Sony 2003 Annual Report Download - page 96

Consolidated Financial Information 2003
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Communications”. Sales of PCs decreased in Japan and the U.S. due to increased price competition. Worldwide
shipments of PCs decreased by approximately 400,000 units to approximately 3,100,000 units. Sales of personal
digital assistants increased significantly, particularly in the U.S. and Europe, as the market for these products
expanded. Sales of CRT based computer displays continued to decrease in the U.S., Europe and Japan due to the
demand shift towards flat panel displays. As a result, sales of flat panel displays (which include LCD televisions)
increased significantly in all areas. Sales of broadcast- and professional-use products decreased as many
broadcasters postponed the installation of new systems due to economic uncertainty.
“Semiconductors” sales increased by 22.4 billion yen, or 12.3 percent, to 204.7 billion yen. The increase was
primarily due to a significant increase in sales of CCDs, particularly in Japan and Other Areas, reflecting higher
demand for digital still cameras, and a significant increase in sales of bipolar integrated circuits for CD-R/RW and
DVD drives, particularly in Japan. Partially offsetting the above increase was a decrease in sales revenue from high
temperature LCDs in all geographic areas due to pricing pressure.
“Components” sales increased by 11.8 billion yen, or 2.2 percent, to 537.4 billion yen. The increase was
primarily due to significant increases in sales of DVD drives, Memory Stick and batteries. DVD drive sales increased
as the strong performance of Sony branded products, particularly in the U.S., allowed Sony to avoid unit price
reductions. Memory Stick sales increased due to continued demand for digital still cameras, with worldwide
shipments of Memory Stick increasing by approximately 8,000,000 units to approximately 19,000,000 units. At the
end of the fiscal year ended March 31, 2003, Sony’s cumulative shipments of Memory Stick had reached 39,000,000
units. Regarding batteries, the growing market for lithium-ion batteries led to strong revenue growth despite declines
in the average selling price. On the other hand, sales of CD-R/RW drives decreased due to severe price competition.
Sales of CRTs also decreased reflecting the decline in the market for CRT televisions and CRT computer displays.
“Other” sales decreased by 10.4 billion yen, or 2.1 percent, to 490.7 billion yen, primarily due to lower sales of
Aiwa products in all geographic areas. This decrease was partially offset by the sales of mobile phone handsets
which were transferred from “Information and Communications” to “Other” in October 2001, as a result of their
becoming consignment sales to SEMC.
In the Electronics segment, cost of sales for the fiscal year ended March 31, 2003 decreased by 368.5 billion yen,
or 8.7 percent to 3,869.2 billion yen compared with the previous fiscal year. This decrease was due to the effects of
restructuring carried out in the previous fiscal year in CRTs and other products, the increased profitability as a result
of increased sales in semiconductors, batteries and other products, and the favorable impact of the appreciation of
the euro against the yen. A majority of goods sold in Europe are imported from other regions; therefore an
appreciation of the euro causes increased sales without a corresponding increase in the cost of sales. Research and
development expenses were 380.3 billion yen, almost flat year on year. The cost of sales ratio decreased from 80.5
percent to 78.8 percent.
Selling, general and administrative expenses decreased by 19.8 billion yen, or 1.9 percent to 1,029.9 billion yen