Sony 2001 Annual Report Download - page 86

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Sony Corporation Annual Report 2001
84
The aforementioned consolidated forecast for the fiscal year ending March 31, 2002 includes the following
factors. Research and development expenses for the fiscal year ending March 31, 2002 are expected to increase
compared with those in the fiscal year ended March 31, 2001. This reflects, in the Electronics business, Sony’s
research and development activities especially in such areas as semiconductors, next-generation displays, optical/
magnetic data storage, and communications and, in the Game business, Sony’s development and introductions of
PlayStation 2 software and research and development activities corresponding to broadband networks. Capital
expenditures (additions to fixed assets) for the fiscal year ending March 31, 2002 are expected to decrease by
approximately 65 billion yen, or approximately 14%, to approximately 400 billion yen, compared with those in the
fiscal year ended March 31, 2001. This is primarily because capital expenditures for manufacturing equipment
for semiconductors in the Game business are expected to decrease significantly while those in the Electronics
business are expected to increase only slightly. Among expenditures in the Electronics business, the largest focus
is on manufacturing equipment for electronic devices including semiconductors and LCDs. Depreciation and
amortization expenses, including amortization of deferred insurance acquisition costs, for the fiscal year ending
March 31, 2002 are expected to increase by approximately 62 billion yen, or approximately 18%, to approximately
410 billion yen compared with those in the fiscal year ended March 31, 2001. This reflects capital expenditures
for the past several years especially in the Electronics business. Depreciation expenses for the fiscal year ending
March 31, 2002 are expected to increase by approximately 60 billion yen, or approximately 22%, to approximately
330 billion yen, compared with those in the fiscal year ended March 31, 2001.
In the Electronics business, overall sales are expected to increase due to the introduction of high-value-
added digital equipment, which is suitable for network environments. Regarding sales by product categories,
sales of such products as PCs, mobile phones, televisions, digital still cameras, DVD-Video players, projectors,
and LCDs are expected to increase. On the other hand, sales of such products as PC-related equipment and such
related devices are expected to decrease. Regarding profit performance, operating income is expected to decrease.
This is primarily due to severe price competition, Sony’s intention to continue to strengthen research and
development activities, increases in depreciation expenses reflecting capital expenditures for the past several
years, and expenses relating to realignment of businesses.
In the Game business, regarding hardware, Sony intends to achieve production shipments of 20 million units
of PlayStation 2 and over 10 million units of PS one. Regarding software, the amount of sales is expected to
increase primarily due to greater hardware penetration of PlayStation 2 and an increase in the number of
software titles available for it. As a result, overall sales are expected to increase significantly. Regarding profit
performance, an operating profit is expected to be recorded because of an anticipated significant improvement in
profit performance primarily due to achievement of cost reductions by establishing a manufacturing structure for
sufficient output of PlayStation 2 hardware, and due to expansion of software sales.
In the Music business, sales are expected to increase primarily due to the strength of albums anticipated for
release during the upcoming year. Regarding profit performance, operating income is expected to increase
primarily due to higher sales and continued benefits associated with global cost reduction initiatives, including
the prior year’s reduction in the number of employees at SMEI.