February 25, 2016
Company Name:
Representative:

Sharp Corporation
Kozo Takahashi
Director & President
(Code No. 6753)

Notice regarding the issuance of new shares through third-party allotments, and change of parent company,
the largest shareholder who is a major shareholder, and major shareholders
Sharp Corporation (“Sharp”) has adopted a resolution for an item below, at its meeting of the Board of Directors
held today (the “Board Meeting”), as follows:
Sharp shall issue new shares (common shares and Class C Shares) through third-party allotment (the
“Capital Increase Through Third-Party Allotment), in which the allottees are Hon Hai Precision Industry
Co., Ltd. (“Hon Hai Precision Industry”), Foxconn (Far East) Limited, a wholly-owned subsidiary of Hon
Hai Precision Industry (“Foxconn FE”), Foxconn Technology Pte. Ltd. (“Foxconn Technology”), and SIO
International Holdings Limited (“SIO”; together with Hon Hai Precision Industry, Foxconn FE, and
Foxconn Technology, collectively the “Planned Allottees”).
In addition, we also hereby announce the expected change of the parent company, the largest shareholder, who is
a major shareholder, and of major shareholders of Sharp, which will occur as a result of the Capital Increase
Through Third-Party Allotment.
I.

Issuance of new shares by third-party allotment

1.

Overview of offering
(1)
(i)

Common shares
Payment period

From June 28, 2016 (Tue.) to September 5, 2016 (Mon.)

(ii) Number of new shares to 3,281,950,697 shares
be issued
(iii) Issued price
118 yen per share
(iv) Amount of procurement
fund
(v) Offering or allotment
method (planned
allottees)

387,270,182,246 yen
Allotted by means of third-party allotment:
To Hon Hai Precision Industry 1,300,000,000 shares
To Foxconn FE
915,550,697 shares
To Foxconn Technology
646,400,000 shares
To SIO
420,000,000 shares

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

1

 (vi) Other

The payments are subject to the effectiveness of the securities registration
statement pursuant to the Financial Instruments and Exchange Act,
acquisition of permits, licenses, or the like from relevant authorities of the
relevant countries, including permission of notification or the like regarding
business combination from competition authorities of the relevant countries,
required in order to execute the Capital Increase Through Third-Party
Allotment, and an approval (special resolution) of the item on the agenda
regarding the issuance of common shares of Sharp at the 122nd ordinary
general meeting of shareholders of Sharp to be held on June 23, 2016 (Thu.)
(the “Ordinary General Meeting of Shareholders”) and the general meeting
of class shareholders by holders of the common shares, the general meeting
of class shareholders by holders of the Class A Shares, and the general
meeting of class shareholders by holders of the Class B Shares (the
“General Meeting of Class Shareholders”) to be also held on June 23, 2016
(Thu.).

(Note) In order to increase the certainty of the execution of the Capital Increase Through Third-Party Allotment,
the Planned Allottees plan to agree in the share subscription agreement to conclude that the Planned
Allottees shall provide a deposit of 100 billion yen, and if the Planned Allottees fail to perform their
obligation to pay the subscription amount, or in other similar cases, Sharp may confiscate the deposit as
liquidated damages. However, if the deposit is not confiscated as liquidated damages, then the deposit may
be appropriated to the capital increase payment for the Capital Increase Through Third-Party Allotment.

(2)
(i)

Class C Shares
Payment period

From June 28, 2016 (Tue.) to September 5, 2016 (Mon.)

(ii) Number of new shares to 8,621,171 shares
be issued
(iii) Issued price
11,800 yen per share
(iv) Amount of procurement
fund
(v) Offering or allotment
method (planned
allottees)

101,729,817,800 yen
Allotted by means of third-party allotment:
To Hon Hai Precision Industry 8,621,171 shares

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

2

 (vi) Other

For more information, please refer to the Appendix “Terms and conditions
of Class C Share issuance.”
It is prescribed that the payment priority of dividends from surplus and
distribution of residual assets for Class C Shares is the same as that for the
common shares, and that the amounts of payment of the dividends and
distribution are the amounts multiplied by prescribed acquisition ratios.
Class C Shares have no voting right. Assignments of Class C Shares are
restricted.
Class C Shares are subject to call in consideration for common shares.
The payments are subject to the effectiveness of the securities registration
statement pursuant to the Financial Instruments and Exchange Act,
acquisition of permits, licenses, or the like from relevant authorities of the
relevant countries, including notifications, permits, or the like regarding
business combination from competition authorities of the relevant countries,
required in order to execute the Capital Increase Through Third-Party
Allotment, and an approval (special resolution) of the items on the agenda
regarding the issuance of Class C Shares and the revision of the articles of
incorporation to be required due to the issuance of the Class C Shares at the
Ordinary General Meeting of Shareholders and the General Meetings of
Class Shareholders. The revision will be disclosed after the proposed
revision is fixed.

(Note) In order to increase the certainty of the execution of the Capital Increase Through Third-Party Allotment,
the Planned Allottees plan to agree in the share subscription agreement to conclude that the Planned
Allottees shall provide a deposit of 100 billion yen, and if the Planned Allottees fail to perform their
obligation to pay the subscription amount, or in other similar cases, Sharp may confiscate the deposit as
liquidated damages. However, if the deposit is not confiscated as liquidated damages, then the deposit may
be appropriated to the capital increase payment for the Capital Increase Through Third-Party Allotment.
2.

Purpose of and reason for the offering

In May 2013, Sharp set and announced its “Medium-Term Management Plan for Fiscal 2013 through 2015” in
order to improve a weakened management structure, and to realize “Recovery and Growth.” In this plan, we set
three basic strategies as the core: (1) Shift management resources to “advantageous markets and fields,” (2) Exit
closed innovation, and aggressively utilize alliances, and (3) Enforce executions by innovating governance systems.
In addition, we also set and carried out, by the entire company, five main plans to achieve “Recovery and Growth”:
(1) Restructuring of the current business portfolio, (2) Improving the profitability of the LCD business, (3)
Expanding overseas businesses focusing on the ASEAN market, (4) Reducing fixed costs by introducing all-Sharp
cost restructuring innovations, and (5) Improving financial position. With these efforts, we returned to profit in the
year ended March 2014, clearing the target set for the sales and operating income.
However, Sharp recorded large deficits for the year ended March 2015, due to a lack of measures, such as rapid
business changes, against the intensified competition in the LCD TV business in America, and the deterioration in
the business environment for the energy solution business, including stagnant demand for solar power, as well as a
lack of foresight in responding to market changes, including the fact that the shift to high-definition products did
not take off, inadequacy in dealing with price declines, and inadequacy in marketing for the small- and medium-

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

3

 size LCD market, as well as recording of the allowance for the price difference in long term contracts for
polysilicon materials used in solar panels, whose prices are higher than the market price, and incorporating the
difference from the market price of small- and medium-size LCDs as a write-down of the inventories to improve
earnings structure.
Accordingly, Sharp announced the “Medium-Term Management Plan for Fiscal 2015 through 2017” on May 14,
2015, and expressed three key strategies, “Reorganizing Business Portfolio,” “Executing Reduction of Fixed Cost,”
and “Reorganizing Corporate Structure and Strengthening Corporate Governance” in order to construct a stable
business foundation unshakeable by environmental changes in the future, and it steadily implemented them.
However, regarding the consolidated results of the display device business for the term ending March, 2016, that
was the first fiscal year of such medium-term management plan, the performance forecast for the net sales and
operating income for the fiscal year was revised down on October 26, 2015 due to reasons, such as a decrease in the
sales of liquid crystals for smartphones for the Chinese market, which were far lower than those anticipated at the
beginning of the term, and the effect of decreased unit price as a result of intensified price competitions. Further, in
the results for the third quarter of the fiscal year ending March, 2016, the accumulated amount of losses for the
period from the first quarter to the third quarter in the quarter net profits that belong to the parent company
shareholders of 108.3 billion yen was recorded. Consequently, as of the end of the third quarter of the fiscal year
ending March 2016, the capital adequacy ratio, which shows financial soundness, declined to 8.6% from 12.3%,
that is the capital adequacy ratio as of the end of June, 2015. In order to improve our capital adequacy ratio and
restore our financial condition, not the bond issuance, which means owing debts, nor the fund borrowing, but rather
procuring funds of a capital nature by issuing shares or the like, is indispensable. In order to procure funds of a
capital nature certainly and promptly, fund procurement not by the issuance of share options or the like, which
would take some time until the exercise thereof, but by a new share issuance, and not by capital increase through
public offering nor allotment to shareholders, in which uncertainties remain, but by third-party allotment, is
appropriate. Accordingly, in addition to the consideration of structural reform, including spin-off of the display
device business, Sharp recognized the improvement of the company-wide financial standing as its urgent business
challenge, and it proceeded with consideration in order to realize structural reform, including alliances, toward its
management reconstruction.
In that situation, since the last autumn, Sharp had discussions with several companies toward its management
reconstruction. Of the companies, Sharp decided that proposals from Innovation Network Corporation of Japan
(“INCJ”) and those from a Taiwanese company, Hon Hai Precision Industry, one of the world’s largest companies
providing electronic device contracted manufacturing services, can be considered as contributive to the resolution
of the management issues stated above. Thus, Sharp has discussed with the only two selected companies since the
beginning of this year.
Sharp received a proposal from INCJ to the effect that, after the company split of our display business, they
would inject capital of 300 billion yen into Sharp, and would integrate the display business into Japan Display Inc.
On the other hand, from Hon Hai Precision Industry, Sharp received a proposal that they would invest in and
provide funds to Sharp’s business, which includes the display business, for the business expansion, and that their
group companies would like to subscribe for Sharp’s common shares for the purposes, such as to provide funds to
contribute to strengthen Sharp’s financial foundation.
Sharp sincerely considered both of the proposals, from the viewpoint of (i) whether they sufficiently grasped
Sharp’s “advantages,” including the variety of product lines based on our “gene of creativity,” which means
creating new products that do not exist in the world, and the wide range of our technologies, and (ii) whether the
necessary and sufficient financial and capital support and business alliance effect can be obtained, in order to
realize Sharp’s business policy, that is, to provide new products and services which realize the “new connections
between people and house appliances” in developing fields, such as robotics and the Internet of Things (the “IoT”)
by integrating these technologies. Further, Sharp carefully conducted consideration so that Sharp could make the
best decision for Sharp, as well as Sharp’s stakeholders, by comprehensively evaluating both proposals, considering

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

4

 the viewpoints of what kind of effect the two proposals would have on Sharp’s shareholders, employees, financial
institutions, and clients if the proposals were implemented, and whether both proposals could be considered to
contribute to the benefit of our various type of stakeholders.
As a result of our consideration from the viewpoints stated above, we decided, as the board of directors of Sharp,
that it would be best for all of Sharp’s stakeholders to perform the Capital Increase Through Third-Party Allotment
to the Planned Allottees, for the following reasons:
(i)

The total amount of contribution by the Planned Allottees will be 489 billion yen. We decided that, as stated
in “3.(2) Intended use of funds procured” below, the contribution will strengthen the competitiveness of our
display device business, and will enable us to provide sufficient funding and capital that can cover the
necessary investments for our growth, so that Sharp’s business activities can develop integrally, and will also
significantly contribute to the improvement of Sharp’s financial standings, including increasing its working
capital;

(ii) We considered that the Planned Allottees have a mutually-complementary relationship with Sharp in the LCD
business. The competitiveness of Sharp’s business is expected to be stronger through the collaboration in that
business. Further, also in other business activities, the productivity and cost competitiveness of Sharp are
expected to be improved by utilizing their manufacturing technique as the world’s top-class EMS. In this way,
the synergy effect in terms of the business is considered to be large;
(iii) The Planned Allottees presented their sufficient understanding of the value of Sharp’s brand, existing
employees, and comprehensive product lines, and of the merits of preserving the ecosystem surrounding
Sharp’s business. Among other things, strong commitments, including the following, were obtained regarding
the management of Sharp after the implementation of the Capital Increase Through Third-Party Allotment:
(i)

Operational independence
maintaining and respecting the independence of Sharp’s and its subsidiaries’ management and operation;

(ii) Maintenance of unity
maintaining the unified operation of Sharp’s and its subsidiaries’ business activities, and providing
sufficient support to the alliances with third parties that Sharp desires to make;
(iii) Maintenance of employment
committing themselves to the principle of retaining existing employees, and respecting Sharp’s
autonomous decisions regarding the optimization of the structure;
(iv) Importance of Sharp brand
continuously using the “Sharp” brand in such a manner as maintains and improves the value of the
“Sharp” brand based on their mutual understanding regarding the efforts to improve the brand value,
including liabilities for customer services and supplied products; and
(v) Maintenance of Sharp technology
maintaining Sharp’s research and development and manufacturing functions in Japan, and mutually
cooperating to prevent leakage of Sharp’s core technology.
(iv) Sharp already had had business deals with the Planned Allottees through the ODM of such products as liquid
crystal TV, mobile phone, and smart phones, for a long time. In addition, Sharp and Hon Hai Precision
Industry have jointly operated Sakai Display Products Corporation, a large-size liquid crystal panel
manufacturer, since August, 2012. Sakai Display Products Corporation achieved a surplus for three
successive years from the term ending December, 2012 by such means as realizing a stable supply of liquid
crystal panels manufactured by Sakai Display Products Corporation to the company’s clients, which are liquid

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

5

 crystal TV-set manufacturers. In this way, a relationship of trust has been built between Sharp and Hon Hai
Precision Industry as joint operation partners.
(v)

Hon Hai Precision Industry, one of the Planned Allottees, plans to purchase half of the Class A Shares held
by Mizuho Bank, Ltd. and The Bank of Tokyo-Mitsubishi UFJ, Ltd. (the “Financial Institutions”) for the total
amount of 100 billion yen. Furthermore, although the issued price per share and other terms and conditions
of the Capital Increase Through Third-Party Allotment are terms and conditions favorable to the Planned
Allottees in particular, by taking into account the effect of establishing a business foundation or improving its
corporate value by implementing the Capital Increase Through Third-Party Allotment, such terms and
conditions were considered to fully take account of the interest of the existing shareholders.

(vi) In order to increase the certainty of the execution of the Capital Increase Through Third-Party Allotment, the
Planned Allottees plan to agree in the share subscription agreement to conclude that the Planned Allottees
shall provide a deposit of 100 billion yen, and if the Planned Allottees fail to perform their obligation to pay
the subscription amount, or in other similar cases, Sharp may confiscate the deposit as liquidated damages.
Regarding (iii) above, the following obligations of the Planned Allottees are planned to be provided:
・

to respect and maintain, to the fullest extent permissible under the applicable laws and regulations and stock
exchange regulations, Sharp’s operational independence (including the handling of its brand, technologies,
customers, suppliers, employees, and other matters relating to the operation of Sharp’s and its subsidiaries’
business) in accordance with the provisions of the share subscription agreement (the outlines thereof are
listed below);

・

for the above purpose, to continue the good faith discussion with Sharp with respect to the concrete governing
structure, procedures, and policies employed by Sharp and its subsidiaries;

・

during the two-year period following the conclusion of the share subscription agreement, not to transfer any
of Sharp’s shares to any third party without prior written consent from Sharp (when transferring the Class C
Shares to any subsidiary or affiliate, Sharp shall not unreasonably reject or withhold its approval on such
transfer);

・

not to additionally acquire Sharp’s shares, which may lead to the delisting of Sharp’s shares or to the
movement of Sharp’s shares from the 1st section of the Tokyo Stock Exchange, and not to cause the Planned
Allottees’ group companies and joint holders to additionally acquire Sharp’s shares;

・

to maintain the unity of Sharp’s and its subsidiaries’ business and refrain from exercising its voting rights or
its influence in any form to have Sharp or its subsidiaries dispose of its business (Sharp will use its best
efforts to improve the profitability of Sharp’s Energy Solution business, including but not limited to seeking
strategic partnerships or joint ventures with appropriate third parties, and the Planned Allottees shall respect
such efforts and cooperate thereto);

・

in the case where Sharp desires a business or capital alliance with third parties, to provide Sharp with
necessary and adequate supports;

・

except for the regular retirements and periodic rotations and pay raises, to commit to the principle of retaining
existing employees, and maintaining employment conditions of Sharp and its subsidiaries and to implement
plans to retain existing employees by way of, including, giving Sharp’s management team full autonomy to
optimize Sharp’s employment needs and organizational structure;

・

to fully recognize the importance of the “Sharp” brand as a management resource, in order for Sharp to
succeed in its future business, as well as Sharp’s long-term efforts that have been made to maintain and

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

6

 enhance such brand (including the customer service and steady product assurance) and based on such
recognition, to maintain and utilize the “Sharp” brand in the manner that maintains or further enhances the
value of the “Sharp” brand; and
・

to cooperate with Sharp in maintaining Sharp’s technology (including the functions of Sharp’s R&D facilities
and factories in Japan) within Sharp and its group companies and in Japan, and shall procure a method which
effectively prevents the leakage of such technology from Sharp and its subsidiaries and to outside of Japan.

Furthermore, Hon Hai Precision Industry plans to covenant, under the share subscription agreement which is
planned to be concluded, and on condition that there is consent of the Financial Institutions and that it will not
violate any laws or regulations, or the like, to purchase half of the outstanding Class A Shares held respectively by
the Financial Institutions, for the total amount of 100 billion yen, immediately after the payment of the Capital
Increase Through Third-Party Allotment; not to exercise the put option of the Class A Shares the consideration for
which is cash; and, to the extent possible maintaining Sharp’s listing, to exercise the put option the consideration
for which is common shares, on or after July 2019; as well as, on the condition that there is consent of Japan
Industrial Solutions Fund I and that it will not violate any laws or regulations, or the like, to purchase the total
number of the Class B Shares held by Japan Industrial Solutions Fund I at the price agreed by both parties,
immediately after the payment of the Capital Increase Through Third-Party Allotment.
Sharp considers that the Capital Increase Through Third-Party Allotment would lead to the improvement of its
financial condition, such that its capital adequacy ratio is expected to improve. This will enable Sharp to allot the
funds to the growth investment, which had to be suppressed due to the present financial condition, and to prepare to
surely implement the structural reform that is under consideration, and thus, a sure management foundation for
achieving the performance goal for the last fiscal year of the Medium-Term Management Plan for Fiscal 2015
through 2017 will be developed. For more information regarding the usage of the funds, please refer to “3.(2)
Intended use of funds procured” below.
Of the Planned Allottees, Foxconn FE is a wholly-owned company of Hon Hai Precision Industry, Foxconn
Technology is a wholly-owned company of Q-Run Holdings Limited in which Hon Hai Precision Industry
indirectly holds 29.59% of the equity interests, and SIO is a company substantially controlled by Mr. Terry Gou,
the Chairman of Hon Hai Precision Industry. However, Foxconn Technology and SIO are not subsidiaries or the
like of Hon Hai Precision Industry, and Hon Hai Precision Industry does not fall under the definition of a Special
Subscriber.
Regarding Sharp’s directors, Sharp plans to agree, in the share subscription agreement planned to be concluded,
in the case where the directors have been nominated by the Planned Allottees, in writing, by April 15, 2016, to use
its best efforts to obtain approval and a resolution of the general meeting of shareholders and of the general
meetings of class shareholders necessary for electing, pursuant to said nomination by the Planned Allottees, 9
directors out of 13 directors, or directors exceeding two-thirds of the total number of directors, so that such
nomination becomes effective immediately after the Capital Increase Through Third-Party Allotment.
The number of shares to be allotted to the Planned Allottees by the Capital Increase Through Third-Party
Allotment is 3,290,571,868 shares (breakdown: common shares: 3,281,950,697 shares; Class C Shares: 8,621,171
shares). The number of voting rights to be allotted to the Planned Allottees by the Capital Increase Through ThirdParty Allotment is 3,281,950. The ratio, as against the total number of issued shares of Sharp as of September 30,
2015, that is 1,701,439,887 shares, will be 193.40% (the ratio against the total number of the voting rights, that is
1,685,204, will be 194.75%).
The Class C Shares contain a call option the consideration for which is common shares which may be exercised
on or after July 1, 2017, and when such call option has been exercised, notwithstanding the stock price as of the
time of acquisition, 862,117,100 common shares will be delivered, and their number of voting rights will be
862,117 voting rights. On the assumption that such call option was exercised as of now, the number of common
shares calculated by adding up the number of common shares delivered by such call option and the number of

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

7

 common shares issued by the Capital Increase Through Third-Party Allotment will be 4,144,067,797 shares; the
number of voting rights will be 4,144,067 voting rights; the ratio, as against the total number of Sharp’s issued
shares as of September 30, 2015, that is 1,701,439,887 shares, will be 243.56% (the ratio against the total number
of voting rights, that is 1,685,204 voting rights, will be 245.91%); and by the Capital Increase Through Third-Party
Allotment, a large dilution will occur.
In addition to the point that, for the improvement of our capital adequacy ratio and in order to restore our
financial condition, not the bond issuance, which means owing debts, nor the fund borrowing, but procuring funds
of a capital nature by issuing shares or the like, is indispensable, and in order to procure funds of a capital nature
certainly and promptly, fund procurement by means of new share issuance and not by means of the issuance of
share options or the like, which would take some time until the exercise thereof, and by means of third-party
allotment and not capital increase through public offering nor allotment to shareholders, in which uncertainties
remain, is appropriate, also in view of the special characteristics of this matter, that is a management reconstruction
accompanied by a business restructuring, we consider that a Capital Increase Through Third-Party Allotment is the
very method that conforms to such special characteristics. We also believe that the Capital Increase Through
Third-Party Allotment can contribute to the improvement of Sharp’s future profitability, because, by allotting the
funds procured through the Capital Increase Through Third-Party Allotment to the usages stated in “3.(2) Intended
use of funds procured” below, favorable outcomes are expected to occur, such that the profit rate will improve
through such means as expanding future sales and strengthening cost competitiveness, and that our financial and
business foundation will be enhanced, which can endure rapid economic changes and other similar structural
changes. Furthermore, as mentioned above, by establishing a strong business tie with the Hon Hai Precision
Industry group, one of the Planned Allottees, and by making our business foundation more stable, we consider that
the Capital Increase Through Third-Party Allotment can eventually contribute to the enhancement of Sharp’s
corporate value and shareholder value. Therefore, the Capital Increase Through Third-Party Allotment can also
bring sufficient profits to the existing shareholders. Thus, we decided to procure funds by the Capital Increase
Through Third-Party Allotment.
3.

Amounts, use, and timing of use as intended of funds procured
(1)

Amounts of funds procured
Common shares

Class C Shares

(i) Total amount to be paid in

387,270,182,246 yen

101,729,817,800 yen

(ii) Estimated issuance expenses

4,723,761,146 yen

-

(iii) Estimated retained balance

382,546,421,100 yen

101,729,817,800 yen

(Note) 1
2

“Estimated issuance expenses” do not include consumption tax and the like.
The breakdown of “Estimated issuance expenses” is registration costs (about 1,713 million yen),
lawyers’ and financial advisers’ fees (about 2,651 million yen), and others (about 360 million yen).
The estimated issuance expenses are a total of various expenses regarding common shares and
Class C Shares.

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

8

 (2)

Intended use of funds procured

The intended use of the above estimated retained balance of 484,276,238,900 yen (breakdown:
382,546,421,100 yen for common shares and 101,729,817,800 yen for Class C Shares) is planned as follows.
Until the funds are applied to the following use, they are planned to be kept as a bank deposit and the like.

Intended Use of Proceeds

Amount (JPY
million)

Timing of use as
intended

(i)

Upgrading technology and commencement of mass
production for the commercialization of OLED
business

200,000

July 2016 through
June 2019

(ii)

Investment in regard of Display Device Company for
higher definition, improvement of yield rate, R&D of
next-era technology, increase in production volume,
and rationalization targeted mainly at medium-sized
products

100,000

July 2016 through
March 2019

(iii)

Investment in regard of Consumer Electronics
Company for R&D, dies, and molds to realize a
transformation of business model for IoT business
expansion, for R&D, dies, and molds to expand the
business in emerging countries, for increase in
production volume and rationalization

45,000

July 2016 through
March 2019

(iv)

Investment in regard of Energy Solutions Company for
R&D and expansion of sales distribution to realize a
transformation from existing business to solution
business

10,000

July 2016 through
March 2019

(v)

Investment in regard of Electronic Component and
Device Company used for R&D, expansion of sales
distribution, increase in production volume, and
rationalization targeted for growing businesses
including automotive, industrials, and IoT

12,000

July 2016 through
March 2019

(vi)

Investment in regard of Business Solutions Company
used for expansion of sales distribution of existing
MFP business, R&D for growing business such as
robotics or solution business, increase in production
volume, and rationalization

50,000

July 2016 through
March 2019

(vii)

Advertising investment and other related expenses for
brand value enhancement for targeted areas such as
Japan, Asia, and China, and investment and other
related expenses for element technology development
and fundamental R&D for new business

37,276

July 2016 through
March 2019

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

9

 Amount (JPY
million)

Intended Use of Proceeds
(viii)

Redemption of corporate bonds

30,000

Timing of use as
intended
September 2016
through March
2019

As written in “2. Purpose of and reason for the offering” above, we were compelled to reduce the growth
investment. Through this third-party allotment, we intend to use the proceeds for capital expenditure to grow each
business segment, operating expenses for brand value enhancement and new business development, and redemption
of corporate bonds.
The items listed from (i) to (vi) above are capital expenditures to grow each business segment for 417,000 million
yen. The item listed in (vii) above is operating expense for brand value enhancement and new business
development for 37,276 million yen. The item listed in (viii) above is the redemption of corporate bonds for 30,000
million yen.
Details of use of proceeds are stated as follows.

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

10

 A.

Capital expenditure to grow each of Sharp’s business segments

a.

Display Device Company (Display Device business)

With OLED (Organic Light-Emitting Diode), it is possible to make displays that are thinner, brighter, and offer
better color performances compared to backlit liquid crystal displays (LCD); therefore, following LCDs, expansion
of OLED display demand is expected for end-markets such as smartphones, automotive displays, and advanced
displays for flat-screen TVs. Our competitors have already initiated a mass production of OLED display products
for mobile phones, and the market share of OLED display within display products is expected to expand through
substituting LCD products. In particular, OLED display market size is expected to become $43.9 billion1 by 2020
(CAGR from 2014 is 16%).
1 MarketsANDMarkets report “OLED Market by Display Application (Type - AMOLED & PMOLED, PanelSize - Small, Medium & Large, Product - Smartphones & Others, Geography), Lighting Application (Type Traditional & Flexible, End-User, Geography), & Geography - Global Forecast to 2020” (April 2015)
In the meanwhile, major smartphone manufacturers have a concrete plan to introduce products using OLED
displays, instead of LCDs, which are currently mainly used, by 2018, and we expect that the trend will transform
existing display markets. We have developed the original technology called “IGZO,” which is already utilized in
LCD products, and LTPS (Low Temperature Poly Silicon) technology, which is useful for high-definition displays.
In the small-sized display market for mobile phones, we plan to utilize both IGZO technology and LTPS
technology to overcome difficulties that existing OLED display products are facing, which are to produce products
with low power consumption with low cost. In the medium/large-sized display market, we expect that the OLED
display market will expand further, because OLED displays with IGZO technology consume less power and
perform better compared with LCDs with amorphous silicon. Through maximizing LCD technology which we
have cultivated for a long time, we aim to become one of the major global OLED display suppliers.
The OLED display market is expected to have rapid expansion, and it will coexist for a long time going forward
with LCD products, where we have a competitive advantage. In the future, we expect flexible OLED display
products with rounding and folding capability (as if it were paper) will be popular for high-end smartphones and
tablets, while LCDs are going to be continuously used in low- to middle-end mobile phone markets.
Through utilizing the investments for “Upgrading technology and commencement of mass production for the
commercialization of OLED business,” as mentioned in (i) above, we will conduct R&D and obtain mass
production facilities required for the launch of trial production lines of organic EL displays before mid-2017. In
doing so, we aim to establish mass production capabilities and plan to initiate mass production at the beginning of
2018. Although the investment amounts and production capabilities will depend on the plans to be made, they are
expected to be as follows, in detail.
We plan to establish R&D lines, pilot lines, and mass production lines in the Kameyama fab to realize the mass
production of OLED display products. In these lines, we aim to produce not only existing OLED display products,
which are already under mass production by our competitors, but also flexible OLED display products. The
investment amount for each type of line is 28 billion yen, 48 billion yen, and 124 billion yen, respectively. We plan
to invest 5 billion yen in 2016, 75 billion yen in 2017, 100 billion yen in 2018, and 20 billion yen in 2019. Through
utilizing the investments mentioned above, we plan to target monthly production equivalent to approximately 10
million units of 5.5” inch panels (68.5 millimeters x 121.5 millimeters) by 2019. As a result, we intend to annually
produce OLED displays for smartphones in volume equivalent to approximately 90 million units of 5.5” inch
panels and target 260 billion yen of annual production from OLED display products.
The R&D lines will be established in the aim of examining and improving the production methods and equipment
of products which are still in their development phase. By providing feedback as necessary while R&D for

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

11

 production methods is still conducted, we plan to develop better products and appropriate production methods. In
the R&D lines, by utilizing the 4.5th generation glass substrate (730 millimeters x 920 millimeters) produced by
FMM (Fine Metal Mask: Metal mask which aligns organic lamella into a single pattern as lamella through
evaporation) and FHM (Fine Hybrid Mask: Mask made from the blended material of metal and plastic film which
aligns organic lamella into a single pattern as lamella through evaporation) vapor deposition technology, we plan to
target monthly production equivalent to approximately 0.65 million units of 5.5” inch panels. In particular, we are
going to spend 20 billion yen on production equipment such as polyimide substrate production equipment, mask
vapor deposition equipment, organic lamella vapor deposition equipment, and capsulation equipment, as well as
inspection and cleaning equipment for each process, and 8 billion yen on the introduction of clean rooms where
production equipment is placed, targeting to establish the R&D lines by the first half of 2017, and to initiate actual
production by the second half of 2017.
The pilot lines will be established in the aim of accumulation of production know-how for full-scale mass
production and development of production technology such as yield ratio improvement. The pilot lines will also
conduct small-scale production and actual shipments to our customer. In the pilot lines, by utilizing the sixthgeneration glass substrate (1,500 millimeters x 1,850 millimeters, half size used) produced with FMM and FHM
vapor deposition technology, we plan to target monthly production equivalent to approximately 2.3 million units of
5.5” inch panels. In particular, we are going to spend 36 billion yen on production equipment such as polyimide
substrate production equipment, mask vapor deposition equipment, organic lamella vapor deposition equipment,
and capsulation equipment, as well as inspection and cleaning equipment for each process, and 12 billion yen on
the introduction of clean rooms where production equipment is placed, targeting to establish the pilot lines by the
second half of 2017, and to initiate actual production by the first half of 2018.
The mass production lines will be established in the aim of mass production for upcoming full-scale demand
surge, together with the pilot lines. In particular, we will establish three lines which are identical to the pilot lines.
By applying accumulated production know-how and technology of yield ratio improvements developed in the pilot
lines, we target to realize high production efficiency from the initiation phase of production. In the mass
production lines, similar to the pilot lines, by utilizing the sixth-generation glass substrate (half size used) produced
with FMM and FHM vapor deposition technology, we plan to target monthly production equivalent to
approximately 6.9 million units of 5.5” inch panels. In particular, we are going to spend 106 billion yen on
production equipment such as polyimide substrate production equipment, mask vapor deposition equipment,
organic lamella vapor deposition equipment, and capsulation equipment, as well as inspection and cleaning
equipment for each process, and 18 billion yen on the introduction of clean rooms where production equipment is
placed, targeting to establish the pilot lines by the second half of 2018, and to initiate actual mass production by the
first half of 2019.
In addition, in the LCD business, in the face of worsening demand supply balance and a sales price drop in the
smartphone liquid crystal panel market, we are currently shifting our production to medium-sized liquid crystal
products for categories such as PCs and tablets, and we plan to stabilize earnings from the LCD business and
enhance cost competitiveness.
With regard to (ii) above “Investment in regard of Display Device Company for higher definition, improvement
of yield rate, R&D of next-era technology, increase in production volume, and rationalization targeted mainly at
medium-sized products,” investments in R&D and CAPEX for the development and increase in production volume
of high-definition products and investments in R&D and CAPEX to improve yield rate (decrease in the rate of
defected goods) will be the main focus of these medium-sized liquid crystal products.
Specifically, we plan to invest in enhancing color filter process equipment and remodeling other process
equipment for increasing the production capacity of medium-sized high-definition liquid crystal products at the
Kameyama fab, remodeling sputtering equipment for the introduction of the new process at the Mie fab, and

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

12

 enhancing the efficiency of post-process at the China fab, for which the allotment of 50,000 million yen in total is
planned. We also have a plan to aggressively invest in the technology development for creating the high valueadded application such as FFD (Free Formed Display) which realizes flexible designing in accordance with display
area, the introduction of implementation equipment at the late process stage for the mass production, and photo
masks mainly for high-definition models for 50,000 million yen in total, including other investments in
rationalization and renewal.
The abovementioned growth investments needed to be curved due to our current financial situation; we expect to
make these investments without delay upon implementation of the Capital Increase Through Third-Party Allotment.
Through these investments, we intend to strengthen product quality and cost competitiveness, and realize a shift to
a business portfolio with higher earnings.
b.

Consumer Electronics Company (Consumer Electronics business)

With regard to Consumer Electronics Company, we plan to integrate Digital Information business, which mainly
consists of LCD TVs, Communication business, which manly consists of mobile phones including smartphones,
and Health and Environmental business, which mainly consists of products with our own Plasma Cluster Ion
technology, in order to develop new products and business by utilizing the wide range of our technology. In
particular, as a genuine IoT (Internet of Things) era is approaching, the market of IoT products is expected to grow,
as it is anticipated that many things will be connected to the Internet and used, offering increased convenience. We
target providing, not only hardware, but also cloud services, together, in order to realize “new connections between
people and house appliances” with higher added value and convenience.
With regards to (iii) above, we plan to use “Investment in regard of Consumer Electronics Company for R&D,
dies, and molds to realize a transformation of business model for IoT business expansion, for R&D, dies, and molds
to expand the business in emerging countries, for increase in production volume and rationalization” for investment
in the development and making of dies and molds, required for the R&D and production of these IoT products, and
investment to enlarge the product line-up for the expansion of the business mainly in emerging countries.
Specifically, in order to change the business to be profitable and stable as a core business of Sharp in the long run,
we plan to invest in R&D and dies and molds for new products of communication robots with “AIoT” function,
which integrates Artificial Intelligence (AI) and Internet of Things (IoT), liquid crystal TVs, cooking appliances,
and others for 10,000 million yen, dies, and molds for the expansion of the localized product line-up of white goods
and other products in emerging countries for 10,000 million yen, and rationalizing and renewing existing equipment
in factories in Japan, China, and other Asian countries to ensure a stable and profitable structure for 25,000 million
yen.
The abovementioned growth and rationalization investments needed to be curved due to our current financial
situation; we expect to make these investments without delay upon implementation of the Capital Increase Through
Third-Party Allotment.
c.

Energy Solutions Company (Energy Solutions business)

With regard to Energy Solutions Company, we are currently accelerating efforts for “a shift to a business model
that focuses on solutions that match local demand.” In Japan, as we are facing a change in the environment, where
industrial solar power generation is in a downturn, we are currently undertaking the transformation from solar
power panel business to solution business, in order to solve problems surrounding energy usage, by using our
technologies. Specifically, in Japan, we plan to propose solutions based on solar energy and storage battery
technology, by using products such as HEMS (Home Energy Management System, which is a system enhancing
efficiency in power production and consumption at home) and energy-saving home appliances and EcoCute, etc.
linked to a cloud network, and plan to aggressively develop EPC (Engineering Procurement and Construction,

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

13

 which is the business receiving orders for design, procurement, and construction of solar power plants altogether),
and IPP (Independent Power Producer) projects targeted mainly in Fukushima restoration areas. In global markets,
we propose energy solutions matched to each country and area. In Asia, we are strengthening the “PV-Diesel
Hybrid system,” which reduces diesel fuel consumption by integrating a diesel power generator and a solar power
system. In the U.S., we are proposing a “Peak Cut System” to utilize battery and power control algorithms, and in
Europe, we are strengthening the expansion of a “PV-Thermal system,” which enhances the power generation
efficiency by utilizing accumulated thermal energy in the back of a solar module with the solar power system.
With regard to (iv) above, we plan to use “Investment in regard of Energy Solutions Company for R&D and
expansion of sales distribution to realize a transformation from existing business to solution business” to invest in
R&D and marketing activities to strengthen solution business, as previously stated.
Specifically, we plan to invest in IPP projects in Fukushima restoration areas and the like for 5,000 million yen,
and software for HEMS development to strengthen energy solution business for houses, for 5,000 million yen.
Through these investments, we will make a change from the existing business focused on PV module sales, to a
new business model with energy solution business at the core.
The abovementioned growth investments needed to be curved due to our current financial situation; we expect to
make these investments without delay upon implementation of the Capital Increase Through Third-Party Allotment.
d.

Electronic Component and Device Company (Electronic Component and Device business)

Electronic Component and Device Company is currently transitioning from its former business model of
manufacturing device modules to one which provides solutions based on the production technological knowledge
gained from the former business model. For example, having at core our customizing capability, and our original
sensing technology cultivated through our experiences in the smartphone camera device business, we are targeting
expanding our solutions business, which utilizes our products and technologies to solve challenges in high valueadded and growing markets, such as automotive, industrials, and IoT markets.
“Investment in regard of Electronic Component and Device Company used for R&D, expansion of sales
distribution, increase in production volume, and rationalization targeted for growing businesses including
automotive, industrials, and IoT,” mentioned in (v) above, will be used as R&D investments, investments to
increase sales distribution, and investments to rationalize production facility in order to strengthen this solution
business.
Specifically, we plan to invest 7,000 million yen towards R&D and dies and molds in order to develop new
products in new business fields, such as camera modules for smartphone and automotive use, 3,000 million yen
towards investment in development and dies and molds and expenditure for the introduction of mass production
facilities for a group of device products with original specific features such as night-vision color cameras (infrared
monitoring cameras that can film in color in dark environments), and 2,000 million yen towards investment in
rationalizing and renewing existing facilities to improve productivity at the Fukuoka and Indonesia fabs.
The above mentioned growth and rationalization investments needed to be curved due to our current financial
situation; we expect to make these investments without delay upon implementation of the Capital Increase Through
Third-Party Allotment.
e.

Business Solutions Company (Business Solutions business)

With regard to Business Solutions Company, we are currently strengthening the solution business with MFP
(digital multi-functional printer) products and display products as a core for global expansion of the solution
business through utilizing our existing products and customer base, as well as effective expansion in investment.
Also, as the MFP business is expected to face a maturing market due to a change in business environment, with a

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

14

 shift to paper-less, we are facing a challenge in developing new business where markets are expected to expand,
such as robotic business, etc.
With regard to (vi) “Investment in regard of Business Solutions Company used for expansion of sales distribution
of existing MFP business, R&D for growing business such as robotics or solution business, increase in production
volume, and rationalization” above, we plan to invest in R&D and capital expenditure rationalizing manufacturing
equipment, in order to solve business challenges which we are facing, as previously stated.
Specifically, 25,000 million yen is planned to be spent on investments in expanding MFP sales distribution, in
order to expand and stabilize the revenue base in North America and Europe, 10,000 million yen is planned to be
spent on investments in software and dies and molds to develop new products for the solution business which
focuses on robotics/digital signage displays, and 15,000 million yen is planned to be spent on investments in
rationalizing and renewing facilities for the automation of and reduction in labor force at production lines, to
improve productivity in existing fabs in both Japan and China.
The above mentioned growth investments needed to be curved due to our current financial situation; we expect to
make these investments without delay upon implementation of the Capital Increase Through Third-Party Allotment.

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

15

 B.
Advertising investment and other related expenses for brand value enhancement for targeted areas such as
Japan, Asia, and China, and investment and other related expenses for element technology development and
fundamental R&D for new business
As stated in the medium-term management plan announced in May 2015, we target to make our company
“necessary for society” over the next 10 years and even 100 years, and have proposed our future direction to be “a
company that consistently offers new value while putting the customer first,” endeavoring to produce creative
products and services.
Going forward, we plan the brand value enhancement of Sharp in target areas such as Japan, Asia, and China,
through the appeal of new products created by the above initiatives and advertising efforts. In achieving this goal,
it is critical to not only remain focused on our existing business, but also focus on fundamental R&D, in order to
continuously develop new products and services.
(vii) above will be used as advertisement expenses and R&D expenses in advancing (i) to (vi) above.
Specifically, 25,000 million yen is planned to be spent on advertising expenses, to further enhance brand value
both domestically and globally, through the use of various media outlets, and 12,000 million yen is planned to be
spent on research material expenses at facilities functioning as the central research institution to create new
business in the future, and on business outsourcing expenses to outsource research and examination to obtain more
professional perspectives. (vii) above accompanies (i) to (vi) above, and these investments will be made by March
2019 depending on the advancements of (i) to (vi) above.
C.

Redemption of corporate bonds

Sharp has issued corporate bonds and will redeem these corporate bonds using the funds of (viii) above. Please
refer to the below table for the issue date, remaining value, coupon rate, and maturity date of our corporate bonds to
be redeemed.
We were considering allotting cash and deposits and future free cash flows for the redemption of these bonds.
However, by allotting the funds from the Capital Increase Through Third-Party Allotment instead, we would be
able to have enough liquidity on hand, thereby improving our financial standing.
(As of September 30, 2015)

4.

Issue Date

Remaining value
(JPY million)

Coupon
rate (%)

Maturity date

23rd unsecured
bond

March 19, 2009

10,000

2.068

March 19, 2019

25th unsecured
bond

September 16,
2009

20,000

1.141

September 16,
2016

Practical approach to the reasonableness of spending funds
For the reasonableness of spending funds, please see “2. Purpose of and reason for the offering” above.

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

16

 5.

Reasonableness of issuing condition, etc.
(1)

Calculation ground for amount to be paid in, and its specific contents

(i) Common shares
Hon Hai Precision Industry, among the Planned Allottees, finally proposed an amount to be paid in of 118
yen per share to Sharp, while Sharp carried out numerous discussions, at the Board Meeting, on the
implementation of the Capital Increase Through Third-Party Allotment at the said amount to be paid in.
After the comprehensive consideration of factors, including: (i) the investigation of comparative advantages
with capital proposals from other candidates, (ii) the need to assuredly and rapidly secure sufficient growth
capital for significant future business development, and (iii) the point that implementing the Capital Increase
Through Third-Party Allotment with the Planned Allottees would, from a medium- to long-term perspective,
be expected to contribute to an increase in corporate and shareholder value; and furthermore, having
determined that, even though Sharp fully understands that there is a high possibility that the interests of
existing shareholders would be damaged by conducting a favorable issuance in which the issued prices are
discounted from the market stock prices at a certain rate, the realization of increase in its corporate value by
establishing a business foundation by the proceeds through the Capital Increase Through Third-Party
Allotment and by improving its cash flow would lead to the furthering of the interests of existing
shareholders, as well as from the point that the amount to be paid in stated above cannot completely be said
that it does not reflect Sharp’s fair price, taking into account the closing price of the shares of Sharp on or
before January 15, 2016, the date on which the speculation that Hon Hai Precision Industry was to re-propose
the purchase at the purchase price of approximately 700 billion yen was reported, as stated below, and from
the point that a certain obligation of the Planned Allottees is provided for, as stated in “2. Purpose of and
reason for the offering” above, Sharp determined that there is reasonableness in the implementation of the
Capital Increase Through Third-Party Allotment at the amount to be paid in stated above and determined the
amount to be paid in to be 118 yen per share.
The said amount to be paid in of 118 yen represents a 32.2% discount against the closing price of the
shares of Sharp on February 24, 2016 (174 yen), the business day immediately preceding the day of the
meeting of the Board of Directors where the resolution was adopted with respect to the Capital Increase
Through Third-Party Allotment; a 23.1% discount against the average closing price (153.50 yen) during the
one-month period prior to the immediately preceding business day; a 12.1% discount against the average
closing price (134.28 yen) for the three-month period prior to the immediately preceding business day; and a
15.8% discount against the average closing price (140.09 yen) for the six-month period prior to the
immediately preceding business day. However, the amount to be paid in of 118 yen represents, when taking
January 15, 2016, the date on which the speculation that Hon Hai Precision Industry was to re-propose the
purchase at the purchase price of approximately 700 billion yen was reported, as a base, a 8.3% premium
against the closing price of the shares of Sharp on January 14, 2016 (109 yen), the business day immediately
preceding such base date; a 0.1% premium against the average closing price (117.89 yen) during the onemonth period prior to the immediately preceding business day; a 7.3% discount against the average closing
price (127.30 yen) for the three-month period prior to the immediately preceding business day.
Furthermore, because the said amount to be paid in is deemed to be an issuance at a particularly favorable
price provided for in the Japan Securities Dealers Association’s “Guidelines Concerning the Handling of
Capital Increase by Third Party Allotment”, Sharp decided the allotment of the common shares in relation to
the Capital Increase Through Third-Party Allotment at an amount to be paid in of 118 yen per share, on
condition that approval by a special resolution at the Ordinary General Meeting of Shareholders be obtained
from each shareholder.

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

17

 (ii) Class C Shares
Sharp, after considering certain assumptions that affect the value of the Class C Shares, and
comprehensively taking into account Sharp’s business environment, financial condition, and the like, with
reference as well to the value analysis results set out below, and as a result of numerous best-efforts
negotiations with the Planned Allottees for the purpose of funds procurement, decided the amount to be paid
in to be 11,800 yen per share. Although the said amount to be paid in falls below the calculation result set
forth in the Calculation Report defined below, by comprehensively considering the point that the funds
necessary for increasing its capital and stabilizing its financial standing are expected to be secured by the
Capital Increase Through Third-Party Allotment through issuance of Class C Shares, Sharp’s business
environment and financial condition, Sharp’s stock price level, the size of funds needed, the status of
discussions with the Planned Allottees on the economic conditions pertaining to the features of Class C
Shares, and the like, Sharp considers that the said amount of Class C Shares to be paid in is reasonable.
In determining the issuing conditions of the Class C Shares, Sharp requested that PLUTUS CONSULTING
Co., Ltd. (address: 3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo; representative: Noguchi Mahito, President and
CEO) (“PLUTUS”), which is a third party evaluation organ independent of Sharp, analyze the value of the
Class C Shares to ensure fairness, and obtained a calculation report for the Class C Shares (the “Calculation
Report”) from PLUTUS. Under certain assumptions (the dilution of the stock value after the issuance of the
common shares and Class C Shares, or the like), PLUTUS executed a value analysis of the Class C Shares.
The value analysis results of the Class C Shares in the Calculation Report
Per share: 12,272 yen to 13,423 yen
In analyzing the value, upon taking into account the terms and conditions, such as the final dividend,
distribution of residual assets, call options the consideration for which is common shares and making a
comparison with the common shares, PLUTUS calculates the logical price of the common shares by adopting,
as a market stock price, (i) the closing price of the shares of Sharp on February 24, 2016 (174 yen), the
business day immediately preceding the day of the Board Meeting where the resolution was adopted with
respect to the Capital Increase Through Third-Party Allotment, (ii) the average closing price (153.50 yen)
during the one-month period prior to the immediately preceding business day, (iii) the average closing price
(134.28 yen) for the three-month period prior to the immediately preceding business day, and (iv) the average
closing price (140.09 yen) for the six-month period prior to the immediately preceding business day, and
calculates the value per Class C Share.

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

18

 (Reference information) Outline of the Class C Shares
<Conversion rate of Class C Shares>
- One Class C Share for 100 common shares
<Dividends>
- Dividend amount…Amount obtained by multiplying the year-end dividend per common share by the
conversion rate of Class C Shares
- Priority…Equal to shareholders holding common shares (common shareholders)
- Accumulation clause…Non-accumulation
- Participation clause…Nonparticipation
- Interim dividends…Amount obtained by multiplying the interim dividend per common share by the
conversion rate of Class C Shares
<Distribution of residual assets>
- Distribution amount…Amount obtained by multiplying the residual assets per common share by the
conversion rate of Class C Shares
- Priority…Equal to common shareholders
- Participation clause…Nonparticipation
Although calculating the fair prices for the Class Shares with no objective market prices is very difficult
and complex, and although there are various ways of thinking with regard to the value evaluation of Class
Shares, regarding the Class C Shares, even though the distribution of their dividends and residual assets are to
increase in accordance with the conversion rate, from the view that they are types which are non-cumulative
and nonparticipating, it could be said that the value of one Class C Share and the value of 100 common shares
are of a similar level. However, because the amount of the Class C Shares to be paid in is a 10% or more
discount against the upper limit of the stock value of the value analysis by PLUTUS, it may be considered to
be a price favorable to those subscribing the shares in particular, under the Companies Act. Therefore, also
regarding the Class C Shares, Sharp decided to issue the Class C Shares in relation to the Capital Increase
Through Third-Party Allotment at an amount to be paid in of 11,800 yen per share, on condition that approval
by a special resolution at the Ordinary General Meeting of Shareholders be obtained from each shareholder
based on Article 199, Paragraph 2 of the Companies Act.

(2)

Grounds on which Sharp determined that the volume of shares to be issued and the size of dilution of
shares are reasonable
The number of shares which will be allotted to the Planned Allottees through the Capital Increase Through
Third-Party Allotment is 3,290,571,868 shares (breakdown: 3,281,950,697 common shares; 8,621,171 Class
C Shares), and the number of voting rights which will be allotted to the Planned Allottees through the Capital
Increase Through Third-Party Allotment is 3,281,950 voting rights, and the ratio, as against the total number
of Sharp’s issued shares as of September 30, 2015, that is 1,701,439,887 shares, will be 193.40% (the ratio
against the total number of voting rights, that is 1,685,204 voting rights, will be 194.75%). The Class C
Shares contain a call option the consideration for which is common shares which may be exercised on or after
July 1, 2017, and when such call option has been exercised, notwithstanding the stock price as of the time of
acquisition, 862,117,100 common shares will be delivered, and their number of voting rights will be 862,117
voting rights. On the assumption that such call option was exercised as of now, the number of common

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

19

 shares calculated by adding up the number of common shares to be delivered by such call option and the
number of common shares issued by the Capital Increase Through Third-Party Allotment will be
4,144,067,797 shares; the number of voting rights will be 4,144,067 voting rights; the ratio, as against the
total number of Sharp’s issued shares as of September 30, 2015, that is 1,701,439,887 shares, will be
243.56% (the ratio against the total number of voting rights, that is 1,685,204 voting rights, will be 245.91%);
and by the Capital Increase Through Third-Party Allotment, a large dilution will occur.
However, by allotting the funds procured to the usages stated in “3.(2) Intended use of funds procured” and
“4. Practical approach to the reasonableness of spending funds” above, the Capital Increase Through ThirdParty Allotment can contribute to the increase in profitability and competitiveness of the Sharp group
companies in the medium- and long-term. Furthermore, such proceeds are also expected to contribute to the
enhancement of Sharp group companies’ corporate value and shareholders profit in the medium- to long-term,
and thus, Sharp considers that the Capital Increase Through Third-Party Allotment can contribute to the
improvement of Sharp’s future profitability. Moreover, as stated above, Sharp considers that, by establishing
a strong business tie with the Hon Hai Precision Industry group, one of the Planned Allottees, and making our
business foundation more stable, the Capital Increase Through Third-Party Allotment can eventually
contribute to the enhancement of Sharp’s corporate value and shareholder value. Thus, Sharp concluded that
the volume of shares to be issued, and the size of dilution of shares by the Capital Increase Through ThirdParty Allotment, are reasonable.
6.

Reasons for selecting the planned allottees, etc.
(1)
(i)
(ii)
(iii)

Outline of the planned allottees
Name

Hon Hai Precision Industry Co., Ltd.

Location

66 Chung-Shan Road, Tu-Cheng Industrial Area, New Taipei City,
Taiwan, R.O.C.

Name and Title of
Representative

Terry Gou, Chairman

Purpose of Business

Production, sales, and repairs of connectors, cases, thermal modules,
communication devices, optical devices, and power supplies, and
assembles of IT-related devices, communication devices, automotive
parts, precision devices, and automotive and various consumer devices,
among other business activities

(iv)

(v)

156,382,882,280 TWD (as of December 30, 2015)
Capital

(When 1 TWD is converted with the closing price of ¥3.66, as of
December 30, 2015, the amount will be 572,361 million yen.)

(vi)

Date of Establishment

February 20, 1974

(vii)

Number of Issued
Shares

15,638,288,228 shares (as of December 31, 2015)

(viii)

Fiscal Year End

December

(ix)

Number of
Employees

7,550 (as of December 31, 2015)

(x)

Main Customers

Apple, Dell, HP

(xi)

Main Banks

Citibank Taiwan Limited

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

20

 Standard Chartered Bank (Taiwan) Ltd.
(xii)

(xiii)

(xiv)

Major Shareholder
and Ratio of
Shareholding

Terry Gou 12.62%

Relationships
between the Parties
Capital Relationship

Sharp and the relevant company have no significant capital relationship.
In addition, no related parties or affiliates of Sharp or those of the
relevant company have any significant capital relationship.

Personnel
Relationship

Sharp and the relevant company have no significant personnel
relationship. In addition, no related parties or affiliates of Sharp or those
of the relevant company have any significant personnel relationship.

Transaction
Relationship

Sharp and the relevant company have transaction relationships regarding
the manufacturing contracts of Sharp’s products such as liquid crystal
TVs, supply of Sharp’s devices to the relevant company, and the like.
With Innolux Corporation, a group company of the relevant company,
Sharp has transaction relationships regarding the authorization of patent
licenses for liquid crystal display equipment.

Status as a Related
Party

The relevant company does not belong to Sharp’s related parties. In
addition, no related parties or affiliates of the relevant company belong to
any related parties of Sharp.

Results of Operations and Financial Conditions for Previous Three Fiscal Years
Fiscal Year Ended

December 2012

December 2013

December 2014

Consolidated Net Assets

2,029,123

2,828,795

3,741,772

Consolidated Total Assets

6,109,710

8,116,739

9,358,316

172.22

215.03

249.96

11,638,078

13,872,635

16,010,055

Consolidated Operating
Income

321,537

383,694

544,127

Consolidated Ordinary
Income

273,167

376,784

503,431

Consolidated Net Income
Attributable to Owners of
Parent

273,167

376,784

503,431

Consolidated Net Income per
Share of Common Stock (¥)

23.18

28.64

33.63

Consolidated Net Assets per
Share (¥)
Consolidated Proceeds of
Sale

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

21

 Dividend per Share (¥)

4.47

6.32

14.44

(Expressed in millions of Japanese Yen unless otherwise specified)

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

22

 (i)
(ii)
(iii)

(iv)

Name

Foxconn (Far East) Limited

Location

Floor 4, Willow House, Cricket Square, P. O. Box 2804, Grand Cayman
KY1-1112, Cayman Islands

Name and Title of
Representatives

Yu Huang, Chiu-Lian (GCFO)

Purpose of Business

Holding company

(v)

Lee Jin-Ming (CBO)

4,935,062,715 USD (as of September 30, 2015)
Capital

(When 1 USD is converted with the closing price of ¥119.97, as of
September 30, 2015, the amount will be 592,059 million yen.)

(vi)

Date of Establishment

January 25, 1996

(vii)

Number of Issued
Shares

4,935,062,715 shares

(viii)

Fiscal Year End

December

(ix)

Number of
Employees

0 (as of December 31, 2015)

(x)

Main Customers

N/A

(xi)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Main Banks

ING Bank N.V. OBU
BNP Paribas

(xii)

(xiii)

Major Shareholder
and Ratio of
Shareholding

Hon Hai Precision Industry Co., Ltd. 100.00%

Relationships
between the Parties
Capital Relationship

Sharp and the relevant company have no significant capital relationship.
In addition, no related parties or affiliates of Sharp or those of the
relevant company have any significant capital relationship.

Personnel
Relationship

Sharp and the relevant company have no significant personnel
relationship. In addition, no related parties or affiliates of Sharp or those
of the relevant company have any significant personnel relationship.

Transaction
Relationship

Sharp and the relevant company have no significant transaction
relationship. In addition, no related parties or affiliates of Sharp or those
of the relevant company have any significant transaction relationship.

Status as a Related
Party

The relevant company does not belong to Sharp’s related parties. In
addition, no related parties or affiliates of the relevant company belong to
any related parties of Sharp.

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

23

 (xiv)

Results of Operations and Financial Conditions for Previous Three Fiscal Years
Fiscal Year Ended

December 2012

December 2013

December 2014

Consolidated Net Assets

1,596,515

2,263,466

2,959,365

Consolidated Total Assets

1,653,047

2,348,673

3,116,312

471.93

557.07

668.39

-

-

-

-2,232

-3,065

-3,609

Consolidated Ordinary
Income

158,842

209,534

306,906

Consolidated Net Income
Attributable to Owners of
Parent

161,969

209,534

306,906

Consolidated Net Income per
Share of Common Stock (¥)

47.88

51.57

69.32

-

-

-

Consolidated Net Assets per
Share (¥)
Consolidated Proceeds of
Sale
Consolidated Operating
Income

Dividend per Share (¥)

(Expressed in millions of Japanese Yen unless otherwise specified)

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

24

 (i)

Name

Foxconn Technology Pte. Ltd.

(ii)

Location

79 Anson Road # 07-03 Singapore (079906)

(iii)

Chang, Chun-Jung (Director)
Name and Title of
Representatives

Lee, Han-Ming (Director)
Lee, Huey Fong (Director)

(iv)

Purpose of Business

(v)

Sales of magnesium alloy parts and thermal modules
130,000,000 USD (as of December 30, 2015)

Capital

(When 1 USD is converted with the closing price of ¥120.54, as of
December 30, 2015, the amount will be 15,670 million yen.)

(vi)

Date of Establishment

April 18, 2005

(vii)

Number of Issued
Shares

130,000,000 shares

(viii)

Fiscal Year End

December

(ix)

Number of
Employees

13 (as of December 31, 2015)

Main Customers

DELL, Compal Electronics, INC., TESLA MOTORS, INC., Flextronics
International Ltd.

(x)
(xi)

Mizuho Bank, Ltd.
Main Banks

Citibank Taiwan Limited
Bank of America, N.A.

(xii)

(xiii)

Major Shareholder
and Ratio of
Shareholding

Q-Run Holdings Limited 100.00%

Relationships
between the Parties
Capital Relationship

Sharp and the relevant company have no significant capital relationship.
In addition, no related parties or affiliates of Sharp or those of the
relevant company have any significant capital relationship.

Personnel
Relationship

Sharp and the relevant company have no significant personnel
relationship. In addition, no related parties or affiliates of Sharp or those
of the relevant company have any significant personnel relationship.

Transaction
Relationship

Sharp and the relevant company have no significant transaction
relationship. In addition, no related parties or affiliates of Sharp or those
of the relevant company have any significant transaction relationship.

Status as a Related
Party

The relevant company does not belong to Sharp’s related parties. In
addition, no related parties or affiliates of the relevant company belong to

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

25

 any related parties of Sharp.
(xiv)

Results of Operations and Financial Conditions for Previous Three Fiscal Years
Fiscal Year Ended

December 2012

December 2013

December 2014

Consolidated Net Assets

29,516

55,399

78,189

Consolidated Total Assets

59,905

86,310

135,454

227.04

426.15

601.45

Consolidated Proceeds of
Sale

67,872

71,574

70,855

Consolidated Operating
Income

13,901

18,703

12,548

Consolidated Ordinary
Income

14,554

20,112

14,849

Consolidated Net Income
Attributable to Owners of
Parent

14,554

20,113

14,837

Consolidated Net Income per
Share of Common Stock (¥)

111.95

154.71

114.13

Dividend per Share (¥)

171.43

-

-

Consolidated Net Assets per
Share (¥)

(Expressed in millions of Japanese Yen unless otherwise specified)

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

26

 (i)
(ii)

Name
Location

SIO International Holdings Limited
Floor 4, Willow House, Cricket Square, P. O. Box 2804, Grand Cayman
KY1-1112, Cayman Islands

(iii)

Name and Title of
Representative

C.C. Lin (Director)

(iv)

Purpose of Business

Holding Company

(v)

Capital

66 billion JPY

(vi)

Date of Establishment

May 7, 2012

(vii)

Number of Issued
Shares

660,000,000 shares

(viii)

Fiscal Year End

December

(ix)

Number of
Employees

0 (as of December 31, 2015)

(x)

Main Customers

N/A

(xi)

Main Bank

Citibank Taiwan Limited

(xii)

Major Shareholders
and Ratio of
Shareholding

Ri Quan Investment Co., Ltd.

14.66%

Hong Han Investment Co., Ltd.

14.54%

Lian Ju Investment Co., Ltd.

14.52%

Yung Li Investment Co., Ltd.

12.73%

Yi Ji Investment Co., Ltd.

11.06%

Hong Wei Investment Co., Ltd.

6.67%

(Mr. Terry Gou directly or indirectly holds 74.18% of SIO International
Holdings Limited’s shares. The remaining shares of 25.82% are held by
those other than Hon Hai Precision Industry Co., Ltd. or Mr. Terry Gou.)
(xiii)

Relationships
between the Parties

Capital Relationship

Sharp and the relevant company have no significant capital relationship.
In addition, no related parties or affiliates of Sharp or those of the
relevant company have any significant capital relationship.
(The relevant company holds 37.61% of shares of Sakai Display Products
Corporation, Sharp’s equity method affiliate.)

Personnel
Relationship

Sharp and the relevant company have no significant personnel
relationship. In addition, no related parties or affiliates of Sharp or those

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

27

 of the relevant company have any significant personnel relationship.
(The relevant company’s affiliate has seconded an officer (Toshiaki
Takayama) to Sakai Display Products Corporation, Sharp’s equity
method affiliate.)
Transaction
Relationship

Status as a Related
Party

(xiv)

Sharp and the relevant company have no significant transaction
relationship. In addition, no related parties or affiliates of Sharp or those
of the relevant company have any significant transaction relationship.
The relevant company does not belong to Sharp’s related parties. In
addition, no related parties or affiliates of the relevant company belong to
any related parties of Sharp.
(Sharp and the relevant company each hold 37.61% of shares of Sakai
Display Products Corporation, Sharp’s equity method affiliate.)

Results of Operations and Financial Conditions for Previous Three Fiscal Years
Fiscal Year Ended

December 2012

December 2013

December 2014

Consolidated Net Assets

64,854

67,463

71,019

Consolidated Total Assets

93,198

92,659

71,451

Consolidated Net Assets per

98.26

102.22

107.60

28,962

109,889

4,753

Consolidated Operating
Income

-363

649

114

Consolidated Ordinary
Income

-363

649

114

Consolidated Net Income
Attributable to Owners of
Parent

-756

3,074

3,135

Consolidated Net Income per
Share of Common Stock (¥)

-0.87

4.22

3.62

-

-

-

Share (¥)
Consolidated Proceeds of
Sale

Dividend per Share (¥)

(Expressed in millions of Japanese Yen unless otherwise specified)
(Note) 1

The results above of Hon Hai Precision Industry among the Planned Allottees are calculated with
the exchange rates as follows: for fiscal year 2012, the closing price of 2.98 yen equivalent to 1
TWD as of December 28, 2012; for fiscal year 2013, the closing price of 3.51 yen as of December
30, 2013, and for fiscal year 2014, the closing price of 3.80 yen as of December 30, 2014.

2

The results above of Foxconn FE, Foxconn Technology, and SIO among the Planned Allottees are
calculated with the exchange rates as follows: for fiscal year 2012, the closing price of 86.58 yen
equivalent to 1 USD as of December 28, 2012; for fiscal year 2013, the closing price of 105.40 yen

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

28

 as of December 30, 2013, and for fiscal year 2014, the closing price of 120.53 yen as of December
30, 2014.
3

(2)

Among the Planned Allottees, Hon Hai Precision Industry is a company listed on the Taiwan Stock
Exchange, and Foxconn FE is its wholly-owned subsidiary. Foxconn Technology is a whollyowned subsidiary (second-tier subsidiary) of FOXCONN TECHNOLOGY Co., Ltd., which is a
company listed on the Taiwan Stock Exchange, and SIO is a company practically controlled by Mr.
Terry Gou, Hon Hai Precision Industry’s chairman. Sharp has heard from the Planned Allottees,
FOXCONN TECHNOLOGY Co., Ltd., and Mr. Terry Gou, that the Planned Allottees, their
officers, or subsidiaries have no ties with any antisocial forces and the like. In addition, since
through transactions with the Hon Hai Precision Industry group, Sharp already recognizes that the
group does not have such relationships, and based on other situations, Sharp has determined that
the Planned Allottees, their officers, or subsidiaries have no ties with any antisocial forces and the
like and has submitted the certificate of confirmation to that effect to the Tokyo Stock Exchange,
Inc.
Reasons for selecting the planned allottees

With respect to the reasons for selecting the planned allottees, please refer to the above “2. Purpose of and
reason for the offering.”
(3)

Planned allottees’ policy for holding shares

The Planned Allottees have confirmed that they plan to hold Sharp’s common shares and Class C Shares to
be allotted for the long-term as stable shareholders to aim for Sharp’s management stability through capital
enhancement and improvement of corporate value by the provision of growth funds. Sharp plans to agree
under the share subscription agreement planned to be concluded with the Planned Allottees that if the Planned
Allottees assign Sharp’s shares held by them to any third party within two years from the conclusion date of
such share subscription agreement, the Planned Allottees will obtain Sharp’s prior written consent.
Sharp will obtain a written confirmation from each of the Planned Allottees which states that, if all or part
of Sharp’s common shares and Class C Shares are assigned by the Planned Allottee within two years from the
payment date for the Capital Increase Through Third-Party Allotment, (i) a report on such assignment shall be
made to Sharp, and (ii) the Planned Allottee shall agree that the substance of the relevant report shall be
reported by Sharp to the Tokyo Stock Exchange, Inc., and that the substance of the relevant report shall be
made available to the general public.
(4)

Contents confirmed with regard to funds required for the payment by the planned allottee

Regarding Hon Hai Precision Industry, which is listed on the Taiwan Stock Exchange, among the Planned
Allottees, Sharp has confirmed its latest disclosed financial statements. Regarding each of the Planned
Allottees, Sharp has received their respective certificate of bank deposit balance and confirmed that they have
the funding capacity necessary for the payment.
7.

Major shareholders and their shareholding ratios after the offering
(1)

Common shares

Before the offering (as of September 30, 2015)

After the offering

Nippon Life Insurance Company

2.78% Hon Hai Precision Industry Co.,
Ltd.

26.09%

Meiji Yasuda Life Insurance Company

2.69% Foxconn (Far East) Limited

18.37%

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

29

 QUALCOMM INCORPORATED

2.47% Foxconn Technology Pte. Ltd.

12.97%

Mizuho Bank, Ltd.

2.46% SIO International Holdings
Limited

8.43%

The Bank of Tokyo-Mitsubishi UFJ,
Ltd.

2.45% Nippon Life Insurance
Company

0.95%

Makita Corporation

2.11% Meiji Yasuda Life Insurance
Company

0.92%

Samsung Electronics Japan Co., Ltd.

2.10% QUALCOMM
INCORPORATED

0.84%

SHARP Employee Share-Holding
Association

1.70% Mizuho Bank, Ltd.

0.84%

Japan Trustee Services Bank, Ltd.
(Trust Account)

1.60% The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

0.84%

Mitsui Sumitomo Insurance Company,
Limited

1.45% Makita Corporation

0.72%

(Note) Shareholding ratios after the offering are based on the list of common shareholders as of September 30
2015, and reflect the change by the Capital Increase Through Third-Party Allotment.

(2)

Class A Shares

Before the offering (as of September 30, 2015)
Mizuho Bank, Ltd.

50.00%

The Bank of Tokyo-Mitsubishi UFJ,
Ltd.

50.00%

*

After the offering
The same as the left.

Hon Hai Precision Industry plans to covenant, under the share subscription agreement which is planned to
be concluded, and on condition that there is consent of the Financial Institutions and that it will not violate
any laws or regulations, or the like, to purchase half of the outstanding Class A Shares held respectively by
the Financial Institutions, at the total price of 100 billion yen, immediately after the payment of the Capital
Increase Through Third-Party Allotment; not to exercise the put option of the Class A Shares the
consideration for which is cash; and, to the extent possible maintaining Sharp’s listing, to exercise the put
option the consideration for which is common shares, on or after July 2019.
(3)

Class B Shares

Before the offering (as of September 30, 2015)
Japan Industrial Solutions Fund I

*

After the offering

100.00% The same as the left.

Hon Hai Precision Industry plans to covenant, under the share subscription agreement which is planned to

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

30

 be concluded, and on the condition that there is consent of Japan Industrial Solutions Fund I and that it will
not violate any laws or regulations, or the like, to purchase all outstanding Class B Shares held by Japan
Industrial Solutions Fund I at the total price agreed between Hon Hai Precision Industry and Japan
Industrial Solutions Fund I, immediately after the payment of the Capital Increase Through Third-Party
Allotment.
(4)

Class C Shares

Before the offering (as of September 30, 2015)

Hon Hai Precision Industry Co.,
Ltd.

Not applicable

8.

After the offering
100.00%

Future outlook

The impacts of the Capital Increase Through Third-Party Allotment on the consolidated earnings for the fiscal
year ending March 2016 and the consolidated earnings for the fiscal year ending March 2017 are under examination
at this time, and Sharp will announce them as soon as they are finalized..

9.

Matters regarding the procedures of ethical actions of a corporate

As the issuance of new shares associated with the Capital Increase Through Third-Party Allotment will result in
the dilution standing at 25% or more, and as Hon Hai Precision Industry will become the controlling shareholder of
Sharp through the Capital Increase Through Third-Party Allotment, Sharp will implement procedures to confirm
the intent of each shareholder concerning the Capital Increase Through Third-Party Allotment, in compliance with
Item 2, Article 432 in the securities listing regulations provided by the Tokyo Stock Exchange, Inc. Furthermore,
because the issuance of common shares of the Capital Increase Through Third-Party Allotment would be deemed to
be a favorable issuance since their issued prices are discounted from their market stock prices at a certain rate, and
because the issuance of Class C Shares may also be considered to be a favorable issuance since their issued prices
are 10% or more discount against the upper limit of the stock price of the value analysis by PLUTUS, specifically,
Sharp plans to confirm the intent of each shareholder by obtaining an approval for the Capital Increase Through
Third-Party Allotment by a special resolution upon explanation to each shareholder of the necessity and the
appropriateness of the Capital Increase Through Third-Party Allotment, at the Ordinary General Meeting of
Shareholders and at the General Meeting of Class Shareholders.

10.
(1)

Business results for and status of equity finance executed in previous three fiscal years
Business results for previous three years (consolidated)
Ended March, 2013

Ended March, 2014

Ended March, 2015

2,478,586 million yen

2,927,186 million yen

2,786,256 million yen

Operating income or
operating loss (-)

-146,266 million yen

108,560 million yen

-48,065 million yen

Ordinary income or
ordinary loss (-)

-206,488 million yen

53,277 million yen

-96,526 million yen

Sales

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

31

 Net income or net loss (-)

-545,347 million yen

11,559 million yen

-222,347 million yen

-489.83 yen

8.09 yen

-131.51 yen

Dividend per share

― yen

― yen

― yen

Net assets per share

106.90 yen

115.43 yen

17.84 yen

Net income or net loss
per share (-)

(2)

Current number of issued shares and number of dilutive shares (as of September 30, 2015)
Ratio to number of issued
shares

Number of shares
Common shares 1,701,214,887 shares
Number of issued shares

100%

Class A Shares 200,000 shares

(Note 1) ―

Class B Shares 25,000 shares

(Note 1) ―

Number of dilutive shares at
current conversion price (exercise
price)

(Note 2) 3,202,407,104 shares

(Note 2) 188.2%

Number of dilutive shares at
minimum conversion price
(exercise price)

(Note 2) 3,202,407,104 shares

(Note 2) 188.2%

Number of dilutive shares at
maximum conversion price
(exercise price)

(Note 2) 3,202,407,104 shares

(Note 2) 188.2%

(Note 1)

Class A Shares and Class B Shares do not have voting rights; therefore, their ratios to number of
issued common shares are not indicated.

(Note 2)

Because the exercise of the put option of the Class A Shares is on or after July 1, 2019, and the
calculation of the number of common shares to be delivered by such exercise depends on the
future figures, in calculating the ratio to the above number of shares and to the number of issued
shares, upon assuming that such put option has been exercised as of now, the acquisition price
necessary for the calculation thereof is calculated using the average value of the VWAP in
ordinary trading of Sharp’s common shares publicly announced on the Tokyo Stock Exchange in
30 consecutive trading days prior to September 15, 2015.

(3)

Recent stock prices

(i) Stock prices for recent three years
Ended March, 2013

Ended March, 2014

Ended March, 2015

Opening

606 yen

271 yen

314 yen

High

607 yen

633 yen

341 yen

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

32

 Low

142 yen

234 yen

219 yen

Closing

272 yen

314 yen

235 yen

(ii) Stock prices for recent six months
September
2015

October

November

December

January
2016

February

Opening

177 yen

136 yen

130 yen

129 yen

126 yen

141 yen

High

179 yen

154 yen

180 yen

140 yen

151 yen

186 yen

Low

132 yen

132 yen

119 yen

108 yen

108 yen

134 yen

Closing

137 yen

133 yen

126 yen

125 yen

139 yen

174 yen

(Note) The stock prices in February 2016 indicated above are the stock prices as of February 24, 2016.

(iii) Stock price on the business day immediately preceding the date of resolution authorizing the issuance
February 24, 2016

(4)

Opening

176 yen

High

178 yen

Low

165 yen

Closing

174 yen

Equity finance for the most recent three years

(i) Capital increase through third-party allotment
Payment Date

March 28, 2013

Amount of Proceeds

10,134,160,000 yen (Estimated Net Amount)

Issue Price

290 yen per share

Total number of
issued shares as at the
time of offering
Number of shares
offered
Total number of
shares after offering

1,140,819,887 shares

35,804,000 shares
1,176,623,887 shares

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

33

 Allottee

Samsung Electronics Japan Co., Ltd.

35,804,000 shares

Initial purpose of use
of the funds as
intended at the time of
issue

a.

Introduction of new technology for LCDs with high-definition features 6,900 million yen

b.

Investment including rationalization of manufacturing facilities for LCDs
used in mobile devices such as tablet terminals and notebook computers
with high-definition features - 3,234 million yen

Timing of use of funds
as intended as the time
of issue

a.

April 2013 to March 2015

b.

April 2013 to March 2015

Status of allocation as
of today

a.-b.

Allocation has been completed as per the initial purpose of use of the
funds.

(ii) Capital increase through third-party allotment
Payment Date

June 24, 2013

Amount of
Proceeds

5,852,736,000 yen (Estimated Net Amount)

Issue Price

502 yen per share

Total number of
issued shares as at
the time of
offering

1,176,623,887 shares

Number of shares
offered

11,868,000 shares

Total number of
shares after
offering

1,188,491,887 shares

Allottee

QUALCOMM INCORPORATED

Initial purpose of
use of the funds as
intended at the
time of issue

a.

Development cost for the manufacturing next generation MEMS display 1,200 million yen

b.

Investment in the equipment for the development of manufacturing next
generation MEMS display - 4,653 million yen

Timing of use of
funds as intended
at the time of issue

a.

June 2013 to December 2014

b.

June 2013 to December 2014

a.-b.

Allocation has been completed as per the initial purpose of use of the funds.

Status of
allocation as of
today

11,868,000 shares

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

34

 (iii) Capital increase through public offering
Payment Date

October 15, 2013

Amount of Proceeds

108,003,880,000 yen (Estimated Net Amount)

Issue Price

279 yen per share

Total number of issued shares as
at the time of offering

1,188,491,887 shares

Number of shares offered

408,000,000 shares

Total number of shares after
offering
Initial purpose of use of the
funds as intended at the time of
issue

Timing of use of funds as
intended at the time of issue

Status of allocation as of today

1,596,491,887 shares
a.

Equipment, etc. for the development/production of LCD
televisions for domestic and emerging markets - 17,400
million yen

b.

Equipment, etc. for the development/production of
communication terminals for the domestic market - 14,100
million yen

c.

Equipment, etc. for a new plant in Indonesia - 44,500 million
yen

d.

Equipment, etc. for the development/production of digital
multifunction printers - 16,700 million yen

e.

Equipment, etc. for the development of high power models for
the domestic market - 8,300 million yen

f.

Equipment, etc. for the development/production of camera
modules/GaN (gallium nitride) power devices - 33,500 million
yen

g.

Investment in equipment, etc. for definition enhancement and
improvement of yield ratios - 86,000 million yen

h.

Equipment, etc. for research and development, including
exploitation in 5 priority business areas - 21,000 million yen

a.

FY2013 to FY2015

b.

FY2013 to FY2015

c.

FY2013 to FY2015

d.

FY2013 to FY2015

e.

FY2013 to FY2015

f.

FY2013 to FY2015

g.

FY2013 to FY2015

h.

FY2013 to FY2015

a.-h.

Allocation has been completed as per the initial purpose of use

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

35

 of the funds.
(Note) The amounts listed in “Initial purpose of use of the funds as intended at the time of issue” are the expected
amounts of investment including proceeds from public offerings, proceeds from “(v) Capital increase
through third-party allotment” as indicated below, funds on hand, and borrowings.

(iv) Capital increase through third-party allotment
Payment Date

October 22, 2013

Amount of Proceeds

17,390,717,000 yen (Estimated Net Amount)

Issue Price

279 yen per share

Total number of issued shares as
at the time of offering

1,596,491,887 shares

Number of shares offered

62,723,000 shares

Total number of shares after
offering
Allottees

Initial purpose of use of the funds
as intended at the time of issue

Timing of use of funds as
intended at the time of issue

1,659,214,887 shares
DENSO CORPORATION

8,960,000 shares

Makita Corporation

35,842,000 shares

LIXIL Corporation

17,921,000 shares

a.

DENSO CORPORATION: Funds for development of a
dedicated organization structure to undertake collaboration in
the field of in-vehicle business and working capital for
business operations including activity costs - 2,478 million
yen

b.

Makita Corporation: Investment in production equipment and
development facilities for the expansion of products in the
field of electric power tools, home equipment, and OPE
(Outdoor Power Equipment) - 4,000 million yen

c.

Makita Corporation: Expenses incurred for technology
development for the expansion of products in the field of
electric power tools, home equipment, and OPE (Outdoor
Power Equipment) - 5,946 million yen

d.

LIXIL Corporation: Investment in production equipment and
development facilities for joint development of new products
merging home electrical appliance technologies and
construction materials technologies - 2,000 million yen

e.

LIXIL Corporation: Other expenses incurred for achieving
joint development and production of the developed products 2,967 million yen

a.

September 2013 to August 2015

b.

October 2013 to September 2018

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

36

 Status of allocation as of today

c.

October 2013 to September 2018

d.

October 2013 to September 2015

e.

October 2013 to September 2015

a., b, c., d., and e.

Allocation has been completed as per the initial
purpose of use of the funds.

(v) Capital increase through third-party allotment
Payment Date

November 12, 2013

Amount of Proceeds

11,133,120,000 yen (Estimated Net Amount)

Issue Price

267.36 yen per share

Total number of issued shares as
at the time of offering

1,659,214,887 shares

Number of shares offered

42,000,000 shares

Total number of shares after
offering

1,701,214,887 shares

Allottee

Nomura Securities Co., Ltd.

Initial purpose of use of the funds
as intended at the time of issue

a.

Equipment, etc. for the development/production of LCD
televisions for domestic and emerging markets - 17,400
million yen

b.

Equipment, etc. for the development/production of
communication terminals for the domestic market - 14,100
million yen

c.

Equipment, etc. for a new plant in Indonesia - 44,500 million
yen

d.

Equipment, etc. for the development/production of digital
multifunction printers - 16,700 million yen

e.

Equipment, etc. for the development of high power models
for the domestic market - 8,300 million yen

f.

Equipment, etc. for the development/production of camera
modules/GaN (gallium nitride) power devices - 33,500
million yen

g.

Investment in equipment, etc. for definition enhancement and
improvement of yield ratios - 86,000 million yen

h.

Equipment, etc. for research and development, including
exploitation in 5 priority business areas - 21,000 million yen

a.

FY2013 to FY2015

b.

FY2013 to FY2015

Timing of use of funds as
intended at the time of issue

42,000,000 shares

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

37

 Status of allocation as of today

c.

FY2013 to FY2015

d.

FY2013 to FY2015

e.

FY2013 to FY2015

f.

FY2013 to FY2015

g.

FY2013 to FY2015

h.

FY2013 to FY2015

a.-h.

Allocation has been completed as per the initial purpose of
use of the funds.

(vi) Issue of Class A Shares by capital increase through third-party allotment
Payment Date

June 30, 2015

Issue Price

1,000,000 yen per share

Amount of Proceeds

200,000,000,000 yen

Total number of issued shares as
at the time of offering

1,701,214,887 shares

Number of shares offered
Total number of shares after
offering
Allottees

(common shares)

200,000 shares
1,701,439,887 shares
Mizuho Bank, Ltd.

(including Class A Shares and Class B
Shares)
100,000 shares

The Bank of Tokyo-Mitsubishi UFJ, Ltd. 100,000 shares
Initial purpose of use of the funds
as intended at the time of issue

a. Repayment of Sharp’s and Sharp’s subsidiary’s debt owed to
Mizuho Bank group
100,000 million yen
b. Repayment of Sharp’s and Sharp’s subsidiary’s debt owed to Bank
of Tokyo-Mitsubishi UFJ group
100,000 million yen

Timing of use of funds as
intended at the time of issue

a. June, 2015

Status of allocation as of today

a.-b.

b. June, 2015
Allocation has been completed as per the initial purpose of
use of the funds.

(vii) Issue of Class B Shares by capital increase through third-party allotment
Payment Date

June 30, 2015

Issue Price

1,000,000 yen per share

Amount of Proceeds

25,000,000,000 yen

Total number of issued shares as
at the time of offering

1,701,214,887 shares

(common shares)

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

38

 Number of shares offered

25,000 shares

Total number of shares after
offering

1,701,439,887 shares

(including Class A Shares and Class B
Shares)

Allottee

Japan Industrial Solutions Fund I

25,000 shares

Initial purpose of use of the funds
as intended at the time of issue

a. New installation and replacement of mechanical equipment, etc.
for achieving higher definitions and improving yields, and other
rationalization investments, etc. in the LCD business - 17,600
million yen
b. Investment in molds for new products for Japan, China and Asia,
and rationalization investments, etc. in each domestic and overseas
factory in the health and environment business - 4,000 million yen
c. Investment in molds for new products, and rationalization
investments, etc. in each factory in the business solutions business
- 3,000 million yen

Timing of use of funds as
intended at the time of issue

Status of allocation as of today

11.

a.

July 2015 to March 2018

b.

July 2015 to March 2018

c.

July 2015 to March 2018

a.-c.

Allocation is being made based on the initial purpose of use
of the funds.

Terms and conditions of issuance

(1)

Common shares

(i)

Number of new shares to be

(ii)

issued
Issuing price

(iii)

Total amount of issuing price

(iv)

Amount of stated capital to

(v)

be increased
Amount of additional paid-in

(vi)

capital to be increased
Method of offering and
a llotment
(planned allottees and number
of shares planned to be allotted)

(vii)

Terms of payment

Common shares

3,281,950,697 shares

118 yen per share
387,270,182,246 yen
193,635,091,123 yen
193,635,091,123 yen
Allotted by means of third-party allotment:
To Hon Hai Precision Industry 1,300,000,000 shares
To Foxconn FE

915,550,697 shares

To Foxconn Technology

646,400,000 shares

To SIO

420,000,000 shares

June 28, 2016 (Tue.) through September 5, 2016 (Mon.)

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

39

 (viii) Others

*As stated in the above “1.(1)(vi) Others”, payment shall be made on
condition that the securities registration statement filed under the
Financial Instruments and Exchange Act comes into effect; that the
notification to and permission from the competition authorities of
relevant foreign countries with respect to business combination and the
permission and authorization from authorities of relevant countries
necessary for execution of the Capital Increase Through Third-Party
Allotment are granted; and that the proposal concerning the issuance of
common shares of Sharp is approved (special resolution) at the Ordinary
General Meeting of Shareholders and the General Meeting of Class
Shareholders.

(2)

Class C Shares
Please see Appendix “Terms and conditions of Class C Share issuance.”

II.

Change in the parent company, the largest shareholder who is a major shareholder, and the major
shareholders

1.

Background of change

As mentioned above, because Hon Hai Precision Industry will come to directly hold 26.17% of Sharp’s voting
rights by the issuance of new shares through third-party allotment of which the allottee is Hon Hai Precision
Industry, together with 18.43% of the voting rights which Foxconn FE, a wholly-owned subsidiary of Hon Hai
Precision Industry, will come to hold, it will come to directly or indirectly hold 44.60% of the voting rights.
Furthermore, because Foxconn Technology is a company in which Hon Hai Precision Industry holds twenty‐
hundredths of the voting rights, and because SIO is a company substantially controlled by Mr. Terry Gou, the
Chairman of Hon Hai Precision Industry, both companies fall under persons who are found to exercise their voting
rights in the same manner as Hon Hai Precision Industry, due to a close relationship with Hon Hai Precision
Industry. Hon Hai Precision Industry will, together with both of the aforementioned companies, come to hold
66.07% of the voting rights, and thus, it will newly become Sharp’s parent company. Furthermore, because Hon
Hai Precision Industry will come to hold 26.17% of Sharp’s voting rights by the Capital Increase Through ThirdParty Allotment, it will newly become Sharp’s largest shareholder, which is a major shareholder. Furthermore,
Foxconn FE and Foxconn Technology will newly become Sharp’s major shareholders.

2.

Outline of changing shareholders

Outlines of Hon Hai Precision Industry, which is to become Sharp’s parent company and largest shareholder,
which is a major shareholder by the Capital Increase Through Third-Party Allotment, and Foxconn FE and Foxconn
Technology which are to become Sharp’s major shareholders, are as stated in “I.6.(1) Outline of the planned
allottees” above.

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

40

 3.

Number of voting rights held by such shareholder, and the ratio to the number of voting rights of all
shareholders before and after the change
(1)

Hon Hai Precision Industry

Category

Number of voting rights (ratio of voting rights
held)
Directly held

Aggregate

Total

－

－

－

1,300,000

915,550

2,215,550

(26.17%)

(18.43%)

(44.60%)

Major
shareholder
ranking

Before change
(as of September 30,
2015)

After change

(2)

－

Parent Company
and Largest
shareholder who
is a major
shareholder

－

No. 1

Foxconn FE
Number of voting rights (ratio of voting rights
held)
Directly held

Aggregate

Total

Major
shareholder
ranking

－

－

－

－

－

Major
shareholder

915,550

0

915,550

(18.43%)

(0%)

(18.43%)

Category

Before change
(as of September 30,
2015)

After change

No. 2

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

41

 (3)

Foxconn Technology
Number of voting rights (ratio of voting rights
held)
Directly held

Aggregate

Total

Major
shareholder
ranking

－

－

－

－

－

Major
shareholder

646,400

0

646,400

(13.01%)

(0%)

(13.01%)

Category

Before change
(as of September 30,
2015)

After change

No. 3

(Note 1)

The ratio to the number of voting rights of all shareholders after change is calculated by setting the
denominator to the number of voting rights of all shareholders (4,967,154 voting rights) that is the
number of voting rights of all shareholders (1,685,204 voting rights) calculated by deducting the
number of shares without voting rights (16,235,887 shares) from the total number of issued shares
(1,701,439,887 shares) as of September 30, 2015 plus 3,281,950 voting rights that are to be
increased in association with the Capital Increase Through Third-Party Allotment.

(Note 2)

The ratio to the number of voting rights of all shareholders after the change is rounded to the
second decimal place.

4.

Change scheduled date
Any day from June 28, 2016 (Tue.) to September 5, 2016 (Mon.)

5.

Future outlook
As stated in “I.6.(3) Planned allottees’ policy for holding shares” above.

End

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

42

 Appendix
1.

Terms and conditions of Class C Share issuance

Name of shares
Sharp Corporation Class C Shares (the "Class C Shares")

2.

Number of shares offered for subscription
8,621,171 shares

3.

Amount to be paid in for shares offered for subscription
11,800 yen per share

4.

5.

Capital and capital reserve to be increased
Capital

50,864,908,900 yen (5,900 yen per share)

Capital reserve

50,864,908,900 yen (5,900 yen per share)

Total amount to be paid in
101,729,817,800 yen

6.

Payment date
June 28, 2016 through September 5, 2016

7.

Method of issuance
Allotted by a third-party allotment method as follows:
Hon Hai Precision Industry Co., Ltd.

8.

8,621,171 shares

Dividends from surplus
If Sharp is to pay a dividend from surplus using the record date belonging to a business year, it shall pay the
dividend to shareholders who hold Class C Shares (the “Class C Shareholders”) and registered pledgees of the
Class C Shares (together with the Class C Shareholders, “Class C Shareholders, Etc.”) entered or recorded in
the final shareholders resister as at the record date (the “Record Date for Dividends”) by the monetary amount
of dividend from surplus calculated by multiplying the amount of dividend per common share by the
conversion ratio provided for in Item 11(2) below per the Class C Share (the amount paid by such dividend per
share of Class C Shares is referred to as the “Class C Dividend”) ranking pari-passu with the shareholders who
hold common shares (the “Common Shareholders”) and registered pledgees of the common shares (together
with the Common Shareholders, “Common Shareholders, Etc.”) entered or recorded in the final shareholders

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

43

 resister as at the Record Date for Dividends. A fraction of less than one yen that arises in the amount
calculated by multiplying the Class C Dividend by the number of the Class C Shares owned by each Class C
Shareholders, Etc. is to be rounded down.
9.

Distribution of residual assets
If Sharp is to distribute residual assets, it shall distribute residual assets to the Class C Shareholders, Etc. by
the monetary amount of distribution of residual assets calculated by multiplying the amount of residual assets
to be distributed per common share by the conversion ratio provided for in Item 11(2) below per the Class C
Share (the amount paid by such distribution per share of Class C Shares is referred to as the "Class C Residual
Assets Distribution Amount") ranking pari-passu with the Common Share Holders, Etc. A fraction of less
than one yen that arises in the amount calculated by multiplying the Class C Residual Assets Distribution
Amount by the number of the Class C Shares owned by each Class C Shareholders, Etc. is to be rounded down.

10.

Voting rights
Class C Shareholders do not have voting rights at general meetings of shareholders and general meetings of
class shareholders constituted by Class C Shareholders unless otherwise provided for in laws.

11.

Call option the consideration for which is common shares
(1)

On and after July 1, 2017, Sharp may acquire all or some of the Class C Shares in exchange for
delivery of the number of common shares calculated by multiplying the number of Class C Share by
the conversion ratio provided for in Item (2) below per the Class C Share to the extent permissible
under law and regulations on the coming of the day to be separately determined by the Board of
Directors meeting. If Sharp acquire some of the Class C Shares, it may decide the Class C Shares to
acquire on a pro rata basis or by other reasonable method to be separately determined by the Board of
Directors meeting.

(2)
12.

The conversion ratio of Class C Shares should be 100.
Consolidation of shares or share split; allotment of shares without contribution, etc.

(1)

When consolidating or splitting shares, Sharp shall consolidate or split the Class C Shares at the same
time and the same rate as the common shares.

(2)

When allotting the shares without contribution or the share options without contribution (including

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

44

 those attached to bonds with a share option, the same shall apply hereinafter), Sharp shall allot the
Class C Shares without contribution or the share options without contribution for which the Class C
Shares are the underlying shares to the Class C Shareholders at the same time and same rate as Sharp
allots the common shares without contribution or the share options without contribution for which the
common shares are the underlying shares to the Common Shareholders (including to practically
conform with the number of shares underlying the share options).
(3)

When issuing the shares for subscription by granting an entitlement to an allotment of shares to the
shareholders (including the disposition of treasury shares, the same shall apply hereinafter) or issuing
the share options by granting an entitlement to an allotment of share options to the shareholders
(including the disposition of their own share options, the same shall apply hereinafter), Sharp shall
grant an entitlement to the allotment of the Class C Shares or share options for which the Class C
Shares are the underlying shares to the Class C Shareholders at the same time and the same rate as
Sharp grants entitlements to the allotment of common shares or share options for which the common
shares are the underlying shares to the Common Shareholders (including to practically conform with
the number of shares underlying the share options) under fair conditions in terms of the amount to be
paid for the shares or share options for subscription, or the value of the property to be contributed
when such share options are exercised.

(4)

Except for the cases listed in the preceding items, Sharp will not implement share split or
consolidation of shares, or an allotment of shares without contribution or share options without
contribution in relation to Class C Shares, and will not grant an entitlement to the allotment of shares
for subscription or share options for subscription to Class C Shareholders.

13.

Restrictions on assignment
Any acquisition of Class C Shares by assignment requires the approval of Sharp’s Board of Directors.

Attention: This press release is not an offer to sell or a solicitation of an offer to buy any securities. This press release has been prepared solely for the
purpose of announcing the issuance of new shares by Sharp and not for the purpose of soliciting investment or engaging in any other similar activities
within or outside Japan. Estimates, expectations, forecasts and other future information set out in this press release have been prepared based on the
information that is available for Sharp as of today and on certain premises and assumptions, and the actual financial performance or result might be
substantially different from such future information contained in this press release due to any unknown or known risk factors including domestic and
global economic conditions.

45