Sony 2003 Annual Report Download - page 210

Consolidated Financial Information 2003
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Electronics Segment
In an effort to improve the performance of the Electronics segment, Sony has undergone a number of
restructuring efforts to reduce its operating costs. For the years ended March 31, 2001, 2002 and 2003, Sony
recorded total restructuring charges of ¥20,620 million, ¥86,852 million and ¥72,473 million ($604 million),
respectively, within the Electronics segment. Significant restructuring activities are the following:
Downsizing of computer display CRT operations -
In the year ended March 31, 2002, as flat panel monitors became more popular in the marketplace, the
demand for computer display CRTs was drastically reduced. In this situation, Sony decided to abandon
certain manufacturing equipments for computer display CRTs mainly in the U.S. in the second quarter of
the year ended March 31, 2002. Restructuring charges totaling ¥19,639 million consisted of non-cash
equipment write-downs of ¥6,261 million, costs related to the buy-out and cancellation of operating leases
totaling ¥11,264 million and other costs related to the disposal of equipment of ¥2,114 million. Of the total
restructuring charges recorded, ¥946 million was recorded in cost of sales and ¥18,693 million was
included in selling, general and administrative expense in the consolidated statements of income. The
restructuring activity was completed in the year ended March 31, 2003, and all reserve balances were fully
utilized as of March 31, 2003.
In the year ended March 31, 2003, due to further market shrinkage and demand shift from CRT displays
to LCDs, Sony made a decision to discontinue certain computer display CRT manufacturing operations in
Japan and Southeast Asia to rationalize production facilities and downsize its business. Restructuring
charges totaling ¥6,902 million ($58 million) consisted of personnel related costs of ¥1,208 million ($10
million), non-cash equipment write-downs and disposals of ¥4,010 million ($34 million) and contract
termination and other costs of ¥1,684 million ($14 million). Of the total restructuring charges, ¥1,264
million ($11 million) was recorded in cost of sales and ¥5,638 million ($47 million) was included in selling,
general and administrative expense in the consolidated statements of income. The remaining reserve
balance as of March 31, 2003 was ¥383 million ($3 million) and will be utilized in the year ending March 31,
2004.
Aiwa Co. Ltd. restructuring -
In the year ended March 31, 2002, in response to a decline in performance of Aiwa Co., Ltd., and its
subsidiaries (“Aiwa”), Aiwa underwent a drastic restructuring program to eliminate the causes of this
downward trend and to return to be profitable. Aiwa recorded restructuring charges totaling ¥25,484
million in the year ended March 31, 2002, which included a reduction of unprofitable product lines, plant
closures and a reduction of the work forces. These charges consisted of non-cash equipment write-downs
and disposals of ¥10,244 million, personnel related costs of ¥8,209 million, and other costs of ¥7,031
million including the devaluation of inventory. Among these charges ¥5,734 million was recorded in cost of
sales and ¥19,750 million was included in selling, general and administrative expense in the consolidated
statements of income. Aiwa eliminated its employees from various employee levels, business functions,
operating units and geographic regions.