Sony 2003 Annual Report Download - page 94

Consolidated Financial Information 2003
8
Commencing with the first quarter ended June 30, 2002, Sony partly realigned its business segment
configuration and Electronics segment product category configuration. In accordance with this realignment, results of
the previous fiscal year have been reclassified to conform to the presentation for the current fiscal year. Sales of
related businesses in the NACS, established in April 2002 to enhance network businesses, are included in the
“Other” segment. In addition to Sony Communication Network Corporation (“SCN”), which was originally contained in
the “Other” segment, NACS-related businesses include an in-house oriented information system service business
and an Integrated Circuit (“IC”) card business formerly contained in the “Other” category of the Electronics segment.
Electronics
Sales for the fiscal year ended March 31, 2003 decreased by 345.7 billion yen, or 6.5 percent, to 4,940.5 billion
yen compared with the previous fiscal year. Operating income of 41.4 billion yen was recorded compared to an
operating loss of 1.2 billion yen in the previous fiscal year. The year on year decrease in sales was due to the
continued industry-wide effects of falling consumption in markets for certain products in the Electronics segment,
increased price competition worldwide, and the impact of business withdrawals and rationalization of product lines
(refer to Note 18 of Notes to Consolidated Financial Statements).
Regarding sales by geographic area, sales decreased by 12 percent in the U.S. and by 9 percent in Japan, but
sales increased by 2 percent in Europe and non-Japan Asia and other geographic areas (“Other Areas”), respectively.
Sales decreased in the U.S. over a wide range of products including, in descending order of financial impact, PCs,
computer displays, Aiwa products, CRT televisions, DVD-Video players, home-use video cameras, home audio and
CD-R/RW drives. Sales in the U.S. were also negatively impacted by Sony’s withdrawal from the home telephone
business in 2001. Products with increased sales in the U.S. included personal digital assistants, projection
televisions and digital still cameras. In Japan, overall demand decreased substantially, with PCs, Aiwa products,
home-use video cameras and CRT televisions showing year on year sales declines; however, sales of
semiconductors increased. In Europe, sales of PCs, digital still cameras and digital home-use video cameras
showed strong sales growth, while sales of Aiwa products and computer displays decreased. Sales in Europe were
also positively impacted by the strength of the euro against the yen in the second half of the year. In Other Areas,
sales of digital still cameras, home-use video cameras and PCs increased while sales of Aiwa products and
broadcast- and professional-use products decreased. The transfer of Sony’s mobile phone business to Sony
Ericsson Mobile Communications, AB (“SEMC”), an affiliate accounted for under the equity method since October
2001, also had a negative impact on sales, particularly in Japan and Europe. This was because before the transfer of
the business to SEMC, Sony handled all aspects of the mobile phone operation from manufacturing through to sales,
while now Sony only manufactures handsets on consignment from SEMC and SEMC is responsible for the remainder
of the operation. These consignment sales are recorded in the Electronics segment.
The sales decrease during the fiscal year ended March 31, 2003, accelerated in the fourth quarter, as sales
decreased by 227.0 billion yen, or 18.1 percent, to 1,025.3 billion yen compared to the fourth quarter of the previous
fiscal year. This was principally due to declines in sales, in descending order of financial impact, of PCs, CRT
televisions, Aiwa products, computer displays, home-use video cameras and home audio.