Sony 2003 Annual Report Download - page 213

Consolidated Financial Information 2003
- 127 -
Pictures Segment
Due to changes within the television production and distribution business, the competition to obtain
customers between the major television networks and other production and distribution companies is
becoming more intense. This competitive environment has resulted in fewer opportunities to produce shows
for the networks and a shorter lifespan for ordered shows that do not immediately achieve favorable ratings.
Consistent with this trend, Sony has seen an increase in the number of new programs being distributed yet
canceled in their first or second season and that are generally less profitable, and a decrease in the number of
network programs that are able to achieve syndication and that are generally more profitable. As a result, in
the year ended March 31, 2002, Sony decided to consolidate its television operations and downsize the
network television production business in the Pictures segment. Sony recorded restructuring charges totaling
¥8,452 million which consisted of personnel related costs of ¥1,753 million, non-cash asset write-downs and
disposals of ¥1,767 million, and other costs of ¥4,932 million including those relating to the buy-out of term deal
commitments. These restructuring charges were all recorded in cost of sales in the consolidated statements of
income. In the year ended March 31, 2003, additional restructuring charges totaling ¥480 million ($4 million)
were recorded. These costs were included in cost of sales in the consolidated statements of income. The
remaining reserve balance as of March 31, 2003 was ¥947 million ($8 million). The restructuring plan is
expected to complete by the second quarter of the year ending March 31, 2005 and all reserves will be utilized
over the next two years.
The following table displays the balance of the accrued restructuring charges recorded for the years ended
March 31, 2001, 2002 and 2003.
Yen in millions
Employee
termination
benefits
Non-cash
write-downs
and disposals
Other associated
costs
Tota l
Balance at March 31, 2000 ¥58 - ¥2,131 ¥2,189
Restructuring costs 19,200 ¥14,070 1,448 34,718
Non-cash charges - (14,070) - (14,070)
Cash payments (18,142) - (2,617) (20,759)
Adjustments 145 - 126 271
Balance at March 31, 2001 1,261 - 1,088 2,349
Restructuring costs 38,123 39,598 29,253 106,974
Non-cash charges - (39,598) - (39,598)
Cash payments (33,291) - (16,907) (50,198)
Adjustments 150 - 203 353
Balance at March 31, 2002 6,243 - 13,637 19,880
Restructuring costs 46,953 42,768 16,530 106,251
Non-cash charges - (42,240) - (42,240)
Cash payments (38,548) - (23,172) (61,720)
Adjustments 136 (528) (1,208) (1,600)
Balance at March 31, 2003 ¥14,784 - ¥5,787 ¥20,571