Sony Corporation Consolidated Financial Results for the First Quarter Ended June 30, 2004
PRNewswire-FirstCall
TOKYO
07/28/2004
Sony Corporation today announced its consolidated results for the first quarter ended June 30, 2004 (April 1, 2004 to June 30, 2004).
(Billions of yen, millions of U.S. dollars,
except per share amounts)
First quarter ended June 30
2003 2004 Change 2004*
Sales and operating revenue Y1,603.8 Y1,612.1 +0.5% $14,927
Operating income 16.7 9.8 -41.4 91
Income before income taxes 35.8 6.6 -81.5 61
Net income 1.1 23.3 +1,975.3 215
Net income per share of
common stock
- Basic Y1.24 Y25.10 +1,924.2% $0.23
- Diluted 1.24 23.81 +1,820.2 0.22
* U.S. dollar amounts have been translated from yen, for convenience only,
at the rate of Y108 = U.S. $1, the approximate Tokyo foreign exchange
market rate as of June 30, 2004.
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Consolidated Results for the First Quarter Ended June 30, 2004
Sales and operating revenue ("sales") increased 0.5% compared with the same quarter of the previous fiscal year; on a local currency basis sales grew 5%. (For all references herein to results on a local currency basis, see Note I on page 8.)
In the Electronics segment, although sales to outside customers increased, overall sales decreased 0.2% due to a significant decline in intersegment sales to the Game segment resulting from the outsourcing of PlayStation 2 ("PS 2") production to third parties in China. With respect to major products in the Electronics segment, sales of flat panel and LCD rear projection televisions and digital still cameras increased, while sales of portable audio and CRT televisions decreased. Sales declined in the Game segment due to lower sales of hardware. Sales increased in the Music segment due to a string of successful releases. In the Pictures segment, although sales on a U.S. dollar basis increased, sales decreased due to the appreciation of the yen. In the Financial Services segment, revenue decreased due to a change in the accounting classification, effective as of the third quarter of the fiscal year ended March 31, 2004, of certain products (refer to page 5, "Financial Services").
Operating income decreased 41.4% (27% increase on a local currency basis) compared with the same quarter of the previous year.
In the Electronics segment, operating income declined mainly due to the appreciation of the yen and an increase in restructuring charges. In the Game segment, an operating loss was recorded mainly due to lower sales of software published by Sony Computer Entertainment Inc. ("SCE"). Although the Music segment recorded an operating loss, the loss decreased compared with the same quarter of the previous year as a result of an increase in sales and the realization of benefits from restructuring activities. In the Pictures segment, operating income was recorded compared with an operating loss in the same quarter of the previous year due to the successful performance of home entertainment and theatrical releases. In the Financial Services segment, operating income declined mainly due to an increase in insurance claims paid.
Restructuring expenses for the first quarter amounted to Y12.0 billion ($111 million) compared to Y6.5 billion in the same quarter of the previous fiscal year. In the Electronics segment, restructuring expenses were Y10.7 billion ($99 million) compared to Y4.6 billion in the same quarter of the previous fiscal year.
Income before income taxes decreased 81.5% compared with the same quarter of the previous fiscal year. Deterioration in the net effect of other income and other expenses was mainly the result of a decrease in gain from the sale of securities investments and an increase in net foreign exchange loss. The decrease in gain from the sale of securities investments was due to the recording, in the same quarter of the previous fiscal year, of a deferred gain of Y6.0 billion, from Sony's sale, during the fiscal year ended March 31, 2003, of its equity interest in Telemundo Communications Group, Inc. and its subsidiaries.
Net income increased significantly compared to the same quarter of the previous year. An equity gain was recorded in equity in net income of affiliated companies, compared to an equity loss in the same quarter of the previous fiscal year. Equity in net income of affiliated companies for the first quarter of the current year included the recording of Y12.8 billion ($119 million) as equity in net income from InterTrust Technologies Corporation ("InterTrust"). This amount reflects InterTrust's proceeds from a license agreement with Microsoft Corporation arising from the settlement of a patent-related lawsuit. In addition, Sony Ericsson Mobile Communications AB ("Sony Ericsson") significantly improved earnings and contributed Y5.8 billion ($54 million) to equity in net income compared to the loss of Y5.8 billion recorded in the same quarter of the previous year. As for income tax expense (benefit), as a result of the reversal of deferred tax liabilities on undistributed earnings from a foreign subsidiary, a net tax benefit of Y1.8 billion ($17 million) was recorded. In addition, as of the fiscal year beginning April 1, 2004, Sony Life Insurance Co., Ltd. ("Sony Life") has adopted new accounting principles that have resulted in the recording of a Y4.7 billion ($44 million) charge as the cumulative effect of an accounting change. (See Note 6. on page F-7 for details of these new accounting principles.)
Remarks by Nobuyuki Idei, Chairman and Group CEO of Sony Corporation
The consolidated results when viewed on a local currency basis demonstrated both increased revenue and increased profits. However, due to the appreciation of the yen, operating income declined and only a slight increase in sales could be realized for the first quarter ended June 30, 2004. Net income increased significantly mainly due to the contribution of equity in net income including that from Sony Ericsson. In addition, the worldwide theatrical release of Spider-Man 2 beginning at the end of June is proving to be a huge success.
For the Sony Group, the fiscal year ending March 31, 2005 has been earmarked as an important year for strengthening the foundation necessary for achieving mid- to long-term growth. We will continue to enhance the competitiveness of our products in key categories such as digital AV products, and will release enticing new products such as the new PlayStation Portable handheld video game system. In addition, by investing proactively in key components such as semiconductors and LCD panels, we are striving to increase the proportion of components developed internally in order to incorporate added-value into the Sony Group. In the Music segment, the establishment of a joint venture with Bertelsmann AG is aimed at improving profitability by enhancing management efficiencies and generating benefits from increased business size.
With the implementation of these measures coupled with a sound restructuring program and the enhancement of our management structure, Sony will be a company that works together, as a group, for the realization of ever more enhanced profitability.
Operating Performance Highlights by Business Segment
Electronics
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2003 2004 Change 2004
Sales and operating revenue Y1,100.3 Y1,098.0 -0.2% $10,167
Operating income 13.8 6.9 -49.9 64
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Sales decreased 0.2% (4% increase on a local currency basis) due to a significant decline in intersegment sales to the Game segment primarily owing to the outsourcing of PS 2 game console production to third parties in China. On the other hand, sales to outside customers increased 4.0% compared to the same quarter of the previous year. This was due to an increase in sales of flat panel televisions, which exhibited increased sales in all geographic regions; Cybershot digital still cameras, which saw continued market growth and an increase in the number of units sold; and LCD rear projection televisions, which saw increased sales especially in the U.S. However, CRT televisions, faced with a shift in demand towards flat panel televisions, experienced a decline in sales, as did portable audio due to negative market conditions.
Operating income decreased by Y6.9 billion, or 49.9% compared with the same quarter of the previous year. Although sales to outside customers increased, operating income decreased due to the appreciation of the yen and an increase in restructuring charges. In addition, an increase in research and development expenses associated with semiconductor process technologies also contributed to the decrease in operating income. The decrease in sales of portable audio, and the decline in unit prices of flat panel televisions and PC drives also contributed to the decrease in operating income. On the other hand, the operating performance of CCDs improved due to an increase in sales mainly of digital still cameras.
Inventory, as of June 30, 2004, was Y603.2 billion ($5,585 million), a Y74.5 billion, or 14.1%, increase compared with the level as of June 30, 2003 and a Y110.9 billion, or 22.5%, increase compared with the level as of March 31, 2004. In particular, there was an increase in the inventory of products such as flat panel televisions, digital still cameras and camcorders associated with increased production due to increased sales to outside customers.
Game
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2003 2004 Change 2004
Sales and operating revenue Y125.2 Y105.4 -15.9% $976
Operating income (loss) 1.8 (2.9) - (27)
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Sales decreased 15.9% compared with the same quarter of the previous year (a 13% decrease on a local currency basis) due to a decrease in sales of hardware, and despite an increase in sales of software.
Hardware: Although PS 2 unit sales in Europe increased compared with the same quarter of the previous fiscal year, unit sales in Japan and the U.S. decreased, contributing to a decline in overall unit sales. This overall decline in unit sales, combined with strategic price reductions of the PS 2 in Japan, the U.S. and Europe caused the decrease in sales.
Software: Although unit sales of and revenue from PlayStation software decreased, this was more than offset by an increase in the unit sales and revenue of PS 2 software, resulting in an overall increase in software sales. There was an increase in revenue in Japan, while revenue in the U.S. and Europe decreased.
Operating loss of Y2.9 billion ($27 million) was recorded, compared to operating income of Y1.8 billion in the same quarter of the previous year, mainly due to a decrease in hardware sales, a decrease in sales of software published by SCE and the continuation of aggressive investment in research and development for future business.
Worldwide hardware production shipments:*
- PS 2: 0.71 million units (a decrease of 1.94 million units)
- PS one: 0.57 million units (a decrease of 0.26 million units)
Worldwide software production shipments:*
- PS 2: 38 million units (an increase of 7 million units)
- PlayStation: 3 million units (a decrease of 5 million units)
* Production shipment units of hardware and software are counted upon
shipment of the products from manufacturing bases. Sales of such
products are recognized when the products are delivered to customers.
Inventory as of June 30, 2004 was Y111.5 billion ($1,032 million), a Y33.4 billion, or 23.1%, decrease compared with the level as of June 30, 2003 and a Y19.4 billion, or 14.8%, decrease compared with the level as of March 31, 2004.
Music
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2003 2004 Change 2004
Sales and operating revenue Y117.0 Y118.8 + 1.5% $1,100
Operating loss (6.0) (1.1) - (10)
The amounts presented above are the sum of the yen-translated results of Sony Music Entertainment Inc. ("SMEI"), a U.S. based operation which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis, and the results of Sony Music Entertainment (Japan) Inc. ("SMEJ"), a Japan based operation which aggregates results in yen. Management analyzes the results of SMEI in U.S. dollars, so discussion of certain portions of its results are specified as being on "a U.S. dollar basis."
Sales increased 1.5% compared with the same quarter of the previous year (7% increase on a local currency basis). Of the Music segment's sales, 71% were generated by SMEI, and 29% were generated by SMEJ.
SMEI: Sales on a U.S. dollar basis increased 8% compared with the same quarter of the previous year. Strong music sales were driven by several key releases including Gretchen Wilson's debut album Here for the Party, Prince's Musicology, and Anastacia's self-titled album. Manufacturing revenues also increased due to higher sales volume, particularly of DVDs.
SMEJ: Sales increased 7% compared with the same quarter of the previous year due to an increase in revenue associated with artists' live concerts and an increase in album and singles sales. Best selling albums during the quarter included Yutaka Ozaki's 13/71 The Best Selection, Ken Hirai's Hitomi wo Tojite and FLOW's GAME.
Operating loss of Y1.1 billion ($10 million) was recorded compared with an operating loss of Y6.0 billion in the same quarter of the previous year, an improvement of Y4.9 billion year on year, as operating performance at both SMEI and SMEJ continued to improve.
SMEI: In the first quarter ended June 30, 2004, SMEI's operating loss declined 40% compared with the prior year (U.S. dollar basis) due to higher sales resulting from stronger releases and the continued realization of benefits from the worldwide restructuring activities implemented over the past two years. These activities included the rationalization of record label shared services, manufacturing, distribution and support functions.
SMEJ: Operating income increased significantly compared to the prior year due to the higher sales noted above and an improvement in the cost of sales ratio mainly resulting from an increase in the sale of albums with relatively low production costs.
In December 2003, Sony and Bertelsmann AG announced that they had signed a binding agreement to combine their recorded music businesses in a joint venture. The newly formed company, which will be known as Sony BMG, will be 50% owned by each parent company. It will not include SMEI's music publishing, physical distribution and disc manufacturing business or SMEJ. Regulatory approval has now been obtained in the EU and approval in the U.S. is still pending.
Pictures
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2003 2004 Change 2004
Sales and operating revenue Y151.1 Y148.2 - 1.9% $1,372
Operating income (loss) (2.4) 4.1 - 38
The results presented above are a yen-translation of the results of Sony Pictures Entertainment ("SPE"), a U.S. based operation that aggregates the results of its worldwide subsidiaries on a U.S. dollar basis. Management analyzes the results of SPE in U.S. dollars, so discussion of certain portions of its results are specified as being on "a U.S. dollar basis."
Sales decreased 1.9% compared with the same quarter of the previous year (6% increase on a U.S dollar basis). Sales, on a U.S. dollar basis, increased primarily due to higher home entertainment revenues led by the strong performance of 50 First Dates and Big Fish. Major theatrical releases which contributed to sales in the first quarter ended June 30, 2004, included Spider-Man 2 (released on June 30), Hellboy and 13 Going on 30. Television revenues increased due to higher advertising revenues on The King of Queens and higher international syndication and DVD revenues from television library product, offset slightly by lower Seinfeld syndication sales due to the extension of an agreement with a U.S. cable network in the same quarter of the previous year.
Operating income of Y4.1 billion ($38 million) was recorded compared with an operating loss of Y2.4 billion in the prior year, an improvement of Y6.5 billion year on year, primarily due to the successful performance of home entertainment and theatrical releases. In addition, operating income benefited from lower marketing expenditures in the current year's first quarter ended June 30, 2004 compared to the same quarter of the previous year. Television profits declined from the prior year primarily due to the lower Seinfeld syndication sales noted above.
Financial Services
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2003 2004 Change 2004
Financial Services revenue Y149.6 Y133.6 -10.7% $1,237
Operating income 14.0 10.4 -25.9 96
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Financial Services revenue decreased 10.7% to Y133.6 billion ($1,237 million) compared with the same quarter of the previous year, mainly due to a decrease in revenue at Sony Life. Revenue at Sony Life decreased by Y17.7 billion or 14% to Y112.7 billion ($1,044 million), compared with the same quarter of the previous year*. Regarding Sony Life, as of the third quarter beginning October 1, 2003, the method of recognizing insurance premiums received on certain products was changed from being recorded as revenues to being offset against the related provision for future insurance policy benefits. This change in revenue recognition method which led to a decrease in revenue from insurance premiums, coupled with a decrease in valuation gains from the separate account assets which are defined by insurance business law in Japan, resulted in a decrease of revenue at Sony Life. Because valuation gains from such separate account assets revert to the insurance policy holder, there is no effect on operating income.
Operating income decreased by Y3.6 billion or 25.9% to Y10.4 billion ($96 million) compared with the same quarter of the previous year, mainly due to a decrease in operating income at Sony Life. Operating income at Sony Life decreased by Y3.8 billion or 26% to Y10.5 billion ($97 million), primarily due to an increase in insurance claims paid, dividends, and the introduction of a new accounting policy (See Note 6. on page F-7).* The aforementioned change in revenue recognition method, adopted in the third quarter beginning October 1, 2003, did not have a material effect on operating income at Sony Life.
* The Financial Services revenue and operating income at Sony Life are
calculated on a U.S. GAAP basis. Therefore, they differ from the
results that Sony Life discloses on a Japanese statutory basis. The
above mentioned change in revenue recognition method did not have an
impact on results on a Japanese statutory basis.
Other
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2003 2004 Change 2004
Sales and operating revenue Y62.3 Y59.4 -4.7% $550
Operating income (loss) 3.4 (0.8) - (7)
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Sales decreased 4.7% compared to the same quarter of the previous fiscal year. This was mainly the result of a decrease in intersegment sales at a Japanese subsidiary involved in the advertising agency business, in accordance with contract changes. However, there was an increase in sales in both the production and marketing of animation products and in the IC card businesses. In addition, an increase in revenue resulted from the switch from the equity accounting method to the consolidated accounting method, in the second quarter of the previous fiscal year, of a subsidiary responsible for operating a real estate complex in Germany.
An operating loss of Y0.8 billion ($7 million) was recorded, representing a decrease of Y4.2 billion compared with the operating income of Y3.4 billion in the same quarter of the previous fiscal year. This deterioration was due to the fact that a business operated by a U.S. subsidiary recorded a one-time gain of Y7.7 billion on the sale of rights related to a portion of the Sony Credit Card portfolio in the same quarter of the previous fiscal year.
Cash Flow
The following charts show Sony's unaudited condensed statements of cash flow on a consolidated basis for all segments excluding the Financial Services segment and for the Financial Services segment alone. These separate condensed presentations are not required under U.S. GAAP, which is used in Sony's consolidated financial statements. However, because the Financial Services segment is different in nature from Sony's other segments, Sony believes that these presentations may be useful in understanding and analyzing Sony's consolidated financial statements.
Cash Flow - Consolidated (excluding Financial Services segment)
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
Cash flow 2003 2004 Change 2004
- From operating activities Y(138.4) Y(72.9) Y+65.5 $(675)
- From investing activities (55.7) (174.9) -119.2 (1,620)
- From financing activities 113.7 (49.1) -162.8 (455)
Cash and cash equivalents at
beginning of the first quarter 438.5 592.9 +154.4 5,490
Cash and cash equivalents as
of June 30 357.9 309.2 -48.7 2,863
Operating Activities: During the quarter ended June 30, 2004, operating activities used more cash than they generated, mainly due to an increase in inventory in the Electronics segment, in particular of flat panel televisions, digital still cameras and camcorders reflecting an increase in production due to an increase in sales to outside customers, and a decrease in notes and accounts payable, trade, although this was partially offset by net income, excluding the effect of depreciation and amortization, and a decrease in notes and accounts receivable, trade, mainly in the Music and Pictures segments. Compared with the same quarter of the previous fiscal year, there was a decrease in the use of net cash as although there was a decrease in notes and accounts payable, trade, this was offset by a decrease in notes and accounts receivable, trade.
Investing Activities: During the quarter ended June 30, 2004, Sony made aggressive capital investments mainly concentrated in semiconductors, as well as investments associated with an amorphous TFT LCD panel manufacturing joint venture (named S-LCD Corporation) established with Samsung Electronics Co., Ltd.
As a result, the total amount of cash flow from operating activities and from investing activities was a use of cash of Y247.8 billion ($2,294 million).
Financing Activities: During the quarter ended June 30, 2004, Sony redeemed a portion of its long-term debt.
Cash and Cash Equivalents: In addition to the aforementioned information, the total balance of cash and cash equivalents, accounting for the effect of foreign currency exchange rate fluctuations, decreased Y48.7 billion to Y309.2 billion ($2,863 million) as of June 30, 2004, compared to June 30, 2003.
Cash Flow - Financial Services segment
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
Cash flow 2003 2004 Change 2004
- From operating activities Y66.1 Y50.5 Y-15.5 $468
- From investing activities (76.1) (209.8) -133.7 (1,942)
- From financing activities 41.3 92.3 +51.0 855
Cash and cash equivalents at
beginning of the first quarter 274.5 256.3 -18.2 2,373
Cash and cash equivalents
as of June 30 305.8 189.4 -116.5 1,754
Operating Activities: Operating activities generated more cash than was used due to an increase in income from insurance premiums and other, reflecting an increase in insurance-in-force.
Investing Activities: As the result of increased investment, particularly in domestic bonds, due to the aforementioned increase in income from insurance premiums and the continued appreciation of domestic interest rates, payments for investments and advances exceeded proceeds from sales of securities investments, maturities of marketable securities and collections of advances.
Financing Activities: Deposits from customers in the banking business increased due to factors including an increase in the number of accounts.
Cash and Cash Equivalents: As a result of the above, cash and cash equivalents decreased Y116.5 billion to Y189.4 billion ($1,754 million) as of June 30, 2004 compared to June 30, 2003.
Notes
Note I: During the first quarter ended June 30, 2004, the average value of the yen was Y108.8 against the U.S. dollar and Y130.7 against the euro, which was 7.4% higher against the U.S. dollar and 1.8% higher against the euro, compared with the average rates for the same quarter of the previous fiscal year. Operating results on a local currency basis described herein reflect sales and operating income obtained by applying the yen's average exchange rate in the same quarter of the previous fiscal year to local currency- denominated monthly sales, cost of sales, and selling, general and administrative expenses in the quarter. Local currency basis results are not reflected in Sony's financial statements and are not measures conforming with Generally Accepted Accounting Principles in the U.S. ("U.S. GAAP"). In addition, Sony does not believe that these measures are a substitute for U.S. GAAP measures. However, Sony believes that local currency basis results provide additional useful analytical information to investors regarding operating performance.
Note II: "Sales and operating revenue" in each business segment represents sales and operating revenue recorded before intersegment transactions are eliminated. "Operating income" in each business segment represents operating income recorded before intersegment transactions and unallocated corporate expenses are eliminated.
Outlook for the Fiscal Year ending March 31, 2005
Profits for the first quarter of the fiscal year exceeded expectations. Nonetheless, because we are cautious about the future operating environment, we have not revised our forecast for the fiscal year ending March 31, 2005 announced on April 27, 2004, as stated in the table below. In addition, there has been no change to our forecast for capital expenditures, depreciation and amortization or research and development expenses.
Change from previous year
Sales and operating revenue Y7,550 billion +1%
Operating income 160 billion +62
Income before income taxes 160 billion +11
Net income 100 billion +13
Restructuring expenses of approximately Y130 billion are included in the above forecast (no change from the previous forecast).
Capital expenditures
(additions to fixed assets) Y410 billion +8%
Depreciation and amortization* 370 billion +1
(Depreciation expenses for
tangible assets) (290 billion) (+1)
* Including amortization of intangible assets and amortization of
deferred insurance acquisition costs.
Research and development
expenses 550 billion +7
Assumed exchange rates from the second quarter: approximately Y105 to the U.S. dollar, approximately Y125 to the euro.
As noted in the Music section of "Operating Performance Highlights by Business Segment," regulatory approval has been obtained in the EU and is pending in the U.S. that will allow the merger of Sony Corporation of America and Bertelsmann AG's recorded music businesses. Once the merger is completed, management of the joint venture will then establish a budget for the remainder of the fiscal year that includes restructuring activities. The above forecast does not give effect to the benefits of this merger or the restructuring costs to be incurred in its implementation. As the joint venture will be accounted for under the equity method, sales and operating income of the recorded music business will no longer be consolidated within those line items; rather, the net income of the joint venture will be reported as equity in net income of affiliated companies.
As of June 30, 2004, Sony had deferred tax assets on tax loss carry forwards in relation to Japanese local income taxes totaling Y89.0 billion. However, there is a possibility that, depending on future operating performance, Sony may establish a valuation allowance against part or all of its deferred tax assets that would be charged to income as an increase in tax expense. On the other hand, as of June 30, 2004, the U.S. subsidiaries of Sony had valuation allowances of Y83.5 billion against deferred tax assets for U.S. federal and certain state taxes. However, there is a possibility that, depending on future operating performance, as early as during the fiscal year ending March 31, 2005, Sony may reverse part or all of the valuation allowances that would be recognized into income as a reduction to tax expense.
However, it should be noted that the forecast above does not include the possibility of the establishment of a valuation allowance against deferred tax assets in Japan, or the possibility of the reversal of valuation allowances against deferred tax assets in the U.S.
For your reference, further details about valuation allowances against deferred tax assets can be found under the "Deferred tax asset valuation" section of "Critical Accounting Policies" in Item 5. Operating and Financial Review and Prospects of Sony Corporation's Form 20-F for the fiscal year ended March 31, 2004.
URL: http://www.sec.gov/Archives/edgar/data/313838/000114554904000801/0001145549- 04-000801-index.htm
Cautionary Statement
Statements made in this release with respect to Sony's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "may" or "might" and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions and beliefs in light of the information currently available to it. Sony cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward- looking statements, and therefore you should not place undue reliance on them. You also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to (i) the global economic environment in which Sony operates, as well as the economic conditions in Sony's markets, particularly levels of consumer spending; (ii) exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales or in which Sony's assets and liabilities are denominated; (iii) Sony's ability to continue to design and develop and win acceptance of its products and services, which are offered in highly competitive markets characterized by continual new product introductions, rapid development in technology and subjective and changing consumer preferences (particularly in the Electronics, Game, Music and Pictures segments); (iv) Sony's ability to implement successfully personnel reduction and other business reorganization activities in its Electronics, Music and Pictures segments; (v) Sony's ability to implement successfully its network strategy for its Electronics, Music, Pictures and Other segments and to develop and implement successful sales and distribution strategies in its Music and Pictures segments in light of the Internet and other technological developments; (vi) Sony's continued ability to devote sufficient resources to research and development and, with respect to capital expenditures, to correctly prioritize investments (particularly in the Electronics segment); and (vii) the success of Sony's joint ventures and alliances. Risks and uncertainties also include the impact of any future events with material unforeseen impacts.
Home Page: http://www.sony.net/IR/ Business Segment Information (Unaudited) (Millions of yen, millions of U.S. dollars) Three months ended June 30 Sales and operating revenue 2003 2004 Change 2004 Electronics Customers Y1,047,500 Y1,089,565 +4.0% $10,089 Intersegment 52,818 8,456 78 Total 1,100,318 1,098,021 -0.2 10,167 Game Customers 120,332 100,061 -16.8 926 Intersegment 4,914 5,304 50 Total 125,246 105,365 -15.9 976 Music Customers 101,289 103,752 +2.4 961 Intersegment 15,711 15,031 139 Total 117,000 118,783 +1.5 1,100 Pictures Customers 151,131 148,191 -1.9 1,372 Intersegment 0 0 0 Total 151,131 148,191 -1.9 1,372 Financial Services Customers 142,969 127,706 -10.7 1,182 Intersegment 6,678 5,918 55 Total 149,647 133,624 -10.7 1,237 Other Customers 40,559 42,863 +5.7 397 Intersegment 21,778 16,568 153 Total 62,337 59,431 -4.7 550 Elimination (101,899) (51,277) - (475) Consolidated total Y1,603,780 Y1,612,138 +0.5% $14,927 Electronics intersegment amounts primarily consist of transactions with the Game business. Music intersegment amounts primarily consist of transactions with the Game and Pictures businesses. Other intersegment amounts primarily consist of transactions with the Electronics business. Operating income (loss) 2003 2004 Change 2004 Electronics Y13,758 Y6,890 -49.9% $64 Game 1,761 (2,881) - (27) Music (5,990) (1,059) - (10) Pictures (2,397) 4,101 - 38 Financial Services 14,047 10,403 -25.9 96 Other 3,390 (782) - (7) Total 24,569 16,672 -32.1 154 Unallocated corporate expenses and elimination (7,897) (6,898) - (63) Consolidated total Y16,672 Y9,774 -41.4% $91 Commencing with the first quarter ended June 30, 2004, Sony has partly realigned its business segment configuration. Results in the first quarter of the previous year have been reclassified to conform to the presentations for the current quarter. Electronics Sales and Operating Revenue to Customers by Product Category (Millions of yen, millions of U.S. dollars) Three months ended June 30 Sales and operating revenue 2003 2004 Change 2004 Audio Y152,392 Y134,386 -11.8% $1,244 Video 224,448 251,205 +11.9 2,326 Televisions 187,958 197,161 +4.9 1,826 Information and Communications 188,141 174,043 -7.5 1,612 Semiconductors 53,055 66,910 +26.1 619 Components 135,842 151,710 +11.7 1,405 Other 105,664 114,150 +8.0 1,057 Total Y1,047,500 Y1,089,565 +4.0% $10,089 The above table is a breakdown of Electronics sales and operating revenue to customers in the Business Segment Information on page F-1. The Electronics segment is managed as a single operating segment by Sony's management. However, Sony believes that the information in this table is useful to investors in understanding the sales contributions of the products in this business segment. In addition, commencing with the first quarter ended June 30, 2004, Sony has partly realigned its product category configuration in the Electronics segment. Accordingly, results of the previous year have been reclassified. The primary changes are as follows: Main Product Previous Product Category New Product Category AIWA "Other" "Audio" or "Video" or "Televisions" Set-top box "Video" "Televisions" Geographic Segment Information (Unaudited) (Millions of yen, millions of U.S. dollars) Three months ended June 30 Sales and operating revenue 2003 2004 Change 2004 Japan Y511,269 Y484,632 -5.2% $4,487 United States 459,729 418,296 -9.0 3,873 Europe 346,798 375,333 +8.2 3,475 Other Areas 285,984 333,877 +16.7 3,092 Total Y1,603,780 Y1,612,138 +0.5% $14,927 Classification of Geographic Segment Information shows sales and operating revenue recognized by location of customers. Consolidated Statements of Income (Unaudited) (Millions of yen, millions of U.S. dollars, except per share amounts) Three months ended June 30 2003 2004 Change 2004 Sales and operating revenue: % Net sales Y1,449,222 Y1,471,121 $13,622 Financial service revenue 142,969 127,706 1,182 Other operating revenue 11,589 13,311 123 1,603,780 1,612,138 +0.5 14,927 Costs and expenses: Cost of sales 1,059,152 1,103,271 10,215 Selling, general and administrative 404,305 376,937 3,490 Financial service expenses 129,026 117,294 1,086 (Gain) loss on sale, disposal or impairment of assets, net (5,375) 4,862 45 1,587,108 1,602,364 14,836 Operating income 16,672 9,774 -41.4 91 Other income: Interest and dividends 6,128 4,981 46 Royalty income 7,382 5,661 52 Gain on sale of securities investments, net 8,526 689 6 Gain on issuance of stock by subsidiary and equity investee - 307 3 Other 12,851 6,849 64 34,887 18,487 171 Other expenses: Interest 6,155 7,527 70 Loss on devaluation of securities investments 500 931 9 Foreign exchange loss, net 872 5,683 53 Other 8,261 7,506 69 15,788 21,647 201 Income before income taxes 35,771 6,614 -81.5 61 Income taxes 25,384 (1,842) (17) Income before minority interest, equity in net income (loss) of affiliated companies and cumulative effect of an accounting change 10,387 8,456 -18.6 78 Minority interest in income (loss) of consolidated subsidiaries (461) 621 6 Equity in net income (loss) of affiliated companies (9,727) 20,142 187 Income before cumulative effect of an accounting change 1,121 27,977 +2,395.7 259 Cumulative effect of an accounting change (2004: Net of income taxes of Y2,675 million) - (4,713) (44) Net income Y1,121 Y23,264 +1,975.3 $215 Per share data: Common stock Income before cumulative effect of an accounting change - Basic Y - Y30.20 - $0.28 - Diluted Y - 28.52 - 0.26 Net income - Basic 1.24 25.10 +1,924.2 0.23 - Diluted 1.24 23.81 +1,820.2 0.22 Subsidiary tracking stock Net income (loss) - Basic (7.97) 13.87 - 0.13 Consolidated Balance Sheets (Unaudited) (Millions of yen, millions of U.S. dollars) June 30 March 31 June 30 June 30 ASSETS 2003 2004 2004 2004 Current assets: Cash and cash equivalents Y663,700 Y849,211 Y498,587 $4,617 Time deposits 4,890 4,662 6,184 57 Marketable securities 230,028 274,748 494,219 4,576 Notes and accounts receivable, trade 1,145,962 1,123,863 1,113,384 10,309 Allowance for doubtful accounts and sales returns (94,874) (112,674) (109,555) (1,014) Inventories 720,895 666,507 761,962 7,055 Deferred income taxes 131,244 125,532 123,965 1,148 Prepaid expenses and other current assets 542,814 431,506 440,486 4,078 3,344,659 3,363,355 3,329,232 30,826 Film costs 306,072 256,740 259,792 2,405 Investments and advances: Affiliated companies 92,100 86,253 168,222 1,558 Securities investments and other 1,976,955 2,426,697 2,386,537 22,097 2,069,055 2,512,950 2,554,759 23,655 Property, plant and equipment: Land 188,856 189,785 186,620 1,728 Buildings 878,242 930,983 934,311 8,651 Machinery and equipment 2,084,805 2,053,085 2,085,402 19,309 Construction in progress 67,062 98,480 117,456 1,088 Less-Accumulated depreciation (1,914,037) (1,907,289) (1,952,104) (18,075) 1,304,928 1,365,044 1,371,685 12,701 Other assets: Intangibles, net 256,118 248,010 233,271 2,160 Goodwill 296,124 277,870 287,278 2,660 Deferred insurance acquisition costs 331,738 349,194 363,401 3,365 Deferred income taxes 233,036 203,203 228,203 2,113 Other 471,245 514,296 522,106 4,835 1,588,261 1,592,573 1,634,259 15,133 Y8,612,975 Y9,090,662 Y9,149,727 $84,720 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings Y260,451 Y91,260 Y103,828 $961 Current portion of long-term debt 35,028 383,757 354,045 3,278 Notes and accounts payable, trade 771,521 778,773 762,582 7,061 Accounts payable, other and accrued expenses 803,178 812,175 783,635 7,256 Accrued income and other taxes 77,057 57,913 45,257 419 Deposits from customers in the banking business 284,669 378,851 413,654 3,830 Other 396,406 479,486 457,630 4,238 2,628,310 2,982,215 2,920,631 27,043 Long-term liabilities: Long-term debt 806,606 777,649 781,089 7,232 Accrued pension and severance costs 507,114 368,382 377,213 3,493 Deferred income taxes 72,375 96,193 88,469 819 Future insurance policy benefits and other 1,980,437 2,178,626 2,265,008 20,972 Other 269,913 286,737 276,082 2,557 3,636,445 3,707,587 3,787,861 35,073 Minority interest in consolidated subsidiaries 19,082 22,858 23,287 216 Stockholders' equity: Capital stock 476,591 480,267 480,285 4,447 Additional paid-in capital 989,919 992,817 992,834 9,193 Retained earnings 1,302,848 1,367,060 1,390,321 12,873 Accumulated other comprehensive income (430,851) (449,959) (437,524) (4,051) Treasury stock, at cost (9,369) (12,183) (7,968) (74) 2,329,138 2,378,002 2,417,948 22,388 Y8,612,975 Y9,090,662 Y9,149,727 $84,720 Consolidated Statements of Cash Flows (Unaudited) (Millions of yen, millions of U.S. dollars) Three months ended June 30 2003 2004 2004 Cash flows from operating activities: Net income Y1,121 Y23,264 $215 Adjustments to reconcile net income to net cash used in operating activities Depreciation and amortization, including amortization of deferred insurance acquisition costs 84,277 85,531 792 Amortization of film costs 52,867 55,055 510 Accrual for pension and severance costs, less payments 10,115 7,820 72 (Gain) loss on sale, disposal or impairment of assets, net (5,375) 4,862 45 Gain on sales of securities investments, net (8,526) (689) (6) Gain on issuance of stock by subsidiary and equity investee - (307) (3) Deferred income taxes 15,303 (15,627) (145) Equity in net (income) losses of affiliated companies, net of dividends 9,971 (19,668) (182) Cumulative effect of an accounting change - 4,713 44 Changes in assets and liabilities: (Increase) decrease in notes and accounts receivable, trade (32,757) 24,663 228 Increase in inventories (84,739) (88,947) (824) Increase in film costs (71,399) (51,412) (476) Increase (decrease) in notes and accounts payable, trade 70,057 (21,838) (202) Decrease in accrued income and other taxes (39,789) (13,674) (127) Increase in future insurance policy benefits and other 66,027 40,771 378 Increase in deferred insurance acquisition costs (16,229) (15,940) (148) Increase in marketable securities held in the financial service business for trading purpose - (12,343) (114) Increase in other current assets (84,415) (22,203) (206) Decrease in other current liabilities (30,744) (25,363) (235) Other (7,917) 18,848 176 Net cash used in operating activities (72,152) (22,484) (208) Cash flows from investing activities: Payments for purchases of fixed assets (84,197) (128,891) (1,193) Proceeds from sales of fixed assets 13,870 14,359 133 Payments for investments and advances by financial service business (254,879) (414,488) (3,838) Payments for investments and advances (other than financial service business) (8,545) (67,182) (622) Proceeds from sales of securities investments, maturities of marketable securities and collections of advances by financial service business 194,804 214,755 1,988 Proceeds from sales of securities investments, maturities of marketable securities and collections of advances (other than financial service business) 6,941 6,552 61 Increase in time deposits (1,122) (1,399) (13) Cash assumed upon acquisition by stock exchange offering 3,634 - - Proceeds from issuances of stock by subsidiary - 267 2 Net cash used in investing activities (129,494) (376,027) (3,482) Cash flows from financing activities: Proceeds from issuance of long-term debt 1,234 8,574 79 Payments of long-term debt (3,428) (39,461) (365) Increase (decrease) in short-term borrowings 129,641 (3,073) (28) Increase in deposits from customers in the financial service business 35,553 65,155 603 Dividends paid (11,566) (11,577) (107) Other 1,048 15,031 139 Net cash provided by financing activities 152,482 34,649 321 Effect of exchange rate changes on cash and cash equivalents (194) 13,238 123 Net decrease in cash and cash equivalents (49,358) (350,624) (3,246) Cash and cash equivalents at beginning of the fiscal year 713,058 849,211 7,863 Cash and cash equivalents at June 30 Y663,700 Y498,587 $4,617 (Notes) 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of Y108 = U.S. $1, the approximate Tokyo foreign exchange market rate as of June 30, 2004. 2. As of June 30, 2004, Sony had 1,007 consolidated subsidiaries (including variable interest entities). It has applied the equity accounting method in respect to 69 affiliated companies. 3. Sony calculates and presents per share data separately for Sony's common stock and for the subsidiary tracking stock which is linked to the economic value of Sony Communication Network Corporation, based on Statement of Financial Accounting Standards ("FAS") No.128, "Earnings per Share". The holders of the tracking stock have the right to participate in earnings, together with common stock holders. Accordingly, Sony calculates per share data by the "two-class" method based on FAS No.128. Under this method, basic net income per share for each class of stock is calculated based on the earnings allocated to each class of stock for the applicable period, divided by the weighted-average number of outstanding shares in each class during the applicable period. The earnings allocated to the subsidiary tracking stock are determined based on the subsidiary tracking stockholders' economic interest in the targeted subsidiary's earnings available for dividends or change in accumulated losses that do not include those of the targeted subsidiary's subsidiaries. The earnings allocated to common stock are calculated by subtracting the earnings allocated to the subsidiary tracking stock from Sony's net income for the period. Weighted-average shares used for computation of earnings per share of common stock are as follows. The dilutive effect in the weighted- average shares for the three months ended June 30, 2003 and 2004 mainly resulted from convertible bonds. Weighted-average shares (Thousands of shares) Three months ended June 30 2003 2004 Income before cumulative effect of an accounting change and net income - Basic 921,748 924,955 - Diluted 925,537 1,000,348 Weighted-average shares used for computation of earnings per share of the subsidiary tracking stock for the three months ended June 30, 2003 and 2004 are 3,072 thousand shares. There were no potentially dilutive securities or options granted for earnings per share of the subsidiary tracking stock. 4. Sony's comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes changes in unrealized gains or losses on securities, unrealized gains or losses on derivative instruments, minimum pension liabilities adjustments and foreign currency translation adjustments. Net income, other comprehensive income and comprehensive income for the three months ended June 30, 2003 and 2004 were as follows: (Millions of yen, millions of U.S. dollars) Three months ended June 30 2003 2004 2004 Net income Y1,121 Y23,264 $215 Other comprehensive income: Unrealized gains (losses) on Securities 17,018 (15,163) (140) Unrealized gains (losses) on derivative instruments 646 (2,262) (21) Minimum pension liabilities adjustments (4,218) (363) (3) Foreign currency translation adjustments 27,681 30,223 279 41,127 12,435 115 Comprehensive income Y42,248 Y35,699 $330 5. In January 2003, the FASB issued FASB Interpretation ("FIN") No.46, "Consolidation of Variable Interest Entities - an Interpretation of Accounting Research Bulletins ("ARB") No.51", and the revised FIN No.46 was issued in December 2003. This interpretation addresses consolidation by a primary beneficiary of a variable interest entity ("VIE"). FIN No.46 is effective immediately for all new VIEs created or acquired after January 31, 2003. Sony has not entered into any new arrangements with VIEs on or after February 1, 2003. For VIEs created or acquired prior to February 1, 2003, Sony adopted FIN No.46 on July 1, 2003. As a result of the adoption of FIN No.46, Sony recognized Y2,117 million of loss as the cumulative effect of accounting change. Additionally, Sony's assets and liabilities increased as non-cash transactions, which resulted in no cash flows, by Y95,255 million and Y97,950 million, respectively, as well as cash and cash equivalents of Y1,521 million. 6. Adoption of New Accounting Standards Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts In July 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts". SOP 03-1 requires insurance enterprises to record additional reserves for long-duration life insurance contracts with minimum guarantees or annuitization options. Additionally, SOP 03-1 provides guidance for the presentation of separate accounts. This statement is effective for fiscal years beginning after December 15, 2003. Sony adopted SOP 03-1 on April 1, 2004. As a result of the adoption of SOP 03-1, Sony's operating income decreased by Y968 million ($9 million) and Sony recorded a one-time charge of Y4,713 million ($44 million), net of income taxes of Y2,675 million, as a cumulative effect of an accounting change for the three months ended June 30, 2004. In addition, the separate account assets, which are defined as "special accounts" by insurance business law in Japan and were previously included in "Security investments and other" in the consolidated balance sheet, are now treated as general account assets and included in "Marketable securities" in the consolidated balance sheet. Other Consolidated Financial Data (Millions of yen, millions of U.S. dollars) Three months ended June 30 2003 2004 Change 2004 Capital expenditures (additions to property, plant and equipment) Y81,017 Y88,071 +8.7% $815 Depreciation and amortization expenses* 84,277 85,531 +1.5 792 (Depreciation expenses for property, plant and equipment) (65,636) (68,907) (+5.0) (638) R&D expenses 114,164 123,582 +8.2 1,144 * Including amortization expenses for intangible assets and for deferred insurance acquisition costs Condensed Financial Services Financial Statements (Unaudited)
The results of the Financial Services segment are included in Sony's consolidated financial statements. The following schedules shows unaudited condensed financial statements for the Financial Services segment and all other segments excluding Financial Services. These presentations are not required under U.S. GAAP, which is used in Sony's consolidated financial statements. However, because the Financial Services segment is different in nature from Sony's other segments, Sony believes that a comparative presentation may be useful in understanding and analyzing Sony's consolidated financial statements.
Transactions between the Financial Services segment and Sony without Financial Services are eliminated in the consolidated figures shown below. (Millions of yen, millions of U.S. dollars)
Condensed Statements of
Income
(Millions of yen, millions of U.S. dollars)
Three months ended June 30
Financial Services 2003 2004 Change 2004
%
Financial service revenue Y149,647 Y133,624 -10.7 $1,237
Financial service expenses 135,600 123,221 -9.1 1,141
Operating income 14,047 10,403 -25.9 96
Other income (expenses), net
14 (62) - (0)
Income before income taxes 14,061 10,341 -26.5 96
Income taxes and other 7,058 3,826 -45.8 35
Income before cumulative
effect of an accounting
change 7,003 6,515 -7.0 61
Cumulative effect of an
accounting change - (4,713) - (44)
Net income Y7,003 Y1,802 -74.3 $17
(Millions of yen, millions of U.S. dollars)
Three months ended June 30
Sony without Financial
Services 2003 2004 Change 2004
%
Net sales and operating
revenue Y1,462,818 Y1,486,409 +1.6 $13,763
Costs and expenses 1,459,962 1,486,927 +1.8 13,768
Operating income (loss) 2,856 (518) - (5)
Other income (expenses), net 18,855 (3,209) - (30)
Income (loss) before
income taxes 21,711 (3,727) - (35)
Income taxes and other 27,688 (25,189) - (234)
Net income (loss) Y(5,977) Y21,462 - $199
(Millions of yen, millions of U.S. dollars)
Three months ended June 30
Consolidated 2003 2004 Change 2004
%
Financial service revenue Y142,969 Y127,706 -10.7 $1,182
Net sales and operating
revenue 1,460,811 1,484,432 +1.6 13,745
1,603,780 1,612,138 +0.5 14,927
Costs and expenses 1,587,108 1,602,364 +1.0 14,836
Operating income 16,672 9,774 -41.4 91
Other income (expenses), net 19,099 (3,160) - (30)
Income before income taxes 35,771 6,614 -81.5 61
Income taxes and other 34,650 (21,363) - (198)
Income before cumulative
effect of an accounting
change 1,121 27,977 +2,395.7 259
Cumulative effect of an
accounting change - (4,713) - (44)
Net income Y1,121 Y23,264 +1,975.3 $215
Condensed Balance Sheets
(Millions of yen, millions of U.S. dollars)
Financial Services June 30 March 31 June 30 June 30
ASSETS 2003 2004 2004 2004
Current assets:
Cash and cash equivalents Y305,833 Y256,316 Y189,381 $1,754
Marketable securities 225,103 270,676 490,144 4,538
Notes and accounts
receivable, trade 77,545 72,273 72,339 670
Other 136,840 100,433 81,891 758
745,321 699,698 833,755 7,720
Investments and advances 1,816,554 2,274,510 2,250,950 20,842
Property, plant and equipment 44,840 40,833 40,819 378
Other assets:
Deferred insurance
acquisition costs 331,738 349,194 363,401 3,365
Other 108,860 110,804 108,956 1,009
440,598 459,998 472,357 4,374
Y3,047,313 Y3,475,039 Y3,597,881 $33,314
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings Y68,285 Y86,748 Y103,176 $955
Notes and accounts
payable, trade 6,383 7,847 7,176 66
Deposits from customers in
the banking business 284,669 378,851 413,654 3,830
Other 100,206 175,357 158,775 1,471
459,543 648,803 682,781 6,322
Long-term liabilities:
Long-term debt 140,262 135,811 135,993 1,259
Accrued pension and
severance costs 9,097 10,183 10,748 100
Future insurance policy
benefits and other 1,980,437 2,178,626 2,265,008 20,972
Other 116,161 126,349 120,406 1,115
2,245,957 2,450,969 2,532,155 23,446
Minority interest in
consolidated subsidiaries - - 5,820 54
Stockholders' equity 341,813 375,267 377,125 3,492
Y3,047,313 Y3,475,039 Y3,597,881 $33,314
(Millions of yen, millions of U.S. dollars)
Sony without Financial
Services June 30 March 31 June 30 June 30
ASSETS 2003 2004 2004 2004
Current assets:
Cash and cash
equivalents Y357,867 Y592,895 Y309,206 $2,863
Marketable securities 4,925 4,072 4,075 38
Notes and accounts
receivable, trade 976,757 943,590 935,065 8,658
Other 1,288,524 1,151,879 1,274,358 11,799
2,628,073 2,692,436 2,522,704 23,358
Film costs 306,072 256,740 259,792 2,405
Investments and advances 372,682 358,629 423,858 3,925
Investments in Financial
Services, at cost 176,905 176,905 197,073 1,825
Property, plant and
equipment 1,260,087 1,324,211 1,330,866 12,323
Other assets 1,261,742 1,251,901 1,272,866 11,786
Y6,005,561 Y6,060,822 Y6,007,159 $55,622
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings Y260,389 Y409,766 Y373,908 $3,462
Notes and accounts
payable, trade 766,841 773,221 757,236 7,011
Other 1,182,370 1,190,563 1,144,546 10,598
2,209,600 2,373,550 2,275,690 21,071
Long-term liabilities:
Long-term debt 802,706 775,233 777,738 7,201
Accrued pension and
severance costs 498,017 358,199 366,465 3,393
Other 309,526 348,946 331,854 3,073
1,610,249 1,482,378 1,476,057 13,667
Minority interest in
consolidated subsidiaries 13,390 17,554 17,567 163
Stockholders' equity 2,172,322 2,187,340 2,237,845 20,721
Y6,005,561 Y6,060,822 Y6,007,159 $55,622
(Millions of yen, millions of U.S. dollars)
Consolidated June 30 March 31 June 30 June 30
ASSETS 2003 2004 2004 2004
Current assets:
Cash and cash
equivalents Y663,700 Y849,211 Y498,587 $4,617
Marketable
securities 230,028 274,748 494,219 4,576
Notes and accounts
receivable, trade 1,051,088 1,011,189 1,003,829 9,295
Other 1,399,843 1,228,207 1,332,597 12,338
3,344,659 3,363,355 3,329,232 30,826
Film costs 306,072 256,740 259,792 2,405
Investments and
advances 2,069,055 2,512,950 2,554,759 23,655
Property, plant and
equipment 1,304,928 1,365,044 1,371,685 12,701
Other assets:
Deferred insurance
acquisition costs 331,738 349,194 363,401 3,365
Other 1,256,523 1,243,379 1,270,858 11,768
1,588,261 1,592,573 1,634,259 15,133
Y8,612,975 Y9,090,662 Y9,149,727 $84,720
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short-term
borrowings Y295,479 Y475,017 Y457,873 $4,240
Notes and accounts
payable, trade 771,521 778,773 762,582 7,061
Deposits from
customers in the
banking business 284,669 378,851 413,654 3,830
Other 1,276,641 1,349,574 1,286,522 11,912
2,628,310 2,982,215 2,920,631 27,043
Long-term liabilities:
Long-term debt 806,606 777,649 781,089 7,232
Accrued pension and
severance costs 507,114 368,382 377,213 3,493
Future insurance
policy benefits and
other 1,980,437 2,178,626 2,265,008 20,972
Other 342,288 382,930 364,551 3,376
3,636,445 3,707,587 3,787,861 35,073
Minority interest in
consolidated
subsidiaries 19,082 22,858 23,287 216
Stockholders' equity 2,329,138 2,378,002 2,417,948 22,388
Y8,612,975 Y9,090,662 Y9,149,727 $84,720
(Millions of yen, millions of U.S. dollars)
Condensed Statements of
Cash Flows Three months ended June 30
Financial Services 2003 2004 2004
Net cash provided by operating
activities Y66,074 Y50,544 $468
Net cash used in investing
activities (76,094) (209,778) (1,942)
Net cash provided by financing
activities 41,310 92,299 855
Net increase (decrease) in cash
and cash equivalents 31,290 (66,935) (619)
Cash and cash equivalents at
beginning of the fiscal year 274,543 256,316 2,373
Cash and cash equivalents
at June 30 Y305,833 Y189,381 $1,754
(Millions of yen, millions of U.S. dollars)
Three months ended June 30
Sony without Financial Services 2003 2004 2004
Net cash used in operating
activities Y(138,365) Y(72,863) $(675)
Net cash used in investing
activities (55,744) (174,929) (1,620)
Net cash provided by (used in)
financing activities 113,655 (49,135) (455)
Effect of exchange rate changes
on cash and cash equivalents (194) 13,238 123
Net decrease in cash and cash
equivalents (80,648) (283,689) (2,627)
Cash and cash equivalents at
beginning of the fiscal year 438,515 592,895 5,490
Cash and cash equivalents at
June 30 Y357,867 Y309,206 $2,863
(Millions of yen, millions of U.S. dollars)
Three months ended June 30
Consolidated 2003 2004 2004
Net cash used in operating
activities Y(72,152) Y(22,484) $(208)
Net cash used in investing
activities (129,494) (376,027) (3,482)
Net cash provided by financing
activities 152,482 34,649 321
Effect of exchange rate changes
on cash and cash equivalents (194) 13,238 123
Net decrease in cash and cash
equivalents (49,358) (350,624) (3,246)
Cash and cash equivalents at
beginning of the fiscal year 713,058 849,211 7,863
Cash and cash equivalents at
June 30 Y663,700 Y498,587 $4,617
SOURCE: Sony Corporation
CONTACT: Tokyo, Yukio Ozawa, +81-3-5448-2180, in New York, Masaaki Konoo
or Justin Hill, +1-212-833-6722, or in London, Chris Hohman or Shinji Tomita,
+44-20-7444-9713, all of Sony Corporation