Sony 2003 Annual Report Download - page 223

Consolidated Financial Information 2003
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settlement of stock option plan, Sony is required to reimburse the VIE for repayment of the bank loan. At
March 31, 2003, the maximum exposure amount associated with the bank loan is ¥6,938 million ($58 million).
24. Commitments and contingent liabilities
(1) Commitments:
Commitments outstanding at March 31, 2003 amounted to ¥297,768 million ($2,481 million). The major
components of the commitments are as follows:
In the ordinary course of business, Sony makes commitments for the purchase of property, plant and
equipment. As of March 31, 2003, such commitments outstanding were ¥30,814 million ($257 million).
Certain subsidiaries in the Music business have entered into long-term contracts with recording artists
and companies for the production and/or distribution of prerecorded music and videos. These contracts
cover various periods mainly through March 31, 2006. As of March 31, 2003, these subsidiaries were
committed to make payments under such long-term contracts of ¥54,508 million ($454 million).
Certain subsidiaries in the Pictures business have entered into agreements under which the subsidiaries
acquire completed films, or certain rights therein, from third parties. These agreements cover various
periods through March 31, 2005. As of March 31, 2003, these subsidiaries were committed to make
payments under such contracts of ¥40,116 million ($334 million).
A subsidiary in the Pictures business has also entered into a distribution agreement with a third party to
distribute, in certain markets and territories, all feature length films produced or acquired by the third party
during the term of the agreement. The distribution agreement expires on December 31, 2006 if a minimum of
36 films have been delivered as of that date. If 36 films have not been delivered by December 31, 2006, the
distribution agreement expires on the earlier of the delivery of the 36th film or May 25, 2007. The subsidiary
has the right to distribute the films for 15 years from the initial theatrical release of the film. Under the terms
of the distribution agreement, the subsidiary must fund a portion of the production cost and is responsible for
all distribution and marketing expenses. As of March 31, 2003, 17 films have been released or funded by the
subsidiary. The subsidiary’s estimated commitment to fund the production of the remaining films under this
agreement is ¥88,024 million ($734 million).