Академический Документы
Профессиональный Документы
Культура Документы
Financial Highlights
Operating Performance Highlights
To Our Shareholders
Review of Operations
Electronics
Game
Entertainment
Financial Services
Other
R&D Strategies and Selection of
Key Technological Fields
The Sony Challenge: Seeing is Believing
Corporate Governance/New Directors
and Corporate Executive Officers
Corporate Social Responsibility
Financial Section
Stock Information
Stock Acquisition Rights and
Bond Information
Investor Information
1
2
4
8
8
13
16
20
22
23
26
32
34
35
130
131
132
Cautionary Statement
Statements made in this annual report with respect to Sonys 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
managements 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 forwardlooking 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 Sonys 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 Sonys assets and liabilities are denominated; (iii) Sonys ability to continue to design and develop and win
acceptance of its products and services, which are offered in highly
competitive markets characterized by continual new product introductions, rapid development in technology and subjective and changing consumer preferences (particularly in the Electronics, Game,
Music, Pictures and Other segments); (iv) Sonys ability to implement
successfully personnel reduction and other business reorganization
activities in its Electronics, Music, Pictures and Other segments;
(v) Sonys ability to implement successfully its network strategy for its
Electronics, Music, Pictures and Other segments and to develop and
implement successful sales and distribution strategies in its Music,
Pictures and Other segments in light of the Internet and other technological developments; (vi) Sonys 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); (vii) shifts in customer demand for financial services such as life insurance and failure to conduct successful Asset
Liability Management and (viii) the success of Sonys joint ventures
and alliances. Risks and uncertainties also include the impact of any
future events with material unforeseen impacts.
SONY AR-E0629
Page 36
05.7.6, 2:16 PM
Financial Highlights
Sony Corporation and Consolidated Subsidiaries Years ended March 31
Percent
change
Dollars in millions*
except per
share amounts
2005/2004
2005
Yen in millions
except per share amounts and number of employees
2003
2004
2005
7,473,633
185,440
247,621
80,831
7,496,391
98,902
144,067
52,774
7,159,616
113,919
157,207
16,044
(44,690)
1,714
29,039
+1,594.2
271
115,519
115,519
90,628
88,511
168,551
163,838
+86.0
+85.1
1,575
1,531
853,788
(706,425)
632,635
(761,792)
646,997
(931,172)
+2.3
6,047
(8,703)
125.74.
118.21.
98.26.
89.03.
4.5%
+15.2
+9.1
69.6
180.96.
162.59.
+84.2%
+82.6
+83.3
+81.7
125.74.
118.21.
25.00.
95.97.
87.00.
25.00.
175.90.
158.07.
25.00.
AT YEAR-END
Stockholders equity . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . .
2,280,895
8,370,545
2,378,002
9,090,662
2,870,338
9,499,100
+20.7%
+4.5
Number of employees . . . . . . . . . . . . .
161,100
162,000
151,400
6.5%
$66,912
1,065
1,469
150
1.69.
1.52.
1.64.
1.48.
0.23.
$26,826
88,777
* U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 107=U.S.$1, the approximate Tokyo foreign exchange
market rate as of March 31, 2005.
Please refer to pages 70 and 71 for detailed footnotes to the table above.
(Yen in billions)
800
200
600
150
Cash flows
(%)
(Yen in billions)
1,000
500
500
1,000
6.2%
5.0%
400
100
200
50
2003
2004
2005
3.8%
2003
2004
2005
2003
2004
2005
Net income
Return on equity
Sony Corporation 1
SONY AR-E0629
Page 1
05.7.6, 2:42 PM
(Yen in billions)
Electronics
5,096.0
5,042.3
5,021.6
(Yen in billions, %)
Sales
65.9
66.5%
Operating (loss)
income
Operating margin
(6.8)
(34.3)
2003
2004
2005
Sales
Operating (loss) income
Assets
2004
2005
5,096.0
5,042.3
5,021.6
65.9.
(6.8.)
1.3
2,974.0
2,995.3
(3,434.1)
(34.3.)
2005/2004
(Percent
change)
0.4%
%
%
(Yen in billions)
Game
955.0
112.7
780.2
9.7%
729.8
67.6
2003
2004
2005
Sales
955.0
780.2
729.8
6.5%
112.7
67.6
43.2
36.1%
Operating margin
Assets
2003
2004
Sales
Operating income
2005/2004
(Percent
change)
(Yen in billions, %)
Operating income
43.2
11.8
8.7
5.9
673.2
684.2
482.0
2005
(Yen in billions)
Music
466.3
440.3
249.1
3.3%
8.8
(6.0)
(28.3)
2003
2004
2005
Sales
Operating income (loss)
2005/2004
(Percent
change)
(Yen in billions, %)
2003
2004
2005
Sales
249.1
43.4%
466.3
440.3
Operating income
(loss)
(28.3.)
(6.0.)
8.8.
Operating margin
3.5
500.6
484.0
325.9
Assets
(Yen in billions)
Pictures
802.8
9.7%
756.4
733.7
63.9
59.0
35.2
(Yen in billions, %)
2003
2004
2005
Sales
Financial
Services
2005/2004
(Percent
change)
802.8
756.4
733.7
3.0%
Operating income
59.0
35.2
63.9
+81.4%
Operating margin
7.3
4.7
8.7
868.4
856.5
863.1
Assets
2003
2004
Sales
Operating income
2005
(Yen in billions)
7.4%
537.3
593.5
560.6
55.2
55.5
22.8
2005/2004
(Percent
change)
(Yen in billions, %)
2003
2004
2005
Financial services
revenues
537.3
593.5
560.6
5.6%
Operating income
22.8
55.2
55.5
0.+0.6%
Operating margin
2003
2004
2005
Financial Services revenues
Operating income
Assets
4.2
9.3
0.9.9
2,897.1
3,475.0
3,885.5
0.0
(Yen in billions)
Other
3.4%
261.1
268.3
254.4
(Yen in billions, %)
2003
2004
2005
Sales
261.1
268.3
254.4
(28.3.)
(12.1.)
333.5
371.7
347.9
Operating loss
Operating margin
(12.1)
(28.3)
2003
2004
Sales
Operating loss
(4.1)
Assets
(4.1.)
2005/2004
(Percent
change)
5.2%
%
%
2005
2 Sony Corporation
SONY AR-E0629
2003
Page 2
05.7.6, 2:42 PM
Description of Business
Segment sales were essentially level. Calculated using the same exchange rates as the previous fiscal year,
segment sales edged up 1%.
Sales of flat panel televisions, Cyber-shot digital still cameras and liquid crystal display (LCD) rear-projection
televisions increased, while sales of cathode-ray tube (CRT) televisions and portable audio products declined.
Despite a decrease in restructuring expenses, the segments operating loss widened as falling sales prices
prompted a further increase in the cost of sales ratio. Products contributing to the worsening of the segments
operating loss included CRT televisions, portable audio products and video cameras.
The transfer of SMEIs business to SONY BMG in August 2004 prompted a 43.4% decline in segment sales.
An increase in sales of recordings boosted SMEJs sales 6.9%.
SMEJ achieved a significant increase in operating income, reflecting higher sales and a lower cost of sales ratio.
Segment sales decreased 3.0%, owing primarily to the appreciation of the yen. On a U.S. dollar basis, sales
rose 1%.
Higher sales on a U.S. dollar basis were largely attributable to increases in home entertainment and theatrical
revenues worldwide and television syndication sales outside the United States.
Worldwide home entertainment revenues rose on the strength of strong performances by DVD and VHS
releases and brisk syndication sales of films shown in theaters in the previous fiscal year, notably 50 First
Dates, Big Fish and Bad Boys II.
Theatrical revenues were bolstered by such successful releases as Spider-Man 2, Hitch and The Grudge.
Sales gains supported record-high operating income.
Segment revenue declined 5.6%, owing largely to a change in Sony Lifes method of recognizing revenue.
Operating income increased 0.6%, reflecting the absence of impairment losses on lease assets recorded by
Sony Finance International in the preceding fiscal year.
Sales decreased 5.2%. This was primarily due to a decrease in intersegment sales resulting from contractual
revisions at a Japan-based subsidiary in the advertising agency business.
Operating loss narrowed, reflecting lower fixed costs, a gain on the sale of a commercial building with a
showroom in Japan, and a robust performance by an animation production and marketing business.
Sony Corporation 3
SONY AR-E0629
Page 3
05.7.6, 2:38 PM
To Our Shareholders
4 Sony Corporation
SONY AR-E0629
Page 4
05.7.6, 2:37 PM
Nobuyuki Idei
Chairman and Group Chief Executive Officer
(Appointed Chief Corporate Advisor on June 22, 2005)
Sony
Sony Corporation
Corporation 55
SONY AR-E0629
Page 5
05.7.6, 2:37 PM
Operating in a shrinking market, the Music segment generated an increase in operating income, thanks partly to a string of hits by new artists at Sony Music Entertainment (Japan) Inc. (SMEJ), which greatly bolstered SMEJs recorded music sales. In
the Pictures segment, expanded box office revenue as well as sales of titles on DVD
and VHSattributable to such hits as Spider-Man 2drove both sales and operating
income to new heights.
During the period, we took several steps that reinforced the already formidable position of our entertainment business in the industry. Of particular note, we formed two key
equity and business alliances. In August 2004, we created SONY BMG, a joint venture
that brings together our non-Japanese recorded music business Sony Music Entertainment Inc. and BMG, the music group of Bertelsmann AG, with the aim of raising
profitability through enhanced efficiency and expanded scale. In April 2005, a consortium comprising Sony and four partner companies completed the acquisition of
MetroGoldwynMayer Inc. (MGM).
In addition to using our global channels to distribute MGMs existing library of film
and television content, we will be involved in co-financing and producing new titles.
New Management Structure
Guided by our Transformation 60 (TR60) groupwide medium-term corporate strategy
which focuses on structural reforms aimed at enhancing operational profitability and
growth strategiesefforts to reduce fixed costs through the restructuring of operations
are proceeding according to plan. Although our electronics business has yet to sufficiently recover in terms of profitability, we have been implementing strategies that
will ensure the steady growth of the Sony Group. The fiscal year ending March 31,
2006, marks the start of the next stage of Sonys evolutiona stage of accelerated
growth. Accordingly, we judged this to be an opportune time to create a new
management structure.
At the Board of Directors meeting to be held following the Ordinary General Meeting of Shareholders on June 22, 2005, we expect three candidates for positions on
the Board to be approved: Sir Howard Stringer, nominated as Chairman and Chief
Executive Officer (CEO), Dr. Ryoji Chubachi, nominated as President and Electronics
CEO, and Mr. Katsumi Ihara, nominated as Executive Deputy President and President
of the Home Electronics Network Company. Under the robust guidance of this new
management team, the Sony Group will remain on course for further growth.
April 26, 2005
Nobuyuki Idei
Chairman and Group Chief Executive Officer
(Appointed Chief Corporate Advisor on June 22, 2005)
66 Sony
Sony Corporation
Corporation
SONY AR-E0629
Page 6
05.7.6, 2:34 PM
Ryoji Chubachi
Executive Deputy President and Electronics CEO
(Appointed President and Electronics CEO on June 22, 2005)
Sony Corporation 7
SONY AR-E0629
Page 7
05.7.6, 2:34 PM
Review of Operations
Electronics
http://www.sony.net/electronics/
Home Electronics
Televisions and other home electronics products with enhanced performance
and ease of use have become the hub of the modern living room, essential to
the enjoyment of television programming, movies, games and other types of
entertainment content.
With demand continuing to shift from cathode-ray tube (CRT) televisions toward flat
panel televisions, Sony is concentrating management resources on LCD and LCD
rear-projection televisions. In the fiscal year ended March 31, 2005, we reinforced our
lineup of LCD televisions with the introduction of lower-cost models as well as highend models with outstanding picture quality. Efforts to differentiate models contributed to a significant rise in Sonys market share during the 2004 year-end holiday
sales season. Of particular importance to this achievement were dramatic improvements in three fundamental areas: picture quality, audio fidelity and ease of operation.
The new WEGA Engine HD, an integrated digital high-definition system developed to
deliver greater depth and a higher degree of realism, renders a highly precise, beautiful picture. The S-Master sound engine is a 100W output, full-digital amplifier that
capitalizes on Sonys capabilities in high-fidelity audio to deliver the crystal clear audio
reproduction essential to complement large-screen viewing. The xross (cross) media
bar (XMB) is a graphical user interface (GUI) that applies technologies developed in
the games business to enhance operability, enabling people to access and enjoy
content from a variety of devices on their televisions quickly and easilyan important
consideration in this era of increasingly multifunctional televisions.
In spring 2005, we further expanded our lineup in Japan with the Happy Wega series
of digital high-definition (HD) televisions, which have earned a strong reputation. The
Happy Wega series uses fewer components and employs the same structure and circuitry as other Wega televisions. This led to a reduction of material and other manufacturing costs and is helping to improve the profitability of our LCD televisions.
Sony will begin sourcing LCD panels from S-LCD Corporation, our joint venture with
Samsung Electronics Co., Ltd. of Korea, as well as promoting in-house sourcing of
other key devices. These efforts should enable us to achieve further cost reductions
already realized with the Happy Wega seriesin other LCD televisions.
We plan to launch HD televisions featuring Cell, a next-generation, high-performance
processor developed in cooperation with IBM Corporation and Toshiba Corporation.
DVD recorder
DVD Recorders
Going into the 2004 year-end holiday sales season, we introduced new
Sugoroku DVD recorders featuring a high-capacity hard disk drive (HDD) and
an electronic program guide (EPG). These models also feature an automatic
recording function, which uses the EPG to automatically locate and record all
programs related to a particular keyword entered by the user.
Sugoroku, developed as an attractive post-VHS unit offering high picture quality,
easy operation and intelligent recording, has expanded and enhanced our product
mix. The PSX, a fun-to-use DVD recorder that enables users to enjoy video, music,
photographs and games on a single unit, is carving out a new market for intelligent
entertainment devices. These efforts will position us to respond to increasingly
diverse customer needs in the rapidly expanding market for DVD recorders.
8 Sony Corporation
SONY AR-E0629
Page 8
05.7.6, 2:31 PM
SONY AR-E0629
Page 9
05.7.6, 2:31 PM
The Grand Wega LCD rear-projection television continued to enjoy popularity in the
U.S. market, reflecting consumer appreciation of comparatively inexpensive large
televisions. New additions to our LCD rear-projection lineup during the fiscal year
included a model featuring Sonys exclusive Silicon X-tal (crystal) Reflective Display
(SXRD) technology, which achieves high resolution and high contrast, as well as fast
responsiveness. This technology facilitates higher panel pixel density than conventional display devices, thereby realizing full HD (1920 x 1080 pixel) resolution and a
smooth-textured, cinematic picture quality. In the fiscal year ending March 31, 2006,
we will take further steps to differentiate our LCD rear-projection televisions from
those of other companiesincluding introducing new models with SXRDand
strengthen our lineup in all regions.
SXRD: Sonys exclusive SXRD achieves outstanding resolution and contrast, as well
as fast responsiveness, facilitating a sharper, richer and more smoothly textured picture
than ever before possible with consumer-use rear-projection television. A narrow interpixel spacing2,000,000 pixels with a pitch of 9 mdelivers full HD resolution within
an image area measuring a mere 0.78 inches across. In addition, a liquid crystal cell
gap of less than 2 m and vertically aligned liquid crystal materials facilitate contrast
of 3000:1 or higher and a response speed of less than five milliseconds, resulting in a
clear, stable picture.
Mobile Electronics
Cyber-shot DSC-T7
Sony expanded its video camera and digital still camera lineup. In portable
audio, the Network Walkman was a hit.
In the fiscal year ended March 31, 2005, the global market for digital still cameras
exhibited strong growth. Sony continues to command a significant share of this
market, thanks to the popular Cyber-shot lineup, which reflects our continuing efforts
to combine slim designs with large LCD screens and extended recording times. We
are also focusing efforts on the development of innovative products that combine
video and digital still camera features in a single unit.
Also in the period, we launched full-scale, global sales of DVD Handycam,
bolstering our lineup of video cameras, which previously focused on Handycams
using conventional tape media. While DVD Handycam accounted for approximately
10% to 20% of sales of Sony video cameras in the past fiscal year, we are aiming to
greatly increase shipments in the fiscal year ending March 31, 2006.
During the year, we introduced the first consumer-use video camera with full HD
resolution based on the 1080 interlaced (1080i) digital HD standard, bringing HD
picture quality out of the broadcast arena and into the home. Customers responded
to this easy-to-use model very favorably. We will promote the shift to HD video
cameras by enhancing our lineup, offering consumers a whole new experience.
Key devices are what really set Sonys video and digital still cameras apart from
those of other manufacturers. These include small LCD panels, batteries and
charge-coupled devices (CCDs), which are image-capturing devices that work like an
electronic version of a human eye. We source these devices internally, facilitating
vertically integrated production and ensuring our ability to enhance product appeal while
lowering production costs.
Super HAD CCD: Sonys CCD technology has enabled the development of the Super HAD
CCD, a CCD that offers both a high saturation signal level and increased sensitivity. This
technology greatly reduces the ineffective areas between the on-chip microlenses formed
over each pixel, thereby increasing the efficiency of utilization of incident light.
Real lmaging Processor: Sony designed the Real Imaging Processor using an exclusive
algorithm that increases processing precision and speed, improving picture quality and
reducing start-up time for a truly enjoyable picture-taking experience. Thanks to a system
large-scale integration (LSI) designed for energy efficiency, the Real Imaging Processor
consumes 30% less energy than previous processors, thus improving battery life.
10 Sony Corporation
SONY AR-E0629
Page 10
05.7.6, 2:31 PM
Network Walkman
Sony Corporation 11
SONY AR-E0629
Page 11
05.7.6, 2:31 PM
In the portable audio market, trends and ways of enjoying music are changing
rapidly as consumer preferences shift from CD-based and MD-based products to
those with flash memory and HDDs. In spring 2005, we released our latest Network
Walkman, reinforcing our lineup of Walkman portable audio products in the Japanese
market, which until then comprised the CD Walkman and the MD Walkman. The
Network Walkman, available in both flash memory and hard disk models, enjoyed
strong sales.
In November 2004, we established the Connect Company, a global business that
uses Sonys unique strengths to distribute content, client software and hardware. Not
limited to music distribution, Connect aims to foster a broad-based network business
that also encompasses movie and other entertainment content.
VAIO T-Series
VAIO T-Series
The VAIO T-Series, launched in autumn 2004, is a slim (25mm), lightweight
(1.38kg) notebook PC. This sleek machine was made possible by reducing the
number of components used and arranging them more efficiently. Despite its
small size, the VAIO T-Series carries an array of features comparable to those
found in a full-sized notebook, including a 10.6-inch-wide LCD display and a
DVDRW drive. The unique finish, with a texture similar to that of a leather-bound
book, and four rich color choices, including midnight blue and burgundy, add a
touch of quality and class that has earned a positive response from consumers
around the world. We will continue to combine our passion for making things
with advanced audiovisual technologies and IT capabilities to create high-valueadded products and build new PC markets.
K750
W800
Z800
W31S
12 Sony Corporation
SONY AR-E0629
Page 12
05.7.6, 2:30 PM
premini-II
Game
http://www.scei.co.jp/global/
Gran Turismo 4: The latest title from the Gran Turismo series.
Cumulative worldwide shipments of the Gran Turismo
series for PS and PS2 reached 43 million units in March
2005. The series revolutionized the concept of racing
games, delivering an entertainment-packed experience
as a real-life driving and racing lifestyle simulator. It has
won strong support from a broad range of users all over
the world and received high acclaim from automobile
experts and enthusiasts.
titles on UMD in April 2005, the entertainment experience on PSP has been enhanced
further. PSP was also released in Asia in May 2005, and will be launched in Europe in
September. SCE and other content developers and publishers will continue to release
attractive software in all regions. As an entirely new handheld entertainment platform
enabling users to enjoy entertainment content at any time, anywhere, PSP will create
a new market around the world.
Sony Corporation 13
SONY AR-E0629
Page 13
05.7.6, 2:30 PM
In games, not only will movement of characters and objects be far more refined and
realistic, but landscapes and virtual worlds will also be rendered in real time, thereby
elevating the freedom of graphics expression to levels not experienced in the past. PS3
will also have built-in Gigabit Ethernet and wireless local area network (LAN) features,
thereby creating a new world of entertainment through its networking capabilities.
PS3 will also offer backward compatibility with over 13,000 game titles created for
PlayStation (PS) and PS2 worldwide by March 2005, allowing users to continue to
enjoy these enormous assets.
With PS, PS2, PSP and PS3, expected to be released in spring 2006, SCE will
create and develop a new world of computer entertainment through the fusion of
games, music, movies and broadcasting.
(Design and specifications are subject to change without notice)
14 Sony Corporation
SONY AR-E0629
Page 14
05.7.6, 2:29 PM
SONY AR-E0629
Page 15
05.7.6, 2:29 PM
Entertainment
The fiscal year ended March 31, 2005 was a pivotal year in Sonys entertainment businesses, with the successful integration of the SONY BMG MUSIC
ENTERTAINMENT (SONY BMG) joint venture and a record performance by
Sony Pictures Entertainment Inc. (SPE). In addition, the acquisition of
MetroGoldwynMayer (MGM) by a consortium led by Sony Corporation of
America (SCA) was completed in early April 2005.
In August 2004, Sony Corporation and Bertelsmann AG merged their recorded music
assets to create SONY BMG, a joint venture with an impressive array of current
artists and a vast catalog that includes some of the most important recordings in
history. SONY BMG is streamlining its operations and investing in talent development
to position the company for future growth.
In the fiscal year ended March 31, 2005, SPE generated record-breaking operating
income, due in part to the worldwide success of Spider-Man 2, strong home
entertainment sales and international television syndication. In April 2005, a consortium comprised of SCA, Providence Equity Partners Inc., Texas Pacific Group,
Comcast Corporation and DLJ Merchant Banking Partners completed its acquisition
of MGM. In conjunction with the acquisition, SPE entered into agreements to cofinance and produce new motion pictures with MGM and to distribute MGMs existing
film and television content. The members of the consortium entered into a separate
agreement to form a joint venture, to be managed by Comcast, establishing new
cable/satellite channels that will feature SPE and MGM content.
By expanding access to content, Sonys entertainment companies have improved
their strategic position. Licensing of the content to existing and emerging distribution
channels such as digital cable, mobile and broadband services, as well as distribution
in new media formats, are expected to create a wide array of revenue-generating
opportunities.
Through the consortiums acquisition of MGM, one of the worlds most
renowned motion picture studios, Sony has created a strategic partnership
with a massive library of entertainment content.
MGM owns the worlds largest library of modern films, comprising approximately 4,000 titles. MGMs film library has received 208 Academy Awards,
making it one of the largest award-winning collections in the world, and it
includes several of the most successful film franchises in history, including
James Bond, Pink Panther and Rocky.
Additionally, the library also includes over 10,400 episodes from television
series previously broadcast on prime-time network television, cable or in firstrun syndication, where original episodes are initially broadcast on a syndicate
of television stations and not on a single network. The programs in the MGM
library have won, among others, 108 Emmy Awards and 17 Golden Globe
Awards.
With our strong financial and strategic partners, Sony looks forward to
building on MGMs exceptional legacy and capitalizing on emerging technologies and markets to provide consumers worldwide more opportunities to enjoy
MGMs vast library.
16 Sony Corporation
SONY AR-E0629
Page 16
05.7.6, 2:26 PM
Music
Destinys Child
Destinys Childs Destiny Fulfilled was released in
November 2004 and went on to sell 5.5 million units
during the fiscal year, achieving double platinum
status in the United States, Canada and Japan,
and platinum and gold status in countries across
Europe, Oceania and Asia.
Maroon 5
Maroon 5 was honored with the Best New Artist
award at the 2005 GRAMMY Awards. Their debut album, Songs about Jane, has spent 104
weeks on the Billboard 200 Chart and sold more
than 8 million albums worldwide.
Ken Hirai
Ken Hirais soulful voice has cemented his
position as one of Japans most popular male
vocalists. His single Close Your Eyesused as
the theme song for the film Crying Out Love in the
Center of the World in 2004was one of a string
of hits from his sixth album, SENTIMENTALovers,
which sold 1.8 million units.
Gretchen Wilson
Gretchen Wilsons Here for the Party, which was
released in May 2004, was the top-selling debut
album in any genre for the year. The artist won the
2005 GRAMMY for Best Female Country Vocal
Performance.
Usher
Ushers Confessions, the worlds bestselling album
in 2004, was honored with three awards at the 2005
GRAMMY Awards.
ORANGE RANGE
Okinawas six-man pop-rock unit ORANGE RANGE
has emerged in recent years as one of Japans most
popular bands. The band has released several hit
singles, including Hana, used as the theme song
for the film Ima, Ai ni Yukimasu. Their second album,
musiQ, sold 2.8 million units, putting ORANGE
RANGE firmly among the top of the J-Pop scene.
Seinfeld
The first four seasons of Seinfeld, considered by
many to be the best TV sitcom ever, were released
on DVD by Sony Pictures Home Entertainment.
Seinfeld has become one of the fastest selling TV
titles on DVD ever.
Jeopardy!
Jeopardy! is a classic TV quiz show with a twist:
the host provides the answers and the contestants
must give the questions. Now in its 21st season,
Jeopardy! remains the highest-rated quiz show on
television, attracting 10 million viewers daily.
50 First Dates
Adam Sandler continues to be one of Columbia
Pictures most consistent and bankable stars. His
2004 romantic comedy 50 First Dates was a hit
with audiences in movie theaters worldwide and
was one of the studios most successful home
entertainment titles this past year.
Kung Fu Hustle
Produced by Columbia Pictures Film Production
Asia, Kung Fu Hustle has become one of Asias
most successful local films of all time, grossing close
to $70 million. It broke a number of records throughout Asia, including all-time biggest opening weekends in China, Hong Kong, Taiwan and Malaysia.
Hitch
Will Smiths romantic comedy Hitch was a breakout
success around the world for Columbia Pictures in
2005, earning more than $359 million in ticket sales.
Pictures
Spider-Man 2
Columbia Pictures critically lauded blockbuster
Spider-Man 2 was the No. 1 live action film of 2004,
generating nearly $800 million in worldwide box
office receipts. Spider-Man 2 opened at No. 1 in
more than 70 territories around the globe.
Sony
Sony
Corporation
Corporation1717
SONY AR-E0629
Page 17
05.7.6, 2:25 PM
MUSIC
http://www.sony.net/music/
The creation of the SONY BMG joint venture enables the company to continue to
invest aggressively in new talent and develop new musical content throughout its
worldwide operations. During the year, successful artist development efforts delivered
strong results from such artists as Anastacia, Ciara, Destinys Child, John Legend,
Jennifer Lopez, Mario, Maroon 5, Britney Spears, Rod Stewart, Usher and Gretchen
Wilson. At the 47th Annual GRAMMY Awards ceremony, the newly combined
company led the industry with a total of 28 GRAMMY Awards in a wide range of
genres, including R&B, pop, rock and country, with awards going to such artists as
Alicia Keys, Usher, John Mayer, Los Lonely Boys and Gretchen Wilson.
The merger also provided the company with the resources to continue to build on
its position as a global leader in the growing online and mobile music markets. SONY
BMG aggressively expanded its efforts in the mobile arena by establishing new
relationships for the distribution of master ringtones, which are actual recordings that
replace the standard mobile phone ringer, and ringback tones, which are recordings
that take the place of the ringing sound callers traditionally hear when dialing. The
company also entered into agreements with wireless carriers in Europe and Asia to
facilitate the growth of 3G mobile services, which provide such features as full-length
audio and video offerings. Master ringtones represented one of the largest areas of
growth in wireless service, with a number of master ringtones achieving total sales of
more than a million units during the fiscal year ended March 31, 2005.
Even as the music company forged a wide range of new relationships for the digital
distribution of its content, it also played an active role in the successful introduction of
a new product designed to rejuvenate the traditional retail market. In the United
States, SONY BMG led the music industrys rollout of DualDisc, a new, two-sided,
single-disc product that combines DVD video content and enhanced audio on one
side, with a full-length audio album on the other. High-profile titles such as Omarions
debut release O and Jennifer Lopezs Rebirth were issued simultaneously on CD and
DualDisc, with DualDisc accounting for well over 30% of weekly sales for both titles.
Sony Music Entertainment Japan
http://www.sonymusic.co.jp/
In the fiscal year ended March 31, 2005, a string of hits from leading artists, including
ORANGE RANGEs musiQ, Ken Hirais SENTIMENTALovers and Porno Graffittis
PORNO GRAFFITTI BEST BLUES, contributed to sales of Sony Music Entertainment
(Japan) Inc. (SMEJ). During the period, SMEJ continuously enjoyed the top share of
the Japanese music market in terms of sales. At the 19th Japan Gold Disc Awards,
ORANGE RANGE was named Artist of the Year, while releases by SMEJ artists
garnered seven of 20 Japanese Rock and Pop Album of the Year awards.
SMEJ also took steps to accelerate growth in its network service business.
Downloads from SMEJs various services, including Chaku-Uta, launched in 2002,
and Chaku-Uta Full master ringtone download services, are currently in the order of
5.0 million per month, and SMEJ continues to enjoy the top share of this key market
in terms of revenues.
Sony will continue to grow its music business in Japan by developing new talent
and providing exciting new recordings, while at the same time cultivating new ways of
enjoying music that take advantage of technological advances.
18 Sony Corporation
SONY AR-E0629
Page 18
05.7.6, 2:23 PM
PICTURES
http://www.sony.net/movies/
With a consistent and stable approach to its core businesses, SPE achieved record
profitability in the fiscal year ended March 31, 2005. The year was filled with critical
and commercial successes and further strengthened SPEs position as a global
leader in the entertainment industry. In calendar year 2004, the studio was No. 1 in
theatrical market share in the United States for the second time in the past three
years, and generated ticket sales in excess of $1 billion in each of the United States
and international markets for the third year in a row, which set a company record.
Leading the way was Spider-Man 2, which opened at No. 1 in the United States
and 70 of the international territories in which it was released. The film has grossed
nearly $800 million in worldwide box office revenue to date and won the Academy
Award for Best Achievement in Visual Effects. In addition, the studio experienced
tremendous success with films such as Hitch and The Grudge. SPE continues to
pursue a local language production and distribution strategy and achieved noteworthy results this year with the foreign language films The House of Flying Daggers and
Kung Fu Hustle, which both enjoyed critical acclaim and box office success around
the world.
The strength and consistency of the film slate has translated into significant results
in the home entertainment market, with Spider-Man 2 being this years top performer.
In addition, the studio capitalized on content from Sony Pictures Television for DVD
distribution, most notably Seinfeld, which has become one of the fastest selling
television titles on DVD in history. Having digitized more film and television titles than
any other studio, SPE is well positioned for continued success with emerging home
entertainment formats, including the Universal Media Disc (UMD) used by Sonys
PlayStation Portable (PSP). As a result, PSP owners have the opportunity to watch
some of SPEs latest films, including Spider-Man 2, on a portable device.
Sony Pictures Television International (SPTI) continued to pursue its branded
international channel strategy with the launches of Animax India in July 2004 and
AXN Germany in November 2004. To date, SPTI has formed or invested in approximately 40 international networks, which are available in more than 100 countries.
Local Language Television Production
The past decade has seen significant growth in demand for local language
television content. To capitalize on this market trend, SPTI has steadily
expanded its local language production capabilities in key markets around the
world. With dedicated offices in France, Germany, Hong Kong, Miami (Latin
America), the Peoples Republic of China, Spain and the United Kingdom, SPTI
manages the production of shows based on its popular game show formats,
such as The Dating Game and The Newlywed Game, as well as scripted
formats. The Nanny, for example, which ended production in the United States
in 1999, is now enjoying success with localized versions in Greece, Russia,
Turkey and Argentina.
Today, SPTI is the global leader in local language production, with more
than 9,000 episodes produced in over 30 countries. In fact, SPTI is the No. 1
independent comedy producer in Germany and produces more original
programming in Russia than any other major Hollywood studio. In November
2004, SPTI formed the first fully government-approved television production
joint venture in the Peoples Republic of China.
Sony Corporation 19
SONY AR-E0629
Page 19
05.7.6, 2:23 PM
Financial Services
http://www.sony.co.jp/money/
SONY AR-E0629
Page 20
05.7.6, 2:21 PM
example of risk segmentation. Policyholders can enjoy this option when their traveled
distance does not exceed a specified annual limit, and apply a discount to the following years premiums, the size of which is based on the distance remaining under the
limit. Sony Assurance also launched a new service that eliminates the requirement for
policyholders to report to the insurance company and to pay extra premiums when
they exceed the distance limit agreed to in the policy.
In medical insurance, to respond to diversifying customer needs, Sony Assurance
broadened the choice of coverage options for its whole-life insurance products and
commenced sales of SURE Basic and SURE Wide in May 2005.
In the fiscal year ended March 31, 2005, net premiums increased 18%, to 36.6
billion. The total number of automobile and cancer insurance policies in force
surpassed 650,000.
Sony Bank
Sony Bank, founded as an Internet bank that provides asset management and other
financial services to individual customers, has actively and inventively offered various
new services.
In June 2004, the New Zealand dollar was added to the foreign currency deposit
transaction service line-up. The foreign currency deposit service is one of the banks
main services. In addition, to support individual customers flexible investment activities, in December 2004 Sony Bank introduced limit order services as well as foreign
currency time deposits with special agreements.
In the fiscal year ended March 31, 2005, Sony Bank newly added 17 investment
trusts to its investment trust business, bringing the total number of funds it handles to
40. Meanwhile, the bank successfully enhanced the features of its housing loan business in November 2004 by, among other things, developing a special arrangement
that enables borrowers to partially set various fixed rates from time to time on their
floating-rate loans.
In the fiscal year ended March 31, 2005, deposits from customers in the banking
business rose 44%, to 546.7 billion, and the balance of loans doubled to 126.3
billion. Additionally, the number of accounts at Sony Bank as of March 31, 2005,
increased by 98,968, or 37%, to 367,748.
eLIO card
Sony Corporation 21
SONY AR-E0629
Page 21
05.7.6, 2:21 PM
Other
Sony Communication Network Corporation (SCN) is primarily expanding the So-net
Internet service in Japan. So-net presently provides Internet access and content
services to approximately 2.45 million subscribers.
The market for broadband Internet services continues to grow quickly. The domestic market for constant-connection broadband servicesincluding asymmetric digital
subscriber lines (ADSLs), fiber-to-the-home (FTTH) and cable televisionexceeded
18 million subscribers in December 2004, according to Ministry of Internal Affairs and
Communications statistics, and Internet users continue to join.
In the fiscal year ended March 31, 2005, SCN sought to attract new subscribers
by strengthening its broadband content services and adding personalized services,
such as the customizable portal My So-net and the easy-to-use personal web site
service, So-net Blog. To allow subscribers to use its network without worry, SCN was
an early adopter of personal privacy policies, obtaining Privacy Mark* certification in
November 1999.
Two of SCNs affiliates were listed on the Tokyo Stock Exchange Mothers market
in the period under review. So-net M3, Inc., a consolidated subsidiary of SCN listed
in September 2004, provides pharmaceutical marketing support services centered
on m3.com, a portal for physicians in Japan. In May 2005, the subscriber base for
m3.com reached 100,000, making it the largest in the country. DeNA Co., Ltd., an
SCN equity-method affiliate listed in February 2005, offers e-commerce solutions,
including Bidders, an auction and shopping site, and Mobaoku, an auction site for
mobile phone users.
To provide SCN with greater independence and more flexibility to adopt its own
management structures and growth strategies, we are considering the possibility of
pursuing an initial public offering of SCNs common stock and delisting our subsidiary
tracking stock. We believe this would allow SCN to achieve its full potential within the
Sony Group.
* Privacy Mark: Personal information management accreditation administered by the Japan Information
Processing Development Corporation (JIPDEC).
A 4 7 0 0 0 1 ( 0 3)
22 Sony Corporation
SONY AR-E0629
Page 22
05.7.6, 2:21 PM
Research and development (R&D) are vital to achieving the continuous innovation
crucial to sustained corporate growth. After identifying key technological fields and
R&D themes with the potential to deliver growth, Sony manages its R&D activities
strategically to differentiate and increase the value-added components of its products
and services. While Sony naturally directs efforts toward technologies that sustain
and develop its current businesses, it also examines technologies that will create new
markets and give consumers fresh lifestyle ideas.
As we progress into the era of broadband networks, it is increasingly important to
create environments that facilitate the enjoyment of high-definition (HD) images and
other high-grade audiovisual content inside and outside the home. The key to realizing such environments is the home server, which is used to control both networked
audiovisual equipment and the content recorded or purchased by the consumer. We
recognize semiconductors, displays and storage technologies as essential to making
home servers and the connected audiovisual equipment better, easier to use, and
more feature-packed. Accordingly, we will concentrate our R&D activities on these
three key technological fields for the foreseeable future.
R&D Results for the Fiscal Year Ended March 31, 2005
Semiconductors
Electronics products derive the majority of their value-added, advanced features from
semiconductor devices. Accordingly, Sony has made semiconductor technologies a
key focus and is active in semiconductor design and process technology research,
as well as the development of high-performance, high-function devices closely linked
to products.
CellThe Next-Generation Processor
At the International Solid-State Circuits Conference (ISSCC) in February 2005, the Sony
Group, IBM Corporation and Toshiba Corporation revealed Cell, a high-performance
processor under joint development since March 2001. Built on a revolutionary new
multicore architecture, Cell features eight floating-point computing cores and a Powerbased processor core, achieving clock speeds exceeding 4GHz and supercomputer-level
floating-point computing performance. We will incorporate Cell into next-generation
audiovisual equipment, including computer entertainment systems, home servers and
digital televisions. We also plan to continue developing this processor to achieve breakthrough advances in performance for real-time processing of rich media applications.
Cellthe next-generation processor
Sony Corporation 23
SONY AR-E0629
Page 23
05.7.6, 2:20 PM
Displays
With the advent of HD broadcasting and Blu-ray Disc recorders for recording and
playing back HD content, and of high-resolution digital still cameras and video cameras, Sony is developing the architecture that will allow people to enjoy and be entertained by the growing diversity of high-resolution content. To this end, we are using
our proprietary know-how to advance display technologies and devices in the pursuit
of realism, our concept of the ideal picture quality.
Triluminous Wide-Spectrum Backlit LED System
We developed Triluminous, a wide-spectrum backlit light-emitting diode (LED) system, and used it in the QUALIA 005 LCD television, making the QUALIA 005 the first
consumer-use LCD television with LED backlighting. By using independent panels for
red, green and blue (RGB) signals, this backlit LED system achieves more realistic,
wide-spectrum color reproduction than previous LCD television backlit systems.
GxL System
Our new projection format, called the GxL (G-by-L) system, utilizes diffraction grating elements on the surface of a micro-electromechanical systems (MEMS) chip and
primary color lasers to reproduce colors more faithfully than LEDs. The GxL system
debuted in March 2005 at the Laser Dream Theater at the 2005 World Exposition in
Aichi, Japan, projecting at high resolution onto an ultra-wide 2005-inch screen
(approximately 10 meters high and 50 meters wide).
Storage
We are developing a range of backbone devices compliant with the Blu-ray Disc
standard to complement our fast-track commercialization of Blu-ray Disc systems for
HD image recording and playback.
Three-Wavelength Optical Recording/Playback Heads for Blu-ray Discs,
DVDs and CDs
Combining our extensive experience in semiconductor laser, surface mount and
optical technologies, we developed a three-wavelength optical recording and playback
head that supports Blu-ray Disc, DVD and CD playback with a single optical head.
Joint Development of Dual Wavelength Coupler for Red and Blue-Violet Lasers
In collaboration with Nichia Corporation, we developed a dual wavelength coupler for
the playback of DVD-format and blue-violet laser optical discs. It integrates two laser
diodes for the different laser wavelengths, the respective pickup elements and the
components for transmitting and receiving optical signals. Because prior systems
relied on separate elements to support the different wavelengths, this coupler will
help to simplify, miniaturize and lighten optical heads while making them more reliable.
24 Sony Corporation
SONY AR-E0629
Page 24
05.7.6, 2:20 PM
R&D expenses
(Yen in billions)
600
into biotechnology and other areas, learning how to apply in our devices the qualities
of DNAthe legacy of evolutionand mimic the elegantly elaborate formation of
514.5
1.7
450
443.1
1.3
61.5
83.4
502.0
0.7
68.5
protein molecules.
We will continue R&D into these new technologies to facilitate their use in daily life
and enable us to offer products, services and entertainment that improve the quality
of life for people everywhere.
300
380.3
429.4
432.8
** Moores Law is the principle that the data density of integrated circuits doubles every 1824 months.
** Micro=one millionth, nano=one billionth, giga=1 billion, tera=1 trillion, peta=1 quadrillion (1,000 trillion)
150
2003
2004
The Sony
Challenge:
Seeing is
Believing
At Sony, our commitment to creating new visual
experiences doesnt stop at consumer electronics.
In this special feature, we take a look at three
applications of Sony technologies that underscore
this statement: the Laser Dream Theater, which uses
innovative technologies to offer images of unsurpassed
beauty; Sony Pictures Imageworks, a visual effects
and character animation leader; and CineAlta, a
revolutionary digital movie production system.
2005
Electronics
Game
Other
Sony Corporation 25
26 Sony Corporation
R&D expenses
(Yen in billions)
600
into biotechnology and other areas, learning how to apply in our devices the qualities
of DNAthe legacy of evolutionand mimic the elegantly elaborate formation of
514.5
1.7
450
443.1
1.3
61.5
83.4
502.0
0.7
68.5
protein molecules.
We will continue R&D into these new technologies to facilitate their use in daily life
and enable us to offer products, services and entertainment that improve the quality
of life for people everywhere.
300
380.3
429.4
432.8
** Moores Law is the principle that the data density of integrated circuits doubles every 1824 months.
** Micro=one millionth, nano=one billionth, giga=1 billion, tera=1 trillion, peta=1 quadrillion (1,000 trillion)
150
2003
2004
The Sony
Challenge:
Seeing is
Believing
At Sony, our commitment to creating new visual
experiences doesnt stop at consumer electronics.
In this special feature, we take a look at three
applications of Sony technologies that underscore
this statement: the Laser Dream Theater, which uses
innovative technologies to offer images of unsurpassed
beauty; Sony Pictures Imageworks, a visual effects
and character animation leader; and CineAlta, a
revolutionary digital movie production system.
2005
Electronics
Game
Other
Sony Corporation 25
26 Sony Corporation
Size: 34 x 6 x 2mm
GxL device
GxL System
GxL color
reproduction
spectrum
HDTV color
reproduction
specifications
Spectrum
locus
CIE 1931 chromaticity diagram
(xy chromaticity diagram)
Sonys GxL display technology offers images like none ever seen before.
At the 2005 World Exposition in Aichi, Japan, Sony is presenting the Laser Dream
Theater, where high-quality images are projected with lasers onto one of the worlds
largest screens. The ultra-wide, 2005-inch screen is big enough to show even a
whale in life-size proportions, or display the skyline at dusk over the savanna with
such realism that you believe the real thing is right before your eyes.
Behind this amazing performance is the GxL (G-by-L) system under development
at Sony. GxL is a projection system that combines our proprietary high-output laser
technologies and cutting-edge micro-electromechanical systems (MEMS). By using
red, green and blue (RGB) lasers, it is able to more than double the
vividness of color produced in cathode-ray tube (CRT) televisions.
For example, only the GxL system can faithfully reproduce the brilliant
deep blue of the earth as shown at the end of Laser Dream Theaters Morpho menelaus
Clive S. Pratt
presentationthe same hue as found on the wings of the Morpho
The Insect Company
butterfly (morpho menelaus) dwelling in the Amazon.
The Laser Dream Theater brings together multiple Sony Group technologies, from
those used in content planning around the Expos theme, Natures Wisdom, to
those used in filming, music scores and image projection. A specially developed
camera system was used to film the images, which entered a single lens and were
simultaneously recorded onto three Hi-Vision video system HDCAM-SRs. Sony Music
Entertainment Japan also produced the high-fidelity music flowing from the 86
speakers installed in the theater.
Gathering the best in technology, Sony overcame numerous difficulties to realize its
dream of delivering high-quality, beautiful imagery never before seen on so gigantic a
screen. In pursuit of achievements like this, we will continue to follow our dreams and
curiosity to bring wonder and delight to people worldwide.
Naoya Eguchi
General Manager, Laser & Optics Development Department,
Photonics Development Division, Core Technology
Development Group, Micro Systems Network Company,
Sony Corporation
It was the summer of 2002 when I first heard about Sonys plans to participate
in the World Exposition. About the only thing decided then was that we would
try to create a 2005-inch screen to honor the year of the Expo. At the time, the
GxL prototype could only project up to 200 inches, so there was a more than
tenfold discrepancy between that and the 2005-inch goal. Nevertheless, a passion burned within us to create a laser display, a so-called dream display, with
our own hands. We managed to overcome many obstacles in an amazingly
short period to develop brand-new blue and green lasers.
The human optic nerve is constituted so it can respond to the three additive
primary colorsred, green and blue. The GxL system uses single wavelength
RGB lasers with outstanding color purity, enabling it to reproduce the same
colors as in real objects. The beauty it produces far exceeded even my own
expectations. When you look at the real world through a 2005-inch screen like
some huge window, you cant help but feel a sense of wonder and excitement.
Sony Corporation 27
SONY AR-E0629
Page 27
05.7.6, 2:19 PM
Spider-Man 2 Motion Picture 2004 Columbia Pictures Industries, Inc. All rights reserved. Spider-Man Character & 2004
Marvel Characters, Inc. All rights reserved.
available to other studios in the motion picture industry and are the choice for leading
filmmakers. Some of Hollywoods most notable films featuring the companys visual
effects and animation include Bewitched, The Aviator (Miramax), The Polar Express
(Warner Bros.), Bad Boys II, Spider-Man and Spider-Man 2, Big Fish, The Matrix
The Lord of the Rings: The Two Towers (New Line), Stuart Little and Stuart Little 2,
The Matrix Reloaded (Warner Bros.), Harry Potter and the Sorcerers Stone (Warner
Bros.), Cast Away (Fox/DreamWorks) and Charlies Angels.
28 Sony Corporation
SONY AR-E0629
Page 28
05.7.6, 2:19 PM
Spider-Man 2, winner of the 2005 Academy Award for Best Achievement in Visual
Effects, demonstrated Imageworks drive to surpass its previous accomplishments
a challenge of the highest order. In Spider-Man 2, the hero gets up close and personal
with the tentacled villain, Doctor Otto OctaviusDoc Ock. Spider-Man engages in
extensive hand-to-hand combat with both real and virtual versions of Doc Ock, which
required complex and detailed CG versions of both characters. The reality of SpiderMans moves and reactions to attacks and blows from Doc Ocks tentacles required
Jerome Chen
a complete rethinking of the Spider-Man character, with even higher expectations for
the animators. Both digital characters showcased the state of the art in digital humans,
with lifelike movement and appearance, especially in the rendering of skin, hair and
fabric. In the original Spider-Man, both the title character and the villain were masked.
In Spider-Man 2, we see their individual faces close up, which required the development
Spider-Man 2 Motion Picture 2004 Columbia Pictures Industries, Inc. All rights reserved. Spider-Man Character & 2004
Marvel Characters, Inc. All rights reserved.
A detailed digital city in Spider-Man 2, far more extensive than anything seen in Spider-Man, enabled the filmmakers to stage scenes across an urban landscape. This was most spectacularly revealed in the scenes in
which Spider-Man flies through the city and throughout a sequence where fully digital characters Spider-Man
and Doc Ock fight onboard a speeding train.
Sony Corporation 29
SONY AR-E0629
Page 29
05.7.6, 2:19 PM
For more than a decade, Imageworks has challenged itself to build on its own
capabilities and expand the creative palette. Imagemotion, a new proprietary
technology developed by Imageworks, enables live-action filmmakers to work in an
all-CG environment while using all of their familiar moviemaking tools. Imagemotion
allows for the simultaneous recording of face and body performance data by multiple
live actors and the application of that data to create CG images and camera movements. Imageworks pioneered the Imagemotion process in its groundbreaking work
Jill Culton
dently producing The ChubbChubbs!, which ultimately won the Academy Award for
produce all-CG animated motion pictures presents Imageworks with its next chal-
lenge. Sony Pictures Animations first two feature films, Open Season and Surfs Up,
emotion and a cast of endearing characters. At the same time, we have to think
about the look and style of the picture.
On Open Season, were going for a
graphic, stylized look. I really want the
audience to have the feeling you get
when youre in the woods for the first
time and your senses are overwhelmed
by the magnificence around you. One of
30 Sony Corporation
SONY AR-E0629
Page 30
05.7.6, 2:18 PM
Rick McCallum
Producer, Lucasfilm Ltd.
Let me be blunt. We simply could not
have made Star Wars Episode III without
the help of Sony and their development
of the HDCAM-SR 4:4:4 camera and
recording system.
Since we have gone to a completely
digital pipeline, another world has
opened up to us.
George Lucas and I are very passionate about digital filmmaking, and all of us
at Lucasfilm appreciate the contribution
CineAlta has made to our work. The two
main ways it has impacted our work has
been in allowing us to be more creative
and increasing our workflow efficiency.
For example, we can instantly access
footage we have just shot, which helps
not only the director, but the cast as well.
This, coupled with longer recording
times, helps us keep the production
moving at a fast pace without losing
momentum for camera reloads. Additionally, digital shooting allows us to go
into post production, not only off-line but
even online without any chemical processes like telecine, film scanning and
color timing, which increases our
production efficiency dramatically.
I believe that digital acquisition gives
us a significant advantage. It really is a
shame that very few people can enjoy
our movies in theaters at the same
quality level in which we shoot them.
Someday when the entire process
is digital, including the elusive final link of
theatrical distribution, moviegoers will get
to see films the way they were meant to
be seen. That will be a great day, and
one that Sony will have made a major
contribution to.
Sony Corporation 31
SONY AR-E0629
Page 31
05.7.6, 2:17 PM
SONY AR-E0629
Page 32
05.7.6, 2:17 PM
Nominating Committee
Proposes the appointment and
dismissal of Directors
Yotaro Kobayashi* (Chairman)
Hirobumi Kawano*
Akishige Okada*
Sir Howard Stringer
Ryoji Chubachi
Audit Committee
Compensation Committee
Execution
Corporate Executive Officers
Execution of Sony Group Business activities within the scope of authority delegated by the Board of Directors
Representative Corporate Executive Officers:
Sir Howard Stringer** Chairman and Chief Executive Officer
Ryoji Chubachi**
President and Electronics CEO
Katsumi Ihara**
Executive Deputy President and NC President, Home Electronics Network Company
Corporate Executive Officers:
Nobuyuki Oneda
Executive Vice President and Chief Financial Officer
Keiji Kimura
Executive Vice President and Officer in Charge of Technology Strategies
NC President, Information Technology & Communications Network Company
Nicole Seligman
Executive Vice President and General Counsel
Yutaka Nakagawa
Executive Vice President and NC President, Personal Audio Visual Network Company
** Concurrently serving as Director.
Sony Corporation 33
SONY AR-E0629
Page 33
05.7.6, 2:16 PM
Compliance Office
*1
East Asia
*2
Pan-Asia
*3
Regional
Compliance
Offices
Americas
Europe
Japan
Compliance
Officer
Compliance
Officer
Compliance
Officer
Compliance
Officer
Compliance
Officer
Regional
Subsidiaries
Subsidiaries in
the Americas
Subsidiaries in
Europe
Subsidiaries in
Japan
Subsidiaries in
East Asia
Subsidiaries in
Pan-Asia
34 Sony Corporation
Financial Section
Contents
Operating and Financial Review and Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Five-Year Summary of Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Quarterly Financial and Stock Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Consolidated Statements of Changes in Stockholders Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Sony Corporation 35
BH6/30
Page 35
05.7.7, 3:35 AM
OPERATING RESULTS
Operating Results for the Fiscal Year Ended March 31, 2005
OVERVIEW
After translation of Sonys financial results into yen (the currency in
ELECTRONICS
Restructuring charges in the Electronics segment for the fiscal
year ended March 31, 2005 were 81.8 billion yen, compared to
143.3 billion yen in the previous fiscal year. Of these restructuring
GAAP). Sonys sales and operating revenue (sales) for the fiscal
year ended March 31, 2005 decreased 4.5 percent compared
statements of income.
In addition to the above restructuring efforts, Sony undertook
compared to the previous fiscal year, several segments experienced an improvement in profitability such as the Pictures
several headcount reduction programs to further reduce operating costs in the Electronics segment. As a result of these pro-
March 31, 2005 was 14.0 billion yen and will be paid through
the fiscal year ending March 31, 2006. Sony will continue seek-
RESTRUCTURING
In the fiscal year ended March 31, 2005, Sony recorded restruc-
turing charges of 90.0 billion yen, a decrease from the 168.1 billion yen recorded in the previous fiscal year. The primary restruc-
MUSIC
ended March 31, 2005 were 3.8 billion yen, compared to 9.9
billion yen in the previous fiscal year.
36 Sony Corporation
BH6/30
Page 36
05.7.7, 3:35 AM
turing program since the fiscal year ended March 31, 2001 to
reduce staffing and other costs through the consolidation and
(Yen in billions)
8,000
800
6,000
600
4,000
400
2.5%
2,000
1.3%
2003
2004
1.5% 200
2005
restructuring program.
Cost of sales for the fiscal year ended March 31, 2005 decreased
by 58.1 billion yen, or 1.1 percent, to 5,000.1 billion yen com-
OPERATING PERFORMANCE
pared with the previous fiscal year, but increased from 73.5
percent to 76.2 percent as a percentage of sales. Year on year,
Yen in billions
Percent change
2004
2005
2005/2004
7,496.4
7,159.6
Operating income . . . . . . . . . .
98.9
113.9
+15.2
144.1
157.2
+9.1
affiliated companies . . . . . . . .
1.7
29.0
+1,594.2
Net income . . . . . . . . . . . . . . .
88.5
163.8
+85.1
4.5%
SALES
Sales for the fiscal year ended March 31, 2005 decreased by
336.8 billion yen, or 4.5 percent, to 7,159.6 billion yen compared with the previous fiscal year. A further breakdown of sales
figures is presented under Operating Performance by Business
Segment below.
(Sales in this analysis of the ratio of selling, general and
administrative expenses to sales refers only to the net sales
the cost of sales ratio rose from 78.9 percent to 81.8 percent in
the Electronics segment and increased from 70.1 percent to
73.0 percent in the Game segment. On the other hand, the cost
of sales ratio decreased from 58.5 percent to 57.2 percent in
the Music segment and improved in the Pictures segment from
60.0 percent to 58.7 percent.
In the Electronics segment, there was a deterioration in the
cost of sales ratio particularly within the CRT television, portable
audio, DVD recorder (including PSX) and video camera businesses. In the Game segment, there was an increase in the cost
of sales ratio as a result of costs associated with both the
launch of the PlayStation Portable (PSP) and the changeover
to the new PlayStation 2 (PS2) model. The cost of sales ratio
in the Music segment improved due to the establishment of
SONY BMG which is accounted for under the equity method
resulting in a higher percentage of sales being derived from
SMEJ which benefited from the contribution of greatest hits
Sony Corporation 37
BH6/30
Page 37
05.7.7, 3:35 AM
album sales. In the Pictures segment, the cost of sales ratio also
improved primarily due to the substantial contribution from
Spider-Man 2.
Personnel related costs included in cost of sales decreased
Research and development costs (all research and development costs are included within cost of sales) for the fiscal year
Other segments.
OPERATING INCOME
Operating income for the fiscal year ended March 31, 2005
as an increase in cost of sales that exceeded the reduction in selling, general and administrative expenses. For a further break-
In the consolidated results for the fiscal year ended March 31,
2005, other income decreased by 24.7 billion yen, or 20.2
percent, to 97.6 billion yen, while other expenses decreased by
22.8 billion yen, or 29.5 percent, to 54.3 billion yen, compared
7.5%
7.6%
(%)
(%)
80
72.0%
73.5%
76.2%
300
60
40
150
6.4%
450
with the previous fiscal year. The net amount of other income
and other expenses was net other income of 43.3 billion yen, a
25.9%
23.2%
20
value of the yen, especially during the first quarter of the fiscal
year ended March 31, 2005, was lower than the value of the yen
at the time that Sony entered into foreign exchange forward
contracts and foreign currency option contracts. These con-
2003
2004
2005
2003
2004
Cost of sales/sales
SGA/sales
2005
38 Sony Corporation
BH6/30
Page 38
05.7.7, 3:35 AM
For the fiscal year ended March 31, 2005, a loss on devaluation of securities investments of 3.7 billion yen was recorded, an
Inc and total gains of 4.7 billion yen from the sale of stock and a
change in interest in a subsidiary resulting from the initial public
affiliates such as STAR CHANNEL INC., a Japan-based subscription television company specializing in the broadcast of
2004, from Sonys sale, during the fiscal year ended March 31,
2003, of its equity interest in Telemundo Communications
NET INCOME
INCOME TAXES
Net income for the fiscal year ended March 31, 2005 increased
by 75.3 billion yen, or 85.1 percent, to 163.8 billion yen com-
Income taxes for the fiscal year ended March 31, 2005 decreased by 36.7 billion yen, or 69.6 percent, to 16.0 billion yen.
pared with the previous fiscal year. This increase was the result
primarily of the abovementioned increase in income before
ances against deferred tax assets for U.S. federal taxes and
certain state taxes. However, in the fiscal year ended March 31,
of the previous fiscal year and at the end of the fiscal year ended
March 31, 2005.)
Basic net income per share was 175.90 yen compared with
95.97 yen in the previous fiscal year, and diluted net income per
share was 158.07 yen compared with 87.00 yen in the previous
fiscal year. Refer to Notes 2 and 22 of Notes to Consolidated
Financial Statements.
Sony Corporation 39
BH6/30
Page 39
05.7.7, 3:35 AM
(Yen in billions)
200
(Yen)
200
150
7.4%
Electronics
Game
Music
Pictures
Financial Services
Other
3.4%
9.7%
6.2%
150
3.3%
5.0%
9.7%
100
3.8%
50
2003
2004
2005
100
50
66.5%
*Years ended March 31
*Including intersegment transactions
2003
2004
2005
Net income
ROE
Basic
Diluted
2004
Percent change
2005
2005/2004
5,042.3
780.2
5,021.6
729.8
0.4%
6.5%
Music . . . . . . . . . . . . . . . .
Pictures . . . . . . . . . . . . . .
440.3
756.4
249.1
733.7
43.4%
3.0%
Financial Services . . . . . . .
Other . . . . . . . . . . . . . . . .
593.5
268.3
560.6
254.4
5.6%
5.2%
Elimination . . . . . . . . . . . .
(384.7)
(389.6)
Consolidated . . . . . . . . . . . .
7,496.4
7,159.6
4.5%
(6.8)
(34.3)
Game . . . . . . . . . . . . . . . .
Music . . . . . . . . . . . . . . . .
67.6
(6.0)
43.2
8.8
36.1%
%
Pictures . . . . . . . . . . . . . .
Financial Services . . . . . . .
35.2
55.2
63.9
55.5
+81.4%
+0.6%
Other . . . . . . . . . . . . . . . .
(12.1)
(4.1)
Total . . . . . . . . . . . . . . . . . . .
133.1
133.0
0.1%
corporate expenses . . . .
(34.2)
(19.0)
Consolidated . . . . . . . . . . . .
98.9
113.9
+15.2%
40 Sony Corporation
BH6/30
Page 40
05.7.7, 3:35 AM
ELECTRONICS
Sales for the fiscal year ended March 31, 2005 decreased 20.7
PSX) recorded a significant increase in sales worldwide. Worldwide shipments of digital still cameras increased by approxi-
and digital still cameras, although sales mainly of CRT televisions, PCs, computer displays and portable audio declined.
audio decreased.
(Yen in billions)
6,000
600
4,000
400
Worldwide shipments of LCD televisions increased by approximately 570,000 units, compared to the previous fiscal year, to
2,000
200
1.3%
0
0.1%
0.7%
2,000
2003
2004
2005
200
Sales (left)
Operating income (loss) (right)
Operating margin
* Years ended March 31
Performance
by Product Category
BH6/30
Page 41
05.7.7, 3:34 AM
broadcasting facilities.
Semiconductors sales decreased by 6.9 billion yen, or
6.0 billion yen to 23.4 billion yen compared with the previous
fiscal year. This amount includes 18.8 billion yen in restructuring
charges, which includes 7.5 billion yen related to CRT and CRT
televisions manufacturing facilities in Europe. The amount of
previous fiscal year. This loss was due to the recording, within
the Electronics segment, of research and development costs
These costs were previously recorded within the Game segment. CRT televisions and portable audio products recorded a
PSX) also experienced an increased operating loss. The operating income for video cameras also decreased.
in association with the business integration of Sonys semiconductor manufacturing operations, overall research and develop-
Manufacturing
by Geographic Area
Approximately 50 percent of the Electronics segments total
annual production during the fiscal year ended March 31, 2005
took place in Japan, including the production of digital still
cameras, video cameras, flat panel televisions, PCs, semiconductors and components such as batteries and Memory Sticks.
42 Sony Corporation
BH6/30
Page 42
05.7.7, 3:34 AM
was destined for other regions. China accounted for approximately 10 percent of total annual production, approximately 70
2005
3.31
2.77
102.49
PS2 . . . . . . . . . . . . . . . . .
20.10
16.17
87.47
2.97
2.97
PSP . . . . . . . . . . . . . . . . .
In the Electronics segment, the negative effect of the appreciation of the yen against the U.S. dollar exceeded the positive
effect of the appreciation of the euro against the yen. Sales for
the fiscal year ended March 31, 2005 decreased, on a yen
basis, by 0.4 percent, but increased on a local currency basis
by approximately 1 percent. In terms of operating performance,
there was a deterioration in the operating loss compared to the
previous fiscal year, but if calculated on a local currency basis,
this operating loss was smaller compared to the actual results
on a yen basis.
Sales to outside customers by geographic area on a yen basis
decreased in Japan by 10 percent, and in the U.S. by 4 percent:
however, sales in Europe remained relatively unchanged and
sales increased in Other Areas by 9 percent. Sales on a local
currency basis for regions outside Japan increased in the U.S.
by 1 percent and in Other Areas by 13 percent, but decreased
Cumulative as of
March 31, 2005
32.00
10.00
959.00
PS2 . . . . . . . . . . . . . . . . .
222.00
252.00
824.00
5.70
5.70
PSP . . . . . . . . . . . . . . . . .
in Europe by 2 percent.
Sales and operating income
in the Game segment
GAME
Sales for the fiscal year ended March 31, 2005 decreased by
50.5 billion yen, or 6.5 percent, to 729.8 billion yen compared
with the previous fiscal year. Operating income decreased by
(Yen in billions)
11.8%
(Yen in billions)
1,200
240
900
600
120
300
60
8.7%
180
5.9%
2003
2004
2005
Sales (left)
Operating income (right)
Operating margin
*Years ended March 31
Sony Corporation 43
BH6/30
Page 43
05.7.7, 3:34 AM
MUSIC
Sales for the fiscal year ended March 31, 2005 decreased by
On a U.S. dollar basis, sales for the fiscal year in the Pictures
segment increased approximately 1 percent and operating
was recorded.
On a local currency basis, sales in the Music segment
50 First Dates, Big Fish and Bad Boys 2. For theatrical revenues, the success of the current year film slate, particularly
sales at SMEI after July 31, 2004. Therefore, SMEIs results are
not comparable with the results of the previous fiscal year.
year release slate decreased 70 million U.S. dollars as compared to the previous fiscal year. However, sales in the fiscal
year ended March 31, 2005 from the prior year release slate
increased 304 million U.S. dollars as compared to sales in the
previous fiscal year from the release slate for the fiscal year
ended March 31, 2003. While benefiting from higher theatrical
revenues, total fiscal year release slate revenues were lower due
to the timing of the fiscal years film slates release in the home
from the absence in the fiscal year ended March 31, 2005 of
several transactions in the television business that occurred in
90
60
(Yen in billions)
600
400
200
30
0
1.4%
200
6.1%
2003
2004
2005
3.5%
0
30
Sales (left)
Operating income (loss) (right)
Operating margin
*Years ended March 31
Operating loss from the fiscal year release slate decreased 415
million U.S. dollars and operating income for the prior years
release slate increased 173 million U.S. dollars as compared to
the prior year. Spider-Man 2s worldwide success contributed
substantially to this fiscal years earnings, offset somewhat by
the disappointing theatrical performance of Spanglish. Further
improving operating income was a 38 million U.S. dollar decrease
in restructuring charges. Partially offsetting these increases in
PICTURES
Sales for the fiscal year ended March 31, 2005 decreased by
22.7 billion yen, or 3.0 percent, to 733.7 billion yen compared
with the previous fiscal year. Operating income increased by
28.7 billion yen, or 81.4 percent, to 63.9 billion yen and the
operating income was the impact of the absence of the television transactions noted above, which reduced operating income
by approximately 150 million U.S. dollars due primarily to the
factors noted above for revenue.
As of March 31, 2005, unrecognized license fee revenue at
44 Sony Corporation
BH6/30
Page 44
05.7.7, 3:34 AM
fee revenue will be recognized in the fiscal year that the product
is available for broadcast.
(Yen in billions)
800
7.3%
400
60
40
4.7%
200
FINANCIAL
20
2003
2004
2005
80
8.7%
600
Sales (left)
Operating income (right)
Operating margin
SERVICES
Please note that the revenue and operating income at Sony Life,
Sony Assurance Inc. (Sony Assurance) and Sony Bank Inc.
(Sony Bank) discussed below differ from the results that Sony
Life, Sony Assurance and Sony Bank disclose on a Japanese
statutory basis.
Financial Services revenue for the fiscal year ended March 31,
2005 decreased by 33.0 billion yen, or 5.6 percent, to 560.6
billion yen compared with the previous fiscal year. Operating
income increased by 0.3 billion yen, or 0.6 percent, to 55.5
billion yen and the operating income margin increased to
9.9 percent compared with the 9.3 percent of the previous
fiscal year.
At Sony Life, revenue decreased by 38.7 billion yen, or
7.5 percent, to 474.3 billion yen compared with the previous
fiscal year. The main reasons for the decrease in revenue were
a change in the method of recognizing insurance premiums
received on certain products, as of the third quarter beginning
October 1, 2003, from being recorded as revenues to being
offset against the related provision for future insurance policy
benefits, coupled with a small decrease in valuation gains in the
current fiscal year compared to the previous fiscal year in which
significant valuation gains were recorded against stock conver-
(Billions of yen)
800
80
9.9%
9.3%
600
60
400
40
4.2%
200
20
2003
2004
2005
BH6/30
Page 45
05.7.7, 3:34 AM
Sony without
Financial Services
Financial Services
Years ended March 31
2004
2005
2004
Consolidated
2005
2004
2005
593,544
560,557
565,752
537,715
6,939,964
6,632,728
6,930,639
6,621,901
..................................................
593,544
560,557
6,939,964
6,632,728
7,496,391
7,159,616
538,383
505,067
6,896,377
6,575,354
7,397,489
7,045,697
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55,161
55,490
43,587
57,374
98,902
113,919
1,958
10,204
52,746
40,639
45,165
43,288
57,119
65,694
96,333
98,013
144,067
157,207
22,975
25,698
30,916
(37,043)
53,439
(11,344)
34,144
39,996
65,417
135,056
90,628
168,551
(4,713)
(2,117)
(2,117)
(4,713)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,144
35,283
63,300
135,056
88,511
163,838
OTHER
During the fiscal year ended March 31, 2005, sales within the
Other segment were comprised mainly of sales from an advertising agency business in Japan; SCN, an Internet-related
400
40
operating losses for the segment improved for the fiscal year
from 12.1 billion yen to 4.1 billion yen.
200
20
(Yen in billions)
(Yen in billions)
1.6%
4.5%
200
20
10.8%
400
2003
2004
2005
40
Sales (left)
Operating loss (right)
Operating margin
*Years ended March 31
46 Sony Corporation
BH6/30
Page 46
05.7.7, 3:34 AM
ending March 31, 2006, and will instead consolidate its results
within the Other segment. After the establishment of SONY
BMG, for the second half of the fiscal year ended March 31,
2005, sales revenue for the Music segment (including
rate fluctuations mainly derived from the fact that the countries
where manufacturing takes place may be different from those
2005, were 3.5 percent of the total assets for all segments.
Furthermore, as of the first quarter of the fiscal year ending
foreign currencies.
Sony Global Treasury Services Plc (SGTS) in London
HEDGING
During the fiscal year ended March 31, 2005, the average value
of the yen was 106.5 yen against the U.S. dollar, and 133.7 yen
against the euro, which was 5.2 percent higher against the U.S.
dollar and 1.9 percent lower against the euro, respectively, compared with the average of the previous fiscal year. Operating
monthly local currency-denominated sales, cost of sales, and selling, general and administrative expenses for the fiscal year ended
March 31, 2005, as if the value of the yen had remained constant.
In the Music segment, Sony consolidates the yen-translated
segment, results for this fiscal year only include the results of
SMEIs recorded music business for the months of April through
July 2004, and the twelve month results for SMEIs music
publishing business and SMEJ. However, results for the previ-
To minimize the adverse effects of foreign exchange fluctuations on its financial results, particularly in the Electronics
BH6/30
Page 47
05.7.7, 3:34 AM
1.53 months at the end of the previous fiscal year. Sony considers this level of inventory to be appropriate in the aggregate.
AND ADVANCES
ASSETS
CURRENT
ASSETS
Current assets on March 31, 2005 increased by 192.8 billion
PROPERTY,
equipment) for the fiscal year ended March 31, 2005 decreased
by 21.4 billion yen, or 5.7 percent, to 356.8 billion yen compared
with the previous fiscal year. Capital expenditures in the Electronics segment increased by 59.1 billion yen, or 23.5 percent, to
48 Sony Corporation
BH6/30
Page 48
05.7.7, 3:34 AM
previous fiscal year-end if the value of the yen had remained the
same on March 31, 2005 as it was on March 31, 2004.
yen, or 3.4 percent to 5.8 billion yen, and decreased in the Other
segment by 4.0 billion yen, or 39.3 percent, to 6.1 billion yen.
CURRENT
OTHER ASSETS
Other assets on March 31, 2005 decreased by 46.7 billion yen,
yen of convertible bonds due on March 31, 2005, 5.0 billion yen
were redeemed on the maturity date with 282.8 billion yen of the
1,189.4 billion yen. This decrease was primarily the result of the
fact that, due to the establishment of SONY BMG, artists
Deferred tax assets on March 31, 2005 increased by 37.2 billion yen, or 18.3 percent, to 240.4 billion yen compared with the
Financial Statements.)
Notes and accounts payable, trade on March 31, 2005 in all
billion yen compared with the previous fiscal year-end. This was
mainly due to an increase in deferred insurance acquisition costs
LONG-TERM
LIABILITIES
LIABILITIES
at Sony Life.
LIABILITIES
Total current and long-term liabilities on March 31, 2005
to 627.4 billion yen. This was primarily the result of the reclassification of long-term debt to current liabilities, including 119.0
BH6/30
Page 49
05.7.7, 3:34 AM
TOTAL
INTEREST-BEARING DEBT
(Yen in billions)
(%)
(Yen)
3,200
40
3,200
30
2,400
1,600
20
1,600
800
10
800
30.2%
2,400
Interest-bearing liabilities
27.2%
26.2%
(Yen in billions)
1,600
1,200
800
2003
2004
2005
Stockholders equity
Stockholders equity ratio
Stockholders equity ratio=
Stockholders equity/Total assets
400
2003
2004
2005
* As of March 31
*As of March 31
2003
2004
2005
STOCKHOLDERS EQUITY
Stockholders equity on March 31, 2005 increased by 492.3
excluding Financial Services as well as the condensed consolidated balance sheet. This presentation is not required under
U.S. GAAP, which is used in Sonys consolidated financial statements. However, because the Financial Services segment is dif-
of convertible bonds due on March 31, 2005, 5.0 billion yen were
redeemed on the maturity date with 282.8 billion yen of the 287.8
billion yen balance outstanding at the start of the fiscal year being
converted into common stock, and, therefore, incorporated into
50 Sony Corporation
BH6/30
Page 50
05.7.7, 9:28 AM
CONDENSED BALANCE SHEETS SEPARATING OUT THE FINANCIAL SERVICES SEGMENT (UNAUDITED)
Yen in millions
Sony without
Financial Services
Financial Services
Years ended March 31
2004
2005
Consolidated
2004
2005
2004
2005
Assets
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
699,698
990,191
2,692,436
2,592,849
3,363,355
3,556,171
256,316
259,371
592,895
519,732
849,211
779,103
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
270,676
456,130
4,072
4,072
274,748
460,202
72,273
77,023
943,590
952,692
1,011,189
1,025,362
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,433
197,667
1,151,879
1,116,353
1,228,207
1,291,504
Film costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
256,740
278,961
256,740
278,961
2,274,510
2,378,966
358,629
445,446
2,512,950
2,745,689
176,905
187,400
40,833
38,551
1,324,211
1,333,848
1,365,044
1,372,399
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
459,998
477,809
1,251,901
1,189,398
1,592,573
1,545,880
349,194
374,805
349,194
374,805
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110,804
103,004
1,251,901
1,189,398
1,243,379
1,171,075
................................................
3,475,039
3,885,517
6,060,822
6,027,902
9,090,662
9,499,100
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
648,803
708,613
2,373,550
2,137,480
2,982,215
2,809,368
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,748
45,358
409,766
204,027
475,017
230,266
7,847
7,099
773,221
801,252
778,773
806,044
378,851
546,718
378,851
546,718
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
175,357
109,438
1,190,563
1,132,201
1,349,574
1,226,340
Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,450,969
2,756,679
1,482,378
1,228,927
3,707,587
3,795,547
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135,811
135,750
775,233
627,367
777,649
678,992
10,183
14,362
358,199
338,040
368,382
352,402
2,178,626
2,464,295
2,178,626
2,464,295
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126,349
142,272
348,946
263,520
382,930
299,858
5,476
17,554
18,471
22,858
23,847
Stockholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
375,267
414,749
2,187,340
2,643,024
2,378,002
2,870,338
................................................
3,475,039
3,885,517
6,060,822
6,027,902
9,090,662
9,499,100
INVESTMENTS
Sony regularly evaluates its investment portfolio to identify other-
market value.
In evaluating the factors for available-for-sale securities with
been less than its original cost, the financial condition, operating
results, business plans and estimated future cash flows of the
months). The presumption of an other-than-temporary impairment in such cases may be overcome if there is evidence to
Sony Corporation 51
BH6/30
Page 51
05.7.7, 3:34 AM
support that the decline is temporary in nature due to the existence of other factors which overcome the duration or magnitude
to be other-than-temporary in the future based on Sonys evaluation of additional information such as continued poor operating
results, future broad declines in value of worldwide equity markets and the effect of world wide interest rate fluctuations. As a
The assessment of whether a decline in the value of an investment is other-than-temporary is often judgmental in nature and
Unrealized
gain
Cost
Unrealized
loss
Fair market
value
Financial Services
Available for sale
Debt securities
Sony Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,769,693
56,988
(2,130)
1,824,551
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
315,101
1,096
(281)
315,916
Sony Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,256
22,735
(278)
64,713
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,469
5,172
(12)
14,629
Equity securities
Held to maturity
Debt securities
Sony Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,414
530
(13)
27,931
2,163,933
86,521
(2,714)
2,247,740
61,212
21,520
(577)
82,155
17
17
61,229
21,520
(577)
82,172
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,225,162
108,041
(3,291)
2,329,912
Non-Financial Services:
losses that met the test discussed above for impairment as the
declines in value were observed to be small both in amounts
52 Sony Corporation
BH6/30
Page 52
05.7.7, 3:34 AM
vary as follows:
Within
1
1 year . . . . . . . . . . . . . . . . . . . . . . . . . 18 percent
to 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . 55 percent
to 10 years . . . . . . . . . . . . . . . . . . . . . . . . . 21 percent
For the fiscal years ended March 31, 2003, 2004 and 2005,
total impairment losses were 25.5 billion yen, 16.7 billion yen
in financial conditions and the investment environment. Moreover, Sony Life analyzes the character of future insurance policy
and 4.2 billion yen of which 2.3 billion yen, 0.2 billion yen and
0.5 billion yen, respectively, were recorded by Sony Life in
years ended March 31, 2005 and March 31, 2004). Impairment
losses other than at Sony Life in each of the three fiscal years
mainly offers housing loans to individuals and does not have any
corporate loan exposure.
Sony Corporation 53
BH6/30
Page 53
05.7.7, 3:34 AM
Less than
1 year
1 to 3 years
3 to 5 years
After 5 years
40,301
11,173
17,435
6,655
4,498
805,561
155,157
192,741
278,684
178,979
169,951
38,182
53,561
24,556
53,652
83,683
67,698
15,973
12
82,080
45,651
36,429
* The total amount of expected future pension payments is not included in the above table or the total amount of commitments outstanding at March 31, 2005 discussed
below as such amount is not currently determinable. Sony expects to contribute approximately 35.0 billion yen to the Japanese pension plans and approximately 6.0 billion
yen to the foreign pension plans for the fiscal year ending March 31, 2006 (Note 15).
* The total unused portion of the line of credit extended under loan agreements in the Financial Services segment is not included in the above table or the amount of
commitments outstanding at March 31, 2005 discussed below as it is not foreseeable how many loans will be executed. The total unused portion of the line of credit
extended under these contracts was 199.9 billion yen as of March 31, 2005 (Note 24).
* The 5 year Revolving Credit Agreement with Sony BMG, which matures on August 5, 2009 and provides for a base commitment of 32.1 billion yen and additional
incremental borrowings of up to 16.1 billion yen, is not included in the above table or the amount of commitments outstanding at March 31, 2005 discussed below as such
amount is not currently determinable. Sonys outstanding commitment under this Credit Agreement as of March 31, 2005 was 24.1 billion yen (Note 24).
Total amounts of
contingent liabilities
7,642
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,407
26,049
54 Sony Corporation
BH6/30
Page 54
05.7.7, 3:34 AM
amounts due at March 31, 2005 relating to the existing undivided interests in the pool of receivables that had been sold.
are not VIEs while MGM is a VIE. However, MGM will not be
consolidated as Sony is not the primary beneficiary of this VIE.
During the fiscal year ended March 31, 2005, Sony entered
into new accounts receivable sales programs that provide for
CASH FLOWS
(The fiscal year ended March 31, 2005 compared with the fiscal
year ended March 31, 2004)
yen, or 21.0 percent, compared with the previous fiscal year, and
the Financial Services segment generated 168.1 billion yen of net
employs these arrangements because they provide a diversification of funding sources. The assets and liabilities associated with
during the fourth quarter and within the Music segment associated with the decrease in sales after August 2004, and a
ingly, the assets and liabilities associated with these arrangements were consolidated. Refer to Note 23 of Notes to Consoli-
Sony Corporation 55
BH6/30
Page 55
05.7.7, 3:34 AM
yen, or 8.3 percent, to 779.1 billion yen, compared with the end
of the previous fiscal year. The total outstanding balance of cash
Cash flows
(Yen in billions)
1,000
500
500
1,000
2003
2004
2005
(UNAUDITED)
The following schedule shows unaudited condensed statements
of cash flow for the Financial Services segment and all other
segments excluding the Financial Services segment as well as
the repayment of long term debt and 23.0 billion yen in cash
being used for the payment of dividends.
In the fiscal year ended March 31, 2005, net cash was used
for financing activities compared to 153.8 billion yen of net cash
procured in the previous fiscal year. This change was due mainly
to the issuance of 250.0 billion yen in euro yen convertible
56 Sony Corporation
BH6/30
Page 56
05.7.7, 3:34 AM
CONDENSED STATEMENTS OF CASH FLOWS SEPARATING OUT THE FINANCIAL SERVICES SEGMENT
Yen in millions
Sony without
Financial Services
Financial Services
Years ended March 31
2004
2005
2004
Consolidated
2005
2004
2005
241,627
168,078
401,090
485,439
632,635
646,997
(401,550)
(421,384)
(352,496)
(472,119)
(761,792)
(931,172)
141,696
256,361
153,759
(95,373)
313,283
205,177
(47,973)
8,890
(47,973)
8,890
(18,227)
3,055
154,380
(73,163)
136,153
(70,108)
274,543
256,316
438,515
592,895
713,058
849,211
256,316
259,371
592,895
519,732
849,211
779,103
MARKET ACCESS
Capital expenditures
(additions to property, plant
and equipment)
amount as of March 31, 2005 was 536.8 billion yen. There was
no outstanding balance as of March 31, 2005. Sony Capital
Corporation (SCC), a Sony finance subsidiary in the U.S., had
an outstanding MTN balance of approximately 58.8 billion yen
(Yen in billions)
(Yen in billions)
400
400
300
300
200
200
LIQUIDITY MANAGEMENT
Sony defines its liquidity sources as the amount of cash, cash
100
100
2003
2004
2005
2003
2004
2005
BH6/30
Page 57
05.7.7, 3:34 AM
due date come within the fiscal year, and possible downward
earnings risk due to business environment change.
The cash balance on March 31, 2005, was 523.8 billion yen. A
short-term shortage in the cash balance is financed by the
issue CP for its working capital needs has not been limited.
CASH MANAGEMENT
Sony is centralizing and working to make more efficient its global
RATINGS
transactions.
Sony Life currently obtains ratings from four rating agencies:
A+ by S&P both for long-term local currency issuer ratings and
insurance and finance capability ratings, A+ by AM Best
Moodys
S&P
R&I
Long-term debt
A1 (Outlook:
Negative)
A (Outlook:
Negative)
AA
Short-term debt
P-1
A-1
a-1+
58 Sony Corporation
BH6/30
Page 58
05.7.7, 3:34 AM
to the development of a variety of strategic devices and innovative new products as part of research and development activities
REWARDING SHAREHOLDERS
NUMBER OF EMPLOYEES
of expenses were for the development of new product prototypes while the remaining 38 percent were for the development
BH6/30
Page 59
05.7.7, 3:34 AM
TREND INFORMATION
striving to keep pace with price erosion by reducing its manufacturing and other costs. It is seeking to maintain the premium
performance of Sony and should be read in light of the cautionary statement on that subject, which appears on the inside front
year ended March 31, 2004 and invested 90 billion yen in the
fiscal year ended March 31, 2005 on semiconductor fabrication
60, a series of fundamental reforms aimed at improving operational profitability and competitiveness in anticipation of future
equipment built at the 65 nanometer level of process technology. Chips that will be manufactured using this equipment will
integrated its semiconductor manufacturing business by transferring Sony Computer Entertainments semiconductor manufac-
to that segment. Below is a description of the issues management believes each segment continues to face and an explana-
In the area of other key devices, Sony invested in 7th generation amorphous TFT LCD panel production equipment, through
ELECTRONICS
Although the Electronics segment continues to hold a very
comes from Samsung while the CFO comes from Sony. Production of LCD panels began in April 2005. Expected production
GAME
In the Game segment, PS2 has a high share of the global game
console market, and the PS2 business, particularly the PS2
60 Sony Corporation
BH6/30
Page 60
05.7.7, 3:34 AM
Assurance and Sony Bank, with the aim of both increasing the
synergies between these businesses and targeting an initial
public offering during the fiscal year ending March 31, 2007.
MUSIC
Within the music industry, album sales over the past several
years have decreased due to piracy and competition from other
2004, forming the joint venture SONY BMG. The newly formed
company is 50 percent owned by each parent company and is
Statement.
PICTURES
In the Pictures segment, Sony faces intense competition, rising
will strengthen against the U.S. dollar and the euro compared
with the fiscal year ended March 31, 2005.
FINANCIAL SERVICES
In the Financial Services segment, the value of assets accumu-
income taxes.
In June 6, 2005, SCN sold 17,935 shares of So-Net M3 Inc.,
(approximately 40 percent) of Sonys total assets being accounted for by the Financial Services segment. To strengthen
at 694,600 yen per share with a total value of 12.5 billion yen.
As a result of this sale, Sony records approximately 11.9 billion
yen gain on the sale of its stock for the year ending March 31,
2006, and Sonys ownership interest has been reduced from
BH6/30
Page 61
05.7.7, 3:34 AM
DEPRECIATION
ELECTRONICS
In the fiscal year ending March 31, 2006, expenses for depreciation and amortization, which includes the amortization of
prices, appreciation of the yen against the U.S. dollar and euro
and increase in both depreciation and amortization and research
RESEARCH
AND DEVELOPMENT
Sony expects research and development costs (total of expenses
GAME
AND AMORTIZATION
MUSIC
Due to the establishment of SONY BMG, sales are expected to
PICTURES
tions that are believed to be reasonable under the circumstances. The results of these evaluations form the basis for
FINANCIAL SERVICES
Although revenue is expected to continue to grow mainly due to
CAPITAL EXPENDITURES
In the fiscal year ending March 31, 2006, capital expenditures
62 Sony Corporation
BH6/30
Page 62
05.7.7, 3:34 AM
INVESTMENTS
Sonys investments are comprised of debt and equity securities
the length of time and extent to which the market value of the
security has been less than its original cost, the financial
resulting in lower future cash flows and fair value due to unforeseen changes in business assumptions could negatively affect
yen. This included 8.1 billion yen for the impairment of semiconductor and computer display CRT manufacturing equipment to
securities which may have a decline in value that is other-thantemporary. The presumption of an other-than-temporary
be abandoned or to be sold in connection with certain restructuring activities in the Electronics segment. It also included 2.7
assets such as semiconductor and TV display CRT manufacturing equipment to be abandoned or sold in connection with
include business plans and future cash flows of the issuer of the
security, the regulatory, economic or technological environment
in future periods.
Sony Corporation 63
BH6/30
Page 63
05.7.7, 3:33 AM
an indefinite life are not amortized, but are tested for impairment
in accordance with FAS No. 142 on an annual basis and
analysis. This approach uses significant estimates and assumptions including projected future cash flows, the timing of such
the fourth quarter of the fiscal year ended March 31, 2005, Sony
performed the annual impairment analysis and no impairment
impairment loss.
tion. That is, the fair value of the reporting unit is allocated to all
of the assets and liabilities of that unit (including any unrecog-
nized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the
assumptions used are appropriate, differences in actual experience or changes in assumptions may affect Sonys pension
64 Sony Corporation
BH6/30
Page 64
05.7.7, 3:33 AM
fiscal year ended March 31, 2004 and reflects current market
interest rate conditions. For Japanese pension plans, a 10 basis
ance for deferred tax assets (including deferred tax assets on tax
loss carry-forwards), all available evidence, both positive and
negative, is considered. Information on historical results is supplemented by all currently available information on future years,
rates of return on various categories of plan assets. For Japanese pension plans, the expected long-term rate of return on
pension plan assets was 4.0% and 3.2% as of March 31, 2004
and 2005 respectively. The actual loss on pension plan assets
for the fiscal year ended March 31, 2005 was 0.1%. Actual
results that differ from the expected return on plan assets are
ability to realize the tax benefit of deferred tax assets for local
income taxes is dependent on whether Sony Corporation and
had deferred tax assets for local income taxes totaling 77.5
billion yen. The eventual ability to realize the tax benefit of its
over the fair value of the plans assets. This liability was established by a charge to stockholders equity, resulting in no impact
CHANGE IN ASSUMPTION
Yen in billions
Pre-tax
PBO
Pension
expense
Equity
(net of tax)
/+45.0
/+3.0
+/1.8
/+1.3
+/0.8
Corporations future results may yield sufficient negative evidence to support the future determination that it is more likely
than not that Sony Corporation will not realize the tax benefit of
all these deferred tax assets. If this is the case, subject to review
of relevant qualitative factors and uncertainties, Sony may
establish a valuation allowance against part or all of the deferred
tax assets of Sony Corporation. Such valuation allowances
would be charged to income as an increase in tax expense.
Sony Corporation 65
BH6/30
Page 65
05.7.7, 3:33 AM
FILM ACCOUNTING
An aspect of film accounting that requires the exercise of
ACCOUNTING
ACCOUNTS
In July 2003, the Accounting Standards Executive Committee of
actual results to date of each film. For example, a film that has
resulted in lower than expected theatrical revenues in its initial
weeks of release would generally have its theatrical, home entertainment and television distribution ultimate revenues adjusted
FUTURE
THE
approximately 1.30% to 5.20%. Mortality, morbidity and withdrawal assumptions for all policies are based on either the life
66 Sony Corporation
BH6/30
Page 66
05.7.7, 3:33 AM
stock acquisition rights have been met. EITF Issue No. 04-8 is
effective for reporting periods ending after December 15, 2004.
Sony adopted EITF Issue No. 04-8 during the quarter ended
December 31, 2004. As a result of the adoption of EITF Issue
change and net income for the fiscal year ended March 31,
2005 were decreased by 7.26 yen and 7.06 yen, respectively,
the provisions of FIN No. 46R upon its issuance. The adoption
of FIN No. 46R did not have an impact on Sonys results of
EMPLOYERS
RECENT PRONOUNCEMENTS
Termination Benefits, and FAS No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions. FAS No.
the period the service is received. Sony has accounted for its
employee stock-based compensation in accordance with the
provisions prescribed by APB No. 25 and its related interpretations and has disclosed the net effect on net income and net
CONSOLIDATION
encouraged during the fiscal years beginning after the date this
statement is issued. The options for transition methods
No. 46, Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51. FIN No. 46 addresses consolidation by a
prescribed in FAS No. 123(R) include either the modified prospective or the modified retrospective methods. Sony intends
Sony Corporation 67
BH6/30
Page 67
05.7.7, 3:33 AM
currently evaluating the impact of adopting this new pronouncement. However, Sony expects that the total expenses to be
recorded in the future periods will be consistent with the pro
forma information in Note 2(2) of Notes to the Consolidated
Financial StatementsStock-based compensation.
INVENTORY
COSTS
In November 2004, the FASB issued FAS No. 151, Inventory
Costs, an amendment of Accounting Research Bulletin (ARB)
No. 43, Chapter 4. This statement requires certain abnormal
expenditures to be recognized as expenses in the current
period. It also requires that the amount of fixed production
overhead allocated to inventory be based on the normal
capacity of the production facilities. This statement shall be
effective for fiscal years beginning after June 15, 2005, with early
adoption encouraged during the fiscal years beginning after the
date this statement is issued. The adoption of FAS No. 151 is
not expected to have a material impact on Sonys results of
operations and financial position.
EXCHANGES
OF NONMONETARY ASSETS
In December 2004, the FASB issued FAS No. 153, Exchanges
of Nonmonetary Assets, an amendment of APB Opinion No.
29. This statement requires that exchanges of productive
assets be accounted for at fair value unless fair value cannot
be reasonably determined or the transaction lacks commercial
substance. This statement shall be effective for nonmonetary
asset exchanges occurring in the fiscal periods beginning after
June 15, 2005, with early adoption during the fiscal periods
beginning after the date this statement is issued encouraged.
Sony is currently evaluating the impact of adopting this new
pronouncement.
68 Sony Corporation
BH6/30
Page 68
05.7.7, 3:33 AM
Dollars in
millions except
per share
amounts
Yen in millions
except per share amounts
2001
2002
2003
2004
9,332
15,310
132.64.
124.36.
115,519
115,519
2005
2005
7,159,616
113,919
157,207
16,044
29,039
$66,912
1,065
1,469
150
271
168,551
163,838
1,575
1,531
90,628
88,511
10.21.
10.18.
125.74.
118.21.
98.26.
89.03.
180.96.
162.59.
$ 1.69.
1.52.
18.33.
19.28.
25.00.
16.72.
16.67.
25.00.
125.74.
118.21.
25.00.
95.97.
87.00.
25.00.
175.90.
158.07.
25.00.
1.64.
1.48.
0.23.
913,932
918,462
919,706
923,650
931,125
(15.87.)
(41.98.)
(41.80.)
17.21.
3,072
3,072
3,072
3,072
348,268
354,135
351,925
366,269
372,865
$ 3,485
465,209
416,708
326,734
433,214
261,241
443,128
378,264
514,483
356,818
502,008
3,335
4,692
830,734
2,315,453
778,716
2,370,410
719,166
2,280,895
381,140
2,378,002
746,803
2,870,338
$ 6,979
26,826
$ 26.84.
$88,777
919,617
919,744
3,072
922,385
3,072
926,418
3,072
0.16.
997,211
3,072
* Including amortization expenses for intangible assets and for deferred insurance acquisition costs
Sony Corporation 69
BH6/30
Page 69
05.7.7, 3:33 AM
Notes: 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 107=U.S. $1, the approximate Tokyo foreign exchange market rate as of
March 31, 2005.
2. In July 2003, the Accounting Standards Executive Committee of American Institute of Certified Public Accountants (AcSEC) issued Statement of Position (SOP)
03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts. SOP 03-1 requires
insurance enterprises to record additional reserves for long-duration life insurance contracts with minimum guarantee or annuity receivable options. Additionally,
SOP 03-1 provides guidance for the presentation of separate accounts. This statement is effective for fiscal years beginning after December 15, 2003. Sony
adopted SOP 03-1 on April 1, 2004. As a result of the adoption of SOP 03-1, Sonys operating income decreased by 5,156 million ($48 million) for the year
ended March 31, 2005. Additionally, on April 1, 2004, Sony recognized 4,713 million ($44 million) of loss (net of income taxes of 2,675 million) as a cumulative
effect of an accounting change. In addition, the separate account assets, which are defined by insurance business law in Japan and were previously included in
Securities investments and other on the consolidated balance sheet, were excluded from the category
of separate accounts under the provision of SOP 03-1. Accordingly, the assets previously treated as separate account assets are now treated within general
account assets.
3. In July 2004, the Emerging Issues Task Force (EITF) issued EITF Issue No. 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings per
Share. In accordance with Statement of Financial Accounting Standards (FAS) No. 128, Sony had not previously included in the computation of diluted earnings
per share (EPS) the number of potential shares of common stock issuable upon the conversion of contingently convertible debt instruments (Co-Cos) that have
not met the conditions to exercise the associated stock acquisition rights. EITF Issue No. 04-8 requires that the maximum number of shares of common stock
that could be issued upon the conversion of Co-Cos be included in diluted EPS computations from the date of issuance regardless of whether the conditions to
exercise such rights have been met. EITF Issue No. 04-8 is effective for reporting periods ending after December 15, 2004. Sony adopted EITF Issue No. 04-8
during the quarter ended December 31, 2004. As a result of the adoption of EITF Issue No. 04-8, Sonys diluted EPS of income before cumulative effect of an
accounting change and its net income for the year ended March 31, 2004 were restated respectively. Sonys diluted EPS of income before cumulative effect of an
accounting change and its net income for the year ended March 31, 2005 were decreased by 7.26 ($0.07) and 7.06 ($0.07), respectively, compared to those
before the adoption of EITF Issue No. 04-8.
4. In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation (FIN) No. 46, Consolidation of Variable Interest Entitiesan
Interpretation of ARB No. 51. FIN No. 46 addresses consolidation by a primary beneficiary of a variable interest entity (VIE). Sony early adopted the provisions of
FIN No. 46 on July 1, 2003.
As a result of adopting the original FIN No. 46, Sony recognized a one-time charge with no tax effect of 2,117 million as a cumulative effect of accounting
change in the consolidated statement of income, and Sonys assets and liabilities increased by 95,255 million and 97,950 million, respectively. These increases
were treated as non-cash transactions in the consolidated statement of cash flows. In addition, cash and cash equivalents increased by 1,521 million.
See Note 23 for further discussion on the VIEs that are used by Sony.
In December 2003, the FASB issued revised FIN No. 46 (FIN No. 46R), which replaced FIN No. 46. Sony early adopted the provisions of FIN No. 46R upon its
issuance. The adoption of FIN No. 46R did not have an impact on Sonys results of operations and financial position or impact the way Sony had previously
accounted for VIEs.
5. On April 1, 2001, Sony adopted FAS No.133, Accounting for Derivative Instruments and Hedging Activities as amended by FAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activitiesan Amendment of FASB Statement No. 133. As a result, Sonys operating income, income before income
taxes and net income for the year ended March 31, 2002 decreased by 3,007 million, 3,441 million and 2,167 million, respectively. Additionally, Sony recorded
a one-time non-cash after-tax unrealized gain of 1,089 million in accumulated other comprehensive income in the consolidated balance sheet, as well as an aftertax gain of 5,978 million in the cumulative effect of accounting changes in the consolidated statement of income.
6. In July 2001, the FASB issued FAS No. 142, Goodwill and Other Intangible Assets. Sony adopted FAS No. 142 retroactive to April 1, 2001. As a result, Sonys
operating income and income before income taxes for the year ended March 31, 2002 increased by 20,114 million and income before cumulative effect of
accounting changes as well as net income for the year ended March 31, 2002 increased by 18,932 million.
7. In June 2000, AcSEC issued SOP 00-2, Accounting by Producers or Distributors of Films. Sony adopted SOP 00-2 retroactive to April 1, 2000. As a result,
Sonys net income for the year ended March 31, 2001 included a one-time, non-cash charge with no tax effect of 101.7 billion, primarily to reduce the carrying
value of its film inventory.
8. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements.
Sony adopted SAB No. 101 in the fourth quarter ended March 31, 2001 retroactive to April 1, 2000. As a result, a one-time no-cash cumulative effect adjustment
of 2.8 billion was recorded in the income statement directly above the caption of net income for a change in accounting principle. In December 2003, SAB No.
101 was amended by SAB No. 104, Revenue Recognition. The amendment did not have an impact on Sonys results of operations and financial position.
70 Sony Corporation
BH6/30
Page 70
05.7.7, 3:33 AM
2nd quarter
2005
2004
3rd quarter
2005
2004
4th quarter
2005
2004
2005
1,603.8.
16.7.
35.8.
25.4.
1,612.1.
9.8.
6.6.
(1.8.)
1,797.0.
33.2.
44.1.
10.3.
1,702.3.
43.4.
63.3.
16.2.
2,323.4.
158.8.
157.8.
67.6.
2,148.2.
138.2.
149.2.
7.0.
1,772.2.
(109.8.)
(93.6.)
(50.5.)
1,697.0.
(77.4.)
(61.9.)
(5.3.)
(9.7.)
20.1.
2.9.
6.1.
3.1.
2.3.
5.5.
0.5.
1.1.
1.1.
28.0.
23.3.
35.0.
32.9.
53.2.
53.2.
92.6.
92.6.
143.8.
143.8.
(38.2.)
(38.2.)
(56.5.)
(56.5.)
1.24.
1.24.
30.20.
28.52.
37.99.
35.60.
57.50.
53.76.
100.16.
92.51.
155.32.
138.08.
(41.23.)
(41.23.)
(59.40.)
(59.40.)
1.24.
1.24.
25.10.
23.81.
35.69.
33.48.
57.50.
53.76.
100.16.
92.51.
155.32.
138.08.
(41.23.)
(41.23.)
(59.40.)
(59.40.)
99.3.
104.1.
84.3.
85.5.
87.4.
91.2.
95.2.
92.0.
81.0.
114.2.
88.1.
123.6.
90.0.
136.2.
90.1.
127.0.
97.6.
123.8.
78.7.
119.4.
109.6.
140.4.
100.0.
132.0.
4,190
2,720
4,670
3,890
4,410
3,430
4,160
3,590
4,200
3,520
3,970
3,650
4,660
3,780
4,400
3,760
$ 35.51.
23.92.
$ 43.66.
34.08.
$ 38.30.
29.23.
$ 38.44.
32.50.
$ 37.96.
32.59.
$ 38.96.
34.02.
$ 42.36.
34.98.
$ 41.47.
36.34.
* Including amortization expenses for intangible assets and for deferred insurance acquisition costs.
** Stock price data are based on daily closing prices.
Notes: 1. In July 2003, AcSEC issued SOP 03-1. SOP 03-1 requires insurance enterprises to record additional reserves for long-duration life insurance contracts with minimum
guarantee or annuity receivable options. Additionally, SOP 03-1 provides guidance for the presentation of separate accounts. This statement is effective for fiscal years
beginning after December 15, 2003. Sony adopted SOP 03-1 on April 1, 2004. As a result of the adoption of SOP 03-1, Sonys operating income decreased by
1,595 million ($15 million) and 5,156 million ($48 million) for the three months and the year ended March 31, 2005. Additionally, on April 1, 2004, Sony recognized
4,713 million ($44 million) of loss (net of income taxes of 2,675 million) as a cumulative effect of an accounting change. In addition, the separate account assets,
which are defined by insurance business law in Japan and were previously included in Securities investments and other on the consolidated balance sheet, were
excluded from the category of separate accounts under the provision of SOP 03-1. Accordingly, the assets previously treated as separate account assets are now
treated within general account assets.
2. In July 2004, EITF issued EITF Issue No. 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings per Share. In accordance with FAS No. 128,
Sony had not previously included in the computation of diluted EPS the number of potential shares of common stock issuable upon the conversion of Co-Cos that
have not met the conditions to exercise the associated stock acquisition rights. EITF Issue No. 04-8 requires that the maximum number of shares of common stock
that could be issued upon the conversion of Co-Cos be included in diluted EPS computations from the date of issuance regardless of whether the conditions to
exercise such rights have been met. EITF Issue No. 04-8 is effective for reporting periods ending after December 15, 2004. Sony adopted EITF Issue No. 04-8
during the quarter ended December 31, 2004. As a result of the adoption of EITF Issue No. 04-8, Sonys diluted EPS of income before cumulative effect of an
accounting change and its net income for the year ended March 31, 2004 were restated. Sonys diluted EPS of its income before cumulative effect of an accounting change and net income for the year ended March 31, 2005 were decreased by 7.26 ($0.07) and 7.06 ($0.07), respectively, compared to those before the
adoption of EITF Issue No. 04-8.
3. In January 2003, the FASB issued FIN No. 46, Consolidation of Variable Interest Entitiesan Interpretation of ARB No. 51. FIN No. 46 addresses consolidation
by a primary beneficiary of a VIE. Sony early adopted the provisions of FIN No. 46 on July 1, 2003.
As a result of adopting the original FIN No. 46, Sony recognized a one-time charge with no tax effect of 2,117 million as a cumulative effect of accounting
change in the consolidated statement of income, and Sonys assets and liabilities increased by 95,255 million and 97,950 million, respectively. These increases
were treated as non-cash transactions in the consolidated statement of cash flows. In addition, cash and cash equivalents increased by 1,521 million.
See Note 23 for further discussion on the VIEs that are used by Sony.
In December 2003, the FASB issued revised FIN No. 46 (FIN No. 46R), which replaced FIN No. 46. Sony early adopted the provisions of FIN No. 46R upon
its issuance. The adoption of FIN No. 46R did not have an impact on Sonys results of operations and financial position or impact the way Sony had previously
accounted for VIEs.
Sony Corporation 71
BH6/30
Page 71
05.7.7, 3:33 AM
Segment Information
Sony Corporation and Consolidated SubsidiariesYears ended March 31
Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................................................
Dollars in millions**
2003
2004
2005
4,624,181
4,838,268
4,786,236
61.9.%
64.5.%
2005
$44,731
66.9.%
Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................................................
936,274
12.5.
753,732
10.1.
702,524
9.8.
6,566
Music . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................................................
433,147
5.8.
409,487
5.5.
216,779
3.0.
2,026
Pictures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
802,770
756,370
733,677
6,857
...................................................
10.7.
10.1.
10.2.
Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................................................
509,398
6.8.
565,752
7.5.
537,715
7.5.
5,025
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................................................
167,863
2.3.
172,782
2.3.
182,685
2.6.
1,707
Consolidated total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,473,633
7,496,391
7,159,616
$66,912
2003
Audio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.........................................................
784,114
17.0.%
2004
675,496
14.0.%
Dollars in millions*
2005
571,864
12.0.%
2005
$ 5,345
Video . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................................................
828,308
17.9.
949,261
19.6.
1,034,736
21.6.
9,670
Televisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
981,655
925,501
957,122
8,945
...................................................
21.2.
19.1.
20.0.
836,724
18.1.
834,757
17.3.
778,374
16.3.
7,275
Semiconductors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................................................
204,710
4.4.
253,237
5.2.
246,314
5.1.
2,302
Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
527,782
623,799
619,477
5,789
...................................................
11.4.
12.9.
12.9.
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................................................
460,888
10.0.
576,217
11.9.
578,349
12.1.
5,405
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,624,181
4,838,268
4,786,236
$44,731
*U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 107=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2005.
Note: The above table is a breakdown of Electronics sales and operating revenue in Sonys business segment information. The Electronics segment is managed as a single
operating segment by Sonys management. Effective for the year ended March 31, 2005, Sony has partly changed its product category configuration. The main
changes are that AIWA product group has been moved from Other to Audio or Video or Televisions, and the set-top box product group has been moved from
Video to Televisions. Accordingly, sales and operating revenue for the years ended March 31, 2003 and 2004 have been restated to conform to the presentation for
the year ended March 31, 2005.
72 Sony Corporation
BH6/30
Page 72
05.7.7, 3:33 AM
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.........................................................
Dollars in millions*
2003
2004
2005
2,093,880
2,220,747
2,100,793
28.0.%
29.6.%
2005
$19,634
29.3.%
U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.........................................................
2,403,946
32.2.
2,121,110
28.3.
1,977,310
27.6.
18,479
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.........................................................
1,665,976
22.3.
1,765,053
23.6.
1,612,536
22.6.
15,070
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,309,831
1,389,481
1,468,977
13,729
.........................................................
17.5.
18.5.
20.5.
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,473,633
7,496,391
7,159,616
$66,912
*U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 107=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2005.
Note: Classification of geographic segment information shows sales and operating revenue recognized by location of customers.
Sony Corporation 73
BH6/30
Page 73
05.7.7, 3:33 AM
Dollars in millions
(Note 3)
Yen in millions
2004
2005
2005
0,849,211
4,662
0,779,103
1,492
$07,281
14
274,748
1,123,863
460,202
1,113,071
4,301
10,403
(112,674)
666,507
(87,709)
631,349
(820)
5,900
125,532
431,506
141,154
517,509
1,319
4,837
3,363,355
3,556,171
33,235
256,740
278,961
2,607
ASSETS
Current assets:
86,253
252,905
2,364
2,426,697
2,492,784
23,297
.............................................................
2,512,950
2,745,689
25,661
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
189,785
930,983
182,900
925,796
1,709
8,652
2,053,085
98,480
2,192,038
92,611
20,486
866
.............................................................
3,272,333
3,393,345
31,713
LessAccumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,907,289
2,020,946
18,887
.............................................................
1,365,044
1,372,399
12,826
248,010
277,870
187,024
283,923
1,748
2,653
349,194
203,203
374,805
240,396
3,503
2,247
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
514,296
459,732
4,297
.............................................................
1,592,573
1,545,880
14,448
...................................................................
9,090,662
9,499,100
$88,777
Other assets:
74 Sony Corporation
BH6/30
Page 74
05.7.7, 3:33 AM
Dollars in millions
(Note 3)
Yen in millions
2004
2005
2005
0,091,260
383,757
0,063,396
166,870
$00,592
1,560
778,773
812,175
806,044
746,466
7,533
6,976
57,913
378,851
55,651
546,718
520
5,110
479,486
424,223
3,965
2,982,215
2,809,368
26,256
Long-term liabilities:
Long-term debt (Notes 9, 12 and 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
777,649
678,992
6,346
368,382
96,193
352,402
72,227
3,293
675
2,178,626
286,737
2,464,295
227,631
23,031
2,127
.............................................................
3,707,587
3,795,547
35,472
22,858
23,847
223
3,917
3,917
36
476,350
617,792
5,774
992,817
1,367,060
1,134,222
1,506,082
10,600
14,076
69,950
62,669
586
(600)
(89,261)
(2,490)
(90,030)
(23)
(841)
(430,048)
(355,824)
(3,326)
.............................................................
(449,959)
(385,675)
(3,604)
(0)
(0)
(12,183)
(6,000)
(56)
.............................................................
2,378,002
2,870,338
26,826
9,090,662
9,499,100
$88,777
Sony Corporation 75
BH6/30
Page 75
05.7.7, 3:33 AM
Dollars in millions
(Note 3)
Yen in millions
2003
2004
2005
6,916,042
509,398
48,193
6,883,478
565,752
47,161
6,565,010
537,715
56,891
$61,355
5,025
532
...................................................
7,473,633
7,496,391
7,159,616
66,912
4,979,421
1,782,367
486,464
5,058,205
1,798,239
505,550
5,000,112
1,535,015
482,576
46,730
14,346
4,510
2005
39,941
35,495
27,994
261
...................................................
7,288,193
7,397,489
7,045,697
65,847
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
185,440
98,902
113,919
1,065
14,441
32,375
1,928
72,552
18,756
34,244
18,059
11,774
14,708
31,709
5,437
137
296
51
36,232
4,870
34,587
16,322
29,447
153
275
...................................................
157,528
122,290
97,623
912
Other expenses:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on devaluation of securities investments . . . . . . . . . . . . . . . .
Foreign exchange loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,314
23,198
44,835
27,849
16,481
32,795
24,578
3,715
524
25,518
230
35
5
238
Other income:
Interest and dividends (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gain, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of securities investments, net (Notes 6 and 8) . . . . . .
Gain on change in interest in subsidiaries and equity investees
(Note 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................................................
95,347
77,125
54,335
508
247,621
144,067
157,207
1,469
178,847
(98,016)
87,219
(34,445)
85,510
(69,466)
799
(649)
...................................................
80,831
52,774
16,044
150
166,790
6,581
(44,690)
91,293
2,379
1,714
141,163
1,651
29,039
1,319
15
271
115,519
90,628
168,551
1,575
(2,117)
(4,713)
(44)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0,115,519
0,088,511
0,163,838
$01,531
76 Sony Corporation
BH6/30
Page 76
05.7.7, 3:33 AM
Dollars
(Note 3)
Yen
2003
2004
2005
2005
125.74.
118.21.
98.26.
89.03.
180.96.
162.59.
$1.69.
1.52.
(2.29.)
(2.03.)
(5.06.)
(4.52.)
(0.05.)
(0.04.)
125.74.
118.21.
25.00.
95.97.
87.00.
25.00.
175.90.
158.07.
25.00.
1.64.
1.48.
0.23.
(41.98.)
(41.80.)
17.21.
0.16.
Sony Corporation 77
BH6/30
Page 77
05.7.7, 3:33 AM
Dollars in millions
(Note 3)
Yen in millions
2003
2004
2005
2005
115,519
088,511
163,838
$1,531
351,925
366,269
372,865
3,485
312,054
37,858
305,786
35,562
276,320
22,837
2,582
214
39,941
35,495
27,994
261
(49,354)
4,707
(1,722)
(16)
(4,870)
(16,322)
(153)
(98,016)
(34,445)
(69,466)
(649)
net of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of an accounting change (Note 2) . . . . . . . .
46,692
1,732
2,117
(15,648)
4,713
(146)
44
trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) decrease in inventories . . . . . . . . . . . . . . . . . . . . .
174,679
36,039
(63,010)
(78,656)
(22,056)
34,128
(206)
319
(317,953)
(299,843)
(294,272)
(2,750)
trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in accrued income and other taxes . . . .
(58,384)
14,637
93,950
(46,067)
31,473
3
294
0
233,992
(66,091)
264,216
(71,219)
144,143
(65,051)
1,347
(608)
369
(28,524)
(266)
29,095
26,205
(34,991)
44,772
(29,699)
46,545
(278)
435
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,950
22,250
64,898
607
853,788
632,635
646,997
$6,047
78 Sony Corporation
BH6/30
Page 78
05.7.7, 3:33 AM
Dollars in millions
(Note 3)
Yen in millions
2003
2004
2005
(275,285)
(427,344)
(453,445)
$ (4,238)
25,711
33,987
34,184
319
(1,012,508)
(1,167,945)
(1,309,092)
(12,235)
(123,839)
(33,329)
(158,151)
(1,478)
529,395
791,188
923,593
8,632
148,977
1,124
35,521
6,130
25,849
5,890
242
55
(706,425)
(761,792)
(931,172)
(8,703)
2005
12,323
267,864
57,232
535
(238,144)
(7,970)
(32,042)
(57,708)
(94,862)
11,397
(887)
107
142,023
129,874
294,352
2,751
24,700
(22,871)
30,300
(23,106)
(40,400)
(22,978)
(377)
(215)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,195)
(1,899)
436
(93,134)
313,283
205,177
1,918
(24,971)
(47,973)
8,890
83
29,258
136,153
(70,108)
(655)
683,800
713,058
849,211
7,936
849,211
779,103
$ 7,281
713,058
Supplemental data:
Cash paid during the year for
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash investing and financing activities
Conversion of convertible bonds . . . . . . . . . . . . . . . . . . . . . . . .
171,531
22,216
114,781
22,571
344
65,477
18,187
612
170
7,977
282,744
$ 2,641
9,034
18,298
19,049
178
Bertelsmann AG (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,402
88
Sony Corporation 79
BH6/30
Page 79
05.7.7, 3:33 AM
Yen in millions
Subsidiary
tracking
stock
3,917
Common
stock
472,189
172
Comprehensive income:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax
(Note 16)
Unrealized gains on securities:
Unrealized holding gains or losses arising
during the period . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for gains
Less: or losses included in net income . . . .
Unrealized losses on derivative instruments:
Unrealized holding gains or losses arising
during the period . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for gains
Less: or losses included in net income . . . .
Minimum pension liability adjustment . . . . . .
Foreign currency translation adjustments:
Translation adjustments arising during
the period . . . . . . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for
Less: losses included in net income . . . . . . . . .
Total comprehensive income . . . . . . . . . . . . . .
Stock issue costs, net of tax . . . . . . . . . . . . . . . .
Dividends declared . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . . .
Reissuance of treasury stock . . . . . . . . . . . . . . . .
Balance at March 31, 2003 . . . . . . . . . . . . . . . . .
Conversion of convertible bonds . . . . . . . . . . . . .
Stock issued under exchange offering (Note 16) . .
Retained
earnings
968,223 1,209,262
172
15,791
(275,593)
Treasury
stock, at
cost
115,519
(9,627)
(9,627)
4,288
4,288
(4,477)
(4,477)
395
(110,636)
395
(110,636)
(83,993)
(83,993)
7,665
7,665
(80,866)
(19)
(23,022)
3,917
472,361
3,989
10
984,196 1,301,740
3,988
5,409
(471,978)
(19)
(23,022)
(1,817)
(1,817)
64
74
(9,341) 2,280,895
7,977
5,409
88,511
88,511
57,971
57,971
(5,679)
(5,679)
7,537
7,537
(3,344)
93,415
(3,344)
93,415
(129,113)
(129,113)
1,232
1,232
110,530
(53)
(23,138)
3,917
476,350
(776)
992,817 1,367,060
(449,959)
(53)
(23,138)
(8,523)
(8,523)
5,681
4,905
(12,183) 2,378,002
80 Sony Corporation
BH6/30
Page 80
Total
(7,588) 2,370,410
344
15,791
115,519
Comprehensive income:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax
(Note 16)
Unrealized gains on securities:
Unrealized holding gains or losses arising
during the period . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for gains
Less: or losses included in net income . . . .
Unrealized losses on derivative instruments:
Unrealized holding gains or losses arising
during the period . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for gains
Less: or losses included in net income . . . .
Minimum pension liability adjustment . . . . . .
Foreign currency translation adjustments:
Translation adjustments arising during
the period . . . . . . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for losses
Less: included in net income . . . . . . . . . . . . . .
Total comprehensive income . . . . . . . . . . . . . .
Stock issue costs, net of tax . . . . . . . . . . . . . . . .
Dividends declared . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . . .
Reissuance of treasury stock . . . . . . . . . . . . . . . . .
Balance at March 31, 2004 . . . . . . . . . . . . . . . . .
Additional
paid-in
capital
Accumulated
other
comprehensive
income
05.7.7, 3:33 AM
Yen in millions
Subsidiary
tracking
stock
3,917
Comprehensive income:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax
(Note 16)
Unrealized gains on securities:
Unrealized holding gains or losses arising
during the period . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for gains
Less: or losses included in net income . . . .
Unrealized losses on derivative instruments:
Unrealized holding gains or losses arising
during the period . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for gains
Less: or losses included in net income . . . .
Minimum pension liability adjustment . . . . . .
Foreign currency translation adjustments:
Translation adjustments arising during
the period . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income . . . . . . . . . . . . . .
Stock issue costs, net of tax . . . . . . . . . . . . . . . .
Dividends declared . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . . .
Reissuance of treasury stock . . . . . . . . . . . . . . . .
Balance at March 31, 2005 . . . . . . . . . . . . . . . . .
Common
stock
476,350
52
141,390
Additional
paid-in
capital
Retained
earnings
992,817 1,367,060
53
141,354
340
Accumulated
other
comprehensive
income
(449,959)
Treasury
stock, at
cost
(12,183) 2,378,002
105
282,744
340
163,838
163,838
5,643
5,643
(12,924)
(12,924)
(209)
(209)
(1,681)
(769)
(1,681)
(769)
74,224
74,224
228,122
(541)
(24,030)
3,917
Total
(342)
(245)
617,792 1,134,222 1,506,082 (385,675)
(541)
(24,030)
(416)
(416)
6,599
6,012
(6,000) 2,870,338
Sony Corporation 81
BH6/30
Page 81
05.7.7, 3:33 AM
Subsidiary
tracking
stock
$36
Common
stock
$4,452
1
1,321
Additional
paid-in
capital
$ 9,279
1
1,320
3
Comprehensive income:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax
(Note 16)
Unrealized gains on securities:
Unrealized holding gains or losses arising
during the period . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for gains
Less: or losses included in net income . . . .
Unrealized losses on derivative instruments:
Unrealized holding gains or losses arising
during the period . . . . . . . . . . . . . . . . . . .
Less: Reclassification adjustment for gains
Less: or losses included in net income . . . .
Minimum pension liability adjustment . . . . . .
Foreign currency translation adjustments:
Translation adjustments arising during
the period . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income . . . . . . . . . . . . . .
Stock issue costs, net of tax . . . . . . . . . . . . . . . .
Dividends declared . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . . .
Reissuance of treasury stock . . . . . . . . . . . . . . . .
Balance at March 31, 2005 . . . . . . . . . . . . . . . . .
Retained
earnings
Accumulated
other
comprehensive
income
$12,776
$(4,205)
Treasury
stock, at
cost
$(114)
1,531
$36
$5,774
(2)
$14,076
53
53
(121)
(121)
(2)
(2)
(16)
(7)
(16)
(7)
694
694
2,132
$(3,604)
(4)
62
$ (56)
82 Sony Corporation
BH6/30
Page 82
05.7.7, 3:33 AM
$22,224
2
2,641
3
1,531
(5)
(224)
(3)
$10,600
Total
(5)
(224)
(4)
57
$26,826
Sony Corporation 83
BH6/30
Page 83
05.7.7, 3:33 AM
1. Nature of operations
ment, design, manufacture, and sale of various kinds of electronic equipment, instruments, and devices for consumer and
industrial markets. Sony also develops, produces, manufactures, and markets home-use game consoles and software.
products are marketed throughout the world and game products are marketed mainly in Japan, the United States of America
and Europe by sales subsidiaries and unaffiliated local distributors as well as direct sales via the Internet. Sony is engaged in
the development, production, manufacture, marketing, distribution and broadcasting of image-based software, including film,
video and television product. Sony is also engaged in the development, production, manufacture, and distribution of recorded
insurance operations through a Japanese life insurance subsidiary and non-life insurance subsidiaries, banking operations
The
acquisition rights have been met. EITF Issue No. 04-8 is effective for reporting periods ending after December 15, 2004. Sony
adopted EITF Issue No. 04-8 during the quarter ended December 31, 2004. As a result of the adoption of EITF Issue No. 04-8,
Accounting
separate accounts
In July 2003, the Accounting Standards Executive Committee of
net income for the year ended March 31, 2005 were decreased
by 7.26 ($0.07) and 7.06 ($0.07), respectively, compared to
84 Sony Corporation
BH6/30
Page 84
05.7.7, 3:33 AM
Employers
postretirement benefits
In December 2003, the Financial Accounting Standards Board
(FASB) issued FAS No. 132 (revised 2003), Employers Disclosures about Pensions and Other Postretirement Benefits (FAS
No. 132(R)), which revised FAS No. 132, Employers Disclosures
about Pensions and Other Postretirement Benefits, an amendment of FAS No. 87, Employers Accounting for Pensions, FAS
No. 88, Employers Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits,
and FAS No. 106, Employers Accounting for Postretirement
Benefits Other Than Pensions. FAS No. 132(R) revised employers disclosures about pension plans and other postretirement
benefit plans. It did not change the measurement or recognition of
those plans required by FAS No. 87, 88 and 106. While retaining
the disclosure requirements of FAS No. 132, FAS No. 132(R)
requires additional disclosures about assets, obligations and cash
flows. The provisions of FAS No. 132(R) were generally effective
for financial statements with fiscal years ending after December
15, 2003, excluding the disclosure of certain information about
foreign plans. The information about foreign plans is effective for
fiscal years ending after June 15, 2004. In accordance with FAS
No. 132(R), (Note 15), Pension and severance plans, has been
share in excess of or less than Sonys average per share carrying value. With respect to such transactions, where the sale of
Consolidation
Basis
affiliated companies
The consolidated financial statements include the accounts of
of estimates
BH6/30
Page 85
05.7.7, 3:33 AM
Translation
of foreign currencies
All asset and liability accounts of foreign subsidiaries and affili-
Film
Cash
Property,
Marketable
nese subsidiaries, except for certain semiconductor manufacturing facilities whose depreciation is computed on the straight-line
costs
method, and on the straight-line method for its foreign subsidiaries at rates based on estimated useful lives of the assets, princi-
unrealized gains or losses included as a component of accumulated other comprehensive income, net of applicable taxes. Debt
Significant renewals and additions are capitalized at cost. Maintenance and repairs, and minor renewals and betterments are
Goodwill
to have an indefinite life are not amortized and are tested for
impairment on an annual basis and between annual tests if an
Equity
of similar companies.
Accounting
Inventories
with FAS No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed.
86 Sony Corporation
BH6/30
Page 86
05.7.7, 3:33 AM
assets held and used, other than goodwill and intangible assets
with indefinite lives, and assets to be disposed of, whenever
In the Game segment, technological feasibility of the underlying software is reached shortly before the products are released
Deferred
Costs that vary with and are primarily related to acquiring new
insurance policies are deferred as long as they are recoverable.
Derivative
Product
warranty
Sony provides for the estimated cost of product warranties at
or cash flows.
In accordance with FAS No. 133, the derivative financial instru-
upon product sales, estimated probability of failure and estimated cost per claim. The variables used in the calculation of
as fair value hedges for recognized assets or liabilities or unrecognized firm commitments are recognized in earnings as offsets to
Future
Accounting
financial instruments
earnings.
Sony Corporation 87
BH6/30
Page 87
05.7.7, 3:33 AM
award. As the exercise prices for Sonys stock-based compensation plans are generally determined based on the prevailing
Stock-based
compensation
Accounting for Stock-Based Compensation, to its stockbased compensation. See Note 17 for detailed assumptions.
Yen in millions
Years ended March 31
2003
2004
2005
2005
90,756
168,498
$1,575
Deduct: under the fair value based method, net of related tax effects . . . . . . . . . . . . . . .
(7,008)
(6,334)
(4,690)
(44)
Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108,640
84,422
163,808
$1,531
115,648
88,639
163,785
$1,531
Deduct: under the fair value based method, net of related tax effects . . . . . . . . . . . . . . .
(7,008)
(6,334)
(4,690)
(44)
Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108,640
82,305
159,095
$1,487
As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deduct: Total stock-based compensation expense determined
Yen
Years ended March 31
2003
2004
Dollars
2005
2005
125.74.
98.26.
180.96.
$1.69.
Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118.12.
91.40.
175.92.
1.64.
As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118.21.
89.03.
162.59.
$1.52.
Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111.20.
82.96.
158.10.
1.48.
As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125.74.
95.97.
175.90.
$1.64.
Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118.12.
89.11.
170.86.
1.60.
As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118.21.
87.00.
158.07.
$1.48.
Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111.20.
80.94.
153.58.
1.44.
Diluted EPS:
Diluted EPS:
88 Sony Corporation
BH6/30
Page 88
05.7.7, 3:33 AM
Net income and net income per share allocated to the subsidiary tracking stock would not be impacted if Sony had applied
insurance policy benefits and other. Revenues from these contracts are comprised of fees earned for administrative and
Free
In accordance with EITF Issue No. 01-09, Accounting for Consideration Given by a Vendor to a Customer or Reseller of the
Stock
issue costs
expenses. For the years ended March 31, 2003, 2004 and 2005,
consideration given to a reseller, primarily for free promotional
shipping and cooperative advertising programs included in selling, general and administrative expense totaled 29,135 million,
Revenue
recognition
Revenues from electronics, game and music sales are recog-
Cost
Research
of sales
Costs classified as cost of sales relate to the producing and
Selling,
iary writes, most of which are categorized as long-duration contracts, mainly consist of whole life, term life and accident and
intangible assets.
Sony Corporation 89
BH6/30
Page 89
05.7.7, 3:33 AM
this method, basic net income per share (EPS) for each class
of stock is calculated based on the earnings allocated to each
Financial
class of stock for the applicable period, divided by the weightedaverage number of outstanding shares in each class during the
service expenses
applicable period.
The earnings allocated to the subsidiary tracking stock are
Services segment.
Advertising
costs
Advertising costs are expensed when the advertisement or
Shipping
Income
taxes
The provision for income taxes is computed based on the pretax
cise, or contingent issuance of securities including the conversion of Co-Cos regardless of whether the conditions to exercise
Accounting
Net
2004), Share-Based Payment (FAS No. 123(R)). This statement requires the use of the fair value based method of account-
No. 25. With limited exceptions, FAS No. 123(R) requires that
the grant-date fair value of share-based payments to employees
90 Sony Corporation
BH6/30
Page 90
05.7.7, 3:33 AM
ended March 31, 2003 and 2004 have been made to conform
to the presentation for the year ended March 31, 2005.
its related interpretations and has disclosed the net effect on net
income and net income per share allocated to the common
stock if Sony had applied the fair value recognition provisions of
FAS No. 123 to stock-based compensation as described above
in (2) Significant accounting policiesStock-based compensation. This statement shall be effective for fiscal years beginning
included solely for the convenience of the reader. These translations should not be construed as representations that the yen
after June 15, 2005, with early adoption during the fiscal years
beginning after the date this statement is issued encouraged.
spective methods. Sony intends to adopt the modified prospective method of transition, which requires that compensation
4. Inventories
Inventories comprise the following:
costs
In November 2004, the FASB issued FAS No. 151, Inventory
Costs, an amendment of Accounting Research Bulletin (ARB)
No. 43, Chapter 4. This statement requires certain abnormal
expenditures to be recognized as expenses in the current period.
It also requires that the amount of fixed production overhead
allocated to inventory be based on the normal capacity of the
production facilities. This statement shall be effective for fiscal
years beginning after June 15, 2005, with early adoption during
the fiscal years beginning after the date this statement is issued
March 31
2004
2005
Finished products . . . . . . . .
427,877
405,616
$3,791
Work in process . . . . . . . . . .
2005
98,607
93,181
871
140,023
132,552
1,238
....................
666,507
631,349
$5,900
5. Film costs
Film costs comprise the following:
Dollars in
millions
Yen in millions
March 31
financial position.
Dollars in
millions
Yen in millions
2004
2005
2005
Theatrical:
Exchanges
of nonmonetary assets
In December 2004, the FASB issued FAS No. 153, Exchanges
Released (including
acquired film libraries) . . .
136,057
119,438
$1,116
7,946
11,358
106
79,198
118,271
1,106
33,378
29,894
279
In production and
development . . . . . . . . .
Television licensing:
Released (including
June 15, 2005, with early adoption during the fiscal periods
beginning after the date this statement is issued encouraged.
In production and
161
....................
256,740
278,961
$2,607
BH6/30
Page 91
05.7.7, 3:33 AM
remained to be amortized on a straight-line basis over an average of the remaining life of 5 years. Approximately 108,833
related to the sale of Telemundo as a result of certain indemnifications provided by Sony to the acquirer, which was subse-
more but less than or equal to 50% under the equity method.
In addition, investments in general partnerships in which Sony
tion (50%), bit Wallet, Inc (34.6%), STAR CHANNEL, INC. (17.8%),
and InterTrust Technologies Corporation (InterTrust) (49.5%).
Dollars in
millions
Yen in millions
March 31
2004
Current assets . . . . . . . . . . .
2005
2005
433,154 0,942,328
$08,807
94,130
361,406
3,377
Other assets . . . . . . . . . . . .
57,756
250,245
2,339
Total assets . . . . . . . . . . .
585,040 1,553,979
$14,523
Current liabilities . . . . . . . . . .
397,242 0,876,430
$08,191
Long-term liabilities . . . . . . .
27,639
115,999
1,084
Stockholders equity . . . . . .
160,159
561,550
5,248
585,040 1,553,979
$14,523
66
2003
2004
Dollars in
millions
2005
Gross profit . . .
231,083
477,796
(81,422)
11,323
63,404
$13,769
4,465
593
Law of Japan. As a result, Sony no longer has a significant influence on the decision making of CWC. Therefore, CWC is no
Net income
(loss) . . . . . . .
2005
Sales and
revenue . . . . .
56
Yen in millions
In September 2002, Sony completed the sale of its equity interest in Sony Tektronix Inc., which resulted in a gain of 3,090 million.
BH6/30
Page 92
05.7.7, 3:33 AM
Yen in millions
Dollars in
millions
Yen in millions
Years ended March 31
2003
2004
2005
2005
Sales . . . . . . . .
161,983
258,454
256,799
$2,400
Purchases . . . .
102,735
106,100
101,976
$ 953
Dollars in
millions
and Extinguishments of Liabilities, because Sony has relinquished control of the receivables. During the period from April
2005
March 31
2004
2005
62,359
50,062
$468
Advances . . . . . . . . . . . . . .
561
16,756
$157
13,547
15,225
$142
Sony Corporation 93
BH6/30
Page 93
05.7.7, 3:33 AM
insignificant. Although Sony continues servicing the sold receivables, no servicing liabilities are recorded because costs for
Cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Available-for-sale:
Debt securities . . . . . . . . . . . . . . . . . . 1,938,673
55,922
Equity securities . . . . . . . . . . . . . . . . .
86,517
63,225
Held-to-maturity securities . . . . . . . . . . .
26,439
381
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 2,051,629
119,528
58,161
(1,886)
147,856
107,126
(28)
26,792
27,431
530
108,041
(2,464) 2,146,302
49,350
(814)
155,662
(13)
27,948
(3,291) 2,329,912
Dollars in millions
Cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Available-for-sale:
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$19,538
$ 544
$(23)
$20,059
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,002
461
(8)
1,455
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
256
(0)
261
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$20,796
$1,010
$(31)
$21,775
At March 31, 2005, debt securities classified as available-forsale securities and held-to-maturity securities mainly consist of
Japanese government and municipal bonds and corporate debt
securities with maturities of one to ten years.
Proceeds from sales of available-for-sale securities were
215,554 million, 397,817 million and 613,035 million ($5,729
million) for the years ended March 31, 2003, 2004 and 2005,
respectively. On those sales, gross realized gains computed on
the average cost basis were 3,570 million, 9,525 million and
24,080 million ($225 million) and gross realized losses were
3,125 million, 1,906 million and 5,940 million ($56 million),
respectively.
Marketable securities classified as trading securities at March 31,
2004 and 2005 were 131,044 million and 315,946 million
($2,953 million), respectively, which consist of debt and equity
securities including short-term investments in money market funds.
In the ordinary course of business, Sony maintains long-term
investment securities, included in securities investments and
other, issued by a number of non-public companies. The aggre-
gate carrying amounts of the investments in non-public companies at March 31, 2004 and 2005, were 51,367 million and
48,877 million ($457 million), respectively. A non-public equity
investment is valued at cost as fair value is not readily determinable. If the value is estimated to have declined and such decline
is judged to be other than temporary, the impairment of the
investment is recognized and the carrying value is reduced to its
fair value.
Securities investments and other as of March 31, 2004 also
included separate account assets (Note 11) in the life insurance
business, which were carried at fair value and excluded from the
above table as gains or losses accrue directly to policyholders.
As a result of the adoption of SOP 03-1, the separate account
assets, which are defined by insurance business law in Japan and
were previously included in Securities investments and other on
the consolidated balance sheet, were excluded from the category
of separate accounts under the provision of SOP 03-1. Accordingly, the assets previously treated as separate account assets are
now treated within general account assets. On April 1, 2004,
94 Sony Corporation
BH6/30
Page 94
05.7.7, 3:33 AM
ended March 31, 2003 and 2004 was insignificant. For the
year ended March 31, 2005, Sony booked 12,631 million
($118 million) of net unrealized gain on trading securities
which is mainly derived from the general accounts in the life
insurance business reclassified from the separate accounts as
explained above.
The following table presents the gross unrealized losses on, and fair value of, Sonys investment securities with unrealized losses,
aggregated by investment category and the length of time that individual investment securities have been in a continuous unrealized loss
position, at March 31, 2005.
Yen in millions
Less than 12 months
12 months or more
Unrealized
losses
Fair value
Total
Unrealized
losses
Fair value
Unrealized
losses
Fair value
Available-for-sale:
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
242,388
(2,044)
41,523
(420)
283,911
(2,464)
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,010
(457)
1,225
(357)
12,235
(814)
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
239
(0)
660
(13)
899
(13)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
253,637
(2,501)
43,408
(790)
297,045
(3,291)
Dollars in millions
12 months or more
Unrealized
losses
Fair value
Total
Unrealized
losses
Fair value
Unrealized
losses
Fair value
Available-for-sale:
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,265
$(19)
$388
$(4)
$2,653
$(23)
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103
(5)
12
(3)
115
(8)
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0)
(0)
(0)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,370
$(24)
$406
$(7)
$2,776
$(31)
9. Leased assets
Yen in millions
March 31
2004
2005
2005
Class of property:
Land . . . . . . . . . . . . . . . . . .
(00,174
(00,181
$(002
factors which overcome the duration or magnitude of the decline. On the other hand, there may be cases where impairment
Buildings . . . . . . . . . . . . . . .
12,421
11,089
104
36,907
33,747
315
losses are recognized when the decline in the fair value of the
security is not more than 20 percent or such decline has not
existed for an extended period of time, as a result of considering
specific factors which may indicate the decline in the fair value is
Machinery, equipment
and others . . . . . . . . . . . . .
Accumulated depreciation . .
(19,385)
(18,509)
(173)
....................
(30,117
(26,508
$(248
other-than-temporary.
At March 31, 2005, Sony determined that the decline in value
for securities with unrealized losses shown in the above table is
not other-than-temporary in nature.
Sony Corporation 95
BH6/30
Page 95
05.7.7, 3:33 AM
Yen in
millions
Dollars in
millions
15,211
$142
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
11,062
103
Dollars in
millions
2008 . . . . . . . . . . . . . . . . . . . . . . . . .
8,895
83
2009 . . . . . . . . . . . . . . . . . . . . . . . . .
10,873
102
038,182
$0,357
2010 . . . . . . . . . . . . . . . . . . . . . . . . .
3,001
28
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
30,568
286
Later years . . . . . . . . . . . . . . . . . . . . .
5,428
51
2008 . . . . . . . . . . . . . . . . . . . . . . . . .
22,993
215
54,470
509
2009 . . . . . . . . . . . . . . . . . . . . . . . . .
14,060
131
132
2010 . . . . . . . . . . . . . . . . . . . . . . . . .
10,496
98
Later years . . . . . . . . . . . . . . . . . . . . .
53,652
501
169,951
$1,588
14,169
40,301
377
LessCurrent obligations . . . . . . . . . . .
11,713
110
28,588
$267
Dollars in millions
2005
March 31
Artist contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
080,675
0(68,300)
015,218
(11,094)
$0,142
$(104)
Music catalog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109,795
(47,610)
65,674
(19,641)
614
(184)
52,996
(23,172)
55,173
(26,139)
516
(244)
31,983
(13,577)
31,907
(16,181)
298
(151)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55,048
(27,422)
27,648
(11,625)
258
(108)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
330,497
(180,081)
195,620
(84,680)
$1,828
$(791)
Accumulated
amortization
Gross
carrying
amount
2005
Gross
carrying
amount
Accumulated
amortization
Gross
carrying
amount
Accumulated
amortization
Yen in
millions
22,650
$212
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
18,287
171
2008 . . . . . . . . . . . . . . . . . . . . . . . . .
12,202
114
2009 . . . . . . . . . . . . . . . . . . . . . . . . .
10,623
99
2010 . . . . . . . . . . . . . . . . . . . . . . . . .
8,874
83
96 Sony Corporation
BH6/30
Page 96
Dollars in
millions
05.7.7, 3:33 AM
Dollars in
millions
Yen in millions
March 31
2004
2005
2005
Trademarks . . . . . . . . . . . .
57,384
57,195
$535
Distribution agreement . . . .
18,834
18,848
176
.....................
76,218
76,043
$711
The changes in the carrying amount of goodwill by operating segment for the years ended March 31, 2004 and 2005 are as follows:
Yen in millions
Electronics
Game
Music
Pictures
Financial
Services
Other
Total
53,179
5,634
(6,049)
110,606
(46,021
76
78,697
1,666
1,624
534
290,127
7,910
(6,049)
Other * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(528)
(244)
(3,771)
(9,574)
(1)
(14,118)
52,236
110,362
42,326
70,789
2,157
277,870
12,329
5,872
4,349
(12,329)
52
5,868
441
2,069
18,651
378
29
(15,626)
1,281
1,277
63
(15,626)
3,028
70,815
114,740
(15,704
77,934
441
4,289
283,923
Dollars in millions
Electronics
Game
Music
Pictures
Financial
Services
Other
Total
$488
$1,031
$396
$662
$20
$2,597
116
55
41
(116)
1
54
$4
19
174
(146)
12
12
(146)
28
$662
$1,072
$147
$728
$4
$40
$2,653
During the year ended March 31, 2004, Sony performed the
annual impairment test for goodwill and recorded an impairment
loss of 6,049 million in the Electronics segment. This impairment charge reflected the overall decline in the fair value of a
Sony Corporation 97
BH6/30
Page 97
05.7.7, 3:33 AM
costs are deferred and amortized generally over the premiumpaying period of the related insurance policies, and that future
tions for all policies are based on either the subsidiarys own
experience or various actuarial tables. At March 31, 2004 and
March 31, 2004 and 2005 were 146,540 million and 153,228
million ($1,432 million), respectively.
mainly consist of whole life, term life and accident and health
insurance contracts. The life insurance revenues for the years
ended March 31, 2003, 2004 and 2005 were 450,363 million,
437,835 million and 426,774 million ($3,989 million), respec-
2003, 2004 and 2005 were 21,269 million, 28,371 million and
35,454 million ($331 million), respectively.
Dollars in
millions
Yen in millions
March 31
2004
2005
2005
Unsecured loans,
principally from banks:
with weighted-average
interest rate of 1.80% . . .
26,260
with weighted-average
interest rate of 2.79% . . .
38,796
$362
65,000
24,600
230
....................
91,260
63,396
$592
with weighted-average
subsidiary.
98 Sony Corporation
BH6/30
Page 98
05.7.7, 3:33 AM
Yen in millions
March 31
2004
2005
2005
58,786
1,122
$ 11
113,436
1,060
58,755
550
287,753
2,336
77,646
Due 2005 to 2017 with interest ranging from 0.23% to 5.89% per annum . . . . . . . . . . . . . . . . . . . .
Medium-term notes of consolidated subsidiaries:
Due 2004 to 2006 with interest ranging from 1.09% to 4.95% per annum . . . . . . . . . . . . . . . . . . . .
60,537
Due 2006 with interest ranging from 2.78% to 4.95% per annum . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured 1.4% convertible bonds, due 2005, convertible at 3,995.5 for one common share,
redeemable before due date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured zero coupon convertible bonds, due 2008, convertible currently at 5,605 ($52) for
one common share, redeemable before due date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
250,000
250,000
Unsecured 0.03% bonds, due 2004 with detachable warrants, net of unamortized discount . . . . . . . .
3,981
Unsecured 0.1% bonds, due 2005 with detachable warrants, net of unamortized discount . . . . . . . . .
3,924
3,981
37
12,000
12,000
112
7,300
7,300
68
Unsecured 0.9% bonds, due 2007 with detachable warrants of subsidiary tracking stock . . . . . . . . . .
150
150
99,994
99,998
935
99,994
99,996
935
49,981
49,984
467
49,996
49,997
467
15,000
15,000
140
15,000
15,000
140
4,900
4,900
46
40,301
377
42,689
Due 2005 to 2019 with interest ranging from 1.55% to 30.00% per annum . . . . . . . . . . . . . . . . . . .
Guarantee deposits received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,775
23,942
224
............................................................................
1,161,406
845,862
7,906
383,757
166,870
1,560
............................................................................
0,777,649
678,992
$6,346
Sony Corporation 99
BH6/30
Page 99
05.7.7, 3:33 AM
A summary of the exercise rights of the detachable warrants as of March 31, 2005 is as follows:
Exercise price
Issued on
Exercisable during
Yen
Dollars
September 1, 2000
through August 22, 2005
November 1, 2001
through October 18, 2006
January 6, 2003
through December 20, 2007
June 20, 2002
through June 20, 2007
07,167
$067
12,457
116
6,039
56
3,300
31
Status of exercise
Dollars in
millions
166,870
178,117
32,059
282,430
$1,560
1,665
300
2,640
2010 . . . . . . . . . . . . . . . . . . . . . . . . .
2,909
27
has committed line contracts. Furthermore, Sony has Commercial Paper Programs, the size of which was 1,251,450 million
tions and intercompany accounts receivable and payable denominated in foreign currencies. Interest rate and currency swap
agreements are utilized primarily to lower funding costs, to diversify sources of funding and to limit Sonys exposure associated
mercial paper for the period generally not in excess of 270 days
up to the size of the programs. In addition, Sony has Medium
million) for the years ending March 31, 2007 and 2008, respectively. There are no deposits having a maturity date after March
31, 2008.
BH6/30
Page 100
05.7.7, 3:33 AM
in income.
The amount of ineffectiveness of these fair value hedges, that
was reflected in earnings, was not material for the years ended
March 31, 2003, 2004 and 2005. In addition, there were no
No. 133.
Foreign exchange forward contracts and foreign currency
option contracts that do not qualify as hedges are markedto-market with changes in value recognized in other income
and expenses.
which are used for reducing the risk arising from the changes in
the fair value of fixed rate debt and available-for-sale debt
affects earnings. For the years ended March 31, 2003 and
2004, these cash flow hedges were fully effective. For the year
derivatives have been designated as fair value hedges in accordance with FAS No. 133.
Sony also enters into interest rate and currency swap agreements that are used for reducing the risk arising from the
equity into earnings as loss. For the year ended March 31,
2005, there were no forecasted transactions that failed to occur
into interest rate and currency swap agreements, which effectively swap foreign currency denominated variable rate debt for
functional currency denominated fixed rate debt. These derivatives are considered to be a hedge against changes in the
not qualify as hedges, which are used for reducing the risk
arising from changes of variable rate and foreign currency
Sony enters into foreign exchange forward contracts and purchased and written foreign currency option contracts primarily to
BH6/30
Page 101
05.7.7, 3:33 AM
separated from the host contracts and accounted for as derivative instruments under FAS No. 133 are recognized in income.
and cash equivalents, time deposits, notes and accounts receivable, trade, short-term borrowings, notes and accounts payable,
mary also excludes debt and equity securities which are disclosed
in Note 8.
Yen in millions
2004
Notional
amount
March 31
2005
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
(845,862)
(856,321)
(994) 1,545,814
(55)
(55)
(1,161,406) (1,235,669)
(994)
Notional
amount
375,582
10,781
10,781
428,261
1,646
1,646
124,925
(1,000)
(1,000)
146,506
(3,390)
(3,390)
218,101
(4,229)
(4,229)
171,133
(4,417)
(4,417)
8,574
384
384
5,734
131
131
17,007
(9)
(9)
136,470
(92)
(92)
Embedded derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
421,416
12,885
12,885
405,756
11,894
11,894
Dollars in millions
2005
Notional
amount
March 31
Carrying
amount
Estimated
fair value
$(7,906)
$(8,003)
$14,447
(1)
(1)
4,002
15
15
1,369
(32)
(32)
1,599
(41)
(41)
54
1,275
(1)
(1)
Embedded derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,792
111
111
BH6/30
Page 102
05.7.7, 3:33 AM
and its subsidiaries in Japan are entitled, under most circumstances, to lump-sum indemnities or pension payments as
length of service.
Sony uses a measurement date of March 31 for substantially
in a lump-sum amount or monthly pension payments. Contributions to the plans are funded through several financial institutions
were as follows:
Japanese plans:
Dollars in
millions
Yen in millions
Years ended March 31
2003
2004
2005
2005
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(47,884
(54,501
(31,971
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,857
19,489
21,364
$(299
200
(25,726)
(22,812)
(16,120)
(151)
(375)
(375)
(375)
(4)
20,655
31,019
20,236
189
(939)
(939)
(7,216)
(67)
(1,380)
(876)
(8)
(60,976
(80,883
(48,984
$(458
BH6/30
Page 103
05.7.7, 3:33 AM
Foreign plans:
Dollars in
millions
Yen in millions
Years ended March 31
2003
2004
2005
2005
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,954
11,252
(6,419
$060
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,478
8,566
8,091
76
(7,319)
(6,812)
(6,712)
(63)
(47)
(27)
(18)
(0)
1,452
1,569
1,637
15
(208)
(117)
(114)
(1)
(460)
5,574
1,713
16
15,850
20,005
11,016
$103
The changes in benefit obligation and plan assets, funded status and composition of amounts recognized in the consolidated
balance sheets were as follows:
Japanese plans
Yen in millions
March 31
2004
Foreign plans
Dollars in
millions
2005
Dollars in
millions
Yen in millions
2005
2004
2005
2005
(993,542
$(9,285
157,580
155,838
$1,456
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54,501
31,971
299
11,252
6,419
60
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19,489
21,364
200
8,566
8,091
76
5,802
2,111
20
644
873
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(120,873)
(1,130)
3,900
286
(81,873)
1,641
15
431
12,210
114
(17,082)
14,288
134
(2,988)
(28)
(66)
(628)
(6)
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(36,137)
(25,042)
(234)
(9,387)
(11,639)
(109)
Divestiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(32,140)
(301)
993,542
901,726
8,427
155,838
153,598
1,435
405,248
513,095
4,795
67,937
85,662
800
93,154
(354)
(3)
13,065
7,513
70
(3,420)
3,517
33
Employer contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,243
34,581
323
16,475
18,406
172
5,802
2,111
20
644
873
(112)
(1)
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(14,352)
(14,982)
(140)
(9,039)
(11,168)
(104)
Divestiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12,666)
(118)
(534,451
$(4,995
85,662
(92,025
$0,860
and 12,666 million ($118 million) of its plan assets which were
included in Sonys foreign plans to the joint venture.
BH6/30
Page 104
05.7.7, 3:33 AM
Japanese plans
Yen in millions
March 31
2004
Foreign plans
Dollars in
millions
2005
Dollars in
millions
Yen in millions
2005
2004
2005
2005
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(480,447)
(367,275)
$(3,432)
(70,176)
(61,573)
$(575)
328,467
322,237
3,011
27,550
37,383
349
(479)
(104)
(1)
211
(20,784)
(134,440)
(1,256)
(748)
(501)
(5)
(173,243)
(179,582)
$(1,678)
(43,163)
(24,684)
$(231)
(001,795
$(0,017
(02,609
(01,351
$(013
portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(322,677)
(309,957)
(2,897)
(61,452)
(42,934)
(401)
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,263
113
41
128,171
128,580
1,202
15,567
16,858
157
(173,243)
(179,582)
$(1,678)
(43,163)
(24,684)
$(231)
The accumulated benefit obligation for all defined benefit pension plan as follows:
Japanese plans
Yen in millions
March 31
2004
2005
830,898
Foreign plans
Dollars in
millions
2005
835,420
$7,808
Dollars in
millions
Yen in millions
2004
129,879
2005
2005
121,176
$1,132
The projected benefit obligations, the accumulated benefit obligations and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were as follows:
Japanese plans
Yen in millions
March 31
2004
Foreign plans
Dollars in
millions
2005
2005
Dollars in
millions
Yen in millions
2004
2005
2005
991,030
898,985
$8,402
135,459
132,556
$1,239
830,362
835,420
7,808
113,020
115,147
1,076
512,720
533,926
4,990
74,167
86,070
804
Weighted-average assumptions used to determine benefit obligations as of March 31, 2003, 2004 and 2005 were as follows:
Japanese plans:
Foreign plans:
March 31
2003
Discount rate . . . . . . . . . . . .
2004
2005
1.9%
2.4%
2.3%
3.0
3.0
3.3
Rate of compensation
increase . . . . . . . . . . . . . . .
March 31
2003
Discount rate . . . . . . . . . . . .
2004
2005
6.3%
5.8%
5.5%
4.1
4.0
3.3
Rate of compensation
increase . . . . . . . . . . . . . . .
BH6/30
Page 105
05.7.7, 3:33 AM
Weighted-average assumptions used to determine net pension and severance costs for the years ended March 31, 2003, 2004 and
2005 were as follows:
Japanese plans:
Foreign plans:
2003
Discount rate . . . . . . . . . . . .
2.4%
2004
1.9%
2005
2.4%
2003
Discount rate . . . . . . . . . . . .
2004
2005
6.6%
6.3%
5.8%
8.1
8.3
7.8
4.5
4.1
4.0
assets . . . . . . . . . . . . . . . .
4.0
4.0
3.2
Rate of compensation
assets . . . . . . . . . . . . . . . .
Rate of compensation
increase . . . . . . . . . . . . . . .
3.0
3.0
3.3
increase . . . . . . . . . . . . . . .
Foreign plans:
March 31
2004
2005
March 31
2004
2005
Equity securities . . . . . . . . . . . . . . . . . . .
39.0%
28.0%
Equity securities . . . . . . . . . . . . . . . . . . .
63.2%
68.3%
Debt securities . . . . . . . . . . . . . . . . . . . .
14.7
34.7
Debt securities . . . . . . . . . . . . . . . . . . . .
26.6
23.4
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . .
42.7
33.7
Real estate . . . . . . . . . . . . . . . . . . . . . .
3.2
4.0
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6
3.6
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.0
4.3
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0%
100.0%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0%
100.0%
fair value of plan assets, expected return on plan assets and the
present value of benefit obligations. Sony expects to contribute
Japanese plans
Yen in
millions
Dollars in
millions
Foreign plans
Yen in
millions
5,625
$ 53
2007 . . . . . . . . . . . . .
2006 . . . . . . . . . . . . . 018,281
19,734
184
5,977
56
2008 . . . . . . . . . . . . .
22,075
206
6,308
59
2009 . . . . . . . . . . . . .
24,600
230
6,860
64
2010 . . . . . . . . . . . . .
29,475
275
7,912
74
20112015 . . . . . . . .
181,527
1,697
51,919
485
BH6/30
Page 106
Dollars in
millions
05.7.7, 3:33 AM
On June 20, 2001, Sony Corporation issued shares of subsidiary tracking stock in Japan, the economic value of which is
the subsidiary tracking stock held by each holder by the Standard Ratio or the net proceeds from the sale of the shares of
intended to be linked to the economic value of Sony Communication Network Corporation (SCN), a directly and indirectly
series of subsidiary tracking stock upon paying to the shareholders thereof an amount equal to the current market price of the
rate class of stock different from common stock, if any resolution of the General Meeting of Shareholders would adversely
one of the following: 1) compulsory retirement in cash, 2) compulsory conversion to common stock of Sony Corporation, or 3)
subsidiary tracking stock will have the right to approve or disapprove such resolution by a special resolution of the meeting of
BH6/30
Page 107
05.7.7, 3:33 AM
outstanding during the years ended March 31, 2003, 2004 and
2005 have resulted from the following:
Number of shares
138,330
2,502,491
2,944,800
1,088,304
70,765,533
27,400
purchased for each class of stock. Once such approval of shareholders was obtained, Sony Corporation could purchase its own
shares at any time during the period up to the conclusion of the
next Ordinary General Meeting of Shareholders.
The Ordinary General Meeting of Shareholders held on June
20, 2002 approved that Sony Corporation acquire up to a total
not exceeding 90 million outstanding shares of its common
stock at an amount in total not exceeding 650 billion and a
total not exceeding 300 thousand outstanding shares of the
subsidiary tracking stock at an amount in total not exceeding 1
billion until the conclusion of the General Meeting of Shareholders held for the year ended March 31, 2003. As a result, no
exchange as a result of which Aiwa Co., Ltd. became a whollyowned subsidiary. As a result of this share exchange, Sony
accounted for in accordance with the provisions of the Japanese Commercial Code by crediting approximately one-half of
cash dividends for the six-month period ended March 31, 2005
has been incorporated in the accompanying consolidated
Corporation held on May 16, 2005 and was then recorded in the
statutory books of account, in accordance with the Japanese
Commercial Code.
BH6/30
Page 108
05.7.7, 3:33 AM
Pre-tax
amount
Tax
expense
Net-of-tax
amount
0(18,575)
08,948
00(9,627)
3,421
867
4,288
(4,477)
(6,268)
1,791
682
(287)
395
(181,725)
71,089
(110,636)
(87,103)
3,110
(83,993)
7,665
7,665
(281,903)
85,518
(196,385)
(089,861
(31,890)
(057,971
(7,371)
1,692
(5,679)
11,586
(4,049)
7,537
(5,961)
2,617
(3,344)
162,408
(68,993)
93,415
(134,312)
5,199
(129,113)
1,232
1,232
(117,443
(95,424)
(022,019
(07,184
(1,541)
( 05,643
(18,140)
5,216
(12,924)
(2,015)
1,806
(209)
(2,848)
1,167
(1,681)
(1,700)
931
(769)
76,585
(2,361)
74,224
(59,066
(5,218
(64,284
BH6/30
Page 109
05.7.7, 3:33 AM
Dollars in millions
Pre-tax
amount
Tax
expense
Net-of-tax
amount
$(068
$(15)
$(053
(170)
49
(121)
(19)
17
(2)
(27)
11
(16)
(16)
(7)
716
(22)
694
$(552
$(49
$(601
During the years ended March 31, 2003 and 2004, 7,665
million and 1,232 million of foreign currency translation adjust-
the directors, corporate executive officers and selected employees of Sony, and subsidiary tracking stock acquisition rights for
ees of Sony. By exercising a warrant, directors, corporate executive officers and selected employees can purchase the
common stock or subsidiary tracking stock of Sony Corporation, the number of which is designated by each plan. The
BH6/30
Page 110
05.7.7, 3:33 AM
Presented below is a summary of the activities regarding common stock warrant, convertible bond and stock acquisition rights
plans for the years shown:
2003
2004
2005
WeightedWeightedWeightedWeightedNumber of
average
Number of
average
Number of
average
average
shares
exercise price
shares
exercise price
shares
exercise price exercise price
Years ended March 31
Yen
Yen
5,853,892
8,648
9,640,892
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,874,100
5,313
2,621,400
Yen
7,832 11,705,592
5,017
Dollars
6,082
$56.84
2,433,600
3,996
37.35
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(27,400)
3,896
36.41
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(87,100)
8,306
(556,700)
6,760
(998,592)
5,923
55.36
9,640,892
7,832 11,705,592
6,082 13,113,200
5,754
$53.78
4,314,292
9,773
7,522
6,994
$65.36
5,853,892
7,223,600
A summary of common stock warrants, convertible bond options and stock acquisition rights outstanding and exercisable at March
31, 2005 is as follows:
Outstanding
Exercisable
WeightedWeightedWeightedNumber of
average
average
average
shares
exercise price exercise price remaining life
Yen
Yen
3,78207,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,497,600
Dollars
WeightedWeightedNumber of
average
average
shares
exercise price exercise price
Years
Yen
Dollars
04,680
$43.74.
8.24.
4,608,000
05,250
$49.07.
2,615,600
10,065
94.07.
3.14.
2,615,600
10,065
94.07.
3,78213,202 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,113,200
05,754
$53.78.
7.22.
7,223,600
06,994
$65.36.
7,00113,202 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A summary of subsidiary tracking stock warrants and stock acquisition rights outstanding and exercisable at March 31, 2005 is as
follows:
Outstanding
Yen
8153,300 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercisable
WeightedWeightedWeightedNumber of
average
average
average
shares
exercise price exercise price remaining life
181,500
1,591
Dollars
WeightedWeightedNumber of
average
average
shares
exercise price exercise price
Years
$14.87.
7.22.
Yen
90,300
2,118
Dollars
$19.79.
Sonys recorded music business with the recorded music business of Bertelsmann AG (Note 6), employees of Sonys recorded
BH6/30
Page 111
05.7.7, 3:33 AM
Weighted-average
assumptions:
the date of grant, which is amortized to expense over the vesting period in determining the pro forma impact, is estimated
2003
2004
2005
2.76%
2.18%
2.04%
Expected lives . . . . . . . .
4.23 years
3.67 years
3.54 years
Expected volatility . . . . .
47.33%
42.83%
35.56%
Expected dividend . . . . .
0.47%
0.57%
0.62%
the date of grant. Sony holds treasury stock for the SAR plan in
Japan to minimize cash flow exposure associated with the
SARs. In addition, Sony uses various strategies to minimize the
compensation expense associated with the SAR plans in the
United States of America and Europe.
The status of the SAR plans is summarized as follows:
2004
2005
WeightedWeightedWeightedWeightedNumber of
average
Number of
average
Number of
average
average
SARs
exercise price
SARs
exercise price
SARs
exercise price exercise price
Years ended March 31
Yen
Yen
Yen
Dollars
2,410,394
6,644
2,343,028
6,341
1,526,568
6,424
$60.04.
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,750
6,323
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11,800)
5,727
(241,134)
3,955
36.96.
Expired or forfeited . . . . . . . . . . . . . . . . . . . . . . . . .
(84,316)
7,274
(816,460)
5,494
(420,350)
5,855
54.72.
2,343,028
6,341
1,526,568
6,424
865,084
7,436
$69.50.
2,176,319
6,211
1,462,391
6,421
856,156
7,455
$69.67.
Exercisable
WeightedWeightedWeightedNumber of
average
average
average
SARs
exercise price exercise price remaining life
Yen
Dollars
WeightedWeightedNumber of
average
average
SARs
exercise price exercise price
Years
Yen
03,23405,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61,850
04,767
$044.55.
6.77.
61,850
04,767
$044.55.
05,00110,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
749,109
7,365
68.83.
1.08.
740,181
7,386
69.03.
10,00113,419 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54,125
11,471
107.21.
4.56.
54,125
11,471
107.21.
03,23413,419 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
865,084
07,436
$069.50.
1.70.
856,156
07,455
$069.67.
BH6/30
Dollars
Page 112
05.7.7, 3:33 AM
For the years ended March 31, 2003, 2004 and 2005, Sony
recorded total restructuring charges of 106,251 million,
the following:
Electronics Segment
In an effort to improve the performance of the Electronics seg-
million ($764 million), respectively, within the Electronics segment. In addition to the above charges, the Electronics segment
ties. These charges consisted of non-cash equipment impairment and disposal costs of 3,504 million, personnel related
3,954 million was recorded in loss on sale, disposal or impairment of assets, net in the consolidated statements of income.
ber 1, 2002.
BH6/30
Page 113
05.7.7, 3:33 AM
ductor plant in the U.S. This restructuring activity was substantially completed in the year ended March 31, 2005 and total
tive and profitable business model. As a result, the Music segment has undergone a worldwide restructuring program since
the year ended March 31, 2001 to reduce staffing and other
costs through the consolidation and rationalization of facilities
as of March 31, 2005 was 161 million ($2 million) and will be
paid or settled through the year ended March 31, 2006.
worldwide excluding Japan. As part of this restructuring program, Sony combined its recorded music business with the
of income.
During the year ended March 31, 2004, Sony recorded net
for the years ended March 31, 2003 and 2004, respectively,
were recorded in the non-Japan based disc manufacturing and
completed during the year ended March 31, 2006, and the total
cost of the program is estimated to be 53,106 million ($496
ment of the joint venture. At March 31, 2005, the liability balance
was 1,856 million ($17 million) with most of the liabilities to be
Retirement programs
In addition to the restructuring efforts disclosed above, Sony has
the years ended March 31, 2003, 2004 and 2005, respectively,
and these charges were included in selling, general and admin-
million) and will be paid through the year ending March 31, 2006.
Sony will continue seeking the appropriate level of headcount to
Music Segment
Due to the continued contraction of the worldwide music market
BH6/30
Page 114
05.7.7, 3:33 AM
During the year ended March 31, 2004, Sony broadened the
scope of its worldwide restructuring of the Music segment,
units, and geographic regions during this phase of the worldwide restructuring program.
the reduction of staffing levels and the disposal of certain longlived assets. This restructuring program was substantially com-
pleted during the year ended March 31, 2005 and the total cost
of this restructuring program was 4,996 million ($47 million).
($8 million) and other related costs of 2,142 million ($20 million). These charges are included in selling, general and adminis-
Pictures Segment
statements of income.
During the year ended March 31, 2005, the Pictures segment
its operating costs. For the years ended March 31, 2003, 2004
and 2005, Sony recorded total restructuring charges of 480
costs. These restructuring charges consisted primarily of personnel related costs of 292 million ($3 million) which were
BH6/30
Page 115
05.7.7, 3:33 AM
The changes in the accrued restructuring charges for the years ended March 31, 2003, 2004 and 2005 are as follows:
Yen in millions
Employee
Non-cash
termination write-downs
benefits and disposals
Other
associated
costs
Total
6,243
13,637
19,880
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,953
42,768
16,530
106,251
Non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(42,240)
(42,240)
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(38,548)
(23,172)
(61,720)
Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
136
(528)
(1,208)
(1,600)
14,784
5,787
20,571
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133,367
19,170
15,554
168,091
Non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(19,170)
(19,170)
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(124,674)
(13,686)
(138,360)
Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,173
333
1,506
24,650
7,988
32,638
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,563
25,564
10,836
89,963
Non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(25,564)
(25,564)
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(61,523)
(10,427)
(71,950)
Adjustments* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,705)
(3,096)
(4,801)
14,985
5,301
20,286
Dollars in millions
Employee
Non-cash
termination write-downs
benefits and disposals
Other
associated
costs
Total
$ 230
$ 75
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
501
$ 239
101
$ 305
841
Non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(239)
(239)
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(575)
(97)
(672)
Adjustments* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(16)
(29)
(45)
$ 140
$ 50
$ 190
*Adjustments primarily consist of the transfer of the accrued restructuring charges to SONY BMG, a joint venture with Bertelsmann AG (Note 6).
31, 2003, 2004 and 2005 were 98,195 million, 106,590 million
BH6/30
Page 116
05.7.7, 3:32 AM
year ending March 31, 2006, and Sonys ownership interest has
been reduced from 74.8% to 60.8%.
27.7% to 24.8%.
In addition to the above transactions, for the year ended
total value of 585 million ($5 million). As a result of these transactions, Sony recorded a 1,823 million ($17 million) gain on
Yen in millions
Years ended March 31
2003
2004
2005
2005
(7,998)
(84,571)
005,005
$0,047
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
255,619
228,638
152,202
1,422
...................................................................
247,621
144,067
157,207
$1,469
Income taxesCurrent:
Sony Corporation and subsidiaries in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
069,311
22,286
23,497
$ 220
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109,536
64,933
62,013
579
...................................................................
178,847
87,219
85,510
$ 799
$
Income taxesDeferred:
Sony Corporation and subsidiaries in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(90,016)
(32,845)
0(4,976
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,000)
(1,600)
(74,442)
(696)
...................................................................
(98,016)
(34,445)
(69,466)
$ (649)
47
ning with the year ended March 31, 2004. Under the Japanese
consolidated tax filing system, a 2% surtax was imposed only
for the year ended March 31, 2004. As a result, the statutory tax
rate was 43.9% for the year ended March 31, 2004.
BH6/30
Page 117
05.7.7, 3:32 AM
During the year ended March 31, 2005, a corporation sizebased enterprise tax was introduced in Japan and the portion
Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows:
Years ended March 31
2003
2004
42.0%
43.9%
2005
41.0%
(1.9)
(2.4)
(0.1)
5.5
6.5
(22.7)
(14.8)
(9.2)
(4.0)
Lower tax rate applied to life and non-life insurance business in Japan . . . . . . . . . . . . . . . . . . . . . . .
(0.6)
(2.6)
(1.9)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.4
0.4
(2.1)
32.6%
36.6%
10.2%
The significant components of deferred tax assets and liabilities are as follows:
Dollars in
millions
Yen in millions
March 31
2004
2005
2005
(196,308
(193,212
$(1,806
150,073
159,610
1,492
Film costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54,194
56,746
530
45,664
56,551
529
35,855
36,654
343
Accrued bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,285
34,536
323
30,241
30,270
283
Depreciations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,108
15,320
143
13,740
8,552
80
14,005
6,574
61
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
141,731
153,525
1,434
732,204
751,550
7,024
(127,577)
(89,110)
(833)
604,627
662,440
6,191
(125,768)
(135,083)
(1,262)
(71,586)
(57,314)
(536)
(45,239)
(41,564)
(388)
(36,490)
(35,418)
(331)
(44,778)
(30,865)
(288)
(16,899)
(6,184)
(58)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(39,435)
(58,714)
(550)
(380,195)
(365,142)
(3,413)
(224,432
(297,298
$(2,778
BH6/30
Page 118
05.7.7, 3:32 AM
million for the year ended March 31, 2004 and a decrease of
38,467 million ($360 million) for the year ended March 31, 2005.
deferred tax assets for U.S. federal and certain state taxes.
However, based on both improved operating results in recent
For the year ended March 31, 2003, 33,525 million of the
decrease in the valuation allowance relates to the realization of tax
ing loss carryforwards for corporate income tax and local income tax in Japan are calculated by multiplying approximately
March 31
2004
2005
Dollars in
millions
2005
Current assets
Deferred income taxes . . . .
125,532
141,154
$1,319
Other assets
Deferred income taxes . . . .
203,203
240,396
2,247
Current liabilities
Other . . . . . . . . . . . . . . . . .
(8,110)
(12,025)
(113)
Long-term liabilities
Deferred income taxes . . . .
(96,193)
(72,227)
(675)
224,432
297,298
$2,778
available tax credit carryforwards expire at various dates primarily up to 9 years. Realization is dependent on whether such
companies will be able to generate sufficient taxable income
prior to expiration of the loss carryforwards and tax credit
carryforwards. Although realization is not assured, management
believes it is more likely than not that all of the deferred tax
assets, less valuation allowance, will be realized. The amount of
such net deferred tax assets considered realizable, however,
could be changed in the near term if estimates of future taxable
income during the carryforward period are changed.
BH6/30
Page 119
05.7.7, 3:32 AM
22. Reconciliation of the differences between basic and diluted net income per share (EPS)
(1) Income before cumulative effect of accounting changes and net income allocated to each class of stock:
Dollars in
millions
Yen in millions
Years ended March 31
2003
Income before cumulative effect of an accounting change allocated to the common stock . .
2004
2005
2005
115,648
90,756
168,498
$1,575
tracking stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(129)
(128)
53
115,519
90,628
168,551
$1,575
115,648
88,639
163,785
$1,531
(129)
(128)
53
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115,519
88,511
163,838
$1,531
Yen in millions
Years ended March 31
2003
Income before cumulative effect of an accounting change allocated to the common stock . .
Effect of dilutive securities:
Convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsidiary tracking stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before cumulative effect of an accounting change allocated to the common stock
for diluted EPS computation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2004
2005
2005
115,648
90,756
168,498
$1,575
2,398
2,260
1,209
(0)
11
(0)
118,046
93,016
169,707
$1,586
Thousands of shares
Weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of dilutive securities:
Warrants and stock acquisition rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
919,706
923,650
931,125
12
78,873
48
121,120
61
112,589
998,591
1,044,818
1,043,775
Yen
Dollars
Basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125.74.
98.26.
180.96.
$1.69.
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118.21.
89.03.
162.59.
$1.52.
tion of diluted EPS since they did not have a dilutive effect.
Stock options issued by affiliated companies accounted for
under the equity method for the years ended March 31, 2003,
2004 and 2005, which have a potentially dilutive effect by
decreasing net income allocated to common stock, were excluded from the computation of diluted EPS since such stock
stock for the years ended March 31, 2003 and 2004, which
BH6/30
Page 120
05.7.7, 3:32 AM
result of which CIS Corporation became a wholly-owned subsidiary. As a result of this share exchange, Sony issued 1,088
10,179 million and 10,586 million, respectively, and a cumulative effect of accounting change of 388 million was charged to
net income with no tax effect. As of March 31, 2005, the total
outstanding under the bank credit facility was 6,441 million
change for the year ended March 31, 2004 was restated in the
above table (Note 2).
Weighted-average shares used for computation of EPS attributable to subsidiary tracking stock for the years ended March 31,
its distribution fees. Any losses incurred by the VIE over and
above 3,221 million ($30 million) will be shared by the other
2003, 2004 and 2005 were 3,072 thousand shares. As discussed in Note 2, there were no potentially dilutive securities for
Sony since its establishment. With respect to this entity, there was
no impact to Sonys results of operations and financial position
upon the adoption of FIN No. 46. Under the terms of the stock
option plan, upon exercise, Japanese employees receive cash
25,277 million and 27,035 million, respectively, and a cumulative effect of accounting change of 1,729 million was charged to
net income with no tax effect. Sony has the option to purchase
the building at any time during the lease term which expires in
December 2008 for 27,374 million ($256 million). The debt held
by the VIE is unsecured. At the end of the lease term, Sony has
of this VIE.
Sony Corporation 121
BH6/30
Page 121
05.7.7, 3:32 AM
B. Loan Commitments
Subsidiaries in the Financial Services segment have entered into
A. Purchase Commitments
Commitments outstanding at March 31, 2005 amounted to
duction of films and television programming as well as agreements with third parties to acquire completed films, or certain
venture had no borrowings outstanding under the Credit Agreement. Accordingly, Sonys outstanding commitment under the
36th film or May 25, 2007. It is estimated that the third party will
produce or acquire a total of 39 films under the distribution
agreement. The subsidiary has the right to distribute the films for
15 years from the initial theatrical release of the film. Under the
was 7,642 million ($71 million) and was not recorded on the
consolidated balance sheet as of March 31, 2005.
Dollars in
millions
145,111
$1,357
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
53,753
502
2008 . . . . . . . . . . . . . . . . . . . . . . . . .
16,412
153
2009 . . . . . . . . . . . . . . . . . . . . . . . . .
1,632
15
2010 . . . . . . . . . . . . . . . . . . . . . . . . .
712
Thereafter . . . . . . . . . . . . . . . . . . . . . . .
23,109
216
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
240,729
$2,250
BH6/30
Page 122
05.7.7, 3:32 AM
Sony Corporation and certain of its subsidiaries are defendants in several pending lawsuits. However, based upon the
Yen in millions
Years ended March 31
2004
2005
2005
51,892
50,670
$ 474
51,569
33,493
313
(46,971)
(40,358)
(377)
(2,970)
(751)
(7)
Translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,850)
1,865
17
50,670
44,919
$ 420
BH6/30
Page 123
05.7.7, 3:32 AM
Business segments
Sales and operating revenue:
Dollars in
millions
Yen in millions
Years ended March 31
2003
2004
2005
2005
$44,731
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
471,798
204,051
235,411
2,200
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,095,979
5,042,319
5,021,647
46,931
Game
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
936,274
753,732
702,524
6,566
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,757
26,488
27,230
255
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
955,031
780,220
729,754
6,821
Music
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
433,147
409,487
216,779
2,026
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,191
30,819
32,326
302
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
466,338
440,306
249,105
2,328
Pictures
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
802,770
756,370
733,677
6,857
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
802,770
756,370
733,677
6,857
5,025
Financial Services
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
509,398
565,752
537,715
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,878
27,792
22,842
213
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
537,276
593,544
560,557
5,238
1,707
Other
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
167,863
172,782
182,685
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93,282
95,535
71,742
671
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
261,145
268,317
254,427
2,378
Elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(644,906)
(384,685)
(389,551)
(3,641)
$66,912
Electronics intersegment amounts primarily consist of transactions with the Game and Pictures segments.
Game intersegment amounts primarily consist of transactions with the Electronics segment.
Music intersegment amounts primarily consist of transactions with the Game segment.
Other intersegment amounts primarily consist of transactions with the Electronics segment.
BH6/30
Page 124
05.7.7, 3:32 AM
Yen in millions
Years ended March 31
2003
2004
2005
2005
065,939
(6,824)
(34,305)
$ (321)
Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112,653
67,578
43,170
404
Music . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(28,261)
(5,997)
8,783
82
Pictures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58,971
35,230
63,899
597
Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,758
55,161
55,490
519
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(28,316)
(12,054)
(4,077)
(38)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
203,744
133,094
132,960
1,243
Elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,065
13,226
13,530
126
Corporate expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(33,369)
(47,418)
(32,571)
(304)
185,440
98,902
113,919
1,065
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
157,528
122,290
97,623
912
Unallocated amounts:
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(95,347)
(77,125)
(54,335)
(508)
247,621
144,067
157,207
$1,469
Yen in millions
Years ended March 31
2003
2004
2005
2005
Total assets:
Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,973,972 2,995,306 3,434,138
$32,095
Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
673,208
684,226
482,037
4,505
Music . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
500,627
483,990
325,928
3,046
Pictures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
868,395
856,517
863,056
8,066
Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,897,119
3,475,039
3,885,517
36,313
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
333,485
371,720
347,885
3,251
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,246,806
8,866,798
9,338,561
87,276
Elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(266,167)
(319,204)
(439,489)
(4,107)
Corporate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
389,906
543,068
600,028
5,608
$88,777
Unallocated corporate assets consist primarily of cash and cash equivalents, securities investments and property, plant and equipment maintained for general corporate purposes.
BH6/30
Page 125
05.7.7, 3:32 AM
Yen in millions
Years ended March 31
2003
2004
2005
2005
203,433
210,888
275,701
$2,577
Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,496
57,256
16,504
154
Music . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,008
16,123
9,451
88
Pictures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,552
7,844
5,598
52
52,041
56,586
52,788
494
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,157
13,455
8,564
80
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
347,687
362,152
368,606
3,445
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,238
4,117
4,259
40
Consolidated total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
351,925
366,269
372,865
$3,485
Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
181,316
251,980
311,101
$2,908
Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,986
100,360
18,824
176
Music . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,291
3,651
2,894
27
Pictures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,138
6,013
5,808
54
Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,655
4,618
3,845
36
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,993
10,124
6,149
57
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
259,379
376,746
348,621
3,258
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,862
1,518
8,197
77
Consolidated total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
261,241
378,264
356,818
$3,335
sions, and the set-top box product group has been moved
from Video to Televisions. Accordingly, sales and operating
revenue for the years ended March 31, 2003 and 2004 have
been restated to conform to the presentation for the year ended
March 31, 2005, Sony has partly changed its product category
Yen in millions
Years ended March 31
2003
2004
2005
$05,345
Video . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
828,308
949,261
1,034,736
9,670
Televisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
981,655
925,501
957,122
8,945
836,724
834,757
778,374
7,275
Semiconductors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
204,710
253,237
246,314
2,302
Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
527,782
623,799
619,477
5,789
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
460,888
576,217
578,349
5,405
$44,731
BH6/30
2005
Page 126
05.7.7, 3:32 AM
Geographic information:
Sales and operating revenue which are attributed to countries based on location of customers for the years ended March 31, 2003,
2004 and 2005 and long-lived assets as of March 31, 2003, 2004 and 2005 are as follows:
Dollars in
millions
Yen in millions
Years ended March 31
2003
2004
2005
2005
$19,634
U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,403,946
2,121,110
1,977,310
18,479
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,665,976
1,765,053
1,612,536
15,070
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,309,831
1,389,481
1,468,977
13,729
$66,912
Dollars in
millions
Yen in millions
March 31
2003
2004
2005
2005
Long-lived assets:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,365,160 1,430,443 1,414,632
$13,221
U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
713,524
671,534
662,120
6,188
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
164,459
211,147
183,620
1,716
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
148,616
133,640
144,896
1,354
$22,479
BH6/30
Page 127
05.7.7, 3:32 AM
supplemental information in accordance with disclosure requirements of the Japanese Securities and Exchange Law, to which
Dollars in
millions
Yen in millions
Years ended March 31
2003
2004
2005
2005
$(21,024
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,433,998
2,514,698
2,575,093
24,066
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,681,028
4,867,621
4,824,641
45,090
20,246
U.S.A.
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,632,176
2,341,304
2,166,323
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
189,502
198,450
235,362
2,200
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,821,678
2,539,754
2,401,685
22,446
14,244
Europe
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,520,930
1,647,694
1,524,182
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
121,598
66,950
52,417
490
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,642,528
1,714,644
1,576,599
14,734
1,073,497
1,154,470
1,219,563
11,398
Other
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
789,444
813,798
804,721
7,521
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,862,941
1,968,268
2,024,284
18,919
Elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(34,277)
$(66,912
Operating income:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0,011,444 0,0(69,875) 0,000,(765)
98,762
85,290
72,414
677
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62,206
78,822
12,186
114
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63,773
70,543
58,554
547
(50,745)
(65,878)
(28,470)
(266)
$(01,065
BH6/30
$00,00(7)
U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page 128
05.7.7, 3:32 AM
BH6/30
Page 129
05.7.7, 3:32 AM
Stock Information
2004
331,477,756
249,934,658
281,939,398
51,973,659
10,131,705
1,660
446
791,371
6,017
121
366,289,954
192,651,120
316,428,972
44,113,525
10,006,709
1,444
386
823,335
5,726
97
480,990,694
172,413,987
300,072,586
37,334,315
9,471,631
1,409
350
776,192
5,240
72
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
925,457,176
799,615
929,490,280
830,988 1,000,283,213
783,263
Number of
shareholders
20.7%
48.1%
Number of
shares held
Number of
shareholders
Japanese
securities
firms
Other Japanese
corporations
27.0%
39.4%
2005
Number of
shares held
35.8%
2004
Number of
shareholders
2005
Number of
shares held
30.5%
5.6%
1.1%
34.0%
4.8%
1.1%
3.7%
1.0%
17.2%
30.0%
Stock Price Range and Trading Volume on the Tokyo Stock Exchange
Years ended March 31
Nikkei stock average
20,000
15,000
10,000
5,000
Trading volume
(Million shares)
200
100
0
2001
Notes: 1.
2.
3.
4.
2002
2003
2004
2005
This trading volume shows the monthly volume of trade on the Tokyo Stock Exchange. Each fiscal year starts in April and ends in March.
Stock prices and the Nikkei stock average is based on a simple average of daily closing prices for each day of every month at the Tokyo Stock Exchange.
Stock prices have been adjusted to reflect the two-for-one stock split completed on May 19, 2000.
On June 20, 2001, Sony issued 3,072,000 shares of subsidiary tracking stock.
2001
8,900
15,100
7,510
38.6.%
2002
6,700
10,340
3,960
24.7.%
2003
2004
2005
4,200
7,530
4,070
37.3.%
4,360
4,670
2,720
+3.8.%
4,270
4,710
3,550
2.1.%
919,617
919,744
922,385
926,418
997,211
8.18.
6.16.
3.87.
4.04.
4.26.
25.0.
19.28.
2,521.19.
25.0.
16.67.
2,570.31.
25.0.
118.21.
2,466.81.
25.0.
89.03.
2,563.67.
25.0.
162.59.
2,872.21.
Note: Stock prices and per share data have been adjusted to reflect the two-for-one stock split completed on May 19, 2000. However, no adjustment to reflect such stock
split has been made to the number of shares outstanding at the year ended March 31, 2000. Stock price data are based on daily closing prices.
BH6/30
Page 130
05.7.7, 3:32 AM
Date of issue
(Exercise period)
Total number of
SARs to be issued
December 9, 2002
(December 8, 2012)
December 9, 2002
(December 8, 2012)
March 31, 2003
(March 31, 2013)
November 14, 2003
(November 13, 2013)
November 14, 2003
(November 13, 2013)
March 31, 2004
(March 31, 2014)
November 18, 2004
(November 17, 2014)
November 18, 2004
(November 17, 2014)
March 31, 2005
(March 31, 2015)
12,004
Exercise
price
Outstanding
balance
Percentage of
SARs exercised (%)
5,396.00
12,004
455
1,008.00
455
14,475
U.S.$36.57
14,201
1.9
13,978
4,101.00
13,978
455
815.00
455
12,236
U.S.$40.90
12,236
14,242
3,782.00
14,242
455
1,259.00
455
10,094
U.S.$40.34
10,094
Note: Stock acquisition rights numbers 1 through 9 were issued at no cost for the purpose of granting stock options. The number of shares to be issued upon exercise of each stock acquisition right is 100.
Convertible Bonds
Name
Date of issue
Interest rate
(%)
Total amount
of issue
Conversion
price
Outstanding balance
(Percentage of bonds converted)
250,000.million
5,605.0
10
U.S.$57,331.thousand
13,220.0
10
U.S.$77,056.thousand
8,814.0
U.S.$57,307.thousand
5,952.23
10
U.S.$67,297.thousand
6,931.0
250,000.million
(0%)
U.S.$47,665.thousand
(0%)
U.S.$53,307.thousand
(0%)
U.S.$56,492.thousand
(0%)
U.S.$43,073.thousand
(0%)
Years
Notes: 1. The stock acquisition rights of the bonds with stock acquisition rights (principal amount of 250 billion) cannot be detached from the bonds, and the exercise of a stock acquisition right causes
the corresponding bond to be canceled in lieu of a cash payment for purchase of shares. Due to this close interrelation between the bonds and stock acquisition rights, and in consideration of
the value of the stock acquisition rights and the economic value obtainable by issuing the bonds with the coupon, issue price and other terms of the issue, the stock acquisition rights are
issued at no cost.
2. All U.S. dollar convertible bonds were issued to provide equity-based compensation to certain executives in Sonys U.S. subsidiary companies. All U.S. dollar convertible bonds were issued for
distribution to certain executives in Sony Corporations U.S. subsidiary companies as an equity-based incentive plan. Although the conversion ratio is 0% for all these bonds, the value of bonds
issued does not match the outstanding balance of bonds because Sony Corporation purchased and canceled a portion of these warrants that were not used for the incentive plan.
3. The fourth series of unsecured convertible bonds (outstanding balance: 5,008 million) was redeemed at maturity on March 31, 2005..
Date of issue
Years
Interest rate
(%)
Total amount
of issue
Conversion
price
Outstanding balance
(Percentage of warrants exercised)
0.1
4,000 million
7,166.5
1.55
12,000 million
12,457.0
0.9
7,300 million
6,039.0
0.9
3,300.0
4,000 million
(0%)
11,490 million
(0%)
6,920 million
(0%)
150 million
(0%)
150 million
Notes: 1. All bonds with warrants were issued for distribution to the directors and other executives of Sony Corporation as an equity-based incentive plan. The fourteenth series of unsecured bonds with
warrants for shares of subsidiary tracking stock was issued for distribution to the directors and other executives of Sony Communication Network. Regarding the tenth series of unsecured
bonds with warrants and the thirteenth series of unsecured bonds with warrants, Sony Corporation canceled a portion of the warrants that were not used for the incentive plan. As a result,
although the exercise ratio is 0% for both issues, the value of bonds issued does not match the outstanding balance of warrants.
2. The sixth series of unsecured bonds with warrants (4,000 million) was redeemed at maturity on August 17, 2004.
Straight Bonds
Name
Date of issue
Years
Outstanding balance
7
7
10
5
10
5
10
2.00
1.99
(Note 2)
1.42
2.04
0.64
1.52
15,000 million
15,000 million
5,000 million
100,000 million
50,000 million
100,000 million
50,000 million
15,000 million
15,000 million
4,900 million
100,000 million
50,000 million
100,000 million
50,000 million
Notes: 1. Sony Corporation assumed responsibility for the sixth (2) series of unsecured bonds, the seventh (2) series of unsecured bonds and the eighth (2) series of unsecured bonds as a result of its
merger with AIWA Corporation. Sony Corporation repurchased and canceled 100 million of the eighth (2) series of unsecured bonds.
2. The interest rate of the eighth (2) series of unsecured bonds is calculated by subtracting 2-year interest rate swap from 20-year interest rate swap and then adding 1.00%. (If the result of this
calculation is negative, the interest rate is 0%.)
BH6/30
Page 131
05.7.7, 3:32 AM
Investor Information
SONY CORPORATION
7-35, Kitashinagawa 6-chome, Shinagawa-ku
Tokyo 141-0001, Japan
Phone:
81-(0)3-5448-2111
Facsimile: 81-(0)3-5448-2244
Japan
SONY CORPORATION
IR Office
7-35, Kitashinagawa 6-chome,
Shinagawa-ku, Tokyo 141-0001
Phone:
81-(0)3-5448-2180
Facsimile: 81-(0)3-5448-2183
U.S.A.
SONY CORPORATION OF AMERICA
Investor Relations
550 Madison Avenue, 27th Floor
New York, NY 10022-3211
Phone:
U.S. and Canada 800-556-3411
International
1-402-573-9867
Facsimile: 1-212-833-6938
U.K.
SONY GLOBAL TREASURY SERVICES PLC.
Investor Relations
11th Floor, St. Helens, 1 Undershaft
London EC3A 8EE
Phone:
44-(0)20-7444-9713
Facsimile: 44-(0)20-7444-9763
Contact Address:
JPMorgan Service Center
JPMorgan Chase Bank
P.O. Box 43013
Providence, RI 02940-3013
Phone: U.S.
800-360-4522
International 1-781-575-4328
BH6/30
Page 132
05.7.7, 3:32 AM
SONY AR-E0629
Page 37
05.7.6, 2:16 PM