large power generation facilities in temperate regions. As a supplier of both types of solar cells, Sharp is in an excellent position to meet the needs in each region and help increase photovoltaic power generation around the...

  • Page 16
    Special Feature: Sharp Pioneers the Future with Environment and health Business 1 Developing Business with a Focus on "Energy Creation": Solar Cell Business (3) Solar cell plants are the oil fields of the 21st century Thermal power generation Middle East, etc. Photovoltaic power generation ...

  • Page 17
    ... of materials Solar cell/ module production Power generation businesses System integration * Independent Power Producer (IPP) business: A business that builds and operates its own power generation facilities, and sells the electric power it generates to power companies. Annual Report 2009 15

  • Page 18
    ... above the floor and a horizontal distance of 1.5 meters from the output at the "High" blower setting, using the IG-B200 Plasmacluster Ion generator. Service life of 40,000 hours (More than 10 years at 10 hours per day) Requires less electricity Capable of modulating light 16 ShARp CORpORAtION

  • Page 19
    ...as well with LED lamps. Sharp is also advancing with the development of applied products such as solar-powered LED lights, and LED security lights. These will form part of our future expansion of the LED lighting business. Plasmacluster Ion generator LED downlight LED lamp Annual Report 2009 17

  • Page 20
    ... Electronic Components Main Products LCDs TFT LCD modules, Duty LCD modules, System LCD modules Sales Total Assets Capital Investment Solar Cells Crystalline solar cells, thin-film solar cells 44.4% 61.7% 81.9% Other Electronic Devices CCD/CMOS imagers, LSIs for LCDs, microprocessors, flash...

  • Page 21
    ... 500 0 05 06 07 08 09 Capital Investment (billions of yen) 300 200 100 0 05 06 07 08 09 · Capital investment shown on pages 18-19 includes the amount of leased properties. · Operating income (loss) shown on page 19 is the amount before elimination of intersegment trading. Annual Report 2009 19

  • Page 22
    ... our line-up of large-screen high-definition models, we achieved greater unit sales than the previous fiscal year. Sharp aims to roll out highly-advanced, cost-competitive LCD TVs to the market in a timely manner, and develop AQUOS into a true global brand. AQUOS XS1 Video Recorders/Players...

  • Page 23
    ... develop this business further. Air purifier with humidifier featuring Plasmacluster Ion technology Square type LED light Information Equipment This product group recorded lower revenue and profits, after a corporate freeze in capital investment depressed sales of MFPs and facsimiles. MFPs Sharp...

  • Page 24
    ... developed a photovoltaic power generation system that allows efficient installation to meet the needs of residential users in Japan. Meanwhile in thin-film solar cells, Sharp worked to bolster the production framework by increasing production capacity at the Katsuragi Plant and constructing a new...

  • Page 25
    ... technologies, the plant will produce the highest standard LCDs for TVs in the industry. Preparations are under way to begin operation of the solar cell plant by March 2010. 21st Century Manufacturing Complex under construction in Sakai City, Osaka Prefecture (Photo taken May 2009) Annual Report...

  • Page 26
    ... solar cells liquid crystal particles in a given direction plays a pivotal role in improving the display characteristics of an LCD TV. Sharp is currently developing a completely new alignment technology which uses a light irradiation process to provide an alignment film with a function to control...

  • Page 27
    ... at high power. As a result, we have developed a laser with a pulsed-output power of 500mW, twice the level of current lasers in mass production. Our new laser also has outstanding durability for stable operation over long periods of time. These features make it possible to record four-layer Blu-ray...

  • Page 28
    ... will work to further expand and reinforce its plans and measures in these areas in the future. 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 2009, Sharp was recognized...

  • Page 29
    ... main product in the current market, as well as our activities involving thin-film solar cells, a market sector with much growth potential. At the same time, we are using joint development projects, alliances and other forms of cooperation to become a total solutions provider in photovoltaic power...

  • Page 30
    ... the non-profit organization Osaka Placement Assistance Network for Person with Disabilities. This organization gave high marks to Sharp Tokusen Industry for its initiatives, including a program for people with disabilities to work at the company on a trial basis. Sharp will continue its commitment...

  • Page 31
    ... Business Promotion Committee Business execution and checks Ensure apt policy execution/ information sharing Report Operational audit Operational audit Accounting audit Business execution (Business groups/functional groups/sales and marketing groups/subsidiaries and affiliates) Annual Report 2009...

  • Page 32
    ... as customers, business partners and employees, putting undue pressure on shareholders to sell their shares, not providing sufficient information about the purchase activity or the buyer, and not providing enough time for the board of directors of the target company to provide an alternative plan...

  • Page 33
    ... 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 effective term of the Plan was set to end at the conclusion of the 115th Ordinary General Meeting of Shareholders. Sharp...

  • Page 34
    ... 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...

  • Page 35
    ...which may adversely affect brand image or influence Sharp's business results and financial position. (10) Leakage of Personal Data and Other Information Sharp retains personal data and other confidential information concerning its customers, business partners and employees. Extreme care is taken to...

  • Page 36
    ... Director Director Director Toshishige Hamano Yoshiaki Ibuchi Kenji Ohta Takashi Nakagawa Director Director Director Tetsuo Onishi Nobuyuki Taniguchi Kunio Ito*1 Corporate Auditors Full-time Corporate Auditors Executive Officers CEO Senior Executive Managing Officer Executive Officers...

  • Page 37
    ... 42 Consolidated Balance Sheets 44 Consolidated Statements of Operations 45 Consolidated Statements of Changes in Net Assets 46 Consolidated Statements of Cash Flows 47 Notes to Consolidated Financial Statements 63 Independent Auditors' Report 64 Consolidated Subsidiaries Annual Report 2009 35

  • Page 38
    Five-Year Financial Summary Sharp Corporation and Consolidated Subsidiaries Years Ended March 31 Yen (millions) 2005 2006 2007 2008 2009 U.S. Dollars (thousands) 2009 Net Sales ...Domestic sales ...Overseas sales ...Operating Income (Loss) ...Income (Loss) Before Income Taxes and Minority ...

  • Page 39
    ... 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...

  • Page 40
    ... have been reclassified and are included in Audio-Visual and Communication Equipment. "Sales by Product Group" of 2008 has been restated to conform with the 2009 presentation. *2 Other Electronic Device group's sales do not include internal sales to the LCD/Solar Cell groups. 38 ShARp CORpORAtION

  • Page 41
    ...million in the prior year). Although sales of solar cells fared well, sales of LCD TVs declined as a result of sharply lowered prices, despite an increase in units sold. Sales of mobile phones fell significantly following the slowdown in the domestic market. In the Americas, sales decreased 22.8% to...

  • Page 42
    ... of a new LCD panel plant planned for Sakai City, Osaka Prefecture aimed at enhancing the competitiveness and improving earnings of large-size LCD panels, as well as to develop new production lines at the Katsuragi Plant and push forward with the construction of a thin-film solar cell plant in Sakai...

  • Page 43
    .... Cash Flows Cash and cash equivalents at the end of the year were ¥317,358 million, a decrease of ¥21,908 million over the prior year as payments in investing activities associated with capital investments exceeded proceeds from operating activities and financing activities. Net cash provided by...

  • Page 44
    ... Sheets Sharp Corporation and Consolidated Subsidiaries as of March 31, 2008 and 2009 Yen (millions) 2008 2009 U.S. Dollars (thousands) 2009 ASSETS Current Assets: Cash and cash equivalents ...Time deposits ...Short-term investments (Note 2) ...Notes and accounts receivable- Trade ...Installment...

  • Page 45
    ...,062) (94,247) (764,907) 96,216 10,808,732 $27,718,773 Capital surplus...Retained earnings ...Less cost of treasury stock: 10,174 thousand shares in 2008 and 10,219 thousand shares in 2009 ...Net unrealized holding gains (losses) on securities ...Deferred gains (losses) on hedges ...Foreign currency...

  • Page 46
    Consolidated Statements of Operations Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2008 and 2009 Yen (millions) 2008 2009 U.S. Dollars (thousands) 2009 Net Sales ...Cost of Sales ...Gross profit ...Selling, General and Administrative Expenses ...Operating income ...

  • Page 47
    ... Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2008 and 2009 (thousands) Yen (millions) Net unrealized holding gains (losses) on securities Deferred gains (losses) on hedges Foreign currency translation adjustments Number of shares Common stock (Note 7) Capital...

  • Page 48
    Consolidated Statements of Cash Flows Sharp Corporation and Consolidated Subsidiaries for the Years Ended March 31, 2008 and 2009 Yen (millions) 2008 2009 U.S. Dollars (thousands) 2009 Cash Flows from Operating Activities: Income (loss) before income taxes and minority interests ...Adjustments to...

  • Page 49
    ...net of applicable income taxes, as a separate component of net assets. (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 Annual Report 2009 47

  • Page 50
    ... market. Work in process and raw materials were principally stated at current production and purchase costs, respectively, but not in excess of the estimated realizable value. Effective for the year ended March 31, 2009, inventories held by the Company and its domestic consolidated subsidiaries are...

  • Page 51
    ... 31, 2008 and 2009, 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...

  • Page 52
    ... 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...

  • Page 53
    ...Inventories as of March 31, 2008 and 2009 were as follows: Yen (millions) 2008 U.S. Dollars (thousands) 2009 2009 Finished products ...Work in process ...Raw materials... ¥198,579 148,351 107,422 ¥454,352 ¥179,629 148,482 71,874 ¥399,985 $1,851,846 1,530,742 740,969 $4,123,557 Annual Report...

  • Page 54
    ... and 2009. 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...

  • Page 55
    ... as of March 31, 2008 and 2009 were included in the consolidated balance sheets as follows: Yen (millions) 2008 U.S. Dollars (thousands) 2009 2009 Deferred tax assets (Current Assets) ...Deferred tax assets (Investments and Other Assets) ...Other current liabilities ...Other long-term liabilities...

  • Page 56
    ... of March 31, 2008 and March 31, 2009, 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 which provide, among other things, that security and guarantees...

  • Page 57
    ... minimum lease receipts for only non-cancelable contracts as of March 31, 2008 and 2009 were as follows: Yen (millions) 2008 U.S. Dollars (thousands) 2009 2009 Due within one year ...Due after one year ... ¥1,725 1,428 ¥3,153 ¥ 699 1,341 ¥2,040 $ 7,206 13,825 $21,031 Annual Report 2009 55

  • Page 58
    ... 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, 2009, the shareholders approved...

  • Page 59
    ...The estimated amount of all retirement benefits to be paid at future retirement dates is allocated to each service year mainly based on points. 10. Segment Information The Company and its consolidated subsidiaries operate in Consumer/Information Products business and Electronic Components business...

  • Page 60
    ...Consumer/Information Products...Electronic Components...Elimination ...Consolidated ...Corporate assets as of March 31, 2008 and 2009 were ¥464,645 million and ¥442,849 million ($4,565,454 thousand), respectively, and were mainly comprised of the Company's cash and cash equivalents, investments in...

  • Page 61
    ... 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...

  • Page 62
    ... 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. As a result, for the year ended March 31, 2008, operating income for "Japan...

  • Page 63
    ...consideration of business 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 Company and its consolidated subsidiaries mainly reduced the book value of LCD production facilities which...

  • Page 64
    ...Meeting held on May 15, 2009, to have Sharp Display Products Corporation, a wholly owned subsidiary of the Company, succeed to the production and sales business of large-sized LCD panels and LCD modules at the new LCD plant now under construction by the Company in Sakai City, Osaka Prefecture, Japan...

  • Page 65
    ... and sales business of large-sized LCD panels and LCD modules at the new LCD plant now under construction in Sakai City, Osaka Prefecture, Japan by way of an absorption-type corporate split. The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended...

  • Page 66
    ... Trading Corporation Sharp Business Computer Software Inc. Sharp Yonago Corporation SD Future Technology Co., Ltd. Overseas: Sharp Electronics Corporation Sharp Laboratories of America, Inc. Sharp Electronics Manufacturing Company...

  • Page 67
    Investor Information (As of March 31, 2009) Shareholders Number of Shareholders 124,130 Principal Shareholders Number of shares held Percentage of total shares (%) Nippon Life Insurance Company Japan Trustee Services Bank, Ltd. (Trust Account 4G) Meiji Yasuda Life Insurance Company Japan Trustee ...

  • Page 68
    Electricity for plate making and printing of this report has been fed by solar green power only. 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.