Japan's leading maker of liquid crystal displays had a 500 billion yen ($5.1 billion) net loss for the year, worse than the 450 billion yen deficit it forecast in November, the sources said on condition that they not be identified.
Its operating profit for the second half of its business year was 20 billion yen, compared with the company's forecast for 13.8 billion yen, the sources added.
The company needed a second-half operating profit to allow its lenders to justify a bail-out that rescued it from failing last year.
The write-off of excess capacity, however, highlights softer demand from Apple, which has seen its profit growth slow dramatically from more than 60 percent over the past five years to a projected rate of less than 5 percent for the next decade.
At the start of the year, Sharp was forced to curtail production of 9.7-inch screens for Apple's iPad, sources told Reuters in January.
That has stepped up the urgency for Sharp to find new customers and uses for its leading-technology displays and may make it harder for the company to convince investors and lenders it remains a viable company.
Sharp, which will announce its results for latest business year on May 14, said in statement through the Tokyo Stock Exchange that it had not released the earnings number, without commenting directly on whether it would report a bigger loss than forecast.
In addition to the write-offs, the company is also taking a charge to put aside cash for possible fines from a display price-fixing investigation in Europe, the sources said.
The expanded net loss was first reported in the Nikkei business daily.
The news sent Sharp's shares falling as much as 5.6 percent on Wednesday to 319 yen, their lowest in nearly three weeks, compared with a 0.2 percent drop in the benchmark Nikkei average. The shares have lost more than half their value since the start of last year as the company's troubles mounted, while the benchmark has risen 63 percent.
Sharp in October received a $4.4 billion bailout from banks including Mizuho Financial Group and Mitsubishi Financial Group in return for mortgaging nearly all its factories and offices in Japan and pledging to cut 10,000 jobs.
It has since raised additional cash by selling equity stakes to Qualcomm Inc, which in December agreed to invest as much as $120 million in the Japanese company, and South Korea's Samsung Electronics Co, which in March said it would inject $103 million in return for a 3 percent stake.
It is also in talks to offload its overseas television assembly plants. But with a 200 billion yen convertible bond falling due in September, that money plus the investments from Qualcomm and Samsung will not be enough to cover its financing needs, leading analysts to speculate it will need to find fresh funding sources.
($1 = 97.4100 Japanese yen)
(Reporting by Reiji Murai; Writing by Tim Kelly; Editing by Edmund Klamann)