Sony 2001 Annual Report Download - page 58

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Sony Corporation Annual Report 2001
56
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following “Operating and Financial Review and Prospects” is based on current information known
to management as of May 31, 2001.
(Notes)
i) On January 5, 2000, the acquisition transactions by way of exchanges of stock, whereby Sony Music Entertainment
(Japan) Inc., Sony Chemicals Corporation, and Sony Precision Technology Inc. became wholly-owned subsidiaries of
Sony Corporation, were completed. Intangible assets and goodwill realized from these transactions are being amortized
over their useful lives of up to a maximum of 20 years. Such amortization is recorded in selling, general and administra-
tive expenses. As a result, during the fiscal year ended March 31, 2001, operating income and income before income
taxes each decreased by 16.7 billion yen and net income decreased by 13.3 billion yen, and during the fiscal year ended
March 31, 2000, operating income and income before income taxes each decreased by 4.2 billion yen, and net income
decreased by 3.3 billion yen (refer to Note 4 of Notes to Consolidated Financial Statements).
ii) In June 2000, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants
(“AcSEC”) issued Statement of Position (“SOP”) 00-2, “Accounting by Producers or Distributors of Films.” SOP 00-2 is
effective for fiscal years starting on or after December 16, 2000 with early application encouraged. Sony adopted SOP
00-2 effective as of April 1, 2000 (refer to Note 2 of Notes to Consolidated Financial Statements). As a result, Sony’s
operating income, income before income taxes, and net income for the fiscal year ended March 31, 2001 each
decreased by 28.5 billion yen. Additionally, Sony’s net income for the fiscal year ended March 31, 2001 decreased by
101.7 billion yen, reflecting a one-time non-cash after-tax cumulative effect adjustment in the income statement
directly above the caption of “net income” for a change in accounting principle.
iii) In December 1999, the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) No. 101,
“Revenue Recognition in Financial Statements.” Sony adopted SAB No. 101 in the fiscal year ended March 31, 2001,
effective as of April 1, 2000 (refer to Note 2 of Notes to Consolidated Financial Statements). The impact on consolidated
results for this change in accounting principle was not material. However, a one-time non-cash after-tax cumulative
effect adjustment of 2.8 billion yen was recorded in the income statement directly above the caption of “net income”
for a change in accounting principle.
iv) Effective from the fiscal year ended March 31, 2001, gain or loss on sale and disposal, net and loss from impairment of
long-lived assets, which were previously recorded in other income and expenses, are now recorded in selling, general
and administrative expenses. The presentation for previous fiscal years has been restated to conform to the presenta-
tion for the fiscal year ended March 31, 2001. In addition to the above restatements, certain amounts in the consoli-
dated balance sheets, consolidated statements of income, and consolidated statements of cash flows in previous fiscal
years have been reclassified to conform to the presentation for the fiscal year ended March 31, 2001.