Sony 1998 Annual Report Download - page 46

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[44] Sony Corporation Annual Report 1998
Cash Flows
Sony’s management aims to maintain a solid financial position with ample liquidity to provide operational flexibility.
There was a net decrease in cash and cash equivalents at end of year of ¥5.2 billion ($40 million), including
the effect of exchange rate changes of ¥1.1 billion ($8 million), resulting in a balance of ¥423.3 billion ($3,207
million) at year-end.
During the year, net cash provided by operating activities decreased to ¥612.4 billion ($4,639 million) from
the previous fiscal year, mainly due to an increase in inventories, decreases in accrued income and other taxes and
other factors. Depreciation and amortization, including amortization of goodwill and intangibles and deferred insur-
ance acquisition costs, rose 13.2% to ¥301.7 billion ($2,285 million). Depreciation and amortization is projected to
be higher in the fiscal year ending March 31, 1999.
During the year, net cash used in investing activities increased to ¥598.7 billion ($4,536 million) from the
previous fiscal year, mainly due to higher payments for purchases of fixed assets.
During the year, net cash used in financing activities decreased significantly to ¥17.8 billion ($135 million)
from the previous fiscal year. This was due to a small net repayment of short-term borrowings, reflecting the substan-
tial demand for funds during the year mentioned above, compared to a significant net repayment of short-term
borrowings in the previous fiscal year. In addition, proceeds from issuance, mainly of the Notes, increased from the
previous fiscal year, while net repayment of long-term debt also increased because of redemptions, mainly of MTN in
the United States.
Capital Expenditures
Capital expenditures (additions to fixed assets) were up 30.2% to ¥388.0 billion ($2,939 million). Major compo-
nents of the capital expenditures were approximately ¥70.0 billion ($530 million) in the semiconductor field, which
was the largest amount, and investments in such fields as displays and recording media. In the fiscal year ending
March 31, 1999, while Sony plans to maintain a high level of investment in these business areas, total capital
expenditures are expected to decrease.
Major Agreements
This section details major agreements having an effect on liquidity or earnings during the year and expected in the
fiscal years ending March 31, 1999 and thereafter.
During the year, Sony made an equity investment of approximately ¥5.0 billion in Japan Sky Broadcasting Co., Ltd
(JSkyB), a digital communications satellite broadcaster. In May 1998, JSkyB and PerfecTV Corporation completed
their merger. As a result of this merger, Sony owns 11.375% of shares of the combined company, known as Japan
Digital Broadcasting Services Inc. Sony also invested a total of approximately ¥4.2 billion in broadcast programming
companies relating to the digital communications satellite broadcasting business during the year. In the fiscal year
ending March 31, 1999, Sony plans to make additional investments of approximately ¥3.9 billion in other broadcast
programming companies. Such communications satellite related businesses are currently in start-up phases, and Sony
is committed to such new business areas, with the required additional investments to be made in accordance with its
share of equity. Sony also plans to make an investment of approximately ¥0.8 billion in broadcast programming
companies involved in digital satellite broadcasting in the fiscal year ending March 31, 1999.
Stockholders’ Equity
(Percent of Total Assets)
(Billion ¥, %)
Net Cash Provided by
Operating Activities
(Billion ¥)
94
1,329
(31.1)
95 96 97 98
1,008
(23.9)
1,169
(23.2)
1,459
(25.7)
1,816
(28.4)
94
338
95 96 97 98
182 234 723 612
Capital Expenditures
(Billion ¥)
94
196
95 96 97 98
251 251 298 388