Sony 1999 Annual Report Download - page 61

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Sony Corporation Annual Report 1999
On September 1, 1995, Sony Corporation issued
¥1 billion ($8,333 thousand) of 0.1% bonds, with 500
detachable warrants. One warrant, which became exer-
cisable from October 1, 1995, entitles the holder to
subscribe ¥2 million ($17 thousand) for shares of
common stock of Sony Corporation at ¥5,330 ($44) per
share (subject to adjustment in certain circumstances).
Upon issuance of the bonds, Sony Corporation bought
all of these warrants and distributed such instruments at
fair market value to the then directors of Sony Corpora-
tion as a part of their remuneration. All warrants have
been exercised.
On August 16, 1996, Sony Corporation issued
¥2 billion ($16,667 thousand) of 0.1% bonds, with
1,000 detachable warrants. One warrant, which became
exercisable from October 1, 1996, entitles the holder
to subscribe ¥2 million ($17 thousand) for shares of
common stock of Sony Corporation at ¥7,022 ($59) per
share (subject to adjustment in certain circumstances).
Upon issuance of the bonds, Sony Corporation bought
all of these warrants and distributed such instruments
at fair market value to the then directors and selected
employees of Sony Corporation as a part of their remu-
neration or salary. At March 31, 1999, 222 warrants were
outstanding and will expire on August 15, 2000.
On October 13, 1997, Sony Corporation issued
¥3.5 billion ($29,167 thousand) of 0.1% bonds, with
1,750 detachable warrants. One warrant, which became
exercisable from November 2, 1998, entitles the holder
to subscribe ¥2 million ($17 thousand) for shares of
common stock of Sony Corporation at ¥11,788 ($98) per
share (subject to adjustment in certain circumstances).
Upon issuance of the bonds, Sony Corporation bought
all of these warrants and distributed such instruments at
fair market value to the then directors and selected
employees of Sony Corporation as a part of their remu-
neration or salary. At March 31, 1999, all warrants were
outstanding and will expire on October 12, 2001.
On August 17, 1998, Sony Corporation issued
¥4 billion ($33,333 thousand) of 0.03% bonds, with
2,000 detachable warrants. One warrant, which will be
exercisable from September 1, 1999, entitles the holder
to subscribe ¥2 million ($17 thousand) for shares of
common stock of Sony Corporation at ¥12,527 ($104) per
share (subject to adjustment in certain circumstances).
Upon issuance of the bonds, Sony Corporation bought
all of these warrants and distributed such instruments
at fair market value to the then directors and selected
employees of Sony Corporation as a part of their remu-
neration or salary. At March 31, 1999, all warrants were
outstanding and will expire on August 16, 2004.
On March 4, 1998, Sony Corporation issued unsecured
U.S. $1.5 billion Notes due 2003 with an interest rate of
6.125%. The Notes are redeemable before the due date.
By entering into several interest rate and currency swap
agreements and interest rate swap agreements, Sony has
effectively converted the cash stream for these Notes
into yen with fixed interest rates of 1.287% to 1.515%
per annum for ¥150,000 million ($1,250,000 thousand)
principled amount and LIBOR plus 0.06997% per annum
for ¥43,425 million ($361,875 thousand) principled
amount as of March 31, 1999.
At March 31, 1999, property, plant and equipment
with a book value of ¥8,293 million ($69,108 thousand)
was mortgaged as security for loans and bonds issued by
consolidated subsidiaries.
Aggregate amounts of annual maturities of long-term
debt during the next five years are as follows:
Year ending March 31 Yen in millions Dollars in thousands
2000 . . . . . . . . . . . . ¥ 87,825 $ 731,875
2001 . . . . . . . . . . . . 224,394 1,869,950
2002 . . . . . . . . . . . . 165,147 1,376,225
2003 . . . . . . . . . . . . 224,283 1,869,025
2004 . . . . . . . . . . . . 47,045 392,042
At March 31, 1999, Sony had unused lines of credit
amounting to ¥2,101,709 million ($17,514,242
thousand) of which ¥1,163,850 million ($9,698,750
thousand) related to commercial paper programs and
¥598,458 million ($4,987,150 thousand) related to
medium term notes. Under these programs, Sony is
authorized to obtain short-term financing at prevailing
interest rates for periods not in excess of 360 days.
The basic agreements with certain banks in Japan
include provisions that collateral (including sums on
deposit with such banks) or guarantors will be furnished
upon the banks’ request and that any collateral fur-
nished, pursuant to such agreements or otherwise, will
be applicable to all present or future indebtedness to
such banks.
11. Insurance-related operations
Sony’s stock life insurance subsidiary maintains account-
ing records as noted in Note 2 in accordance with the
accounting principles and practices prescribed by the
Japanese Ministry of Finance (the “MOF”), which vary in
some respects from U.S. GAAP. Those differences are
mainly: that insurance acquisition costs are charged to
income when incurred in Japan whereas in the U.S.
those costs are deferred and amortized generally over
the premium-paying period of the insurance policies,
that future policy benefits calculated locally under the
authorization of the MOF are comprehensively adjusted
to a net level premium method with certain adjustments
of actuarial assumptions for the U.S. GAAP purposes and
that deferred income taxes are not recognized under
local accounting practices. For purposes of preparing the
consolidated financial statements, appropriate adjust-
ments have been made to reflect such items in accor-
dance with U.S. GAAP.
The amounts of statutory net equity of the subsidiary
as of March 31, 1998 and 1999 were ¥40,625 million
and ¥40,626 million ($338,550 thousand), respectively.