Sony 2001 Annual Report Download - page 85

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Sony Corporation Annual Report 2001
83
In June 2001, Sony Corporation intends to issue shares of subsidiary tracking stock in Japan, the economic
value of which is intended to be linked with the economic value of Sony Communication Network Corporation
(“SCN”), a wholly-owned subsidiary of Sony engaged in Internet-related services. This issuance aims to further
the growth of SCN as a member of the Sony group, by enhancing its independence and flexibility, and at the
same time to enhance overall group corporate value by enhancing SCN’s synergy with other Sony group divisions.
EVA®
Sony has been using EVA® as one evaluation measure to improve returns from capital investment since the fiscal
year ended March 31, 2000. In the Electronics business, to which Sony first introduced EVA®, Sony has been
focusing on key businesses by introducing the concept of cost of capital based on EVA® to profit evaluations and,
since the fiscal year ended March 31, 2001, has been reflecting EVA® in compensation, including for general
managers as well as for corporate executive officers. In the fiscal year ending March 31, 2002, Sony intends to
proceed with the introduction of EVA® in the Music and Pictures businesses. Sony intends to make further use of
EVA® throughout the group.
Forecast of Consolidated Results
Factors which may affect Sony’s financial performance include the following: general market factors in major
areas where Sony conducts its businesses such as general economic conditions and levels of consumer spending,
foreign exchange fluctuations, taxation policies of individual countries, and trading tariffs as well as subjective
and changing consumer preferences and changing demographics, penetration ratios of products, Sony’s ability
to continue to design, develop, manufacture, sell, and win acceptance of its products and services, procurement
of key devices, research and development expenses and depreciation expenses for capital expenditures for
making high value-added and digital network products, and various costs including expenses for raw materials,
personnel, and royalty.
Regarding the forecast of consolidated results for the fiscal year ending March 31, 2002, a more severe
business environment is expected due to such factors as the remaining uncertainty in the progress of economic
structural reform and recovery in Japan, the possibility that the negative effects of the economic slowdown in
the U.S. will spread to other countries, oversupply, and price competition. However, Sony’s consolidated sales,
operating income, and income before income taxes are expected to be higher than that in the fiscal year ended
March 31, 2001. Regarding net income, profit performance is expected to improve significantly primarily due to
the one time effect of the adoption of the new film accounting standard (refer to Note 2 of Notes to Consolidated
Financial Statements) in the fiscal year ended March 31, 2001. This forecast assumes that the yen for the fiscal
year ending March 31, 2002 will continue to be weak against the U.S. dollar and euro compared with the fiscal year
ended March 31, 2001. Also, this forecast does not include the effects relating to the proposed new company
between Sony and Ericsson, which is expected to be formed after completion of definitive documentation and
satisfaction of applicable regulatory requirements (refer to page 81).