Financial Material

Net sales were 747.8 billion yen, down 6.0% compared to the same period last year. Amidst a challenging environment including the appreciation of the yen and skyrocketing costs for raw materials, as well as declines in prices for digital products and electronic devices, Sharp’s main devices such as LCDs and solar cells generally continued to sell well. However, net sales were affected by the loss on fluctuations in exchange rates of 34.8 billion yen and by a decrease in sales of mobile phones and wireless PDAs of 79.5 billion yen compared to the same period in the previous year, reflecting the impact of a sluggish Japanese domestic mobile phone market. Operating income was 36.4 billion yen, down 13.8% compared to the same period last year. Net income was 24.8 billion yen, up 2.8% compared to the same period last year. Despite posting the loss on valuation of inventory for prior periods in conjunction with revisions to Japanese accounting standards, we posted the gain on sales of stocks of subsidiaries and affiliates resulting from a transfer of stock in Sharp Finance Corporation, leading to the improved net income.