Sony 2003 Annual Report Download - page 116

Consolidated Financial Information 2003
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maturity dates vary as follows:
・ Within 1 year: 22 percent
・ 1 to 5 years: 47 percent
・ 5 to 10 years: 31 percent
Sony also maintains long-term investment securities issued by a number of non-public companies. The
aggregate carrying amount of the investments in non-public companies at March 31, 2003, which were valued at the
lower of cost or fair value, was 69.6 billion yen.
For the years ended March 31, 2001, 2002 and 2003, total impairment losses were 4.2 billion yen, 27.6 billion
yen and 25.5 billion yen of which none, 9.2 billion yen and 2.3 billion yen, respectively, were recorded by Sony Life in
Financial Services revenue (refer to “Financial Services” under “Operating Performance by Business Segment”).
The remaining losses in each of the three years were reflected in non-operating expenses and primarily relate to the
certain strategic investments in non- financial services businesses. These investments primarily relate to companies
in the U.S. and Europe with which Sony has strategic relationships for the purpose of developing and marketing new
technologies and the impairment losses recorded for each of the three years primarily reflect the inability of these
companies to successfully develop and market such technology. None of these impairment losses was individually
material to Sony, except for the devaluation of securities explained in “Other Income and Expenses” for the fiscal year
ended March 31, 2003. Upon determination that the value of an investment is impaired, the value of the investment
is written down to its fair value. For publicly traded investments, fair value is determined by the closing stock price as
of the date on which the impairment determination is made. For non-public investments, fair value is determined
through the use of such methodologies as discounted cash flows, valuation of recent financings and comparable
valuations of similar companies. The impairment losses that were recorded in each of the three years related to the
unique facts and circumstances of each individual investment and did not significantly impact other investments.
Sony Life and Sony Bank’s investments constitute the majority of the investments in the Financial Services
segment. Sony Life and Sony Bank account for approximately 84 percent and 14 percent of the investments of the
Financial Services segment, respectively.
Sony Life’s basic investment policy is to take both expected returns and investment risks into account in order to
maintain sound asset quality, structuring its asset management portfolio to ensure steady medium- and long-term
returns by investing assets in an efficient manner and responding flexibly to changes in financial conditions and the
investment environment. Moreover, the company analyzes the character of future insurance policy benefits by
utilizing Asset Liability Management (“ALM”), a method of managing interest rate fluctuation risk through the
comprehensive identification of the mismatches of duration and cash flows between assets and liabilities.
Government bonds and corporate bonds constitute a majority of Sony Life’s current portfolio. Sony Life invests in
various types of government and corporate bonds in many countries, companies and industries, to diversify
associated risks. Further, as stocks accounted for approximately 1.7 percent of such securities, the financial
structure of the company is not greatly influenced by stock prices.
Sony Bank operates using the same basic investment policy as Sony Life, taking expected returns and