Form 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of July 2007
Commission File Number: 001-06439
SONY CORPORATION
(Translation of registrant's name into English)
1-7-1 KONAN, MINATO-KU, TOKYO, 108-0075, JAPAN
(Address of principal executive offices)
The registrant files annual reports under cover of Form 20-F.
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F,
Form 20-F X Form 40-F __
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934,
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):82-______
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SONY CORPORATION
(Registrant)
By: /s/ Nobuyuki Oneda
(Signature)
Nobuyuki Oneda
Executive Vice President and
Chief Financial Officer
Date: July 26, 2007
List of materials
Documents attached hereto:
i) Press release announcing Consolidated Financial Results for the
First Quarter Ended June 30, 2007
Sony Corporation
1-7-1 Konan, Minato-ku
Tokyo 108-0075 Japan
No: 07-066E
3:00 P.M. JST, July 26, 2007
Consolidated Financial Results
for the First Quarter Ended June 30, 2007
Tokyo, July 26, 2007 -- Sony Corporation today announced its consolidated
results for the first quarter of the fiscal year ending March 31, 2008
(April 1, 2007 to June 30, 2007).
(Billions of yen, millions of U.S. dollars, except per share amounts)
First quarter ended June 30
2006 2007 Change 2007*
in Yen
------- ------- ------ ------
Sales and operating Y1,744.2 Y1,976.5 +13.3% $16,069
revenue
Operating income 27.0 99.3 +267.2 808
Income before income 54.0 83.8 + 55.0 681
taxes
Equity in net income 3.6 22.0 +506.4 178
of affiliated
companies
Net income 32.3 66.5 +105.8 540
Net income per share
of common stock
- Basic Y32.25 Y66.29 +105.6 $0.54
- Diluted 30.75 63.14 +105.3 0.51
Unless otherwise specified, all amounts are presented on the basis of
Generally Accepted Accounting Principles in the U.S. ("U.S. GAAP").
* U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of Y123=U.S.$1, the approximate Tokyo foreign exchange
market rate as of June 29, 2007.
Consolidated Results for the First Quarter Ended June 30, 2007
--------------------------------------------------------------
Sales and operating revenue ("sales") increased 13.3% (a 7% increase on a
local currency basis) compared with the same quarter of the previous
fiscal year. (For all references herein to sales on a local currency
basis, see Note.)
Electronics segment sales increased 11.6% (a 4% increase on a local
currency basis). Products such as Cyber-shot(TM) digital cameras, BRAVIA(TM)
LCD televisions and Handycam(R) video cameras contributed to the sales
increase; however, sales declined for products such as LCD rear-projection
televisions and CRT televisions. In the Game segment, sales increased 60.5%
compared to the same quarter of the previous fiscal year primarily as a result
of the contribution to sales from PLAYSTATION(R)3 ("PS3"), which was released
during the second half of last fiscal year. In the Pictures segment, there
was a 13.0% increase in revenue mainly due to the highly successful worldwide
theatrical performance of Spider-Man 3. In the Financial Services segment,
revenue increased by 48.9% mainly due to an improvement in both valuation
gains (losses) from convertible bonds in the general account and gains (losses)
from investments in the separate account at Sony Life Insurance Co., Ltd.
("Sony Life").
Operating income increased 267.2% to Y99.3 billion ($808 million)
compared to the same quarter of the previous fiscal year.
In the Electronics segment, operating income increased 77.3% compared to
the same quarter of the previous fiscal year. This was primarily due to a
positive impact from the depreciation of the yen versus the U.S. dollar
and the Euro, as well as an increase in sales of semiconductors to the
Game segment. In the Game segment, the operating loss increased primarily
due to the loss arising from strategic pricing of PS3 at points lower
than its production cost. In the Pictures segment, operating income was
recorded compared to an operating loss recorded in the same quarter of
the previous fiscal year primarily as a result of higher sales in the
home entertainment market of prior fiscal year films as well as lower
overall theatrical marketing expenses on upcoming summer releases
incurred in the current quarter. In the Financial Services segment, there
was an increase in operating income mainly attributable to the
above-mentioned improvement in valuation gains (losses) from convertible
bonds in the general account at Sony Life.
Restructuring charges, which are recorded as operating expenses, amounted
to Y3.4 billion ($28 million) for the quarter compared to Y10.7 billion
for the same quarter of the previous fiscal year. In the Electronics
segment, restructuring charges were Y2.6 billion ($21 million) compared
to Y10.1 billion in the same quarter of the previous fiscal year.
Income before income taxes increased 55.0% compared to the same quarter
in the previous fiscal year due to the increase in operating income
mentioned above, although there was a decrease in the net effect of other
income and expenses. The lower net effect of other income and expenses
was a result of the recording of a net foreign exchange loss in the
current quarter versus the net foreign exchange gain recorded in the same
quarter of the previous fiscal year. In addition, there was a gain of
Y18.0 billion recorded for the change in ownership interests in
subsidiaries and investees during the same quarter in the previous fiscal
year from the sale of a majority ownership interest in StylingLife
Holdings Inc. ("StylingLife"), a holding company comprised of Sony's six
retail businesses.
Income taxes: During the current quarter, Sony recorded Y39.7 billion
($322 million) of income taxes resulting in an effective tax rate of
47.3%. The effective tax rate for the current quarter exceeded the
Japanese statutory tax rate primarily due to the recording of an
additional tax provision for the undistributed earnings of Sony Ericsson
Mobile Communications AB ("Sony Ericsson").
Equity in net income of affiliated companies increased 506.4% to Y22.0
billion ($178 million) compared to the same quarter of the previous
fiscal year. Sony recorded equity in net income for Sony Ericsson of
Y17.7 billion ($144 million), an increase of Y7.5 billion compared to the
same quarter of the previous year. Sony also recorded equity in net
income of Y1.2 billion ($10 million) for SONY BMG MUSIC ENTERTAINMENT
("SONY BMG"), an improvement of Y5.8 billion from the equity in net loss
recorded in the same quarter of the previous fiscal year, primarily due
to lower marketing, overhead and restructuring expenses as well as a gain
on the sale of an interest in a joint venture of SONY BMG. Equity in net
income of Y1.5 billion ($12 million) was recorded for S-LCD Corporation,
a joint-venture with Samsung Electronics Co., Ltd., an improvement of
Y1.8 billion compared to the same quarter of the previous fiscal year.
Sony did not record any equity gain or loss for Metro-Goldwyn-Mayer Inc.
("MGM") during the current quarter compared to equity in net loss of Y2.6
billion recorded in the same quarter of the prior fiscal year. As of
March 31, 2007, Sony no longer has any book basis in MGM and accordingly,
no additional losses are recorded.
As a result of the changes in the items discussed above, net income
increased 105.8% to Y66.5 billion ($540 million) compared to the same
quarter of the previous fiscal year.
Operating Performance Highlights by Business Segment
----------------------------------------------------
"Sales and operating revenue" in each business segment represents sales
and operating revenue recorded before intersegment transactions are
eliminated. "Operating income (loss)" in each business segment represents
operating income (loss) recorded before intersegment transactions and
unallocated corporate expenses are eliminated.
Electronics
-----------
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2006 2007 Change 2007
in Yen
------- ------- ------ ------
Sales and operating Y1,280.9 Y1,429.3 +11.6% $11,621
revenue
Operating income 47.4 84.1 +77.3% 684
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Sales increased by 11.6% compared to the same quarter of the previous
fiscal year (a 4% increase on a local currency basis). Sales to outside
customers increased 6.9% compared to the same quarter of the previous
fiscal year. There was an increase in sales of products including
"Cyber-shot" digital cameras, which experienced favorable sales in all
regions, "BRAVIA" LCD televisions, which experienced higher unit sales
outside of Japan, and Handycam(R) video cameras, which recorded increased
sales primarily in the U.S. and Europe. On the other hand, there was a
decrease in sales of several products including LCD rear-projection
televisions and CRT televisions, as the market for such products is
shrinking.
Operating income of Y84.1 billion ($684 million) was recorded, a 77.3%
increase compared to the same quarter of the previous fiscal year. This
was primarily the result of a positive impact from the depreciation of
the yen versus the U.S. dollar and the Euro, as well as an increase in
sales. With regard to products within the Electronics segment, the
improvement was mainly attributable to "Cyber-shot" digital cameras,
system LSIs, which saw a contribution from the sales of semiconductors
for PS3, and Handycam(R) video cameras. This was partially offset by a
decrease in contribution from other products including "BRAVIA" LCD
televisions, due to unit price declines.
Inventory, as of June 30, 2007, was Y928.4 billion ($7,548 million),
which increased Y120.8 billion, or 15.0%, compared with the level as of
June 30, 2006 and an increase of Y202.6 billion, or 27.9%, compared with
the level as of March 31, 2007.
Operating Results for Sony Ericsson Mobile Communications AB
------------------------------------------------------------
The following operating results for Sony Ericsson, which is accounted for
by the equity method, are not consolidated in Sony's consolidated
financial statements. However, Sony believes that this disclosure
provides additional useful analytical information to investors regarding
operating performance.
(Millions of Euros)
Quarter ended June 30
2006 2007 Change
in Euros
-------- -------- --------
Sales and operating revenue EUR2,272 EUR3,112 +37%
Income before income taxes 211 327 +55
Net income 143 220 +54
Sales for the current quarter increased by 37% compared to the same
period of the previous year. Results were boosted by sales of successful
models such as Walkman(R) and "Cyber-shot" phones. As a result, Sony
recorded equity in net income of Y17.7 billion ($144 million).
Game
----
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2006 2007 Change 2007
in Yen
------ ------ ------ ------
Sales and operating Y122.5 Y196.6 +60.5% $1,598
revenue
Operating income (26.8) (29.2) - (237)
(loss)
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Sales increased 60.5% compared with the same quarter of the previous
fiscal year (a 49% increase on a local currency basis).
Hardware: Overall hardware sales increased as a result of the
contribution to sales from PS3, which was released during the second half
of last fiscal year, in addition to increased unit sales of PlayStation(R)2
("PS2") and PSP(R) (PlayStation(R)Portable) ("PSP").
Software: Overall software sales increased as a result of the
contribution from PS3 software sales, in addition to an increase in PS2
software sales.
An operating loss of Y29.2 billion ($237 million) was recorded, a Y2.4
billion deterioration compared to the same quarter of the previous fiscal
year. This deterioration was primarily due to the loss arising from the
strategic pricing of PS3 at points lower than its production cost,
although operating income from software increased due to further hardware
penetration in the market.
Worldwide hardware unit sales (increase compared to the same quarter of
the previous fiscal year):*
-> PS2: 2.70 million units (an increase of 0.37 million units)
-> PSP: 2.14 million units (an increase of 0.73 million units)
-> PS3: 0.71 million units
Worldwide software unit sales (increase/decrease compared to the same
quarter of the previous fiscal year):*
-> PS2: 31.1 million units (a decrease of 1.6 million units)
-> PSP: 9.9 million units (an increase of 0.6 million units)
-> PS3: 4.7 million units
*Beginning with the quarter ended June 30, 2007, the method of reporting
hardware and software unit sales has been changed from production
shipments to recorded sales.
Inventory, as of June 30, 2007, was Y227.0 billion ($1,846 million),
which represents a Y105.0 billion, or 86.1%, increase compared with the
level as of June 30, 2006. This increase was primarily due to the buildup
of finished goods inventory following the introduction of the PS3
platform in Japan, North America, and Europe. Inventory increased by
Y28.2 billion, or 14.2%, compared with the level as of March 31, 2007.
Pictures
--------
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2006 2007 Change 2007
in Yen
------ ------ ------ ------
Sales and operating Y204.8 Y231.4 +13.0% $1,881
revenue
Operating income (1.2) 3.3 - 26
(loss)
Unless otherwise specified, all amounts are reported on a U.S. GAAP basis. The
results presented above are a yen-translation of the results of Sony Pictures
Entertainment ("SPE"), a U.S. based operation which aggregates the results of
its worldwide subsidiaries. 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 increased 13.0% compared with the same quarter of the previous fiscal year
(a 7% increase on a U.S. dollar basis). Sales increased primarily due to the
highly successful worldwide theatrical performance of Spider-Man 3 combined with
growth in advertising revenues from several of SPE's international channels.
Operating income of Y3.3 billion ($26 million) was recorded as compared to an
operating loss of Y1.2 billion in the same quarter of the previous fiscal year.
The current quarter's results benefited from sales in the home entertainment
market of such films as Casino Royale and Stomp the Yard that were released in
the prior fiscal year. Operating income also benefited from lower theatrical
marketing expenses incurred for upcoming summer releases compared to the same
quarter of the prior year. These benefits were partially offset by the U.S.
theatrical under-performance of Surf's Up and lower home entertainment sales
from acquired third-party product.
Financial Services
------------------
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2006 2007 Change 2007
in Yen
------ ------ ------ ------
Financial service Y124.1 Y184.8 +48.9% $1,503
revenue
Operating income 4.6 33.8 +637.1 274
In Sony's Financial Services segment, results include Sony Financial
Holdings Inc., Sony Life, Sony Assurance Inc., Sony Bank Inc. and Sony
Finance International Inc. Also, unless otherwise specified, all amounts
are reported on a U.S. GAAP basis. Therefore, they differ from the
results that Sony Life discloses on a Japanese statutory basis.
Financial service revenue increased 48.9% compared with the same quarter
of the previous fiscal year, due to an increase in revenue at Sony Life.
Revenue at Sony Life was Y161.8 billion ($1,316 million), a Y63.7 billion
or 64.9% increase compared with the same quarter of the previous fiscal
year. The main reason for this higher revenue was an improvement in both
valuation gains (losses) from convertible bonds in the general account
and gains (losses) from investments in the separate account, and an
increase in insurance premium revenue reflecting an increase in policy
amounts in force.
Operating income increased 637.1% compared with the same quarter of the
previous fiscal year as a result of a significant increase in operating
income at Sony Life. Operating income at Sony Life was Y34.6 billion
($281 million), a Y31.5 billion, or 1,018.0% increase compared with the
same quarter of the previous fiscal year, due to the above-mentioned
improvement in valuation gains (losses) from convertible bonds in the
general account, and an increase in insurance premium revenue reflecting
an increase in policy amounts in force.
All Other
---------
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
2006 2007 Change 2007
in Yen
----- ----- ---- ----
Sales and operating Y88.1 Y84.2 -4.5% $684
revenue
Operating income 4.7 7.8 +63.9 63
Unless otherwise specified, all amounts are on a U.S. GAAP basis.
Sales decreased 4.5% compared with the same quarter of the previous
fiscal year. This sales decrease is due to the fact that two months of
consolidated results for six of Sony's retail businesses were included
within All Other in the same quarter of the previous fiscal year.
However, the results of these businesses were deconsolidated as of June
1, 2006 due to the sale by Sony Corporation of its majority ownership
interest in StylingLife, a holding company comprised of the
above-mentioned six retail businesses, during the first quarter of the
previous fiscal year.
Sales increased at Sony Music Entertainment (Japan) Inc. ("SMEJ") mainly
as a result of an increase in consignment sales of non-SMEJ titles and
album sales compared to the same quarter of the previous fiscal year.
Best-selling albums and singles during the current quarter included CAN'T
BUY MY LOVE by YUI, ALL YOURS by Crystal Kay and EPopMAKING-Pop tono
Sogu- by BEAT CRUSADERS.
Operating income increased 63.9% compared with the same quarter of the
previous fiscal year. This increase was principally a result of the
increased sales recorded at SMEJ as well as higher fee revenue from new
subscribers at So-net Entertainment Corporation.
Operating Results for SONY BMG MUSIC ENTERTAINMENT
--------------------------------------------------
The following operating results for SONY BMG, which is accounted for by
the equity method, are not consolidated in Sony's consolidated financial
statements. However, Sony believes that this disclosure provides
additional useful analytical information to investors regarding operating
performance.
(Millions of U.S. dollars)
Quarter ended June 30
2006 2007 Change in
U.S. Dollars
---- ---- ----
Sales and operating revenue $872 $875 +0.3%
Income (loss) before income (73) 31 -
taxes
Net income (loss) (81) 21 -
During the quarter ended June 30, 2007, sales at SONY BMG increased by
0.3% compared to the same quarter of the previous year due to the
strength of several releases combined with the growth in digital sales
being offset by the decline in the worldwide physical music market. SONY
BMG recorded income before income taxes of $31 million, as compared to a
loss before income taxes of $73 million in the same quarter of the
previous fiscal year. Income before income taxes includes $29 million of
restructuring charges, a decrease of $18 million year-on-year. Though
sales were essentially unchanged from the prior year, profitability
improved primarily due to lower marketing, overhead and restructuring
expenses as well as a gain on the sale of an interest in a joint venture
of SONY BMG. As a result, Sony recorded equity in net income of Y1.2
billion ($10 million). Best selling releases during the quarter included
Avril Lavigne's The Best Damn Thing, Kelly Clarkson's My December and R.
Kelly's Double Up.
Cash Flows
----------
The following charts show Sony's unaudited condensed statements of cash
flows 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 Flows - Consolidated (Excluding Financial Services segment)
-------------------------
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
Cash flows 2006 2007 Change 2007
in Yen
------ ------ ------ ------
- From operating Y(189.1) Y(135.9) Y+53.3 $(1,104)
activities
- From investing (100.4) (110.7) -10.3 (900)
activities
- From financing 95.8 37.9 -57.9 308
activities
Cash and cash 585.5 522.9 -62.6 4,251
equivalents at
beginning of the
fiscal year
Cash and cash 381.6 327.1 -54.4 2,660
equivalents at
June 30
Operating Activities: During the current quarter, despite a decrease in
notes and accounts receivable, trade, cash flows from operating
activities resulted in a net use of cash. This was due primarily to
increased inventory in the Electronics segment of LCD televisions and of
semiconductors for the PS3, as well as a result of a decrease in notes
and accounts payable, trade.
Investing Activities: During the current quarter, net cash used within
the Electronics segment was for the purchase of fixed assets, principally
semiconductor fabrication equipment, and part of the investment in S-LCD
with respect to the manufacturing facilities for 8th generation TFT LCD
panels.
As a result, total net cash used by operating activities and used in
investing activities during the current quarter was Y246.5 billion
($2,004 million).
Financing Activities: During the current quarter, an increase in
short-term borrowings was partially offset by dividend payments.
Cash and Cash Equivalents: As a result of the above factors, and taking
into account the effect of foreign currency exchange rate fluctuations,
the total balance of cash and cash equivalents was Y327.1 billion ($2,660
million) at June 30, 2007, which was a decrease of Y195.7 billion
compared to March 31, 2007 and a decrease of Y54.4 billion compared to
June 30, 2006.
Cash Flows - Financial Services segment
---------------------------------------
(Billions of yen, millions of U.S. dollars)
First quarter ended June 30
Cash flows 2006 2007 Change 2007
in Yen
----- ----- ------ -----
- From operating Y91.9 Y41.6 Y-50.4 $338
activities
- From investing (40.1) (291.3) -251.2 (2,368)
activities
- From financing 9.4 95.9 +86.6 780
activities
Cash and cash 117.6 277.0 +159.4 2,252
equivalents at
beginning of the
fiscal year
Cash and cash 178.8 123.2 -55.6 1,002
equivalents at
June 30
Operating Activities: Net cash provided by operating activities was
generated due to an increase in revenue from insurance premiums, primarily
reflecting an increase in policy amounts in force at Sony Life.
Investing Activities: Payments for investments and advances mainly
carried out at Sony Life exceeded proceeds from maturities of marketable
securities, sales of securities investments and collections of advances.
Financing Activities: In addition to an increase in policyholders'
accounts at Sony Life, there was an increase in deposits from customers
in the banking business.
Cash and Cash Equivalents: As a result of the above, the balance of cash
and cash equivalents was Y123.2 billion ($1,002 million) at June 30,
2007, which was a decrease of Y153.8 billion compared to March 31, 2007
and a decrease of Y55.6 billion compared to June 30, 2006.
Note
----
During the quarter ended June 30, 2007, the average value of the yen was
Y119.8 against the U.S. dollar and Y161.2 against the Euro, which was
5.3% lower against the U.S. dollar and 11.8% lower against the Euro,
compared with the average rates for the same quarter of the previous
fiscal year. Sales on a local currency basis described herein reflect
sales obtained by applying the yen's monthly average exchange rate in the
same quarter of the previous fiscal year to local currency-denominated
monthly sales in the current quarter. Sales on a local currency basis are
not reflected in Sony's financial statements and are not measures
conforming with U.S. GAAP. In addition, Sony does not believe that these
measures are a substitute for U.S. GAAP measures. However, Sony believes
that sales on a local currency basis provide additional useful analytical
information to investors regarding operating performance.
Outlook for the Fiscal Year ending March 31, 2008
-------------------------------------------------
Our forecast for the fiscal year ending March 31, 2008, is unchanged from
the forecast of May 16, 2007 as per the table below.
In addition to first quarter operating results that exceeded Sony's May
forecast, the assumed foreign currency exchange rates for the second
quarter and thereafter have been revised to reflect a decline in value of
the yen compared to the May forecast. However, we are more cautious about
the business environment for the remainder of the fiscal year for the
Electronics and Game segments compared to our May forecast.
Change from
previous
fiscal year
Sales and operating revenue Y8,780 billion +6%
Operating income 440 billion +513
(Restructuring charges recorded 35 billion -10)
as operating expenses
Income before income taxes 420 billion +312
Equity in net income of
affiliated companies 80 billion +2
Net income 320 billion +153
Capital expenditures Y440 billion +6
(additions to fixed assets)*
Depreciation and amortization** 430 billion +7
(Depreciation expenses for (350 billion) (+11)
tangible assets)
Research and development expenses 550 billion +1
* Investments in S-LCD are not included within the forecast for capital
expenditures.
** The forecast for depreciation and amortization includes amortization
of intangible assets and amortization of deferred insurance acquisition
costs.
Assumed foreign currency exchange rates for the remainder of the fiscal
year: approximately Y117 to the U.S. dollar and approximately Y158 to the
Euro.
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," "aim," "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, as well as achieve
sufficient cost reductions for, its products and services, including
newly introduced platforms within the Game segment, 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 and
Pictures segments, and the music business); (iv) Sony's ability and
timing to recoup large-scale investments required for technology
development and increasing production capacity; (v) Sony's ability to
implement successfully personnel reduction and other business
reorganization activities in its Electronics segment; (vi) Sony's ability
to implement successfully its network strategy for its Electronics, Game
and Pictures segments, and All Other, including the music business, and
to develop and implement successful sales and distribution strategies in
its Pictures segment and the music business in light of the Internet and
other technological developments; (vii) 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); (viii) Sony's ability to
maintain product quality (particularly in the Electronics and Game
segments); (ix) the success of Sony's joint ventures and alliances; (x)
the outcome of pending legal and/or regulatory proceedings; and (xi)
shifts in customer demand for financial services such as life insurance
and Sony's ability to conduct successful asset liability management in
the Financial Services segment. Risks and uncertainties also include the
impact of any future events with material adverse impacts.
(Unaudited)
Consolidated Balance Sheets
---------------------------
(Millions of yen, millions of U.S. dollars)
June 30 June 30 June 30 March 31
-----------------------------
ASSETS 2006 2007 Change from 2006 2007 2007
--------- --------- ---------------- ------- ---------
Current
assets:
Cash and Y 560,400 Y 450,368 Y -110,032 -19.6 % $ 3,662 Y 799,899
cash
equiv-
alents
Marketable 461,655 516,014 +54,359 +11.8 4,195 493,315
securities
Notes 1,125,063 1,268,374 +143,311 +12.7 10,312 1,490,452
and
accounts
receivable,
trade
Allowance (85,384) (110,843) -25,459 +29.8 (901) (120,675)
for
doubtful
accounts
and sales
returns
Inventories 948,126 1,189,195 +241,069 +25.4 9,668 940,875
Deferred 200,966 230,458 +29,492 +14.7 1,874 243,782
income
taxes
Prepaid 537,180 780,428 +243,248 +45.3 6,344 699,075
expenses
and other
current
assets
--------- --------- ------- ------- ---------
3,748,006 4,323,994 +575,988 +15.4 35,154 4,546,723
Film costs 355,609 309,841 -45,768 -12.9 2,519 308,694
Investments
and
advances:
Affiliated 296,261 467,121 +170,860 +57.7 3,798 448,169
companies
Securities 3,235,834 3,668,091 +432,257 +13.4 29,822 3,440,567
investments
and other
--------- --------- ------- ------- ---------
3,532,095 4,135,212 +603,117 +17.1 33,620 3,888,736
Property, plant
and equipment:
Land 179,824 169,454 -10,370 -5.8 1,378 167,493
Buildings 945,258 1,004,770 +59,512 +6.3 8,169 978,680
Machinery 2,375,891 2,554,261 +178,370 +7.5 20,766 2,479,308
and
equipment
Construction 105,307 63,996 -41,311 -39.2 520 64,855
in progress
Less- (2,167,871) (2,343,545) -175,674 +8.1 (19,053) (2,268,805)
Accumulated
deprec-
iation
--------- --------- ------- ------- ---------
1,438,409 1,448,936 +10,527 +0.7 11,780 1,421,531
Other assets:
Intangibles, 204,130 234,848 +30,718 +15.0 1,909 233,255
net
Goodwill 292,497 310,842 +18,345 +6.3 2,527 304,669
Deferred 385,152 398,619 +13,467 +3.5 3,241 394,117
insurance
acquisition
costs
Deferred 162,078 221,162 +59,084 +36.5 1,798 216,997
income
taxes
Other 407,741 481,505 +73,764 +18.1 3,915 401,640
--------- --------- ------- ------- ---------
1,451,598 1,646,976 +195,378 +13.5 13,390 1,550,678
--------- --------- ------- ------- ---------
Y 10,525,717 Y 11,864,959 Y +1,339,242 +12.7% $ 96,463 Y 11,716,362
--------- --------- ------- ------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
liabilities:
Short-term Y 81,422 Y 104,960 Y +23,538 +28.9% $ 853 Y 52,291
borrowings
Current 188,232 40,652 -147,580 -78.4 331 43,170
portion of
long-term
debt
Notes and 836,632 974,084 +137,452 +16.4 7,919 1,179,694
accounts
payable,
trade
Accounts 762,463 885,328 +122,865 +16.1 7,198 968,757
payable,
other and
accrued
expenses
Accrued 40,328 66,069 +25,741 +63.8 537 70,286
income and
other taxes
Deposits 634,950 796,578 +161,628 +25.5 6,476 752,367
from
customers
in the
banking
business
Other 491,487 518,165 +26,678 +5.4 4,213 485,287
--------- --------- ------- ------- ---------
3,035,514 3,385,836 +350,322 +11.5 27,527 3,551,852
Long-term
liabilities:
Long-term 868,204 1,024,604 +156,400 +18.0 8,330 1,001,005
debt
Accrued 175,042 190,590 +15,548 +8.9 1,550 173,474
pension
and
severance
costs
Deferred 178,468 280,114 +101,646 +57.0 2,277 261,102
income
taxes
Future 2,799,808 3,117,406 +317,598 +11.3 25,345 3,037,666
insurance
policy
benefits
and other
Other 256,109 283,167 +27,058 +10.6 2,302 281,589
--------- --------- ------- ------- ---------
4,277,631 4,895,881 +618,250 +14.5 39,804 4,754,836
Minority 39,084 37,902 -1,182 -3.0 308 38,970
interest in
consolidated
subsidiaries
Stockholders'
equity:
Capital 624,967 629,019 +4,052 +0.6 5,114 626,907
stock
Additional 1,138,213 1,146,403 +8,190 +0.7 9,320 1,143,423
paid-in
capital
Retained 1,630,569 1,782,895 +152,326 +9.3 14,495 1,719,506
earnings
Accumulated (217,044) (9,105) +207,939 -95.8 (74) (115,493)
other
comprehensive
income
Treasury (3,217) (3,872) -655 +20.4 (31) (3,639)
stock,
at cost
--------- --------- ------- ------- ---------
3,173,488 3,545,340 +371,852 +11.7 28,824 3,370,704
--------- --------- ------- ------- ---------
Y 10,525,717 Y 11,864,959 Y +1,339,242 +12.7% $ 96,463 Y 11,716,362
--------- --------- ------- ------- ---------
Consolidated Statements of Income
---------------------------------
(Millions of yen, millions of U.S. dollars, except per share amounts)
Fiscal
year
ended
First quarter ended June 30 March 31
2006 2007 Change from 2006 2007 2007
--------- --------- ----------- ---- ------- ---------
Sales and
operating
revenue:
Net Y 1,599,536 Y 1,768,152 Y +168,616 +10.5% $ 14,375 Y 7,567,359
sales
Financial 118,540 177,052 +58,512 +49.4 1,440 624,282
service
revenue
Other 26,160 31,306 +5,146 +19.7 254 104,054
operating
revenue
--------- --------- ------- ------- ---------
1,744,236 1,976,510 +232,274 +13.3 16,069 8,295,695
Costs and
expenses:
Cost of 1,212,079 1,328,902 +116,823 +9.6 10,804 5,889,601
sales
Selling, 383,887 404,124 +20,237 +5.3 3,285 1,788,427
general and
administrative
Financial 113,951 145,421 +31,470 +27.6 1,182 540,097
service
expenses
(Gain)loss 7,271 (1,260) -8,531 - (10) 5,820
on sale,
disposal
or impairment
of assets,
net
--------- --------- ------- ------- ---------
1,717,188 1,877,187 +159,999 +9.3 15,261 8,223,945
Operating 27,048 99,323 +72,275 +267.2 808 71,750
income
Other income:
Interest and 7,094 9,460 +2,366 +33.4 77 28,240
dividends
Foreign 2,542 - -2,542 - - -
exchange gain,
net
Gain on 3,901 1,380 -2,521 -64.6 11 14,695
sale of
securities
investments,
net
Gain on 18,046 - -18,046 - - 31,509
change in
interest in
subsidiaries
and equity
investees
Other 4,767 6,452 +1,685 +35.3 53 20,738
--------- --------- ------- ------- ---------
36,350 17,292 -19,058 -52.4 141 95,182
Other expenses:
Interest 5,411 7,044 +1,633 +30.2 57 27,278
Loss on 16 41 +25 +156.3 1 1,308
devaluation
of securities
investments
Foreign - 18,916 +18,916 - 154 18,835
exchange
loss, net
Other 3,943 6,856 +2,913 +73.9 56 17,474
--------- --------- ------- ------- ---------
9,370 32,857 +23,487 +250.7 268 64,895
Income before 54,028 83,758 +29,730 +55.0 681 102,037
income taxes
Income taxes 24,767 39,650 +14,883 +60.1 322 53,888
--------- --------- ------- ------- ---------
Income before 29,261 44,108 +14,847 +50.7 359 48,149
minority
interest and
equity in net
income of
affiliated
companies
Minority 592 (382) -974 - (3) 475
interest
in income
(loss) of
consolidated
subsidiaries
Equity in net 3,622 21,965 +18,343 +506.4 178 78,654
income of
affiliated
companies
--------- --------- ------- ------- ---------
Net income Y 32,291 Y 66,455 Y +34,164 +105.8 $ 540 Y 126,328
--------- --------- ------- ------- ---------
Per share data:
Common stock
Net income
- Basic Y 32.25 Y 66.29 Y +34.04 +105.6 $ 0.54 Y 126.15
- Diluted 30.75 63.14 +32.39 +105.3 0.51 120.29
Consolidated Statements of Cash Flows
-------------------------------------
(Millions of yen, millions of U.S. dollars)
Fiscal
year
ended
First quarter ended June 30 March 31
2006 2007 2007 2007
-------- ------- ----- --------
Cash flows from
operating activities:
Net income Y 32,291 Y 66,455 $ 540 Y 126,328
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation and 91,265 104,004 846 400,009
amortization, including
amortization of deferred
insurance acquisition
costs
Amortization of film 79,320 90,232 734 368,382
costs
Stock-based compensation 750 898 7 3,838
expense
Accrual for pension and (1,349) (3,133) (25) (22,759)
severance costs, less
payments
(Gain) loss on sale, 7,271 (1,260) (10) 5,820
disposal or impairment
of assets, net
Gain on sale or loss on (3,885) (1,339) (10) (13,387)
devaluation of securities
investments, net
(Gain) loss on revaluation 14,994 (10,633) (86) (11,857)
of marketable securities
held in the financial
service business for
trading purpose, net
Gain on change in (18,046) - - (31,509)
interest in
subsidiaries
and equity
investees
Deferred income taxes 29,271 23,859 194 (13,193)
Equity in net (income) (2,935) 22,926 186 (68,179)
losses of affiliated
companies, net of
dividends
Changes in assets and
liabilities:
(Increase) decrease in (64,622) 260,600 2,119 (357,891)
notes and accounts
receivable, trade
Increase in inventories (155,591) (210,163) (1,709) (119,202)
Increase in film costs (81,673) (78,213) (636) (320,079)
Increase (decrease) in 26,605 (216,799) (1,763) 362,079
notes and accounts
payable, trade
Decrease in accrued (37,680) (28,151) (229) (14,396)
income and other taxes
Increase in future 25,089 48,311 393 172,498
insurance policy
benefits and other
Increase in deferred (14,959) (17,355) (141) (61,563)
insurance acquisition
costs
(Increase) decrease 23,111 (17,047) (139) 31,732
in marketable securities
held in the financial
service business for
trading purpose
(Increase) decrease in 16,521 (24,912) (203) (35,133)
other current assets
Increase (decrease) in (116,126) (68,725) (559) 73,222
other current liabilities
Other 52,446 (33,496) (273) 86,268
-------- ------- ----- --------
Net cash provided by (97,932) (93,941) (764) 561,028
(used in) operating
activities
-------- ------- ----- --------
Cash flows from investing
activities:
Payments for purchases of (132,167) (104,344) (848) (527,515)
fixed assets
Proceeds from sales of fixed 6,437 8,466 69 87,319
assets
Payments for investments (252,547) (497,598) (4,046) (914,754)
and advances by financial
service business
Payments for investments (5,888) (26,318) (214) (100,152)
and advances (other than
financial service business)
Proceeds from maturities 220,449 217,601 1,769 679,772
of marketable securities,
sales of securities
investments and
collections of
advances by financial
service business
Proceeds from maturities of 966 1,968 16 22,828
marketable securities,
sales of securities
investments and
collections of advances
(other than financial
service business)
Proceeds from sales of 30,298 928 7 43,157
subsidiaries' and
equity investees'
stocks
Other 116 (508) (3) (6,085)
-------- ------- ----- --------
Net cash used in investing (132,336) (399,805) (3,250) (715,430)
activities
-------- ------- ----- --------
Cash flows from financing
activities:
Proceeds from issuance of 105,453 23,447 191 270,780
long-term debt
Payments of long-term debt (952) (6,081) (49) (182,374)
Increase in short-term 1,857 30,800 250 6,096
borrowings
Increase in deposits from 64,907 75,077 610 273,435
customers in the financial
service business
Increase (decrease) in (62,700) 18,000 146 (100,700)
call money and bills sold
in the banking business
Dividends paid (12,552) (12,562) (102) (25,052)
Proceeds from issuance of 1,685 4,285 35 5,566
shares under stock-based
compensation plans
Other 126 (1,619) (13) 152
-------- ------- ----- --------
Net cash provided by 97,824 131,347 1,068 247,903
financing activities
-------- ------- ----- --------
Effect of exchange rate (10,254) 12,868 105 3,300
changes on cash and cash
equivalents
-------- ------- ----- --------
Net increase (decrease) (142,698) (349,531) (2,841) 96,801
in cash and cash
equivalents
Cash and cash equivalents 703,098 799,899 6,503 703,098
at beginning of the fiscal
year
-------- ------- ----- --------
Cash and cash Y 560,400 Y 450,368 $ 3,662 Y 799,899
equivalents at the
end of the period
-------- ------- ----- --------
(Notes)
1. U.S. dollar amounts have been translated from yen, for convenience only, at
the rate of Y123 = U.S. $1, the approximate Tokyo foreign exchange market
rate as of June 29, 2007.
2. As of June 30, 2007, Sony had 963 consolidated subsidiaries (including
variable interest entities). It has applied the equity accounting method
in respect to 62 affiliated companies.
3. Weighted-average number of outstanding shares used for computation of
earnings per share of common stock are as follows. The dilutive effect in
the weighted-average number of outstanding shares mainly resulted from
convertible bonds.
Weighted-average number of (Thousands of shares)
outstanding shares First quarter ended June 30
---------------------------------- 2006 2007
Net income --------- ---------
- Basic 1,001,206 1,002,496
- Diluted 1,049,969 1,052,584
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 first quarter ended June 30, 2006 and 2007
were as follows:
(Millions of yen, millions of U.S. dollars)
First quarter ended June 30
2006 2007 2007
------------------------------------------------------------------------------
Net income Y 32,291 Y 66,455 $ 540
Other comprehensive income (loss):
Unrealized losses on securities (48,226) (4,900) (40)
Unrealized gains (losses) on derivative (55) 644 5
instruments
Minimum pension liabilities (36) - -
adjustments
Pension liabilities adjustments - (1,516) (12)
Foreign currency translation (12,290) 112,160 912
adjustments
------- ------- ------
(60,607) 106,388 865
------------------------------------------------------------------------------
Comprehensive income (loss) Y (28,316) Y 172,843 $ 1,405
------------------------------------------------------------------------------
5. In September 2005, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants ("AcSEC") issued the
Statement of Position ("SOP") 05-1, "Accounting by Insurance Enterprises
for Deferred Acquisition Costs in Connection with Modifications or
Exchanges of Insurance Contracts." SOP 05-1 provides guidance on accounting
for deferred acquisition costs on internal replacements of insurance and
investment contracts other than those specifically described in FAS No. 97,
"Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sales of
Investments." Sony adopted SOP 05-1 on April 1, 2007. The adoption of SOP
05-1 did not have a material impact on Sony's results of operations and
financial position.
6. In March 2006, the Financial Accounting Standards Board ("FASB") issued
FAS No. 156, "Accounting for Servicing of Financial Assets - an
amendment of FASB Statement No. 140." This statement amends FAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" with respect to the accounting for
separately recognized servicing assets and servicing liabilities. Sony
adopted FAS No. 156 on April 1, 2007. The adoption of FAS No. 156 did not
have a material impact on Sony's results of operations and financial
position.
7. In June 2006, the FASB issued FASB Interpretation ("FIN") No. 48,
"Accounting for Uncertainty in Income Taxes, an interpretation of FASB
Statement No. 109." FIN No. 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in
accordance with FAS No. 109, "Accounting for Income Taxes." FIN No. 48
prescribes a minimum recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. FIN No. 48 also provides guidance
on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure, and transition.
Sony adopted FIN No. 48 effective April 1, 2007. As a result of the
adoption of FIN No. 48, Sony's opening retained earnings decreased by
Y4,452 million ($36 million). As of April 1, 2007, total unrecognized tax
benefits were Y223,857 million ($1,820 million). If Sony were to prevail on
all unrecognized tax benefits recorded, Y129,632 million ($1,054 million)
of the Y223,857 million would reduce the effective tax rate. Sony does not
anticipate any significant increases and decreases in unrecognized tax
benefits within the next twelve months.
Interest associated with unrecognized tax benefits is included in interest
expense. At April 1, 2007, Sony had an accrual of Y7,899 million ($64
million) related to interest recorded as accrued expenses (before any tax
benefits related thereto).
Penalties associated with income taxes are recorded within income tax
expense. At April 1, 2007, Sony had an accrual of Y3,696 million ($30
million) related to penalties recorded as a component of other non-current
liabilities.
As of April 1, 2007, Sony is subject to income tax examinations for Japan
and various foreign tax jurisdictions for tax years from 1998 through 2007.
8. In June 2006, the Emerging Issues Task Force ("EITF") issued EITF
Issue No. 06-3, "How Taxes Collected from Customers and Remitted to
Governmental Authorities Should be Presented in the Income Statement." EITF
Issue No. 06-3 requires disclosure of the accounting policy for any tax
assessed by a governmental authority that is imposed concurrently on a
specific revenue-producing transaction between a seller and a customer.
EITF Issue No. 06-3 should be applied to financial reports for interim and
annual reporting periods beginning after December 15, 2006. Sony adopted
EITF Issue No. 06-3 on April 1, 2007. The adoption of EITF Issue No. 06-3
did not have a material impact on Sony's results of operations and
financial position.
Other Consolidated Financial Data
---------------------------------
(Millions of yen, millions of U.S. dollars)
First quarter ended June 30
2006 2007 Change 2007
-------- ------- ------- ------
Capital expenditures (additions to Y 134,056 Y 95,001 -29.1% $ 772
property, plant and equipment)
Depreciation and amortization expenses* 91,265 104,004 +14.0 846
(Depreciation expenses for tangible (71,002) (76,276) +7.4 (620)
assets)
R&D expenses 119,370 125,983 +5.5 1,024
* Including amortization expenses for intangible assets and for deferred
insurance acquisition costs
Business Segment Information
-----------------------------
(Millions of yen, millions of U.S. dollars)
First quarter ended June 30
Sales and operating revenue 2006 2007 Change 2007
---------------- ----------- --------- ------ --------
Electronics
Customers Y 1,231,640 Y 1,316,049 +6.9% $ 10,700
Intersegment 49,252 113,280 921
---------------- ----------- --------- --------
Total 1,280,892 1,429,329 +11.6 11,621
Game
Customers 117,026 183,909 +57.2 1,495
Intersegment 5,463 12,673 103
---------------- ----------- --------- --------
Total 122,489 196,582 +60.5 1,598
Pictures
Customers 204,751 231,398 +13.0 1,881
Intersegment - - -
---------------- ----------- --------- --------
Total 204,751 231,398 +13.0 1,881
Financial Services
Customers 118,540 177,052 +49.4 1,440
Intersegment 5,561 7,788 63
---------------- ----------- --------- --------
Total 124,101 184,840 +48.9 1,503
All Other
Customers 72,279 68,102 -5.8 553
Intersegment 15,860 16,075 131
---------------- ----------- --------- --------
Total 88,139 84,177 -4.5 684
Elimination (76,136) (149,816) - (1,218)
---------------- ----------- --------- --------
Consolidated total Y 1,744,236 Y 1,976,510 +13.3% $ 16,069
---------------- ----------- --------- --------
Electronics intersegment amounts primarily consist of transactions with the
Game segment, Pictures segment and All Other.
All Other intersegment amounts primarily consist of transactions with the
Electronics and Game segments.
Operating income (loss) 2006 2007 Change 2007
----------------------- --------- -------- ------ ------
Electronics Y 47,419 Y 84,081 +77.3% $ 684
Game (26,803) (29,206) - (237)
Pictures (1,165) 3,251 - 26
Financial Services 4,579 33,753 +637.1 274
All Other 4,731 7,754 +63.9 63
----------------------- --------- -------- ------ ------
Total 28,761 99,633 +246.4 810
Corporate and elimination (1,713) (310) - (2)
----------------------- --------- -------- ------ ------
Consolidated total Y 27,048 Y 99,323 +267.2% $ 808
Electronics Sales and Operating Revenue to Customers by Product Category
------------------------------------------------------------------------
(Millions of yen, millions of U.S. dollars)
First quarter ended June 30
Sales and operating revenue 2006 2007 Change 2007
---------------------------------- -------- ------- ------- ------
Audio Y 116,292 Y 125,491 +7.9 % $ 1,020
Video 270,181 337,388 +24.9 2,743
Televisions 262,054 235,209 -10.2 1,912
Information and Communications 213,150 232,070 +8.9 1,887
Semiconductors 47,991 57,160 +19.1 465
Components 204,736 192,371 -6.0 1,564
Other 117,236 136,360 +16.3 1,109
---------------------------------- -------- ------- ------
Total Y 1,231,640 Y 1,316,049 +6.9% $ 10,700
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.
Geographic Segment Information
------------------------------
(Millions of yen, millions of U.S. dollars)
First quarter ended June 30
Sales and operating revenue 2006 2007 Change 2007
---------------------------------- -------- ------- ------- ------
Japan Y 476,198 Y 516,504 +8.5% $ 4,199
United States 447,917 468,724 +4.6 3,811
Europe 398,852 476,280 +19.4 3,872
Other Areas 421,269 515,002 +22.3 4,187
---------------------------------- -------- ------- ------
Total Y 1,744,236 Y 1,976,510 +13.3% $16,069
Classification of Geographic Segment Information shows sales and
operating revenue recognized by location of customers.
Condensed Financial Services Financial Statements
-------------------------------------------------
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.
Condensed Balance Sheet
-----------------------
(Millions of yen, millions of U.S. dollars)
Financial Services June 30 March 31 June 30 June 30
ASSETS 2006 2007 2007 2007
-------- ------- ------- ------
Current assets:
Cash and cash equivalents Y 178,848 Y 277,048 Y 123,243 $ 1,002
Marketable securities 454,081 490,237 513,011 4,171
Other 217,525 321,969 375,214 3,050
-------- ------- ------- ------
850,454 1,089,254 1,011,468 8,223
Investments and advances 3,149,420 3,347,897 3,570,916 29,032
Property, plant and equipment 38,056 38,671 38,275 311
Other assets:
Deferred insurance 385,152 394,117 398,619 3,241
acquisition costs
Other 96,223 107,703 106,158 863
-------- ------- ------- ------
481,375 501,820 504,777 4,104
-------- ------- ------- ------
Y 4,519,305 Y 4,977,642 Y 5,125,436 $ 41,670
-------- ------- ------- ------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings Y 82,917 Y 48,688 Y 70,163 $ 570
Notes and accounts payable, 12,516 13,159 13,620 111
trade
Deposits from customers 634,950 752,367 796,578 6,476
in the banking business
Other 150,784 143,245 128,889 1,048
-------- ------- ------- ------
881,167 957,459 1,009,250 8,205
Long-term liabilities:
Long-term debt 127,284 129,484 127,485 1,036
Accrued pension and 13,438 8,773 8,464 69
severance costs
Future insurance policy 2,799,808 3,037,666 3,117,406 25,345
benefits and other
Other 149,649 204,317 213,650 1,737
-------- ------- ------- ------
3,090,179 3,380,240 3,467,005 28,187
Minority interest in 4,123 5,145 5,116 42
consolidated subsidiaries
Stockholders' equity 543,836 634,798 644,065 5,236
-------- ------- ------- ------
Y 4,519,305 Y 4,977,642 Y 5,125,436 $ 41,670
-------- ------- ------- ------
Sony without (Millions of yen, millions of U.S. dollars)
Financial Services June 30 March 31 June 30 June 30
ASSETS 2006 2007 2007 2007
-------- ------- ------- ------
Current assets:
Cash and cash equivalents Y 381,552 Y 522,851 Y 327,125 $ 2,660
Marketable securities 7,574 3,078 3,003 24
Notes and accounts 1,023,490 1,343,128 1,132,128 9,204
receivable, trade
Other 1,539,698 1,625,914 1,892,992 15,390
-------- ------- ------- ------
2,952,314 3,494,971 3,355,248 27,278
Film costs 355,609 308,694 309,841 2,519
Investments and advances 467,617 623,342 643,114 5,229
Investments in Financial 187,400 187,400 187,400 1,524
Services, at cost
Property, plant and 1,400,353 1,382,860 1,410,661 11,469
equipment
Other assets 1,005,734 1,100,795 1,192,812 9,697
-------- ------- ------- ------
Y 6,369,027 Y 7,098,062 Y 7,099,076 $ 57,716
-------- ------- ------- ------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings Y 220,448 Y 80,944 Y 113,603 $ 924
Notes and accounts 825,028 1,167,324 961,723 7,819
payable, trade
Other 1,172,416 1,392,333 1,351,164 10,985
-------- ------- ------- ------
2,217,892 2,640,601 2,426,490 19,728
Long-term liabilities:
Long-term debt 804,854 925,259 948,058 7,708
Accrued pension and 161,604 164,701 182,126 1,481
severance costs
Other 332,586 410,354 420,924 3,421
-------- ------- ------- ------
1,299,044 1,500,314 1,551,108 12,610
Minority interest 34,572 32,808 31,769 258
in consolidated
subsidiaries
Stockholders' equity 2,817,519 2,924,339 3,089,709 25,120
-------- ------- ------- ------
Y 6,369,027 Y 7,098,062 Y 7,099,076 $ 57,716
-------- ------- ------- ------
(Millions of yen, millions of U.S. dollars)
Consolidated June 30 March 31 June 30 June 30
ASSETS 2006 2007 2007 2007
-------- ------- ------- ------
Current assets:
Cash and cash equivalents Y 560,400 Y 799,899 Y 450,368 $ 3,662
Marketable securities 461,655 493,315 516,014 4,195
Notes and accounts 1,039,679 1,369,777 1,157,531 9,411
receivable, trade
Other 1,686,272 1,883,732 2,200,081 17,886
-------- ------- ------- ------
3,748,006 4,546,723 4,323,994 35,154
Film costs 355,609 308,694 309,841 2,519
Investments and advances 3,532,095 3,888,736 4,135,212 33,620
Property, plant and 1,438,409 1,421,531 1,448,936 11,780
equipment
Other assets:
Deferred insurance 385,152 394,117 398,619 3,241
acquisition costs
Other 1,066,446 1,156,561 1,248,357 10,149
-------- ------- ------- ------
1,451,598 1,550,678 1,646,976 13,390
-------- ------- ------- ------
Y 10,525,717 Y 11,716,362 Y 11,864,959 $ 96,463
-------- ------- ------- ------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings Y 269,654 Y 95,461 Y 145,612 $ 1,184
Notes and accounts 836,632 1,179,694 974,084 7,919
payable, trade
Deposits from customers 634,950 752,367 796,578 6,476
in the banking business
Other 1,294,278 1,524,330 1,469,562 11,948
-------- ------- ------- ------
3,035,514 3,551,852 3,385,836 27,527
Long-term liabilities:
Long-term debt 868,204 1,001,005 1,024,604 8,330
Accrued pension and 175,042 173,474 190,590 1,550
severance costs
Future insurance policy 2,799,808 3,037,666 3,117,406 25,345
benefits and other
Other 434,577 542,691 563,281 4,579
-------- ------- ------- ------
4,277,631 4,754,836 4,895,881 39,804
Minority interest in 39,084 38,970 37,902 308
consolidated subsidiaries
Stockholders' equity 3,173,488 3,370,704 3,545,340 28,824
-------- ------- ------- ------
Y 10,525,717 Y 11,716,362 Y 11,864,959 $ 96,463
-------- ------- ------- ------
Condensed Statements of Income
------------------------------
(Millions of yen, millions of U.S. dollars)
Financial Services First quarter ended June 30
2006 2007 Change 2007
-------- ------- ------- ------
Financial service revenue Y 124,101 Y 184,840 +48.9% $ 1,503
Financial service expenses 119,522 151,087 +26.4 1,229
-------- ------- ------
Operating income 4,579 33,753 +637.1 274
Other income (expenses), net (57) (83) - (0)
-------- ------- ------
Income before income taxes 4,522 33,670 +644.6 274
Income taxes and other 1,085 13,690 +1,161.8 112
-------- ------- ------
Net income Y 3,437 Y 19,980 +481.3% $ 162
--------------------------- -------- ------- ------
Sony without (Millions of yen, millions of U.S. dollars)
Financial Services First quarter ended June 30
2006 2007 Change 2007
-------- ------- ------- ------
Net sales and operating Y 1,628,283 Y 1,801,475 +10.6% $ 14,646
revenue
Costs and expenses 1,606,130 1,736,297 +8.1 14,116
-------- ------- ------
Operating income 22,153 65,178 +194.2 530
Other income (expenses), net 33,465 (8,516) - (69)
-------- ------- ------
Income before income taxes 55,618 56,662 +1.9 461
-------- ------- ------
Income taxes and other 20,489 3,613 -82.4 30
-------- ------- ------
Net income Y 35,129 Y 53,049 +51.0% $ 431
-------- ------- ------
(Millions of yen, millions of U.S. dollars)
Consolidated First quarter ended June 30
2006 2007 Change 2007
-------- ------- ------- ------
Financial service revenue Y 118,540 Y 177,052 +49.4% $ 1,440
Net sales and operating 1,625,696 1,799,458 +10.7 14,629
revenue
-------- ------- ------- ------
1,744,236 1,976,510 +13.3 16,069
Costs and expenses 1,717,188 1,877,187 +9.3 15,261
-------- ------- ------- ------
Operating income 27,048 99,323 +267.2 808
Other income (expenses), net 26,980 (15,565) - (127)
-------- ------- ------- ------
Income before income taxes 54,028 83,758 +55.0 681
Income taxes and other 21,737 17,303 -20.4 141
-------- ------- ------- ------
Net income Y 32,291 Y 66,455 +105.8% $ 540
-------- ------- ------- ------
Condensed Statements of Cash Flows
----------------------------------
(Millions of yen, millions of U.S. dollars)
Financial Services First quarter ended June 30
2006 2007 2007
------- ------- -----
Net cash provided by operating Y 91,910 Y 41,551 $ 338
activities
Net cash used in investing activities (40,061) (291,286) (2,368)
Net cash provided by financing activities 9,369 95,930 780
------- ------- -----
Net increase (decrease) in cash and cash 61,218 (153,805) (1,250)
equivalents
Cash and cash equivalents at beginning 117,630 277,048 2,252
of the fiscal year
------- ------- -----
Cash and cash equivalents at the Y 178,848 Y 123,243 $ 1,002
end of the period
------- ------- -----
(Millions of yen, millions of U.S. dollars)
Sony without First quarter ended June 30
Financial Services 2006 2007 2007
------- ------- -----
Net cash used in operating activities Y (189,114) Y (135,851) $ (1,104)
Net cash used in investing activities (100,376) (110,684) (900)
Net cash provided by financing activities 95,828 37,941 308
Effect of exchange rate changes on cash (10,254) 12,868 105
and cash equivalents
------- ------- -----
Net decrease in cash and cash equivalents (203,916) (195,726) (1,591)
Cash and cash equivalents at beginning 585,468 522,851 4,251
of the fiscal year
------- ------- -----
Cash and cash equivalents at the Y 381,552 Y 327,125 $ 2,660
end of the period
------- ------- -----
(Millions of yen, millions of U.S. dollars)
Consolidated First quarter ended June 30
2006 2007 2007
------- ------- -----
Net cash used in operating activities Y (97,932) Y (93,941) $ (764)
Net cash used in investing activities (132,336) (399,805) (3,250)
Net cash provided by financing activities 97,824 131,347 1,068
Effect of exchange rate changes on cash (10,254) 12,868 105
and cash equivalents
------- ------- -----
Net decrease in cash and cash equivalents (142,698) (349,531) (2,841)
Cash and cash equivalents at beginning 703,098 799,899 6,503
of the fiscal year
------- ------- -----
Cash and cash equivalents at the Y 560,400 Y 450,368 $ 3,662
end of the period
------- ------- -----
Investor Relations Contacts:
----------------------------
Tokyo New York London
Tatsuyuki Sonoda Sam Levenson/Justin Hill/ Shinji Tomita
Miki Emura
+81-(0)3-6748-2180 +1-212-833-6722 +44-(0)20-7444-9713
Home Page: http://www.sony.net/IR/