/FIRST ADD -- NYTU018 -- SONY CORPORATION EARNINGS/
PRNewswire
04/27/2004
Business Segment Information
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sales and operating
revenue 2003 2004 Change 2004
Electronics
Customers Y4,543,313 Y4,758,400 +4.7% $45,754
Intersegment 397,137 138,995 1,336
Total 4,940,450 4,897,395 -0.9 47,090
Game
Customers 936,274 753,732 -19.5 7,247
Intersegment 18,757 26,488 255
Total 955,031 780,220 -18.3 7,502
Music
Customers 512,908 487,457 -5.0 4,687
Intersegment 84,598 72,431 697
Total 597,506 559,888 -6.3 5,384
Pictures
Customers 802,770 756,370 -5.8 7,273
Intersegment 0 0 0
Total 802,770 756,370 -5.8 7,273
Financial Services
Customers 509,398 565,752 +11.1 5,440
Intersegment 27,878 27,792 267
Total 537,276 593,544 +10.5 5,707
Other
Customers 168,970 174,680 +3.4 1,680
Intersegment 137,323 155,712 1,497
Total 306,293 330,392 +7.9 3,177
Elimination (665,693) (421,418) - (4,052)
Consolidated total Y7,473,633 Y7,496,391 +0.3% $72,081
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 Y41,380 Y(35,298) - $(339)
Game 112,653 67,578 -40.0% 650
Music (7,867) 18,995 - 182
Pictures 58,971 35,230 -40.3 339
Financial Services 22,758 55,161 +142.4 530
Other (24,983) (10,030) - (96)
Total 202,912 131,636 -35.1 1,266
Unallocated corporate
expenses and
elimination (17,472) (32,734) - (315)
Consolidated total Y185,440 Y98,902 -46.7% $951
Commencing with the first quarter ended June 30, 2003, Sony has partly realigned its business segment configuration. In the NACS, expenses incurred in connection with the creation of a network platform business have been transferred out of the Other segment and reclassified as unallocated corporate expenses, because the expected future benefits of this business will be spread across the Sony Group. In accordance with these realignments, results for the previous year have been reclassified to conform to the presentation for the current year.
In the quarter ended December 31, 2003, regarding Sony Life, the recognition method of 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, reducing revenue in the Financial Services segment in the year ended March 31, 2004, by Y30.8 billion. This change did not have a material effect on operating income.
(Millions of yen, millions of U.S. dollars)
Three months ended March 31 (Unaudited)
Sales and operating revenue 2003 2004 Change 2004
Electronics
Customers Y995,663 Y1,104,378 +10.9% $10,619
Intersegment 29,632 7,825 75
Total 1,025,295 1,112,203 +8.5 10,694
Game
Customers 163,715 121,436 -25.8 1,168
Intersegment 3,623 5,301 51
Total 167,338 126,737 -24.3 1,219
Music
Customers 124,358 119,139 -4.2 1,145
Intersegment 17,707 14,966 144
Total 142,065 134,105 -5.6 1,289
Pictures
Customers 187,240 236,602 +26.4 2,275
Intersegment 0 0 0
Total 187,240 236,602 +26.4 2,275
Financial Services
Customers 140,142 144,679 +3.2 1,391
Intersegment 7,258 7,462 72
Total 147,400 152,141 +3.2 1,463
Other
Customers 43,246 45,957 +6.3 442
Intersegment 40,975 42,655 410
Total 84,221 88,612 +5.2 852
Elimination (99,195) (78,209) - (752)
Consolidated total Y1,654,364 Y1,772,191 +7.1% $17,040
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 Y(116,144) Y(133,364) - $(1,282)
Game 13,631 (6,886) - (66)
Music (12,443) (5,576) - (54)
Pictures 8,089 36,634 +352.9% 352
Financial Services 3,113 17,192 +452.3 165
Other (9,587) (6,343) - (61)
Total (113,341) (98,343) - (946)
Unallocated corporate
expenses and elimination (3,126) (11,413) - (109)
Consolidated total Y(116,467) Y(109,756) - $(1,055)
Commencing with the first quarter ended June 30, 2003, Sony has partly realigned its business segment configuration. In the NACS, expenses incurred in connection with the creation of a network platform business have been transferred out of the Other segment and reclassified as unallocated corporate expenses, because the expected future benefits of this business will be spread across the Sony Group. In accordance with these realignments, results for the previous year have been reclassified to conform to the presentation for the current year.
In the quarter ended December 31, 2003, regarding Sony Life, the recognition method of 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, reducing revenue in the Financial Services segment in the quarter ended March 31, 2004, by Y15.3 billion. This change did not have a material effect on operating income.
Electronics Sales and Operating Revenue to Customers by Product Category
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sales and operating
revenue 2003 2004 Change 2004
Audio Y682,517 Y623,582 -8.6% $5,996
Video 851,064 948,111 +11.4 9,116
Televisions 950,166 917,207 -3.5 8,819
Information and
Communications 836,724 834,757 -0.2 8,027
Semiconductors 204,710 253,237 +23.7 2,435
Components 527,782 623,799 +18.2 5,998
Other 490,350 557,707 +13.7 5,363
Total Y4,543,313 Y4,758,400 +4.7% $45,754
Three months ended March 31 (Unaudited)
Sales and operating
revenue 2003 2004 Change 2004
Audio Y133,555 Y121,460 -9.1% $1,168
Video 153,197 197,456 +28.9 1,899
Televisions 203,035 213,794 +5.3 2,056
Information and
Communications 214,822 208,816 -2.8 2,008
Semiconductors 52,453 66,163 +26.1 636
Components 131,128 159,464 +21.6 1,533
Other 107,473 137,225 +27.7 1,319
Total Y995,663 Y1,104,378 +10.9% $10,619
The above table is a breakdown of Electronics sales and operating revenue to customers in the Business Segment Information. 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 product categories in this business segment. In addition, commencing with the first quarter ended June 30, 2003, 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
Set-top box "Televisions" "Video"
Computer display "Information and Communications" "Televisions"
LCD television "Information and Communications" "Televisions"
CRT "Components" "Televisions"
Geographic Segment Information
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sales and operating revenue 2003 2004 Change 2004
Japan Y2,093,880 Y2,220,747 +6.1% $21,353
United States 2,403,946 2,121,110 -11.8 20,395
Europe 1,665,976 1,765,053 +5.9 16,972
Other Areas 1,309,831 1,389,481 +6.1 13,361
Total Y7,473,633 Y7,496,391 +0.3% $72,081
Three months ended March 31 (Unaudited)
Sales and operating revenue 2003 2004 Change 2004
Japan Y517,933 Y549,960 +6.2% $5,288
United States 481,747 492,729 +2.3 4,738
Europe 363,360 406,956 +12.0 3,913
Other Areas 291,324 322,546 +10.7 3,101
Total Y1,654,364 Y1,772,191 +7.1% $17,040
Classification of Geographic Segment Information shows sales and operating revenue recognized by location of customers.
Consolidated Statements of Income
(Millions of yen, millions of U.S. dollars,
except per share amounts)
Year ended March 31
2003 2004 Change % 2004
Sales and operating revenue:
Net sales Y6,916,042 Y6,883,478 $66,187
Financial service revenue 509,398 565,752 5,440
Other operating revenue 48,193 47,161 454
7,473,633 7,496,391 +0.3 72,081
Costs and expenses:
Cost of sales 4,979,421 5,058,205 48,637
Selling, general and
administrative 1,782,367 1,798,239 17,291
Financial service
expenses 486,464 505,550 4,861
Loss on sale, disposal
or impairment of
assets, net 39,941 35,495 341
7,288,193 7,397,489 71,130
Operating income 185,440 98,902 -46.7 951
Other income:
Interest and dividends 14,441 18,756 180
Royalty income 32,375 34,244 329
Foreign exchange gain, net 1,928 18,059 174
Gain on sale of securities
investments, net 72,552 11,774 113
Gain on issuances of
stock by subsidiaries
and equity investees - 4,870 47
Other 36,232 34,587 333
157,528 122,290 1,176
Other expenses:
Interest 27,314 27,849 268
Loss on devaluation of
securities investments 23,198 16,481 159
Other 44,835 32,795 315
95,347 77,125 742
Income before income taxes 247,621 144,067 -41.8 1,385
Income taxes 80,831 52,774 507
Income before minority
interest, equity in net
income (loss) of affiliated
companies and cumulative
effect of an accounting
change 166,790 91,293 -45.3 878
Minority interest in
income of consolidated
subsidiaries 6,581 2,379 23
Equity in net income
(loss) of affiliated
companies (44,690) 1,714 16
Income before cumulative
effect of an accounting
change 115,519 90,628 -21.5 871
Cumulative effect of an
accounting change(2004:
Net of income taxes of
Y0 million) - (2,117) (20)
Net income Y115,519 Y88,511 -23.4 $851
Per share data:
Common stock
Income before cumulative
effect of an accounting
change
- Basic Y125.74 Y98.26 -21.9 $0.94
- Diluted 118.21 93.00 -21.3 0.89
Net income
- Basic 125.74 95.97 -23.7 0.92
- Diluted 118.21 90.88 -23.1 0.87
Subsidiary tracking stock
Net income (loss)
- Basic (41.98) (41.80) - (0.40)
Additional Paid-in Capital and Retained Earnings
The following information shows change in additional paid-in capital for the year ended March 31, 2003 and 2004 and change in retained earnings for the year ended March 31, 2003 and 2004.
Sony discloses this supplemental information in accordance with disclosure requirements of the Japanese Securities and Exchange Law, to which Sony, as a Japanese public company, is subject.
(Millions of yen, millions of U.S. dollars)
Year ended March 31
2003 2004 2004
Additional Pain-in Capital:
Balance, beginning of year Y968,223 Y984,196 $9,463
Conversion of convertible bonds 172 3,988 38
Exchange offerings 15,791 5,409 52
Reissuance of treasury stock 10 (776) (7)
Balance, end of year Y984,196 Y992,817 $9,546
(Millions of yen, millions of U.S. dollars)
Year ended March 31
2003 2004 2004
Retained Earnings:
Balance, beginning of year Y1,209,262 1,301,740 $12,517
Net income 115,519 88,511 851
Cash dividends (23,022) (23,138) (222)
Common stock issue costs, net
of tax (19) (53) (1)
Balance, end of year Y1,301,740 Y1,367,060 $13,145
Consolidated Statements of Income (Unaudited)
(Millions of yen, millions of U.S. dollars,
except per share amounts)
Three months ended March 31
2003 2004 Change % 2004
Sales and operating revenue:
Net sales Y1,503,150 Y1,615,836 $15,537
Financial service revenue 140,142 144,679 1,391
Other operating revenue 11,072 11,676 112
1,654,364 1,772,191 +7.1 17,040
Costs and expenses:
Cost of sales 1,140,533 1,238,300 11,907
Selling, general and
administrative 476,883 495,378 4,763
Financial service expenses 137,013 126,385 1,215
Loss on sale, disposal or
impairment of assets, net 16,402 21,884 210
1,770,831 1,881,947 18,095
Operating income (loss) (116,467) (109,756) - (1,055)
Other income:
Interest and dividends 4,280 5,388 52
Royalty income 10,129 10,389 100
Foreign exchange gain, net - 7,588 73
Gain on sale of securities
investments, net 1,682 28 0
Gain on issuances of stock
by subsidiaries and equity
investees - 3,951 38
Other 11,560 8,139 78
27,651 35,483 341
Other expenses:
Interest 7,251 7,179 69
Loss on devaluation of
securities investments 5,273 3,931 38
Foreign exchange loss, net 264 - -
Other 18,138 8,190 79
30,926 19,300 186
Income (loss) before income
taxes (119,742) (93,573) - (900)
Income taxes (23,412) (50,498) (486)
Income (loss) before minority
interest, equity in net
income (loss) of affiliated
companies (96,330) (43,075) - (414)
Minority interest in income
(loss) of consolidated
subsidiaries (90) 557 6
Equity in net income (loss)
of affiliated companies (14,904) 5,477 53
Net income (loss) Y(111,144) Y(38,155) - $(367)
Per share data:
Common stock
Net income (loss)
- Basic Y(120.47) Y(41.23) - $(0.40)
- Diluted (120.47) (41.23) - (0.40)
Subsidiary tracking stock
Net income (loss)
- Basic (69.86) (13.12) - (0.13)
Consolidated Balance Sheets
(Millions of yen, millions of U.S. dollars)
March 31
ASSETS 2003 2004 2004
Current assets:
Cash and cash equivalents Y713,058 Y849,211 $8,165
Time deposits 3,689 4,662 45
Marketable securities 241,520 274,748 2,642
Notes and accounts receivable,
trade 1,117,889 1,123,863 10,806
Allowance for doubtful
accounts and sales returns (110,494) (112,674) (1,083)
Inventories 625,727 666,507 6,409
Deferred income taxes 143,999 125,532 1,207
Prepaid expenses and other
current assets 418,826 431,506 4,149
3,154,214 3,363,355 32,340
Film costs 287,778 256,740 2,469
Investments and advances:
Affiliated companies 111,510 86,253 829
Securities investments and
other 1,882,613 2,426,697 23,334
1,994,123 2,512,950 24,163
Property, plant and equipment:
Land 188,365 189,785 1,825
Buildings 872,228 930,983 8,952
Machinery and equipment 2,054,219 2,053,085 19,741
Construction in progress 60,383 98,480 947
Less-Accumulated depreciation(1,896,845) (1,907,289) (18,340)
1,278,350 1,365,044 13,125
Other assets:
Intangibles, net 258,624 248,010 2,385
Goodwill 290,127 277,870 2,672
Deferred insurance acquisition
costs 327,869 349,194 3,358
Deferred income taxes 328,091 203,203 1,954
Other 451,369 514,296 4,944
1,656,080 1,592,573 15,313
Y8,370,545 Y9,090,662 $87,410
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings Y124,360 Y91,260 $878
Current portion of long-term
debt 34,385 326,450 3,139
Notes and accounts payable,
trade 697,385 778,773 7,488
Accounts payable, other and
accrued expenses 864,188 812,175 7,809
Accrued income and other taxes 109,199 57,913 557
Deposits from customers in the
banking business 248,721 378,851 3,643
Other 356,810 479,486 4,610
2,435,048 2,924,908 28,124
Long-term liabilities:
Long-term debt 807,439 834,956 8,028
Accrued pension and severance
costs 496,174 368,382 3,542
Deferred income taxes 159,079 96,193 925
Future insurance policy
benefits and other 1,914,410 2,178,626 20,948
Other 255,478 286,737 2,758
3,632,580 3,764,894 36,201
Minority interest in
consolidated subsidiaries 22,022 22,858 220
Stockholders' equity:
Capital stock 476,278 480,267 4,618
Additional paid-in capital 984,196 992,817 9,546
Retained earnings 1,301,740 1,367,060 13,145
Accumulated other
comprehensive income (471,978) (449,959) (4,327)
Treasury stock, at cost (9,341) (12,183) (117)
2,280,895 2,378,002 22,865
Y8,370,545 Y9,090,662 $87,410
Consolidated Statements of Cash Flows
(Millions of yen, millions of U.S. dollars)
Year ended March 31
2003 2004 2004
Cash flows from operating
activities:
Net income Y115,519 Y88,511 $851
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation and amortization,
including amortization of
deferred insurance acquisition
costs 351,925 366,269 3,522
Amortization of film costs 312,054 305,786 2,940
Accrual for pension and
severance costs, less payments 37,858 35,562 342
Loss on sale, disposal or
impairment of assets, net 39,941 35,495 341
Gain on sales of securities
investments, net (72,552) (11,774) (113)
Deferred income taxes (98,016) (34,445) (331)
Equity in net (income) losses
of affiliated companies,
net of dividends 46,692 1,732 17
Cumulative effect of an
accounting change - 2,117 20
Changes in assets and liabilities:
(Increase) decrease in notes
and accounts receivable,
trade 174,679 (63,010) (606)
(Increase) decrease in
inventories 36,039 (78,656) (756)
Increase in film costs (317,953) (299,843) (2,883)
Increase (decrease) in notes
and accounts payable, trade (58,384) 93,950 903
Increase (decrease) in
accrued income and other
taxes 14,637 (46,067) (443)
Increase in future insurance
policy benefits and other 233,992 264,216 2,541
Increase in deferred
insurance acquisition costs (66,091) (71,219) (685)
(Increase) decrease in other
current assets 29,095 (34,991) (336)
Increase in other current
liabilities 26,205 44,772 431
Other 48,148 34,230 328
Net cash provided by
operating activities 853,788 632,635 6,083
Cash flows from investing activities:
Payments for purchases of fixed
assets (275,285) (427,344) (4,109)
Proceeds from sales of fixed
assets 25,711 33,987 327
Payments for investments and
advances by financial service
business (1,012,508) (1,167,945) (11,231)
Payments for investments and
advances (other than financial
service business) (123,839) (33,329) (320)
Proceeds from sales of
securities investments,
maturities of marketable
securities and collections
of advances by financial
service business 529,395 791,188 7,607
Proceeds from sales of
securities investments,
maturities of marketable
securities and collections
of advances (other than
financial service business) 148,977 35,521 342
(Increase) decrease in time
deposits 1,124 (1,456) (14)
Cash assumed upon acquisition
by stock exchange offering - 3,634 35
Gain on issuances of stock by
subsidiaries - 3,952 38
Net cash used in investing
activities (706,425) (761,792) (7,325)
Cash flows from financing
activities:
Proceeds from issuance of
long-term debt 12,323 267,864 2,575
Payments of long-term debt (238,144) (32,042) (308)
Decrease in short-term
borrowings (7,970) (57,708) (555)
Increase in deposits from
customers in the banking
business 142,023 129,874 1,249
Dividends paid (22,871) (23,106) (222)
Other 21,505 28,401 273
Net cash provided by (used in)
financing activities (93,134) 313,283 3,012
Effect of exchange rate changes
on cash and cash equivalents (24,971) (47,973) (461)
Net increase in cash and cash
equivalents 29,258 136,153 1,309
Cash and cash equivalents at
beginning of the fiscal year 683,800 713,058 6,856
Cash and cash equivalents at
end of the fiscal year Y713,058 Y849,211 $8,165
(Notes)
1. U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of Y104 = U.S. $1, the approximate Tokyo foreign
exchange market rate as of March 31, 2004.
2. As of March 31, 2004, Sony had 1,048 consolidated subsidiaries
(including variable interest entities). It has applied the equity
accounting method in respect to 66 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 and the year ended March 31, 2003
and 2004 mainly resulted from convertible bonds. No additional shares
were included in the computation of diluted net loss per share for the
three months ended March 31, 2003 and 2004 because to do so would have
been antidilutive.
Weighted-average shares (Thousands of shares)
Year ended March 31
2003 2004
Income before cumulative effect of an accounting
change and net income
- Basic 919,706 923,650
- Diluted 998,591 1,000,215
Weighted-average shares (Thousands of shares)
Three months ended March 31
2003 2004
Net income
- Basic 920,814 924,439
- Diluted 920,814 924,439
Weighted-average shares used for computation of earnings per share of
the subsidiary tracking stock for the three months and the year ended
March 31, 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 (loss) and comprehensive income (loss) for the
three months and the year ended March 31, 2003 and 2004 were as
follows:
(Millions of yen,
millions of U.S. dollars)
Year ended March 31 Three months ended March 31
2003 2004 2004 2003 2004 2004
Net income (loss) Y115,519 Y88,511 $851 Y(111,144) Y(38,155) $(367)
Other comprehensive
income (loss):
Unrealized gains
(losses) on
Securities (5,339) 52,292 503 2,834 21,385 206
Unrealized gains
(losses) on
derivative
instruments (4,082) 4,193 40 (668) 1,302 13
Minimum pension
liabilities
Adjustments (110,636) 93,415 898 (110,636) 95,611 919
Foreign currency
translation
adjustments (76,328) (127,881) (1,229) 25,387 (27,752) (267)
(196,385) 22,019 212 (83,083) 90,546 871
Comprehensive
income (loss) Y(80,866) Y110,530 $1,063 Y(194,227) Y52,391 $504
5. On April 1, 2002, Sony adopted FAS No.144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". FAS No.144 addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets. FAS No.144 establishes a single accounting model
for long-lived assets to be disposed of by sale and modifies the
accounting and disclosure rules for discontinued operations. The
adoption of the provision of FAS No.144 did not have a material impact
on Sony's results of operations and financial position for the year
ended March 31, 2003.
6. In April 2002, the Financial Accounting Standards Board ("FASB")
issued FAS No.145, "Rescission of FASB Statements No.4, 44 and 64,
Amendment of FASB Statement No.13, and Technical Corrections". This
statement rescinds certain authoritative pronouncements and amends,
clarifies or describes the applicability of others, effective for
fiscal years beginning or transactions occurring after May 15, 2002,
with early adoption encouraged. Sony elected early adoption of this
statement retroactive to April 1, 2002. The adoption of this
statement did not have an impact on Sony's results of operations and
financial position.
7. In June 2002, the FASB issued FAS No.146, "Accounting for Costs
Associated with Exit or Disposal Activities". FAS No.146 is effective
for exit or disposal activities that are initiated after December 31,
2002. FAS No.146 addresses financial accounting and reporting for
costs associated with exit or disposal activities. Sony adopted FAS
No.146 on January 1, 2003. The adoption of this statement did not
have a material effect on Sony's results of operations and financial
position.
8. In November 2002, the FASB issued FASB Interpretation ("FIN") No.45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others, an
interpretation of FASB Statements No.5, 57, and 107 and rescission of
FASB Interpretation No.34". The interpretation elaborates on the
existing disclosure requirements for most guarantees. It also
clarifies that at the time a company issues a guarantee, the company
must recognize an initial liability for the fair value of the
obligations it assumes under the guarantee. The initial recognition
and initial measurement provisions of FIN No.45 are applicable on a
prospective basis to guarantees issued or modified after December 31,
2002. The initial recognition and initial measurement provisions of
FIN No.45 did not have a material effect on Sony's results of
operations and financial position as at and for the year ended
March 31, 2003.
9. In December 2002, the FASB issued FAS No.148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an Amendment of
FASB Statement No.123". FAS No.148 amends FAS No.123, "Accounting for
Stock-Based Compensation", to provide alternative methods of
transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. FAS No.148 also
requires that disclosures of the pro forma effect of using the fair
value method of accounting for stock-based employee compensation be
displayed more prominently and in a tabular format. Sony adopted the
disclosure-only requirements in accordance with FAS No.148 for the
year ended March 31, 2003. Sony has accounted for its employee
stock-based compensation in accordance with Accounting Principles
Board Opinion No.25, "Accounting for Stock Issued to Employees" and,
therefore, the adoption of the provisions of FAS No.148 did not have
an impact on Sony's results of operations and financial position.
10. Effective with the first quarter ended June 30, 2003, "(Gain) loss on
sale, disposal or impairment of assets, net" which was previously
included in "Selling, general and administrative" is disclosed
separately in "Costs and expenses". Such amounts for the three months
and the year ended March 31, 2003 have been reclassified to conform to
the presentation for this year.
11. Adoption of New Accounting Standards
Consolidation of Variable Interest Entities
In January 2003, the FASB issued FIN No.46, "Consolidation of Variable
Interest Entities - an Interpretation of 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, the provisions of FIN No.46
must be adopted by the end of the third quarter of the year ending
March 31, 2004, with early adoption from the second quarter
encouraged. For VIEs acquired prior to February 1, 2003, any
difference between the net amount added to the balance sheet and the
amount of any previously recognized interest in the VIE will be
recognized as a cumulative effect of accounting change. 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 ($20 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 ($916 million) and Y97,950 million
($942 million), respectively, as well as cash and cash equivalents of
Y1,521 million ($15 million).
Accounting for Asset Retirement Obligations
In June 2001, the FASB issued FAS No.143, "Accounting for Asset
Retirement Obligations". This statement addresses financial
accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset
retirement costs. Sony adopted FAS No.143 on April 1, 2003. The
adoption of FAS No.143 did not have a material impact on Sony's
results of operations and financial position.
Multiple Element Revenue Arrangements
In November 2002, the FASB issued Emerging Issues Task Force ("EITF")
Issue No.00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables". EITF Issue No.00-21 provides guidance on when and how
to account for arrangements that involve the delivery or performance
of multiple products, services and/or rights to use assets. Sony
adopted EITF Issue No.00-21 on July 1, 2003. The adoption of EITF
Issue No.00-21 did not have a material impact on Sony's results of
operations and financial position.
Derivative Instruments and Hedging Activities
In April 2003, the FASB issued FAS No.149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities". This statement
amends and clarifies financial accounting and reporting for derivative
instruments, including derivative instruments embedded in other
contracts and for hedging activities under FAS No.133. Sony adopted
FAS No.149 on July 1, 2003. The adoption of FAS No.149 did not have
an impact on Sony's results of operations and financial position.
Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity
In May 2003, the FASB issued FAS No.150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity". FAS No.150 establishes standards for how certain financial
instruments with characteristics of both liabilities and equity shall
be classified and measured. This statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning
after June 15, 2003. Sony adopted FAS No.150 on April 1, 2003. The
adoption of FAS No.150 did not have an impact on Sony's results of
operations and financial position.
Other Consolidated Financial Data
(Millions of yen, millions of U.S. dollars)
Year ended March 31
2003 2004 Change 2004
Capital expenditures
(additions to property,
plant and equipment) Y261,241 Y378,264 +44.8% $3,637
Depreciation and
amortization expenses* 351,925 366,269 +4.1 3,522
(Depreciation expenses for
tangible assets) (279,476) (286,911) (+2.7) (2,759)
Research and development
expenses 443,128 514,483 +16.1 4,947
Three months ended March 31
2003 2004 Change 2004
Capital expenditures
(additions to property,
plant and equipment) Y76,610 Y109,582 +43.0% $1,054
Depreciation and amortization
expenses* 96,241 99,339 +3.2 955
(Depreciation expenses for
tangible assets) (74,340) (76,485) (+2.9) (735)
Research and development
expenses 131,379 140,368 +6.8 1,350
* 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 show 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 Year ended March 31
Financial Services 2003 2004 Change % 2004
Financial service
revenue Y537,276 Y593,544 +10.5 $5,707
Financial service expenses 514,518 538,383 +4.6 5,177
Operating income 22,758 55,161 +142.4 530
Other income (expenses),
net (1,282) 1,958 - 19
Income before income taxes 21,476 57,119 +166.0 549
Income taxes and other 13,071 22,975 +75.8 221
Net income Y8,405 Y34,144 +306.2 $328
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sony without Financial
Services 2003 2004 Change % 2004
Net sales and operating
revenue Y6,974,980 Y6,939,964 -0.5 $66,730
Costs and expenses 6,811,292 6,896,377 +1.2 66,311
Operating income 163,688 43,587 -73.4 419
Other income (expenses),
net 67,846 52,746 -22.3 507
Income before income taxes 231,534 96,333 -58.4 926
Income taxes and other 120,089 30,916 -74.3 297
Income before cumulative
effect of an accounting
change 111,445 65,417 -41.3 629
Cumulative effect of an
accounting change - (2,117) - (20)
Net income Y111,445 Y63,300 -43.2 $609
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Consolidated 2003 2004 Change % 2004
Financial service
revenue Y509,398 Y565,752 +11.1 $5,440
Net sales and operating
revenue 6,964,235 6,930,639 -0.5 66,641
7,473,633 7,496,391 +0.3 72,081
Costs and expenses 7,288,193 7,397,489 +1.5 71,130
Operating income 185,440 98,902 -46.7 951
Other income (expenses),
net 62,181 45,165 -27.4 434
Income before income taxes 247,621 144,067 -41.8 1,385
Income taxes and other 132,102 53,439 -59.5 514
Income before cumulative
effect of an accounting
change 115,519 90,628 -21.5 871
Cumulative effect of an
accounting change - (2,117) - (20)
Net income Y115,519 Y88,511 -23.4 $851
(Millions of yen, millions of U.S. dollars)
Condensed Statements of Income Three months ended March 31
Financial Services 2003 2004 Change % 2004
Financial service revenue Y147,400 Y152,141 +3.2 $1,463
Financial service expenses 144,287 134,949 -6.5 1,298
Operating income 3,113 17,192 +452.3 165
Other income (expenses), net 1,173 (92) - (1)
Income before income taxes 4,286 17,100 +299.0 164
Income taxes and other 3,751 7,103 +89.4 68
Net income Y535 Y9,997 +1768.6 $96
(Millions of yen, millions of U.S. dollars)
Three months ended March 31
Sony without Financial
Services 2003 2004 Change % 2004
Net sales and operating
revenue Y1,517,775 Y1,630,452 +7.4 $15,677
Costs and expenses 1,636,881 1,757,683 +7.4 16,900
Operating income (loss) (119,106) (127,231) - (1,223)
Other income (expenses),
net (4,533) 16,551 - 159
Income (loss) before income
taxes (123,639) (110,680) - (1,064)
Income taxes and other (11,977) (62,419) - (600)
Net income (loss) Y(111,662) Y(48,261) - $(464)
(Millions of yen, millions of U.S. dollars)
Three months ended March 31
Consolidated 2003 2004 Change % 2004
Financial service revenue Y140,142 Y144,679 +3.2 $1,391
Net sales and operating
revenue 1,514,222 1,627,512 +7.5 15,649
1,654,364 1,772,191 +7.1 17,040
Costs and expenses 1,770,831 1,881,947 +6.3 18,095
Operating income (loss) (116,467) (109,756) - (1,055)
Other income (expenses),
net (3,275) 16,183 - 155
Income (loss) before income
taxes (119,742) (93,573) - (900)
Income taxes and other (8,598) (55,418) - (533)
Net income (loss) Y(111,144) Y(38,155) - $(367)
Condensed Balance Sheets
(Millions of yen, millions of U.S. dollars)
Financial Services March 31
ASSETS 2003 2004 2004
Current assets:
Cash and cash equivalents Y274,543 Y256,316 $2,465
Marketable securities 236,621 270,676 2,603
Notes and accounts receivable,
trade 68,188 72,273 695
Other 105,593 100,433 965
684,945 699,698 6,728
Investments and advances 1,731,415 2,274,510 21,870
Property, plant and equipment 45,990 40,833 393
Other assets:
Deferred insurance acquisition
costs 327,869 349,194 3,358
Other 106,900 110,804 1,065
434,769 459,998 4,423
Y2,897,119 Y3,475,039 $33,414
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings Y72,753 Y86,748 $834
Notes and accounts payable,
trade 5,417 7,847 75
Deposits from customers in
the banking business 248,721 378,851 3,643
Other 88,986 175,357 1,686
415,877 648,803 6,238
Long-term liabilities:
Long-term debt 140,908 135,811 1,306
Accrued pension and severance
costs 8,737 10,183 98
Future insurance policy
benefits and other 1,914,410 2,178,626 20,948
Other 104,421 126,349 1,216
2,168,476 2,450,969 23,568
Stockholders' equity 312,766 375,267 3,608
Y2,897,119 Y3,475,039 $33,414
(Millions of yen, millions of U.S. dollars)
Sony without Financial Services
March 31
ASSETS 2003 2004 2004
Current assets:
Cash and cash equivalents Y438,515 Y592,895 $5,700
Marketable securities 4,899 4,072 39
Notes and accounts receivable,
trade 943,073 943,590 9,073
Other 1,117,453 1,151,879 11,077
2,503,940 2,692,436 25,889
Film costs 287,778 256,740 2,469
Investments and advances 383,004 358,629 3,448
Investments in Financial
Services, at cost 166,905 176,905 1,701
Property, plant and equipment 1,232,359 1,324,211 12,732
Other assets 1,251,810 1,251,901 12,038
Y5,825,796 Y6,060,822 $58,277
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings Y126,687 Y352,459 $3,389
Notes and accounts payable,
trade 693,589 773,221 7,435
Other 1,245,578 1,190,563 11,448
2,065,854 2,316,243 22,272
Long-term liabilities:
Long-term debt 802,911 832,540 8,005
Accrued pension and severance
costs 487,437 358,199 3,444
Other 310,136 348,946 3,355
1,600,484 1,539,685 14,804
Minority interest in
consolidated subsidiaries 16,288 17,554 169
Stockholders' equity 2,143,170 2,187,340 21,032
Y5,825,796 Y6,060,822 $58,277
(Millions of yen, millions of U.S. dollars)
Consolidated March 31
ASSETS 2003 2004 2004
Current assets:
Cash and cash equivalents Y713,058 Y849,211 $8,165
Marketable securities 241,520 274,748 2,642
Notes and accounts
receivable, trade 1,007,395 1,011,189 9,723
Other 1,192,241 1,228,207 11,810
3,154,214 3,363,355 32,340
Film costs 287,778 256,740 2,469
Investments and advances 1,994,123 2,512,950 24,163
Property, plant and equipment 1,278,350 1,365,044 13,125
Other assets:
Deferred insurance acquisition
costs 327,869 349,194 3,358
Other 1,328,211 1,243,379 11,955
1,656,080 1,592,573 15,313
Y8,370,545 Y9,090,662 $87,410
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings Y158,745 Y417,710 $4,016
Notes and accounts payable,
trade 697,385 778,773 7,488
Deposits from customers in
the banking business 248,721 378,851 3,643
Other 1,330,197 1,349,574 12,977
2,435,048 2,924,908 28,124
Long-term liabilities:
Long-term debt 807,439 834,956 8,028
Accrued pension and severance
costs 496,174 368,382 3,542
Future insurance policy
benefits and other 1,914,410 2,178,626 20,948
Other 414,557 382,930 3,683
3,632,580 3,764,894 36,201
Minority interest in
consolidated subsidiaries 22,022 22,858 220
Stockholders' equity 2,280,895 2,378,002 22,865
Y8,370,545 Y9,090,662 $87,410
(Millions of yen, millions of U.S. dollars)
Condensed Statements of Cash Flows Year ended March 31
Financial Services 2003 2004 2004
Net cash provided by operating
activities Y314,764 Y241,627 $2,323
Net cash used in investing
activities (516,663) (401,550) (3,860)
Net cash provided by financing
activities 149,207 141,696 1,362
Net decrease in cash and cash
equivalents (52,692) (18,227) (175)
Cash and cash equivalents at
beginning of the fiscal year 327,235 274,543 2,640
Cash and cash equivalents at
end of the fiscal year Y274,543 Y256,316 $2,465
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Sony without Financial Services 2003 2004 2004
Net cash provided by operating
activities Y544,051 Y401,090 $3,856
Net cash used in investing
activities (185,883) (352,496) (3,389)
Net cash provided by (used in)
financing activities (251,247) 153,759 1,478
Effect of exchange rate changes
on cash and cash equivalents (24,971) (47,973) (461)
Net increase in cash and cash
equivalents 81,950 154,380 1,484
Cash and cash equivalents at
beginning of the fiscal year 356,565 438,515 4,216
Cash and cash equivalents at end
of the fiscal year Y438,515 Y592,895 $5,700
(Millions of yen, millions of U.S. dollars)
Year ended March 31
Consolidated 2003 2004 2004
Net cash provided by operating
activities Y853,788 Y632,635 $6,083
Net cash used in investing
activities (706,425) (761,792) (7,325)
Net cash provided by (used in)
financing activities (93,134) 313,283 3,012
Effect of exchange rate changes
on cash and cash equivalents (24,971) (47,973) (461)
Net increase in cash and cash
equivalents 29,258 136,153 1,309
Cash and cash equivalents at
beginning of the fiscal year 683,800 713,058 6,856
Cash and cash equivalents at
end of the fiscal year Y713,058 Y849,211 $8,165
END FIRST AND FINAL ADD
SOURCE: Sony Corporation
CONTACT: Investors, in Tokyo, Yukio Ozawa, +81-3-5448-2180, in New York,
Masaaki Konoo or Kumiko Koyama, +1-212-833-6722, or in London, Chris Hohman or
Shinji Tomita, +44-20-7444-9713, all of Sony Corporation