Sony 2003 Annual Report Download - page 212

Consolidated Financial Information 2003
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Music segment has undergone a worldwide restructuring program to reduce staffing and other costs through
the consolidation and rationalization of facilities worldwide. For the years ended March 31, 2001, 2002 and
2003, Sony recorded total restructuring charges of ¥7,908 million, ¥8,599 million and ¥22,350 million ($186
million), respectively, within the Music segment excluding Japan. The total estimated costs of the worldwide
restructuring program are ¥43,371 million ($361 million), of which ¥38,857 million ($324 million) was incurred
through March 31, 2003. At March 31, 2003, the remaining reserve balance was ¥11,522 million ($96 million).
This reserve balance will be utilized over the next two to three years, with most of the payments being made
during the year ending March 31, 2004. The worldwide restructuring program is expected to complete by the
year ending March 31, 2006. In addition to the above, Sony also recorded restructuring charges of ¥1,519
million ($13 million) in Japan which were personnel related costs included in selling, general and administrative
expense in the consolidated statement of income, in the year ended March 31, 2003. Significant restructuring
activities included the following:
In the year ended March 31, 2001, the Music segment initiated its worldwide restructuring program with
the shutdown of a CD and audio cassette manufacturing plant in the U.S., as part of its effort to consolidate
manufacturing operations, and staff reductions in other areas. As a result, Sony recorded restructuring
charges totaling ¥7,908 million in the year ended March 31, 2001. The restructuring charges consisted of
personnel related costs of ¥3,540 million, non-cash asset write-downs and disposals of ¥3,160 million and
other costs of ¥1,208 million including lease termination costs. Of the total restructuring charges, ¥779
million was recorded in cost of sales and ¥7,129 million was included in selling, general and administrative
expense in the consolidated statements of income.
In the year ended March 31, 2002, Sony recorded additional restructuring charges totaling ¥8,599
million. Restructuring activities included the rationalization of digital media initiative and portfolio
investment businesses in order to focus on core music activities and staff reductions. Charges incurred in
the year ended March 31, 2002 consisted of personnel related costs of ¥5,100 million, non-cash asset
write-downs and disposals of ¥787 million, and other costs of ¥2,712 million including lease termination
costs. These charges were included in selling, general and administrative expense in the consolidated
statements of income.
In the year ended March 31, 2003, restructuring charges related to the worldwide restructuring of the
Music segment totaled ¥22,350 million ($186 million). Restructuring activities included the further
consolidation of operations through the shutdown of a cassette and CD manufacturing and distribution
center in Holland and a second CD manufacturing facility in the U.S. as well as further staff reductions in
other areas. The restructuring charges consisted of personnel related costs of ¥14,932 million ($124
million), non-cash asset write-downs and disposals of ¥3,256 million ($27 million) and other costs of
¥ 4,162 million ($35 million) including lease termination costs. These charges were included in selling,
general and administrative expense in the consolidated statements of income. Employees were
eliminated across various employee levels, business functions, operating units, and geographic regions
during this phase of the worldwide restructuring program.