Sony 2001 Annual Report Download - page 60

Sony Corporation Annual Report 2001
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Sales
Sales for the fiscal year ended March 31, 2001 increased by 628.2 billion yen, or 9.4%, to 7,314.8 billion yen
compared with the previous year, for the reasons discussed above.
Cost of Sales and Selling, General and Administrative Expenses (Excluding the Insurance Business)
Cost of sales for the fiscal year ended March 31, 2001 increased by 451.6 billion yen, or 9.8%, to 5,046.7 billion
yen compared with the previous year and increased from 72.9% to 73.3% as a percentage of sales. The increase
in cost of sales was primarily due to increases in manufacturing-related expenses, such as raw materials and
depreciation, and research and development expenses. This increase in cost of sales was partially offset by the
yen’s strength against the U.S. dollar and particularly the euro. In addition, in the Pictures business, due to
Sony’s adoption in April 2000 of the new film accounting standard (refer to Note 2 of Notes to Consolidated
Financial Statements), certain exploitation costs such as advertising expenses and marketing costs are now
recorded as incurred in selling, general, and administrative expenses for the current fiscal year, rather than
deferred as film inventory and amortized in cost of sales as in previous fiscal years. Research and development
expenses for the fiscal year ended March 31, 2001 increased by 22.2 billion yen, or 5.6%, to 416.7 billion yen
compared with the previous year, primarily in the Electronics business. However, the ratio of research and
development expenses to sales decreased from 6.3% to 6.0%.
Selling, general and administrative expenses for the fiscal year ended March 31, 2001 increased by 125.0
billion yen, or 8.3%, to 1,634.0 billion yen compared with the previous year. Despite this increase, the ratio of
selling, general and administrative expenses to sales decreased from 23.9% to 23.7%. The increase in expenses
was primarily due to the effects of the aforementioned new film accounting standard, an increase in amortiza-
tion expenses for intangible assets and goodwill resulting from the acquisition transactions of three listed
subsidiaries (refer to Note 4 of Notes to Consolidated Financial Statements), and an increase in royalty
expenses. However, the increase in selling, general, and administrative expenses was partially offset by the
yen’s strength against the U.S. dollar and particularly the euro and the approximately 5.6 billion yen reversal of
stock-price linked incentive compensation, reflecting the decrease in Sony Corporation’s stock price during the
year. In comparison, the previous year included an approximately 19.2 billion yen charge related to incentive
compensation. In addition, gains or losses on the sale and disposal, net and losses from impairment of long-
lived assets, which were previously recorded in other income and expenses, are now recorded in selling,
general and administrative expenses (refer to Note 2 of Notes to Consolidated Financial Statements). Losses on
the sale and disposal, net and losses from impairment of long-lived assets increased by 6.9 billion yen, or
39.5%, to 24.3 billion yen compared with the previous year. During the year, losses on the sale and disposal of
long-lived assets were recorded primarily in the Electronics business, in which Sony actively proceeded with
new equipment purchases and realignment of manufacturing facilities.