Sony 2003 Annual Report Download - page 88

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Consolidated Financial Information 2003
2
Operating and Financial Review and Prospects
The following “Operating and Financial Review and Prospects” is based on information known to management as of
August 26, 2003.
Operating Results
Overview
Although the global economy showed some signs of growth in the fiscal year ended March 31, 2003, military
action in Iraq contributed to increased economic uncertainty in the second half of the year, particularly in the U.S., and
the year ended without any indications of a sustained recovery. In Japan, in addition to stagnant consumer demand
and an increase in unemployment, declines in the stock market contributed to the unfavorable economic climate.
Under such difficult market conditions and reflecting the impact of the translation of financial results into yen in
accordance with Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”), the currency in which Sony’s
financial statements are prepared, Sony’s sales and operating revenue (“sales”) for the fiscal year ended March 31,
2003 decreased 1.4 percent compared with the previous fiscal year. This decrease was principally due to
industry-wide declines in personal consumption in the Electronics segment, and also increased price competition in
certain markets, including the PC, DVD-Video player and home-use video camera markets. However, operating
income increased 37.7 percent compared with the previous fiscal year due to the beneficial effect of the depreciation
of the yen against the euro, as well as increased profitability of the Electronics segment, resulting from restructuring
initiatives in previous fiscal years, of the Game segment, due to increased software sales and decreased production
costs, and of the Pictures segment, due to strong worldwide performance of certain releases in the current year.
On a local currency basis, (refer to “Foreign Exchange Fluctuations and Risk Hedging” below), Sony’s sales for
the fiscal year ended March 31, 2003 decreased approximately 2 percent and operating income decreased
approximately 5 percent compared with the previous fiscal year.
Restructuring
Restructuring expenses for the fiscal year ended March 31, 2003 amounted to 106.3 billion yen, compared to
107.0 billion yen in the previous fiscal year. The primary restructuring activities were in the Electronics and Music
segments.
Electronics
Restructuring charges in the Electronics segment for the fiscal year ended March 31, 2003, were 72.5 billion yen,
compared to 86.9 billion yen in the previous fiscal year, but exceeded the 60.0 billion yen total that was estimated at
the beginning of the year.