Financial Material

For the nine months ended December 31, 2011, sales of LCD TVs were 466.9 billion yen, down 28.3%, while on a unit basis, sales were 10.09 million sets, down 11.6%, both compared to the same period last year. Considering the situation leading up to the third quarter, and the effects of falling prices and other factors, Sharp projects sales of LCD TVs for the fiscal year ending March 31, 2012 to be 600.0 billion yen, down 25.3% from the previous year, with unit sales of 12.80 million sets, down 13.7%. In Japan, there was a market contraction to about 30% of levels from the same period in the previous year, due mainly to a sharp decline in the demand after the end of analog TV broadcasting. This factor led to prices declining further than had been expected for 32-inch and 40-inch products. Conversely, overseas sales in the third quarter exceeded those of the same period in the previous year, both on a monetary and a unit basis, due to increased sales of large-size LCD TVs 60 inches and larger, particularly in the U.S. In North America, around 60% of LCD TV sales were of 60 inches and larger, and our brand image is strengthening, with a market share of more than 70% of this size. Our global sales target for 60-inches and larger models throughout fiscal 2011 is around 1.50 million units. Sales of LCDs were 583.0 billion yen, down 25.5% compared to the same period last year. For the fiscal year ending March 31, 2012, Sharp anticipates sales of LCDs to be 800.0 billion yen, down 22.1% from the previous year. Sales of large-size LCD TVs of 60 inches and larger were strong in the U.S., and the operation at the Sakai Plant showed a steady trend supported by internal demand, but external sales decreased. As a result of a rapid decline in demand for LCD TVs in Japan, the utilization rate was reduced at the Kameyama No. 2 Plant, which produces LCD panels for medium-size TVs. Consequently, the external sales ratio of large-size LCDs fell from its previous level of around 30% to around 10% in the third quarter. For mobile LCDs, third-quarter sales stagnated due to a fall in sales of LCDs for Android smartphones and due to a significant delay in the mass production and shipment of IGZO LCDs for mobile terminals. In the fourth quarter, shipment of IGZO LCDs is scheduled to begin. In the case of large-size LCDs, it was decided to implement production adjustments to reduce inventory to an appropriate level. In addition, to coincide with these production adjustments, we are considering the introduction of IGZO technology to some of the LCD production lines at the Sakai Plant.

Sales of mobile phones were 238.1 billion yen, down 26.2%, and unit sales were 5.92 million units, down 22.7%, compared to the same period last year. For the fiscal year ending March 31, 2012, Sharp is projecting sales of mobile phones of 320.0 billion yen, down 22.6% over the previous year, and on a unit basis, sales of 8.00 million units, down 17.9%. Amid the severe business environment for mobile phones, Sharp will continue to launch one-of-a-kind smartphones centered on its unique technology, such as models that feature link functions with AQUOS LCD TVs and achieving high picture quality with low power consumption.

Sales of solar cells were 159.4 billion yen, down 21.6% compared to the same period in the previous year. On a production volume basis, sales were 831 MW, down 10.3%. For the fiscal year ending March 31, 2012, Sharp projects sales of solar cells to be 200.0 billion yen, down 24.7% compared to the previous year, and on a production volume basis, 1,100 MW, down 11.4%. The business environment overseas continues to deteriorate, with financial instability in Europe, a reduction in demand due to the revision of feed-in tariffs in various countries, subsequent price declines, and ongoing yen appreciation. In addition, the entry of Chinese manufacturers into the Japan market is making the competitive environment ever more severe. In response to this, Sharp is working to transform its business structure and profit structure by promoting local production for local consumption and reinforcing efforts in downstream areas, including system sales and power generation.